GOP Tax Bill Not so Great for Business Owners

[Dylan Lawrence Moore]

Mark J Kohler is a tax attorney and CPA that teaches tax and legal courses all around the country, and is the guy I learn my tax and legal information from. This is the guy who teaches how to set up S-corps with HSAs and retirement accounts and rentals so you can lose money on your tax return while making money in reality. He tracks court cases to see how people are winning and losing on specific aspects of the tax code and bases his tax and legal strategies around it.

He is not happy about the new GOP tax bill.

Mark breaks it down into three sections: Individual, Small Business, and Big Business/Corporate.

The tax bill for big business/corporate is great. Knocking down the rate to 20% to make the US one of the most competitive corporate tax rates in the world. I agree with Mark that this is a great thing and will encourage big business to come back to the US, or to just set up shop in the first place.

However, for the individual and the small business owner, things aren't so great. Even though there are some vague bones thrown in the general direction of the individual (double standard writeoff), the bones thrown at the small business owner are almost completely useless to the majority of small business owners (i.e. they take affect after you net more than $260k), or they are outright negative: tax credits and writeoffs are slashed left and right. Same with the individual: even with the doubling of the standard deduction and simplifying the tax rates, itemization is removed.

I've posted an article and two videos from Mark. The first video is Mark's initial breakdown (before the Senate bill came up), and the second is after the Senate bill comes up, in which Mark includes his recommendations and how to approach Senators for recommendations. I've also included his article which breaks down his specific recommendations:

1. Change the Senate version of the flow-thru business deduction of 17.4% to 12.4% and allow all trade or businesses to use it, including personal service firms, with no phase out limitations.
2. Don’t use ANY provisions of the House Bill in regards to flow-thru entities.
3. Do not eliminate the Entertainment deduction for business owners (part of the House bill). Audits and Tax court guidance have prevented its abuse for years and will continue to do so.
4. Keep the current provision of selling your personal residence with the 2 out of 5 year rule.
5. Keep the Coverdell IRA (the 529 is a Wall Street strategy and we should encourage saving for education, not discourage it)
6. Continue to allow for Roth IRA re-characterizations (It’s not being abused, the IRS just hates it and Social Security is tenuous at best- We need Roths!!)
7. Multiple Business Tax Credits are gutted with the House Bill. Leave these alone. They may sense for business and encourage wise business expenditures and investments.
8. Go ahead and double the standard deduction and ‘simplify’ tax returns for millions of Americans that own modest homes, rent and have a W-2 – Great…BUT DO NOT touch the itemized deductions. Leave them alone for those that want to AND can use them. Don’t touch the State and Local Income Tax (SALT) deduction, mortgage interest, charitable and medical itemized deductions.
9. Oh, yes… I KNOW that these 10 recommendations will cost (at least the 8 above). So what you do is only reduce the Corporate tax rate to 25% or 27.5% in order to pay for the cuts above. Big corporations don’t need all the breaks in this Bill.
10. Moreover, to help pay for the above cuts for ‘main street’ and small business owners, no one in the top 2% of income in the U.S. need any sort of tax break. Gut those provisions out of the legislation, period.

I agree with everything on here except #9. Keep the corporate tax bill low. Congress just creates the money out of thin air anyway--spending isn't limited by taxing.

Here's the article and the videos:

GOP versus Small Business - Tax Bill Update

Mark's Initial breakdown of the bill:

 

Mark's update and recommendation's to Congress, primarily aimed at the Senate:

 

[Dylan Lawrence Moore]

This is also an excellent time to emphasize that the federal government needs ZERO tax dollars to pay for anything. Because the feds issue currency, they are not bound by tax collection revenues in order to pay for anything--like a state or a municipal government. It turns out the idea that the government is going to crash into economic armageddon and our grandchildren are going to inherit our debt if the deficit continues to pile into the debt is a load of bunk.

[Tyler H]

So why don’t they just pay the debt? Why have the debt at all if they can just issue currency to pay for stuff? 

