Same as it …

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Guardian UK
Inheritance tax is toxic. We need new ways to tackle inequality

I can see the side where `death taxes` should be high … so as to start each generation off at a similar place … but, I also can see that most of the world don’t see that far.
Top comments –

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This chart … a hundred-trillion in outstanding bonds –

This Twitter comment is good (Chovanec). It is the better way to think of it.

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BBC News
UK household debt now a record £13,000, says TUC

According to the ONS, total unsecured debt hit an all-time high of £349bn at that point.
The TUC divided that number by the total number of households in the UK.
However, its figures are inflated by the inclusion of student loans, which have increased rapidly over the last couple of years.

Guardian UK
No one can afford to stop the new consumer credit crisis
The Bank of England is too complacent about rising debt in households with stagnant incomes. But government dare not risk any slowdown in spending

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  • amoeba

    The article was more about the adverse effects of property prices rising to be unaffordable.

    I do not blame Thatcher for what she did, it was a reasonable way of letting people accumulating some wealth in a property, rather than renting.

    But it became an addiction and a keystone of every politcal party since, on the promise of rising house and “help to get on the ladder” votes have been bought and secured ever since.

    Now the green belts need to be turned into green cities, but the selfish NIMBY opposers will stop that.

    • Yes … the Thatcher ideas were `right` in principle.
      I think she more wanted to `break` the `commoners` … by saddling them with mortgages, so they would be more pliable at work.

      The banks went along, because … as-long-as all-banks-do-the-same-thing, the books balance.
      Once the government had started the stampede … the banks have to keep it going, or their asset-sides fall to pieces.

  • CSArichardo

    The death tax thing is interesting because its really the impact of the super wealthy (who accumulate massive wealth) that needs some leveling.

    My guess is that most middle class people that inherit money will spend it into the economy within their lifetime???! Hence I think in the US the Inheritance/Estate Tax starts above $5 million ??

    https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States

    However the super wealthy have figured out the foundation thing ! Donate money into your private foundation while living and put your family in charge of the board !! You even get a tax deduction for it.

    • That is just a wriggle.

      I don’t think you will get the middle-class to vote to `disinherit` the rich … because they know it will soon be upon them.

      If the middle-class say it is `right` for `everyone` … then it will be.

      But they won’t … because the middle-class are pathetic scumbags.

      • CSArichardo

        All little wriggles add up ?! You are right however to say that the middle class are scumbags of the lower order as opposed to the 1% who are of the higher order.

        As long as the higher order scumbags have the lower order scumbags thinking that we are all equal the scumbags will win out !

  • amoeba

    Somethimes I sit and wonder about stuff.

    Then I read this.

    http://finance.yahoo.com/news/huge-reversal-might-place-could-201700806.html

    And I wondered.

    They put forward the argument that portfolios might “rebalance” and 2,300,000,000,000 USD’s will flow from bonds into stocks.

    Ok, I reckon at any moment we have a closed bucket of invested and investable assets.

    – cash
    – bonds
    – equities

    So how can there be a flow out of bonds? In the instant of a sale, the new bond buyer pays cash to the seller. There is no “net flow in or out” of the bonds.

    The only explanation I can come up with is that if the contributers to the bucket decide that they have a net preference for equities over bonds, the total market value of bonds will drop and the total market value of the equities will (or may) rise.

    This gives an illusory flow of cash, but it is more the transfer of the market value from the loss of the bond holders to the gain of the equity holders.

    But there is absolutely no reason why the drop in market value of the bonds should equal the rise in value of the equities, and the total wealth represented by the bucket can move up or down with the daily mood in any case.

    • I think your `cash` confuses matters a tad.
      There is no such thing (the bank has `your cash` `invested` in bonds (probably).

      The `closed bucket` is labelled – “it all has to go somewhere”.

      • amoeba

        Hmmm,

        The ‘cash’ will be on the opposite side of the bank’s balance sheet to the debt it issued when creating the ‘cash’. It can move around the depositors’ accounts but not provide the bank any extra investible asset.

