Schrodinger’s Bank

And You Thought the Cat Thing Was Bad

This one has been hanging around for a while. Thought this would be a good time for it.

We talk a lot about the sheer, obscene amount of money that billionaires are making despite most Americans struggling to make ends meet. Especially Jeff Bezos, owner of Amazon and the Washington Post, worth about $144B, and Elon Musk, owner of Tesla, SpaceX, Starlink and ’Twit-X,ffs, worth about $440B (!!!).

(Paul McCartney and Taylor Swift excluded.)

(Why?)

(Because, they have a billion dollars after paying good wages to their crews and bands, giving to charities and paying their taxes without question. Their income is royalties and fees -real income-, spent in real taxes, wages and donations. If someone has a billion dollars left after meeting all of those obligations, more power to ‘em!)

(How is that different?)

(Few artists have made their works public, which would allow them to hide income as stock, but, it could also expose their work to stock raiding. So, they’re not up to those corporate shenanigans.)

(Oh, I see. Carry on.)

But, that’s the whole point, here- the oligarchs, richest of the rich who could do the most good, won’t do it.

Journalists often cite the hundreds-to-one ratios of CEO pay to average workers at their company. These points largely drive the campaign to raise taxes on the rich.

And, it’s a popular campaign, as few but the oligarchs can see why they should get a break. And, even worse, the excuse they seem to give for getting that break is simply that ‘they deserve it’. They cling to ‘tinkle on’, I mean, ‘trickle down’ economics. (No, it’s ‘tinkle on’- trust me.)

They paint themselves as the ‘job creators’, and threaten to withhold their graces if they don’t get what they want. They constantly claim that less taxes on them will mean higher wages and more investment in employees.

It just never happens.

Now, you might think that the reason it never happens is because they are simply greedy. Well, they are. But a major portion of their inaction is to preserve the toxic economic state they have cultivated for nigh on 150 years.

I call it ’Schrodinger’s Bank’.

Yes, like ‘Schrodinger’s Cat’. The famous physicist postulated that a cat, in a box with a decaying radioactive isotope, could at any point be alive or dead until observed. You couldn’t know which until you looked in the box. It seems profound, but it’s really just pseudo-science jocularity.

Unless, you put two cats in boxes but one’s transparent and you can time it, oh, wait- three cats, in boxes, with a nuclear timer, but you need a control cat, so, four, aw, hell- six cats in boxes and where can you get radioactive isotopes on a Sunday night?

(He never did it, of course. No cats were harmed in the telling of this joke.)

How the hell does this apply to Bezos’ or Elon’s wealth?

$150-$450 billion, give or take a few dozen billion, is a whole lot of money. On that basis, they’re the poster boys for taxing the rich. Indeed, Amazon is raking in billions of real dollars per year from customers, and if they were receiving and paying tax on that kind of liquid money, the IRS would be collecting a lot of shekels.

But, they’re not.

Billionaires usually take relatively little in cash, comparatively, and often take a bulk of living expense funds in dividends, loans or trusts, deductible and separate from their actual wealth. Bezos was reported to have about $12.7 billion in cash as of March 2023. Musk- about $18 billion.

Both may have much, much more by now, especially Musk. But, that’s in the bank, after taxes, over who knows how many years. Though they make similar amounts of income per year, it doesn’t pay them in liquid, taxed cash. The bulk of their remaining net worth is…..where again?

Schrodinger’s Bank.

Or, as we call it, Wall Street- the stock market.

Our real money, trillions of dollars in net profit, sometimes a trillion per year, goes into Schrodinger’s Bank on Wall Street via stocks, but we don’t know what they’re really worth until they try to take money out. We only know what it costs per share to buy it at the moment, its past prices, and how much the company is worth overall at that price.

Musk doesn’t have $440 billion liquid dollars. His stocks in Tesla, etc. and his assets, combined, are estimated to be worth that much. That establishes his wealth, but not his income.

Suppose you inherited something vintage and rare- considered to be worth a lot of money, let’s say, oh, a rare Waterford Crystal. Let’s suppose that a similar one was pegged on ‘Antiques Roadshow’ as worth $100,000. Happy day! You’ve got $100k!!

Or, do you?

No.

You have a potential value that high- if you can sell it for that much, maybe even more. But, the faster you wish to sell it, the less you’re likely to get for it. If the market is down, or, if too many are selling them, you’ll likely get far less. If you really need the money, you may have to take whatever you can get.

Now, the stock market is nothing if not even more volatile by nature, so, when Elon wants to take that money in cash, he has to sell stock, and selling stock alone makes the price drop.

For everyone.

