These aren't binary outcomes. Tight money does nothing to ease supply-side bottlenecks. It does little to target demand displaced by rising energy prices. If those are the principal drivers of inflation, tightening could depress non-energy demand in a way that causes a recession without alleviating inflation. Stagflation. (To be clear, we're not at tight money yet.)
You don't think the inflation has anything to do with printing $14 trillion out of thin air, or increasing the M1 money supply from ~4tn in march 2020 to over $20tn today?
M2 increased in 2020, but not by as much as you're saying https://fred.stlouisfed.org/series/M2SL
https://www.federalreserve.gov/supervisionreg/caletters/calt...
So hopefully the Fed stops raising interest rates when inflation drops to around 4%.
The biggest problem we've had is a breakdown of our supply chain because of the pandemic.
All major global economies have been printing money at unprecented rates last couple of years.
Year over year inflation is higher than it’s been in 40 years, and they weren’t printing money then either.
US inflation is higher than other wealthy nations and the US also did a larger stimulus. So there is evidence that the additional stimulus may have created greater inflation in the US. Scope this paper here: [0]
As far as the consensus for the cause of inflation being unclear among experts, scope this article in left leaning VOX: [1].
[0] https://www.frbsf.org/economic-research/publications/economi...
[1] https://www.vox.com/23036340/biden-american-rescue-plan-infl...
Canada gave a lot more in stimulus checks (with respect to GDP) than the US but is experiencing less inflation than the US.
https://www.cnn.com/2021/03/03/economy/budget-2021-uk-stimul...
But not the QE/printing money.
One other person I saw mentioned that the reserve requirement was lowered to zero in 2020. I don't think that has ever been done before.
Also, Google MMT. Printing money is only inflationary of the economy is running near capacity.
The public are worried about inflation, it's the issue of the day. They will cut back spending until inflation is seen to be tackled which will likely bring about a recession anyway.
Given that, the Fed's hand has been forced, if they do not seem to be aggressively trying to deal with inflation the public will become even more scared and reluctant to spend.
Housing, business debt — sure. But there’s a long, convoluted path from cheap debt to inflation of consumer goods.
Hypothetical example: If Dell wants another 2 weeks of GPU’s on hand from Random Supplier X, and Random Supplier X wants 2 weeks of chips for their GPU’s on hand from Nvidia, and Nvidia wants 2 weeks of refined silicon on hand from supplier Y, who wants to source 2 weeks of raw materials early that’s 2 + 2 + 2 + 2 = 8 weeks worth of demand of sand from some mine somewhere out of thin air. Which then dramatically bumps prices for sand and that trickles back down the supply chain.
However, higher interest rates should moderate how much each company in that chain stockpiles, which reduces the demand for sand even if the same number of computers are shipped either way.
The reason "dutch disease" is a problem for resource producing countries is that manufacturing productivity growth is much stronger compared to commodity production. It's better to be a manufacturing powerhouse than it is to be a commodity powerhouse.
It's entirely plausible that services are the same way, it's better to make things for other people than to do things for other people.
So, yeah, anything but an industrial, or post-industrial computer driven line, is setting your country up for long term failure. There is lots of societal enrichment that comes not just from the direct production of these things and their sale but also from how they facilitate the ad-hoc understanding of reality.
Take TV for example. Today you can watch Squid Games on your 65" 4k TV. 30 years ago you got to watch whatever was on cable on your 27" CRT. But where does that improvement get captured? We don't manufacture more TVs. In fact, we make fewer. We don't spend more money on Netflix than Cable. We actually spend less.
There's a lot of things like that where the quality has improved but that's hard to put an actual GDP number on.
Asia is making incremental improvements on products invented in the West. They're not the ones inventing classes of devices or breaking new ground.
They didn't invent it, but they make probably 90% of the hardware components
We've stopped reinvesting our profits, essentially.
This is much more a move in favor of the rich that are owed money by the poor imo.
