I no longer believe in capitalism. At all.

[Jaguar]

How about this. It is tax policy, but it would definitely aid capitalists so you should be happy?

A policy that new businesses started in the next 2 years will not have to pay payroll taxes on their first ~20 employees until 2022?

Or a policy that all businesses which have 0 net profit from Dec 5 2009 until Dec 5 2014 do not have to pay payroll tax from 2015-2020.

JM

Why so unneccessarily specific? Why differentiate between new businesses, and a new line of an existing business? Why encourage businesses to report zero profit?

Taxes should be broad and simple.

[Jon Miller]

It's the only "hoarding" that matters in the Keynesian story. Everything else is consumption or investment.

Gold?

I guess it is a bit of consumption, but besides starting some new mines I think it would mostly just increase the amount payed for gold that already exists.

For an unlimited Ben, would you recommend a $100 billion dollar purchase per month until XX M*V is reached? I think it would need some cut off expectation.

JM

[Lorizael]

Yes, I'm greedy for the following things.

1. A wife

So you admit to being a misogynist.

[Jon Miller]

Why so unneccessarily specific? Why differentiate between new businesses, and a new line of an existing business? Why encourage businesses to report zero profit?

Taxes should be broad and simple.

Profit either goes to investment or sits or goes to the shareholders (who can have it sit or consume or invest).

I think it is likely that the animal spirits of shareholders will feel better sitting on a lot of cash then that of companies, but I could be wrong. Consumption is a person thing, and people are more likely to consume when they feel rich (have lots of cash laying around).

There is some evidence that newer businesses do better, I thought, but that issue is why I provided the second option.

These are short term effects. As such it isn't a long term tax.

JM

[Jaguar]

Gold?

I guess it is a bit of consumption, but besides starting some new mines I think it would mostly just increase the amount payed for gold that already exists.

An interesting thought, certainly, but certainly not all of my printed money would go into gold purchases. Most of it would go into purchases of other objects - objects we actually can make more of. If we lived in a world where everything was like gold - where we could never make more stuff, no matter how hard we tried - then monetary policy would be pointless. But most things aren't like gold.

For an unlimited Ben, would you recommend a $100 billion dollar purchase per month until XX M*V is reached? I think it would need some cut off expectation.

JM

Yes, that's precisely what I'd recommend. Literally, precisely what I'd recommend. The cutoff expectation is that you sell off your assets at market prices, taking money back out of the economy, if the target M*V is exceeded.

[Jon Miller]

OK, I would be up for trying that.

Unfortunately my name isn't Ben.

JM

[Sir Og]

The nice thing is that if the Fed announced such an intention they would probably not need to make any purchases. (in fact they would need to sell some eventually) People and buisinesses would simply stop hoarding once they see that Ben is serious about it. (he would not have to buy the whole Earth for this to work)

[Lorizael]

OK, I would be up for trying that.

Unfortunately my name isn't Ben.

JM

My name is Ben but they stop me whenever I try to hit the "print money" button.

[Jaguar]

OK, I would be up for trying that.

Unfortunately my name isn't Ben.

JM

Glad you're on board, in principle. This idea is pretty popular among the younger generation of Econ students - recent grads like me in the 2005-2012 classes. Older generations remain more scarred by the memory of inflation in the late 1970s, which happened before we were born.

[Ben Kenobi]

Backwards. If you fear inflation, what sort of assets would you want to hold? Anything but cash. You gladly put your money into Walmart stock or whatever. That gives you partial ownership of stuff that distributes real goods and services - safe from inflation. If you hoarded cash, you would be 100% exposed to inflation.

And if you fear deflation, you'll be 100 percent in cash. I'm a big deflationist. I like deflation and Bernake seems to be doing everything he can to fight off the inevitable. Demand is down, demand is going down and eventually the market will correct for this. It's already correcting. Dropping the interest rate to zero longterm? Bad. QE1 and 2 to 'save' the economy from it's massive correction in 2008? Bad. I was happy when prices were finally going down for things like gas and housing, and then the powers that be couldn't have that. So instead they have been trying to crush my generation even more then seeing us actually catch a break for once where the money we make is actually worth something...

[Jaguar]

Deflation is bad, Ben. Real bad. Nobody likes deflation. Not Keynes, not Krugman, not Mankiw, not Bernanke, not me. Not even Friedrich Hayek liked deflation.

[Jon Miller]

Maybe after a zombie apocalypse?

Or after a black plague sort of thing?

JM

[Jaguar]

Sector-specific deflation is fine, when we really genuinely have gotten better at making something. (For example, computers.)

Deflation across the board, even in stuff we haven't gotten better at - like live string quartet performances - is really bad.

[Wezil]

nm

[Ben Kenobi]

Deflation is bad, Ben. Real bad. Nobody likes deflation. Not Keynes, not Krugman, not Mankiw, not Bernanke, not me. Not even Friedrich Hayek liked deflation.

Oh, I agree - but the demand drops are baked in by 40 years of bad policy. Best to prepare oneself for what is coming. These demand drops are really going to screw China over as their workforce declines. America's already seen 30 year lows in workforce participation.

Deflation is the natural response when assets are priced beyond the means of those capable for purchase. Houses have always been about 3 years income, and shouldn't be more than about 130k or so in the US on average. Housing prices being twice that was completely unsustainable.

I feel badly for those who bought into the bubble.