I agree the debt will never be paid back, but increasing the amount of currency relative to goods and services will inevitably lead to a currency crisis, will it not?

Combining this with the massive misallocation of resources which we can attribute to government intervention in the market produces a serious problem that will inflict serious damage to society. Wouldn’t you agree? 

I would love to be persuaded otherwise, but an economic armageddon does seem likely. 

[Dylan Lawrence Moore]

Before I answer anything, I want to prelude with a disclaimer that I understand how absolutely bizarre what I'm about to write sounds. I went through the same growing pains learning MMT, coming from an Austrian/Adam Smith perspective.

Additionally, I want to make it very clear from the getgo that I am IN NO WAY suggesting that government is good by saying these things. I've realized when it comes to economics, it's very, VERY important to differentiate between IS and SHOULD. That is to say, what IS the situation now vs. what SHOULD the situation be later? Right now I'm talking about IS, not SHOULD.

I also want to come out straight with this: I am saying that Stephan Molyneux, Alex Jones, Peter Schiff, Ben Shapiro, Ron Paul, Rand Paul, G. Edward Griffin, Adam Smith, the Tea Party and the Libertarian Party, and the entire entourage of Austrian and Chicago School economics are completely, flat-ass wrong when it comes to understanding money. They are wrong to the extreme that they are encouraging the economic Armageddon that they are preaching against. This is why I keep taking the time to bring it up on the boards: the economic tune needs to change from the "conservative" crowd.

Now I'll get into the response.

2 hours ago, Tyler H said:

So why don’t they just pay the debt?

Because the "federal debt" isn't a debt. It's important to understand the difference between a currency user and a currency issuer. You and I, as well as businesses and state and local governments, are currency users. You and I have to earn money before we can spend it. If we earn more than we spend, this is called savings or a surplus. If we spend more than we earn, we run a deficit. If we owe more money in total than we own, we are said to be in debt. In order to get out of debt, we need to run a surplus to pay it off.

When it comes to the federal government, the words surplus, deficit, and debt have opposite meanings. Because the Federal Reserve, through the statutory authority of the US Congress*, is the only institution legally capable of creating money, that means that if the government doesn't spend money into existence through the Fed, there is no other place for money to come from. That is to say, ever dollar the US "spends" into existence is one dollar the US private sector has to use for its economy. This is why federal debt = private sector savings. Generally speaking (it's a little more complicated than this, but it's close enough to get the point across), the amount of money available in the economic system is equivalent to the federal debt. This absolutely makes sense once you realize that Congress spending money into existence (a.k.a. "debt") IS the money that the economy has to use.

*It's very important to note that the Fed is as creature of Congress, and can be killed by Congress at any time. Congress controls the Fed, not the other way around.

Because the federal government isn't constrained by taxes in order to spend, the effect of taxation is actually to destroy money. Federal taxation removes money from the economic system, just like federal spending introduces money into the system. Taxation is like the brakes, while spending is like the gas. This is why it's extra retarded to talk about the rich paying their fair share. The only point of federal taxation on the rich is to make them less rich because they shouldn't be rich </progressive voice>.

A federal surplus occurs when more taxes are taken in than spent that year, which means more money is destroyed than created.

A federal deficit occurs when more money is spent than taxes are taken in that year, which means more more is created than destroyed.

 

So when it comes to the federal government, "debt" means money available, "surplus" means less money, and "deficit" means more money.

When it comes to you and I, "debt" means money owed, "surplus" means more money, and "deficit" means less money.

3 hours ago, Tyler H said:

Why have the debt at all if they can just issue currency to pay for stuff? 

There is no "debt" in the currency-user sense, as I described above. The problem is everyone, including most politicians, act like there is a debt that needs to be paid back with taxes. The reality is they can issue all the currency they want without taxation to pay for it.

Taxation is needed, however, to give value to the currency. Otherwise no one would use an otherwise worthless piece of paper/electronic note on a bank scoreboard. We need US dollars in order to pay our taxes in the US.

