A key insight I had on how ”it is expensive to be poor“ was when I was helping someone manage a large amount of money, and the financial advisor pointed out this trick. You don’t sell your holdings and live off the proceeds, because that triggers taxes. You take out loans instead.
More here on how to never lose!
I met some Welsh tourists in Italy and they were amused to tell me It’s pronounced, roughly, “cootch” or “koosh”. They informed me it’s sort of regional slang within Wales, which makes it even weirder it’s a Wordle word!
Fun fact for people who do the NYT Wordle puzzle:
CWTCH (Welsh for, very roughly, "snuggle") is allowed by Wordle for some reason and is a GREAT way to avoid the (B/C/H/L/M/P/W)ATCH degeneracy that can sink you in hard mode.
Open HORNS, then if h**** guess FILTH, then if ***tH guess CWTCH.
The loans effectively turn your assets into cash, but you still own them. If you manage the assets, well, their yield will be higher than your loan interest rate, so you end up making money even on wealth you’ve already spent!
Anyway, Andras is correct that when people talk about someone being a billionaire “on paper“ or that the assets are “illiquid“ that really only matters for speculative wealth that is hard to collateralize. Safe assets, especially those with high ROI, can easily be turned into tax-free cash.
It’s not just evil billionaires that use these tricks, it’s a perfectly legal and wise thing to for anyone beyond a certain level of wealth. This is a good reason to expand wealth taxes beyond just property assets to cover anything that can be used to collateralize a loan.
This is also why the federal budget deficit scolds and budget balancers are wrong. The US government can get loans at an extremely low interest rate, and the return on investment of federal spending can be huge. It is foolish and irresponsible for the government not to use this to public advantage!
Eukaryogenesis was not a "step"!
Neat new paper here, which reminds me to plug again Dan Mills' paper with me and Jenn Macalady on the topic of the "Hard Steps" paradigm:
www.science.org/doi/10.1126/...
