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To Clarify, Main Street Is Not Wall Street

After all the destructive policies we have seen coming out of the Eccles Building, it may be time to ask Fed Chairman Jerome Powell, “Do you even know what the economy is?” All the easing and stimulus has taken us to a place we could call Bubbleville. It has bolstered asset prices and speculation but done little to help Main Street or generate a strong economy. This destructive force was unleashed long before Covid-19 came into the picture and hanging our economic misfortunes on the pandemic may sound reasonable but is far from accurate.History shows that misguided financial policies often end in a crisis, in this case, it is likely to play out in massive inflation. Milton Friedman knew a bit about this, he said; The government benefits the first from new money creation, massively increases its imbalances, and blames inflation on the last recipients of the new money created, savers and the private sector, so it “solves” the inflation created by the government by taxing citizens again. Inflation is taxation without legislation.

https://www.youtube.com/watch?v=PeIeFUJ9EY

A comical Progressive Insurance commercial has a smooth-faced fella going on about his beard and apologizing for how he looks. Finally, a coworker asks him, “Jamie, do you even know what a beard is?” Over the months we have watched Fed Chairman Jerome Powell time and time again cut rates and increase the Fed’s balance sheet. This has hurt savers, forced investors into risky investments in search of yield, damaged the dollar, encouraged politicians to spend like drunken sailors, and increased inequality.

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

bruce wilds, advancing time blog, jerome powell, fed, us federal reserve, bubble, financial policies, fed balance sheet, inflation, taxation, inequality

Macron – No taxation without representation

January 12, 2019

Macron – No taxation without representation

The mass protests on the streets of French cities recall the first years of the American War of Independence. In the years before and during the American Independence Movement, the resentment that independence advocates harboured was that the Thirteen Colonies were obliged to pay taxes to the British Crown without being represented in the British Parliament by their own elected deputies. The slogan of the founding fathers of American democracy at the time was “No taxation without representation”. Nowadays it could be inscribed on the flags of the Yellow Vests, the movement that opposes additional taxation by Macron’s government. The government represents the interests of the Brussels technocrats, i.e. bankers and large corporations, and not those of the French people. Brussels does not allow holes in the state budget, does not tolerate anyone who does not abide by its fiscal guidelines. The French were persuaded that they retained sovereignty, although for years the princes from Brussels (commissioners of the revolution against sovereignty of states – Timmermans, Juncker and others) have been setting the course for France. Although the French deputies allegedly represent their people in the European Parliament, they are not proposed directly by the people, but by the parties. Most voters have swallowed the bait for years that the parties act in their interests, but even the dimmest dummy gets wise over the years. Voters in the 21^st century must not be treated as they were in the 19^th: the first cracks in the beautiful image of the handsome president, whom the German media describe as “visionary”, appeared when he reduced property tax on real estate. French citizens could not swallow it. Though the move was supposed to keep money in the country, Macron was denounced by low earners as the “president of the rich”.

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

The Federal Reserve’s Shell Game

June 8, 2018

The Federal Reserve’s Shell Game

Inflation, wealth redistribution, and the subtle art of misdirection

The Federal Reserve is a key component of the US government’s wealth redistribution apparatus. Under the guise of “macroeconomic management,” it redistributes vast amounts of wealth on an ongoing basis through inflation. The victims of these transfers are ordinary Americans. The beneficiaries are the government and its elite cronies.

The Fed masks the nature of this surreptitious taxation and corporate welfare by performing a simple shell game that is just complicated enough to confound the general public.

First, let’s imagine the government performing this kind of inflationary transfer without the shell game.

Let There Be Money

Imagine Uncle Sam sitting at a desk, representing the Federal government. His right hand is the Treasury. It has the government’s main bank account, represented by a ledger on the desk. Uncle Sam also has revenue collecting powers, represented by a gun resting on the desk, which he uses to extort taxes from the public. Whenever he confiscates money, the cash balances of the public decline, and Uncle Sam’s ledger increases by the same amount.

As the God of the Bible could say, “Let there be light” (in Latin, fiat lux) and it was so, the State can say, “Let there be money” (fiat pecunia) and it is so.