3 hours ago, Tyler H said:

I agree the debt will never be paid back, but increasing the amount of currency relative to goods and services will inevitably lead to a currency crisis, will it not?

If the "debt" were to be "paid back", there wouldn't be any money.

I'm assuming you mean uncontrollable inflation by currency crisis, or at least inflation in general. Expecting uncontrollable inflation from the increase in money assumes that the amount of goods and services doesn't change. Until an economy reaches what's called productive capacity, this won't occur. Productive capacity doesn't max out until there is zero unemployment and all manufacturing/energy/whatever other facilities are producing as much as they can. Yes there is a small amount of inflation which is normal, however more money needs to be created/spent into existence in order to reduce unemployment and bring productive capacity back up. Unemployment and non-maxed productive capacity is a result of not enough money being available in the system*.

*It's important to point out that a relatively free society is required for this to be true. That is to say, people have to be free to make productive choices with their money into order to create new goods and services. If an economy is regulated down to the bones and no one can do anything (i.e. socialist countries), then the extra money won't help.

Think of it this way: if I'm in a room with 100 people in it with one exit, and I announce to everyone that if they work for me, I will pay them with my new currency dylanors, which are essentially pieces of paper I wrote on, would anyone work for me? Of course not. However, if I added that there is a man outside the room with a gun that will only let you leave if you give him a dylanor, suddenly my pieces of paper are valuable (this is how money becomes valuable through taxation), and people would be willing to work for me. However, if I only pay out 90 dylanors, that means 10 people in that room are going to lose out. This is how unemployment works. If enough tickets aren't issued for everyone to pay the tax, then there aren't enough to pay everyone to work.

3 hours ago, Tyler H said:

Combining this with the massive misallocation of resources which we can attribute to government intervention in the market produces a serious problem that will inflict serious damage to society. Wouldn’t you agree? 

Yes, I agree government fucks everything up.

However, because right now, MONEY IS GOVERNMENT, there is no other way to address money except through government. The free market uses money, but there is nothing free market about the nature of money. Money is money because the state demands it and creates it to satisfy the demand. The result is that the state is able to violently move resources from the private to the public sector.

In order to avoid economic catastrophe, more money needs to be introduced into the system. There are two ways to do this: spend more or tax less. Taxing less sounds fantastic to me. If I had to pick one tax and destroy it, it would be payroll taxes (social security and medicare). That would be the best way to increase everyone's paycheck immediately.

3 hours ago, Tyler H said:

I would love to be persuaded otherwise, but an economic armageddon does seem likely. 

I was shocked when I learned that every economic depression and recession of the US was actually preceded by a federal government surplus. That's right. When the federal government acts "fiscally responsible", it destroys the whole system. Here's why:

Because federal "debt" isn't debt, the money in existence due to the Fed's spending never has to be paid back. It's just out there floating around. Thus when the government starts "paying off its debt", the private sector is unable to rely on private sector savings to finance things, thus they turn to private sector credit.

Private sector credit technically isn't money (only the government can issue that), but it's close enough that I'm going to talk like it is for the sake of this explanation. Private sector credit needs to be paid back, which is why private sector debt is real debt. If I get a loan from a bank for $100,000, that money needs to be paid back. As I pay back the principle on that $100,000, the credit is canceled out at the bank and the money is destroyed in a similar fashion as when the federal government taxes. The bank makes its money on the interest on that principle, which ultimately has to come from the government spending it into existence.

As the federal government spends less and less, the private sector has to rely more and more on private sector credit. More and more private sector credit needs to be relied on to pay off the original private sector credit, until eventually the private sector can't loan anymore, the whole thing pops, banks stop lending out money and a depression occurs. It's not until spending resumes to introduce money back into the system that the economy can improve again.

