i didn't know poor people had pensions. Also a temporary drop in the stock market would be a small sacrifice for higher overall wages
No the article is accurate. You don't understand what fractional reserve banking is. In relation to the other point you think is contradictory. The affect of money held in cash not used in the economy will reduce inflation. However the selling of assets, which agreed would reduce inflation would be seen on such a level that it would affect poorer people. For example if shares were sold on a large level the value of pension investments would fall. This would have a different affect to inflationary or deflationary pressure, which is what you state is contradictory to the counter inflationary argument of cash not used in the economy. That is the effect a mass sell off shares would have on pension returns. So it is not contradictory it is a different point. One point made is the argument of inflation control, cash not used. The other is the wider consequences on the value of assets, which would fall dramatically if sold in bulk in one go. Please read it again.
It will not be temporary the money will have left the share market and will not be returned. The share price will fall dramatically. Also anyone who works will receive some form of pension and any money invested in a bank will have some exposure to the stock market. Are you going to say people don't have bank accounts now?
Good job Peter Morgan.. ------------------------- The money they have in shares? Share ownership is another investment favoured by the rich. They receive dividends and potential increases in share value as incentive to buy shares. Although a huge amount of money is invested in shares, making the rich sell their shares to pay tax will have a negative impact on the economy. If shares were sold at the magnitude that would be required to pay off public sector debt, the share price would plummet. By owning shares on a huge scale, the rich provide an artificial value to share prices. This would no longer exist if they were forced to sell them on the level needed to balance the national debt. This would have a catastrophic effect on private sector pensions, which are largely funded by share investment. It could push thousands, perhaps millions of pensioners into poverty. ----------------------- Excellent point. As a matter of fact we don't even need the rich to sell shares, the boomers are selling out everyday Thank our lucky stars Helicopter Ben is propping up the market.
Thank you I have another article about to go up that explains the effect of migrating markets and foreign investment and currency value. This is the real mover of the market.
This article seems to be written for people who have very poor to no understanding of how economics and the markets actually work. The author's ideas and explanations are phrased in the most simple of terms but then tries to use those terms to answer a complex political question. While I tend to agree with the overall conclusion in that money is better served in the hands of private citizens versus the government, his way of explaining things makes me want to roll my eyes and not take him seriously. Does anyone actually believe that the stock market will crash because the "rich" have to sell shares in order to pay taxes? How would this actually work? An increase in most of the tax classes would not cause mass asset sales b/c payroll taxes: the money would be deducted from their paycheck capital gains taxes: the shares would have already been sold in the market in order to realize their gain taxes on dividends: the investor already has the cash in hand via the dividend Besides there is no self inflated prices for stocks due to rich people holding them. Savvy investors buy stocks based on valuations of the company, so if people dump shares and the price gets too low then other investors will snatch them up. As far as the other points, I highly doubt anyone would be selling their house or their car due to higher taxes.
I never said crash. It does not have to crash just fall in price. In relation to writing for people who are not economically educated. That was the point. It was for the Huffington Post not the Financial Times.
Very true, I wrote that without reading the second article you linked to that was in favor of taxing the rich. That article was even more absurd but was written so the everyday person could understand so it would only make sense for Peter Morgan to respond in like manner. It just feels misleading to phrase things that are easy to understand for a reader but then cite specifics that actually aren't necessarily true. I really hope there aren't many people out there who read the article in support of taxing the rich who now think it is a good idea to start a new economy centered around "green and sustainable" living, with the only costs being a 20% haircut on the rich.
You do realise that it was a 20% tax on all their assets not just one years income? This is why it was so absurd.