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OpsanusTau
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I read the first few posts and then skipped most of the middle, so sorry if I"m covering something that you've already gone through.

Pete asked, "What are we willing to destroy?"

My immediate answer was, "Large-scale generational wealth!"

As someone was saying above, the problem with the super-rich is that they hoard their wealth rather than keeping it in circulation. Putting reasonable limits on how much wealth can be transferred at the time of death seems to me like it would be beneficial in many ways.

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Pete at Home
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Ops, that's a double edged swowd. While I despise the Walton's, the only chance my son thing Two has of ever having a life of non-torture is for me to amass a fortune and see it preserved for his care after I die. There was a moment where that faint hope was all that stopped me from ... giving up.

I am delighted that someone had taken up my challenge! It's a sobering thought that every building requires a measure of destruction. perhaps architect would not be as popular if every picture of their buildings had to be juxtaposed with pictures of the tree stumps and rock quarries for the materials have been torn from the earth.

[ January 01, 2014, 11:11 AM: Message edited by: Pete at Home ]

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LetterRip
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Pete,

Estate taxes don't kick in till around 5 million in most of the US. Also you can set up a medical trust fund.

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Charles in Charge
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I vote for no taxes.
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DonaldD
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Do you also vote for no police, no (new) laws, no military, no medical care for the poor, no regulation of motor vehicles, no public maintenance of infrastructure, etc... or do you vote for uncontrolled inflation?
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RedVW on a Laptop
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I vote reasonable taxes. 10% maximum tax rate on income, property, or ad velorum taxes. 8% max on total sales tax. Drop investment taxes to 5% maximum. Federal excise taxes no more than 8% of the wholesale cost of the good. Tarrifs and duty taxes no more than 2%. Medical taxes no more than 1% of entire treatment cost. Social Security, remove income ceiling but at the same time allow for individual market investment. Medicare tax remains the same but allow for full deduction of insured costs if covered by independent policy.

Most people would see an effective tax rate of 25-30%

Eliminate deductions for real estate, personal exemptions, business exemptions of all types, and only allow deductions to social work charities.

That would be a decent start.

But to make it easier and fair, Fair Tax.

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AI Wessex
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The tax rate supports the government, so rather than say what the rate should be (and who should pay it), I'd rather ask what the government budget should be in "normal" and "extraordinary" times and then tax toward that. That applies to state taxes, as well. I'm not a fan of municipal taxes, because cities are usually industrial, commercial and financial centers of their states and need funding for things other parts of the state don't need but benefit all. The oversight derived from state funding might also avert some long-term municipal disasters.

[ January 02, 2014, 08:55 AM: Message edited by: AI Wessex ]

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OpsanusTau
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quote:
While I despise the Walton's, the only chance my son thing Two has of ever having a life of non-torture is for me to amass a fortune and see it preserved for his care after I die. There was a moment where that faint hope was all that stopped me from ... giving up.
That's why I said large-scale...

But of course in my fantasy land your son's welfare would be safeguarded by tax-funded society and you wouldn't need to amass a huge fortune and pass it down to him. Alternately, a medical trust fund is a loophole I think I wouldn't mind.

The other common objection people raise is "But what about family businesses??!?!"

To which my response is, if you want to take over your mom's business you can take out a loan and buy it just like anybody else would have to. If the business isn't profitable enough to support you while paying back the loan, you probably are better off without it anyways.

I could fuss around about changing the cap on the estate tax - five million, three million, one million - I guess my idea is that it seems okay to me for people to inherit enough money to make their lives a lot easier and more pleasant, but not great for people to inherit so much money that they remove themselves from productive social activity. But high-net-worth families already get around the limits in various obnoxious and sneaky ways. I'm not an expert in the tax code so I don't know how to fix it.

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Pyrtolin
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quote:
Originally posted by Charles in Charge:
quote:
Originally posted by Pyrtolin:
Our market is so over-saturated with productive capacity that it's being left intentionally idle in order to limit supply of goods to keep prices up.

Could you list or point to some examples of this?
The unemployment rate.

Here's a graph of current capacity utilization:
https://pbs.twimg.com/media/BcLPhFNCMAIgbvZ.jpg:large
(And that's just current capacity, not even accounting for the the rate at which we can depoly new capacity or assorted work rules that are in place specifically designed to avert disemployment by requiring people be hired for otherwise automatable positions or otherwise limit work time per person to keep hiring up.)

It we were up in the neighborhood or 90% utilization and facing some kind of resource limitation (such as the oil shortages from the 70s) then there would be some cause for concern of problematic levels of inflation, but short that, our real problem right now is that existing capacity is so slack that it's simply not profitable to invest in new capacity, especially with financial manipulation and speculation being gamed out to the point where it can provide the promise of high returns with little risk (despite the fact that such a low risk effectively assumes that other people are making the productive investments- as soon as everyone switches over to the financial game, the bottom falls out once the private sector can't pay back its debt level and we have another crash.)

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Pyrtolin
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quote:
To put this another way, adding a 1,000 engineers to the production side of the world economy would do much more good than adding a 1,000 consumers to the consumption side. It's not just a matter of consumers having enough money to buy products.
And the only way to do that is to reduce the cost on the consumption side, of acquiring the necessary education to achieve the qualifications necessary. No amount of production side benefits are going to make more software engineers suddenly appear- the rate limit there is education access (and, to some degree, immigration limits)

quote:
Rather then trying to turn people into more ravenous consumers I'd much rather turn them into more effective producers. We need more doctors, engineers, teachers, scientists, etc... not more shoppers with high credit limits.
The primary limits on those fields are the costs to entry (particularly implicit taxation through education debt that we impose on them) and the reason taht consumer currently lean on creditr is specifically because we've made it more profitable for the private financial industries to extend credit to them rather than to offer them higher wages and better compensation. Strengthening the consumer market explicitly involves displacing credit with income so that it doesn't have to ride a huge level of debt just to keep our economy functional.

Rather than layering on debt to get people the level of education necessary to operate in our market, we should be actively funding it, paying mild additional stipends in fields that are dangerously low, but otherwise freeing up supply and demand fundamentals to actually allow higher wages to directly attract people into the respective fields, not just those that can afford to pay the arbitrary entry fees.

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Pete at Home
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quote:
Originally posted by OpsanusTau:
quote:
While I despise the Walton's, the only chance my son thing Two has of ever having a life of non-torture is for me to amass a fortune and see it preserved for his care after I die. There was a moment where that faint hope was all that stopped me from ... giving up.
That's why I said large-scale...

But of course in my fantasy land your son's welfare would be safeguarded by tax-funded society and you wouldn't need to amass a huge fortune and pass it down to him. Alternately, a medical trust fund is a loophole I think I wouldn't mind.