 

This is why it's so important that prominent conservatives and conservative politicians get this. By preaching the doom and gloom of the National Debt, that our grandchildren are going to have to pay it back and that we're going to run out of taxes and it's going to spiral out of control, it's encouraging people to rally around "paying off the debt". This will cause THE EXACT ARMAGEDDON WHICH IS BEING PREACHED. It's not debt. It doesn't need to be paid back. Our grandchildren won't have to pay it. It won't cause hyperinflation. The leftist organizations that talk about MMT (they call themselves "Real Progressives") are going nuts because conservatives want to reduce spending, and neoliberals want to increase taxes, and that's about all there is in the seats of Congress. I utterly disagree with the Real Progressives' moral recommendation, particularly their idiocy in thinking that all social programs can simply be paid for without a problem and we'll all have their services--ignoring, as you mentioned, that government fucks up the allocation of resources. In general, I don't question the moral nature of the conservatives, I assume they simply are unaware of the rules that they are playing with. MMT are the rules we are playing with, and we better figure it out before we cause the disaster that we say we're working to avoid.

[Goldenages]

20 hours ago, Dylan Lawrence Moore said:

Yes there is a small amount of inflation which is normal, however more money needs to be created/spent into existence in order to reduce unemployment and bring productive capacity back up. Unemployment and non-maxed productive capacity is a result of not enough money being available in the system*.

I just had a great idea, I will start a new business. 

Taking money directly from the FED is no debt, right? So I start a new business, I can hire any number of employees. My business is to hire people.  I just hire them, thats all, they have to do nothing. I take 10.000 dollars from the FED, giving each employee 5000 and keep the rest. Fifty - fifty is a fair share, I think. 

And there is no reason why this business should be confined within the borders of a country. Think of all the poor in Africa. I hire them, they will be rich, I will be rich, and everybody is happy.

Should work if the MMT is correct.

 

regards

Andi

[Dylan Lawrence Moore]

6 minutes ago, Goldenages said:

I just had a great idea, I will start a new business. 

Taking money directly from the FED is no debt, right? So I start a new business, I can hire any number of employees. My business is to hire people.  I just hire them, thats all, they have to do nothing. I take 10.000 dollars from the FED, giving each employee 5000 and keep the rest. Fifty - fifty is a fair share, I think. 

And there is no reason why this business should be confined within the borders of a country. Think of all the poor in Africa. I hire them, they will be rich, I will be rich, and everybody is happy.

Should work if the MMT is correct.

 

regards

Andi

Way to selectively respond to some text in my post and ignore the rest.

[Goldenages]

20 hours ago, Dylan Lawrence Moore said:

Because the federal government isn't constrained by taxes in order to spend, the effect of taxation is actually to destroy money. Federal taxation removes money from the economic system, just like federal spending introduces money into the system. Taxation is like the brakes, while spending is like the gas.

I just take your word. My business model can even be improved, if nobody pays taxes, and everybody can take as much money as he deems necessary. No more brakes, only gas. Alyways enough money in the system, no unemployment. The only requirement is, the money has to come directly from the FED. So we have to get rid of normal banks, but thats no problem, I can hire them all.

regards

Andi

 

 

 

 

 

[Dylan Lawrence Moore]

2 minutes ago, Goldenages said:

I just take your word. My business model can even be improved, if nobody pays taxes, and everybody can take as much money as he deems necessary. No more brakes, only gas. Alyways enough money in the system, no unemployment. The only requirement is, the money has to come directly from the FED. So we have to get rid of normal banks, but thats no problem, I can hire them all.

regards

Andi

I have no idea what any of that means.

[Goldenages]

Thats obvious.

 

regards

Andi

[Tyler H]

23 hours ago, Dylan Lawrence Moore said:

I also want to come out straight with this: I am saying that Stephan Molyneux, Alex Jones, Peter Schiff, Ben Shapiro, Ron Paul, Rand Paul, G. Edward Griffin, Adam Smith, the Tea Party and the Libertarian Party, and the entire entourage of Austrian and Chicago School economics are completely, flat-ass wrong when it comes to understanding money. They are wrong to the extreme that they are encouraging the economic Armageddon that they are preaching against. This is why I keep taking the time to bring it up on the boards: the economic tune needs to change from the "conservative" crowd.

