The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets.
Forbes
The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets.
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You can never defeat their revolutionary nihilism. Nihilists! F**k me,-I mean , say what you want about then tenets of national socialism, Dude, but at least it is an ethos.
Must be exhausting to be a TEA party member:). Sumner argues that comparing US to Europe post 2011 is the counterfactual to show the efficacy of QE. Sumner suggests the US and Europe have had similar amounts of austerity so QE is what separates the two economies. Since 2011, the US - Europe unemployment gap has widened by 5%. Brent made a similar argument and stated something on the order of Greece might be considered as a counterfactual for how the U.S. poor would be doing in a comment to my post last month.
In that post, I followed Izzy's argument that QE was reinforcing the position of the elites and that low interest rates essentially were a tax to the wealthy savers and therefore "just". It would be fair to say that Sumner's post is an effective rebuttal against an assertion I made in my post "QE is policy that benefits the elite at the expense of the poor". I think these comments were wrong. I think Sumner's (Brent's) counterfactual has merit. Clearly QE has had a positive impact on the US economy, (one that I had previously underestimated and had acknowledged publicly on these pages). The labour market appears to be strengthening and the US economy may be poised for higher more consistent growth. This may mean that many of the issues I have been worrying about have been overdone and are set to ameliorate. And yet, we are 5 years out from the start of the great recession and inequality in the US has been rising for the last 30 years. I would be all in favour of an "equability of opportunity not results economy", but we don't have that. Since the Reagan era we have increasingly seen the US move towards crony capitalism - the laws have been rewritten to support a disproportionate amount of income and wealth going to the few ( and by few I mean the 1 in 10,000). This "market" system is not natural or supported by economic theory. The Fed's actions do not address these issues, and because they reinforce the existing elite structures and allow policy makers to not deal with the underlying issues in the economy may actually make the poor worse in the long run. This argument is similar to the one made by some legislators in the Tea Party who suggest that defaulting on the US debt is a good thing (which is why when I made it I acknowledged unconditionally it was an overreach). I hope the benefits of QE outweigh the costs, I hope QE exit is easy for the Fed. I hope Europe China and Japan are able to navigate their challenges. I fear being right - not being wrong. I hope my fear and skepticism are unfounded. From a personal perspective, I have little to gain or lose from all but the most extreme negative outcomes of the distribution. But I once again echo the words of Mark Thoma with respect to redistribution. Fail your Way to Success via WSJ
He expects wages to increase and wealth inequality to narrow starting next year. One of my favorite bears has turned positive- very interesting. Has the Fed won? He thinks labour market will tighten because LFP has dropped so much, capital spending has been weak and that unemployment benefits in the US have increased frictional unemployment. I am from Missouri. (He predicts a mild stagflation - something I have suggested would be the eventuality of the Fed policies). Fed is monetizing Federal Goverment debt. His strategy - Hedged Inflation Risk Protection. (Going long hard assets, shorting government bonds and going long corporates). OTOH, Hussman believes that economic activity remains at a level that is close to a recession.. And pay is not determined by a competitive process.
One of my favorite economists; I have a quote of his on my home page. Most well known for his work on market bubbles and the Case-Shiller housing index. Here is a write up on his contribution via Marginal Revolution. BTW, he wrote a book in 2007 (edit 2003), that advocated that taxation be changed so that inequality in the US would be capped. Fama and Hansen share the award with Shiller. My second published paper uses GMM estimation, Hansen's chief contribution to economics. In contrast to Shiller, Fama pioneered work on efficient markets theory. The committee has a sense of humor awarding Shiller and Fama the same Nobel.
Via Izzy at FT. You know my opinion.
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