The other common objection people raise is "But what about family businesses??!?!"

To which my response is, if you want to take over your mom's business you can take out a loan and buy it just like anybody else would have to. If the business isn't profitable enough to support you while paying back the loan, you probably are better off without it anyways.

I could fuss around about changing the cap on the estate tax - five million, three million, one million - I guess my idea is that it seems okay to me for people to inherit enough money to make their lives a lot easier and more pleasant, but not great for people to inherit so much money that they remove themselves from productive social activity. But high-net-worth families already get around the limits in various obnoxious and sneaky ways. I'm not an expert in the tax code so I don't know how to fix it.

+1. Here again I really like the direction you're thinking in, Ops!

Perhaps if the recipient family members inheriting over 5 million had to attend a contested yearly hearing to prove as individuals that they are actively engaged in perpetuating the family heritage...

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Seriati
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quote:
Originally posted by Pyrtolin:
Consumption taxes areas inane as payroll taxes- they only serve to discourage the fundamental economic activities that are most beneficial across the board.

I'm not seeing the upside of a consumption tax, seems like it does exactly what you're saying but includes its own built in loopholes for not paying tax at all. If enough revenue wasn't coming in, would they have to mandate the wealthy make expenditures?
quote:
Saying that income taxes discourage savings isn't quite accurate, though even where it is accurate, that's only a negative statement because of moral attachment to the word "savings", particularly when you realize that one entity's savings is, by definition another entity's debt, be that entity a person, a bank or corporation, or a government. But if you recast the statement as "Income taxes discourage debt," the moral flavor of it changes completely, despite the fact hat you're saying exactly the same thing.
This chain doesn't follow, because you left out a bunch implicit statements.

First, income does discourage savings. Simply put it destroys the income that could have been saved. How many times has it been argued that currency is nothing but a redeemable tax credit, calling it in cancels the credit. Cancelled currency can not be saved.

Second, your are argument that savings by one equals debt by another is too simplistic to have merit. Yes a bank records a deposit as a debt to the customer, but it also records its as an asset on its books, and even in a simple model it lends it out to another person in another offsetting transaction. After you cancel out the offsetting entries you are left with an asset, and asset that has moved from hands that don't currently need it to those that do with a net benefit to all in the chain involved.

Income taxes are not discouraging debt, they are eliminating consumption and eliminating passive gains from efficient reallocation of resources, in favor of the illusion of reallocation by inefficient government offices.
quote:
That's a bit nonsensical, because said bonus is already scaled to account for the fact that a fair portion of the nominal amount will go to pay the transaction costs for awarding it, not to mention that the prices you pay would also be proportionally higher without the tax, because they're largely already set based on what you can afford to pay with your after tax income (particularly at the bonus levels that you're reporting)
You assume alot in making this claim. What proof do you have that bonuses are tax scaled? Do you have evidience that any employer accounts for employees tax circumstances in setting the amount? Bonuses are scaled by many factors around motivation and retention. Unless your whole point is that we all pay taxes, in which case its pretty much an irrelevant truism. The fact is commodity prices are generally going to be relative to income, whether taxes exist or not, big whoop pointing it out.
quote:
quote:
First, by committing ourselves to a larger revenue stream in the future, we’d reassure those who worry, justifiably, that the government cannot forever spend more than it takes in.
Far from being justifiable, this ids dangerously ignorant thinking specifically because it encourages us toward economically self-destructive actions that have no basis except to serve to ward off this imaginary bogeyman.
That's pretty insulting tone for someone that's promulgating a fringe theory of debt to take with those who follow the mainstream view of how government spending and revenue interact.

There's no where for you to go with an argument that rejects the paradigm that decision makers use, that excessive debt on a national scale has a long term impact on a country's standing vis a vis other country's and that revenue and expenditures are related.

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Pete at Home
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quote:
Originally posted by Charles in Charge:
I vote for no taxes.

I'd go for that but even I have to admit that my proposed solution would be techinically within even my own narrow definition of "SOCIALISM," (a word that I usually use pejoratively) even though my idea is entirely compatible with the original unamended constitution and with the current amended version!

Broadly interpret the "post office" clause to allow the feds to nationalize all communications systems, telephone, internet, cell phone, etc., and fund the entire budget from that revenue, plus "sin taxes" such as gambling, alcohol, marijuana, cigarettes, prostitution, and the inheritances of healthy adults who choose not to work. (Tips hat to Ops). Charitable work is adequate reason for exemption. (tips hat to Red, who I suspect will disagree with me anyway, and I respect him for standing by his principles even if he's exempted personally).

An addendum that unlike the previous ones might require constitutional amendment: The feds should also levy a yearly tax on gasoline-consuming private passenger vehicles by weight, and use that tax to help pay for the freeway system. Fines for nonpayment of the vehicle weight tax would only be required if someone is stopped on a road subsidies by federal funds.

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Seriati
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quote:
Originally posted by LetterRip:
the qeustion is 'do higher taxes' discourage working more hours due to reduced marginal utility of working the extra hour.

People do work fewer hours, but it isn't because each hour is worth less, but because it takes fewer hours to achieve comfort.

What evidence do you have that people work fewer hours? What evidence do you have that its because of some theorehtical level to "achieve comfort"? I must point out, it's not been my experience that high earners ever work less hours in response to tax changes, instead they increase the wasteful time spent on strucuturing their efforts to minimize tax impacts.
quote:
Essentially we seek a basic comfort threshold (provide for the necessities + luxuries) - taxes can achieve that threshold with a much smaller income. For instance in the US you must own a car for almost everyone in order to go to work - on average about 9100$ per year. In Europe there is superb public transport funded by taxes, at a cost of 500$ per capita, and then individuals spend about 3000-4000$ on fares - for a savings of 5100$ - so at 20$ per hour - that is 255 hour savings.
Evidence of your claim on "basic comfort threshhold" please? I've only ever known two people who matched their efforts intentionally and exactly to such a measure then quit working.

The $9100 figure is not the average to own a car. That's the average for all sedans, including depreciation. That's not based on actual costs, so there are any number of ways to bring it down, like leasing, smaller cars, used cars, car pooling, using public transit in the US, etc. I will grant that Europe has some advantages on the public transit side that only a few cities in the US can compete with (though that includes NY, DC and Boston, which is a big coverage area for the densely populated NE). If you look for comparisons, you can see that for instance transportation costs are higher in London than NYC - but that's major metro to major metro.

The rest of your piece follows the same general idea. Though its really not that easy to equate standards of living between the two regions, when there is little in common about how people choose to live. Is it the same standard of living, if your personal living space is much bigger? Is it the same, if you end up with the same level of medical care? What does it even mean ot have the same level of medical care? There's not a lot of evidence that American's recieve a lesser level of care after you account for our generally worse health decisions over all. Is it the same level if you have freedom of movement provided by your own vehicle that it is if you have access to good public transit (not even taking a view on which is better)?

