patrick.net

Norway has about $1.2 Trillion in a sovereign wealth fund.
Divide that by the population of Norway; each Norwegian is theoretically rich.
Edit: Norway is rich from North Sea oil and gas production; historically it was not.

Right, so it's stupid for Norway to have any debt at all. It's like having $1000 in the bank but having $500 on your credit card and paying interest on that instead of paying off the card.

WookieMan says

You’d be shocked how dumb citizens are.

After the last three years, I don't think my opinion of the intelligence of the general public can go any lower. There are still a lot of people with masks on around here.

IIRC correctly, the link between fiat and the national debt is this:

When the government wants to borrow money, it creates and sells US Treasury bonds to the Federal Reserve, a private bank. The Fed literally creates the dollars with with to buy the bond formerly via a printing press, but now just electronically.

To pay back debt of that bond plus the interest, the government does it again. So the number of dollars always goes up and never down.

Everyone holding dollars is screwed as their holdings continuously decline in value. Who gets that value? It seems like the Fed gets it. But what exactly does the Fed do with it?

Patrick says

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

Misc How does not having a national debt make North Korea poor? And how does having a national debt make us richer? I just don't see either one at all.

Not sure if serious. Living standards in NoKo are shit. Worse than shit, actually. They do have debt though - internal debt to their citizens. The government steals their labor and keeps them dirt poor.

Patrick says

Everyone holding dollars is screwed as their holdings continuously decline in value. Who gets that value? It seems like the Fed gets it. But what exactly does the Fed do with it?

That's an easy one to answer. The Fed (like all central banks) use their enormous profits in order to convert their fiat currency into hard assets, along with equities, etc. Since the 2008 global financial crisis, they have quietly been buying up boatloads of Gold and Silver. The central bankers are doing this because they know that the fiat currencies which they create eventually will crash in value. Throughout history, over 300 fiat currencies have failed. Our Dollar will not be the exception.

Since Biden took office, one U. S. Dollar is now worth only 87 cents ... and they did that in just a little over two years.

PS: I personally think this is all being done by design, with the goal being the Great Reset, which will turn out to be totalitarian communism on a global level.

ForcedTQ says

So what we really need are state and federal sinking funds, not debt chains!

Only way to ensure sustainability is to slightly raise taxes and noticeably cut spending.

A lot of deficit is technically funded by taxes, that is the Social Security Trust is funding the deficit.

It shows how much government spending is part of our economy, and that by reducing it, we may see some significant reset in our standard of living.

I am willing to undergo small reduction or cut, such as 5%, for a couple of years, if that means the USA federal government's financial condition realizes a greater solvency.

I have a trifecta retirement plan (military reserve, VA disability, and civil service deferred annuity); I would be willing to see a reduction in my Social Security payments if it was part of a broader plan to improve the federal government's financial health.

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cisTits says

Canada claimed theirs would be temporary until their budget crisis was fixed. That was fixed in the early 2000s but they still have it.

Canada's debt to GDP ratio is over 100% even with high taxation :-(

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cisTits says

Adopting a 'Swiss brake' would be ideal, too.

@citTits what is a "Swiss brake"? A search just gets me bicycle parts.

Patrick says

But insiders could still do that if we had no national debt, right?

No, because no national debt means no central bank. Again, if you refer to Griffin, he does a really good job of explaining how all fiat currency is generated through debt, so if all debts were paid off, the Federal Reserve dollar would cease to exist. Central banks, and dishonest banking(anything not 100% backed by specie), exist only to create debt.

Understanding this subject requires a view of the whole, not a focus on the parts. Think Austrian economics.

RWSGFY says

Not sure if serious. Living standards in NoKo are shit.

Yes, living standards in North Korea are shit.

I don't see any causal relation between not having a national debt and low living standards.

cisTits says

We could impose a VAT like Canada did in the 1990s.

Why not eliminate all income tax and sales tax and just have a land value tax instead?

NuttBoxer says

if all debts were paid off, the Federal Reserve dollar would cease to exist

As it should. We should have a system of:

1. silver by weight (not "dollars", only weight) being real money
2. every other instrument classified as debt with a default warning printed on it
3. gold priced in terms of silver, but acceptable for large transactions as a substitute for silver

Internet commerce would run on credit as now, but the credit card transactions would be promises of real silver, and convertible to real silver for those willing to pay the shipping cost.

Patrick says

2. every other instrument classified as debt with a default warning printed on it

We have this now, read your "money" carefully.

Patrick says

Internet commerce would run on credit as now, but the credit card transactions would be promises of real silver, and convertible to real silver for those willing to pay the shipping cost.

In the larger scheme of what this would mean, decentralization would be key. As large corporations like FedEx, UPS, and of course the USPS cannot exist without mountains of debt. Not saying no internet, but it would return to it's primary purpose, a source for sharing information freely. Marketplaces and ecommerce could still exist, but scale would be limited mostly to local transactions.

