Hot answers tagged

76

That would be really, really bad. Any house that loses value will be unsellable, and thus virtually worthless. Most people living in such a house would be prevented from moving. They cannot sell it, since no one wants to buy an overpriced house, and they cannot afford buying another house with their capital already tied up in the current house. A black ...


28

And everyone is safe, the crash prevented and everyone will keep making millions simply by borrowing more for risk free "investing" in simply owning ones own house, right? It is true, your investment cannot drop in nominal value (not counting inflation,) but it can become totally illiquid, which is worse in many ways. You see, if a stock drops in value by 5%...


22

The main likely reasons why barter is not more common are: The inconvenience of having to find another party who both offers what you want and wants what you offer. Even if such a party can be found, the possible complexity of negotiating a "fair" transaction (eg I'll do your electrical job if you'll clean my windows monthly for the next 3 months). I don'...


15

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as an implicit trade of cash along with the trade of goods. Since I am not going to give tax advice to random strangers on the internet, please consult the tax laws ...


12

Mandating a house be sold at last price sold does not mean that people value it at that sticker price. I could mandate that water bottles only be bought for $1,000,000. This does not mean anyone would buy. I'd just be stuck with a bottle that I don't value. Similarly, setting price floors on the housing market would mean many owners will be stuck with homes....


11

If the housing bubble would burst in Scandinavia as it has done in many other places the recent decade, certainly all banks will immediately be wiped out and millions of Scandinavians will become completely destitute for the rest of their lives with unpayable debts and no property to match it as a deep depression sets in. Firstly, it's not that bad, ...


7

"Why I don't hear nobody speaking about such idea?" Because historical experience says it won't work. By printing money instead of collecting taxes, what increases is the nominal disposable income. The "value of work" is certainly not increased. And the important question is, does this increased nominal income lead to higher consumption? Consider a ...


7

Bursting bubbles don't destroy actual wealth. Instead, they stop destructive processes which convert actual wealth into imaginary wealth. Suppose it would cost \$120,000 to build a house that's would be worth \$100,000 in non-bubble conditions,but market conditions in a bubble would cause such a house to sell for \$150,000. Building a house under such ...


6

There will be a rapid rise in artificial schemes to get round the letter of the law. For example, an agent may charge you 90% of the minimum legal sale price to officially register your house as uninhabitable and obtain a compulsory demolition order for it. A new house built on the same site would not have any previous price history, so it could be sold for ...


5

The current answers correctly point out that financing the government via the printing press would generate inflation. Since inflation is bad, this would be a bad policy. However, these answers miss out on several advantages of an inflation tax. Firstly, there would be substantial productivity gains since the entire government revenue system, tax advisors, ...


5

Examples where this happens are always extreme and contrived. I can think of two kinds of examples. The first is where you have an asset that for some reason has a price of zero or negative but a positive payoff in some states (perhaps no other asset pays off in that state). The second is where you have two assets with positive prices that have negative ...


4

What exactly is it that the trader is alleged to have done, how did this allow him to make irregular profits, and what is the mechanism by which he was able to single-handedly move the entire equities index? According to the Complaint, for over five years and continuing as recently as at least April 6, 2015, Defendants have engaged in a massive effort to ...


4

This would be a catastrophically bad idea. The next time the economy turns down, what happens? Workers who own houses for which they cannot find a buyer at the same price they paid for the house, will be unable to move house. They will therefore be unable to take up employment elsewhere. So you have compounded an economic downturn with an artificial ...


4

It is beneficial (at least, mostly beneficial). Investments are risky, and business projects fail all the time at no fault of the entrepreneur. By bounding the risk profile of corporations, you give incentives for more people to start a business and look out for funding. Let me explain myself with a super simple example. Suppose there was a project that has ...


4

O'Sullivan & Hilliard write: Consumer surplus is a "type of non-financial loss" and can be defined as the amount by which the particular plaintiff values performance of a particular obligation over and above its market value. This is identical to the economist's definition of consumer surplus. Using Pindyck and Rubinfeld's example: If a student was ...


