Also, even within debt, my mental model is off. I think by default in terms of private debt to specific creditors who operate within a money system, not public debt owed to nebulous creditors including "the public" and "china" who are in control of the money system the debt is in
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So this world is double jeopardy for me. Not only is it a debt > equity world which I don't understand, it is public debt > private debt which I understand even less. The best way I can understand it sociologically is in terms of a collectivist huddle against shared risks.
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The philosophical theory behind the world basically bailing itself out via money printer go brrr --> buy up any sort of ridiculous debt anybody cares to issue is "we're all in this together." That somehow pooling risk/resources makes survival likelier and better for all.
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This of course gets us heavily distorted money and prices because essentially the entire world has retreated into a single household where money is managed like a household budget (congrats people who like that wrong metaphor... this stopped clock tells your time)
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If you think prices for medical care in the US ($18k for a Covid test billed to Cigna by UCSF in one tweet that I saw!) are insane, wait till you see how prices for *everything everywhere* end up in that same insane zone.
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This might be the biggest problem with debt. High debt levels distort prices dramatically by collectivizing interests. Money gets spent the way it does within a marriage for instance -- driven more by the pair psychology and co-dependency pattern rather than any sense of value.
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Within a marriage, this is a good thing. Husband might ignore wife's spending to keep the peace. Wife might ignore husband's crazy man cave for the same reason. Parents might give in to kids demands for toys to avoid tantrums and exhaustion rather than to raise kids well.
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But the cost of this is all spending is towards the stability of the collective rather than the ostensible value of things being bought from the outside world. The price of the wife's cosmetics or husband's man cave or the kid's toys is set by the value of "avoid conflict"
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The collective that has bound itself in mutual obligation like a family using debt mechanisms has heavily overindexed internal signals over external signals. The "family" now no longer knows the cost/value of anything against an external reference.
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Or in terms of design of money, the design reflects inner psychological realities of the collective rather than outer material realities of survival and wealth creation.
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Or to put it in terms of a sociological metaphor, the "debt huddle" is so inward focused, it behaves like a locust swarm in the external world, feeding unsustainably on anything it can find.
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And opting out of the monetary system with gold or bitcoin is no use because the real base of value is people, and if the majority of people are in a locust-huddle due to economic-environmental stress, a few choosing not to be locusts can't change anything.
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The only way out of locust mode is to get back to equity > debt mode, which means finding new sources of external wealth and value that lower the sense of extreme risk, scarcity, and deprivation and unbundle the "collective family" into independent economic actors.
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Okay that thinking out loud helped. I think I understand debt better now. Not that it helps. Now I'm more convinced I'm very ill-adapted to this world since I refuse to be a locust bound to other locusts via mutual public debt obligations. I'll pay higher taxes, but that's it.
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Now I need complementary mental models for taxes. I think my theory of debt implies people with the highest likelihood of discovering new sources of wealth should pay the lowest taxes, and everybody else should be taxed to the limit of yield while they go hunting.
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In a fucked-up, heavily distorted way, full of self-congratulation and self-dealing, this is what conservatives and libertarians try to do. The imagine themselves to obviously be "essential" workers in wealth creation even if participation is via 3 degrees of tenuous separation
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For the sake of argument, imagine that all wealth is created by selfless academic scientists making new discoveries, with their students going out and building startups based on those discoveries, invested in by VCs, in turn invested in by LPs.
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In this cartoon wealth pipeline, the scientists would be paid tax-free NSF money just to exist, their students would enjoy low tax rates for building startups, the VCs would pay a slightly higher tax rate, and the LPs higher than that. We're talking net income tax rate here.
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Past LPs, the case that you're "participating in wealth creation" becomes very tenuous indeed. You're at best just not getting in its way. If you're not adding *information bits* to *equity dollars*, you're not helping. You may not be hurting, but you're not helping.
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The basic principle is: if you're helping make money smarter, you get lower taxes. If you're keeping it constant smart or making it dumber, you get higher taxes.
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Somebody, not-me, should write a book about all money as equity invested in future ideas/individuality, as a counterpoint to Graeber's model of all money as debt held in a history of obligations/mutuality.
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The cartoon pipeline is a cartoon because it doesn't work as advertised. Distortion and capture every step of the way.
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Replying to @vgr
Isn't this the current US system? NSF exists (though with income and institutional taxes), startups don't pay taxes until profit, VCs get tax free carried interest, etc., and I think it depends on the LPs what taxes they get, though that's likely closer to VC level.
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I think the big missing piece that could make debt less toxic is being able to choose much more meaningfully who you get indebted to. Every individual/group being able to designate debt in their own currency tokens would be a step in that direction. Decouple globally a bit.
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You kick the global coupling up a level to a much more fine-grained currency market, with much less exposure on the management or mismanagement of the dollar, but higher exposure to smaller-scale bad behavior.
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If instead of a few hundred national currencies and $ as the denoting default, you had millions or billions of currencies, almost all of it backed by small/local patterns of debt holding, what would happen? Like in crypto markets most tokens would have effectively no liquidity.
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The median currency would have 1-2 market movers. In fact typical case would be “my mom bought all my tokens in exchange for indulgently priced better tokens”
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Heh, is running precisely such a closed, illiquid token currency for his young son out of a cookie jar. That idea but broadened.
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Hehe, my theory of polyglot microservices money might run into demand problems
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Poll: What creditor are you *least* willing to take on debt from?
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