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wait what... The poor have debt, inflation eases debt burdens. I would agree that the mechanism the fed uses to control inflation (interest rate which acts more

wait what... The poor have debt, inflation eases debt burdens. I would agree that the mechanism the fed uses to control inflation (interest rate which acts more or less as a proxy for housing prices/mortgages), does end up gouging the poor through the housing market, but this is only because the government allows real estate monopolists/speculators to harvest land rent since we don't have a land value tax.

dnautics 8y ago
many poor are not in debt at all (no access to banking services, period), and it is totally insane to think the rich are not in debt. They may not be in debt directly, but most if not all complex investment and risk mitigation strategies are strictly dependent on a lending entity that distributes debt at low interest rates (shorts, options, futures, etc) Even when the poor are in debt, the debt is usually short-term, and high interest rate, which is practically not eased by inflation. The easing of the debt burden by inflation implicitly assumes that wages keep track with inflation, which they do not, empirically, but arguably by design as well: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "Even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts." Keynesian (and presumably MMT, I'm not sure) depends on the concept that the Phillips curve is a thing. But the mechanism for the Phillips curve to be a thing depends on wages not keeping track with inflation. In other words, you cannot claim that inflation reduces unemployment without also implicitly accepting that inflation is designed to cheat the poor out of their wages.
tatersolid 8y ago
> the government allows real estate monopolists/speculators to harvest land rent since we don't have a land value tax. Huh? I write a check for many thousands of dollars every six months, based on the assessed value of my home and land. We absolutely have “land value” tax in the USA, it’s just collected by the states in most cases.
- zzzzzzzza 8y ago
  Property taxes are not land value taxes, and there's a difference between a halfway land value tax and a full on land value tax where 100% of the natural rent of land is collected (that is, all the external value generated by the surrounding community is harvested by the government instead of rent seekers). It helps to know how (to simplify) a land value tax is assessed. The gov buys random property, demolishes the building, then sells that property on the open market and uses those data points to calculate a gradient. Then an arbitrarily high tax is imposed on the calculated value (e.g. 100%). It (in the long run) doesn't matter how high the tax is as long as it is high enough to capture all land rent, given current market assessed land values, since the price of land will simply adjust to the higher tax (a 400% tax could easily be levied). When such a tax is levied, no one will buy land except those that have a use for it, that is no land speculation/monopoly can occur. If you have more questions I would recommend asking e.g. the georgism subreddit.

dnautics 8y ago

many poor are not in debt at all (no access to banking services, period), and it is totally insane to think the rich are not in debt. They may not be in debt directly, but most if not all complex investment and risk mitigation strategies are strictly dependent on a lending entity that distributes debt at low interest rates (shorts, options, futures, etc) Even when the poor are in debt, the debt is usually short-term, and high interest rate, which is practically not eased by inflation. The easing of the debt burden by inflation implicitly assumes that wages keep track with inflation, which they do not, empirically, but arguably by design as well: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "Even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts." Keynesian (and presumably MMT, I'm not sure) depends on the concept that the Phillips curve is a thing. But the mechanism for the Phillips curve to be a thing depends on wages not keeping track with inflation. In other words, you cannot claim that inflation reduces unemployment without also implicitly accepting that inflation is designed to cheat the poor out of their wages.

tatersolid 8y ago

> the government allows real estate monopolists/speculators to harvest land rent since we don't have a land value tax. Huh? I write a check for many thousands of dollars every six months, based on the assessed value of my home and land. We absolutely have “land value” tax in the USA, it’s just collected by the states in most cases.

zzzzzzzza 8y ago
Property taxes are not land value taxes, and there's a difference between a halfway land value tax and a full on land value tax where 100% of the natural rent of land is collected (that is, all the external value generated by the surrounding community is harvested by the government instead of rent seekers). It helps to know how (to simplify) a land value tax is assessed. The gov buys random property, demolishes the building, then sells that property on the open market and uses those data points to calculate a gradient. Then an arbitrarily high tax is imposed on the calculated value (e.g. 100%). It (in the long run) doesn't matter how high the tax is as long as it is high enough to capture all land rent, given current market assessed land values, since the price of land will simply adjust to the higher tax (a 400% tax could easily be levied). When such a tax is levied, no one will buy land except those that have a use for it, that is no land speculation/monopoly can occur. If you have more questions I would recommend asking e.g. the georgism subreddit.