I’d have to push back against all of those people being grouped together. The Austrian school differentiates between voluntary mediums of exchange and fiat currency. So when you say they all misunderstand money, perhaps they misunderstand the function of fiat currency, but is it your contention that the Austrians also misunderstand all mediums of exchange? 

 

 

On 12/6/2017 at 6:57 PM, Dylan Lawrence Moore said:

It's very important to note that the Fed is as creature of Congress, and can be killed by Congress at any time. Congress controls the Fed, not the other way around.

Do they? Seems like a mutually assured destruction type scenario. The Fed could make things real bad and most people would blame congress. Congress could take the power away, but why would they? They get to bribe people for votes with promises paid for by the Fed. 

 

 

On 12/6/2017 at 6:57 PM, Dylan Lawrence Moore said:

I'm assuming you mean uncontrollable inflation by currency crisis

Yes

 

On 12/6/2017 at 6:57 PM, Dylan Lawrence Moore said:

Expecting uncontrollable inflation from the increase in money assumes that the amount of goods and services doesn't change. Until an economy reaches what's called productive capacity, this won't occur. Productive capacity doesn't max out until there is zero unemployment and all manufacturing/energy/whatever other facilities are producing as much as they can.

This doesn’t seem to be consistent with examples of hyperflation we’ve seen. Is Venezuela at productive capacity? Was Zimbabwe? Or Weimar Germany?

 

I can see where parts of what you’re saying make sense, and other parts I’m finding hard to understand, so it’s worth to me a further look. Would you recommend a book you think would explain MMT in greater detail? My only exposure so far is your posts, Nima’s, and a debate I saw with Bob Murphy and Warren Mosler. Perhaps I’ll rewatch that as well. 

[Dylan Lawrence Moore]

3 hours ago, Tyler H said:

I’d have to push back against all of those people being grouped together. The Austrian school differentiates between voluntary mediums of exchange and fiat currency. So when you say they all misunderstand money, perhaps they misunderstand the function of fiat currency, but is it your contention that the Austrians also misunderstand all mediums of exchange? 

I'm saying all currency is fiat.

3 hours ago, Tyler H said:

Do they? Seems like a mutually assured destruction type scenario. The Fed could make things real bad and most people would blame congress. Congress could take the power away, but why would they? They get to bribe people for votes with promises paid for by the Fed. 

Yup. The Fed is a creature of Congress which is legislated into existence. Congress can take it away at any time.

3 hours ago, Tyler H said:

This doesn’t seem to be consistent with examples of hyperflation we’ve seen. Is Venezuela at productive capacity? Was Zimbabwe? Or Weimar Germany?

Venezuela is socialist and therefore doesn't have a productive capacity. It's hard to be productive when the government raids you for "hoarding" toilet paper, forces you to drop your prices because you're "taking advantage of people", or raises the minimum wage by 50% to "combat inflation".

Zimbabwe's currency was pegged to another currency (I believe it was USD). They also had a problem of corruption, where politicians would make massive "loans" to their buddies, who would immediately sell the currency for another currency, massively driving the price down.

Weimar totally had it's production plundered. Sometimes France would literally march in and confiscate coal. Additionally, Weimar had to repay debts in currency it couldn't create, so they dealt with it by creating their own currency and selling it on the foreign exchange markets to pay for their war reparations. This wildly drove the value of their currency down. The hyperinflation ended the day they stopped the policy of creating money and selling it on the foreign exchange.

3 hours ago, Tyler H said:

I can see where parts of what you’re saying make sense, and other parts I’m finding hard to understand, so it’s worth to me a further look. Would you recommend a book you think would explain MMT in greater detail? My only exposure so far is your posts, Nima’s, and a debate I saw with Bob Murphy and Warren Mosler. Perhaps I’ll rewatch that as well. 