Now let’s say Uncle Sam wants to raise $200 million for current expenditures: bureaucrat salaries, weapons purchases, welfare payments, etc. The problem is, the public has a limited tolerance for overt taxation. So, at a certain point, if Uncle Sam simply gestures to his gun again to levy the funds, he might face a tax revolt.

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

Debt Doesn’t Matter, Because “We Owe It to Ourselves”? Why Krugman and Keynes Are Wrong about This

June 6, 2018

Debt Doesn’t Matter, Because “We Owe It to Ourselves”? Why Krugman and Keynes Are Wrong about This

It is an undeniable fact that debt, whether private or public, must, eventually, be repaid.

Creditors have better memories than debtors. This elegant line was coined by Benjamin Franklin—political philosopher, prolific writer, humorist and American ambassador to France. Mr. Franklin also was one of the Founding Fathers of the United States of America. A true polymath and a man of great common sense.

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

March 1, 2018

When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

When America’s fiscal crisis hits, remember that raising taxes will only exacerbate the problem.

At some point in the next 10 years, there will be a huge fight in the United States over fiscal policy. This battle is inevitable because politicians are violating the Golden Rule of fiscal policy by allowing government spending to grow faster than the private sector (exacerbated by the recent budget deal), leading to ever-larger budget deficits.

I’m more sanguine about red ink than most people. After all, deficits and debt are merely symptoms. The real problem is excessive government spending.

But when peacetime, non-recessionary deficits climb above $1 trillion, the political pressure to adopt some sort of “austerity” package will become enormous. What’s critical to understand, however, is that not all forms of austerity are created equal.

The crowd in Washington reflexively will assert that higher taxes are necessary and desirable. People like me will respond by explaining that the real problem is entitlements and that we need structural reform of programs such as Medicaid and Medicare. Moreover, I will point out that higher taxes most likely will simply trigger and enable additional spending. And I will warn that tax increases will undermine economic performance.

Regarding that last point, three professors, led by Alberto Alesina at Harvard, have unveiled some new research looking at the economic impact of expenditure-based austerity compared to tax-based austerity.

…we started from detailed information on the consolidations implemented by 16 OECD countries between 1978 and 2014. …we group measures in just two broad categories: spending, g, and taxes, t. …We distinguish fiscal plans between those that are expenditure based (EB) and those that are tax based (TB)… Measuring the macroeconomic impact of a plan requires modelling the relationship between plans and macroeconomic variables.

Here are their econometric results.

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

Taxation Is Robbery

February 3, 2018

Taxation Is Robbery

[This article was originally published in 1947 as a pamphlet from Human Events Associates. It was reprinted in 1962 as chapter 22 of of Out of Step: The Autobiography of an Individualist.] Mises.org

The Encyclopaedia Britannica defines taxation as “that part of the revenues of a state which is obtained by the compulsory dues and charges upon its subjects.” That is about as concise and accurate as a definition can be; it leaves no room for argument as to what taxation is.

In that statement of fact the word “compulsory” looms large, simply because of its ethical content. The quick reaction is to question the “right” of the state to this use of power. What sanction, in morals, does the state adduce for the taking of property? Is its exercise of sovereignty sufficient unto itself?

On this question of morality there are two positions, and never the twain will meet. Those who hold that political institutions stem from “the nature of man,” thus enjoying vicarious divinity, or those who pronounce the state the keystone of social integrations, can find no quarrel with taxation per se; the state’s taking of property is justified by its being or its beneficial office. On the other hand, those who hold to the primacy of the individual, whose very existence is his claim to inalienable rights, lean to the position that in the compulsory collection of dues and charges the state is merely exercising power, without regard to morals.

The present inquiry into taxation begins with the second of these positions. It is as biased as would be an inquiry starting with the similarly unprovable proposition that the state is either a natural or a socially necessary institution. Complete objectivity is precluded when an ethical postulate is the major premise of an argument and a discussion of the nature of taxation cannot exclude values.

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

The Deep History of Taxation May Surprise You

November 16, 2017

The Deep History of Taxation May Surprise You

For the majority of history, the idea of sustained taxation in peacetime was anathema. So what happened?