3

The same reason why money became popular in the first place: bartering doesn't scale well. Even if you're able to evade taxes by bartering, the inconvenience makes it difficult to take advantage of this on a large scale. It's only really feasible for casual transactions among family and acquaintenances, not real businesses. When you do barter with these ...


3

Price is the thing that balances supply and demand, if you fix prices artificially low then you create supply shortages. If you fix them artificially high you create demand shortages. So people who want/need to sell their houses in an area where demand has dipped would be unable to do so. Even in areas where natural demand had not dipped buying a house ...


3

You don't give the source of the quote, but presumably what is meant is this. Whether X's production or consumption of a good affects Y (in a physical way such as smoke from X's factory or noise from X's playing loud music, not merely through the workings of the price system) is a matter of fact. On the other hand, whether X is required (assuming a ...


3

Another key feature of those shell companies is that they hide the ultimate beneficiary of the transactions. Banks, insurance companies and most financial services firm must make enquiries as part of the "Know Your Customer" (KYC) regulations: they should be able to find out who will benefit ultimately from the transactions, or in the name of whom they are ...


2

A shell is simply an inactive company - there is a market for shell companies because it allows ordinary persons to buy a ready to go business - for example public traded shells with a stockmarket ticker allow you to skip all the paperwork. Back to topic. A Limited company is a legal person, thus it can buy / sell and hold other companies and assets - sue ...


2

This is a good question! It turns out that exactly as you predict, if you get the transcripts or recordings from the meetings with judge Griesa in NY, some of the representatives of the non-holdouts said they were willing to sign off on the RUFO clause, voiding it. The logic, as you describe is that this would free Argentina to pay the holdouts, letting ...


2

You can't create something from nothing. When the government prints money, that's really just colored paper. Printed money, in case production has not increased, will make money lose value. When the government raises taxes, it is taxing goods and services, i.e. getting real ressources from people (in the form of money, yes, but real ressources nonetheless). ...


2

You are using it correctly. It means the processes and protocols created by banks or those imposed to them by authorities. If the bank also has some quality certificate, like iSOs, them this imposes new compliance costs and processes.


2

Economic evidence on the effects of piracy is mixed. Most of the evidence focuses on the music industry, where piracy has been especially prevalent and where data is often more readily available. Some papers find evidence that piracy has little or no effect of industry profits (here is one prominent example). Other studies (example) find that piracy ...


2

It doesn't save money. Keep in mind that revenue taxes are calculated after deduction of expenses. So if I sell something for 50€, and buy something for 50€, the total earnings of my company have not changed, so neither have my taxes. At the same time, the rules for what a company can claim as business expenses might be wildly different between them, but ...


2

One argument is that it creates a sort of moral hazard: An insider may take (potentially harmful) actions so as to create fluctuations in the share price and profit from such fluctuations. His actions may be harmful to the firm and to society. Example. Suppose a scientist working at a pharmaceutical company on a cure for cancer. All indications are that ...


1

I just faced the same problem and found the solution: Use this code in R: input Stata file library(foreign) child <- read.dta("C:\child.iq.dta") Code found here:(https://www.statmethods.net/input/importingdata.html) You need the double " \ " if you're using R. read.dta(" ") Type the exact folder with data ending. Be careful to use common ...


1

As far as I am aware, there is no "general" international court for economic affairs. The ICJ (Interntaional Court of Justice) is the judicial organ of the UN, and it in fact decided few cases with economic background, but usually in the context of other questions of international law. The closest to what you are looking for is probably WTO dispute ...


1

Are really 90 % of all foreign exchange trades dealt in USD? The actual rate for the most recent year(2016) we have data is 88%. This comes from the Bank for International Settlements. Why does every electronic transaction of USD legally take place on American territory? What laws/processes are responsible? This isn't true. The US handles about 20% ...


1

I did not have either the time or the courage to plough through the text. The last consolidated text I could find stems from 2014 and has since been amended with an annex. Changes made are unclear to me. The full text can be found here. Excerpts that might be useful in this case are article 1.2 and 1.3 with respect to the scope of the application. Other ...


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