I would start with watching stuff with Warren Mosler by himself. I would also recommend picking Nima's brain. That's what I did to learn most of this after he started posting here about it.

[Dylan Lawrence Moore]

Also, to bring this back to the topic of the GOP bill:

Out of Individuals, Small Business, and Corporations, Mark Kohler breaks down pretty clearly that only corporations are getting a good deal out of this bill. I'm happy to see the US become more competitive world wide with big business, but it's goddamn ridiculous to leave the individual and the small business hanging. Plus it gives leftists all the fodder they need to shriek, "IT ONLY BENEFITS THE RICH!!!!"

It's super important to understand: ALL the taxes can be cut because they don't pay for anything. If Trump or Congress or whoever wants to help the most number of people as fast as possible, cut payroll taxes. Everyone would immediately see this in their paycheck (7.6%), all big business would benefit because the costs of employees would drop (7.6%), and small business would benefit because they would no longer have to pay their own FICA (15.2%).

[Tyler H]

9 hours ago, Dylan Lawrence Moore said:

I'm saying all currency is fiat

I think I’ll need some definitions then.

 

9 hours ago, Dylan Lawrence Moore said:

Yup. The Fed is a creature of Congress which is legislated into existence. Congress can take it away at any time.

So is the military, but getting rid of it would be a bad for a politicians health. They created it, but it doesn’t mean they can just get rid of it with no personal consequences; wolf by the ears and all. 

 

Would you like to move this to a new thread, or an MMT one if it exists already?

[Dylan Lawrence Moore]

Just now, Tyler H said:

I think I’ll need some definitions then.

Currency becomes currency when it is taxed, regardless of the material used (gold, silver, notes, wampum, electronic bookkeeping, whatever). The government taxes something that otherwise doesn't have any value, and it becomes valuable because the citizens need it to pay their taxes.

2 minutes ago, Tyler H said:

So is the military, but getting rid of it would be a bad for a politicians health. They created it, but it doesn’t mean they can just get rid of it with no personal consequences; wolf by the ears and all. 

You can say this about any legislation and government institution in existence. What I'm emphasizing is that the Federal Reserve isn't a private bank owned by private people who put everyone in debt by creating money out of nothing. The Federal Reserve acts on direction from Congress and the US Treasury.

 

4 minutes ago, Tyler H said:

Would you like to move this to a new thread, or an MMT one if it exists already?

Sure. Start a new one or dig up an old one.

[Dylan Lawrence Moore]

UPDATE:

Now that the tax bill has passed, it appears that the majority of things that Mark Kohler complained about have been addressed! Mark is planning on breaking the bill down over the next few days.

 

[Dylan Lawrence Moore]

Mark Kohler GOP breakdown for small business owners and individuals!

 

BIG BIG BIG one for business owners: automatic 20% deduction on your adjusted gross income! Mark goes over how this affects sole-props, S-corps, and C-corps.

He also hits on individual double standard deductions, lower bracket rates, and what it means that several deductions have been eliminated.

[Jsbrads]

#8 is bad.

I live in CA and by protecting my tax expenditure at the state level, you are actually encouraging me to raise local taxes higher and displace Federal taxes.

Printing of fiat currency has destroyed every single country that has tried it. Weimar, Zimbabwe, etc.

And he in the US, when we increased Federal spending during the Great Depression and under Obama more recently, it slowed the economy even tho Obama didn’t raise taxes until after he was re-elected.

Is there a source you are quoting? Or is this your theory?

[Dylan Lawrence Moore]

10 hours ago, Jsbrads said:

Printing of fiat currency has destroyed every single country that has tried it. Weimar, Zimbabwe, etc.

Is there a source you are quoting? Or is this your theory?

No, this is not my theory. This is Modern Monetary Theory.

I addressed Weimar and Zimbabwe in a post above. Did you not read it?

[Jsbrads]

I’m not sure how you plan on isolating US currency from the global currency market, but even if you did. Fiat currency is still a store of value, printing would dilute that value.

