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Economic Suicide as Economies and the Middle Class are Taxed to Death

Economics / Great Depression II Sep 04, 2010 - 08:00 AM GMT

By: Ty_Andros

Economics

Diamond Rated - Best Financial Markets Analysis ArticleAs our socialist progressive leaders in the developed world murder wealth creation, the middle class and our economies under the guise of saving them.  Capitalism is now dead in the lands of its birth because there are NO REWARDS for saving, investing, starting a business, hiring an employee, taking a risk or working your ass off to get ahead. 

The rewards for doing so now go to GOVERNMENT, public serpents and their supporters to redistribute to themselves and to the desperate, useful idiots who support them (because they do not have the education required to know not to).  As the something-for-nothings in society turn to government to save them more torture lays ahead.


Public policy responses to the unfolding depression are exactly the OPPOSITE of what is required to restore economic and income growth.  Ob@ma’s policies are not new; they are an AGGRESSIVE expansion of those under George Bush.  More government, more entitlements, more regulation, more deficit spending -- compassionate conservatism was nothing less than progressive socialism in disguise.

The middle class is being destroyed as socialist progressives, elites and crony capitalists destroy the means for rising standards of living/incomes, rewarding savers and investors and short circuit capitalism – ever driving the middle class into dependence through monetary debasement, unsound money and economic sabotage, purposefully. 

Marxist socialism is the economic policy of “misery spread widely”, collapsing economies and destruction of the middle class, and it is now practiced throughout the developed world.  In the developed world, capitalism is dying as socialist predators are allowed to prey upon their young entrepreneurs and small businesses to protect the big crony capitalists who support them.  It  robs the middle class of the opportunities to thrive and rise through being superior competitors who dethrone the corporatists by providing more for less to consumers and being rewarded for doing so.

Capitalism is the economic policy of wealth spread widely, expanding middle classes and is defined as providing more goods and services for less money to consumers, thus destroying entrenched crony capitalists who rely on regulatory assassinations of rugged young competitors… And it is alive and well in the emerging world as their governments PROTECT them from the predators in the developed world, thus allowing them to collect the rewards from global consumers for providing more goods and services for less money.

These policies are creating huge OPPORTUNITIES for prepared investors as volatility expands in ALL MARKETS (stocks, bonds, commodities, currencies, natural resources, etc) to price in the unfolding demise of the western world’s economies, currency and financial systems.  As incomes and economies collapse in the developed world (G7), the printing press will be substituted to FILL IN the shortfall.  Buy and Hold is dead until REAL growth is restored.  Stocks and bonds have 10% upside and 40% downside potential: risking 4 dollars to make one is the definition of INVESTING insanity. 

Gold-backed Absolute-Return Investments with the potential to thrive in UP, down and sideways market conditions are part of the solution.  The indirect exchange and restoring the functions of money to your fiat currencies offer many of the solutions.  This is what I do ( http://www.TraderView.com/consult/ )….

In America, TAXES are about to rise viscously to support those who produce nothing in government.  The bill for FREE healthcare is about to arrive and it is a 20 to 30% rise in premiums for employers who provide it.  Let take a look:

What can you say about this? 

Christina Romer, currently Chairman of the Council of Economic Advisers in the White House, and her husband David when they were at Stanford conducted exhaustive research which concludes that tax increases are highly contractionary, Their estimates imply that the tax increases will shrink economic output by more than three dollars for every dollar in new taxes.

The sun setting of the bush tax cuts and new healthcare taxes beginning in 2011 will generate a projected 300 billion dollars a year in new taxes.  Using the Romer Multiplier implies a 900 billion dollar decline in economic activity next year.

The other taxes contained in the healthcare bill will be phased in over a 4-year period and no one knows what they will be.  The healthcare legislation was a tax bill in disguise, unreported by the press but plainly seen in the final draft.  What employer would hire an employee when they do not know the costs to do so?  The biggest expense in any enterprise is labor, and no one will know the cost -- if costs are unknown you cannot expect hiring to take place.

