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Poland's economic experiment based on Thomas Piketty

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Re: Poland's economic experiment based on Thomas Piketty

#71

Post by danans »

laurencerowe wrote: post #31
ucaetano wrote: post #28

Earlier quoted context omitted.

Exactly! And inflation is just another form of taxes.

Inflation is a tax on wealth but not income (which rises with inflation.) As such it’s a progressive tax since wealth is so unequally distributed. Close to two decades of low inflation in the US and Western Europe has greatly increased inequality. Hyperinflation is destructive and must be avoided but there’s a strong progressive case for increasing the 2% inflation targeted by most central banks.

More specifically, unanticipated inflation is a "tax" to creditors (usually wealthier) who have invested loans and a benefit to their debtors (usually less wealthy).

From https://www3.nd.edu/~cwilber/econ504/504book/outln13c.html

"One important redistribution of income and wealth that occurs during unanticipated inflation is the redistribution between debtors and creditors. a. Debtors gain from inflation because they repay creditors with dollars that are worth less in terms of purchasing power."

Re: Poland's economic experiment based on Thomas Piketty

#72

Post by ucaetano »

drak0n1c wrote: post #44
conanbatt wrote: post #24

Earlier quoted context omitted.

Domestic borrowing is a guarantee of inflation, because the incentive to dilute the debt is too great to not use.

Japan has incredibly high levels of domestic borrowing, but has long suffered deflation. What factors make Japan the exception?

Japan is a developed country (low capital requirements) with a huge stock of capital which it has exported around the world. It can borrow plenty internally before there is a shortage of capital. It has $1.3 trillion in foreign reserves.

Poland is a developing country (high capital requirements) with no accumulated capital and negative savings, its foreign reserves are 10% of Japan's.

Re: Poland's economic experiment based on Thomas Piketty

#73

Post by beedogs »

classicsnoot wrote: post #66
Hasknewbie wrote: post #3

I can see that Bloomberg is still bloomberging: First paragraph: >> "Poland: reasonable strategy roiled by leftist impulses." The current government is a far right Catholic party that has just enacted a law partly denying the Holocaust (somewhat related to this, one of their senator sparked a scandal by posting actual Nazi propaganda online), and the country may have its EU voting right suspended due to the administr…

I would honestly like to know how clarifying the historical accuracy of claims is somehow denying the Holocaust. Your comment has been flagged so it is obvious the Cowards of Dang's Round Table have decided your invective inspired to much vitriol for their liking, but I think your self imposed mental illness should be given over to the light, not pushed into the shadows to fester in the minds of the inadvertently as…

Their government is still lunatic-right, regardless of how many hairs you feel like splitting about some of their policies.

Re: Poland's economic experiment based on Thomas Piketty

#74

Post by foobar2020 »

genericthrow wrote: post #53

"The problem with Poles is they don't want to save," Borowski says. In 2001 so called 'Belka's Tax' was imposed, which is annulling the capital gains tax (19% or something). This makes any placing to actually lose money (even more if you count inflation in). So saving money in sock's drawer is out of question because of inflation, in banks it's even worse, that's been going on for 17 years. How we're suppose to save…

It's 19% of the capital gains, not of the invested money. The parent comment makes it seem like the tax is absurd. Here's a list of countries that implement this tax, including Poland:

https://en.wikipedia.org/wiki/Capital_gains_tax

You _can_ save and invest in Poland.

Re: Poland's economic experiment based on Thomas Piketty

#75

Post by zombieprocesses »

ucaetano wrote: post #69
zombieprocesses wrote: post #50

Earlier quoted context omitted.

> Sad to read this. Most LatAm leftist governments tried the same formula over the past 2 decades, with disastrous consequences. Korea, Taiwan, Japan and china tried it with spectacular results. Also, latin america is a especial situation because they are within the US sphere of influence. Their economic situation is far more complex because of it. > exactly like the one in Argentina and Brazil. Brazil and especially…

> Brazil and especially argentina's financial problems were a result of international borrowing, not domestic borrowing. Patently false. The public debt in Brazil has been almost entirely internal for the past 10 years. Should I show you a chart to settle it? > Korea, Taiwan, Japan and china tried it with spectacular results. Quite the opposite, actually. They received massive inflows of foreign investment, and very…

> Patently false. The public debt in Brazil has been almost entirely internal for the past 10 years. Should I show you a chart to settle it?

Why not show it rather than asking for my permission? But since you asked, please do. And show me the one for argentina while you are at it. Here is brazil's external debt. Increased 250% in 10 years.

https://tradingeconomics.com/brazil/external-debt

> Quite the opposite, actually. They received massive inflows of foreign investment, and very high domestic savings rate.

Foreign investment != external debt. So their high domestic saving rates means they had little need to borrow internationally? That was my point.

> the Asian countries you mentioned have a history of very high savings rate, this generates a stock of capital that the government and companies can borrow at low costs to develop.

