Category Archives: Debt

US Already Inflicts ‘Deposit Taxes In Disguise’

Business, Debt, Democracy, Economy, Federal Reserve Bank, Inflation

“Savers Pay for Spenders,” our March 19 BAB post on Cyprus, asked:

WHY is state-sanctioned theft from Cypriot savers any different to your paycheck being docked for statutory payroll tax deductions?
WHY is state-sanctioned theft from Cypriot savers any different in principle to the statutory theft called the income tax; and, in particular, from the progressive income tax, where the rich (“savers”) are penalized for the sins of the rest?
As to taxes on assets: Property taxes, taxes on investments—why are these seizures of private property any different in principle to the lunge on Cypriot savings accounts the bankers and bureaucrats of Europe have made?
You’d think the US doesn’t tax assets. It does. And how are the taxes above different in principle from a bank deposit levy?

Today comes the news, (via Forbes), that Cyprus and its puppet masters have agreed that, “the Popular Bank of Cyprus (Laiki Bank) will wind down” [presumably this is journo babble for “close”].

Laiki Bank deposits above 100,000 euros—which aren’t protected by EU law—will be frozen and used to pay for the deal. The frozen accounts are expected to yield 4.2 billion euros ($5.5 billion), and account holders will see an estimated 30% to 40% haircut on assets. Far greater than the original 9.9% levy.

“Haircut” is yet more journo mumbo-jumbo. The correct word is “theft.” Large-scale robbery of private property.

Financier Peter Schiff completes the thought expressed in this post’s lede, above—and shared by every clear thinking libertarian. This is all a formality—a more in-your-face lunge for private property :

…isn’t inflation, which allows governments to pay off debt through the creation of new money that transfers purchasing power from savers to borrowers, just a deposit tax in disguise? (Read more about Japan’s plan to do just that). British citizens of all means have been living with such a three percent stealth tax for the past three years, and it is expected to stay that high for at least two more years. Yet a one-time tax of 6.75% in Cyprus is seen as the ultimate act of betrayal?
Many are lamenting that Cyprus’ membership in the EU prevents it from devaluing its own currency to get out of the jam. How would such a course be morally superior? Taking actual losses on deposits is no different than taking losses through devaluation and inflation. Both result in the loss of purchasing power. Asking for a depositor haircut at least deals with the problem honestly and immediately. Although it’s not quite as honest, devaluation can also be effective.

UPDATED: Savers Pay For Spenders

Debt, Economy, EU, Europe, Federal Reserve Bank, Private Property, Socialism

Cypriot officials had colluded with euro-zone Kleptocrats in order to raid individual savings accounts in their country to pay for their profligacy.

If the little guy did this—you or I—we’d be in the big house.

Other than that it is theft, seizing private property to pay for “public” debt punishes the economically righteous, who squirreled away for a rainy day (RETIREMENT). Observe how state policies, in addition to generally being immoral, invariably help invert conventional morality.

The right of private property notwithstanding, why should savers pay for spenders?

However, ask yourself this:

WHY is state-sanctioned theft from Cypriot savers any different to your paycheck being docked for statutory payroll tax deductions?

WHY is state-sanctioned theft from Cypriot savers any different in principle to the statutory theft called the income tax; and, in particular, from the progressive income tax, where the rich (“savers”) are penalized for the sins of the rest?

As to taxes on assets: Property taxes, taxes on investments—why are these seizures of private property any different in principle to the lunge on Cypriot savings accounts the bankers and bureaucrats of Europe have made?

You’d think the US doesn’t tax assets. It does. And how are the taxes above different in principle from a bank deposit levy?

UPDATE (3/20): From Vox Day:

One of the many unintended consequences of the Cyprus situation is that many people are finally beginning to understand that money they deposit into a bank is no longer their money. It’s one thing to have some vague notion of what a fractional reserve system is, it’s another to realize that with every deposit, you are making what amounts to an interest-free loan to some of the shadiest and shakiest entities on the planet.

UPDATED: The Balanced Budget Deception (‘Debt? What’s That,’ Says The Ass With Ears)

Conservatism, Constitution, Debt, Economy, Federalism, Founding Fathers, Individual Rights, libertarianism, Republicans, Rights, Taxation

At least those who tout the Republican budgetary version of a decrease in the increase in spending are no longer claiming to downsize the government.

So proud was Sean Hannity of Paul Ryan’s latest budget iteration that he boasted that, while it increases spending by trillions, it still manages to shave off $4.64 trillion in increases.

According to the Washington Examiner, the current spending trajectory will see “federal government outlays … rise from $3.61 trillion this year to $5.77 trillion in 2023, for a cumulative 10-year total of $46.1 trillion in federal spending.”

“Under Ryan’s new budget, federal spending would reach just $4.95 trillion in 2023, for a 10-year total of $41.46 trillion. That’s $4.64 trillion in deficit savings, which is a good start,” conclude the Examiner editors.

House Budget Committee Chairman Paul Ryan has dusted off last year’s budget, tweaked it a bit and resubmitted it to Republican applause.

Lauding so-called “balanced budget” initiatives is laughable. The real problem is that the quest to “balance federal spending and taxes” is meaningless. It does nothing to stop the federal government from raising taxes as it increases spending and grows in scope and size, ad infinitum.

Ultimately, “A balanced-budget requirement implies is that government has the constitutional right to spend as much as it takes in; that government is permitted to waste however much revenue it can extract from wealth producers, and that the bums must merely bring into balance what was stolen (taxes) with what is squandered (spending).”

“The Powers Delegated to the Federal Government are Few and Defined.” A return to the 18 or so functions the Constitution delegates to the federal government would be a much better start. This requires that entire departments be shuttered.

