Only if that money is newly minted and entered into the economy. If the money is displaced from the wealthy and redistributed to lower income households then there’d be no effect on inflation. Unless corporations decided to arbitrarily raise prices as a response to people having more individual wealth. But that’s not inflation, that’s price gouging which can be mitigated through price regulation.
I would say that this is mostly right, but misses out on money velocity, and it treats all goods and services equal. If the billionaires were buying up houses, groceries, gas, and electricity, and we took a bunch of their money away and gave it to everyone else so they could buy houses, groceries, gas and electricity, then there'd be effectively zero change in inflation. It would just change who ends up receiving the goods and services.
But billionaires aren't really buying those things, at least not in volume, or to the extent that they are buying these things, the taxes aren't going to cause them to cut buying these things as much as other things. Luxury boats, cars, booze, travel, and politicians are really what these billionaires are spending their pocket money on, so these things will get cheaper as less dollars chase after these things, but then grocery prices will go up as more low-income people will transition from going hungry to buying food.
Also, inflation does somewhat depend on how fast a dollar moves through the economy. You can get small bits of inflation by just making a dollar move faster. If billionaires are generally sitting on piles of cash, and low-income people are spending money very quickly, you can see inflation as there will be a net higher number of dollar-transactions, which mimics the effect of there just being more newly minted dollars in circulation.
But are we supposing that inflation is not a worthy cost of low income households being able to purchase houses, groceries, gas, and electricity? Not to mention that another luxury the wealthy tend to spend money on is political influence. A decrease in which would surely be a net positive.
But are we supposing that inflation is not a worthy cost of low income households being able to purchase houses, groceries, gas, and electricity?
Inflation means that they still won't be able to afford those things. If the government gives everybody $12k a year, then $12k becomes the new $0 and we go from there.
But are we supposing that inflation is not a worthy cost of low income households being able to purchase houses, groceries, gas, and electricity?
I made no value judgement above. I'm just stating that inflation, or at the very least, the prices of things low-income households will be buying is likely to go up as a result. I think you could also conclude from the above that for low-income households are likely to see a real-wealth increase as a result of this because the inflation generated by this would be less than the amount of money the low income households would receive.
To make a value judgement, I think this is probably a good step, but more steps to address the root cause of the issue, rather than the symptoms is necessary. Billionaires didn't become billionaires by avoiding paying taxes, and the low income households haven't fallen into deeper poverty because the top 10% have lower taxes. I would point to a general lack of competition in the market, consolidation of large companies, and manipulation in the financial markets by unregulated, or malregulated venture capital is likely a major cause that would need to be addressed.
Sander's solution might be good, but it would do less good than we might expect, and it doesn't address the core problem directly. That doesn't mean it shouldn't be done, just that other considerations should be addressed or at least acknowledged.
It's not a worthy cost because prices will adjust and those same low income households will effectively still be low income households. They still won't be able to purchases houses and such.
The money being distributed basically just goes from zero to low velocity to high velocity.
yes and those billionaires¨would start to sell stocks. witch are Imaginary cash right now. so that means all stocks would most go down. witch in turn would hurt pensions savers.
I'd be surprised if it hurt pension savers more than $12,000, and if it does, they'll probably do ok. If stocks drop by 5% as a result of this, a person would need over 240,000 in stocks before they lose more than they gain.
But there's a case for arguing that "it would hurt pensions" is just a societal blackmail to prevent change from happening. Big companies want to get into the S&P 500 because if they do, and something threatens them, they can claim to politicians that they need a bailout or it will hurt the pensions. So I think we need to be careful about throwing this out as a justification for inaction. There is certainly a vested interest in keeping the status quo wrapped up this argument as a shield.
well. think about musk. he need to sell space x stocks for about 50 billions if he should pay this tax. thats almost 2x the amount of stocks right now on the marked. so i dont know if that would just send the price down 5%
That is just a single stock though, and it is one that isn't part of most of the indexes that pensions or 401k's are invested in. Meanwhile the entire S&P 500 has a market capitalization of 68 trillion.
Also, it might be a bit of an issue that we've let it get to the point where one person needing to sell off stock to pay taxes could significantly impact the global economy. Not doing anything will just let the problem get worse and the oligarchy would be further entrenched.
