Economy Change the Tax Code: Claim Cash Depreciation

[SummerStriker]

Being able to write off depreciation of cash will increase the risk free rate, which will in turn inflate the value of stocks, bonds, and real estate, increasing inflation. So you still won't be able to buy shit.

 

[MLarson]

The AI is already dominating

Thanks a lot @SKYNET!

 

[Lead]

This is taking the flaw in BTC and applying it to the functional currency/ economy. I don’t know how disastrous the policy itself would be (this is looking at cash rather than income) other than over complicating the system but the problem is it tries to reward holding on to money and doing nothing with it. You could put it in stock/ real estate and outpace inflation. If you just keep it in a savings account, it would lose value. Why would we want to incentivize people to do that more? You shouldn’t be incentivized to just sit on money and that’s coming from someone who is harsh on those who are more comfortable letting inflation stay a little higher.

 

[Lead]

Also, I think political pressure works just fine keeping it lower. We see policy makers pay hard if rates go up. You don’t want rates at zero or negative and the FED will targets just above for good reason.

 

[Jack V Savage]

This is taking the flaw in BTC and applying it to the fictional currency/ economy. I don’t know how disastrous the policy itself would be (this is looking at cash rather than income) other than over complicating the system but the problem is it tries to reward holding on to money and doing nothing with it. You could put it in stock/ real estate and outpace inflation. If you just keep it in a savings account, it would lose value. Why would we want to incentivize people to do that more? You shouldn’t be incentivized to just sit on money and that’s coming from someone who is harsh on those who are more comfortable letting inflation stay a little higher.

The TS has previously expressed the view that incentivizing investment leads to cultural decline (from a rightist perspective) in a sad attempt to rationalize incompatible aspects of the GOP's governing ideology.

 

[panamaican]

The TS has previously expressed the view that incentivizing investment leads to cultural decline (from a rightist perspective) in a sad attempt to rationalize incompatible aspects of the GOP's governing ideology.

I'm curious about the details of that. On one level, there are elements of truth to that position but it's a really narrow position.

How does the TS present it?

 

[ChickenBrother]

@Rob Battisti you are conflating 1) deductions for capital losses with 2) deducting depreciation. @panamaican has touched on the rationale but U.S. tax laws already allow you to account for the former if you are invested in an actual financial instrument i.e. stock or bond that you sell for less than your cost basis.

The latter is only allowed for businesses and only for "depreciable" assets that you are allowed to capitalize on your balance sheet and depreciate over time. This depreciation does not require you to sell the asset (as for capital losses) but is intended to reflect the physical deterioration that is evident with physical assets like a tractor or an office building. This rationale doesn't work for assets that don't strictly deteriorate. ex. land can NOT be depreciated under GAAP because it is not considered to be a deteriorating asset.

As @panamaican also touched on, the value of cash as denominated in any currency is relative to other forms of currency including foreign currencies, the value of which can go up or down - it does not strictly deteriorate. On any given day you could exchange your USD for bitcoin, Canadian dollars or Vietnamese Dongs and the value could be higher or lower than yesterday depending on market conditions. Over the very long term, foreign exchange rates tend to track purchasing power parity, although interest rate differentials in central bank rates tend to drive short term moves, excluding extraordinary events.

TLDR: Fighting is like the stock market. It flucturate.

 

[Jack V Savage]

I'm curious about the details of that. On one level, there are elements of truth to that position but it's a really narrow position.

How does the TS present it?

Can't find the threads where it came up (more than one). Something about how saving cash is more stable than having to invest for gains and with risk (or being incentivized to spend).

 

[Andy Capp]

Being able to write off depreciation of cash will increase the risk free rate, which will in turn inflate the value of stocks, bonds, and real estate, increasing inflation. So you still won't be able to buy shit.

I was about to say, if you deliberately depreciate cash isn't that the exact same effect as higher inflation?

 

[SummerStriker]

I was about to say, if you deliberately depreciate cash isn't that the exact same effect as higher inflation?

I don't think there is a good solution. People forget the nightmare of deflation.

 

[brothir]

Can't find the threads where it came up (more than one). Something about how saving cash is more stable than having to invest for gains and with risk (or being incentivized to spend).

If you remember any particular phrase you used then searching for that phrase is how I do it if I want to find things, using myself as a search parameter if applicable.

 

[Jack V Savage]

If you remember any particular phrase you used then searching for that phrase is how I do it if I want to find things, using myself as a search parameter if applicable.

Yeah, the problem for me is that the terms I can think of come up a lot.

 

[Jack V Savage]

Wait, found one:

That’s the scary thing. The hopelessness. The “economists” love to say that if you normalize the inflation over time, it’s 2% a year. Okay, well that still means you’re devaluing your currency by 50% in 30 years. Why save money? Why do anything besides consume. Modern post WWI economics destroyed a moral society due to destroying time preference.

That’s exactly the point. “Investing” isn’t “saving” investing is still putting your money at risk. That doesn’t create a stable society especially one built upon a corrupt marketplace.

 

[Jack V Savage]

Completely nutso if you think about it. Investing actually requires more thinking about the future than a system where a few rich families hoard cash.

 

[panamaican]

Can't find the threads where it came up (more than one). Something about how saving cash is more stable than having to invest for gains and with risk (or being incentivized to spend).

I do think that the constant search for growth and returns does create a set of unsustainable problems in any economy. But I'll refrain from more until I can see the original premise.

 

[Jack V Savage]

I do think that the constant search for growth and returns does create a set of unsustainable problems in any economy. But I'll refrain from more until I can see the original premise.

I found one of the many threads where that came up and linked a couple of his posts.

I disagree about the search for growth leading to any particular set of problems. I think there are a few misconceptions about what it means.