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OpsanusTau
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quote:
Perhaps if the recipient family members inheriting over 5 million had to attend a contested yearly hearing to prove as individuals that they are actively engaged in perpetuating the family heritage...
The bummer is that it seems like these families do things with trust funds and family foundations with highly-compensated directorships and blah blah blah, so that the offspring get playboy levels of money without anyone going over the estate-tax-free limit.

I actually have no idea how this stuff works, but I know it is incredibly complicated. Example: I used to clean house for a person (really nice person - nice whole family, actually) who made an incredibly good living (like living in a half-million dollar beachfront condo in Seattle good living) as part of a group that "managed the finances of high-net-worth families". Whole teams of finance professionals devoted to passing absurd amounts of wealth to the next generations.

Aside from thinking that money should be circulating so that it can do its job and not hoarded in piles by wealth-hoarding families, I also find it tragic that large-scale inherited wealth usually functions to make the inheritor totally unlikely to do anything useful for society with hir time. And these are people who have seriously the most to offer - to the extent that there are genetic traits that correlate to getting interesting things done, these people have those traits, and more importantly they've had all the advantages of a wealthy upbringing lavished upon them. They should be able to do the most awesome things. But instead they devote their lives to preserving generational wealth and social status.

Bah.

I'm on a team with Carnegie and Buffet(t?) about this one, which I think is good company to be in. But like I said before I just don't really understand how to address the problem.

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D.W.
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quote:
It's a sobering thought that every building requires a measure of destruction. perhaps architect would not be as popular if every picture of their buildings had to be juxtaposed with pictures of the tree stumps and rock quarries for the materials have been torn from the earth.
Maybe those who admire architecture would be swayed. Architects however, go through such volumes of paper that deforestation is something we take care of before our first morning coffee is finished. [Razz]

Consideration for the building materials is only in the thought process when vying for LEED points to improve bragging rights for being environmentally conscious at your dinner parties. This does at least support local more often than not so I'm a fan despite the token gestures they often amount to.

That said we are/were? the city's biggest participant of recycling! When the pats on the back are dispensed nobody seems to connect the dots as to what that actually means in terms of paper usage.

Back to your regularly scheduled tax debate.

[ January 02, 2014, 03:49 PM: Message edited by: D.W. ]

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Pyrtolin
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quote:
Originally posted by Seriati:
quote:
Originally posted by Pyrtolin:
Consumption taxes areas inane as payroll taxes- they only serve to discourage the fundamental economic activities that are most beneficial across the board.

I'm not seeing the upside of a consumption tax, seems like it does exactly what you're saying but includes its own built in loopholes for not paying tax at all. If enough revenue wasn't coming in, would they have to mandate the wealthy make expenditures?

There isn't an upside to them, unless your specific objective to it reduce consumer activity. Hence describing them as "inane"

quote:
First, income does discourage savings.
I didn't say that it didn't to some degree- I said that it's questionable to present that as an negative, because it depends of ignorance of the fundamental defined mathematical relationship between debt and savings.

quote:
Simply put it destroys the income that could have been saved.
Indeed- that's the point. In doing so it both reduces the pressure to extend more private debt in order to service that savings and it increases the relative value of smaller, more modest amounts of savings.

quote:
Second, your are argument that savings by one equals debt by another is too simplistic to have merit. Yes a bank records a deposit as a debt to the customer, but it also records its as an asset on its books,
No, it records it as a _liability_ on its books. You get an asset (the account balance) the bank gets a liability. Outstanding loans that have been made are recorded as assets by a bank, not deposits.

quote:
and even in a simple model it lends it out to another person in another offsetting transaction. After you cancel out the offsetting entries you are left with an asset, and asset that has moved from hands that don't currently need it to those that do with a net benefit to all in the chain involved.
You have one depositor, in that model, with a net asset, and customer with a net liability, and the bank with the margin between the rates. But the net asset enjoyed by the bank is from the loan, not the deposit. With only the deposit, the bank is the holder of the net liability, one that it will take an active loss on depended on the interest rate it promised for the deposit.

And, right there you've pointed exactly why such private savings translate to private debt. Because the bank isn't going to sit on that liability. it's going to find a way to lend out that money so as to make a greater return on it than it is paying to get it. The more people that deposit money with the bank, the more pressure it will be under to find people to lend it to, and the lower it will push lending standards to translate those liabilities into revenue generating assets. But even then your asset, and the marginal returns that represent the bank's net asset are precisely equal to the loan liability. They add up to a net total of 0.

The only time the private sector sees a real net increase in savings is if, instead of making loans with the money, the bank chooses to deposit portion of the money into public bonds instead. (The holds true even if they do decide to hold onto paper currency or coins, because those are really just zero interest securities representing claims against the Fed or the Treasury's respective currency accounts where every issues bit of currency is recorded as a debt)

quote:
Income taxes are not discouraging debt, they are eliminating consumption
Only when applied to income levels that are not large enough to create pricing pressure. Applied only to high incomes, they only serve to reduce prices that are inflated in response to those income levels, not to reduce consumption.

quote:
and eliminating passive gains from efficient reallocation of resources, in favor of the illusion of reallocation by inefficient government offices.
That's a purely ideological claim, as neither side has any absolute claim on efficiency- each has certain areas where it can function better, making efficiency purely a matter of policy, not of momentary operations. And, ultimately, the level of real gains is unaffected, just the nominal prices of those gains.

The real value of a house is exactly the same, whither is sells for $500 in a $1 million dollar economy or for $1 million in a $1 billion dollar economy.
quote:
You assume alot in making this claim. What proof do you have that bonuses are tax scaled? Do you have evidience that any employer accounts for employees tax circumstances in setting the amount? Bonuses are scaled by many factors around motivation and retention.
That's the proof right there. They only affect motivation and retention in terms of their relative real value to the recipient, specifically, their post-tax purchasing power. They would fail at their basic purpose if not scaled up to account for transaction costs, no different that the way a store will factor credit card processing fees into product prices before setting them, etc...

quote:
Unless your whole point is that we all pay taxes, in which case its pretty much an irrelevant truism. The fact is commodity prices are generally going to be relative to income, whether taxes exist or not, big whoop pointing it out.
That is core to the point I'm making, and if it were that obvious to everyone, then the whole notion of taxes taking away much of anything rather than simply serving as a price control on commodity prices wouldn't need to point pointed out to people complaining about income taxes somehow taking things away from them. Properly applied, they help squeeze some inherent inefficiency out of the market and help contain price growth, where they limit the ability to arbitrarily bid up the prices on more limited commodities.
quote:
That's pretty insulting tone for someone that's promulgating a fringe theory of debt to take with those who follow the mainstream view of how government spending and revenue interact.
Being a mainstream view does not prevent dangerous ignorance from being dangerous ignorance. It only serve to make it even more pernicious.