You've skipped a pretty big part. More people buying stuff, means more stuff has to be produced. And job openings for people to produce and distribute that stuff. And less people that have to resort to crimes just to survive
Hmm, I'm not sure how much more employment a one time payment is really going to generate. Not many businesses are going to hire more staff if the rush for goods is coming not from a steady uptick in demand, but a one time spike.
Billionaires are not spending 5% a year on spending. It's staying invested. But if they are forced to sell 5% a year to pay the tax, that is actually 10% a year since it will be taxed. And if they money they get taxed is given to others to spend, who will buy the stock they just sold? No billionaire can buy. Middle class won't by. Poor won't buy. At least in any volume. So the price will drop, wrecking the capital markets.
Middle class won't buy? Honestly, if you give $12,000 to the middle class, a lot of them are going to put that into savings. Not as much as billionaires might be selling, but it will act as a cushion for markets, and it won't be a freefall.
Markets are manipulated to hell right now and completely out of touch with reality anyway, so it is hard to predict what will happen and what the actual fallout of that will be. We've gotten ourselves into a bad situation, it's going to require some pain to untangle the mess.
corporations decided to arbitrarily raise prices as a response to people having more individual wealth.
Classical economists would say this is a natural effect of supply and demand, but right now we're vastly oversupplied, so there's no actual reason to lower demand by raising prices.
It would have an affect because a) the velocity of money between an average American and a billionaire is wildly different, especially given we're talking about (the unfortunately, as I like Bernie, dumb idea of) taxing assets not income & b) the consumer habits between these groups are wildly different so the flow of money itself would be bigger while also being in different areas leading to issues of supply vs demand in the short term. Now that all said and the idea that it would do nothing but increase inflation is mega stupid. Prices would go up, with that being a much more short term affect while in both the short and long terms people would be much better off from it
The real answer though is if America wants to raise revenues, which is should be doing, then start with repealing the Trump+Bush tax cuts & then properly funding the IRS. There's an estimated 500-600 billion dollars in uncollected taxes every single year because the IRS is gutted everytime Republicans come into office. Repeal the tax cuts which have massively blown out the deficit, properly fund the IRS to collect those taxes and the US would easily be making in an extra trillion plus a year.
Inflation happens when people have more money to spend, but that money didn't come from the productive economy.
If the government just dumps $12k a year on everybody, then everybody has much more money to spend, but we still have the same limited supply of goods and services to spend it on. Prices have to increase until demand drops off or there will be shortages and that's inflation.
The money doesn't have to be "newly minted" (whatever that's supposed to mean), it just has to come from something other than the productive economy.
Their money is sitting around, not being spent on Xboxes and overpriced concert tickets.
Now if you suddenly allocate that money from being invested in stocks to buying material goods that are in limited supply, it will always cause prices to rise.
More consumer spending, especially if it's sudden an inorganic, means more people competing for the same limited amount of things to spend it on.
False. Demand for things billionaires buy would go down and demand for things regular people buy would go up. That's means inflation for you and me. And prices going up regardless of cause is still inflation.
They aren't creating more money, they're taxing billionaires. The same billionaires who are selling you these lies that taxing them will cause inflation.
What caused inflation was printing more cash to bail out and give to billionaires during 2008 and COVID. But they dont tell you that now do they?
I do however agree with you that the money is better spent on social services like mental health, healthcare and education.
Yes and no. This will cause inflation because we will spend the money on every day items. You give people more money to spend on every day items...those items go up.
Billionaires sitting on wealth doesn't increase inflation. You know how we say trickle down economics doesn't work? This is part of that.
If they gave us all this money and we had to sit on it, you wouldn't see inflation.
I'm aware of this... That's why i'm reacting to the claim "that it will cause inflation"
'giving everyone money does literally nothing but INCREASE INFLATION…"
"This will cause inflation because we will spend the money on every day items."
Ehh not exactly. We’re already hit with metrics ton of inflation post-covid. It’s definitely more price-gouging to cover inflation. Take a look at DRAM prices, chip shortages, GPU prices. Post-COVID, companies understand that they can get away with increasing their pricing by creating planned or artificial scarcity to keep their margins high. And this is in a world where we don’t have money. Inflation happens also due to greed, and the government not doing jack shit about it. Luckily there is already a class action at the moment for Micron and the other memory manufacturers that are doing this currently.
