> there is now a compelling reason to perform the impossible: spend all that damn money before the tax man gets it.
Isn't that a recipe for hyperinflation?
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It's a recipe for increased inflation by increasing money velocity marginally. Not hyper inflation.
Of all the money being transferred per year, little of it is transferred via inheritance. And and even smaller amount of the total money transferred via inheritance is above $10 million range. So maybe you'd see a 0.1% or 0.01% tick up in inflation.
Setting inheritance rats at 100% above 21 million is a silly idea, but not because of a risk of hyper inflation.
>> there is now a compelling reason to perform the impossible: spend all that damn money before the tax man gets it.
> Isn't that a recipe for hyperinflation?
But of prices on... what? Yaacts? It's not like people are going to start buying 1000x more bread loaves and corollas.
On the contrary, it'd probably deflate prices of housing in major "investment" markets, as families off-load second/third/fourth houses.
And for the luxury goods, it might even drive down prices of certain goods. More demand => economies of scale => more efficient production => lower prices => suddenly affordable to a larger market => more demand => ...
But the original premise is kinda depressing. There is an alternative to blowing all your money on hedonism. You can substantially ramp up your donations, for example. I think you'd see an explosion of small churches/local colleges/community centers/etc. with $100M+ endowments.
I wonder what would happen with those luxury goods when the wealthy party dies and nobody else can afford the maintenance costs on these things.
> But of prices on... what? Yaacts? It's not like people are going to start buying 1000x more bread loaves and corollas.
And then what will the yacht company do with all of the money?
> it might even drive down prices of certain goods. More demand => economies of scale => lower prices => more demand => ...
That's not consistent with economic theory. Economies of scale don't work "forever". At some point, the per-unit price will start to rise with quantity again.
> And then what will the yacht company do with all of the money?
Employ people. Reinvest. Raise wages. Expand to new markets. Throw better Christmas parties. Buy the CEO another yacht. You know, run their business.
> That's not consistent with economic theory. Economies of scale don't work "forever". At some point, the per-unit price will start to rise with quantity again.
You mean we won't get $10 yacht?! ;-)
Anyways, that part of my original pose was supposed to be tounge-in-cheek. The point is, I don't think bidding up the prices of real estate in a few super-upper-class retirement snowbird communities is the end of the world. Yes, inflation will happen. But only in certain asset classes that I don't care much about.
It likely won't inflate the price of apples or whole chickens. It may drive up home prices or create a new market for super luxury vehicles. Consider that some big name billionaires could spend millions per day and not see a dent in their overall fortune. Imagine if you needed to spend $5 million a day, how quickly would you run out of things to buy that isn't collector cars, houses, or private companies?
Yep. The parent makes the ever-so-prevalent mistake of assuming that spending( as opposed to greedy hoarding of investments!) is what drives growth and progress.
How does hoarding of I investments drive progress, or is there some double sarcasm that flies over my head?