quote:
There's no where for you to go with an argument that rejects the paradigm that decision makers use, that excessive debt on a national scale has a long term impact on a country's standing vis a vis other country's and that revenue and expenditures are related.
Except, of course, that our system is a representative one, so educating enough of the electorate on the facts and actual math that defines our system weakens the ability of those decisionmakers to get reelected on ,at best, ignorant and misleading arguments (if not deliberately deceptive ones intended to preserve political and economic power)

There is a lot of value in helping people to understand the actual math at play and to look at the actual evidence, rather than to blindly accept a mainstream view that depends primarily on social inertia to cover up the fact that has no basis in real evidence and isn't even mathematically consistent with its own claims.

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Seriati
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quote:
Originally posted by Pyrtolin:
quote:
First, income [tax] does discourage savings.
I didn't say that it didn't to some degree- I said that it's questionable to present that as an negative, because it depends of ignorance of the fundamental defined mathematical relationship between debt and savings.
It doesn't depend on ignorance to depict this as a negative. Preventing people from saving money, is a way to keep them stuck in the class (poor or middle) from which they originate. It also inhibits capital's availability for re-investment and hence private sector growth. This can never be fully efficiently replaced with new government spending.
quote:
quote:
Simply put it destroys the income that could have been saved.
Indeed- that's the point. In doing so it both reduces the pressure to extend more private debt in order to service that savings and it increases the relative value of smaller, more modest amounts of savings.
It doesn't do the latter. Destroying savings ability just makes those people poorer. It doesn't measurable increase the value of savings when they are proportionately small compared with income and overall household budget.

It's questionable if it can reasonably be said to do the former in a banking system that allows lending based on fractional reserves. No matter what amount of private assets are fed into the pool, it's always possible to change the government multiple to feed the debt machine.
quote:
quote:
Second, your are argument that savings by one equals debt by another is too simplistic to have merit. Yes a bank records a deposit as a debt to the customer, but it also records its as an asset on its books,
No, it records it as a _liability_ on its books. You get an asset (the account balance) the bank gets a liability. Outstanding loans that have been made are recorded as assets by a bank, not deposits.
No. The bank records it twice, once as an asset and once as a liability. That's nature of balance sheet accounting it has to balance. In a simple lend, it records it twice more when it hands it off to a borrower, once as a decrease in assets (cash) and then as an increase in assets (recievables).

Which is why your point is silly, debts and assets increase simultaneously from the bank's perspective.
quote:
quote:
and even in a simple model it lends it out to another person in another offsetting transaction. After you cancel out the offsetting entries you are left with an asset, and asset that has moved from hands that don't currently need it to those that do with a net benefit to all in the chain involved.
You have one depositor, in that model, with a net asset, and customer with a net liability, and the bank with the margin between the rates. But the net asset enjoyed by the bank is from the loan, not the deposit. With only the deposit, the bank is the holder of the net liability, one that it will take an active loss on depended on the interest rate it promised for the deposit.
The depositor has a net asset (it started with one so that's just restating the obvious) that it doesn't have an efficient use for. The "customer" has both an asset (the loan payment) and a liability (the repayment obligation). You are correct that the bank will take a loss if it doesn't loan the asset out. But that's kind of the point of the bank, to earn a fee by taking the risk of loss on lending to people who do have an efficient use for the dollars.

Of course government manipulation of that process has massively increased the lending that banks do, and massively decreased the risks of it.
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And, right there you've pointed exactly why such private savings translate to private debt.
And I've also pointed out why that's simplistic. End of story, all the doubled transactions net out to one asset. That one asset is used by someone who can earn more on it than the transaction costs, and therefore will split the extra money with the people that moved the asset to them, which is a win for everyone.
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Because the bank isn't going to sit on that liability. it's going to find a way to lend out that money so as to make a greater return on it than it is paying to get it. The more people that deposit money with the bank, the more pressure it will be under to find people to lend it to, and the lower it will push lending standards to translate those liabilities into revenue generating assets.
And?
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But even then your asset, and the marginal returns that represent the bank's net asset are precisely equal to the loan liability. They add up to a net total of 0.
Actually they don't add up to zero (given you started with an asset, they add up initially to that asset value, later they add up to that amount plus proceeds). The end user only takes the loan if they expect to create a surplus that exceeds the loan liability. If they do so, then then they have a net gain. The bank recieves a net gain in the form of interest, and the original depositor recieves a net gain. And unlike the original transactions, those all end up on the asset side (the offet to shareholder's equity).
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The only time the private sector sees a real net increase in savings is if, instead of making loans with the money, the bank chooses to deposit portion of the money into public bonds instead.
Which is total nonsense. There's no real savings gain from this accounting trick. Savings gains come from actual savings held by customers, they have nothing to do with the bank's decisions itself.

And in fact, what you propose here is almost certainly less efficient than any proposed private loan and leads to a loss in overall wealth. When you compond it through fractional reserves all you've done is created a nonsense arbitrage where the bank is borrowing money from the government to provide back to the government for a purely parasitic gain on the difference on the two rates that provides no growth other than to the owners of the bank, and a net loss to the goverment (and hence the overall economy) to offset it.
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Income taxes are not discouraging debt, they are eliminating consumption
Only when applied to income levels that are not large enough to create pricing pressure. Applied only to high incomes, they only serve to reduce prices that are inflated in response to those income levels, not to reduce consumption.

Even then. You've presented nothing to prove that any significant portion of those incomes is wasted on pricing pressure forces, nor anything that indicates the windfall prices paid isn't then efficiently used by the seller.

And your later statement is just groundless conjecture that almost certainly fails when you look at test cases rather than theory.
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and eliminating passive gains from efficient reallocation of resources, in favor of the illusion of reallocation by inefficient government offices.
That's a purely ideological claim, as neither side has any absolute claim on efficiency- each has certain areas where it can function better, making efficiency purely a matter of policy, not of momentary operations. And, ultimately, the level of real gains is unaffected, just the nominal prices of those gains.
Ideologically, its pretty much fact (and given every you post is ideological what's your point?). Unless you have some examples of efficent government economic transactions that you've been keeping secret? To offset the thousands of economic disasters when the government tries to pick winners, and the even greater amount of waste that it generates even when it does reasonably well on substance. Governement does lots of things better than the private sector, I agree, but economic development with efficienncy is not one of them.