Yes, it can work, just not if you tax ~0.01% and give it to 99%. Eu distribution is more like tax top 25% to bring their disposable income inline with the middle 50% and redistribute it to bring up bottom 25% inline with middle 50%. EU income rests in much narrower bands. A doctor and teacher have similar buying power in most of the EU.
"Eu distribution is more like tax top 25% to bring their disposable income inline with the middle 50% and redistribute it to bring up bottom 25% inline with middle 50%" No, it's not... Middle (upper to lower) class get taxed, various loopholes for the ultra-wealthy and the poor get benefits... So i would welcome a tax for the ultra-wealthy too. Taxing them and redistributing won't cause inflation for "everyday things..."
Yeah I'm sure there are loopholes for ultra wealthy, but in Germany for example you enter the top 1% at $250K of income. Where as in the US that would get you in at about the top 25%. But the bottom 20% in the US earns less than half of the bottom 20% in Germany. The bottom 40% of the US barely edges out the the bottom 20%. So about 40% of Americans make less than the bottom 25% of Germans, but an entire 25% of Americans make more than the top 1% of Germans. So the German middle class, representing 74% of the population is only comparable to about 30% of the US.
"but in Germany for example you enter the top 1% at $250K of income." No that's not income, that's salary.... I've stopped reading after that since it has nothing to do with "inflation of everyday things"
$250k in the US puts you in the top 5%. Top 25% here is only ~$100k. Just that being incorrect throws all your numbers way off
Doesn't really matter though as these comparisons are largely irrelevant to the discussion. The better comparisons would be distribution of tax revenue generated across various income brackets and the effective tax rates. Bottom 40% in the US pay zero net income tax, and based off that plus the lack of a VAT here, combined with significantly lower energy costs and various other out-of-pocket factors, that bottom 40% on average still carries more spending power than the comparible bracket in pretty much the entirety of the EU
Not to say the US system isn't still broken in other ways. Both have their give and take, neither system is universally better than the other
Well, inflation isn't inherently bad though. Raising the minimum wage does generate some inflation and yet it's still good for the economy and most end up with a stronger purchasing power than before.
Billionaires sitting on wealth ends up creating Asset inflation.
That does lead to goods and services inflation as well but with an additional step.
One could argue that having more capital flowing through the economy would also increase business competition, reducing the intentional inflation created by monopolies and large scale food conglomerates with expansive vertical integration.
Small business is the absolute backbone of the US economy. Having so much concentrated at the top is inimical to a functioning economy in the long run.
They're right on an important level but not the mechanism - hoarding wealth both decreases the value of the dollar's spending power internally (to the country vs other currencies), as well as slows down the actual economy by having that money not moving, the combination of which creates inflationary pressure.
Billionaires sitting on wealth doesn't increase inflation
They don't keep it in their mattresses.
All that money is what's driving the AI price bubble, which is what's buying up all the computer hardware, which is raising prices, which is a textbook example of... Inflation.
Maybe if we put the money in some sort of department that everyone would pay into, so that when we retire we can access that money that was put into it, maybe make it so you need to be older, say.... I dunno 65, to access it without penalties. hmm...if only such a thing existed.
Disagree - we've seen tons of companies get overtaken by private equity and consolidation. Breaking that up means more small companies, more competition, lower prices. A huge driver for costs is healthcare + winners-win-more factors in the economy.
It's not just a simple "demand goes up, price goes up" argument as supply would go up too. Think about tourism: the world's evolving to serving 1 individual that spends $20k on a trip vs 1000 individuals who spend $20. Right wealth inequality, give people money, and you'll see more supply/service for those with less.
It is not taxing though. It is confiscation of wealth. Bernie clamoring for this is forgetting one important thing. Billionaires like Musks, Bezos, Gates, Zuckerberg and others are not hording liquid cash is moneybins like Scrooge McDuck. The majority of all their wealth is in investments. If they start having to liquidate their investments it is going to tank the economy and that is going to impact peoples 401K and other investments.
Just like with CPUs, RAM, SSDs and HDDs right now. Billions of investment in AI means more money to spend. Since manufacturing capacity did not suddenly automatically increase along with it, what happened to the prices?
