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Yeah this was a very poor and incorrect understanding. Many assumptions. Tax isnt to curb inflation. The wealthy do get taxed. Everything about creating mon
by yieldcrv 2y ago
Yeah this was a very poor and incorrect understanding.
Many assumptions.
Tax isnt to curb inflation.
The wealthy do get taxed.
Everything about creating money and to whom was wrong.
Look, everything makes more sense if you ditch that entire understanding and look at it like this:
The speed that money moves in an economy is more important than the revenues the government earns. So the government’s ability to collect tax actually isnt the priority, and it isnt controversial when your entity earns and has nothing for the government to collect.
No individual politician is responsible for this view or would even lead with it, but the aggregate outcome is that the government incentivizes some forms of transactions. If you do them, it wont tax you, and if you do something else it will tax you on the remainder. For example, you just want to earn income and save? This is the most heavily taxed because money is not moving in the economy and you are penalized for trying to take no risk.
In this case in the article, taking risk is incentivized. Just Eat moved ~6bn dollars to grubhub’s prior owners a couple years ago, in exchange for shares of grubhub. This is the velocity we want.
They sold it to someone else and realized a 90% loss. That’s a side effect of taking risk and the government allows tax deductions against future gains.
Just Eat can make 5.5bn tax free now if they ever have any profitable trades. Money moving in the economy into businesses and assets is more important and incentivized.
- marcosdumay 2y agoI'm not disagreeing with your overall point. But: > Tax isnt to curb inflation. In MMT, it is for that, and only for that. > The speed that money moves in an economy is more important than the revenues the government earns. AFAIK, that's not known. I'd really like to hear if anybody knows more here.
- lifeisstillgood 2y agoI am dubious about the speed issue - I am pretty sure wash trades are fast, but they don’t count. So we need some measure of “transactions, but that produce or have chance to produce value” - which is kind of back to square one. >>> Tax isnt to curb inflation. Under MMT tax is for destroying money >>> The wealthy do get taxed. But at the same rate as labour ? No. Ie capital gains vs income tax. This might be a fairness issue but it is also directly a resource allocation and incentive issue. If we want more risk to produce more value why not incentivise labour over investment - in the end who will be left to do the labour ? >>> Everything about creating money and to whom was wrong. Governments print money as do banks - it’s where it comes from as a debt. Not sure how else to put it
- yieldcrv 2y agoyes, governments and banks create aka "print" money. can we move off of that point? its your angle where you think this is noteworthy and controversial which is messing up the rest of your analysis. the point is that it wasn't relevant at all, and you're shoehorning it into an irrelevant transaction just because you find it an interesting aspect of MMT, which also isn't even relevant here. regarding speed, or velocity, there is no direct way to measure its efficacy. so there are a lot of proxies. businesses starting, hiring, GDP, home sales, mortgages, venture and private equity transactions and more. its easy to take this for granted until you go to any other monetary union and see how pitiful capital formation is where everyone is saving and hoarding.