One might then ask, do higher-class wages match/exceed inflation more than lower-class wages? This is debatable. But here's some interesting data from the Atlanta FED, where you can track wages by quintile, education, "skill", hourly vs. non-hourly, etc. Make your own conclusions.
It also myopically focuses on household debt. But household debt is significantly lower than either corporate debt or government debt [1].
The biggest debtors benefit the most from inflation — quantitatively speaking, the debts of ordinary people aren’t very big.
[1]: https://www.mckinsey.com/~/media/McKinsey/Industries/Financi...
Just for fun, I thought I’d do the math on deflationary economics:
#!/usr/bin/env raku
use v6;
multi sub deflate($n, $r, $y)
{
my $m = $n;
loop (my $i = 0; $i < $y; $i++)
{
$m = deflate($m, $r);
}
$m;
}
multi sub deflate($n, $r)
{
$n * (1 + $r);
}
sub MAIN(:$rate = 0.0225, :$years = 10)
{
my $purchasing-power = 1;
my $deflate = deflate($purchasing-power, $rate, $years);
my $output = qq:to/EOF/.trim;
After $years years of deflation at a rate of {$rate * 100}% per year,
purchasing power is {$deflate * 100}% of what it was initially.
EOF
$output.say;
}
Assuming an average inflation rate target of 2% per year (per the Fed) and an average GDP growth rate of 0.25% per year, your real purchasing power would grow by about 25% per decade.
Under this scenario, you could mimic a universal basic income of $1000 per month upon saving a total of $480,307.
Bonus: your monthly “UBI” could never be shut off by your government.
sub deflate($power is copy, $rate, $years) {
$power *= 1 + $rate for ^$years;
$power * 100
}
sub MAIN(:$rate = 0.0225, :$years = 10)
{
print qq:to/EOF/;
After $years years of deflation at a rate of {$rate * 100}% per year,
purchasing power is &deflate(1,$rate,$years)% of what it was initially.
EOF
}
The innumerable dark-seeming corners of the language is part of what makes Raku so very, distinctly “Perl”. Little traits and single character sigils that change everything. I find the black magic of Perl моѕt all∪ring ∮.
Inflation and responses to it affect the distribution of wealth. When I hear an automatic response from "responsible" policymakers explain that some sacrifices will be needed to tame it (mostly not by them, of course), then I strongly suspect that we're headed for yet more accumulation of wealth at the top.
Inflation affects the poor much more than it does the rich, which is why it's considered a "regressive tax". The Fed making a historically large rate hike is a direct attempt at fighting inflation, preferentially so over preventing a recession.
And since we're already very near to full employment, the risk that inflation poses to the poor is greater than that of unemployement, hence why it is better for the poor that inflation is brought in check even at the risk of recession.
inflation is a monster that destroys the low and middle class. the rich and powerful have tools to profit and dance around it.
Tanking the economy will hurt these people the most. But yes, inflation would flatten.
I know it won't, because we're entering stagflation territory and unemployment is going to go up. COVID was a massive wealth transfer from the lower and (esp) middle class to the oligarchs.
In a high inflation environment you may find yourself in a position where you have to shift more resources to sales rather than operations. Your current situation with it's pre-inflation salary might just not meet your business goals. Just like they may choose to spend additional income from inflation adjustments on things other than your salary, you can choose how much time you devote to things that are important to you depending on how they reward you.
Stop thinking of yourself as an individual employee and start thinking of yourself as a member of a union. Then actually form that union.
You don't get across-the-board raises by "generating leads". You get them by collectively bargaining.
And I reject entirely the notion that one should be only looking out for one's own gain.
We live in a society, and we damn well need to start acting like it again, rather than the proverbial crabs in a bucket, desperately stepping on each other to try to get ourselves higher.
My parent made a living working for the same employer. My SO's parent made a living working for the same employer. Somehow, not canning the entire staff every two years worked for their generation.
Meanwhile, I work for tech companies where hardly anyone knows anything because nobody has any experience because the entire workforce has to turn over every two years just to try to recoup what inflation has devalued their salary to?
