Yes I do realize that the article suggests the one time 20% tax idea which is absurd to begin with, but most other pundits look to increased tax rates overall on the wealthy. They want to use people with money as a get out of jail free card. Of course if they actually did wipe away their debt then what is going to stop the government from racking it back up again? The answer, nothing.
I hate to write but the responses here are hurrrible.
Let's start with banking.
The poster, antitrust, is correct in that banks don't create loans from deposits. Even the idea that an expansion in reserves will create a boom in lending is wrong. The response by the OP to "antitrust" with "you don't understand fractional reserve banking" illustrates that the OP doesn't understand how lending works.
The rich have in shares.
This makes absolutely no sense. The rich have made a bulk of their wealth from financial investments over time. Raising taxes on the rich would mean higher income taxes which would be independent of their current financial holdings. They're not going to sell assets to help pay the additional liability produced by a higher income tax. A higher tax rate would either mean they reduce spending or contribute less to savings but not liquidate assets. The idea of even entertaining the thought of the rich moving out of the one vehicle that got them to where they are is absurd. The marginal propensity to consume for the rich is quite low compared to the other participants in the economy. Even if their spending slowed considerably, it probably wouldn't even be noticed in the overall economy. The rich are not the backbone to consumer spending.
The money in cash.
I don't even understand this argument. If we call these past few years a period where "money is held in cash" and other periods a time when "money is not held in cash" then the following 2 charts should make something clear.
<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=M2&scale=Left&range=Max&cosd=1980-11-03&coed=2011-12-26&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Weekly%2C+Ending+Monday&fam=avg&fgst=lin&transformation=pc1&vintage_date=2012-01-10&revision_date=2012-01-10>
<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=CPIAUCSL&scale=Left&range=Custom&cosd=1980-01-01&coed=2011-11-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=pc1&vintage_date=2012-01-10&revision_date=2012-01-10>
So if we're in cash, why is inflation roughly at the same level now as it has been for the past 15 years? If expectations changed and money were to leave the zero bound investments, you can bet the Fed will move to remove it pretty damn fast.
I'll have a conclusion later, even some comments for the West Afghanistanians.
Let's start with banking.
The poster, antitrust, is correct in that banks don't create loans from deposits. Even the idea that an expansion in reserves will create a boom in lending is wrong. The response by the OP to "antitrust" with "you don't understand fractional reserve banking" illustrates that the OP doesn't understand how lending works.
The rich have in shares.
This makes absolutely no sense. The rich have made a bulk of their wealth from financial investments over time. Raising taxes on the rich would mean higher income taxes which would be independent of their current financial holdings. They're not going to sell assets to help pay the additional liability produced by a higher income tax. A higher tax rate would either mean they reduce spending or contribute less to savings but not liquidate assets. The idea of even entertaining the thought of the rich moving out of the one vehicle that got them to where they are is absurd. The marginal propensity to consume for the rich is quite low compared to the other participants in the economy. Even if their spending slowed considerably, it probably wouldn't even be noticed in the overall economy. The rich are not the backbone to consumer spending.
The money in cash.
I don't even understand this argument. If we call these past few years a period where "money is held in cash" and other periods a time when "money is not held in cash" then the following 2 charts should make something clear.
<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=M2&scale=Left&range=Max&cosd=1980-11-03&coed=2011-12-26&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Weekly%2C+Ending+Monday&fam=avg&fgst=lin&transformation=pc1&vintage_date=2012-01-10&revision_date=2012-01-10>
<IMG SRC=http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=CPIAUCSL&scale=Left&range=Custom&cosd=1980-01-01&coed=2011-11-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=pc1&vintage_date=2012-01-10&revision_date=2012-01-10>
So if we're in cash, why is inflation roughly at the same level now as it has been for the past 15 years? If expectations changed and money were to leave the zero bound investments, you can bet the Fed will move to remove it pretty damn fast.
I'll have a conclusion later, even some comments for the West Afghanistanians.
M
morganist
NO NO NO.
You do not understand banking. I don't want to go into it but the general principle is still the same, you are wrong. I only have a few hundred words to respond and make points so I don't have the opportunity to explain.
