Topic: The Biden Tax and Spend Plan & The Big Cycle Swing (Read 197 times)

Inflation is basically a tax increase. When you live in a country where inflation is not controlled you can really feel that. Here in Brazil we have about 6% inflation per year. When you pay the taxes of your gains, you will need to pay taxes over that 6% inflation as well, of any investment. If you sold a stock or a crypto with 10% gain in a year, the real gain is only 4%, but you need to pay taxes over 10%.

Not only investors but the whole population suffer the problems of inflation. However, governments all around the world keep paying for academic studies explaning why inflation is good for the economy.

Maybe all this debt increase in US will make the inflation go to uncontrolled levels (like 10% a year), maybe not. Anyway, diversifying is different currencies, such as YEN (from japan) or gold or bitcoin might be a good way to protect small investors from inflation problems.

You slightly misunderstood the US debt situation. Debt is actually the lifeblood of the US economy.

If you think of it in terms of US consumers buying other people's goods, designer clothes, phones, cars, fast food, basically anything that's been manufactured abroad, then dollars are going to those foreign manufacturers.

So more and more dollars are exiting the US economy to non-US foreigners, and this sending money thing is what gives the US its financial power in the first place.

Now somehow the dollars need to find their way back to the US so they are stored in "offshore corps" incorporated in the US and things like that. That's how rich people like Jeff Bezos are able to hide away lots of their money from taxes without leaving a huge hole in the money circulation.

If there was no debt then US wouldn't be able to keep sending dollars since consumer purchasing power will be curtailed (kinda like what covid19 is doing worldwide). So as surprising as it sounds, the world economy needs US debt to keep going.

That's also why the US keeps getting more and more in debt.
 
And as far as corporations are concerned, inflated dollars don't affect their bottom line much because they can just hike up prices. This is why corporation figureheads don't feel the brunt of inflation but a regular person does.

Inflation is also good for banks, who typically charge high interest rates just to make an inflation buffer, and of course the gov. But it silicons for people like us.

And as far as switching to other assets and currencies is concerned, these entities will never let it happen. Not merely because of political influence (most corps actually derive no benefit from that), but because it'll lower the consuming power by makig US debt worthless, so dollar prices will go into freefall along with the rest of the world economy (remember that all MSRPs and prices are denominated in dollars). That's why US is fiercely fighting attempts to make Chinese yuan a world reserve currency for example.

I posted that because the markets are already at ATH levels. That doesn't mean that they won't go up further, but the potential upside may be more limited. If I have the choice, then I would rather go for some asset which is protected against inflation. I am talking about assets such as Bitcoin or Gold, which are suitable for very long term investment. Going for stocks at this point is not preferred. Because in most cases, you can't hold stocks for more than 3-4 years. And that means that you won't be left with much returns, after the tax cut and inflation.

It's much better than not having any investment at all, I mean if you know that inflation is going to make your money really useless then you better find some way to at the least curtail the effect. Crashes aren't a permanent thing to happen in a market so when that happens, just hodl and wait for it to bounce back or better yet, buy some when the crash happens.

Investment doesn't look like a good option. Because in many of the states the capital gains will be taxed at a rate above 50% according to the latest plan from Biden. Now taking the inflation in to account, you will most likely incur a net loss if you invest in assets such as equity and bullion. And there is always a chance of stock market crash or a dip in the gold prices occuring in the near future. If you are an American citizen, there is hardly any option available to beat inflation.

Tell that to the US government, I am pretty sure that they refute and deny your claim that they are experiencing hyperinflation. Yes, the rich are going to benefit from the inflation but I am sure that if you are smart about it, you better have some sort of investment to protect yourself from inflation.

Someone who imposes crazy ideas like a 55% capital gains tax will be called a socialist (irrespective of the country or geography). I really doubt whether Bernie could have raised the taxes any higher than Biden. Trump was neither left nor right. He was a businessman. He might have aligned with the right, because it is clear that the left-wing will definitely reject his pro-business policies. Before aligning with the right, in an economical sense Trump was more left wing than either Biden or Bernie. Back in 1999, he proposed a one-time 14.5% wealth tax on the rich, which he claimed would eradicate the American federal debt. His own words here:


This proposal would get him branded as a radical-left nut by the Republicans at that time. But Trump was right. If you want to tax the rich, then you have to impose a wealth tax. Because income tax and capital gains tax only target the middle class. The uber-rich almost never sell any of their capital assets and therefore these taxes doesn't impact them.

