Home / Sezioni / capitali / The Rich Have Plenty to Give, but Forget Deficits

facebook-link twitter-link

Newsletter

Registrati alla newsletter di sbilanciamoci.info

Sezioni

Ultimi link in questa sezione

05/10/2015
Why we must end upward pre-distribution to the rich
17/07/2015
How Goldman Sachs Profited From the Greek Debt Crisis
14/07/2015
Solo lo spirito del Dopoguerra potrà salvarci dalla crisi eterna
12/03/2015
The Conundrum of Corporation and Nation
22/02/2015
La Grecia, le riforme e il giallo della tabella
10/02/2015
Basic Income Pilots: A Better Option Than QE
05/02/2015
Le coup de force inadmissible et irresponsable de la BCE contre la Grèce

The Rich Have Plenty to Give, but Forget Deficits

07/12/2012

What do rich people do with money? They make the best use of it they can, and in times of high growth and strong confidence they take risks and – if they are good and lucky – reap the rewards.
But the situation is different when the outlook is bleak and when real estate (especially) will be cheaper next year than today. Under these conditions, money is safe and gains value even at zero interest. So the idle balances pile up in banks and in low-risk assets like Treasury debt.
Taxing the wealthy would put idle balances to use. But deficits are not a concern as long as unemployment is high.
Taxing the rich drains those balances and gives the Treasury a revenue flow that cuts the budget deficit. The economic effect of this is nearly nil; both the private and public sectors spend almost exactly what they would have otherwise. GDP and jobs are therefore the same. The reduced deficit cannot reduce interest rates, since they are already near zero. It is a cosmetic gesture that should appeal only to “deficit hawks” – but for some reason it doesn't. I can't imagine why not.

Read more

Tratto da www.nytimes.com