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It’s fairly simple. In 2020 countries across the globe shutdown, and to keep economies “safe” governments printed money and handed it out more or less to people
by lifeisstillgood 3y ago
It’s fairly simple. In 2020 countries across the globe shutdown, and to keep economies “safe” governments printed money and handed it out more or less to people who were in economic danger - waitresses who could not work, though furlough schemes and the like.
USA printed basically 10 trillion (yes with a T). UK about 1 trillion. Germany, France, Spain, South Africa Japan and so on. Maybe 25 trillion? No one seems to have counted.
Under MMT (modern monetary theory) this is fine as long as government takes away the printed token (money) later on in form of tax
But they have not. The money has flowed from waitresses to landlords, to supermarket owners and their landlords and to share owners of supermarkets - basically it went from the poor to the middle class and then to the ultra wealthy.
The ultra wealthy now have an extra 25 trillion dollars. So they “invest”.
Real estate goes to stupid prices (see cost of a 4 bed house in London).
Stock market hits new highs.
But the rest of us have sold our nice middle class homes in suburbs for stupid amounts and moved … somewhere with less amenities.
Or are renting in cities at high rates and food prices going sky high.
The simplest answer is governments only did half the job - the next job is a uber wealth tax - holding of over say 20 million, 30 million, just get taxed, forcing sale of assets and return of assets to the flowing economy and then governments can afford things like welfare and investment again.
We should stop privileging the privileged.
- 486sx33 3y agoI would argue a flat tax is the way to maintain prosperity to the middle class. Aggressively taxing everyone and redistributing only goes to benefit the lower middle class. Which then becomes the new poor and drags mid to upper middle class down.
- dpflan 3y agoLet's see, as arm chair economists, can we have an interesting discussion? It could surely be a tax focused on ultra-rich, who have benefited from tax cuts by parties in power for years. Corporate and ultra-rich taxes are not insane concepts, what is the real difference in quality of life of $20M vs. $50M? What necessities of life are not met? Corporate taxes are even better, dodge those, issue large stock buy backs which will benefit largest shareholders the most -- Milton Friedman smiles from the shareholder value heavens. Imagine the economy has a huge MCMC graph, potentially everyone is connected to each other, with edges of varying strength that correspond to possible outflows and inflows of money between people (and perhaps entities/institutions). It becomes clear that some nodes in the graph are connected to other nodes that end up keeping money in few places to "invest" and accumulate wealth, sitting there, doing nothing for anyone else, tremendous capital accruing more capital because that is how this game can work. Other nodes lead to money moving rapidly in the network and having affect on the lives of many nodes. The economy has to be movement of money among individual components of the economy, because money is the meta-resource, so just use that to stand-in for anything.
- leereeves 3y ago> what is the real difference in quality of life of $20M vs. $50M? Minimal. But people having so much money that they have nothing to spend it on encourages investment in wild ideas like SpaceX or OpenAI. If you tax that money away, who will invest in new ideas?
- gshubert17 3y agoBoth manufacturing corporations and mutual investment funds are ways to aggregate smaller amounts of capital into big enough sums that large factories or investments are possible. I don't think it's necessary to rely on multi-billionaires for investment in wild ideas.
- leereeves 3y agoCan you point me to a few successful examples of that kind of funding?
- Bognar 3y agoFlat taxes are inherently regressive as the poor have to spend a higher proportion of their money than the rich in order to live.
- kyleee 3y agoThat’s of course very easy to remedy by only requiring taxes to be paid by those making over a certain income, say 80k and somehow tied to inflation so the amount raises slightly over time.
- bryanlarsen 3y agoThe Fed has been reducung the money supply since June 2022. i don't think we can blame the issues of 2024 on the actions in 2021.
- lifeisstillgood 3y agoYes, but not through tax which is the point. Quantative tightening just takes money from the fed/bank loop. It is real yes but it’s like thinking interest rates are a lever in the economy anymore. Anyway the QT on M4 has only dropped M4 by a trillion which basically means 9T still out there on top of everything else (#) ie they tried to suck it back out of banks but banks don’t have the wealth - the banks customers do. In short, ultra wealth taxes will stop the ultra wealthy drawing more value out of the economy like a gravity well, and start a flow of wealth through the economy. Imagine all the blood in your body accumulating in your ankle. Your ankle feels it’s rich in blood but you need transfusion after transfusion to keep everything else going.
- ForHackernews 3y ago> it’s like thinking interest rates are a lever in the economy anymore. Interest rates are absolutely a lever in the economy. It's not a coincidence that the instant the free-money ZIRP spigot was shut off, suddenly investors cared about profitability again and fat bloated tech firms started having layoffs for the first time in decades.
- lifeisstillgood 3y agoIf all the hydraulic fluid is draining out of the brake system, pulling on the handbrake (going from a decade of zirp to 7% in a week) is going to have an effect but that does not mean I think you can tap on the brake pedal and get the fine control you think you can. I agree Most tech companies have been spewing capital out the door and funding the lucky RSU / optioned employees for a decade. I guess the weird hiring practises and so on have been hiding that reality. I think shareholders are waking up to it, but zirp is only a small part of the story
- 3y ago
- nradov 3y agoA wealth tax sounds good in theory but no one has ever figured out a way to make it with effectively in practice. What do you do with illiquid assets such as patents or equity in private companies? Would owners have to pay for independent valuations every year as part of filing taxes? There's just no way to do it at scale. A wealth tax would also tend to cause people to hide their assets in non-productive things like physical precious metals instead of investing in businesses that grow the national economy.
- lotsofpulp 3y agoA sufficiently high land value tax would filter through pretty much everything as a decent wealth tax, and would require no additional work since it’s already continuously appraised. Too low land value taxes incentivize hoarding. Also, copyright should be reduced to 10 years, maybe 20 years at the longest.
- gshubert17 3y agoWould taxation of intellectual property reduce rent-seeking behavior? Any idea how it might be implemented?
- lotsofpulp 3y agoNo, but simply removing the ability to seek rent by removing copyright would.
- ForHackernews 3y agoJust tax the hell out of land: https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism Very hard to hide acres of Earth.
- wakawaka28 3y agoVery hard to determine a fair value for those acres too. Everything outside of actual land purchase prices is hypothetical, and not every worthwhile purpose for land produces the same income. We already have high property taxes in some places anyway. Of course I think some kind of tax is necessary but the higher the tax the more this "ownership" resembles a lease.