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Not only does everyone love getting “free money” from the state, they also love hearing the fantasy repeated endlessly that debts are no problem.

Governments, like individuals, can spend liberally with great generosity, or they can be frugal. Everyone receiving government money loves the state’s free-spending generosity, as it is “free money” to the recipients.

But there is no such thing as truly “free money,” a reality discussed by Niccolo Machiavelli in his classic work on leadership and statecraft, The Prince, published in 1516. In Machiavelli’s terminology, leaders could either pursue the positive reputation of being liberal in their spending (not “liberal” in a political sense) or suffer the negative reputation of being mean, i.e. miserly, tight-fisted and frugal.

Machiavelli pointed out that the spending demanded to maintain the reputation for free-spending liberality soon exhausted the funds of the state and required the leader to levy increasingly heavy taxes on the citizenry to pay for the state’s largesse.

Once we examine this necessary consequence of liberal spending, it turns out the generous government is anything but generous, as it is eventually forced to impoverish its people to support its spending.

It is the miserly leader and state that is actually generous, for it is the miserly leader / state that places a light burden on the earnings and livelihoods of the citizenry.

As Machiavelli explained, taxes and the inflation that comes with free spending both rob everyone, while the state’s generosity is a political process that necessarily distributes the largesse asymmetrically:

If he is wise he ought not to fear the reputation of being mean, for in time he will come to be more considered than if liberal, seeing that with his economy his revenues are enough…

…click on the above link to read the rest…

Inflation – Cassandra Speaks

February 17, 2022

Inflation – Cassandra Speaks

Inflation should be front and centre for markets – give or take Ukraine, Oil, etc. How real is it, and just how bad could the consequences be? Not talking about it is one way to ensure it hurts.

“The way to crush the bourgeoise is to grind them between the millstones of taxation and inflation.”

This Morning: Inflation should be front and centre for markets – give or take Ukraine, Oil, etc. How real is it, and just how bad could the consequences be? Not talking about it is one way to ensure it hurts.

Contrary to expectations, World War Last didn’t break out yesterday. Either the Russians are stepping back or they are retreating in a forward direction while adding thousands of new troops… Who knows..? Who to believe? In the absence of evidence or a credible reason for Putin pressing the auto-destruct button while he’s winning, (er, yes, he probably is as the West discomboffulates around the issue, beset by leadership crises, division, energy prices and distrust), can we now look forward to Spring?

And get back to worrying about real stuff. Like inflation?

The news this morning is UK inflation hitting a 30-year high, home price rises in the US and UK earning more than the average working wage, and the Fed Minutes – yawn. Put these together and it looks torrid. Yet the market seems unbovvered… There is a strong likelihood the Fed will hike 50 bp in March and up to 10 times in the next (whatever length of time) years/months/minutes… Whateva… Expectations of aggressive moves in rates have doubled in recent weeks.

Commentary in the bond market ranges from the risks of over-aggressive policy mistakes, arguments about how long “transitory” inflation might last, and the risks of further supply and wage driven inflation hikes…

…click on the above link to read the rest of the article…

Welcome to the age of cuts

February 8, 2022

Welcome to the age of cuts

The UK government faced a barrage of criticism over its National Insurance hike this week. The tax – which theoretically pays for public services, pensions, and benefits – was in creased last autumn, before the political class became aware of the massive increase in gas and electricity prices coming later this year. However, with cost-push inflation rising across the economy, and with rises in local taxes due to be announced, millions of British households are facing a massive squeeze on their standard of living. This has given more weight to the idea that government should extend its pandemic borrowing until the economy has recovered, rather than raising new taxes at this point.

It goes without saying that nobody welcomes tax increases. Nevertheless, as a consequence of the way this currency-creation system works, the government is rapidly running out of room to manoeuvre. In the UK, around £500bn worth of government bonds are index-linked, so that as the inflation rate rises, so the cost of servicing the debt increases. As James Sillars at Sky News reported this week:

“Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation… The Office for National Statistics (ONS) said the cost of servicing the country’s £2trn+ debt pile was almost 200% or £5.4bn up on December 2020.

“It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December – its highest level since 1991.”

The problem will worsen in the spring as the new energy price cap comes into force, and as prices continue to rise across the economy. This sets up one of contemporary democracy’s greatest flaws. It is precisely during inflationary periods that the people begin to demand more government spending and less taxation…

…click on the above link to read the rest of the article…

Biden’s New “Regressive” Methane Tax Will Raise Average American’s Gas Bill By 17%: Op-Ed

December 12, 2021

Biden’s New “Regressive” Methane Tax Will Raise Average American’s Gas Bill By 17%: Op-Ed

At a time when the Biden administration is panicking in an attempt to keep energy prices down, the House has slapped a “fee” on methane that is being called a “stealth tax” on natural gas and everyone who uses it.