But you wrote that it was quite the opposite just a sentence ago? I'm saying that korea, taiwan, japan and china did not depend on foreign borrowing. You conflate foreign investment with borrowing. Then you contradict yourself.

> Poland (and the LatAm countries I mentioned) have very low or negative savings rate, and almost no capital stock, so any increase in borrowing by the government has to be met with foreign capital or it will cause inflation and higher interest rates.

Well then they need to increase their savings rate or limit their borrowing?

Re: Poland's economic experiment based on Thomas Piketty

#76

Post by mr_spothawk »

genericthrow wrote: post #53

"The problem with Poles is they don't want to save," Borowski says. In 2001 so called 'Belka's Tax' was imposed, which is annulling the capital gains tax (19% or something). This makes any placing to actually lose money (even more if you count inflation in). So saving money in sock's drawer is out of question because of inflation, in banks it's even worse, that's been going on for 17 years. How we're suppose to save…

deflationary bitcoin is everybody's pension fund! /s(?)

Re: Poland's economic experiment based on Thomas Piketty

#77

Post by ucaetano »

zombieprocesses wrote: post #75
ucaetano wrote: post #69

Earlier quoted context omitted.

> Brazil and especially argentina's financial problems were a result of international borrowing, not domestic borrowing. Patently false. The public debt in Brazil has been almost entirely internal for the past 10 years. Should I show you a chart to settle it? > Korea, Taiwan, Japan and china tried it with spectacular results. Quite the opposite, actually. They received massive inflows of foreign investment, and very…

> Patently false. The public debt in Brazil has been almost entirely internal for the past 10 years. Should I show you a chart to settle it? Why not show it rather than asking for my permission? But since you asked, please do. And show me the one for argentina while you are at it. Here is brazil's external debt. Increased 250% in 10 years. https://tradingeconomics.com/brazil/external-debt > Quite the opposite, actual…

> Why not show it rather than asking for my permission? But since you asked, please do. And show me the one for argentina while you are at it. Here is brazil's external debt. Increased 250% in 10 years.

That number is irrelevant, look at the composition:

http://www.tesouro.fazenda.gov.br/ca/web/stn/a-divida-em-gra...

I guess that settles it then. Maybe you shouldn't talk about the economic situation of a country you seem to know nothing about.

> Foreign investment != external debt.

Indeed, but foreign investment creates local stocks of capital, lowering internal interest rates and allowing for the government to borrow internally without significantly impacting businesses and households.

> But you wrote that it was quite the opposite just a sentence ago? I'm saying that korea, taiwan, japan and china did not depend on foreign borrowing. You conflate foreign investment with borrowing. Then you contradict yourself.

As you said yourself, Foreign investment != external debt. Forgot about that?

> Well then they need to increase their savings rate or limit their borrowing?

Both. Increasing savings rate takes many years to generate a stock of capital. In the meantime, they need to reduce government spending and borrow internationally.

Re: Poland's economic experiment based on Thomas Piketty

#79

Post by neilwilson »

ucaetano wrote: post #11

> That means a pause in privatization, which Morawiecki says contributed up to 14 billion zlotys a year to the budget, a preference for domestic over foreign borrowing (the share of Poland's debt owned by foreigners is down to 50 percent from about 60 percent three years ago) and a reliance on state enterprises to increase investment because private companies are too small and not boldly expansionist enough to provid…

It's only sad that people still trot out the 'crowding out' thesis ten years after it proved to be false.

Poland has its own currency which its banks create as required.

There can be no shortage of financial capital in a country with a free floating exchange rate and no dollarised sovereign debt. There can only be a shortage of stuff.

Re: Poland's economic experiment based on Thomas Piketty

#80

Post by genericthrow »

foobar2020 wrote: post #74
genericthrow wrote: post #53

"The problem with Poles is they don't want to save," Borowski says. In 2001 so called 'Belka's Tax' was imposed, which is annulling the capital gains tax (19% or something). This makes any placing to actually lose money (even more if you count inflation in). So saving money in sock's drawer is out of question because of inflation, in banks it's even worse, that's been going on for 17 years. How we're suppose to save…

It's 19% of the capital gains, not of the invested money. The parent comment makes it seem like the tax is absurd. Here's a list of countries that implement this tax, including Poland: https://en.wikipedia.org/wiki/Capital_gains_tax You _can_ save and invest in Poland.

Right, I might phrased it imprecisely. Anyway let me show you screenshot from my bank taken today (sorry it's for some reason only in polish): https://imgur.com/a/ISthS

so putting 10k PLN (2k EUR) for 24 months in, you'll gain 50 EUR and small text at the bottom says it's BEFORE taxation! Average gross wage depends on region, but it's around 1k EUR per month. I cannot find median, values but it's much lower, most people here don't have two cents to rub together not to mention to put twice the average salary for 24 months to get 50 EUR

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