Two things in life are certain: death and taxes. So goes the saying. And yet despite that, the idea of the necessity of taxation is largely undisputed, “consent” to its use is, historically seen, new. How did it come about that tax evasion, first an act of protection against the abuse of government, is now frowned upon? Why is there such moral indignation, and why is tax avoidance such a big deal today when it was widespread centuries ago?

Think of the procedure of taxation and then imagine you’d have to explain it to a person who has never heard of it before. That is pretty much the history of taxation in a nutshell. Early taxes in Ancient Rome and Greece were not only very low and indirect (for instance, on goods), they were only levied when there was a time of crisis. European countries which were large traders, such as the Netherlands or England, gathered funds for the expenses of the state through tariffs. While these were protectionist and surely not good news for the farmers on each side, at least they did not claim ownership to a part of the people’s income, as they did in France.

Historically Speaking

The crown was confronted with such a large opposition to the tith, that King Henry suspended it and promised to never levy such a tax again.

During the Middle Ages, the King’s finances and those of private individuals were merged: there was no distinction between a public budget and private budget. Consecutive monarchs instituted taxes according to the expenses they deemed necessary at that moment in time.

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

The Great Deficit Ruse

November 4, 2017

The Great Deficit Ruse

Your intuition is right: tax cuts are good and tax increases are bad.

If your profligate friend blew his budget on liquor, you might feel bad for him. But it’s unlikely that you would be willing to fork over money to cover his mistake. He needs to figure it out. And maybe, then, he will learn a lesson for the future.

This is exactly how I feel about all this whining about the federal deficit. I didn’t cause it. It’s not my problem. I should not be forced to pay for it. I don’t work every day in order to earn money to pay for other people’s problems.

It’s bad citizenship always to be willing to pay the government’s debts.

Admit that you agree. You don’t really care about the deficit. Not really. It’s an abstraction to you. More crucially, the deficit is not your fault. You are not responsible for paying for one dime of the federal debt. No portion of your justly made income should be taken to cover the fiscal irresponsibility of anyone except perhaps your children.Actually, it’s very bad parenting always to be ready to pay the kids’ debts. It’s similarly bad citizenship always to be willing to pay the government’s debts.

All this media talk–and it is incessant and ubiquitous–about how the deficit is way more important than your property rights completely disregards the realities of politics. Namely: politicians and bureaucrats desperately need an excuse to take your money. Making you pay for their past mistakes is as good an excuse as any.

Your intuition is right: tax cuts are good and tax increases are bad.

But hold on: doesn’t that just shove the burden of debt onto the next generation? My answer: not if the next generation is similarly unwilling to cough up taxes to pay for the dumb things government does.

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

Arizona Challenges the Fed’s Money Monopoly

March 6, 2017

Arizona Challenges the Fed’s Money Monopoly

History shows that, if individuals have the freedom to choose what to use as money, they will likely opt for gold or silver.

Of course, modern politicians and their Keynesian enablers despise the gold or silver standard. This is because linking a currency to a precious metal limits the ability of central banks to finance the growth of the welfare-warfare state via the inflation tax. This forces politicians to finance big government much more with direct means of taxation.

Despite the hostility toward gold from modern politicians, gold played a role in US monetary policy for sixty years after the creation of the Federal Reserve. Then, in 1971, as concerns over the US government’s increasing deficits led many foreign governments to convert their holdings of US dollars to gold, President Nixon closed the gold window, creating America’s first purely fiat currency.

America’s 46-year experiment in fiat currency has gone exactly as followers of the Austrian school predicted: a continuing decline in the dollar’s purchasing power accompanied by a decline in the standard of living of middle- and working-class Americans, a series of Federal Reserve-created booms followed by increasingly severe busts, and an explosive growth in government spending. Federal Reserve policies are also behind much of the increase in income inequality.

Since the 2008 Fed-created economic meltdown, more Americans have become aware of the Federal Reserve’s responsibility for America’s economic problems. This growing anti-Fed sentiment is one of the key factors behind the liberty movement’s growth and represents the most serious challenge to the Fed’s legitimacy in its history. This movement has made “Audit the Fed” into a major national issue that is now closer than ever to being signed into law.

