Taxes … Looking at the what is. Part 1 of many parts

Sitting, realizing little written. Little to read and open ones mind, as to why I believe that serfdom should be abolished.

That is to say income taxes imposed on ones earnings.

I was brought up in a strange era. Too late for one generation and too early for another.

Let us look at one quote on taxes.

Frank Chodorov on Income Tax, The Root of Evil

“The only beneficiaries of income taxation are the politicians, for it not only gives them the means by which they can increase their emoluments but it also enables them to improve their importance. The have-nots who support the politicians in the demand for income taxation do so only because they hate the haves; although they delude themselves with the thought that they might get some of the pelt the fact is that the taxing of incomes cannot in any way improve their economic condition.”

Looking at the beneficiaries, politicians first.

The income is technically limited, as too benefits, as too retirement benefits.

It is what is in the fine print of costs incurred.

Power corrupts though, not very many politicians retain their original personalities.

Retirement is like that Goose that laid the golden egg.

During a politicians career they learn to lie, the obey the commandments of the party leader and misguide people.

Their tenure once terminated bestow great benefits.

Oh yes, they also do a great deal during their reign to greatly improve their mundane importance. Even to the pointless task of memoirs, … This alone should be reserved for great leaders…. We have but a few.

Civil (Public) Servants
Graded and wait in line.
Working for the politicians, not the public.

Look at the Tax Collectors, as a separate area.

These ‘have nots’ strive to improve their own importance and their attitude and personalities change.

They believe that it is their money they are collecting and everyone is out to game the State. A delusional world that is inbred within the institution.
Trust none, not even your own.

I was amazed at how many of the staff employed within these organizations turn on one another. Benefits are in higher grading, salary.

What they won’t do to make that ladder shorter.
They hate the haves …..

Social Security

The simple fact of the matter is that any capitalist economy that introduces an income tax, then changes to a socialist economy.

A safety net for those unemployable, in transition, sick, pregnant or incapacitated.

The servants are one of a kind.

These people stuck in a rut and waiting for a death, resignation, retirement further up the line, as with the tax collectors and other civil/public servants.

Everyone of these long term civil/public servants have to have problem. I am sorry but how many of these employees count the steps to work every morning until they are resigned to the fact that nothing is going to change?

They have to be special, they have to be able to take the same shit day in and day out.

Frank Chodorov’s book is a great read.


The inane policy of negative interest rates

I had a conversation with a friend today and the comment arose about negative interest rates – I explained that they were a negative for a reason but the impact is bizarre in that the Banks will pay you to borrow money.

He was shocked – in fact dumbfounded – a real WTF moment – so that it could register.

I needed to explain that variable rate loans for example are tied to a central point – as an example the well known London Interbank Offer Rate (LIBOR). The loan rate may be fixed at say 2 percent above LIBOR and this rate adjusted on a monthly basis.

If rates go negative – let us say for example 5 percent – then that would equate to the borrower receiving 3 percent interest being paid by the bank.

Silence – stunned silence.

The stupidity of the situation is that the purpose of negative interest rates are being pushed so low in Europe – in fact, in the negative territory – so that some banks are paying borrowers to take loans – yes from Denmark to Switzerland some borrowers are very happy.

If you read the prior article on this blog about Quantitative Easing then you will be aware of its purpose – the ‘cash-strapped’ governments in Europe are paying almost nothing to borrow money by selling their sovereign bonds.

That’s helping bolster their finances – the intention was that businesses would be paying very little to borrow – so they can invest and expand at little cost with the vain hope of increasing employment.

The flow on would be that savers are finding it doesn’t pay much to save money by depositing it in the bank or putting it in a money fund, so they ‘may’ be more inclined to spend it – and help boost economic growth.

All of this ‘Modern Monetary Theory’ has no empirical evidence to support the alleged efficacy of this proposition – and much to the contrary – It should come as no surprise that it doesn’t work as advertised – and no surprise that the conflicted practitioners of dogmatic interventionism don’t care whether it works for society or not.

It works for them personally – as a means to an end – lower the value of the currency – deflate the value of the currency to defer investors – in the vain hope of stimulating domestic economy.

On a prior article I indicated that the Eurozone was in deflation – Quantitive Easing (QE) and low or negative interest rates will have this affect – principally due to the ‘confidence’ of the consumer.

These policies hurt savers – whilst the desire is to force consumers to spend the contrary indicators – are that debt is being repaid.