Democrats claim to care for the poor by taxing the rich. But in reality all they are doing is to take money from the middle class and distribute it among the Unions and the welfare rats. You will never find Democrats talking about the wealth tax, because that will force many of their supporters such as Jeff Bezos, Mark Zuckerberg and Bill Gates to pay substantial taxes for the first time.

The funny thing about the current administration is that right wing doesn't like him and call him a far left, and the far left calls him a moderate and not left enough.

You are calling him a far left person during this period, yet here I am as a progressive from Bernie/AOC type level and I can honestly tell you that he has been quite moderate for a very long time and he keeps going with that during his situation. He promised student debt cancelling, he hasn't done that, he promised 2000 checks but only given 1400 and to just certain poor people (even though it covered almost anyone aside from millionaires) and he once again attacked other nations while even trump who someone far left like me keeps saying a right win nut removed our troops from other nations whereas a democrat like Biden once again attacked other nations.

So far to me, as a progressive leftist, Biden has been just a disappointment and that's it. Sure he is still 100 times better than Trump to me, but he is also 100 times worse than Bernie for me.

I heard some of my friends in the group talked about 39% information about Mr. Biden's new tax law. It seems to be a product of the "Heal America" ​​campaign. I think it will also have a lot of contradictions to approve and the reactions will affect crypto. Specifically it will be bitcoin and some Defi. I assume it could deteriorate or bitcoin will continue to move for its new journey.

Hyperinflation is inevitable because the cash is already printed. There will be no way to change the result. It was just that they were slowly taking steps to implement their plans. The people who benefit from inflation are the rich. The beneficiaries of the printing money are the US government and the person behind the Fed, they print money to buy the whole world. Stricter economic management is essential because if not, then the US dollar will collapse.

Couldn't put it any better. Biden won the elections by painting himself as a moderate, and with some help from the COVID 19 pandemic. But his policies resembles more like radical left, rather than center left. The 6 trillion USD spending plan is going to destroy the American economy. Democrats always love to reward the unproductive population in the form of welfare payments and to punish the successful people, but this time they are pushing too hard. The crazy idea to tax capital gains at 55% will result in destruction of the stock market, but the decision to rise corporate tax is going to do the maximum overall damage.

Biden’s Tax Plan is more likely political stuff, IMO.
Like yes, Biden is a democrat with massive Public Relations and this plan would make him look like a good person to the fools.

However, I don’t really like the idea of punishing the big businesses, making them pay more taxes, and then so on, once a business made something illegal to avoid taxes, they would penalize it more like slaves.

These businesses also strive and make decisions that most of the employees couldn’t handle.  That’s why their job and what they do are being rewarded by their earnings, but that is not always the case.  Well, I just wanna say good luck to the U.S Economy, I think they are trying to make the people even and there will be a time that no one would be doing business anymore and stay as employees instead.

They still are doing good in terms of preventing a burst in hyperinflation with so much stimulus injection that they did but I don't think that it will last, USA is too corrupt to the bone to be able to fix this problem, either they will patch up the cracks not solving the problem of letting it all go down and starting over again, at this point their government and economy is wlaking on a tight rope.

There is a huge difference between the Biden spending plan and Trump spending plan. Trump spent the money carefully and made sure that no state or city is discriminated. On the other hand, more than half of Biden's $6 trillion spending plan is earmarked for failed cities and various unions, which will be stolen in all probability (similar to what happened earlier). I don't understand the point in providing additional funding for failed inner cities, because they don't have the proper mechanism to spend the funds they receive. There is no accountability and most of those funds will end up with various politicians.

The thing is we are seeing a lot more situations about more government wanted in many nations (except the ones that already have dictator like characters at the top) because people do not want to live in a liberal world where there are very few regulations. Why? Because we have seen the results of that, what do you expect to do in USA when they can't provide their healthcare and their lockdown, and can't pay rents, can't go outside, many horrible stuff during the last one year, and what if there is zero government during that?

It would have been "death to poor, heaven to rich" situation which kind of already happened with a few exceptions , both parties both presidents and both senates all agreed on a stimulus check 3 times total, that is at least "leftist" but republicans agreed that was needed and Trump gave it as well, so basically when the time comes, everyone does what they say "leftist" because sometimes governments are very much needed.