The House bill results in an “escalating tax on methane emissions by oil and gas producers,” a new op-ed in the Wall Street Journal points out. The tax will hit $1,500 per ton by 2025 and the fee is supposed to be a contribution to recent promises made in Glasgow to curb methane emissions.

The cost of the fee will obviously get passed along to the consumer, which will then result in even higher energy prices than consumers are already struggling with. 180 million Americans use natural gas to hear their homes, the report says.

In the meantime, the Energy Information Administration (EIA) has come out and stated that half of U.S. households that heat with natural gas will pay 30% more than winter than they did last year. This methane tax could add another 17% to an average bill, the WSJ editorial board writes.

The WSJ op-ed board calls it a “regressive tax” and says that “Department of Energy notes the average energy burden for low-income families is three times higher than for more affluent households”.

The methane tax “exposes the contradiction at the heart of Democratic climate policy” and clearly violates President Biden’s promise not to raise taxes on those making less than $400,000 per year, the op-ed argues.

The op-ed concludes by arguing that once the methane tax is in place, it’ll be easy to raise over time. Combined with new methane regulations, it’ll continue to raise costs and introduce inefficiencies for producers.

The methane tax is “targeted, punitive and can be linked to higher consumer energy bills,” the op-ed concludes.

George Monbiot champions wealth taxes on ultra-rich as best way to prevent environmental collapse

November 15, 2021

George Monbiot champions wealth taxes on ultra-rich as best way to prevent environmental collapse

Why do we tolerate the massive environmental impacts of the very rich? Most of our dysfunctions are caused by pandering to the rich. —

George Monbiot

“Why do we tolerate the massive environmental impacts of the very rich? Most of our dysfunctions are caused by pandering to the rich. The way governments have allowed democracy to be eroded by lobbyists (including politicians with lucrative private interests); the deregulation that lets corporations, oligarchs and landlords squeeze their workers and tenants, then dump their costs on society; the permissive environment for profiteering during the pandemic; the degradation of health, education, and other public services by the constant drive towards privatization: all these are symptoms of the same condition. The same applies to the worst of our predicaments: the destruction of our life-support systems. The very rich arrogate to themselves the lion’s share of the planetary space on which we all depend. It is hard to understand why we tolerate this attack on our common interests…. Big money now buys everything: even access to the meetings that should address these dysfunctions. On some accounts, Cop26 is the most exclusive of all climate summits. Delegates from poor nations have been thwarted by a cruel combination of byzantine visa requirements, broken promises to make Covid vaccines available, and the mad costs of accommodation, thanks to government failures to cap local prices, or make rooms available. Even when delegates from poorer nations can scale these walls, they often find themselves excluded from the negotiating areas, and therefore unable to influence the talks….

…click on the above link to read the rest of the article…

Billionaire Tax Is A Ploy To Take Eyes Off Bigger Problems

November 1, 2021

Billionaire Tax Is A Ploy To Take Eyes Off Bigger Problems

In sports, the term head-fake is used to describe the act of moving the head in such a way as to deceive an opponent as to one’s intended direction or move. The idea of a billionaire tax to tax the super-rich with the idea they will pay for all the gifts the government wants to shower on the people is such a distraction. The idea we can level a playing field that is totally tilted to favor the rich by taxing them after billions of dollars are transferred into their coffers through questionable policies is bullshit.

Small Businesses Provide Choice

Politicians are about to embark on a bit of expensive theater to give the impression they can address inequality through increasing taxes on the ultra-rich, this will fail. What we need are policies that promote small businesses. Small businesses provide choice, and choice is freedom. Freedom to live as you wish and options on how you shape your future. Freedom stands in total opposition to the World Economic Forum idea that by 2030 you will own nothing and be happy.

Let us assume that what ProPublica found is true; While the median American household earning roughly $70,000 per year paid 14% in federal taxes each year, the 25 richest Americans (by Forbes’ tally) paid a “true tax rate” of just 3.4% on wealth growth of $401 billion between 2014 and 2018. If so, you can understand why those households with a $70,000 per year income are steamed. ProPublica also claims that since the beginning of the COVID-19 pandemic, billionaires have seen a 70% increase in their wealth, from nearly $3 trillion to almost $5 trillion.

