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Comment by wdewind | Hacker News Reader

I'm not really sure what you're arguing here. As I've mentioned in other posts, there's obviously a balance, but suggesting that the credit markets could go away entirely and be supplanted by "friends and family" loans is a gross misunderstanding of the credit markets, and certainly would not at all benefit the lower class. The entire premise of TARP was that this is true and economists on both sides of the aisle largely agree with it.

> It's perhaps not a coincidence that the last few decades have seen ever increasing credit availability while the middle class shrinks.

I don't think so. I think it has much more to do with tax law.

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> The entire premise of TARP was that this is true and economists on both sides of the aisle largely agree with it.

The premise of TARP was that allowing large institutions to fail and trigger a cascade of bankruptcies would have resulted in too much collateral damage to innocent parties who reasonably assumed that large financial institutions and insurers would meet their obligations.

Putting restrictions on bank lending is very different than allowing them to default at scale.

> I don't think so. I think it has much more to do with tax law.

That is a widespread belief but it has no basis. The rich have never paid high taxes in the US, even at times with nominally high tax rates. During the period in the 20th century that the highest individual rates were >80%, there were also so many loopholes that rich families regularly paid no taxes. And if the taxes actually paid haven't gone down then it has to be something else.

But "the power to tax is the power to destroy" as I'm sure you know. What difference in result do you imagine between a law discouraging lending and a law taxing it heavily enough to prevent wealth concentration?

We're getting lost in the weeds. What exactly are you proposing?

Also, it's good to remember what 'marginal rates' are. I always say, if you want to argue as if marginal rates are the base rate, let's ask your accountant if they'd like to adopt your line of argument. I daresay they'd have a pretty clear idea of what's at stake.

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