Hiring budget is 3x bigger than rises budget.
Dont ask me whose retarded idea is that.
Who's Mark?
Oh, he worked here three years ago.
Citation needed. Unemployment is at 3.6% and the population on UE insurance is below 1%, and we are adding 400k+ jobs/mo.
This of course can change, but as of right now, UE is not going up.
Can't have that.
Poor people either don't go to college, or go to a cheap community college, or get scholarships/financial aid.
Very rich families just pay for college without taking out student loans.
https://www.brookings.edu/blog/up-front/2020/10/09/who-owes-...
> The highest-income 40 percent of households (those with incomes above $74,000) owe almost 60 percent of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40 percent of households hold just under 20 percent of the outstanding debt and make only 10 percent of the payments.
Also, medical and credit card debt can generally be discharged in bankruptcy. Student loan debt can't, but consider this from the same link:
> What may be more surprising, however, is the difference in payment burdens. A growing share of borrowers participate in income-driven repayment (IDR) plans, which do not require any payments from those whose incomes are too low and limit payments to an affordable share of income for others. And some borrowers are in forbearance or deferment because of financial hardships. As a result, out-of-pocket loan payments are concentrated among high-income households; few low-income households enrolled in IDR are required to make payments.
https://www.federalreserve.gov/releases/z1/dataviz/household... for a higher level set of charts.
If you look at it by state, you can draw a north south line from the western boundary of Texas to the western boundary of North Dakota. West of that line is debt; east of that line (until you hit the coast) its better.
Running it from 1999 to present is also kind of interesting.
The St. Louis Fed has a report on Income Distribution, Household Debt, and Aggregate Demand: A Critical Assessment1 https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed... - it is not light reading.
From part of the summary (on page 29):
> With respect to the long-term rise in household debt: This is a monetary phe- nomenon. Fundamentally, it is the result of higher interest rates and lower real income growth and inflation. On the other side of the equation, increasing income inequality has simply led to an increase in private consumption inequality. To the extent that consumption demand has been stronger than would be predicted by a Keynesian story of consumption propensities declining with income, the ex- planations appear to be a mix of increased luxury consumption by high-income households and and increased social spending classified as household consumption in the national accounts. Income inequality may indeed have contributed to weaker aggregate demand. But so may a number of other factors affecting desired consump- tion and investment, including: the progressive satiation of consumption demand; slowing population growth; increasing monopoly power; the shift from manufac- turing to less capital-intensive services; changes in the fraction of profits retained in the business sector; the trade deficit; and increased longevity of capital goods. The possible influences of all these factors, along with countervailing forces tending to raise aggregate demand, need to be investigated systematically we should not immediately focus on one possible story to the exclusion of the others.
Page 28 appears to have the line item you're after:
> Household debt is concentrated near the top of the income distribution; very little is owed by lower-income households.
Another chunk of data to work from: https://www.debt.org/faqs/americans-in-debt/demographics/
Anyone with $1,000 has the resources to stop any (or several) of a large number of unfortunate circumstances that they may encounter. $10,000 even more so. $100,000 should be years of runway along the same lines. So it makes sense that when everyone is riding an economy downward, the people with the least cushion get hurt the worst.
Furthermore, a lot of inflation is in housing itself, so if one already is a homeowner, then a significant amount of inflation is bypassed.
So we could see recession AND inflation at the same time. Then tack on higher interest rates, and everything goes squish.
Edit: Normally I’d suggest a carbon tax and rebate to low income folks, but that would directly work against Fed FFR increasing efforts and Congress is so pathetic as to not be able to get it done.
Lots of folks interested in EVs when fuel is $5-6/gallon, which will remain for some time. Gotta scale up faster, build the machine that builds the machine and whatnot.
https://e360.yale.edu/digest/new-analysis-suggests-we-have-p...
https://about.bnef.com/blog/electric-vehicle-sales-set-to-ri...
