Scrooge McDucks ... Say. Isn't that just an alias for Fiat McClucks? If it spends, taxes and lobbies by fiat ... maybe it IS all just fiat? Yet what good is fiat if we practice it on everything except thinking? Cluck, cluck. Poor McDuck. Clever enough to acquire a duck suit, but still no wiser than a chicken.
Bill Gross notes that extreme wealth disparity triggers declines in distributed savings, and declines in distributed investment too. Both are obvious, logical points. However, his ONLY suggestion is to tax the wealthy more?
Why? To get more fiat? For whom? For the issuer of public initiative contracts and public initiative coupons - i.e., fiat currency?
Note to Bill. The US Treasury doesn't need any fiat back. Beardsley Ruml said so, on page 35, 68 years ago!
Here's a hint to Bill. Let's assume the Treasury DID need to get some fiat back, in order to get more fiat to express. You know, in case the sky was falling. I'm just clucking! Bear, er .. duck with me.
1) What would it do with that extra fiat? Spend it on public contracts? :)
2) Who would get to earn and keep some of that extra fiat? Labor? But ONLY if their income increased more than their taxes did?
So, Bill, EVEN IF THE TREASURY DID NEED TO GET YOUR HOARDED FIAT CURRENCY BACK, IN ORDER TO HAVE SOME ... it would have to spend it and tax labor at lower rates to achieve anything with it.
So, count me dense, but ...
3) Why not just encourage the Treasury to spend more on labor NOW, instead of waiting to get your taxes back?
4) Why not just drastically reduce taxes on labor? NOW! Instead of waiting on both clawed-back fiat AND arbitrarily delayed initiation of further fiat?
What on earth is the difference between 1,2 versus 3,4? Only tempo?
And maybe parsimony? And even then, ONLY for this particular context? Yes, a fiat currency regime ALLOWS for an expanded Policy Space and increased Policy Agility. It guarantees neither, however. Only fiat combinations of awareness/initiative/intelligence guarantee faster/better/leaner application of fiscal and monetary policy tools.
What? Bill Gross says 3&4 might further reduce the buying power of his remaining private savings hoard MORE than strategy 1&2 did? Higher inflation than 1&2? Really? Maybe. It depends .. on a LOT of implementation details. Yet isn't increasing inflation just an increased tax on saved capital - i.e., just what Bill wants? And, hasn't Bill already concluded that the timeless purpose of national policy is to increase our real economic options, not just hoard fiat numerals in bank accounts?
Look Bill, mathematically, it hardly matters whether you raise taxes on capital faster than you raise taxes on labor ... OR ... you lower taxes on labor faster than you lower taxes on capital. Right now, please do whichever is bureaucratically simplest in our current situation. That is, use Occam's Razor. In a fiat currency regime, the difference between those two situations is purely a matter of semantics, not reality. Either way, the amount of fiat used to denominate a desired adaptive rate is a dimensionless number, one that scales with the size, adaptive rate, context and arbitrary habits of a given population. What matters is the social computation latency - and policy latency - required to recognize and implement adaptive policy. Reducing that latency across multiple situations STARTS by recognizing that 1,2 and 3,4 are mathematically the same.
You are VERY CLOSE to rediscovering the definition of "fiat." Go for it! Pull a Ruml.*
What? Bill Gross says 3&4 might further reduce the buying power of his remaining private savings hoard MORE than strategy 1&2 did? Higher inflation than 1&2? Really? Maybe. It depends .. on a LOT of implementation details. Yet isn't increasing inflation just an increased tax on saved capital - i.e., just what Bill wants? And, hasn't Bill already concluded that the timeless purpose of national policy is to increase our real economic options, not just hoard fiat numerals in bank accounts?
Look Bill, mathematically, it hardly matters whether you raise taxes on capital faster than you raise taxes on labor ... OR ... you lower taxes on labor faster than you lower taxes on capital. Right now, please do whichever is bureaucratically simplest in our current situation. That is, use Occam's Razor. In a fiat currency regime, the difference between those two situations is purely a matter of semantics, not reality. Either way, the amount of fiat used to denominate a desired adaptive rate is a dimensionless number, one that scales with the size, adaptive rate, context and arbitrary habits of a given population. What matters is the social computation latency - and policy latency - required to recognize and implement adaptive policy. Reducing that latency across multiple situations STARTS by recognizing that 1,2 and 3,4 are mathematically the same.
You are VERY CLOSE to rediscovering the definition of "fiat." Go for it! Pull a Ruml.*
* What's that Ruml-ing I hear in the distance?
2 comments:
The reason Mike, why Gross is saying that is not really for the function of taxation, it is because he is living and working in a culture of orthodox economics ...one that actually do not want to accept real monetary theory. But, in this culture which is the culture both political parties are on, revenues and spending mean totally different things...and you and I know they are wrong but lets look at the bright side, still we need re-distribution of wealth in this country, not for what its monetary impact will be but in order to support a culture of Social Justice, and in this sense its ok when these economically ignorant figures adopt the tax the wealthy meme...its better than having to cut spending...(within their frameset)
Even if the govt starts to tax 'carried interest' there is no guarantee that people can even pay it... iow govt spends first and then collects the taxes, but in carried interest, the increase in the value of the carry was not due to govt 'spending first'... these people are going to have to liquidate something else in order to raise the USD balances to pay the tax...
What Gross is suggesting is not even going to work the way he thinks...
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