The level of real gains is absolutely affected. It's completely depressed when you filter it through the parasitic mechanism of government that bleeds a fraction of everything to no beneficial purpose other than inefficiently feeding itself.
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The real value of a house is exactly the same, whither is sells for $500 in a $1 million dollar economy or for $1 million in a $1 billion dollar economy.
So what? If you prevent people from saving they'll never be able to buy it other than by becoming debt slaves.
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You assume alot in making this claim. What proof do you have that bonuses are tax scaled? Do you have evidience that any employer accounts for employees tax circumstances in setting the amount? Bonuses are scaled by many factors around motivation and retention.
That's the proof right there. They only affect motivation and retention in terms of their relative real value to the recipient, specifically, their post-tax purchasing power. They would fail at their basic purpose if not scaled up to account for transaction costs, no different that the way a store will factor credit card processing fees into product prices before setting them, etc...
If your "proof" is that bonuses are paid in a taxed environment, then it's literally a useless statement that you made, that profers no content to the end user. Credit card fees is a horrid example that works nothing like bonuses from a rational decision point of view.
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Unless your whole point is that we all pay taxes, in which case its pretty much an irrelevant truism. The fact is commodity prices are generally going to be relative to income, whether taxes exist or not, big whoop pointing it out.
That is core to the point I'm making, and if it were that obvious to everyone, then the whole notion of taxes taking away much of anything rather than simply serving as a price control on commodity prices wouldn't need to point pointed out to people complaining about income taxes somehow taking things away from them. Properly applied, they help squeeze some inherent inefficiency out of the market and help contain price growth, where they limit the ability to arbitrarily bid up the prices on more limited commodities.
The whole point that people argue about taxes is disparate tax results. If everyone paid an identical tax rate, no exceptions, then your conclusion would have merit. But with people paying different tax rates something is being taken away from people (when they compare themselves to other people) and accordingly your points ignoring that (and pretending a single relevant consequence of uniform application) aren't reasonable. Pretending that because people pay tax on a bonus, it must therefore account for the tax on the bonus, when there is ABSOLUTELY no evidence that bonuses generally account for anyone's person tax situation is what is absurd.

Simply put, you know as well as I do, they aren't just commodity price controls, they are deliberate tools of redistribution of wealth.
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That's pretty insulting tone for someone that's promulgating a fringe theory of debt to take with those who follow the mainstream view of how government spending and revenue interact.
Being a mainstream view does not prevent dangerous ignorance from being dangerous ignorance. It only serve to make it even more pernicious.
And true passion on a fringe view doesn't make you right, and certainly doesn't entitle you to condescend.
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Except, of course, that our system is a representative one, so educating enough of the electorate on the facts and actual math that defines our system weakens the ability of those decisionmakers to get reelected on ,at best, ignorant and misleading arguments (if not deliberately deceptive ones intended to preserve political and economic power)
Like I said before, I'd enjoy seeing another country - where I don't live - put your theories to the test. And just print themselves enough income to be rich. I suspect that what you'll see is a complete destruction of the international trade value of their currency and no actual betterment of their wealth positions.
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There is a lot of value in helping people to understand the actual math at play and to look at the actual evidence, rather than to blindly accept a mainstream view that depends primarily on social inertia to cover up the fact that has no basis in real evidence and isn't even mathematically consistent with its own claims.
And there's a lot of value in realizing that the math IS NOT where the value comes from.
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Pete at Home
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If rich people were putting money into their mattresses, I can see how that would be deflationary. But isn't bank money technically in some sort of productive use, let alone money in stocks and bonds?
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Charles in Charge
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quote:
Originally posted by D.W.:
That said we are/were? the city's biggest participant of recycling! When the pats on the back are dispensed nobody seems to connect the dots as to what that actually means in terms of paper usage.

In today's world of farmed paper trees, more paper usage leads to more trees, not fewer! Be proud of your contribution.

[ January 03, 2014, 01:11 AM: Message edited by: Charles in Charge ]

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Charles in Charge
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quote:
Originally posted by Pete at Home:
If rich people were putting money into their mattresses, I can see how that would be deflationary. But isn't bank money technically in some sort of productive use, let alone money in stocks and bonds?

Yeah, rich people don't actually "hoard" their money. That only happens in Christmas stories. Even if the rich just parked their money in a savings account the bank would use it to fund loans and other investments.

As Ops pointed out (somewhat ironically), the rich actively manage their money. They don't need all their wealth to be liquid, so they can put large amounts of money in longer term investments. Their are whole classes of investments that only the rich (aka accredited investors) are even allowed to buy.

One of the norms of Silicon Valley is that successful entrepreneurs turn around and invest in the next generation of startups. It is the rich who funded Intel, Google, Ebay, Tesla, SpaceX, Facebook, etc...

Overall, I'd guess that the rich's money is better (for both themselves and the economy) invested than average. So, the argument to move money to its most productive use is an argument to transfer wealth from the non-rich to the rich.

[ January 03, 2014, 01:39 AM: Message edited by: Charles in Charge ]

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Charles in Charge
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quote:
Originally posted by Pyrtolin:
quote:
To put this another way, adding a 1,000 engineers to the production side of the world economy would do much more good than adding a 1,000 consumers to the consumption side. It's not just a matter of consumers having enough money to buy products.
And the only way to do that is to reduce the cost on the consumption side, of acquiring the necessary education to achieve the qualifications necessary.
"reduce the cost on the consumption side" - that's just a way of saying we should improve the production of education without actually using the word production.

There are lots of exciting experiments in education (Khan Academy, Coursera, EdX and others) that are trying to massively reduce the cost of education while maintaining decent quality. If successful these could lead to huge improvements in the production of education, especially in the developing world where huge amounts of human capital are currently being wasted by education systems that are almost unimaginably bad. This would be a massive win for the global economy.

These experiments in production are more likely to succeed at larger scale and have much bigger impact than any feasible demand-side policies such as redistribution of wealth or printing money.

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Pete at Home
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quote:
Originally posted by D.W.:
quote:
It's a sobering thought that every building requires a measure of destruction. perhaps architect would not be as popular if every picture of their buildings had to be juxtaposed with pictures of the tree stumps and rock quarries for the materials have been torn from the earth.
Maybe those who admire architecture would be swayed. Architects however, go through such volumes of paper that deforestation is something we take care of before our first morning coffee is finished. [Razz]

Consideration for the building materials is only in the thought process when vying for LEED points to improve bragging rights for being environmentally conscious at your dinner parties. This does at least support local more often than not so I'm a fan despite the token gestures they often amount to.

That said we are/were? the city's biggest participant of recycling! When the pats on the back are dispensed nobody seems to connect the dots as to what that actually means in terms of paper usage.

Back to your regularly scheduled tax debate.