Don't get me wrong. I WANT an EV, but there isn't one out there I would buy. No way am I getting a 1st, 2nd, or 3rd year EV. I'm not going to be a beta tester. No way am I getting an EV with just touch screens. No way am I getting an EV which is a pain to maintain or repair.
To say leaded fuel is still available is a little bit of a misnomer, in the states anyhow, its not legally available as a road fuel, nor is a TEL additive - there are lead substitutes, but they're potassium I think, largely to prevent valve seat wear.
As far as I know, low octane unleaded fuel has always been available, you could always get a 'regular' grade gas without TEL, and premium fuel was marketed as with TEL.
And cars didn't last nearly as long as they did before.
This definitely varies on the definition of "the electric future" is. Are we in the electric future when the number of total passenger miles driven increases or stays the same while the gallons of gas combusted for passenger car travel decreases? Is it when >50% of cars on the road are electric? 100% of passenger cars?
Oh yeah that'll get past congress. I'm sure one of our parties won't have an aneurism over this idea :)
That could happen tomorrow. It could be challenged in court, but the internal running of federal departments hasn't traditionally been successfully been upheld unless they have some novel legal theory as to why this is unconstitutional.
Relax regulations which prevent companies from building new or expanding plants?
> The market is responding to the probability of an electric future.
The "electric future" is so far out there. The fuel would likely just be exported. Also, fuel is not the only thing produced at refineries.
- reduce speed limits, like in the 70s. Actually enforce with speed cameras everywhere (bonus, fewer people will die). - mpg mandates for new vehicles, like Obama, but now also include light trucks. (bonus, fewer people will die).
The fact that they are not even being discussed by policymakers in this context of high gas prices tells you that driving fast with large vehicles is fetishized.
The problem is that Congress is functionally ineffective at responding to popular demand, intentionally. The Senate is structurally allowed to act anti-democratically against the will of the populace: two representatives for fifty arbitrarily defined land areas are allowed to override proportionally elected representatives, and the filibuster allows only a third of them to block any action.
We are at a political impasse. Things will get worse because it does not look good to the minority party for the majority party to enact real economic wins.
If only the majority party were willing to wrestle a tiny speck of that anti-democratic power away from the Senate by overriding extreme rules like the filibuster...
Or reverting back (pre-1970s) to the "Talking Filibuster,"[0] where you could only stop a vote by continuing to "debate" on the floor of the Senate.
That won't solve the problem, but it would be a step in the right direction: Talk until you can't and in the meantime, try to negotiate with the majority.
Core inflation in the UK is 6.2%, in the US is 6%, more than half the inflation rate. This is not the same in countries more affected by the energy shock, such as the eurozone.
This isn't just hindsight bias either. Plenty of people have been warning about exactly this problem for years.
Not that administration is solely to blame for our predicament. The failure goes back even before the previous administration who had a mandate to make radical changes after the 2008 election cycle, and instead continued business as usual.
Instead, they ramped it up and now we're here. The war is not the main cause of this, but was the monkey wrench thrown in the money printer, bringing down this house of cards.
This issue was years in the making, but they were just kicking the can down the road hoping the bubble wouldn't burst on their watch.
But, for what it's worth, the rate hikes needed to start years before that, probably between 2013 and 2015. 2010-2020 was the window to make up for big spending.
* source is from a bar talk with an economist, I didn’t do my own research here…
Here is an argument. Fed is a thief. First it recklessly bailed out all the toxic banks and derivatives in 2008, then kept the interest rates low for too long propping up the asset prices, then basically printed money as if there is no tomorrow, and then the moment middle class started to see wage growth they gave the asset owning class opportunity exit with big margin as they retired and then started raising the rates. End the Fed.
We’ll see what the BoE and the UK government do, but I’m not an optimist. I don’t see Johnson stop using public money to directly buy votes and I’m very doubtful of the competence of a central banker that goes on TV asking people to not demand pay rises.