America has printed too much money to stimulate the economy. Too much money causes the value of money to be lost and the inflation of goods increases.
Taxing too much on the rich increases the inflation rate of the currency even faster because the rich hold a lot of the world's wealth. The rich will increase the value of their goods to get back what is lost.
Trust in the dollar will gradually shift to other assets such as real estate, stocks and cryptocurrencies.

@Poker Player having read his book I can understand what you’re trying to say, and yes whenever there is a tax reform the ultra rich people always find a loophole and find ways to reduce their taxes by hiring top accountants.

Furthermore let’s say rich guys like Elon continue taking loan to save taxes, won’t this harm the banking sector if few rich people default on their loans in the long term, and for that very reason I hope this plan isn’t implemented.

My single most important issue with the Biden tax plan is that for the successful people ("wealthy" or "super-rich" as per the Democrat almanac), now the long term capital gains tax will be equal to the income tax. In states such as California and New York, this group will be forced to pay taxes above 55% on top of their gains from capital assets. Now this is more like wealth confiscation rather than taxation. Because if the government wants to tax capital gains on par with income, then they need to reimburse capital losses as well (in cash, not in credits). Else it is going to wreck the economy in the long term.

Th Biden tax plan did make a negative effect on the market and surly this effect will be going to be more seen after the official execution of the plan. However, there is still nothing to be worry about for holders because not matter how big is the fundamental news, any fundamental news can make a temporary effect in the market during this time will be many emotional reactions be the newbie people. but, after this period of the time the market will continue it own movements because in long term this will fade out.

It is questionable how he won the elections and I doubt that most of the people wanted to vote for senile old man like Biden, but I agree that consequences will be terrible, and similar thing would happen in case Trump won.
I don't think that people realize all the problems that are waiting us in next few years and even people holding Bitcoin, Gold and other assets will have to suffer for sometime, but inflation and high prices will destroy fiat currencies.
Just in last few years more money has been printed than in all recorded history before that, so think about that in combination with increased taxes.
I can't even imagine what will happen with rest of the world and third world countries after situation goes really bad in United States with Mother of all Depressions, but our best bet and hope is Bitcoin.

The taxes aren't to pay for stimulus specifically, but to reduce the deficit that republicans have exploded during every stint they've been in power since the 1980s. Although they do a lot of talking about how they're the party of fiscal discipline, a dispassionate look at the numbers reveals how big of a lie this is. Reagan promised to limit the size of government and then promptly doubled the size of the deficit with a rash of new spending while cutting taxes. Bush Jr. is still the president with the largest deficit in US history, and Trump inherited a recovering economy and rapidly shrinking deficit only to explode the deficit back over a trillion dollars under the best economy the US has seen in decades. The level of mismanagement is impossible to overstate.

Although I am one of those who think that in general, few regulations and few taxes are good, I am not against paying more for those who have more. What happens is that in reality measures such as those applied by Biden are more populist than anything else, and, in the end, the richest are not going to pay anything. In reality they are a redistribution of income from the upper middle class to the classes below, but the very rich escape.


For example, the increase in capital gains tax makes it more difficult for people in the upper middle class to continue climbing the ladder, but do you think the rich are really going to be affected? The very rich don't sell. Almost never, and with this law it will be never. Kiyosaki says he never sells. He pays 0 taxes. If he needs money, he goes to the bank and asks for a loan guaranteeing it with his properties. So do the Rockefellers and many others. Take Elon Musk for example:

Elon Musk, short on cash, keeps borrowing more and more money even as Tesla stock surges

I found this article very interesting,  especially for this chart below and the idea we are starting a new cycle of more taxes to pay for those economic stimulus.

https://www.linkedin.com/pulse/biden-tax-spend-plan-big-cycle-swing-ray-dalio?trk=portfolio_article-card_title


As we can see, we are starting a new cycle due to the recent changes in the world.

Usd may not be the most stable currency anymore in the years to come. Gold and now bitcoin are interesting alternatives to protect our money from those economic cycles,  which certainly can hurt a lot of our savings.

As stated above  , people want that policy, this is why Biden won. even though it might have terrible consequences for the US and the whole world.

We will see a lot of government spending in the next years..