UPDATE: Scrap everything I’ve just said (NOT). This just in from the president: “There is no debt crisis.”

Without reading what TAWE (“The Ass With Ears”) has said, you know that, to dismiss a $16.5 trillion debt, you have to think that macroeconomics and microeconomic are two separate solitudes, governed by different laws.

To say such a stupid thing as TAWE has said, “You have to to believe that the values and virtues ordinary mortals hold themselves to don’t apply to government; that the laws of economics are NOT natural, but political, laws.”

“We don’t have an immediate crisis in terms of debt,” President Obama told ABC News correspondent George Stephanopoulos this week.

In uttering such a fatuity, BHO showed that he has no regard for or knowledge of what Thomas Jefferson was warning about, when he said:

“The greatest danger came from the possibility of legislators plunging citizens into debt. We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

The Survivalist’s Guide to ‘Obammunism’ & Beyond

Classical Liberalism, Debt, Economy, Government, Healthcare, libertarianism, Political Economy, Regulation, Socialism, The State, Welfare

“The Survivalist’s Guide to ‘Obammunism’ & Beyond” is the current column.

“No statist lies are safe from his scrutiny,” writes Lew Rockwell about economist Thomas J. DiLorenzo’s latest book. What follows is an excerpt from my conversation with professor DiLorenzo about, ”Organized Crime: The Unvarnished Truth About Government,” and the timeless truths to which it speaks.

5. ILANA MERCER: You write: “At the heart of the U.S. government’s continued takeover of the health care sector of the economy was a law passed during the Obama administration that would eventually drive the private health insurance industry out of business and transform it into a de facto nationalized industry.” Elaborate. Since, as you repeatedly warn, the natural laws of economics cannot be repealed, what will these health care exchanges achieve? How will they invariably be funded? What will be the cost to business? To the millions who’re losing coverage? Who will ultimately fork out for the per-head fee imposed on medical plans?

THOMAS DILORENZO: The Obama version of health-care socialism forces insurance companies to cover people with expensive diseases without charging them higher rates to compensate for the additional risk. This effectively will force the insurance companies to pay out billions in health care costs, and then the Obammunists will impose price controls on the industry because that’s what socialists always do once they intervene in a market by forcing businesses to offer something for nothing, thereby driving demand through the roof. The price controls will cause massive bankruptcy, at which point the argument will be made that what is needed is “single-payer healthcare,” a euphemism for health-care socialism or government-run monopoly. In the meantime, they seem to be imposing hundreds of relatively small, hidden taxes to come up with the revenue to keep the scheme going.

6. MERCER: “The Obamacare Survival Guide” is a best-seller on Amazon. The market is producing survivalist literature to help Americans navigate the treacherous shoals of this law. What does it tell you? Like me, you must know plenty of Obama-heads (doctors too) who shrugged off the idea that further centralizing health care—a modest healthcare expansion totaling $2 trillion, I believe—would cost them anything at all. As The Lancet recently confirmed, in the UK’s National Health Service funding is inversely related to patient outcomes. You speak of “inputs” and “outputs.”

DILORENZO: I cited a study by the late Milton Friedman entitled “Inputs and Outputs in Medical Care,” published by the Hoover Institution some twenty years ago. In it the Nobel laureate economist showed that, historically, as government became more and more involved in health care by taking over hospitals and funding Medicare and Medicaid, inputs – in terms of money spent – skyrocketed while “output” in terms of patients served declined. He spoke of something called “Gammon’s Law,” named after a British physician named Max Gammon, who noticed that with healthcare socialism in England, increased “inputs” in the form of massive amounts of money spent always seemed to disappear “as though through a black hole” with little or nothing to show for it in terms of health care.

7. MERCER: You touch briefly on the “private component of GDP.” Free-market thinkers get that the private economy alone produces wealth. But no. GDP is a political construct, defined, tracked and manipulated by the D.C. political machine. Unpack the GDP gambit for us, down to its deceptive components.

DILORENZO: Including government spending in the definition of GDP was a creation of John Maynard Keynes, who defined it as C (Private Consumption) + I (Private Investment) + G (Government Purchases) + X-M (Net Exports). In so doing, Keynesians concluded that the most prosperous year in American economic history – 1946 – was actually a year of revival of the Great Depression with a precipitous drop in economic activity because of the huge decline in federal government spending after World War II. Of course, this was NOT a year of depression but an explosion of private investment, consumption, and job creation.

8. MERCER: About that elusive economic recovery: My colleague Vox Day (who sadly called it a day on WND) argued that, “The Great Depression 2.0 will be worse than its predecessor.” Day chalked that up to today’s unprecedented levels of debt, consumption and credit, private and public. It’s a hunch. But I think you’ll disagree.

DILORENZO: No one can predict something like this, especially since today’s economy is vastly different from the 1930s. Capital markets are much more sophisticated, for one thing, although government regulators by the thousands do their best to destroy them – and with them what’s left of American capitalism. Predictions like this always ignore the resilience of entrepreneurs. As the Austrian Business Cycle theory of Mises and Hayek contends, it is the boom period where all the damage is done in the form of “malinvestment” – in the latest bust this was mostly in real estate. During the recession or depression is when entrepreneurs are forced to become more efficient, more inventive, more creative – or else. This is how the Japanese recovered from something much worse than a depression – long years of war and the dropping of atomic bombs on their country – in a little over a decade.

More on “sequesteria,” tax loopholes and Obamacare, at www.ilanamercer.com, where the conversation with professor DiLorenzo continues.

Read the complete column, “The Survivalist’s Guide to ‘Obammunism’ & Beyond.”