Wealth Accumulation at the Top

I definitely haven't fleshed out all the details but something occurred to me this morning and I wanted to share in the hopes that I can get some feedback.

In a nutshell -

I think it would be fair to say that one of the "goals" of the Federal Reserve has been to maintain a slow inflation, somewhere in the 2-4% range. General inflation occurs because additional money is being pumped into the economy by the government.

The thing is, that "new" money doesn't hit the economy everywhere at once and prices and wages do not rise all at once. Those who get that "new" money first are getting it before prices and wages have begun to rise, so they have "new" money to spend on goods and services being sold at "old" prices. As the "new" money slowly makes its way through the economy, wages and price levels will slowly rise with the general laborer being among the very last to see an increase in wages.

I've known, at least conceptually, about the horrible effects of inflation, particularly on the poor and retired, for quite a while, but this morning I "saw" something I haven't seen before.

As the Fed continues to pursue inflation over decades there is a slow transfer of wealth to those that receive the money first from the rest of the country. I do not have any data on this but I'm confident that I can name who gets that "new" money first - banks, big business and institutions, and the wealthy. Long before any of that "new" money gets to the couple buying a home or a small business owner borrowing money to expand it has passed through several layers, each of which is, through no direct action of their own, getting a tiny piece of the wealth of everyone below them on the ladder.

This has some important implications, most notably that even the most ethical big business that paid all its taxes, treated its employees well, paid well, and did everything "right" would still see a very slow, but steady, increase in its total wealth relative to everyone further down the ladder.

Given that it has been about 25 years since we have seen a sustained recession and we've had an equally long period of slow, steady inflation it would seem that, even holding tax rates constant, we would have seen a significant accumulation of wealth at "the top" during this period.

Decreases in income tax rates, greed, and other factors also played a role and cannot be ignored (and it will take someone with considerably more experience in mathematics and statistics to determine the effects of each), but it seems clear to me that there is a lot more to the story of wealth accumulation than the powers that be are discussing or, quite probably, given their handling of our current recession, even aware and it is a direct result of the policies they prescribe.

I can't decide...

I can't decide which was the most humorous:

a) Watching the Republicans and "conservatives" try to hi-jack the tea party events by screaming for lower taxes even as they plan to increase the size, scope and intrusiveness of government

b) Watching the Democrats and liberals scoff at the parties and assert that they are all the product of Fox News, the wealthy or one "extremist" group or another

c) Watching and reading the incessant references to the parties as "teabagging" from those on the left that know what that means and are using it in a derogatory manner and those on the right that have no idea

d) Watching the protestors show their "mad as hell and not going to take it anymore" frustration even as they don't seem to have a clear indication as to what it is they aren't going to take any more

e) Watching and reading comments about "going Galt" from people that probably haven't read 1,100 page in the last five years combined much less the novel they quote

f) Watching me play golf yesterday after not playing since last September

I'm going to go with answer (f) - the only thing damaged by it is my ego, to everyone else its hilarious...unless you happened to be in the group directly ahead or behind us or the poor bastard that got paired up with us at random.

Tea-blogging

All across the country thousands of people are attending "tea parties" today to protest...something. There are all sorts of reasons but the primary motivating factor appears to be nothing more than frustration at the disconnect between Wall Street and Main Street, between Washington and the rest of the country, between what we were and what we've become.

I understand. Trust me, there is probably no one more frustrated than I am at all that has led us here.

But, I am afraid that the entire "tea party" movement is much ado about nothing. Republicans (one half of the very reason we've arrived at this point) are doing all they can to hi-jacked the "movement" in a bid to take back power from the Democrats (the other half of how we got here). It's the same game, all over again. The fact of the matter is that Americans protest the same way they give to charity - without getting their hands dirty. Myself included. Standing in a park for an afternoon, listening to speeches, and waving American flags might make us feel better, but that's about it.

The fact of the matter is that most Americans live hand-to-mouth and can't take time away from work to engage in any serious protesting and we certainly aren't about to break any laws to do it. The "tea parties" will be held where they are told to hold them and will begin and end when their permits allow - certainly not the spirit in which the original tea party occurred. In fact, the more involved the various established political parties and local governments become the more it begins to look like some Orwellian "Two Minutes Hate."

I can't help but feel that the people that are supposed to be getting the message are laughing.

Maybe I am wrong and this is the start of a real shift in the American political landscape. I certainly hope it is. If so, my apologies for being late (fashionably?) to the party. But, all indications are that it is just another verse in the same tired song we've been hearing for decades and, until I see evidence to indicate otherwise, I've got better things to do.