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Economy

Grant (10 Dec 2005 18:28): Fafblog explains Nature's Harmonious Money Cycle.
Paul (22 Dec 2005 16:19): So apparently Philadelphia and Pennsylvania both have flat taxes on income, of 4.3% plus 3.1%. For me this is a lot of tax, since I'm kinda used to being in a pretty low bracket for progressive taxes.
m (23 Dec 2005 11:47): and, according to the West Wing, sales tax is regressive. That is, poor people spend a much higher percentage of their [income? net worth? I don't know what the regressive quality is measured on] on things covered by sales tax than do rich people. How you like them apples, paul? Yhar!
m (23 Dec 2005 11:50): but isn't state income tax always really small compared to what the feds take from you? Like, that bastard FICA always socked it to me pretty hard. Except I'm in favor of everything (I think yes, everything) that fica pays for, so you'd think it'd be hard to complain. But just watch me!
DK (24 Dec 2005 13:55): Sales taxes are basically the same thing economically speaking as an income tax. If you do the analysis, they shift the equilibrium point the same way if you assume that everyone spends all they make. Because people don't, they are in fact regressive.

However, by that same token, it is much harder for the wealthy to shield themselves from sales tax. Just as an example, if you have a $10M trust fund, let's say you have a 10%/year income stream (quite reasonable), so you get $1M/year. That is taxed at cap gains rates (~15%) rather than at income tax rates (probably average around 32% for 1M). Escaping a sales tax is pretty much impossible (if it were federal), while the income tax has so many holes in it, you could slip an elephant through.

DK
Paul (10 Jan 2007 16:37): finally!
m (10 Jan 2007 20:39): Ho!!
Paul (2 Apr 2007 15:29): For the record, I made a serious attempt to pay my Philadelphia School Income Tax today. The online linked forms make it clear that anyone with money in an investment account (other than a bank) has to pay the tax. However, they don't make it clear where to write your name. Instead, I dropped by city hall, where the clerk not only said her department (the revenue department) only handles taxes on owners of property in Philadelphia, but also flatly refused to give me a copy of the form, which she had right there, claiming it was only for property owners. Suffice to say I can't fill out the form correctly, because the department of revenue refuses to give me the form, so I can't pay the tax.
Paul (9 May 2008 16:02): Hey, $600 just showed up in my bank account!
G (9 May 2008 17:49): Dude! This economy rocks!
Paul (10 May 2008 4:13): Hm... Now I'm not sure the $600 adequately compensates for my loss of buying power due to recent inflation.
Paul (20 Sep 2008 2:52): A NYTimes editorial gives a somewhat more cogent explanation of wtf is up with the economy.
Paul (1 Oct 2008 5:00): Does anyone here understand the economic crisis? I still don't get why Bush thinks we need to buy $700b of toxic mortgages now now now (other than that he's an idiot).

I see less controversial measures---raising FDIC insurance to $250k or maybe $1m, bailing out specific homeowners by buying their mortgages from the bank for cheap, perhaps more "economic stimulus" flat payments to everyone---as sufficient response to protect Main Street in the short term. If Wall Street woes hit harder on Main Street, more measures can be taken when arrive at that point.