This action or reaction to the stupidity of the situation is no more evident in the commercial arena than the losses posted by Deutsche Bank and Credit Suisse. Please note that I have only read the headlines of the losses and capital raising a but it does not surprise me – in view of the deflation factor on assets (bonds) and currencies.

A report issued by Bank of America supports this prognosis – please note that my comments are in italics – in that it states

“The easing bias of central banks in Europe over the last week has exacerbated the shortage of positive-yielding assets. Negative-yielding government debt in the Eurozone has jumped from €2tr to €2.6tr over the last week and now stands at a record high. The previous peak in negative-yielding government debt was €2.4tr, reached in April this year prior to the “Bundshock” – I highlighted this in an April article – in that smart money is seeking short term liquidity (cash) – thereby creating volatility in the Bond markets.


Charts courtesy of Bloomberg

“The problem of low inflation remains evident. Swiss inflation has collapsed into very negative territory, albeit precipitated by the SNB abandoning their currency peg earlier in the year. While Danish inflation has moved away from zero post big rate cuts in 2015, it is still hovering at just 0.5%. And Swedish inflation has been stuck around zero since early 2013. The Eurozone itself is in deflation.


Charts courtesy of BoA

“The problem of low inflation remains evident. Swiss inflation has collapsed into very negative territory, albeit precipitated by the SNB abandoning their currency peg earlier in the year. While Danish inflation has moved away from zero post big rate cuts in 2015, it is still hovering at just 0.5%. And Swedish inflation has been stuck around zero since early 2013.”


Charts courtesy of BoA

“Yet, household savings rates have also risen. For Switzerland and Sweden this appears to have happened at the tail end of 2013 (before the oil price decline). As the BIS have highlighted, ultra-low rates may perversely be driving a greater propensity for consumers to save as retirement income becomes more uncertain.”


Charts courtesy of BoA

“For now, negative rates as a policy tool remain a “work in progress”, judging by the current inflation levels across Europe. But the rise in household savings rates amid so much central bank support is paradoxical to us, and mimics what we highlighted in the credit market earlier this year. Companies in Europe are deleveraging, not releveraging, and are buying back bonds not stock.”

Despite NIRP, therefore, “animal spirits” across companies and consumers in Europe have yet to be stirred.

Animal spirits from my point of view is greed – if one looks at the US Equity Markets over the past several months the majority of capital raising by these listed public companies is not for productive assets but for ‘share buy-backs’.

Using cheap funds to buy back – or maintain – or increase a share price. This from my point of view is a simple statement of the incompetence of the CEO’s that run these companies.

It is in their interests to maintain or increase the share price rather than increase internal performance of the company.

History shows us that the last massive borrowing and share buyback practices were prior to the 2008 financial crisis.

Empirical evidence on QE and negative interest rates is now in – the problem though is who will be inclined to read history to understand the shortcomings of this inane theory?


Quantitive Easing – Setting the record straight


Let us get a few things straight – Quantitive Easing

Quantitive Easing (QE) Mystery Solved

The QE processes adopted by countries does nothing more than transfer assets – from the Central Banks – to the Banks – nothing more nothing less.

This in itself is not spending money – it is not money creation – it is a method by which Central Banks strengthen the Balance Sheets of Commercial Banks – large corporations and the rich.

A simple way of saying – if the Commercial Banks and others have shit assets on their books they can swap them for Central Bank bonds. This is nothing more than protecting the Commercial Banks assets and liquidity.

If Mr Joe Blogs or Mr Public has shit assets the Central Bank is not interested in these assets – not interested in the public – they believe in protecting the Banks – Bondholders – Shareholders of the Banks – large corporations – and by definition the elite.

The only linkage between QE and the money supply is described as indirect – Banks can use these replaced reserves to create money – by making loans to the public.

The onus is not on the Banks to lend – if they do not wish to lend and/or borrowers do not wish to borrow – then the reserves are an ‘inactive’ constraint – if one does borrow than one has to repay the debt.

So a vital missing ingredient on the subject of QE is public perception – confidence to borrow and invest for productive assets – not borrow to repay expensive loans.

When banks seek to increase their capital and borrowers strive to pay down their debts, QE does not increase the money supply and therefore does not cause inflation. 