So, what exactly is in this “billionaires tax bill” and how would it work? Nobody really knows because the devil is in the details and those remain few and far apart…

…click on the above link to read the rest of the article…

To Be Sustainable, Green Energy Must Generate Adequate Taxable Revenue

July 20, 2021

To Be Sustainable, Green Energy Must Generate Adequate Taxable Revenue

What allows any type of energy to be sustainable? I would argue that one of the requirements for sustainability is adequate production of taxable revenue. Company managements depend upon taxable revenue for many purposes, including funding new investments and paying dividends to shareholders. Governments depend upon taxable income to collect enough taxes to provide infrastructure and programs for their growing populations.

Taxable income is a major way that “net energy” is transferred to future investment and to the rest of the economy. If this form of net energy is too low, governments will collapse from lack of funding. Energy production will fall from lack of reinvestment. This profitability needs to come from the characteristics of the energy products, allowing more goods and services to be produced efficiently. This profitability cannot be created simply by the creation of more government debt; the rise in the price of energy is tied to the affordability of goods, particularly the goods required by low-income people, such as food. This affordability issue tends to put a cap on prices that can be charged for energy products.

It seems to me that Green Energy sources are held to far too low a standard. Their financial results are published after subsidies are reflected, making them look profitable when, in reality, they are not. This is one of the things that makes many people from the financial community believe that Green Energy is the solution for the future.

In this post, I will discuss these ideas further. A related issue is, “Which type of oil production fell most in the 2018-2021 period?” Many people had expected that perhaps high-cost energy production would fall. Strangely enough, the production that fell most was that of OPEC oil exporters. These oil exporters often have a very low cost of energy production. The production of US oil from shale also fell.

…click on the above link to read the rest of the article…

Canada Spent $23 Billion to Support Pipelines in Just Three Years

July 8, 2021

Canada Spent $23 Billion to Support Pipelines in Just Three Years

Taxpayers should understand the financial and climate risks of the big commitment, says an independent report.

Governments’ financial support for pipelines is financially and environmentally risky, says a report. Photo from Trans Mountain.

Canadian pipelines have received over $23 billion in support from federal and provincial governments over the past three years, according to a new report from the International Institute for Sustainable Development.

The independent think tank crunched the numbers in a report that looked at the scope of government support for oil and gas pipelines.

The report looks at a broader definition of government support than just subsidies. Government support includes “any way that the federal or provincial governments promote fossil fuel production in a way that has to do with public money,” Corkal says.

Subsidies, on the other hand, are legally defined by the World Trade Organization as a beneficial financial contribution from a government.

Author Vanessa Corkal, policy advisor for Canada Energy Transitions at the institute, says it’s impossible to calculate the exact amount of pipeline subsidies because of a lack of government transparency.

“We thought it was important to highlight the high level of support the Canadian and Albertan government put towards this area,” Corkal says.

It’s important Canadians understand the financial risk governments have made by investing in pipelines, which may never get finished or never pay off, Corkal says.

But the report was also released one week after British Columbia experienced a devastating heat wave, which is likely linked to climate change and therefore the fossil fuel industry, she says.

Canadians need to consider “whether or not these investments are putting us on the path to deal with climate change at the scale and the pace that we need. And the pace we need has really been made clear this past week,” she says.

…click on the above link to read the rest of the article…

The G-7’s Reckless Commitment To Mounting Debt

June 15, 2021

The G-7’s Reckless Commitment To Mounting Debt

Historically, meetings of the largest economies in the world have been essential to reach essential agreements that would incentivise prosperity and growth. This was not the case this time. The G7 meeting agreements were light on detailed economic decisions, except on the most damaging of them all. A minimum global corporate tax. Why not an agreement on a maximum global public spending?

Imposing a minimum global corporate tax of 15% without addressing all other taxes that governments impose before a business reaches a net profit is dangerous. Why would there be a minimum global corporate tax when subsidies are different, some countries have different or no VAT rates (value added tax), and the endless list of indirect taxes is completely different? The G7 “commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises”. This entire sentence makes no sense, opens the door to double taxation and penalizes the most competitive and profitable companies while it has no impact on the dinosaur loss-making or poor-margin conglomerates that most governments call “strategic sectors”.