[Dylan Lawrence Moore]

1 hour ago, Jsbrads said:

I’m not sure how you plan on isolating US currency from the global currency market, but even if you did. 

Did I suggest this?

1 hour ago, Jsbrads said:

Fiat currency is still a store of value, printing would dilute that value.

It wouldn't dilute value until full employment and full production capacity are reached, everyone has enough to pay their taxes, and everyone has enough to meet their desired savings.

[Jsbrads]

So you are admitting inflationary printing disrupts the value of fiat currency?

Although under Obama, the major countries agreed to match Obama’s inflationary policy to hide his behavior, he still devalued our currency.

[Dylan Lawrence Moore]

23 minutes ago, Jsbrads said:

So you are admitting inflationary printing disrupts the value of fiat currency?

Obviously I would admit that something is equal to itself. The Reflexive Property

Also, I don't really know what "disrupt" means when talking about the value of a currency. Lose value? Gain value? Shake value around a little bit?

[Jsbrads]

So why didn’t past American inflationary practices increase employment?

[ofd]

Quote

So why didn’t past American inflationary practices increase employment?

To put this in other words: why didnt't the massive 'money printing' in Japan during the lost decade lead to a hyperinflation? Why did it have deflationary aspects?

[Dylan Lawrence Moore]

10 hours ago, Jsbrads said:

So why didn’t past American inflationary practices increase employment?

Do you mean "increasing the money supply" by inflationary? If you're just going to keep pounding that increasing the money supply by any amount automatically means inflation, then we're not going to get anywhere useful.

10 hours ago, ofd said:

To put this in other words: why didnt't the massive 'money printing' in Japan during the lost decade lead to a hyperinflation? Why did it have deflationary aspects?

Because issuing more currency doesn't automatically equal inflation.

[smarterthanone]

7 minutes ago, Dylan Lawrence Moore said:

Because issuing more currency doesn't automatically equal inflation.

Besides issuing currency to replace destroyed currency, can you give an example?

[Jsbrads]

Increasing the money supply always creates inflation and devalues the currency. It should be noted, many kings tried to do this in the past too and it has always failed in all those cases too. There is one distinction: Governments can inflate the currency by printing small amounts of excess currency and then the damage is less harsh on the populous. Read Schiff.

can you buy a lunch sandwich for 45 cents today? Why?

 

[ofd]

Quote

Increasing the money supply always creates inflation and devalues the currency.

Only if the money created reaches consumers. If it doesn't, printing money can have deflationary effects, if it is used to support zombie banks that would implode if not for the additional money.

[Dylan Lawrence Moore]

On 1/19/2018 at 12:36 AM, Jsbrads said:

Increasing the money supply always creates inflation and devalues the currency.

 

Not until the demand for money is met.

If I own a movie theater with 500 seats and I sell 50 tickets, it doesn't devalue my tickets to sell 51. The only way my tickets could be devalued is if I sold more than 500.

[Tyler H]

But there is unlimited demand for money isn’t there? The demand for tickets is set by what the ticket allows access to and how many people desire that access. It seems like you’re comparing apples and oranges. 

[Dylan Lawrence Moore]

4 hours ago, Tyler H said:

But there is unlimited demand for money isn’t there? The demand for tickets is set by what the ticket allows access to and how many people desire that access. It seems like you’re comparing apples and oranges. 

Nope. The demand for money is essentially limited by: 

1. What's needed to keep everyone employed, plus
2. What's needed to keep full productive capacity, plus
3. What's needed for everyone to pay their taxes, plus
4. What's needed for everyone to save (and be able to invest) the amount that they want to.

Once those four things are met, the tickets have been sold out.

Posting another video made today that relates very directly to this subject. Will be up after moderator approval.

[Jsbrads]

I think I would fine with saving and investing a near infinite amount of money.

Can you explain what has happened in the US? Inflation has been fairly consistent, 4%/year over the long term (until Obama was elected, his first act as president was to get how inflation was measured changed so he could hide the destructiveness of his policies)