View Full Essay Words: Though in many ways, this is something which is subject to change based on such fluctuations in the economy as the pessues on the value of the Ameican dolla today as compaed to the elative success of the Euo which undescoes the unionized Geman economy, the eseach and findings poduced by the suvey questionnaie consideed hee indicate a cultue which is moe pedominant in the United States.
It is quite simply the clearest and most insightful essay I have ever read. And it is short. Now that is out of the way, this post is going to be an attack on the main thesis of that essay. That aspiration is shared by pretty much everyone despite extremely diverse political persuasions and equally diverse conceptions of how to achieve it.
He Snowballing debt or valuable investment essay in frustration with the realities of socialism — enough said. He describes how in order to fight WWII an immense increase in production was mobilised using government deficit spending without any difficulty whatsoever in funding it all.
Where the essay gets really interesting is where he unpicks why such a system is generally only politically acceptable during times of war or under a Fascist regime he noted that the Nazis had full employment policies as soon as they took power. He saw Fascism as something to be avoided by peaceful democratic countries beating them at their own game and extending war time deficit spending policies into peacetime.
He also made astonishingly prophetic warnings about the troubles that might result. In my opinion however Michal Kalecki failed to spot a crucial flaw in the system and that glitch is increasingly smothering our economy now. This need not, however, involve any disturbances in output and employment, if interest on the debt is financed by an annual capital tax.
The current income, after payment of capital tax, of some capitalists will be lower and of some higher than if the national debt had not increased, but their aggregate income will remain unaltered and their aggregate consumption will not be likely to change significantly.
Further, the inducement to invest in fixed capital is not affected by a capital tax because it is paid on any type of wealth. Whether an amount is held in cash or government securities or invested in building a factory, the same capital tax is paid on it and thus the comparative advantage is unchanged.
And if investment is financed by loans it is clearly not affected by a capital tax because if does not mean an increase in wealth of the investing entrepreneur. Thus neither capitalist consumption nor investment is affected by the rise in the national debt if interest on it is financed by an annual capital tax.
He is saying that merely the interest due on the debt needs to be. Clearly he believed that although an asset tax sufficient to pay the interest would not impede the economy for the reasons he givesan asset tax sufficient to balance the budget would or else would be politically unacceptable.
Presumably he envisioned that endless increases in the productivity of the economy would allow the interest payments for the ever larger debt to stay as a proportionately modest burden and so require an equally proportionately modest asset tax. The only change over time would be the stock of government debt securities held by investors.
My argument is that that stock of government debt securities causes behavioural changes that derail the system. They are risk free financial assets 1.
They enable people to save for the future and be certain of being able to draw down the full nominal amount irrespective of how the economy has performed in the interim.
If it were not for such risk free financial assets, the only way to provide for the future financially would be to provide for it in terms of maintaining enough productive capacity to meet that future claim.
As such, risk free financial assets disconnect finance from reality. Owners of the risk free financial assets become a constituency who own wealth that as it increases does nothing to increase or even maintain real world capacity to honour that financial claim.
Currently government securities are issued both as conventional bonds and as inflation protected index linked bonds and of course as cash. Such assets are most valuable when assets that depend on a productive economy are doing worst.
In the case of long dated bonds, such as the 50year gilts and 50year index linked gilts we have in the UK, even the prospect of the economy taking a nose dive causes a surge in their market value.
In a deflationary depression 50year conventional gilts will make you a fortune whilst a stagflationary depression will do the same for holders of 50year index linked gilts. Both asset classes plummet in price whenever an economic recovery seems likely. If it were not for risk free financial assets then everyone would be painfully aware that in order to preserve any of their wealth the economy would need to be productive.
As it stands many people are frankly complacent. The consequent fall in economic output causes shortages that are suffered by those without the risk free financial assets. They probably genuinely believe that the problem is the fault of those who are suffering its consequences.
Ironically it is those who own the most extensive personal safety net of risk free financial assets who are now behind the political force to ensure that further deficits are brought to a halt even though such expansion is our current way of holding off economic depression.One on the most popular debt payoff methods is The debt snowball method: how it works and WHY it works so well to eliminate debt.
Read this before trying to tackle your debt with the highest interest rate! Essay about The Value of the Tax Shield of Debt - Introduction Motivation and background Decisions about optimizing the capital structure of the firm, no matter if it is a small business or a global corporation, has always been an important issue for the management.
Snowballing Debt Or Valuable Investment? Essay words - 7 pages, however, is still well below the industry average of signifying that there is necessity for .
Credit Cards Essay; Credit Cards Essay. The Use and Abuse of Credit Cards.
Essay Debt Credit card debt is one of this nation’s leading internal problems, and it has been for around the last decades. For first-time credit card users, student cards can be valuable tools. Here is THE book recounting the life and times of one of the most respected men in the world, Warren Buffett.
The legendary Omaha investor has never written a memoir, but now he has allowed one writer, Alice Schroeder, unprecedented access to explore directly with him and with those closest to him his work, opinions, struggles, triumphs, follies, and wisdom/5.
Snowballing sampling is where you use one of your own contacts who themselves has a contact to gain access to a particular group and this type of sampling can interlink between several people until you gain access to your desired group.