Every Tesla stockholder loses value, and every one selling stock loses money when large divestitures drive the price down dramatically. With only $18B in the bank, Elon had to finance much of his outrageous $44B bid for $8B Twitter, because selling all that much stock in Tesla or Space X at once would have been disastrous.

So, the first sacred rule of Schrodinger’s Bank is ‘don’t sell unless it’s already going down’.

Stock value can drop all the way to nothing, depending on the circumstances, as it did for so many in the Crash of 1929. Schrodinger’s Bank defaulted, and many stock brokers threw themselves out of skyscraper windows after losing everything.

Backlash against Amazon for its hiring practices could make the stock prices drop, cutting Bezos’ wealth along with it, even with the meager 10% stake he retains. Increased overhead at Amazon due to wage complaints or another pandemic could do just as much damage. All of these could force the stock value to plummet.

Musk is happily paddling the same boat. His Tesla, Space X, Starlink and AI units were under constant scrutiny from government agencies for problems from labor to safety to national security. His $440B is so precarious that he spent $277M just to put himself into the puppeteer’s chair over Trump to avoid a foreclosure from Schrodinger’s Bank.

All of this financial tomfoolery by our 1500 billionaires and the corporations they own, in turn, affects the economy, causing real cash shortages in the markets.

But, they leave it there and just take as much as needed to live, or they can borrow the money and just take enough salary to pay the loans. They avoid taxes on their whole fortune by leaving much of it in the stock market. Once one sells stock, it’s taxable cash.

Like that Waterford Crystal, the asset has a potential value until you sell it, and, when you do, that real income is taxable. Imagine, if you sold it cheap, and the value of all Waterfords went down. (Thankfully, it usually doesn’t work that way, unless, as we said, there’s glut of people selling them, like, because they saw it on ‘Roadshow’.)

In this narrow way, the stock market performs in traditional supply and demand paradigms. When in demand, stocks go up, as ‘Cabbage Patch’ dolls did in the 90s, for reasons only God actually knows.

The problem here is not for Bezos or Musk, they’re fine. $13B- $18B ain’t chicken feed- they’ll always be rich, no matter how much they’re taxed. They could lose all of their stocks and still be among the richest just by what’s left in the bank after taxes.

Still, they don’t want to pay taxes in liquid funds on the assessed value of unsold assets, just as you wouldn’t want to pay tax on $100k for the ‘value’ of that Waterford when you haven’t sold it.

This is the root, depth and breadth of the elite’s entire argument against the wealth tax campaign. From that point of view alone, it makes sense, because it can be demonstrated with as little as a glass vase. Myriad financial instruments are designed to protect money from taxes until it’s received- pensions, IRAs, trusts, bonds, etc, and of course, stocks. Ordinarily, this is cold logic and shouldn’t be a problem.

Now, it seems, at this point, that I’m rooting for the radioactive isotope. On the contrary, I’m all about getting the cat out of the box while it’s still alive.

The bigger box we’re all in- the economy- is suffering fallout from Shrodinger’s Bank- its deadly isotope leaking out and stinking up the whole place.

The sheer volume of money taken from the economy and squirreled back into stocks is unparalleled. The avoidance of tax on such extreme income by keeping it in stocks causes a massive shortfall in government revenue, and a skyrocketing of the debt and deficit. It must be restored.

After FDR’s New Deal, businesses contributed as much as 39% of the GDP. It stands since Reagan at 11%. We’re paying some of that lost 28%, and the rest is going to the deficit.

Yes, it’s the rest of us that are paying for it, because real money that goes into Schrodinger’s Bank rarely comes out again afterwards.

When it does come out, it magically depletes itself, so they leave it there and buy more stock every time they can. Since they don’t re-inject it via wages, infrastructure, benefits or taxes, that money in the stock market is lost from the economy, like water drained from a lake.

It was liquid when we had it, it was liquid when we gave it to them, but not anymore.

And, they refuse to acknowledge that that is the problem- not that they have stocks, but that they are abusing them to the point of damaging the entire market in pursuit of some figurative crown for estimated wealth.

It can’t be stressed enough that almost all of the money earned by the bottom 90% is spent in the marketplace, the bottom 50%, all of it, for sure. But the top 1% puts very little back into the economy, billionaires, almost nothing by comparison.

Somewhere in the vicinity of more than $55 trillion dollars is suspended in Schrodinger’s Bank, the US stock market, its worth only estimated and its return to the economy minimal. Tens of billions can be lost or gained in a day just through intramural trading knocking prices up or down.

Because, remember, stocks can also go up- Musk gained an additional $277B in 2024- and, of course he doesn’t want to pay tax on that.

Because, in the end, it might all be just Monopoly money.

