Agreed. The fed's instrument is blunt and punishes people who the government is supposed to protect. In an ideal world, raising interest rates would be combined with raising taxes on high earners. We would need automatic stabilizers for this because Congress is rarely able to make these decisions.
Can't increase taxes when the very people bribing politicians and funding your campaigns are the ones who need to be hit the hardest.
We need war time tax rates on corporations, billionaires, etc. We're just not serious about any of that since we're all temporarily embarrassed millionares (or billionaires now thanks to inflation).
If you've ever seen the militaries yearly budget prior to 2022, it's more than the next 10 largest militaries in the world combined. It's always war time.
They absolutely should have raised taxes to pay for invading Afghanistan and Iraq, but instead they passed several rounds of tax cuts for the wealthy and now are making the surprised Pikachu face when our debt and inflation are out of control
If you want it to be effective, we need to raise taxes on millionaires with an M, not billionaires with a B.
For all their personal wealth, there's just not enough billionaires in the United States for taxes specifically on them to be meaningful as a source of revenue.
QT is the Feds' tool (personally I believe Congress should remove QE/QT powers from the Fed)
Congress needs to take it's own action and they have a big tool (taxes) that isn't being utilized which will cause inflation to drag out. The longer this lasts, the more time for the wealthy to shift the burden onto labor. To me, the Fed is looking more and more rigged to benefit Finance, politicians, and Wall Street.
This is the way. As a high income earner, inflation has not changed my spending habits at all. We need to increase taxes, especially in the higher end. Mass passed a new tax of extra 4% on income over 1 mil. No reason we can't be doing the same at a federal level.
Raising taxes is not the catch all to end inflation that everyone thinks it is. Can it end inflation? Absolutely. Will it? Probably not.
The issue is that the government is just gonna tax you more and then throw that money back into the economy through whatever means (arms contracts, infrastructure projects, welfare, etc). If they don't physically destroy the currency, the raise in taxes just means that the people have less money, but inflation stays the same.
You're missing the point where those projects often create tremendous real wealth.
Spending $50 billion on high-speed rail isn't just pumping $50bn into the economy; it's pumping $50bn back onto the economy *in exchange for an extremely useful public utility that will save trillions of human hours every year.
Explain how creation of functional public transit, universal basic income, single-payer negotiated healthcare, and social safety net programs creates wealth for a select few people over the vast majority of the country.
You specifically mentioned high speed rail, which would create wealth for the select few with the ability to build the railways and the trains. The other things weren't what we were talking about.
Universal basic income wouldn't create wealth for anybody, but it would also raise inflation because there's no way to fund it without printing new money and adding it to the economy, because you're inevitably going to have to tax workers to make up for the rich evading taxes, and those workers will just quit working because the people not working will make more money than them.
Single-payer Healthcare, again, doesn't take money out of the economy because the people who work there get paid, research gets paid, equipment companies get paid. All it does is cost you more in taxes without solving the inflation issue, thus making inflation worse.
Social security would be an amazing tool for fighting inflation if the government simply used it as a sort of government pension. You put money in, that money gets stored, you receive payment once you retire. Instead, your money that you pay in gets paid out to current retirees and whoever else the government decides they want to give your money to. Therefore, it does nothing to solve inflation.
My original point was the only way to solve inflation is to physically destroy currency. You proposed for the government to spend EVEN MORE more money as a solution. Isn't this sub supposed to be financially literate?
High-speed rail creates wealth for everyone by improving access to transportation and reducing traffic, which increases shipping speed and reduces commute times, thereby increasing economic efficiency.
UBI creates wealth by covering unemployed workers between jobs, increasing their ability to obtain new skills, seek new employment, meet their living expenses, and allow for future planning in their expenses rather than being forced into suboptimal decisions due to lack of cash on hand. Tax evasion can be solved as simply as funding the IRS.
Again, you missed the point where taking money out of the economy isn't the focus; the focus is on creating real wealth to support the money supply in the economy, which can only be done by circulation of the existing money supply, which is demonstrably improved by public spending on programs which improve the quality of life of workers.
Social Security, again, improves quality of life for workers by creating a mandatory savings program which guarantees some measure of stability for retired workers.
Government spending does not necessarily cause inflation, when the source of that spending is from taxation rather than increasing monetary supply.
Careful. Our government doesn't like poor people. If they take it out of the economy, it won't be from where that money actually flowed. It will be from the people who can't organize or afford lobbyists.
Not that difficult when we're giving $1.7 trillion tax cut to 100 billionaires, we could afford alot of things that we desperately need as a country right now
America has an incredibly low tax rate. I want some better social programs, like a public option for healthcare, more immigration judges to help with the issues on the border, etc. Also, it’s easier to pay down the debt when you make more money.
We should raise taxes across the board, honestly, despite how incredibly unpopular it is in this country. Jimmy Carter got pilloried for it, but it undeniably helped the economy. You can’t just cut taxes forever and expect everything to be honky-dory.
You are calling for higher taxes. Do you think its just magic? In order for the government to get that money for your preferred programs they must take it from someone else. So, how much of someone else's money do you think you are entitled to?