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

Looking Forward

August 16, 2016

Looking Forward

Since its inception, International Man has offered prognostications about what the future will bring – economically, politically and socially. The principle writers of the publication have been at this for decades. Each one began by studying world economics and politics in order to make the best choices as to where to live, where to invest, where to store wealth, etc. Over the years, each one got better at researching, better at reading the signs and, ultimately, better at predicting future events.

But, today, we’re approaching a worldwide crisis point and the study that we undertook decades ago has become important for literally hundreds of millions of people who, whether they realise it or not, will soon be impacted by events in a major way.

The foremost concern for readers of this publication is that the world’s leading governments have become decidedly fascist and are rapidly heading in a totalitarian direction. There are a number of facets to this development, all of them disturbing: The elimination of personal privacy, the creation of capital controls, confiscation of wealth, the conversion to electronic banking as the sole form of currency, international taxation standards and the creation of a police state. (There are many, many more facets, but these few tend to be at the core of concern.)

We can expect to see all of these concerns come closer to reality in the near future. The events that bring them about will increase in bothfrequency and magnitude as we get closer. (Historically, this is always the case, as governments that are in trouble race to get controls in place, as their continued ability to control events unravels.)

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

Hate Taxes? You Certainly Are Not Alone…

April 12, 2016

Hate Taxes? You Certainly Are Not Alone…

At this time of the year, millions of Americans are rushing to file their taxes at the last minute, and we are once again reminded just how nightmarish our system of taxation has become. I studied tax law when I was in law school, and it is one of the most mind-numbing areas of study that you could possibly imagine. At this point, the U.S. tax code is somewhere around 4 million words long, which is more than four times longer than all of William Shakespeare’s works put together. And even if you could somehow read the entire tax code, it is constantly changing, and so those that prepare taxes for a living are constantly relearning the rules. It has been said that Americans spend more than 6 billion hours preparing their taxes each year, and Politifact has rated this claim as true. We have a system that is as ridiculous as it is absurd, and the truth is that we don’t even need it. In fact, the greatest period of economic growth in all of U.S. history was when there was no income tax at all. Why anyone would want to perpetuate this tortuous system is beyond me, and yet we keep sending politicians to Washington D.C. that just keep making this system even more complicated and even more burdensome.

If you hate taxes, you are far from alone. According to NBC News, here are some of the things that Americans would rather do than pay taxes…

Six percent would rather sell a kidney, eight percent would rather name their first-born “Taxes,” and 11 percent would rather spend three years cleaning the bathrooms at noro-torious Chipotle.

Of course our system was never intended to be like this anyway. Our founders hated taxes, and they fought a very bitter war to escape the yoke of oppressive taxation. During his very first inaugural address, Thomas Jefferson clearly expressed what he thought about taxes…

“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”

Why couldn’t we have listened to him?

When the federal income tax was originally introduced a little more than a century

Is it Government or Oligarchs?

March 23, 2016

Is it Government or Oligarchs?

QUESTION: Martin,
I am a capitalist and what we have today is the least efficient form of capitalism. Actually it is quite a destructive and dangerous form of capitalism when the concentration of power reaches this level. I think that in all these years that I thought we were talking about different things, maybe we were not. You call big government what I call plutocrats controlling government. You were blaming governments, I was blaming plutocrats that we let become soo big and powerful that can buy any government…
Yet maybe we are not that far off.

… In any case… one question that I would love to ask you… how do you think we are going to fix the problem with the power structure? What I call the power structure is not the legitimate power structure, but the mix of oligarchs and corrupt government working as one cancerogenous entity. I do not see any reasonable way to fix it…?

Best regards

ANSWER: I think what you have to understand is that our structure of government being a republic rather than a democracy invites oligarchy. There has never been a single republic that has ever proven to work. The admixture of money and power always becomes lethal. This is why I blame government, not the oligarchs. They could not buy politicians if they were not (1) career lifetime politicians, and (2) all-powerful law creators. Taxes and regulations become the incentive for the oligarchs to buy government. If we eliminate taxes and career politicians, we will solve most of the problem. We then must eliminate socialism, which at its core is predicated upon the foundation of Marxism that advocates government possessing power by insisting it could alter society by regulation. This serves as a fundamental pillar for taxation.

