Tight labor markets have raised concerns about the role of labor costs in persistently high inflation readings. Policymakers are paying particular attention to nonhousing services inflation, which is considered most closely linked to wages. Analysis shows that higher labor costs are passed along to customers in the form of higher nonhousing services prices, however the effect on overall inflation is very small. Labor-cost growth has no meaningful effect on goods or housing services inflation. Overall, labor-cost growth is responsible for only about 0.1 percentage point of recent core PCE inflation.
The idea of maintaining positive inflation is to stop people from hoarding money without investing it, right? A wealth tax would also have that effect.
The problem is inflation forces you to take risk just to keep the value of your money the same. If a person doesnt want to take risk they should not be forced to do so. People who wanted to grow their wealth but understand the risks and decide to take them would invest.
I don’t think this is a real problem that people face. If all you want is to maintain your existing wealth, there are a wide range of very low risk options that will get you that. The overwhelming majority want to grow their wealth and take risks accordingly.
Right, but “low risk” is not “no risk” and will not grow your wealth as most “low risk” investments do not keep up with inflation. You are just losing money slower than you otherwise would.
Would it? Every variation of a wealth tax I have ever heard proposed is targeted squarely at the ultra wealthy class, virtually all of whose wealth is in stocks (i.e. investments) and as such would necessarily have to tax investments.