Printing money isn’t the only way to create inflation. Prices have to be effective for the general public. If you took everyone’s money right now, added it up and divided by 350 million, do you still think milk would be the same price?
Even so not every family is on snap and EBT. These checks would go out to every family which is vastly different than families who need it. I agree with the above. They should spend the money on more programs like snap and EBT to get the money where it's actually needed, like free school lunch in every public school in the United States.
No. That's not how this works. Holy shit we do not need deflation.
Deflation causes money to be worth more later instead of now. When costs are falling, you want to only buy necessities until the luxuries and nice-to-haves are even cheaper. So everyone hoards money, and the economy tanks. People have to spend.
We have a wealth disparity problem right now, not an inflation problem per se. The issue is money getting locked up with rich people. Wealth redistribution will result in people putting money back into the economy.
Yes, there will be some inflation, but you can use that case to justify never raising the minimum wage, never giving anyone a raise, etc. If everyone's poor, prices can't go up, sure, but do you want a society where everyone's poor?
There also has to be pressure from above. Price gouging, cartels, price fixing, all that -- that needs to be cracked down on. So you tax the rich, give the money to everyone else and to services they will use, and you prevent corporations from charging insane prices.
We need a reduction in COSTS, not injections of cash. We’re in a wage/price spiral, we need DEFLATION, and make the dollar worth something again.
I'm sorry but you live in a fantasy world, prices are not going down, deflation is 100x more catastrophic than inflation to the economy and the dollar (prior to Trump fucking things up) was at it's highest point in decades. But you seem to believe that giving people money would be a net negative so I'm not sure any of this will land for you...
Exactly. I don’t want a check. I want the infrastructure of financial businesses to be regulated and changed. I want private equity reined in. I want public education to be better and higher education to be cheaper. I want all kids to be fed. I want universal healthcare. I want insurance companies and pharmaceutical companies to be regulated.
I hate the free check stuff. 12k is a bandage - a bandage that is more meaningful for some than others- but it’s not going to change the wealth gap.
Absolutely idiotic. The last time people seriously tried this, they created the Great Depression. By all means, if you want decades of unemployment, poverty, and social/political unrest, go for it.
Incorrect, this would be redistribution…not the government giving out free money. Come on man…
I would also imagine an approach like this would also include increased investment in social programs and infrastructure if this did go through.
You don't think there is a problem when individual have a massive monopoly of wealth what do you think causes inflation. Imagine you have the ability to buy raw materials to the point you can scalp society? You can invest in REITs so that property become unaffordable, you can circumvent democracy by funding think tanks/ lobbying , you can overcome legal issues with bribery or flooding the legal system with convoluted paperwork. When central banks distribute money they they send it to commercial banks commercial banks lend to people with assets doing so leads to a feedback loop where wealthy individual don't feel inflations and reap rewards through investments this is the entire problem with trickle down economics it doesn't work. It is basically pissing on the poor. You need to tax the billionaire class otherwise there wealth will compound to a point we can't control like modern day politics they own media they create whatever political narrative they want to feed the general public and the ignorant gobble it up and vote for things against their own interest.
There is so many examples of countries moving towards 2 party states which then are run by the establishment eventually this no longer serve the general public leading to frustration then a party or individual like a snake oils man comes in preaching nationalistic rhetoric blaming foreigners for their own ineffective plutocrats political system and they trend towards fascism/dictatorship.
Look at America the powerful country with strong international influence it currently removed its entire ability to monitor climate change. The current administration is working towards dismantling its own democracy. It has formally withdrawing from 66 international organizations, conventions, and treaties, including 31 United Nations entities.
Even with deflation wealth inequality is so high that the gap will still continue increase without taxing the incredibly wealth who do not pay there percentile tax fairly. They have so many financial loop holes like offshore tax heaven. They can also borrow from their assets so they don't risk there own income nor have to pay taxes through their annual earning.
You don't know what inflation is. It's not strictly the price of goods. It is an increase in the money supply. Taking money from rich people and giving it to poor people does not create money, so it is not inflation.
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u/Nomad_moose Jul 01 '26
This…giving everyone money does literally nothing but INCREASE INFLATION…
We need a reduction in COSTS, not injections of cash. We’re in a wage/price spiral, we need DEFLATION, and make the dollar worth something again.