Only 3 percent of taxpayers pay over 80 percent of all individual taxes in the United States.  These are small business owners, over their lifetimes they have taken risks and entered the field of capitalism and competition.   If they fail they are broke.

The ones that survive employ the vast majority of Americans and have been rewarded by consumers because they supply more goods and services for less money than their competitors.

 This is virtuous behavior for provider and buyer.  The seller makes a profit and the consumer gets more goods and services for his family for less money.  The reward to this is savings and profits; they earned it with their sweat, risk taking and investment

 And at the same time they provide jobs for many.  So profits and lower prices go hand in hand.

If they are not allowed to keep the fruits from their investment in time, sweat and money they will quit doing so.  three percent is a small group for the something-for-nothings to rest and prey upon.  These are the people that the administration is demonizing as the RICH and for whom they are refusing to allow tax rate extensions.  If twenty percent decide to close their doors and retire because it no longer pays to run their small businesses unemployment will double.

Ask California how well this formula works?

I believe a far higher portion is heading for the hill; they have made their money and don’t need the hassle and, as rugged individuals, they will not be slaves to the president and government -- they are not stupid.

Embedded in Ob@ma’s budget are tax revenue projections and they are Orwellian in size, and they show the intentions of the morally and fiscally corrupt administration that it is:

This chart illustrates the 80% rise of taxation in the United States that the administration and congressional democrats have in their plans to finance their redistributive schemes, also known as MARXIST progressive socialism.  It’s called OB@MAGEDDON and it is the implementation of a social welfare state, continuing middle class destruction and increasing government dependence.  It will IMPLODE wealth creation and private sector income.  Look no further than this short essay from Porter Stansberry (thank you Dennis Gartman for bringing this to us www.thegartmanletter.com ) describing the current state of affairs and unfolding catastrophe:

THIS IS WHY THERE ARE NO JOBS IN AMERICA

By Porter Stanberry

Saturday, August 21, 2010

I’d like to make you a business offer.  Seriously.  This is a real offer.  In fact, you really can’t turn me down, as you’ll come to understand in a moment…

Here’s the deal.  You’re going to start a business or expand the one you’ve got now.  It doesn’t really matter what you do or what you’re going to do.  I’ll partner with you no matter what business you’re in – as long as it’s legal.

But I can’t give you any capital – you have to come up with that on your own.  I won’t give you any labor – that’s definitely up to you.  What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you’re allowed to operate your business.  That’s half of your profits.

Now in return for my rules, I’m going to take roughly half of whatever you make in the business each year.  Half seems fair, doesn’t it?  I think so.  Of course, that’s half of your profits.

You’re also going to have to pay me about 12% of whatever you decide to pay your employees because you’ve got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how.  Come on, you’re my partner.  It’s only “fair”. 

Now…after you’ve put your hard-earned savings at risk to start this business, and after you’ve worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you’d like to cash out – to finally live the good life.

Whether or not this is “fair” – some people never can afford to retire – is a different argument.  As you partner, I’m happy for you to sell whenever you’d like…because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.

I know…I know… you put up all the original capital.  You took all the risks.  You put in all of the labor.  That’s all true.  But I’ve done my part, too.  I’ve collected 50% of the profits each year.  And I’ve always come up with more rules for you to follow each year.  Therefore, I deserve another, final 20% slice of the business. Oh…and one more thing…

Even after you’ve sold the business and paid all of my fees…I’d recommend buying lots of life insurance.  You see, even after you’ve been retired for years, when you die, you’ll have to pay be 50% of whatever you estate is worth.

After all, I’ve got lots of partners and not all of them are as successful as you and your family.  We don’t think its “fair” for your kids to have such a big advantage.  But if you buy enough life insurance, you can finance this expense for your children.

All in all, if you’re a very successful entrepreneur…if you’re one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public…you’ll end up paying me more than 75% of your income over your life.

Thanks so much.

I’m sure you’ll think my offer is reasonable and happily partner with me…but it doesn’t really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules- I’ll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.

