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> There is a reason we don't want billionaires to feel safe with their assets sitting places... Between inflation and income taxes, you don't need to worry abo

> There is a reason we don't want billionaires to feel safe with their assets sitting places... Between inflation and income taxes, you don't need to worry about this. I literally can't remember the last time banks paid enough interest to beat inflation and cover 37% income tax (almost 50% if you're in CA).

taeric 4y ago
Billionaires care very little on either of those things? Leveraged income is not taxed. Is why you don't pay taxes as income on the loan to pay for your house. And inflation they have beat with other returns. If anything, this is reason to keep the insurance rate low. After all, they only "lose" the uninsured part that is not recovered in bank seizure. The scare quotes about people losing 100% of their money in SVB was just that, scare quotes. The assets did not disappear 100% and depositors are first in line. If anything, that should incentivise wealthy people to pay attention to how a bank is being run. Full insurance means I don't give a shit.
Izkata 4y ago
Income tax is on the gain, not the whole amount, so beating the income tax doesn't even make sense. There's nothing to beat.
- ummonk 4y ago
  You can't deduct inflation from the interest earning, so yes the interest rate has to be high enough to cover inflation after tax.
  - taeric 4y ago
    But if it is, let's say 7 million dollars, even earning 0 interest, it can be used as collateral for loans that they can then use in places that has something to beat inflation. Notably, this has a finite lifespan on how often you can do it. It is not some magical process that has no downside. But, to pretend the people that will buy yachts care about inflation loss on things is silly. Every single asset they buy will result in worse loss than inflation. Having safe assets that they know won't be taken is a very nice source of collateral. And note that I never envision them putting their billions away, in this manner. Just many millions. Because they have many many millions.

taeric 4y ago

Billionaires care very little on either of those things? Leveraged income is not taxed. Is why you don't pay taxes as income on the loan to pay for your house. And inflation they have beat with other returns. If anything, this is reason to keep the insurance rate low. After all, they only "lose" the uninsured part that is not recovered in bank seizure. The scare quotes about people losing 100% of their money in SVB was just that, scare quotes. The assets did not disappear 100% and depositors are first in line. If anything, that should incentivise wealthy people to pay attention to how a bank is being run. Full insurance means I don't give a shit.

Izkata 4y ago

Income tax is on the gain, not the whole amount, so beating the income tax doesn't even make sense. There's nothing to beat.

ummonk 4y ago
You can't deduct inflation from the interest earning, so yes the interest rate has to be high enough to cover inflation after tax.
- taeric 4y ago
  But if it is, let's say 7 million dollars, even earning 0 interest, it can be used as collateral for loans that they can then use in places that has something to beat inflation. Notably, this has a finite lifespan on how often you can do it. It is not some magical process that has no downside. But, to pretend the people that will buy yachts care about inflation loss on things is silly. Every single asset they buy will result in worse loss than inflation. Having safe assets that they know won't be taken is a very nice source of collateral. And note that I never envision them putting their billions away, in this manner. Just many millions. Because they have many many millions.