19% would be the complacent middle class 🤮

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[–] 3 points 5 months ago* (last edited 5 months ago)

I don't think interest rates created that wealth for two reasons.

One is because of contradictory trends - interest rates were higher (3-8%) duding the 1800-1930 period of rising inequality than during the late 80s-onwards period. Also interest rates were lower (0.5-4%) during the 1930-1965 period of decreasing inequality. Rates fell persistently under that level only after the dotcom bubble in 2001.

The other reason is is that given I can see brutal inequality happening during the 19th century without many of the modern financial instruments (and across diff countries), I have to conclude that there's a more fundamental process that drives inequality. For me the best explanation so far is the process of capital accumulation which inherent to this economic system.

E: If you wanna see another consistent (inverse) correlation, look at how tax rates evolved during these periods.

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