The global minimum corporate tax is also a protectionist and extractive measure. The rich nations will see little negative impact from this, as they already have their governments surrounded by large multinationals that will not suffer a massive taxation blow because subsidies and tax incentives before net income are large and generous. According to PWC’s Paying Taxes 2020 (https://www.pwc.com/gx/en/paying-taxes/pdf/pwc-paying-taxes-2020.pdf), profit taxes in North America already stand at 18.5% but, more worryingly, total tax contributions including labour and other taxes reach 40% of revenues. In the EU & EFTA profit taxes may be somewhat smaller than in North America, but total taxation remains above 39% of revenues.

…click on the above link to read the rest of the article…

Is the United States on The Same Calamitous Path as Yugoslavia?

June 6, 2021

Is the United States on The Same Calamitous Path as Yugoslavia?

“Tito, go and make them happy and bring order to the Balkans.” Pic from Propagandopolis

Of all the inflationary disasters in modern economic history, Yugoslavia’s is the one most ignored by the mainstream. To be sure, the collapse of the Eastern European nation was a slow burn, but with a big explosion at the end. Most people are familiar with the Serbian/Croatian war and the genocide that followed, but few people are familiar with the economic crisis that led to the conflict.

I am not here to present an in-depth analysis of the eventual breakup of Yugoslavia, only to examine the conditions that triggered it. I believe there are some interesting similarities to burgeoning conditions within the U.S., along with some distinct differences.

The first stage: inflation

President Josip Broz Tito led the nation in various capacities from 1953 to 1980. He used two powerful tools to clamp down on unrest in the ethnically-diverse nation: large-scale repression of dissenting voices using both police and military forces, and allowing regional foreign borrowing. The latter might not sound particularly important. According to the CIA’s 1983 national intelligence document Yugoslavia: An Approaching Crisis?:

Although self-management in theory permits workers to own and manage their enterprises, in fact the leaders in the six republics and two provinces… became the dominant economic decision makers. They grew increasingly protectionist and isolated from each other in pursuing local interests. Ignoring national economies of scale and ultimate profitability, they built redundant enterprises, blocked competition on the “unified market,” and granted unrealistic price increases and subsidies to favored industries. Thus, by the early 1980s inflation in the 30- to 40-percent range became chronic…

…click on the above link to read the rest of the article…

How the World’s Energy Problem Has Been Hidden

May 5, 2021

How the World’s Energy Problem Has Been Hidden

We live in a world where words are very carefully chosen. Companies hire public relations firms to give just the right “spin” to what they are saying. Politicians make statements which suggest that everything is going well. Newspapers would like their advertisers to be happy; they certainly won’t suggest that the automobile you purchase today may be of no use to you in five years.

I believe that what has happened in recent years is that the “truth” has become very dark. We live in a finite world; we are rapidly approaching limits of many kinds. For example, there is not enough fresh water for everyone, including agriculture and businesses. This inadequate water supply is now tipping over into inadequate food supply in quite a few places because irrigation requires fresh water. This problem is, in a sense, an energy problem, because adding more irrigation requires more energy supplies used for digging deeper wells or making desalination plants. We are reaching energy scarcity issues not too different from those of World War I, World War II and the Depression Era between the wars.

We now live in a strange world filled with half-truths, not too different from the world of the 1930s. US newspapers leave out the many stories that could be written about rising food insecurity around the world, and even in the US. We see more reports of conflicts among countries and increasing gaps between the rich and the poor, but no one explains that such changes are to be expected when energy consumption per capita starts falling too low.

The majority of people seem to believe that all of these problems can be fixed simply by increasingly taxing the rich and using the proceeds to help the poor…

…click on the above link to read the rest of the article…

The Hunt for Global Taxes

April 13, 2021

The Hunt for Global Taxes

The proposal is to create a global tax rate as world leaders move to create a one-world government. The United Nations, behind the curtain, is preaching that ONLY they can solve the world crisis in climate change, for it requires a single government to control the world. On top of that, Bill Gates has taken over the funding for studies by Ivermectin & Fluvoxamine Clinical Trial Targeting COVID-19. We can bet that given his monopoly over vaccines, taking over the funding of studies to show an alternative to vaccines will by no means be legitimate. The conflicts of interest are vast.

As I have warned, they desperately needed to remove Trump from office because they viewed him as an outsider and someone elected by “populism,” which threatened the world establishment of political control by elite career politicians. They are now moving in high gear to eliminate democracy by 2022, but certainly, their goal is by 2024.