That's awesome. I need to revise my cynical metaphors regarding creation, find another type.
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Pyrtolin
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quote:
Originally posted by Pete at Home:
If rich people were putting money into their mattresses, I can see how that would be deflationary. But isn't bank money technically in some sort of productive use, let alone money in stocks and bonds?

If you consider predatory lending to be productive use. The problem isn't that it's not being used, but rather that the excess encourages an actively economically destructive use in pursuit of the largest possible profit margin. You can't just qualify financial "savings" as a universal good- you have to ask "who's taking on the debt to support the return on those savings?" if it's the top end racking up the savings because there aren't enough productive investments (non-financial savings, as it were) to dump the money into, then it's the bottom end that's being put into a position where it's being pressed to take out bigger and bigger loans and credit lines to absorb that savings beyond what the public sector makes room for. This process is actively encouraged in the form of wage suppression which makes people on the lower end need loans just to meet the cost of living and providing a sufficient consumer base to keep themselves employed.
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Pyrtolin
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quote:
Originally posted by Charles in Charge:
quote:
Originally posted by Pyrtolin:
quote:
To put this another way, adding a 1,000 engineers to the production side of the world economy would do much more good than adding a 1,000 consumers to the consumption side. It's not just a matter of consumers having enough money to buy products.
And the only way to do that is to reduce the cost on the consumption side, of acquiring the necessary education to achieve the qualifications necessary.
"reduce the cost on the consumption side" - that's just a way of saying we should improve the production of education without actually using the word production.

No, it means that we should ensure that everyone receives sufficient funding to purchase the education they need instead of forcing them to depend on layers and layers of loans to do so if they aren't lucky enough to be inheriting it. What's more, we should generally be ensuring that students can meet their cost of living by paying them in proportion to their overall performance, particularly those that are being forced to transition fields later in life due to shifting market needs.

Doing that will certainly help draw more and better investment to the field of providing education, because producers will invest in developing new ways of providing education in direct proportion to the amount of potential revenue that exists to be captured by doing so.

quote:
These experiments in production are more likely to succeed at larger scale and have much bigger impact than any feasible demand-side policies such as redistribution of wealth or printing money.

Demand side policy is what will provide them a sufficient revenue base to be able to succeed, without any regard to nonsense about "redistribution". The potential for there to be a competitive market- particularly one that is focused on serving the actual needs of the students, rather than needing to cast outwards for other funding sources- for their various approaches relies directly on the ability the generate revenue from the potential students directly, and the ability of the market of potential students to choose to reward those that do the best job in providing the needed level of education, is defined by the ability of those potential students to participate based on being able to afford the costs of entry.
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Pyrtolin
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quote:
Originally posted by Charles in Charge:
Yeah, rich people don't actually "hoard" their money. That only happens in Christmas stories. Even if the rich just parked their money in a savings account the bank would use it to fund loans and other investments.


Which works right up to the point that the asset/credit bubble it creates bursts, and the prices that have been inflated due to purely speculative bidding come tumbling down.

quote:
As Ops pointed out (somewhat ironically), the rich actively manage their money. They don't need all their wealth to be liquid, so they can put large amounts of money in longer term investments. Their are whole classes of investments that only the rich (aka accredited investors) are even allowed to buy.
Indeed- essentially, what this means is that if you have a huge amount of money, you can buy into the special forms of investment that let you take the profit from bubbles while effectively shielding you from the crash, letting the small time investors and lendees that came into the market on your coattails eat the losses.

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One of the norms of Silicon Valley is that successful entrepreneurs turn around and invest in the next generation of startups. It is the rich who funded Intel, Google, Ebay, Tesla, SpaceX, Facebook, etc...
Indeed, which is what such should be encouraged by allowing such spending to be deducted as capital expenditures- so that the desirability of making such investments, that have a fair amount of built in risk, is larger than that of sinking money into CDOs and other financial manipulation games that promise high returns with little or no risk, while producing nothing but more private debt in the process.

quote:
Overall, I'd guess that the rich's money is better (for both themselves and the economy) invested than average. So, the argument to move money to its most productive use is an argument to transfer wealth from the non-rich to the rich.
Investing in productive ventures? Certainly. Invested in financial and asset bubbles? Absolutely not. Hence the need to use a combination to high nominal taxes with deductions around productive uses to direct it away from activity that's destructive and costly to the market as a whole and toward activity that's productive. Otherwise in naturally goes toward the best return for the lowest risk, which is almost always some form of control fraud, since the perpetrators of it can easily walk away with huge margins, even after the nominal fines that we slap them on the wrist with, leaving everyone else to pick up the pieces.
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Pyrtolin
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quote:
Originally posted by Seriati:
It doesn't do the latter. Destroying savings ability just makes those people poorer.


Only if their purchasing power with those savings is reduced. If you only target taxes where they have no effect on actual purchasing power, only on the ability to inflate prices, then they are just as wealthy as they were before, and the value of a lower nominal amount of savings is increased because the prices of the things that can be bought with it are also lower.

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It doesn't measurable increase the value of savings when they are proportionately small compared with income and overall household budget.
Indeed, which is why income tax rates should be graduated such that they only target wide margins between expenditures and income where the marginal value of each dollar is much high, and not narrow ones where the marginal value of each dollar is correspondingly very low, if not effectively non-existent.

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It's questionable if it can reasonably be said to do the former in a banking system that allows lending based on fractional reserves. No matter what amount of private assets are fed into the pool, it's always possible to change the government multiple to feed the debt machine.
Which is why such lending institutions need to be regulates as the public utilities that they actually, and not left to pursue their natural course towards parasitism.
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Second, your are argument that savings by one equals debt by another is too simplistic to have merit. Yes a bank records a deposit as a debt to the customer, but it also records its as an asset on its books,
No, it records it as a _liability_ on its books. You get an asset (the account balance) the bank gets a liability. Outstanding loans that have been made are recorded as assets by a bank, not deposits.
No. The bank records it twice, once as an asset and once as a liability. That's nature of balance sheet accounting it has to balance. In a simple lend, it records it twice more when it hands it off to a borrower, once as a decrease in assets (cash) and then as an increase in assets (recievables).

Which is why your point is silly, debts and assets increase simultaneously from the bank's perspective.


The point is that they net to zero. It's not silly, it's fundamentally important- the private sector cannot magically bootstrap itself into a net gain in financial assets. The only positive private asset in the whole equation, the initial cash, is one that's actively offset by a public liability- the debt recorded when the cash was issued. No amount of private lending can increase t he quantity of private assets- it can only play a zero sum game, with the bank collecting rent for its role in the process.

