Tag Archives: Money/Economy/Taxes

China, Russia call to replace dollar as global reserve currency

“China says it wants a new global currency that is weighted with the values of the major currencies of the world including the dollar, the yen, and the sterling, among others.

China is believed to have at least $1.2 trillion in US currency of its $2 trillion strong currency reserves.

China’s concern is if the U.S. begins to print money to pay debt and stimulate the economy, its own currency will lose significant value.

Most recently, about a week ago, the top Russian bank was also pushing for a new global reserve currency for the same reasons and to also strengthen Russian influence in the world.” (business2press.com)

If this is what they’re saying publicly, imagine what they’re saying privately.

Ron Paul Predicts 15-year Depression

“But the credibility of both western governments and their currencies is waning, and has been ever since the gold standard was abandoned in 1971, says Mr Paul. And that means even ‘safe’ investments are far from safe, he claims. . . .

Unfortunately, cashing out will not protect the value of investments, he insists, because ‘fiat’ currencies will all decline over the coming years as measures to try to haul the world economy out of recession fail. ‘The current stimulus measures are making things a lot worse,’ says Mr Paul.

‘The US government just won’t allow the correction the economy needs.’ He cites the mini-depression of 1921, which lasted just a year largely because insolvent companies were allowed to fail. ‘No one remembers that one. They’ll remember this one, because it will last 15 years.’

At some stage – Mr Paul estimates it will be between one and four years – the dollar will implode. ‘The dollar as a reserve standard is done,’ he says. He sees little hope for other currencies where central banks have also created too much liquidity dating right back to the early 1970s.” (Read more from infowars.com)

Obama admin. seeks powers to shut firms like AIG

“WASHINGTON (Reuters) – The Obama administration on Tuesday mounted a full-scale push for government authority to shut down troubled institutions like insurer AIG to avoid the need for future bailouts.

U.S. Treasury Secretary Timothy Geithner, testifying before lawmakers still fuming about big bonuses for executives at bailout recipient AIG, called on Congress for new powers to take over big non-bank financial firms that run amok.” (Read more from news.yahoo.com)

First government gives itself the power to redistribute our money to AIG (despite the Constitution). Now they want to give themselves the power to shut down a private company.

WTF!?!?!?!!?!?

If the assholes in government would have simply done NOTHING, then AIG would be shut down – probably by a bankruptcy court. The net effect would be identical, but we’d have more of our money, and governments would have no new powers.

Hauser’s Law of Tax Revenue

“Kurt Hauser is a San Francisco investment economist who, 15 years ago, published fresh and eye-opening data about the federal tax system. His findings imply that there are draconian constraints on the ability of tax-rate increases to generate fresh revenues. I think his discovery deserves to be called Hauser’s Law, because it is as central to the economics of taxation as Boyle’s Law is to the physics of gases. Yet economists and policy makers are barely aware of it. . . .

[Hauser writes:] ‘No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.'”

“As Mr. Hauser said: ‘Raising taxes encourages taxpayers to shift, hide and underreport income. . . . Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation.’

Putting it a different way, capital migrates away from regimes in which it is treated harshly, and toward regimes in which it is free to be invested profitably and safely. In this regard, the capital controlled by our richest citizens is especially tax-intolerant.” (Read more from online.wsj.com)

Political Posturing Over AIG

“I recently received an e-mail from Sen. Tom Harkin expressing outrage over the AIG bonuses and vowing to ‘pass legislation that completely taxes those bonuses away’ and ‘send a message to AIG and other companies who received bailout money.’

While I think the anger is well-founded, I fear it misses the point.

Government should never have entered the business of giving our money to failing companies. The line between government and private enterprise is now perverted. Because of the bailouts, politicians are now posturing by interfering in businesses they know little about, and businessmen (bankers in this case) now have more reason than ever to lobby and influence politics.

The whole process is outrageous. Bad companies should simply go bankrupt. There are plenty of banks here in the Midwest that have been responsible. If we lived in a free society, they would find themselves in a position to buy assets from the hugely irresponsible and incompetent New York banks. Instead, money is taken from the competent and given to the incompetent.

At the same time, politicians are pretending to have stuck it to the man. Scolding AIG over several hundred million in bonuses after handing them several hundred billion is ridiculous.

If Congress wants to scrutinize something, they should scrutinize the Federal Reserve. Instead of worrying about AIG’s millions, they should provide transparency to the Fed’s trillions.” (from press-citizen.com)

Peter Schiff at the 2009 Henry Hazlitt Memorial Lecture

This hour-long video is well worth the time. My favorite part comes at 30:00 when Peter Schiff explains what I believe to be the most crucial lesson from this crisis: it is not a failure of capitalism, but a failure of government interference. The only institutions which needed regulation, are the ones the government created: Freddie Mac, Fannie Mae, the Federal Reserve. At about 60:00, he also repeats what my liberal friends hate to hear, that Obama’s policies are very much like Bush’s.

Interestingly and, I think, appropriately, there is a grassroots movement to convince Peter Schiff to run for Senate in 2010: Peter Schiff for Senate (CT)

Eliot Spitzer on Banking

Disgraced former NY Governor Eliot Spitzer published this article on Federal protection of the banking sector. Shortly thereafter, Patriot Act laws were used to spy on his finances which ultimately exposed his penchant for prostitutes.

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.” (Read more from washingtonpost.com)

Like I always say, government is not our protector against monopolistic companies, they are the creator and enforcer of monopolies.

The $8.5 Trillion Recovery

With recoveries like these, who needs recessions?

This several months old, from Nov 2008, but it’s important to keep the figure in mind: $8.5 trillion. Much was made of the $800 billion which congress actually voted on, but most of the $8.5 trillion came from the super-secretive and largely unaccountable Federal Reserve.

Let’s not allow ourselves to be surprised when the dollar very quickly and very painfully loses its value.

“The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News. That sum represents almost 60 percent of the nation’s estimated gross domestic product.

Given the unprecedented size and complexity of these programs and the fact that many have never been tried before, it’s impossible to predict how much they will cost taxpayers. The final cost won’t be known for many years. . . .

Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in “unusual and exigent circumstances,” to other financial institutions.” (Read more from sfgate.com)

AIG Bonus Bombshell Raises New Questions About Goldman Sachs

“Decisions made during the final months of the Bush administration created an environment in which the most politically connected investment banks, Goldman Sachs and Morgan Stanley, not only flourished, but saw their competitors laid waste, with firms like Lehman in bankruptcy, and others, like Merrill Lynch and Bank of America, forced to merge in desperate hope of surviving.” (Read more from huffingtonpost.com)

Goldman Sachs Wins Big In Secret Bailout Via AIG

In terms of power and influence, no other bank seems to come close to Goldman Sachs. Their name comes up a lot as you travel down the rabbit hole of government secrecy.

“In case you were wondering where on earth all that money went that you shoveled into the black hole known as AIG, we now have a pretty good idea.

* $13 billion of it went to Goldman Sachs
* $12 billion went to Soc Gen
* $12 billion went to Deutsche Bank
* $9 billion went to Barclays
* $7 billion went to Merrill Lynch
* $5 billion went to Bank of America

And so on.

All these firms did business with AIG voluntarily. All these firms knew (or should have known) the risks of doing business with an unregulated firm in an unregulated part of the market. All these firms were willing to take the risk that AIG wouldn’t be able to make good on its commitments.” (Read more from businessinsider.com)