The present inflation is a bit of a mixed bag. It is partially caused by higher wages, but it is mostly caused by high oil prices, disturbances in grain and fertilizer sales caused by the war in ukraine and various covid related supply chain screwups.
I think the solution is to continue to address the things that can be addressed, like the covid supply chain screwups, low refining capacity, etc. Triggering a recession on purpose is really dumb.
Some specific areas that are getting hit hard like housing have specific problems that need to be fixed, like zoning.
Or as Traders say...
>It's priced in.
Tax does not do anything to extract money in the end from anyone but the consumer; or at least not any tax that I've bothered to actually sit down and trace in the rare accounting mood.
> It's priced in.
That's just not true. It can only be true if you assume all sellers collude not to lower prices.
In a free market, one seller might eat the tax, undercut the rest, and net more money at a lower profit margin by attracting business from competitors. That risk generally prevents taxes from being fully priced in.
$4 to make the thing, get it to you, and pay all taxes inherent to all the jurisdictions involved in producing and selling the thing to you. Let's even assume I'm the most amazing business man, and I've trimmed the process down to the absolute minimum possible cost per unit by nailing every optimization under the sun.
and $1 profit to come out ahead.
Now. That $1 profit is totally open to get undercut by a competitor.
We've pinned that $4 as the minimum possible cost to make that widget based on the laws of physics and business. Even if my competitors are all as amazing as me, they too hit $4 spend to produce 1 widget.
The next day, a tax is imposed. Not on the consumer, but on the businesses; this increases the floor cost per widget produced from $4 to $4.50 cents.
I priced things at $5 a widget. I'm still in the black with no adjustment. I have two choices: increase cost to keep making the same relative profit (if the market will bear it) in terms of cash, or convert some of that cash profit to "Goodwill" by basically taking a haircut and eating the tax. This could get me brand recognition or attract a certain type of investor.
My competitor, Sudden But Inevitable Undercut Inc. Priced their widget at $4.50 previously only pocketing 50 cents.
Unfortunately, they have no wiggle room any further. They drop out of the market, as to them the thought of increasing the price is unthinkable.
Any other competitors are left with the same choice as I had:
A) increase price to get same relative profit B) cash in on Goodwill
But as more companies choose B, the value of B plummets. No one cares if you ate the tax if everyone does it, and in fact not doing it when everyone else does attracts an equally large set of particularly minded investors
The consumer still ends up ultimately eating it because supply just shrunk, demand stayed the same, (price goes up) because a supplier was just priced out of the market in a poof of non-profitability.
BUT! The ones who dropped out liquidated their stuff! Who'll buy it? Probably suppliers still making widgets. Who has the most to throw around? Me, of course. I could grab all those assets to prevent my competitors from being able to utilize them to scale, or to bolster my own production to be able to service more demand! I can do this, because growth can only be bought with money now. I have money now! Yay, greed!
So now, you're left resolving that Goodwill spread across your supplier population. In my experience, there is a far smaller set of Stakeholder value centric companies than Shareholder centric value companies.
Let's say it's 50/50 though, lets assume the market bears my elevated cost for buying the widget without much complaint. What does next quarter look like?
The ones who readjust up for the same relative profit may be able to capture fulfillment for a higher fraction of the finite demand. At first, this may seem advantageous to those who took a haircut, because that essentially turns into a bump in supply, pushing prices down; but as long as the higher priced widget sellers keep improving faster than the competitors that took the haircut, over time they (the less altruistic bunch) may be able to drive more benevolent competitors out of profitability, recapturing their (the more altruistic, but slower growing suppliers) now unprofitably serviced chunk of demand.
Boo! I say as the highest price supplier, I didn't make as much as I wanted in end consumer sales, but hey, wholesale is better than no sale, right? And I can still play the ole M&A card to acquire other suppliers to increase the shadow I cast in terms of effect on price.
If the market doesn't bear the higher cost, it can go the other way of course, and if one makes the dangerous assumption of rational homo economicus, the more benevolent actors may hold out, but they still won't won't grow as fast as their less altruistic competitor, (growth requires cash now, not goodwill).