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and even in a simple model it lends it out to another person in another offsetting transaction. After you cancel out the offsetting entries you are left with an asset, and asset that has moved from hands that don't currently need it to those that do with a net benefit to all in the chain involved.
You have one depositor, in that model, with a net asset, and customer with a net liability, and the bank with the margin between the rates. But the net asset enjoyed by the bank is from the loan, not the deposit. With only the deposit, the bank is the holder of the net liability, one that it will take an active loss on depended on the interest rate it promised for the deposit.
The depositor has a net asset (it started with one so that's just restating the obvious) that it doesn't have an efficient use for.

A net asset, note, that only exists in light of a corresponding public liability for the issuance of that asset.
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The "customer" has both an asset (the loan payment) and a liability (the repayment obligation). You are correct that the bank will take a loss if it doesn't loan the asset out. But that's kind of the point of the bank, to earn a fee by taking the risk of loss on lending to people who do have an efficient use for the dollars.
To lend it to people willing to pay a fee for the use of the money. Not necessarily an efficient use. And, in fact, the more money that the bank needs to sell to people, the less picky it can be about the quality of the person taking the loan, to the point where it actively has to begin convincing people that they need loans and working to generate demand among those that should be considered uncreditworthy. That's the fundamental story behind the housing and credit bubbles that we're still suffering from the collapse of.

quote:
Of course government manipulation of that process has massively increased the lending that banks do, and massively decreased the risks of it.

It has massively reduced the risks for people doing business with the banks- it has actually curtailed the level of lending that banks can do by imposing reserve requirements and requiring the use of one standard from of bank note, rather than, as happened prior to the establishment of the Federal Reserve, each bank being free to issue as much of its own paper as it saw fit. It's only since we've loosened the corresponding regulations that prevented banks from abusing this system that we've seen them begin to return to what their default state of operation was, now boosted up by years of implicit confidence, created by the limits on their behavior.

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And, right there you've pointed exactly why such private savings translate to private debt.
And I've also pointed out why that's simplistic. End of story, all the doubled transactions net out to one asset.

One asset that is balanced by an equal amount of federal debt created in order to issue the asset.
quote:
That one asset is used by someone who can earn more on it than the transaction costs, and therefore will split the extra money with the people that moved the asset to them, which is a win for everyone.
One person who hopes to be able to do so, or, as is currently more likely, one person who has been convinced by the bank that they will be able to do so, or simply is in desperate enough need to current funding that the worry about how to pay it back later. (in fact the bank may even be tempted to favor the latter types because they can charge a higher margin on selling them the money, thinking that they've properly accounted for the risk, and will pass up low margin customers that have a much lower risk level unless actively forced to pay attention to them by laws such as the CRA)

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Because the bank isn't going to sit on that liability. it's going to find a way to lend out that money so as to make a greater return on it than it is paying to get it. The more people that deposit money with the bank, the more pressure it will be under to find people to lend it to, and the lower it will push lending standards to translate those liabilities into revenue generating assets.
And?

And those people will be unable to pay back the loans, and eventually the bubble collapses with the bank taking the profit and the depositor and the borrower getting burned in the process.

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]Actually they don't add up to zero (given you started with an asset, they add up initially to that asset value, later they add up to that amount plus proceeds).
Again, an asset that (assuming it's not the result of some other loan) is explicitly balanced by a public debt of the same amount, which that asset is a credit against.

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The end user only takes the loan if they expect to create a surplus that exceeds the loan liability.
No, the loan consumer takes a loan if they need money. Being able to repay it is a secondary consideration.

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If they do so, then then they have a net gain. The bank recieves a net gain in the form of interest, and the original depositor recieves a net gain. And unlike the original transactions, those all end up on the asset side (the offet to shareholder's equity).

Except you're glossing over where that net gain comes from.

In our simplified economy here, you've pretty much exposed exactly where the mainsteam view isn't mathematically sound. The net total of existing assets is less than the total loan obligation that's due. In order for the borrower to break even, they must not only gather more money in revenue than currently exists in the current economy just to meet the loan; if they want to turn a profit, they need to find a few more dollars than that, even. Unless someone takes out another loan to provide enough revenue to the borrower to pay back the first loan, the borrower defaults and the bank cannot honor the account of the depositor. The little credit bubble bursts without additional publicly issued money to make up the difference.


quote:
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The only time the private sector sees a real net increase in savings is if, instead of making loans with the money, the bank chooses to deposit portion of the money into public bonds instead.
Which is total nonsense. There's no real savings gain from this accounting trick. Savings gains come from actual savings held by customers, they have nothing to do with the bank's decisions itself.

As noted above, the actual savings held by consumers are offset by loans. For the net private balance sheet, that nets to $0 in savings. My $10 dollar deposit in the bank plus your $10 loan taken from the bank = $0 net public savings. However, If I make a $10 deposit, the bank puts $1 into public bonds and loans you $9, not $10 - $9 = $1. That $1 of public bond deposits equates to $1 in net public savings. As long as it's the private sector loaning money to itself, you can't get a net increase in savings, because the assets and liabilities add to $0 within the private sector; it's only when a deposit crosses the line to the public sector that the private sector can claim a net positive.

quote:
And in fact, what you propose here is almost certainly less efficient than any proposed private loan and leads to a loss in overall wealth. When you compond it through fractional reserves all you've done is created a nonsense arbitrage where the bank is borrowing money from the government to provide back to the government for a purely parasitic gain on the difference on the two rates that provides no growth other than to the owners of the bank, and a net loss to the goverment (and hence the overall economy) to offset it.
Again, capturing exactly the need for strict regulation of commercial lending activities, except that a net loss to the public sector is a net gain to the private sector and it's the private sector that, in this context, meaningfully defines the economy (Leaving aside foreign accounts for the moment). In fact, the net gain to the private sector is exactly the entire point of the system, the thing that makes it not nonsense, but rather the fundamental structure that makes banking a productive service instead of occupying it historical position of being outright parasitism on behalf of the wealthy elements of society.

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quote:
Only when applied to income levels that are not large enough to create pricing pressure. Applied only to high incomes, they only serve to reduce prices that are inflated in response to those income levels, not to reduce consumption.