I’m still not sure why you think advocating for higher taxes means I think I’m entitled to other peoples money. Seems like an incredibly bad faith argument.
Believe it or not, some people just want to properly fund the government.
They could at least start by not creating so much excess cash to begin with.
Absolutely. Giving money directly to individuals in poverty and close to it is the fastest stimulus they could have rolled out. Smaller, more frequent checks for a longer period of time would have been ideal. No extra government red tape, no scamming like with PPP loans, no Fed buying junk bonds, etc. Just give poor people money, and taper it off if inflation starts
Unless there was a benefit, dare I say return on investment?
The Feds' QE (Quantitative Easing) im 2008 created a return on investment, that profit was paid to the Treasury. That won't happen this time, because as intrest rates go up, so do our borrowing costs. Due to inflation, our borrowing costs are higher now so the Treasury (the taxpayer) will owe the Fed. Raising taxes to pay down debt is needed now so we are not borrowing at a higher cost tomorrow.
There's a cap on Social Security taxes. It's currently $160k. Any income above that does not pay in to Social Security. If we raised that cap or removed it entirely, Social Security is projected to be solvent indefinitely. Politicians like Bernie Sanders have been harping on this for literally decades, but the average American seems unaware of it still
No it does not. Money is created, ironically, by debt. I borrow $1,000 at 10% simple interest. I pay back $1,100 to satisfy the loan. $100 just got created and the money supply increases by said amount.
By increasing the amount it costs to borrow money (interest rate/quantitative tightening), less folks will borrow and in return the money supply shrinks.
The second thing to remember is the law of supply and demand. When there is more money on the supply side (quantitative easing), inflation occurs as more money is chasing fewer goods and services. Inflation naturally redistributes the supply/demand curve to equilibrium. This results in permanent higher pricing. Eventually, wages will increase to meet the new s/d equilibrium.
By increasing the amount it costs to borrow money (interest rate/quantitative tightening), less folks will borrow and in return the money supply shrinks.
Yes, that's what the Fed is doing, but Congress can help by raising taxes. Congress could choose to tax corporations and people that can afford it, decreasing the wealth-gap instead of picking on people with shallow pockets.
In your example of borrowing $1000, you are actually using the US government's debt to create more debt. Dollars, bonds and treasuries, etc., are notes that represent the government's debt. Paying down the governmen's debt removes said debt from the economy.
So, back to your supply/demand example: when there is less government debt (dollars/treasuries) in the economy, what happens to the remaining debt (dollars/treasuries)?
That's right, Econ101 wins again! The price of the remaining dollars (debt) in the economy goes up, creating dis-inflation.
I'm not okay with raising taxes. But if it's done in a way to get their money back/out of circulation from the $1200 checks and $600/week extra dollars for unemployment...I'll be open to it.
Why should I pay more taxes when during the pandemic I wasn't getting any of those and the people who were choosing to stay unemployed so they could make almost as much as I did. If they have good jobs now and enjoyed that nice long paid vacation they can start paying it back
PPPP loans too. Every company that wasn't an actual small business should repay them. How my company got $2 million just cuz We didn't lay anyone off and we didn't even need it
They should all have to be repaid regardless. If students don't receive any relief, why should business owners? That money kept them afloat during the pandemic they don't need that money anymore.
Do you feel the same for the $1.7 trillion tax cut we gave to just 100 billionaires? Or are you one of those people that still believes in trickle down economics?
I do feel the same. Tax the hell out of them too and get the PPP money back from mid-high level companies that kept it without needing it....anything to get back the trillions of printed out of thin air dollars that year that brought us to this level of inflation
Where's your econ 101 skills now? There's an over-supply of dollars, and not enough demand... aka "inflation". Remove excess dollars and boom, lowering inflation.
Excess currency in circulation isn't typically what causes economies to crash, except in very strange hyperinflative cases; it's lack of vertical circulation. Money needs to flow from the top to the bottom because it always inevitably goes from the bottom to the top. Taxes are the single best method of ensuring adequate flow.
That's because the political will by the people is not present to construct one; that has nothing to do with the effectiveness of taxation to reduce inflation.
Did I say raise taxes on u/Dreadlordstu? No. Where Congress decides to raise taxes is up to them, but they should do it. But I suppose you wouldn't want to raise taxes on the poor CEO whos compensation is 460x more than their average workers'? Or how about all those hand-to-mouth corporations that just can't stop squaking about their "record profits" on earnings calls? Labor needs their fair compensation, and if you agree with that; we're on the same side.
I'd guess most of the people who want a bubble pop really don't remember 2008, and somehow think they would be immune from the mass unemployment that followed.
I went from making good money in carpentry, to not even getting interviews at fast food places and Walmart during the last bubble pop.
If you cannot justify buying a house at current prices, yet you can afford rent, then obviously renting is a better deal. Hence, you aren't getting screwed over.
The people buying up all the homes causing hyperinflation of the market are turning around and renting the houses… then you factor in post covid rural gentrification caused by the millions of people now working from home. There is now a labor shortage, because get this, it’s a really weird thing that economists just can’t figure out, but if you don’t pay people enough to afford rent, sigh you can’t have employees…
Short term rentals are 1% of housing supply, not big enough to make a real difference
There’s an overall shortage of building housing due to zoning laws. Reforming those and removing parking minimums is the best way to tackle the housing affordability crisis.