As I have warned, our models of politics have NEVER shown Panic Cycles since the 1930s. It appears that some states are trying to fight back where the Democrats want mail-in ballots that are not secure and same-day registration to vote to ensure there can be no verification of who the people even are. The Supreme Court has abandoned its role to protect our constitution by refusing to hear any of the cases, which may not have overturned the election but would have dealt with changing the rules as they went.

People have no idea what is at stake. These people in power want ABSOLUTE control, and they never want another popular person to run for office anywhere that would dare to threaten their goal of eliminating democracy.

…click on the above link to read the rest of the article…

Canada, the Supreme Court hold that Carbon Tax is Constitutional

March 26, 2021

Canada, the Supreme Court hold that Carbon Tax is Constitutional

In Canada, the Supreme Court ruled Thursday that Ottawa has the power to impose a carbon price across the country as a “matter of national concern.” This is a major win for Trudeau and he can really make sure that the Canadian economy further declines to enable the Build Back Better agenda.

Let me make this VERY CLEAR. Even the US Supreme Court upheld Obamacare by holding it was a “TAX” When Obama deny that. Even the US Supreme Court would have struck down Obamacare as a social program, but as a TAX it held that government can impose ANY tax it so desires and at any rate. When it comes to taxes, the Supreme Courts of Europe, USA, Canada, or Bangladesh, will ALWAYS rule in favor of governmental power to TAX without constraint. They will ignore the history that 99% of all revolutions unfold because of taxes. Therefore, do not be surprised about tax rulings by the courts. This is also when Western society is doomed. We will not be able to sustain this sort of government beyond 2032. So just start planning now for the next real Great Reset which will be the overthrow of republics.

This is why in my solution, TAXATION must be abolished – PERIOD! If we simply printed the amount of money we needed to run government and it is capped at say 5%-10% of GDP, it would be far less destructive than taxation for the debt will never be repaid. At times, the accumulative interest expenditures have reached 70% of the debt showing that the real problem is borrowing in the first place. All of this COVID and Climate Change is a cover-up for the fact that the system of debt is coming to an end…

…click on the above link to read the rest of the article…

martin armstrong, armstrong economics, climate change, carbon tax, canada, taxes, supreme court of canada, canadian government

ONLY

March 14, 2021

ONLY

Claude Monet Grand Canal, Venice 1908

Our freedoms are cancel-cultured one by one, and by now hardly anyone notices anymore, because the media is in on it. But this cannot end well. We better stop this now, or it will get awfully out of hand. It’s a sliding scale bouncing down a slippery slope that gifts politicians and “health authorities” the world over with ever more powers, which they really should not have, as everyone would agree with who takes a step back to look at the bigger picture.• ONLY doctors are experts.

• We use ONLY vaccines to fight Covid, no prophylactics. No vitamin D, HCQ or ivermectin.

• We have ONLY Emergency Use Authorization vaccines.

• We can soon ONLY travel after having been inoculated with such vaccines.

• We can ONLY express officially approved opinions.

• ONLY doctors are experts.

You can’t let your country be run by doctors, virologists and epidemiologists. Anyone can understand that. But this is the reality:

Advisory Committee On Pandemic Needs Variety Of Experts, Not Just Doctors

The existing committee of experts advising the government on the pandemic must reshape to add experts from different research disciplines instead of one to become more efficient, according to a professor on Friday. Manolis Dermitzakis, professor of genetics at the University of Geneva, told Skai television that, in the first wave of the pandemic, the decisions for the committee were simple. It ONLY had to decide whether some activities should open or close, while the public largely complied with the restrictive measures. But the complexity of the situation as the pandemic continued from the summer onwards was so great that a commission which includes ONLY doctors could not function. Dermitzakis also argued that the panel must have fewer members. “A committee that has 30-40 members and consists ONLY of doctors cannot function,” he said.

…click on the above link to read the rest of the article…

The End of Paper Money – the Digital Revolution

March 5, 2021

The End of Paper Money – the Digital Revolution

The assumption in governments has always been that WE ARE THE PROBLEM – not them! They have really believed that if they could tax the underground economy they would have balanced budgets. We all know that in reality, no matter how much money they collect, they will always spend more. This idea that digital currency will wipe out crime is rather absurd. I was talking to a young person who buys their weed, like so many these days. They make a phone call, it is dropped off in their mailbox, and they pay by some cash transfer application. So they never even see the person anymore. So the move toward digital transactions has not eliminated the underground economy, it has actually improved it making it more efficient.

Meanwhile, the criminals have to learn now how to code in order to hack into systems. It seems that this trend is forcing criminals to become much more professional in their endeavors.

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