In general I am a deficit owl, not hawk...but I don't believe the recent tax law, which barely does anything for middle class downwards, is a productive use of debt. Debt accumulated for productive means is usually okay, but not this upwards accumulation of wealth.
Also upwards accumulation of wealth can sometimes mean less tax revenue. Middle class salary workers pay a lot of tax, so with more upwards accumulation of wealth (maybe accelerating due to AI) then what will happen to tax revenue? People getting laid off don't pay tax, and shifting that money to corporate, tax havens, and cap gains types of taxes will probably end up lower overall
You are correct. But you are commenting in a place where mid six figure engineers consider themselves middle class and not wealthy.
Yes, the top 20% pay the vast majority of taxes and are taxed at the highest rate until you get into the ownership classes where income goes down and capital gains goes up. Plus that’s when all the tax deferral strategies come into play.
And yes, by all reasonable definitions if you are in the top 20% either income or wealth you are categorically wealthy.
Corp income tax (paid by shareholders from the rich to teacher pensions to anyone with a retirement account...), estate tax,...
When all is accounted for ... The rich still pay a far larger share than the income they earn. It's why OECD rates the US as the most progressive tax system among member nations.
True or not that the wealthy pay a greater share of their money in taxes, it doesn't matter. The money has to come from somewhere and the middle and lower classes can't afford it. Also the middle class can't pay more and continue buying the super wealthy's goods. We need to spend less and tax more. 1 trillion in interest per year is insane.
Do you not see this as inevitable? It may be the case that money does 'trickle down' but it most certainly gushes upward. And so when the government prints massive sums of money, that's effectively just indirect handouts that end up going to the wealthiest, enabling them to gobble up even more of the overall economy and, in turn, enabling them to grow even wealthier.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
It’s complicated. The gold standard in general is an awful system outside of stagnant economies (you end up with deflation + endless boom and bust cycles).
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
The Minneapolis Fed calculated CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51. From 1971 to current, it increased by more than 800 points. Keep in mind all the incredible events that 1800 to 1950 covers - World Wars 1 and 2, the Civil War, Great Depression, Spanish Flu, and more. And prices always stayed extremely stable.
Then we give the government the ability to print money at their discretion and money just starts inflating endlessly to the point of having no real meaning all the while wealth inequality grows to unimaginably high levels, to the point that the richest American now has personal wealth greater than the entire GDP of America in the 50s.
So you clearly don't just inevitably end up with deflation. Before 1971 the overall economic system was quite stable. Obviously there booms and busts, but it's not like the current system has changed that. Instead we now just have constant busts which are stabilized only by the government dumping obscene amounts of money into the economy which results makes all the economic and related problems we have even worse. And it's all obviously building up to a completely catastrophic bust that'll likely make the Great Depression look like the 'good ole days.'
> CPI levels since 1800 here. [1] In the 150 years from 1800 to 1950, the CPI never shifted more than 25 points from the starting base of 51.
Yes and there were extreme swings in between. Predictable 2% inflation is better for the economy than unpredictable up and down jumps in prices of 10-20% over a decade or two.
> Keep in mind all the incredible events that 1800 to 1950 covers
You haven’t actually looked at actual charts or yearly figures have you? It was a roller coaster.
I certainly agree about your points on inequality etc. but Fiat money is not the cause of that itself. Monetary and fiscal policy failures are.
> Before 1971 the overall economic system was quite stable
Yes, for several decades. After the roller coaster of ~1770 to ~1950.
Did you look at the data? Over 150 years prices literally never once increased (relative to the baseline of 50) more or less than 50%. And outside of the Civil War and World Wars annual changes would have hardly been noticeable. In fact in the overwhelming majority of years there was no change at all! The CPI was so stable that I was even able to pinpoint a major event I had forgotten about (war of 1812) when looking at the data because it was one of the relatively rare periods of instability.
Then in 1971 things went insane and we went from a base index of 121 to 942! And yes this does directly cause inequality in a wide array of different ways! The most obvious is the 'gush up' effect as already mentioned. Another way is that it makes it much easier to undermine labor. So for instance many people would be relatively happy to be earning 25% more than they were 5 years ago. In reality? They've been given a paycut because that's not even enough to keep up with inflation, and there's 0 chance of it going any direction but up from here. So they've gotten poorer with a smile on their face. Hence why real wages are practically flat since 1971.
It also turns money itself into a somewhat toxic asset and motivates the hoarding of things. For instance Bill Gates is the largest private owner of farmland. By contrast lower income types often think starting a saving accounts, or (ugh...) a cd savings account is a fiscally responsible thing to do. And before 1971 this would have been 100% true. But now a days it's basically a scam, because you're never going to get interest rates that beat inflation, because nobody wants your rapidly devaluing money.
They'd be far better off putting their money into precious metals, land, or basically anything to try to escape the inflation trap. But lower income types often need more access to their funds on demand in case e.g. their car breaks down. So it's a system that very much punishes lower income types.
> somewhat toxic asset and motivates the hoarding of things.
As opposed to hoarding money which is both bad for the economy and made you richer for doing absolutely nothing?
e.g. prices halved between 1865 and ~1900. The rich got richer, lack of freely available capital limited growth and anyone who had loans got screwed (imagine being a farmer who mortgaged his farm and is seeing agricultural prices go down every year). Constant technological progress bailed everyone out but it wasn’t a pretty time.
My point is that consistent and mostly predictable inflation (i.e. that was the case only during a fraction of of the last ~50 years) is much preferable than constant boom and bust cycles and volatile price swings that were frequent under the gold standard.
Of course it’s very easy to mismanage monetary and fiscal policy when you can print an unlimited amount of money and put incompetent/corrupt people in charge.
Try to put yourself in my shoes for a second, and think about what I'm reading from you. The example you chose was not only the exact year the US Civil War had just ended, but also the start of the second US industrial revolution and even a peak of the transition from rural->urban life. So in other words - some very major events. And over 35 years during this wild times, prices dropped by half, all while wages for workers were raising rapidly. And debt was quite rare 'back in the day'. In 1890 about 39% of farms had a mortgage [1], and that was near a peak of the bell curve on that. Go back before the Civil War and other such events and it shrinks down to 10-20%.
For some contrast to this point, I'll pick my date of 1971. Over just 9 years prices more than doubled. If we do the same timeline of 35 years, prices increased by more than 500%. And during this time, wages didn't come even remotely close to keeping up. So people were paying more and earning less. And obviously indebtedness also skyrocketed during this era, which is indeed nice for inflation (at least if wages keep up, which again they often don't), but that's only because people could no longer afford anything! Like in modern times the median home costs 7 years of median salary, which means basically nobody, outside of the very wealthy, can afford a home without going into decades of debt. By contrast in the past there were homes available for less than a year's salary - which is rather necessary when you can't just go get endless funny money to buy something.
And you're arguing that this new system is better for workers. Now of course it's possible I'm straw-manning you, though I assure you it's not intentional if so! But if not, then what am I missing here? Because I think surely, if you put yourself in my shoes, you can see that your argument isn't the most compelling.