So say our more altruistic company charges less most of the time, they're still going to have to price in the difference in response to the proportion of increased demand by consumers drawn by their normally lower prices, the max demand they can in house satisfy with their own production, and the elevated cost of sourcing more expensive supply from a less popular supplier due to their higher price to keep customers happy. Their prices are still pegged high, and they are vulnerable vulnerable to shakedowns by their upstream supplier if they want to keep that goodwill flowing.
A final equilibrium is reached only when there is no more room allowed by regulators for M&A until there is a breakthrough or change in the laws and physics of business, to bump that floor price down.
In reality, all businesses make these types of decisions all the time. The hard truth remains though: if you tack on higher costs to produce, there is nothing to stop businesses from passing that cost along. Not passing it along can net some goodwill, but rapidly hits diminishing returns as more companies do it, and hamstrings your growth potential if the population of the type of investor your goodwill piques the interest of ever shifts substantially, and in particular, shrinks. I've met far more pragmatic, profitability driven investors than ideal driven, so I'd wager your idealists are way less common than your "lets make lotsa money" investors.
Cash buys you more throughput. Goodwill may get you more demand, but inability to keep up and fulfill that demand means you're delegating business, and customers to a more costly supplier eventually anyway. Which raises the question, if you can't give everyone the lower price now, why not pass on the cost of that tax, reclaim your profit, possibly innovate, and give it to them later? Or why not have it be your hand on the till? I mean you had good intentions. You're just reacting to the market! You'll make it up to the consumer! Just... Later.
Several years later, you get faced with the same decision again and wonder if now is the time... Rinse, repeat.
Greed, in this sense, subverts the "virtuous" cycle.
But lets get back to iteration 1.
The end consumer though... after the tax is imposed is still paying at least $4.51-$5.50 where yesterday, they were paying $4-$5.
So, no... While I think you can cross your fingers and hope a bunch of people famous for being cutthroatly pragmatic will out of the goodness of their heart eat a tax for you...
I've gotten to the point I've thrown in the towel on that, and assume the traders are right
It's priced in.
And this is why we can't have nice things.
The fact that you mention investment potential as a downside of eating the tax is really amusing to me: is it so hard to imagine a sustainable business that actually makes money? Pumping up the numbers to attract investors is not something that matters to a well established profitable business. Half the economy is small businesses, and the owners tend to be a lot more pragmatic than boardrooms.
> While I think you can cross your fingers and hope a bunch of people famous for being cutthroatly pragmatic will out of the goodness of their heart eat a tax for you...
You've completely missed the point. What I'm pointing out is that, sometimes, cutting prices is the cutthroaty pragmatic choice, because undercutting a competitor may net you more total money at a lower profit.
That moderates the effect of taxes, and prevents them from being fully priced in. Even if nobody actually does it, the risk that somebody might affects the market.
Demand for what you do/sell is what fundamentally limits how much money you make, not profit margin. Increasing demand enough can offset decreasing margin.
Arbitrary example: Walmart can absorb a local tax increase which other small local retailers can't because Walmart's tax burden is spread across many tax localities. They get more business and make more money. It isn't goodwill, it is rational.
Just look at tariffs we've seen in the past few years: did all prices instantly jump by the amount of the tariff? Nope.
Inflation causes absolute value of the number represented by that floor to increase.
I assure you. There is only one relative group of people local to whom that number teitching makes a big difference.
Hint: If you sort by income descending, they're toward the far end.
A huge swath of Americans are living paycheck to paycheck and can't afford a $500 emergency. As inflation increases the cost of goods and services those people have even less wiggle room to handle the unexpected and/or they need to start cutting back on expenses.
That's my struggle with this part, and that was my point with the less bargaining power. Everything else you say is true, but I have concerns about this bit. My wage required a job jump to increase and I'm by no means lower middle class.
https://www.wsj.com/articles/transcript-fed-chief-powells-po...
