It helps to think of our current super-rich as an outcome of the asset bubble that currently exists in our economy, due to the fed’s post-2008 money printing; because it’s stock that accounts for most of their net worth.
So what happens if we tax away the majority of that wealth? It’s a huge amount - enough to have a marked effect on the economic system. Well, we get a lot more money spread around the system, but we didn’t get any more products, services, or value being created. What do we get? Inflation. We have the same amount of everything - it just costs more.
So the super rich end up being a place to park inflated dollars to keep them out of the real economy. They’re actually a useful deflationary mechanism.
I’d prefer if we would get out of this asset bubble and return to a “normal” economy but this is the situation we are in.
Yes, it would. Wealth inequality drives all sorts of bad things in society and the economy. Reducing it, i.e., increasing wealth equality, would reduce the effects.
No you’re missing the point - the good intentions don’t matter because they have no impact on the monetary reality - what actually happens is you unleash inflation, just like Trump’s tax cuts, Bidens’s stimulus and ironically-named “Inflation Reduction Act” and of course the Fed’s 2008 money printing which we’re only now paying for.
The super-rich whose net worth consists of large unrealised gains in stock are simply a product of this bad fiscal policy and are, believe it or not, helping, by acting as a buffer to absorb asset inflation. Remember that their wealth is imaginary - stock they can never sell in significant quantities - by forcing them to sell it and pumping the money back into the bottom half of the economy, what was previously imaginary money would now be real money flowing through the economy, causing the price of things consumers care about (i.e. not stocks) to go up.
The only solution is to fix the fiscal policy and stop printing money and running up deficits. Asset prices can return to normal levels and the super-rich’s net worth falls with them because it’s all stocks.
There’s nothing wild about this position, it’s just monetarism. If you expand the money supply without expanding the productive output of the economy, all you’ve done is make money worth less than it was before. The number of goods and services hasn’t changed, the cost to produce/import them hasn’t changed, demand hasn’t changed. You simply have slightly more money that represents a smaller fraction of the total money supply.
It helps to think of our current super-rich as an outcome of the asset bubble that currently exists in our economy, due to the fed’s post-2008 money printing; because it’s stock that accounts for most of their net worth.
So what happens if we tax away the majority of that wealth? It’s a huge amount - enough to have a marked effect on the economic system. Well, we get a lot more money spread around the system, but we didn’t get any more products, services, or value being created. What do we get? Inflation. We have the same amount of everything - it just costs more.
So the super rich end up being a place to park inflated dollars to keep them out of the real economy. They’re actually a useful deflationary mechanism.
I’d prefer if we would get out of this asset bubble and return to a “normal” economy but this is the situation we are in.