Wednesday, August 12, 2020
The Grand Subsidy
The rich have money to lend. Borrowers find this useful; they are willing to pay for this "money rental" service. As a result, even the unproductive rich can collect an income indefinitely as long as spending is less than interest - inflation. (Spending needs to include taxes, BTW.)
Many find the arrangement to be unfair. But fear not! Our government is one of the borrowers, adding over a trillion dollars on the demand side for money rental services. Deficit spending is a subsidy for the rich!
And that, dear readers is the big takeaway for this blog. For all the welfare programs, social insurance, progressive taxes, and regulations, we have a honkin big "secret" subsidy hiding in broad daylight: deficit spending.
Labels:
income distribution,
interest,
passive income
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