Jump to content
Sign in to follow this  
drbubb

What we need now?: Wealth Tax and Debt Forgiveness

Recommended Posts

What we need now?: Wealth Tax and Debt Forgiveness

 

This is a radical thought for me.

 

But I think the world has become dangerously imbalanced, and these two tools could correct the imbalance most quickly

 

 

Any agreement out there?

Share this post


Link to post
Share on other sites

To quote the (current) thread title: "Wealth Tax and Debt Forgiveness" - isn't the former part what is happening in Cyprus, and allegedly the template for the rest of Europe and perhaps the world? Take a chunk from the "rich" to pay for the country's debts?

 

But I guess the individuals indebted remain individually indebted.

 

As for the general idea debt forgiveness, that's like abolishing slavery. The indebted are chattel, in a way. It's just 'flexible' how they choose to pay back and keep the whole shebang operating.

 

My hunch is debt forgiveness has to come before the wealthy get wholloped for tax. But isn't this just a way of describing a nominal (manufactured) deflation across the board?

 

And how could we classify what's worthy of forgiveness? Mortgages, credit cards, student loans? Timing, intention, outcome - all must surely play a part in the rationale for the debts undertaken?

 

What about the well intended £300K flat buyer in central Manchester in 2007, only to naively lose 50% due to (inter-)national circumstances a year later.

 

Or the stretched family using the credit card to pay higher rent and food bills.

 

Or the students, who take on phenomenal debt at young ages for life decisions that may or may not be right for them, whether or not they complete their educations?

 

Would you trust the government or, say, the IMF to make these decisions?

 

It's a lot easier and less political to do QE and watch the numbers inflate across the board, in the hope they balance out overall. :unsure: Until it all goes wronger and wronger!

 

Or when asking this Q did you have a structure in mind to tax the "wealthy" and forgive the "debtors"?

Share this post


Link to post
Share on other sites

Thanks for the comments, T.

.

My real objective would be to try to get the distribution of wealth, back to where it was several decades ago, when we had a more balanced economy. I will say more about this later. But I think the economy is stagnating now because the wealth is in too few hands, and the 1% have little need to spend, meantime the "economic engines" that drain wealth from the middle class are being reinforced and supported by the US Congress that has been bought by corporate interests, like Oil co's, Big Pharma, and the Defense industries - now in the hands of corporate chieftains with a criminal mentality.

.

My hunch is debt forgiveness has to come before the wealthy get wholloped for tax. But isn't this just a way of describing a nominal (manufactured) deflation across the board?

 

And how could we classify what's worthy of forgiveness? Mortgages, credit cards, student loans? Timing, intention, outcome - all must surely play a part in the rationale for the debts undertaken?

 

What about the well intended £300K flat buyer in central Manchester in 2007, only to naively lose 50% due to (inter-)national circumstances a year later.

 

Or the stretched family using the credit card to pay higher rent and food bills.

 

Or the students, who take on phenomenal debt at young ages for life decisions that may or may not be right for them, whether or not they complete their educations?

 

Would you trust the government or, say, the IMF to make these decisions?

. .

Yeah - the debt forgiveness could/should come first probably.

.

If you "forgive" a debt, then a bank or an investor is taking a "hit" or "haircutt", and if you are going to endeavor to be fair on the forgiveness side, you should be fair on the haircut side too. The problem with the Cyprus program, is that it was sudden, and appeared very unfair when it was first announced. Later, the authorities "remember" that deposits were guaranteed to to a certain level, and they decided they need to respect the guarantees. If banks are overstretched, then clearly those who invested in those banks should take a big hit. And if the hit is big enough, should the lenders to the banks take a hit after shareholders are wiped out? I think lenders and even depositors should take a hit before taxpayers.

.

I must say that I think forgiving ALL the debts, or even 50% of the amount, would not the thing to do. Why should those who overborrowed get off scot-free? Perhaps only the debts (like mortgages) which have some collateral backing them should get any forgiveness, and it can be done with some of the equity in the asset surrendered to the lender in return for forgiveness. This way, some borrowers may decide not to take the partial forgiveness, since they may prefer to go on paying the debts, and owning 100% of the asset.

.

Maybe Steve Keen has the right idea on how to do a "debt jubillee" of sorts:

.

+ The government would announce it is resetting its monetary system, through big payments to everyone,

+ The money would first be given to banks, and then only handed out to customers after debts have been repaid

+ The end result would be big inflation, but at least most of the debts would be wiped, and those who have no debts at all, would have more free money to spend

.

I think the banks would need to be consulted in this - though they should like it - and ordinary citizens too. For those without jobs, and on fixed incomes, there is a real risk that the inflation caused by this program would more than wipe out the advertised benefits.

.

Share this post


Link to post
Share on other sites

The World's Richest 8% Earn Half of All Planetary Income

By: RINF Alternativ...

 

The lead research economist at the World Bank, Branko Milanovic, will be reporting soon, in the journal Global Policy, the first calculation of global income-inequality, and he has found that the top 8% of global earners are drawing 50% of all of this planet’s income.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×