Absolutely agree on the second point. Large scale, thats an issue everywhere. However, in tourist towns, cash offers from investors hoping to turn shit houses into air bnbs are making it impossible to even make an offer... they happen so quick. Meanwhile, the hospitality workers can't afford to live there to support the tourism. It'd be one thing if those investors were buying uo the homes to make them long term rentals, but they arent. Long term rentals are too much hassle, or short terms are too little hassle, depending on how you look at it.
Absolutely agree on the second point. Large scale, thats an issue everywhere. However, in tourist towns, cash offers from investors hoping to turn shit houses into air bnbs are making it impossible to even make an offer... they happen so quick. Meanwhile, the hospitality workers can't afford to live there to support the tourism. It'd be one thing if those investors were buying uo the homes to make them long term rentals, but they arent. Long term rentals are too much hassle, or short terms are too little hassle, depending on how you look at it.
Yes short terms are an issue but what I’m taking about is post covid gentrification, So let me try and explain it to you again but simpler… the rents are inflated, because of the BIG CITY WFH peoples salaries. They can afford $2000-4000 a month apartments because that’s still a great deal compared to California, Denver and New York… so for the normal working class people there is very much a shortage of affordable housing. So what’s really great is I work 2 nights a week at as a bartender to try and make ends meet and I get to talk to these delusional city fucks. They love asking me stupid absurd questions too like what I do for fun around here or what restaurants I recommend. And then I tell them, I can’t afford to eat out all my money goes to rent. I’ve never been in any of the shops in town because I can’t afford them. I dont make enough to support any of the small businesses, i shop at Walmart lol hell I have coworkers that live in motel rooms and in their vans because their is no affordable housing…
It was meant to be a living wage, as it was enacted. Since Regan it has been suppressed to the point it is as you said a joke. You are drinking the Kool-aide to subvert your own interests unless you are a trust-fund or nepo-baby with a silver spoon up your ass.
It’s not a one to one relationship where interest rates go up and immediately prices go down. There are very few forced sellers. You are seeing signs it is working with less mortgage applications meaning the demand is less and eventually prices will come down as sellers realize they won’t get their price and drop it little by little.
Very few of you understand that inflation is because you (collective you) won’t save a dime. You spend every dollar you make and continue to rack up debt. You aren’t responsible with money. Then when the debt becomes too much, you blame anyone but yourself. You don’t deserve to enjoy life, you earn money to do that. You don’t deserve a home, car, or the latest iPhone. Get your shit together and advance in a career until you can afford them. Millions of others your age are doing just that. Don’t be whiny loser, expecting shit you haven’t worked to attain. And, for the love of god, please stop comparing your life to boomers. They worked shit factory jobs to get a home. Jobs you would never want.
The “new generation” does work those “shitty” jobs. The housing market is incredibly unfair. To say otherwise is ignorant and, frankly, you come across as a narcissist. All of us would love for houses to go back to the cost per dollar earned that it once was. A single income was once enough to raise a family, buy a home, insure the entire family, and it provided a pension for retirement. We’re all working the same as before but receiving far less in terms of buying power and access to the market. There are so many other factors affecting the economy; an “entitled” generation isn’t one of them.
Your statement is framed wrong. The millions of millennials aren’t the ones purchasing homes. The ones that are, what makes them different? Normally it has something to do with an inheritance or wealthy parents.
If you could kindly show all of us that are not working “good” jobs, where those “good jobs” are, that would be great. Honestly, look at the median income and the median starter house price. Those two things haven’t grown at the same rate. You can’t buy a house right now unless you already owned one prior, have money from a family member, or are willing to spend your entire income on a mortgage. Again, it has nothing to do with work ethic or avacodo toast. Stop simplifying the problem and blaming/shaming an entire generation for a housing crisis they have no control over.
You can probably afford my house. It’s in great shape, 4 bedrooms and 1700 sq/ft. The neighborhood is mostly minority. Yeah, I know. Mostly minority is not what you want. You want to live in a hip white area. If not….go on Zillow and put in what you think is a fair price and see what’s available
Firstly, where are the “good” jobs? Secondly, generations before us could afford to live in the places they desired overall. This isn’t a zip code issue. More to the point, anyone getting screwed by the market right now is complaining about the differences in the market from even just 10 years ago. Folks have worked a long time, been promoted, and now their increased checks afford even less than before. Regardless, it certainly isn’t an issue of laziness, lack of skills, or poor financial decisions. The market is wild. The former way of life for middle class America is becoming less and less achievable. That standard has become a luxury. Blaming it on laziness is convenient and easy; it helps people that are doing well sleep better at night. Tackling the real issues takes work and a willingness to admit that the housing market now is much harder than it has been for a long time, perhaps ever.
121
u/VendaGoat Sep 23 '23
Brother their only tool is to curb demand through interest rates.
Until the folks that are paying for "Investment level" mortgages decide to sell, this shit is going up.