        I think they are introduced globally through central banks’ QE schemes, and locally through imbalances in transfers between banks’ customers base, trade imbalances and currency fluctuations.

        The point I was trying to clarify in me head was that it is simply not the case that 2.3 trillions worth of bonds can be sold and the proceeds put into equities resulting in the total asset value remaining unchanged.

        The number of bonds and the number of equities remain exactly the same. It is the preference of the holders which has changed the market prices, resulting in an apparent cash flow but not based on real cash flows. A bit like the coriolis force.

        • A bank deposit is a liability (yes~?)
          On t’other side (as an asset) it is very very likely to be a bond of some type.

          You must be right.
          To sell a bond … is for someone to buy a bond.

          • amoeba

            As in all these things lying around on bank’s balance sheets, one man’s asset is another man’s liability.

            The deposit is a liability for the bank but an asset for the account holder.

            Pretty much all the assets in banks are loans that the bank has made. Which in turn are the liabilities of the debtors.

            I don’t see that it makes much sense for a bank to carry bonds rather than direct debt as assets. Bonds are a way of either aquiring cash at a lower interest rate than the banks would lend it, or obtaining cash at a higher rate when the banks refuse to lend due to risk.

            However, if one bank does attract more deposits than its loan books it will end up with an excess of reserves. But somewhere else another bank will have a shortage. The shortage can be covered by borrowing from the CB overnight, the excess is an issue in the case of Europe, where Draghi is charging for excess reserves. This will motivate the banks to move into bonds, sending the excess reserves off to be somebody else’s issue.

            • This may not help, but if you think of the loans on the asset side as `bonds` (because they will just sit there and be paid down / boring).

              But then, think of bonds as super-money/monopoly money/not boring at all. Repo and rehypothication and all-round-shenanigans makes bonds into magic money for the banks.

              • amoeba

                The bond repo shenanigans are mostly in the shadow banking sector such as pension and insurance companies.

                Although, to be honest, trying to get a handle on why banks do certain things, and why they are allowed to them, is not easy.

                For example apparently $9 billion in Greek bonds is held by the Bank of France. Which I do not understand.

                And, indeed, neither do I understand why Le Bonk de France carries over 12,000 staff, which I found out from their accounts. Must be loads of economists all churning away at number in order to imprve their models of my behaviour. Good luck.

                • I to am at-a-loss to know why/what is wot.

                  The shadow-banks repo their bonds for `cash` at the banks (normally to buy more bonds).
                  That-is-to-say … the shadow cannot be cast without the solid-banks.

  • CSArichardo

    I found this very interesting because I like the angle !?

    https://www.youtube.com/watch?v=28i3lWxW5xs

    • axel1million

      He views god as transcendent reality.
      After viewing his new year message, I think he needs to take a holiday.

      He knows things can go to hell very quickly. Anyone who has a contemplative understanding of history knows this as well.

      I ask myself if its better to be an self righteous ignoramus person like Meryl Streep or someone who at least ties to tell the truth.
      The Meryl Streep is the easier path, she is completely oblivious to her ignorance!
      https://www.youtube.com/watch?v=gBpkMCa_D50

      • CSArichardo

        Notice that Peterson did not say he believed in God. He said he was a religious person !??!

        Streep was disappointing in her performance at the awards. She needs a new writer !??

        • axel1million

          He does say elsewhere he thought of god as ‘transcendent reality’.
          I think he says he’s religious as he considers it points to the best way to live.

          Once upon a time Streep would have got away with her ‘assertions’. Now she has just exposed herself as someone who reads from a script(which is all she ever was).

          the Hollywood set haven’t a clue about ‘real life’, most of them have never experienced a day of hardship. They have never done ‘deep work’ or ‘deep thinking’.
          I don’t include Michael Moore, he’s a deep thinker for sure – and so are the Russians!