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

Why did Lagarde Stay at the IMF? To Increase its Global Power.

February 23, 2016

Why did Lagarde Stay at the IMF? To Increase its Global Power.

Christine Lagarde Managing Director of the International Monetary Fund spoke at the IMF Arab Fiscal Forum: Fiscal Policy and Growth in Abu Dhabi on February 22, 2016. Her message was clear – forget downsizing government or reforming anything, just raise taxes. She opened the conference saying:

“This event is taking place at a pivotal moment not only for this region but for many other countries that have seen fiscal issues rise to the top of their policy agendas.

Or, to be more precise, it is taxation that has risen to the agenda in many countries. If you wonder why this issue has become so important, let me assure you that this is nothing new in the history of mankind!”

Lagarde is calling for international taxation. She has threatened every tax haven with being sanctioned and removed from the Swift System unless they give up everyone. She has done far more damage to the world economy than any previous director. We have anemic economic growth and rising tax enforcement depriving us of our free society and the free movement of people as well as capital. If you owe taxes, government simply revokes your passport precisely as passports began to prove you owed the state nothing and could travel. She concluded her address and called for global tax enforcement and raising taxes; not reforming government in the least. She said:

“Political economy…proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people…and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”

My main message today is this: creating successful 21^st-century economies requires robust government revenues and an international tax system that works for everybody. These ingredients are essential for growth, fairness, and development.

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

The Empire Has No Clothes

January 27, 2016

The Empire Has No Clothes

empire2 Hans Christian Andersen told the story of “The Emperor’s New Clothes” as part of his Fairy Tales Told for Children collection. The tale is almost two hundred years old. Most know how a little boy was the first to announce that the emperor had no clothes. Andersen’s tale is being re-written today and should be entitled “The Empire Has No Clothes.” This story is one occurring around the world.

Governments are in disrepair and disrepute everywhere. They are increasingly viewed as exploitive, ineffective and catering to privilege. Public interest, the idealistic goal of government, never was real in the sense that it overrode the private needs and wants of officeholders. “Public servants” were never better stewards of public interest than private citizens pursuing their own self-interest. Indeed, once the returns to power increased, self-selection made most politicians inferior in morality and public interest than the typical citizen.

The discomfort and turn against government occurs not because any of its behavior is new. Government has always been dishonest and a scam. What changed over time is the magnitude of government and its burden on citizens. The pain of tolerating it has apparently reached that threshold where people are no longer willing to ignore it.

Governments around the world have become leviathans, meddling in the most minute and personal decisions of its citizens. Supporting government in its infancy required no taxation. Today the average citizen pays more than 40% of his production as tribute and support to the empire. Few believe they get much of value in return.

Even with such confiscatory theft, governments are spending themselves and their citizens into bankruptcy. Capital that entrepreneurs need to start and grow businesses is now consumed by government vote-buying schemes and stupidity. As a result, economic growth cannot occur, jobs are lost and the standard of living declines.

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

Austerity Good or Bad?

October 12, 2015

Austerity Good or Bad?

QUESTION: Martin,

The ‘Austerity’ argument seems a bit confusing.

Surely, “Austerity” means reducing the size of Government and is an understanding that we can’t keep funding zillions of civil/public servants and on the other is a reduction of the Social Security Bill – healthcare, social benefits, the cost of the un and underemployed etc – both of which seem to be excellent objectives unless you are in one of the groups affected. Isn’t it impossible to return to or have a vibrant economy unless and until these objectives are achieved?

ANSWER: The problem with austerity carried out in the fashion is they are turning off the spigot, which is ending Marxist/Socialism, but they are continuing to service the debt and to accomplish that they hunt the rich and raise taxes, then agree to exchange all info and in the process you cause capital to hoard and not invest. So you are not really ending socialism, you are moving more toward totalitarianism.

So we will get these riots for they are not just people who receive, these are the people who cannot find a job because nobody is creating them with deflation. We have to look at both sides and this is why our proposal is to eliminate taxation at the federal level to unwind this mess from both directions.

So there is more to this than just reducing social programs. Doing that raising taxes to still service debts you end you with taxation without representation for the current workforce must then pay for spending that they never received anything in return.

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