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asr comments on The Problem Of Apostasy - Less Wrong
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Yep. Credit default swap can also count when they go through tax havens.
Banning interests on saving accounts doesn't bother me (Edit: err, maybe it should). No one should harvest money merely because they already have some. Now there's inflation, but those who have little money are largely unaffected. That makes inflation a form of tax on accumulated wealth. I'm fine with that.
Now if you must protect the hard-working people who just want to save the little amount of money they have, just have the central bank open one special account per citizen that (1) will have an interest rate equal to the inflation, and (2) cannot hold more than some defined amount of money (in constant dollars). The interest rate would be paid by the state (with a mix of taxes and newly created money).
In such a world, it would be more difficult to have a rent. That's precisely the point. I believe rent seeking behaviour, while often a rational self-interest move, is generally detrimental to the rest of society. I'd rather discourage it.
I am doubtful that inflation preferentially hurts the well-off. If you're wealthy, you are in a position to put some of your wealth in foreign-denominated assets or commodities or the like. If you are not wealthy, you are really dependent on your employer or pension -- and those don't reliably adjust for inflation. Pensioners, particularly, tend to get clobbered.
Bear in mind that the net-present-value of even modest retirement savings or pensions can be many hundreds of thousands of dollars -- a denomination-limited savings account isn't a good way to store retirement savings. You just can't have "small savings account" as the main method of saving money.
Edit: It also occurs to me that banning interest on savings accounts will just move most individual savings into less-regulated forms. People will buy bonds and suchlike. You can ban banking, but the ability to "harvest money merely because they already have some" is almost the definition of investment. And I don't think you can run a major economy without some way to let people collectively invest their capital in larger projects.
I suppose you could hope to reduce the implicit government guarantee on investments by banning interest on bank accounts, but there's nothing magical about banks -- you can get inflation without fractional reserve banking if the velocity of money increases or if people start using other financial instruments as money substitutes.
Rising prices without a corresponding rise in income isn't true inflation, it's just squeezing your people to get their juice. But it does somewhat emulate inflation.
Yes, it would probably be a bad idea to ban investment. Note however than investment requires effort. Yes, having money makes it much, much, easier to invest, and accumulate even more, but "be able to make money because you have money" is slightly different from "make money because you have money". Though if you pay someone to invest your money…
It occurred to me that our fiscal an monetary systems are horribly complicated, and full of loopholes. For instance, many accounting schemes can reduce your taxes just because you cared to apply them. That's crazy, because there's an incentive to make effort for something that is basically useless for the society as a whole. I'd like to see simpler, more robust systems.
I suspect you'll find that you always have slightly different rates of increase for different prices and different incomes. There's no such thing as perfect lockstep increase across an economy. As a result, there will always be somebody who gets hurt. In practice, those people tend to be pensioners, not the middle-aged wealthy.
Yes. But that's quite hard to avoid. The world has lots of complicated corner cases that have to be handled. This goes with the territory. When we apply a tax, we generally apply it to "the market value of" an asset or a gift or what-have-you. But "market value" is an abstraction that doesn't perfectly capture the underlying reality. So there are going to be corner cases where somebody profits from the modeling error. I don't see a way to avoid this. Mitigate when possible, yes. Solve, no.
I think I agree with what you say here.
If only we genuinely tried that, it'd be really cool.