Anyway in relation to the other comments you are also wrong. The first point you raise in relation to share sales is correct. Why because the article was a direct response to another article which said a tax on assets. The article is below and previously quoted.
http://www.huffingtonpost.co.uk/peter-g-tatchell/how-to-save-the-economy-_b_1108497.html
M
morganist
The article was a direct response to this one.
http://www.huffingtonpost.co.uk/peter-g-tatchell/how-to-save-the-economy-_b_1108497.html
The problem with using these official government charts is that changes over time have been obliterated by changing the methods used to calculate the various statistics. If you want to draw any conclusions from these relationships you have to use a constant method of computing the data used to make the charts Convertibility posted above. Below I have given a link to John Williams Web site where you can find the GDP, money supply and inflation charts versus time using a constant method of computation (The blue lines) versus the data produced by changing the method of computation at convenient points, as the government has done (the red line). I would suggest using only the blue lines when trying to draw conclusions using these charts. The SGS notation for the blue lines stands for "shadow government statistics" which is the terminology that Williams applies to statistics computed by a time invariant method of computation. In these charts he uses the method of computation used by the government in 1980.
Note that the United States is currently experiencing approximately double digit inflation, assuming you use food and energy, not the 2.5-5% figure the government would have you believe. The advantages to the Treasury of defining inflation away are self-evident.
http://www.shadowstats.com/alternate_data
I found this entire thread a bit strained in its arguments. What the government was recently taking about was a small change in the tax rate at the upper end of a few percent to take it back to the Clinton era rates. This would be a minor perturbation that would not have any discernible direct effect on "job creation" or assets of the wealthy, but would be helpful in reducing future inflation by a small amount, assuming spending is held in check. Nothing on balance is saved by minor reductions in the tax rate when their is a deficit, it is only a matter of do you want to pay now by direct taxation, or pay more later by indirect taxation spread over a longer time. I've noticed we usually select, or I should say, our politicians select on our behalf, the pay more later approach.
The real answer to deficits for the United states lies in bringing its military and medical spending into line with that of other developed nations while at the same time rebuilding a middle class with money in their pockets-- that of course implies that there will have to be some jobs and productivity in proportion to population going forward. I doubt if any of these things will happen in my lifetime.
And to add one more comment along the lines of tax policy: I am wondering why were social security payroll taxes decreased recently when the Trust actuaries have made it clear that a 2 % increase is needed to account for changing demographics going forward. This "payroll tax reduction" seems rather absurd, unless the goal is to steal indirectly from social security to support the discretionary budget -- read here, if you're so inclined, military industrial complex -- and move one step further toward Wall Street's ultimate goal of getting rid of social security altogether.
Note that the United States is currently experiencing approximately double digit inflation, assuming you use food and energy, not the 2.5-5% figure the government would have you believe. The advantages to the Treasury of defining inflation away are self-evident.
http://www.shadowstats.com/alternate_data
I found this entire thread a bit strained in its arguments. What the government was recently taking about was a small change in the tax rate at the upper end of a few percent to take it back to the Clinton era rates. This would be a minor perturbation that would not have any discernible direct effect on "job creation" or assets of the wealthy, but would be helpful in reducing future inflation by a small amount, assuming spending is held in check. Nothing on balance is saved by minor reductions in the tax rate when their is a deficit, it is only a matter of do you want to pay now by direct taxation, or pay more later by indirect taxation spread over a longer time. I've noticed we usually select, or I should say, our politicians select on our behalf, the pay more later approach.
The real answer to deficits for the United states lies in bringing its military and medical spending into line with that of other developed nations while at the same time rebuilding a middle class with money in their pockets-- that of course implies that there will have to be some jobs and productivity in proportion to population going forward. I doubt if any of these things will happen in my lifetime.
And to add one more comment along the lines of tax policy: I am wondering why were social security payroll taxes decreased recently when the Trust actuaries have made it clear that a 2 % increase is needed to account for changing demographics going forward. This "payroll tax reduction" seems rather absurd, unless the goal is to steal indirectly from social security to support the discretionary budget -- read here, if you're so inclined, military industrial complex -- and move one step further toward Wall Street's ultimate goal of getting rid of social security altogether.
M
morganist
One final time the original article discussed was a direct response to the below article. In which a flat tax of 20% on all assets was proposed in the UK. The US economy has nothing to do with it. Still the arguments still stand. Huge tax rises for anyone will have a detrimental consequence on the economy.
http://www.huffingtonpost.co.uk/peter-g-tatchell/how-to-save-the-economy-_b_1108497.html
What we NEED, for starters... 20% across the board SPENDING CUTS!!