When reserves are an inactive constraint on borrowing and lending, a central bank engaged in buying securities is as fruitless as ‘tits on a bull’ – this does nothing more than creates losses for the Banks and creates stagflation – deflation.

There were three academic studies – that found quantitative easing doesn’t work (1) -the massive fund injection by those countries participating in this ruse was to bail out mates – if one takes the time to read these reports they confirm that it was a bailout program which allowed the Bankers and their associates to make immense profits.

Germany’s finance minister, Wolfgang Schäuble, called the decision “clueless” on the Central Banks QE programs.

Need I say more as to the incompetence of those that dictate financial policy.


And no – not a conspiracy by an elite group – just plain incompetent financial policy.


“One very simple, but radical, idea: to democratise Europe.” OpenDemocracy interview

A democratic European Union would be great – especially after the treatment of Greece – and recently the unconstitutional effort by the President of Portugal – change is needed.

Problem is though the self serving politicians in the EU.

Further problems would be the debt associated with the Club Med countries – should they be allowed to leave the EU – to get their houses into order. Choices have to be made and losses incurred – the alternative is not pretty.

Yanis Varoufakis

Screen Shot 2015-10-25 at 20.19.08

For the OpenDemocracy site click picture above. Or read on…

View original post 4,717 more words

The EU a ‘Totalitarian’ Regime – Constitutional Crisis in Portugal

Well it had to happen sooner or later – the anti austerity party wins the majority of the voles but is denied the right to form a government with a coalition partner.

From the Independent –“Anibal Cavaco Silva, Portugal’s constitutional president, has refused to appoint a Left-wing coalition government even though it secured an absolute majority in the Portuguese parliament and won a mandate to smash the austerity regime bequeathed by the EU-IMF Troika. (1)

Seems that the EU is exercising the totalitarian powers – in that Greece’s Syriza movement – Europe’s first radical-Left government in Europe since the Second World War – was systematically crushed into submission for daring to confront the eurozone ideology.

Me thinks that the IMF – Trioka have had enough of the elected opposition to austerity – rather than take time to bring the newly elected incumbent government to its knees through cash-tration – far better to just cut them off at the knees.

Or …. as the Telegraph UK says “Now the Portuguese Left is running into a variant of the same meat-grinder.”

Me feels that more power to the people – demonstrations and rebellion against the ruling elite required.

Let the games begin.

Image courtesy of

The Portuguese movement “Que se Lixe a Troika” (“Fuck the Troika”) is a powerful, grassroots movement against the IMF, ECB, and EU imposed austerity measures – as its name proudly states.(2)

“Que se Lixe a Troika” made its first appearance in September 2012 – it is about time that they had more boots on the ground to stop the EU’s authoritarianism – maybe join forces with PEGIDA.

Well – it is a democratic country is it not?


Portugal’s opposition Socialists have pledged to topple the centre-right minority government with a no-confidence motion, saying the president had created “an unnecessary political crisis” by nominating Pedro Passos Coelho as prime minister. (3)

Now I think the mainstream media should hang their heads in shame – ‘The Telegraph UK’ the only major paper that has made the initial story – what one should realize is that this is blatant breach of the Constitution.

An election is an election – since when does a President dictate who should rule and for what reasons?

His reasons were simple – not to upset the status quo with the EU and Troika – well Que se Lixe a Troika.




China – Guilding the Lily

As I am writing an article the Chinese have again intervened in their currency – this will be the sixth time since November last.


The situation of the Yuan and the strengthening USD may have indeed been a consideration of the US Federal Reserve at their September meeting – the simple fact of the matter is that the global economy is nuts and regardless of what Yellen and the US Fed Reserve contemplate – there is no substitute for the USD.

Expect continued debasement by China of their currency – with each and every rise – or as what has happened now – a fall in the USD.

Only now ‘The Economist’ has woken up from their slumber with an article ‘Rate cut shows that even China’s government doesn’t believe its own data’.

Quite frankly who would?

Had anyone done the math – the provincial figures were far short of the PBoC data – and when one looks at these figures they are in line with 2009 GDP.

In reality China ‘guilding the lily’ – then again what choice do they have – they are trying to maintain this position of internal strength – to offset the complete ‘fukups’ by other Central Bankers.

Their currency still far too strong in the international markets – yes no one wins currency wars.

Investors seem to think that China will save the world again – that my dear friends is impossible.

Expect more reactions on the Shanghai Index – this against the PBoC comments that the markets are stable.