Even then. You've presented nothing to prove that any significant portion of those incomes is wasted on pricing pressure forces, nor anything that indicates the windfall prices paid isn't then efficiently used by the seller.
That something is efficient requires evidence. Short assuming that all actors have perfect information and honest intentions, inefficiency is the assumed default state.

quote:
And your later statement is just groundless conjecture that almost certainly fails when you look at test cases rather than theory.
You're suggesting that asset bubbles are not well documented occurrences? They hyperinflation does not occur? Both of those are clear examples of spending power outpacing resources availability, and thus driving prices up sheerly due to the income levels that provide the capacity to actually produce the resources or goods in question. Land is particularly subject to this efffect, since there is a pretty solid real limit to its supply, driving realestate prices arbitrarily high in areas where people with exceptionally high incomes can afford to bid prices up well out of reach of the average person, leading to very pathological effects on the cost of living in areas around them (Fan Francisco is a good example of dysfunctionally high baseline rent costs due to real estate inflation driven by the subset of its population that can afford to bid arbitrarily high nominal amounts for desirable property

quote:
quote:
quote:
and eliminating passive gains from efficient reallocation of resources, in favor of the illusion of reallocation by inefficient government offices.
That's a purely ideological claim, as neither side has any absolute claim on efficiency- each has certain areas where it can function better, making efficiency purely a matter of policy, not of momentary operations. And, ultimately, the level of real gains is unaffected, just the nominal prices of those gains.
Ideologically, its pretty much fact (and given every you post is ideological what's your point?).
Ascribing efficiency and inefficiency blindly along public/private lines is a subjective assertion that has no basis in anything but ideology. I do, when the discussion centers around such, argue ideological positions, but I don't try to inject them into descriptive treads of conversation like this.

quote:
Unless you have some examples of efficient government economic transactions that you've been keeping secret? To offset the thousands of economic disasters when the government tries to pick winners, and the even greater amount of waste that it generates even when it does reasonably well on substance. Governement does lots of things better than the private sector, I agree, but economic development with efficienncy is not one of them.
That's a completely irrelevant issue here, one that's suited for a prescriptive description of policy, not a descriptive discussion about how the basic math related to our economy actually works. You'll also note that my preferred solutions on such matters do, in fact, tend to involve engaging the private sector by putting money in its hands to operate the market, not by direct government purchases. (On the other hand, in most cases, the whole "pick winners" thing is revisionist nonsense that likes to pretend that innovation comes from magical inspirations and ignores the fact that it's almost always built on a huge heap of failures that didn't quite make the grade. It's rather convenient to categories dozens of failed attempts as wasteful, while hailing the one attempt that succeed in the end as a marvel of inspiration, pretending that it wasn't actually built entirely on learning from all of the failures that it had to climb over to get to the top. The private sector's record is no better than the public sector's record on such, the only difference is that the public sector tends to let the private sector run the last mile and collect the proceeds once the groundwork had been laid, because the product itself is all the profit the public sector needs, regardless of who ends up collecting the revenue in the end.)

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The level of real gains is absolutely affected. It's completely depressed when you filter it through the parasitic mechanism of government that bleeds a fraction of everything to no beneficial purpose other than inefficiently feeding itself.

In order to feed itself it has to drive more, not less, real production. If it is inefficient in terms of the real resources that it consumes, that only represents a loss if, in doing so, it creates a shortage of needed resources for the private sector to use, otherwise is simply helps to increase overall output and employment to meet that inefficiency, which is a net gain for the private sector, both in real terms of things like capacity and employment, and in financial terms by the revenue that they government provides to the private sector in order to purchase those real goods and services.


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The real value of a house is exactly the same, whither is sells for $500 in a $1 million dollar economy or for $1 million in a $1 billion dollar economy.
So what? If you prevent people from saving they'll never be able to buy it other than by becoming debt slaves.
Buying the house is, in and of itself, a form of savings. Any you've distorted my assertion above from curtailing excess savings where it has no effect on purchasing power to generally curtailing savings regardless of purchasing power.
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]If your "proof" is that bonuses are paid in a taxed environment, then it's literally a useless statement that you made, that profers no content to the end user. Credit card fees is a horrid example that works nothing like bonuses from a rational decision point of view.
Please don't distort the metaphor being used. Credit card fees are like taxes. Product prices were equated to bonuses. Specifically, that the dollar amount is set to attain the desired utility in terms of real transfers, not nominal ones.

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The whole point that people argue about taxes is disparate tax results. If everyone paid an identical tax rate, no exceptions, then your conclusion would have merit.

That's complete nonsense, because money has a differing marginal utility to the recipient based on how much of it they receive above and beyond their basic cost of living, tapering off at what is, effectively a maximum effective capacity to provide useful market input from any single entity without making that entity a de facto source of economic planning by allowing it to control prices and resource availability instead of needed to compete for them in the market as a whole.

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But with people paying different tax rates something is being taken away from people (when they compare themselves to other people) and accordingly your points ignoring that (and pretending a single relevant consequence of uniform application) aren't reasonable. Pretending that because people pay tax on a bonus, it must therefore account for the tax on the bonus, when there is ABSOLUTELY no evidence that bonuses generally account for anyone's person tax situation is what is absurd.

Charles has certainly said differently- he is apparently very affected by the post-tax value of his bonus, not the nominal pretax amount. Except in the very narrow case of bragging for social status purposes, the nominal amount is irrelevant- people care and are motivated by what they actually get in hand. A bonus will only work for its intended purpose if it's scaled to provide enough real compensation to have the needed effect. Charles could equally as easily say taht his company could imporive the bonus rates such taht his post tax return was higher if they wanted him to work more- and if the comapny needed more productivity from him, that's exactly what it would be required to do, regardless of the tax rate.

Your objection has more validity if tax rates themselves were constantly changing- when the actual rate system changes, there definitely a bit of need for renegotiation around such adjustments, but those are one-off situations in most cases, and only needed in as much as they have a real effect on purchasing power, graduation of rates isn't relevant to it, so long as the grades are kept relatively consistent.

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Simply put, you know as well as I do, they aren't just commodity price controls, they are deliberate tools of redistribution of wealth.

Taxes work entirely on the financial level, except for local property taxes they have very little to do with wealth, only with money supply and market behavior.

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And there's a lot of value in realizing that the math IS NOT where the value comes from.
Value comes from labor and the relative desire for things. The math is just about ensuring that we can fully communicate those needs with each other and aren't artificially limited by silencing people by limiting their access to the communication medium on ideological grounds instead of practical ones.
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Charles in Charge
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quote:
Originally posted by Pyrtolin:

Here's a graph of current capacity utilization:
https://pbs.twimg.com/media/BcLPhFNCMAIgbvZ.jpg:large

Thanks for pointing to that. Is that manufacturing capacity?
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LetterRip
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Pete, here is what it means,

quote:
Capacity Utilization: Total Industry (TCU) is the percentage of resources used by corporations and factories to produce goods in manufacturing, mining, and electric and gas utilities for all facilities located in the United States (excluding those in U.S. territories).(1) We can also think of capacity utilization as how much capacity is being used from the total available capacity to produce demanded finished products.

Capacity utilization indexes are constructed for 71 industries in manufacturing, 16 in mining, and 2 in utilities.

http://research.stlouisfed.org/fred2/series/TCU/
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