Looking back to the 1950s, when Eisenhower held a 90% tax rate on income over $500,000, corporations had to pay more and do more to keep more of their money. And, as half a million was considered quite wealthy at the time, there was no pushback from the public on these high rates at the top tier. A strong middle class was happy to be growing, thriving on good wages and benefits.

As the corporate tax rate fell, and inflation rose, this all went down an untenable road, towards oligarchy. Now, 60 years after Kennedy first lowered the rates again to 50%, the current top rate, 37%, still kicks in at just $450,000, but people worth $5 million or more in stocks are doing most of the complaining.

Since their money is not liquid, they don’t want to be taxed on their worth, just their cashflow. Since they’re doing everything they can to minimize their taxable cashflow, they pay pretty much nothing in taxes, even as their products continue to rise in price, culling more and more money out of the economy and into Schrodinger’s Bank.

Now, when someone does want to withdraw from Schrodinger’s Bank, they only pay capital gains level taxes- 20% rather than 37%. Even then, that would at least be something. But, why should they? They can borrow any amount they want, deduct it and pay nothing.

So, they do.

They all do.

And, every year, an appreciable part of our income disappears into Schrodinger’s Bank, alongside the radioactive volatility of the stock market.

How much money does Jeff Bezos or Elon Musk actually have?

They don’t know.

None of them know.

So, they don’t want to be taxed on their wealth, because they know the estimate is not necessarily accurate. (Or, maybe because they know it would be accurate.)

Using Eisenhower’s standard, hell, even using Kennedy’s 50% top rate, and, kicking it in at $50 million (yes, $50M!!!), a measurable hole in the economy and the US deficit could be filled.

And, we’re not talking about net worth. We mean net income- $50M per year.

Even at the current top rate- 37%, $50 million in net liquid income would be about $19 million in taxes, and up from there. And, even with those affected numbering in the mere thousands, that could still be billions in tax revenue.

But, then, who can get by on just $31M per year? I mean! Come on!

It would be better for everyone except them, and they would still be rich beyond our wildest dreams.

That’s not enough for them.

The super-rich like it this way. They can have unlimited wealth and still cry ‘poor’ to the taxman. They love not knowing exactly. They thrive on pretending they’re ‘regular’ folks, just as wary as we are of taxes and government tyranny! They love not being able to be pinned down for their billions. ‘Am I rich or poor? Gee, we won’t know until I open the bank!’

Exxon, for example, had 2023 quarterly profits of almost $20B, yes billion, with a ‘b’. At the 2023 corporate rate, 21%, we’re talking about over $4B in taxes- for one quarter. But, little of this money was taxed, and it won’t come back to the economy, as it would automatically be shifted, pre-tax, into numerous not-lead-lined deposit boxes in, you guessed it- Schrodinger’s Bank.

And, because we can’t leave Elon out, Tesla had $2.3B in single quarter profits last year, and paid $00 in taxes. And where did that money come back into the economy?

Nowhere.

Where is it?

Guess.

Even at such a low corporate rate -now 21%!!-, and with the whole market’s health at stake, our industrial captains won’t help by taking less money under any circumstance. They’d rather hide it in the stock market than pay it in taxes or wages. Tax break? Stock buyback. Increased productivity? Stock buyback. Government subsidy? Stock buyback.

If the businesses that made billions in profit paid the full 21% and livable wages that rose with the cost of living, and gave up raising prices just to increase margin, people could at least catch up with life and get out of the box.

Oligarchs love the box. They love controlling the box with their volatility. They’re not worried about what it does to us- the cats.

They measure their success by their intramural victories, hiding in shell companies and using insider trading to constantly best each other.

And, since our economy is measured mostly by that performance of the stock market, we might as well be betting on submarine races at night.

We are not doing well simply because they’re doing well, and they’re doing fantastically well.

This is the box we’re all in, and they’re our radioactive isotope, rapidly and erratically decaying.

Driven by price hikes, wage cuts and tax avoidance for the sake of stock profit margin- the more it rises in value, the more volatile it grows- the sooner that cat is a goner. (Cats- we have six, remember? Oh, and, I also found an all-night isotope delivery service. I know!)

Schrodinger’s theory was just a wry hypothesis. A clever conjecture, a ‘zen’ prank, an, aw, what the hell, he was just a smartass, pulling the old ‘observation causes reality’ gag. (I blame Descartes.)

His joke applies eerily to the economy. As long as they keep putting money in Schrodinger’s Bank without looking, we don’t know how much it’s worth- if our markets are alive or dead. And their domination of the economy while syphoning from it and the inflated cost of living it spawns are as radioactive as any isotope could be.

Open the box. Look at the damn cat.

C.2025 Cousin B

Image from Wikimedia Commons