Franklin Sanders and others have been strong proponents for self-sufficient local economies, pointing to the damage done by the tractor. If every community had a tailor, a farmer, a mechanic, the need for shipping would dramatically decrease.

NuttBoxer says

We have this now, read your "money" carefully.

I don't see any default warning on Federal Reserve Notes.

Patrick says

Why not eliminate all income tax and sales tax and just have a land value tax instead?

How would that work? Curious.

@GNL

Glad you asked! See https://patrick.net/post/1346922/2022-08-05-georgism-thread

Income tax discourages work.

Sales tax discourages commerce.

A land value tax... discourages nothing except non-productive rent-seeking on land. The house on the land is a different matter. Everyone should be able to charge whatever rent they want on a physical building and pay no tax at all on the rental income from the building, because the building is the result of productive work. But merely owning land and trying to rent it out is not at all productive, but instead is merely an attempt to suck money out of productive people while doing nothing useful at all.

Note that almost all "house" values in the Bay Area are actually the value of the land under the house.

All land, I assume. Farmland, corporate etc? Including land your primary home is on?

I'm trying to envision what the end result would be. Just much lower land values? It would have to be a tax on ALL land otherwise nontaxed land would skyrocket, no?

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

And all those land tax records should be public, so that everyone can see the rate paid and by whom.

The end result would be that no one can profit by doing nothing while demanding that others pay them for the right to live.

Land prices would decline, and this would be a wonderful thing for everyone except landlords who don't create and maintain nice buildings. (If you build and maintain a nice building, you could still be a landlord and make a profit.) Banks would find that their collateral for mortgages is lower, but this is also a good thing. Bankers live by sucking interest payments out of young couples who want to buy a house to raise a family.

There would also be a boom in economic activity because working and running a business would no long be punished by taxes. Most taxes are currently paid solely so that land owners can avoid paying fair land value taxes. And there would be a secondary boom just because no one would have to file income taxes or sales tax reports. Tax lawyers would hate it because the tax system would be so simple.

The land value tax should be set by bidding when the land is sold. Let the market figure out the right tax.

Government would hate it because a market-based land value tax would limit how much they could extract to spend on wars and other stupidity.

Current land owners would also hate it because they were counting on exploiting the next generation.

Patrick says

I don't see any default warning on Federal Reserve Notes.

The section where they specify that it's legal tender. If it was real money, you wouldn't have to say it on the money.

Patrick says

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

And all those land tax records should be public, so that everyone can see the rate paid and by whom.

The end result would be that no one can profit by doing nothing while demanding that others pay them for the right to live.

Land prices would decline, and this would be a wonderful thing for everyone except landlords who don't create and maintain nice buildings. (If you build and maintain a nice building, you could still be a landlord and make a profit.) Banks would find that their collateral for mortgages is lower, but this is also a good thing. Bankers live by sucking interest payments out of young couples who want to buy a house to raise a family.

There would also be a boom in economic activity because working and running a business would no long be punished by taxes. Most taxes are currently paid solely so that...

I must say, it sounds pretty good. No downsides come to mind. Are there any?

Patrick says

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

This is like paying rent to the government on all acreage in the domain. Just like to a feudal lord.

Patrick says

The land value tax should be set by bidding when the land is sold. Let the market figure out the right tax.

This would lead to forced sales when the value of the land goes up. For example, I buy some raw land in Shenandoah that is off road. I build a community of solar powered homes with shared well and septic. The government does not like the low taxes on the land based on the original sale price, so laws allow a rich guy to buy that land out from under me.

RayAmerica says

Artificial wealth is when you possess what you have but are making payments to the real 'owner,' the lender that you borrowed your funds from.

or the government who taxes your possessions FOREVER! Or until you die.

This is another reason we should have hard silver metal currency by weight.

The government cannot plausibly find it and tax it, nor should they be able to.

Patrick says

This is another reason we should have hard silver metal currency by weight.

The government cannot plausibly find it and tax it, nor should they be able to.

Yep, and the right to bring in bulk silver for the Gov Mint to coin, minus a 2-3% Seigniorage fee for the official stamp and die cost, and a little extra for the government seal to go towards revenue. We did that in the 19th.

HeadSet says

This would lead to forced sales when the value of the land goes up.

This is already an issue with existing property tax, so it's not anything unique to Georgism.

One simple solution is to defer the land value tax until the owner dies. That is, let it accumulate as a debt to the government, but with no obligation for the owner to sell until the owner dies.

Debt is how the government manages the masses. It is also a tool of war, financial war.

HeadSet says

This is like paying rent to the government on all acreage in the domain.

This is already how things work everywhere that there is a property tax, which is pretty much... everywhere.

And a land value tax is also the best system for economic productivity because it eliminates income tax and sales tax.

Sure, taxes suck, but there have to be some kind of taxes, and the land value tax is the best way to do it.