Am I naive? I've been reading a lot of empty arguments, mainly relying on innuendo about 1930, but I just can't find any solid argument for a fast bailout.
m (2 Oct 2008 8:51): Bush has put everything into the hands of his secretary of Treasury, Paulsen, who suddenly wields _enormous_ power. Any stupidity in these matters (and any decisions to let certain companies fail, while rescuing others) lie with him.
G (2 Oct 2008 16:22): Although Bush still is somewhat responsible for giving him that much cloth to work with, going along with it, etc.
R (2 Oct 2008 16:25): For a description of the problem, tongodeon had a link in a comment thread to the CBO's take on it: Federal Responses to Market Turmoil. I haven't read the whole thing, but it certainly isn't hyperbolic news-punditry.
R (2 Oct 2008 16:55): Damn, you can just read the cboblog with your RSS feed reader to stay up to date on all things US governmental+economic.
m (14 Oct 2008 10:00): Hey, did we have a big financial market collapse at the end of the 80s, solved by similar bailout-ing?
Paul (15 Oct 2008 8:50): There was a stock market crash and also there was a bank crisis (which might be called a bailout because the FDIC had to pay for lost bank accounts...), but I'm not sure if the two were related.
Paul (19 Oct 2008 9:14): Before I forget the URL, Krugman's view of the original bailout plan
Paul (8 Feb 2009 16:59): "We found that a trader’s morning testosterone level predicts his day’s profitability" quoted here
Paul (23 Jun 2009 3:50): hey, that's my old classmate contradicting the man
Paul (11 Jun 2011 6:44): Will bitcoin be subject to money-multiplier effects (ie, loans)? Why or why not?
G (11 Jun 2011 15:27): The granularity of bitcoin seems like a surmountable problem. One bitcoin is worth, what? Like $20 or $40, or something. But if you have interest on a bitcoin debt, can you pay in quantities less than a whole bitcoin? I, uh, don't actually know.
Paul (11 Jun 2011 17:42): They are "divisible to eight decimal places (a total of 2.1 x 1015 or 2.1 quadrillion units)" (wikipedia)
R (12 Jun 2011 0:40): I should probably read up more on bitcoin, but I was pleased to find that my intuition on this was correct. No multiplier effects. Why? Because it's not a fiat currency, more like commodity money. There's a finite supply of them and they can only be obtained by mining. So, fractional reserve banking is completely out, thus no multiplier. Also, I don't think there's a banking system associated with bitcoin. I found the wikipedia articles on money mutiplier, and this section on full-reserve banking with a gold standard to be interesting and relevent.
z (13 Jun 2011 11:46): i don't understand this arbitrary asymptotic supply curve set by bitcoins. wouldn't something less arbitrary be a constantly growing supply (or perhaps adjusted for population)? that way at least the amount you should charge for 1 hour of work stays "constant" (this is vague i know) and there would not be perverse incentives either to produce or consume.
R (13 Jun 2011 16:58): Aaaand nevermind. It is completely possible to set up a fractional reserve bank, where the value of the accounts is denominated in bitcoin, even if that bank couldn't create bitcoins on demand, or rely on a government bank to bail them out if necessary. And customers using this bank would lose out on the anonymizing functions of bitcoin. Transactions would only be as secure as your bank ensured, if it was a bank-to-bank transfer, there would be no guarantee that the transfer would be in actual bitcoins. If your bank had a run, you'd be likely to lose money stored with them. For commercial banks in the U.S.A., it sounds like the minimum reserve is something like 11%, but I wouldn't want to keep bitcoin in a bank without a significantly higher reserve. Currently, it sounds like there are only full-reserve bitcoin banks in existence, which should be safe. If you trust the bank.
z (13 Jun 2011 21:45): Sure it's always possible to do fractional reserve banking, lest we forget gold storage is how the whole thing got started. Money is just some bookkeeping numbers on the account books. Unless everybody demands to be paid in bitcoins only, the 'real' money will always be 'bank notes'.
R (13 Jun 2011 23:05): Sure, but banks do not want to go back to a gold standard. And when you can choose to work with USD or BitCoin, people are going to gravitate to the optimal currency for their task. I just don't see fractional reserve banking being terribly popular with bitcoin, unless it becomes widely used. And if I'm bothering to use bitcoin, I think I'd probably want a real bitcoin transaction, and would not be satisfied with keeping all my transaction records with a bank. I guess as a store of value, bank notes would be fine...
z (14 Jun 2011 13:10): bitcoins is getting a bit crazy with people running, uh.. "mining rigs" on their GPUs... he who controls computation resources controls the bitcoin currency... hmm, is that any better?
Paul (15 Jun 2011 5:34): I like R's explanation that bitcoin-reserve-banking is stupid, but could still happen because people are stupid. I'm imagining that various bitcoin clones will pop up in the next few years, and that those with some kind of backing in the real world (eg, "4chancoin crypto currency is backed by the full faith and credit of 4chan!") will end up being the ones people really value---like stocks today. Actually, exactly like stocks today, except really easy to trade without brokers. Hm.
Paul (15 Jun 2011 5:39): Did I just say USD are exactly like "stock" in the United States government? Shit, why am I invested so heavily in that?
Paul (16 Jun 2011 18:15): While we're on this topic, is it possible for bitcoin or similar to truly be anonymous? Sure it uses a number instead of your name, but it seems that just as humans can be identified by their google-search-history, they would mostly become identifiable by their bitcoin-transaction-history. As long as the model is for the history of all transactions to be public, I don't see how anonymity could be preserved...
z (18 Jun 2011 5:32): sure, you just need to layer an additional (cooperative) protocol on top of the network, say, do some randomizing transactions that make your node look "typical."
Paul (23 Jun 2011 5:51): That's my question---how much spaghetti do you need in there before it really becomes obfuscated enough to protect your true transactions from being revealed by simple de-obfuscating algorithms? and how much more before it could protect your true transactions from a thorough human-aided investigation?
z (23 Jun 2011 10:33): Ok, now you've got me thinking. What do we mean by "anonymity" anyway? For example, if there is no information about transaction behavior outside of the bitcoins economy revealed (in other words you only have the bitcoins log), what would you really know? So you must really be talking about inferring the identity from a combination of the bitcoins log and other information. Then you must specify what and how much other information is known.

I can imagine a protocol where bitcoins transactions are obfuscated enough by transactions randomly distributed in value to random people, such that everybody looks the same, save for their mean transaction rate (that can't be changed besides spreading it out in time, since .. if you've got to make a net debit, then you've got to make a net debit). Can you identify somebody based on that? That would depend on how atypical you are and how much "spreading" you do ... are you the world's only trillionaire who can sustain a certain spending rate? If so, then you're identified.
G (12 Jan 2012 15:59): I get the feeling that we will miss the postal service when it's gone. :(
m (15 Jun 2012 13:07): Valve just hired an economist?
Paul (1 Nov 2012 17:48): Who cares if it doesn't grow the economy. Senators prefer cutting taxes on the rich anyway.
“We really don’t have any evidence that [personal income tax rates have] any effect on growth,” Alan Auerbach, who runs the Robert D. Burch Center for Tax Policy & Public Finance at the University of California, Berkeley, told Bloomberg when the report first came out. “A lot of the research showing otherwise is based on theoretical calculations.”
NYT article TPM post with link to original report
m (23 Nov 2012 10:34): See who's at the top and who at the bottom of the CEO to Median-Worker pay ratio for the Fortune 50.
G (10 Dec 2012 20:04): From the onion:

According to an analysis by U.S. intelligence agencies, China will have surpassed the United States to become the world’s largest economy by 2030. What do you think?

Then we have no choice but to make sure 2030 never happens.
m (18 Jan 2015 18:39): Do any of you guys understand what the Swiss National Bank did / can you explain it to me?
R (18 Jan 2015 21:54): I hadn't even heard about it, but this Reddit thread seemed helpful.
R (19 Jan 2015 1:42): Man. I swear my phone clipboard is funky. This is the link I was trying for. Ugh.