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How would a wealth tax solve a problem caused government management of interest rates and active management of money supply?

lifeisstillgood 2y ago
This is likely a problem of the differences in your and my mental models - so let’s start with Modern Monetary Theory (MMT) which I think has huge explanatory power. So starting with MMT - money is a token granting allocation of a portion of future productivity. Over COVID the UK printed 1 trillion dollars of extra furlough-like cash, the USA something like 10 trillion, the western world as a whole something like 25 trillion. This was necessary and a Good Thing, but when the nurse or the waitress took the cash, stayed home and paid her rent the landlord got the cash, then his bank got the cash then their shareholders got the dividend and the trillions worked their way up to the richest wealthiest 0.1% So now while productivity is still the same as it was 4 years ago, the amount of tokens representing that productivity is up by 25 trillion. This has lead to enormous inflation pressure especially In assets. So ignoring any other fairness / redistribution issues, MMT says take those tokens out of circulation - the tokens represent the future production of factories and farms - unless those factories got more productive, the amount of money in circulation should not chnage. So tax the wealth to remove about 25 trillion dollars globally. Weirdly a stock market crash or a world war would have a similar effect. But wealth tax seems a much better solution And then We talk about annual wealth taxes, taxing loans as income, CGT chnages or whatever - the goal is to stop money accumulating in one place for too long - blood circulates around the body - having it stop and gather in the kidneys is bad for the body, and eventually bad for the kidneys
- mndgs 2y ago
  "tax the wealth to remove about 25 trillion dollars globally." And what do you think happens once the tax is collected by the government? It is spent. And the money goes back into market, which will earn its returns and will be taxed again. Rarely a government has enough willpower to terminate the money supply collected in the form of taxes...
  - qwytw 2y ago
    > And what do you think happens once the tax is collected by the government? It is spent Well yeah, I kind of thought that was the whole goal? If we assume/believe that governments generally are capable of spending that money in a more equitable way that would benefit a larger proportion of the society (while also resulting in higher productivity growth) than allowing it to be (effectively) hoarded by the wealthy.
    - lifeisstillgood 2y ago
      Yea that’s kind of the point as well - Jeff Bezos is unlikely to spend much on Mississippi’s rural road network.
      - lazide 2y ago
        Is spending a ton of money on Mississippi’s rural road network a useful use of the money?
        lifeisstillgood 2y ago
        Missippians (#) think so :-) (#) ok, that’s a fairly low value comment that I frankly should have not clicked send on, but I just spent ages getting that one blasted word past my own spell checker, user friendly piece of shit, and realising not for the first time that typing anything on a textbox on a mobile is its own piece of hell. Sysiphus I am with you. And yeah Musisippians is probably the wrong collective noun but at this point I don’t care. Kamala and Trump will both just avoid campaigning there because their speech writers simply won’t let them.
        lazide 2y ago
        Mississippi has been a reliable Republican voting block since the parties switched platforms in the 60-70’s. So republicans don’t need to spend money there to get votes. And even if democrats spent all that money there to ‘buy’ the vote - would it be enough to work, considering the socio-political aspects? An argument could be made vis-a-vis gdp improvements. But are good roads good enough to drive major GDP improvements in Mississippi, considering other factors? Probably not.

lifeisstillgood 2y ago

This is likely a problem of the differences in your and my mental models - so let’s start with Modern Monetary Theory (MMT) which I think has huge explanatory power. So starting with MMT - money is a token granting allocation of a portion of future productivity. Over COVID the UK printed 1 trillion dollars of extra furlough-like cash, the USA something like 10 trillion, the western world as a whole something like 25 trillion. This was necessary and a Good Thing, but when the nurse or the waitress took the cash, stayed home and paid her rent the landlord got the cash, then his bank got the cash then their shareholders got the dividend and the trillions worked their way up to the richest wealthiest 0.1% So now while productivity is still the same as it was 4 years ago, the amount of tokens representing that productivity is up by 25 trillion. This has lead to enormous inflation pressure especially In assets. So ignoring any other fairness / redistribution issues, MMT says take those tokens out of circulation - the tokens represent the future production of factories and farms - unless those factories got more productive, the amount of money in circulation should not chnage. So tax the wealth to remove about 25 trillion dollars globally. Weirdly a stock market crash or a world war would have a similar effect. But wealth tax seems a much better solution And then We talk about annual wealth taxes, taxing loans as income, CGT chnages or whatever - the goal is to stop money accumulating in one place for too long - blood circulates around the body - having it stop and gather in the kidneys is bad for the body, and eventually bad for the kidneys

mndgs 2y ago
"tax the wealth to remove about 25 trillion dollars globally." And what do you think happens once the tax is collected by the government? It is spent. And the money goes back into market, which will earn its returns and will be taxed again. Rarely a government has enough willpower to terminate the money supply collected in the form of taxes...
- qwytw 2y ago
  > And what do you think happens once the tax is collected by the government? It is spent Well yeah, I kind of thought that was the whole goal? If we assume/believe that governments generally are capable of spending that money in a more equitable way that would benefit a larger proportion of the society (while also resulting in higher productivity growth) than allowing it to be (effectively) hoarded by the wealthy.
  - lifeisstillgood 2y ago
    Yea that’s kind of the point as well - Jeff Bezos is unlikely to spend much on Mississippi’s rural road network.
    - lazide 2y ago
      Is spending a ton of money on Mississippi’s rural road network a useful use of the money?
      - lifeisstillgood 2y ago
        Missippians (#) think so :-) (#) ok, that’s a fairly low value comment that I frankly should have not clicked send on, but I just spent ages getting that one blasted word past my own spell checker, user friendly piece of shit, and realising not for the first time that typing anything on a textbox on a mobile is its own piece of hell. Sysiphus I am with you. And yeah Musisippians is probably the wrong collective noun but at this point I don’t care. Kamala and Trump will both just avoid campaigning there because their speech writers simply won’t let them.
        lazide 2y ago
        Mississippi has been a reliable Republican voting block since the parties switched platforms in the 60-70’s. So republicans don’t need to spend money there to get votes. And even if democrats spent all that money there to ‘buy’ the vote - would it be enough to work, considering the socio-political aspects? An argument could be made vis-a-vis gdp improvements. But are good roads good enough to drive major GDP improvements in Mississippi, considering other factors? Probably not.