Benefits have been clear everywhere it has been implemented, Hong Kong for example, with the only losers being those who are trying to sponge off the productive work of others.

https://www.emerald.com/insight/content/doi/10.1108/14635780410525153/full/html?skipTracking=true

Hong Kong and Singapore are characterized by rapid economic development and a high population density of 6,250 and 6,055 per km2 land respectively. Land revenue is their major source of income to finance their public infrastructure and social services. Their design and collection of taxes on land, their value‐capture instruments and their allocation of revenue for public works are examined. The article finds that there are some similarities between the two cities in capturing land value, such as the collection of annual rates and stamp duty on property. The differences include the adoption of property tax surcharge and the development charge. In fact, each mechanism has its pros and cons. The method and the extent of each mechanism depend on the goals of the government in respect of the social and economic conditions.

cisTits says

Patrick says

citTits what is a "Swiss brake"? A search just gets me bicycle parts.

Patrick https://www.heritage.org/budget-and-spending/commentary/switzerland-has-budget-surplus-heres-how-and-what-the-us-could-learn

As The Heritage Foundation’s Romina Boccia notes, the Swiss government is restrained by what is called a “debt brake”—a constitutional balanced-budget amendment that requires the government’s budget to balance over the course of a normal business cycle.

The Swiss rule has successfully cut debt-to-GDP from 49% to well below 30%. It enjoys wide support, thanks in large part to its transparent, simple, and limited design.

The spending limit is also flexible, allowing for deficits during economic downturns and requiring a small budget surplus during booms.

Sounds good to me!

Patrick says

HeadSet says

This would lead to forced sales when the value of the land goes up.

This is already an issue with existing property tax, so it's not anything unique to Georgism.

One simple solution is to defer the land value tax until the owner dies. That is, let it accumulate as a debt to the government, but with no obligation for the owner to sell until the owner dies.

Wouldn't that negate the whole reason of a land tax? If you can't force payment, the owner could operate as if there's no tax.

The deferment is supposed to be an exceptional thing to prevent someone from being kicked out.

You do force payment of all the back tax when the property sells after the owner dies.

We should study how Hong Kong and Singapore do these things.

Patrick says

Singapore do these things.

Singapore had Lee Kwan Yew, we had leaders whose policy is continuous and pre-emptive quasi military and financial wars. There is a war going on now on the American people, its a financial and cultural war.

Patrick says

You do force payment of all the back tax when the property sells after the owner dies.

This seems to be no different than debt. You know there would be fees, fines and interest attached.

gabbar says

There is a war going on now on the American people, its a financial and cultural war.

No doubt about it.

GNL says

Patrick says

You do force payment of all the back tax when the property sells after the owner dies.

This seems to be no different than debt. You know there would be fees, fines and interest attached.

Yes, if you don't pay your tax you have a debt, the same as now.

Interest would be a motivator to pay now rather than later.

Let me know if you have a different idea for a way to raise tax money that does not penalize work or commerce.

Sales taxes penalize commerce
Tariffs penalize IMPORTING but encourage domestic production
Income taxes penalize effort

Tobin taxes are a sales tax on financial transactions. They encourage long term investment over short term arbitrage
Capital gains penalizes money, not people, at work. They can also be structured to support long term HODL over short term arbitrage.
Land taxes penalizes physical assets
Property taxes penalize best use of land and are almost as bad as income and sales taxes.

So to me, the best is a mix of a Land (not property) tax, a 1% Tobin tax, and a 10% Tariff.

People would bitch about paying a token $10 1% tax when the trade itself costs $25 in fees from the brokerage on a $1000 stock trade. C'mon! You'd be better off finding another brokerage. The real opponents of a Tobin Tax would be quant traders hiding behind "Concerned Retail investors", give me a fucking break. If you want $1000 in stock and it's the $10 in Tobin Tax and not the $25 to UBS or whomever that's bothering you, get a life.

Another great idea: Constitutional Amendment that forces the government to fund and spend on Non-Discretionary items first, and prohibit the borrowing of money for NON-discretionary items

Patrick says

Let me know if you have a different idea for a way to raise tax money that does not penalize work or commerce.

Gotcha. I'm just playing devil's advocate because I'm curious what the downsides might be.

AmericanKulak says

Land taxes penalizes physical assets

Not the Georgist land value tax, which would require the same tax on an improved lot (with building, sewage, etc) as an unimproved lot next door.

Tobin tax sounds OK to me. Maybe it makes the market slightly less efficient at pricing stocks though.

10% tariff on imports also seems reasonable, helping domestic producers compete, but not locking out really cheap production from countries with natural advantages.

GNL says

gabbar says

There is a war going on now on the American people, its a financial and cultural war.

No doubt about it.

Its about management of masses through news, continued debt, luxury problems, poor food, managed education, managed healthcare, censorship, conditioning, puffery, corporatism...they want money and power by instituting invisible ball and chain.