33:17: I think the banking sector collapse concern is overstated. When you implement LVT, no actual economic value is destroyed, so as long as you plan carefully you can avoid a banking crisis. You’re simply redirecting rents away from mortgage payments and towards the IRS.
Mortgages are packaged into very standardised agency mortgage-backed securities (MBS), and these account for a large fraction of bank assets. The concern is that doing away with mortgages puts a hole in bank balance sheets and trigger insolvency.
But you can do a central bank intervention where you issue a bunch of new government debt / treasuries to swap with the now-defunct MBS. You finance these treasuries with the LVT, so from the banks' perspective nothing has changed.
Then with real estate loans no longer distorting your money supply and interest rates the same way, you can reduce rates on these treasuries over time without fuelling speculation. That way the government can keep more of the LVT revenues. This also reduces interest payouts to capital owners over time, reducing wealth inequality (as you can view interest rates as a tax on being poor, and high rate policy as macroeconomic chemotherapy).
>A simple agricultural example is — say there is a common field that anyone can work on and you can make 100 units of wealth if you work on it. And there's another field that you can also earn 100 units of wealth in, but it's owned by a landowner. Why would you go and work on the landowner’s land when you're going to have to pay him rent? You wouldn't pay them any rent at all, you would work on the field that's free.
Twitter comment here (I'm really not on twitter at all)
https://twitter.com/Stronico/status/1617229352088788995
I really liked that episode - I was fully engaged and opinionated on the topic. I wrote up my thoughts here
https://www.moodyloner.net/2023/01/a-response-to-henry-george-and-the-lunar-society/
Keep up the good work!
33:17: I think the banking sector collapse concern is overstated. When you implement LVT, no actual economic value is destroyed, so as long as you plan carefully you can avoid a banking crisis. You’re simply redirecting rents away from mortgage payments and towards the IRS.
Mortgages are packaged into very standardised agency mortgage-backed securities (MBS), and these account for a large fraction of bank assets. The concern is that doing away with mortgages puts a hole in bank balance sheets and trigger insolvency.
But you can do a central bank intervention where you issue a bunch of new government debt / treasuries to swap with the now-defunct MBS. You finance these treasuries with the LVT, so from the banks' perspective nothing has changed.
Then with real estate loans no longer distorting your money supply and interest rates the same way, you can reduce rates on these treasuries over time without fuelling speculation. That way the government can keep more of the LVT revenues. This also reduces interest payouts to capital owners over time, reducing wealth inequality (as you can view interest rates as a tax on being poor, and high rate policy as macroeconomic chemotherapy).
>A simple agricultural example is — say there is a common field that anyone can work on and you can make 100 units of wealth if you work on it. And there's another field that you can also earn 100 units of wealth in, but it's owned by a landowner. Why would you go and work on the landowner’s land when you're going to have to pay him rent? You wouldn't pay them any rent at all, you would work on the field that's free.
No mention of the commons problem?
I'm actually moving the hosting this weekend - let me get it in it's new home and I will let you know.