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In Capitalism 2.0 the fed interest rate is always negative probably like -10% and the wealthy are forced to always circulate their money to avoid simply losing

In Capitalism 2.0 the fed interest rate is always negative probably like -10% and the wealthy are forced to always circulate their money to avoid simply losing it all in like 10 years. And that's globally a thing. You use it or lose it... even if it's barely making a return. Why? Because the market is now efficient and the wealthy will simply sit on their money or earn a marginal interest on it rather than spend it.

analyst74 8y ago
That's an interest point, all the articles have been discussing negative rate as an extreme measure that's meant to be temporary without justifying why. Maybe negative rate is a better solution than wealth tax.
- andrenth 8y ago
  It’s extreme because it reverses a basic economic principle (money is more valuable now than later). You lend me $100 today and I pay you $90 in one year. The idea is to force people to let go of their long term saving goals and spend now, because saving will make you lose money, thus making the economy grow. It doesn’t seem to work as predicted though (countries doing that aren’t growing). Furthermore, people with access to other types of investment will just switch instead of spending their money. In the end I believe this works as a sort of stealth taxation that affects poor people the most, because they don’t have access/knowledge/risk tolerance to more sophisticated forms of investment.
salawat 8y ago
Money is worthless if it isn't moving. In a real way, it's better for the economy if investments are made that turn out poorly, but reallocate funds to someone who will spend them since odds are that spenders transactions will lead back to your own coffers anyway. What you run into though, is an action economy problem. How do I spend potential billions in a way that it isn't just getting tied up in overly constrictive savings schemes? I.e. how do I get people paid so they can buy? This is the paradox of chasing growth. A company that pays it's workers enough to allow them to consume to increase overall market health won't be the fastest grower, but enables market growth as a whole. The economy doesn't need bubbles. It needs stable growth. Like baking bread. Not enough sugar or water, and the yeast can't make the bread rise. Too much capital, funneled through businesses optimizing for max on paper growth at the expense of workers spending power is the same as starving that yeast, since it's the spending power being exercised which fuels company revenues. The economy is rapidly approaching a sort of hostage taking situation. Capital holders want yield, but businesses want more capital, but can't deliver it because they're sacrificing their employees spending power to fuel their growth numbers on paper. If current trends continue to the extremes, labor simply won't find employment worthwhile. Automation has staved off the rate of collapse of, but in the long run, it can't replace everyone else and won't magically restabilize the system.

analyst74 8y ago

That's an interest point, all the articles have been discussing negative rate as an extreme measure that's meant to be temporary without justifying why. Maybe negative rate is a better solution than wealth tax.

andrenth 8y ago
It’s extreme because it reverses a basic economic principle (money is more valuable now than later). You lend me $100 today and I pay you $90 in one year. The idea is to force people to let go of their long term saving goals and spend now, because saving will make you lose money, thus making the economy grow. It doesn’t seem to work as predicted though (countries doing that aren’t growing). Furthermore, people with access to other types of investment will just switch instead of spending their money. In the end I believe this works as a sort of stealth taxation that affects poor people the most, because they don’t have access/knowledge/risk tolerance to more sophisticated forms of investment.

salawat 8y ago

Money is worthless if it isn't moving. In a real way, it's better for the economy if investments are made that turn out poorly, but reallocate funds to someone who will spend them since odds are that spenders transactions will lead back to your own coffers anyway. What you run into though, is an action economy problem. How do I spend potential billions in a way that it isn't just getting tied up in overly constrictive savings schemes? I.e. how do I get people paid so they can buy? This is the paradox of chasing growth. A company that pays it's workers enough to allow them to consume to increase overall market health won't be the fastest grower, but enables market growth as a whole. The economy doesn't need bubbles. It needs stable growth. Like baking bread. Not enough sugar or water, and the yeast can't make the bread rise. Too much capital, funneled through businesses optimizing for max on paper growth at the expense of workers spending power is the same as starving that yeast, since it's the spending power being exercised which fuels company revenues. The economy is rapidly approaching a sort of hostage taking situation. Capital holders want yield, but businesses want more capital, but can't deliver it because they're sacrificing their employees spending power to fuel their growth numbers on paper. If current trends continue to the extremes, labor simply won't find employment worthwhile. Automation has staved off the rate of collapse of, but in the long run, it can't replace everyone else and won't magically restabilize the system.