It's capital that being severely punished now, with negative returns (on top of inflation), it will take years to recoup losses. Anybody hoping of becoming a rentier (the FIRE crowd, seniors looking to retire come to mind) has seen their plans evaporate the last year.
While the truly rich probably don't care either way, their balance sheets are all shrinking nonetheless.
Low inflation may bring price stability and sanity to the markets, but it will not particularly benefit lower incomes.
This kind of thing really bothers me, and the more I learn about economics the more I understand why public school economics classes are so poor. If people understood this stuff there'd be a revolution.
I think Warren Buffet once said something to the effect of if the average citizen understood how the federal reserve worked there'd be a revolution overnight. I'm sure I got the person or details of the quote wrong, but I'm too lazy to look it up. Regardless, the sentiment stands.
However, if you are poor you would have more debt\less savings. As such a recession would be worse -- especially as it leads to less jobs and lost jobs.
People love to act like they’re helping poor people when in truth they’re just hurting the labor market ie everyone but rich people.
In a recession, spending from the top 10% of the population slows down, which in turn stops the trickle down economics, and hits the lower 90% of the society the hardest. And when that happens after a 2 year long period where they were already hit hard, the effects will be even more long lasting.
[Edit]: Since most of you latched on to the argument that "trickle down economics" doesn't work, I'll clarify. Outside the rhetoric of "Billionaires are hoarding all the money", in a healthy economy, trickle down economics is how most of the businesses work. Every time a person earning six figures goes out buys that extra pair of shoes or goes on that extra vacation or orders in food because they were feeling lazy, it's trickle down economics. It works. When the people with higher purchasing power (I said top 10% for a reason and not top 0.1%) feel the pinch, it has a disproportionate impact on people with less money to spare.
Edit:also look at the economic system practiced in the United States that led up to the introduction of trickle down economics. That happened in the 80’s and there’s 4/5ths of the 20th century that happened prior to that
Every single of the thousands of innovation that goes into an iPhone was subsidized by rich venture capitalists and rich early adopters who were willing to plonk large sums of money to a 'gadget' that only showed promises of work.
It wasn't because the Indian Government Taxed the Rich and made a mandate that everyone should have an device-in-their-pocket-that-carries-all-the-worlds-information-and-productivity-tools
I don’t think finding a silver lining in the end results of a process counts as it succeeding.
Don't forget the governments which helped fund the basic research used to make such things, the middle and lower classes that pay more in property taxes so companies can be bribed to build factories, and other such things.
Put another way it's a much more complicated picture than just those two.
Only if you ignore sales tax, car tax, property taxes, and other such taxes.
The top 10% typically included major corporations but without a source I don't know if the percentage you use does.
Saying that I'd be all for a Federal sales tax of 20% if we could nearly eliminate income taxes.
Contrary to popular belief, the so called utopias like Sweden, tax the poor at almost comparable rates as the rich.
The poor already spend all their money on necessities. If you go to a flat sales tax it will hurt them more than the current progressive regime and favor the wealthy.
#define WEALTHY
Wow, this is pretty eye-opening.
The bottom 50% contribute nothing and in fact are a net negative contributor when you consider welfare, housing, etc, and other benefits. Of course, this doesn't stop certain scumbag pols like Warren from lying to them that it's the other half that's ripping everyone off.
That's the thing. Most people and businesses did not have historic losses, outside of a few market segments. People and businesses are flush with cash, pumping up demand/inflation.
It ever started?
Selfishly I want inflation to inflate away my debt. But I'm well compensated and able to pursue new opportunities even in pretty lean times. Practically we have to control inflation in order to avoid far worse problems.
Are US pensions not tied to the CPI or some other inflation measure? (In Germany, pensions are, in principle, tied to the development of wages, which are generally assumed to outpace inflation.)
I bonds are not tax free.
They can be tax-deferred, and some (educational) uses of interest gained can be tax excluded, for some people.
My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.