Posted: Feb 09, 2017 4:17 am
by Thommo
I think this is probably heading rapidly away from the OP, but before it does I would like to elaborate on my previous point.

If you only look at lending, then the total market for borrowing is likely to be restricted by the size of the economy in areas outside of finance. That is to say that if the lenders did start to "swallow up" all capital, then the amount of money they could make by lending would be inverse to the total market share of the lending sector. After a while the only loans left to be made are unprofitable ones that result in default. Combined with anti-monopoly laws and the presence of large market players who are publicly listed (so anyone can share in their profits by investment) this is probably sufficient to ensure a stable state that is not the accrual of all wealth to few (or one) individuals. Obviously the danger would then be that individuals would corner the loan market, and then make inroads into other markets as well (which is the scenario I cut directly to in my first response).

I don't think it's at all accurate to dismiss the number of countries that have either direct estate taxes or CGT on gains from inheritance (it's not actually small), but this is something of a misunderstanding of what I said about assets being divided on death by a combination of taxes and split inheritances (from the point of view of preventing wealth monopolisation the latter at an average of just 2 beneficiaries has as much effect as a 50% tax would) anyway.