That’s how civil society is supposed to work right?  This is America, isn’t it?  That’s the offer America gives its entrepreneurs.  And the idiots in Washington wonder why there are no new jobs…

Regards,  Porter Stanberry

Thank you, Porter. That, folks, is a description of the United States today; it’s a country where the private sector only EXISTS to feed the leeches in the public sector, banksters, elites and crony capitalists.  They have BETRAYED America and usurped the constitution and become our masters.  They run America to serve no one but themselves and their special-interest supporters; to them the public are sheeple to be fleeced.  As you can see, you do not need to take over a business to confiscate the fruits of its labors; the private sector is independent in name only!!

This is what “CHANGE we can believe in” really is.  Remember last fall when the president held a jobs and economic summit in Washington and DID NOT invite the Chamber of Commerce or the National Federation of independent businesses?  These organizations represent MILLIONS of small businesses and they have NO VOICE in Washington.  They are the dastardly RICH, in the president’s rhetoric.  They weren’t invited because the socialist progressives despise those who are not dependant on them.  Attendees were limited to large crony capitalists such as GE, the too-big-to-fail banks, government motors, and the pharmaceutical and healthcare industries. 

Wealth and income generation CANNOT be expected to RESUME until the public sector is REFORMED and brought back to the FACT that they are our servants not our MASTERS.  The public are not the SLAVES of the PUBLIC sector.

The parasites have now KILLED the host private sector and continue to FEED on the middle class CARCASS with policies which WILL NOT allow them to advance -- personally, professionally or financially.  This is the recipe Europe has had for decades and is why it is a hopeless case to expect wealth generation to resume.  The debt spirals in America and Europe are terminal as incomes will NEVER service the exploding debt.  Take a look at Europe’s tax BURDENS on its slaves….er, I mean public, and keep in mind they sold this as “compassion and social responsibility”:

In reality, this is obscene and absurd, the private sectors and public at large are nothing more than slaves.  No wonder the industrial sectors have LEFT the continent and US.  The public serpents, elites, banksters and crony capitalists have now also EATEN the private sector.  They march HAND in HAND to oppress the public with higher prices for less goods and services for those they claim to serve.  This is where socialist progressives on BOTH SIDES of the POLITICAL aisle are taking Amerika. This is why the G7 WILL NOT escape the greatest depression EVER!

Do you know how a VAT (value added tax) tax works?  Let me explain it.  It is a tax at the levels you see above at EVERY STAGE of production.  Let’s look at a cotton T-shirt.  In the United Kingdom it means 20% tax when the cotton is sold to the mill to produce the thread, then a 20% tax when the thread is sold to another mill to weave into fabric, then a 20% tax when it is sold to the manufacturer to sew the fabric into the garment, then a 20% tax when the finished garment is sold to the retailer, then a 20% tax when the retailer sells it to you.  This is how a $1 pair of underwear at Target or Walmart costs $10 in Europe.  This is government ROBBERY of the public.  Now Ob@ma and the socialist progressive democrats have its sights set on bringing it to YOU.

They call it VALUE ADDED to FOOL the dumbest among us or useful idiots; it is thus with all socialist-progressive legislation: THE OPPOSITE of its TITLE.  It actually subtracts value from the consumer at every stage of production.  Every time wealth is created at every stage of the production cycle it is immediately CONFISCATED and transferred to the PUBLIC sector.  Basically, you are PUNISHED for producing more than you consume and for creating wealth.  Talk about a disincentive to produce wealth -- this is it!  Wealth that is immediately transferred to people who misallocate and destroy it through redistribution through the incompetent bureaucrats and a corrupt state!

This is another reason why Europe no longer makes its own everyday items. To pay this is ECONOMIC suicide for the manufacturing industry and every other industry it touches.  It is why WEALTH creation, the middle class and incomes can never rise. It is why EUROPE cannot grow its economies or middle classes.  The public are rats on spinning wheels to NOWHERE, fleeced to exhaustion and poverty.  This is misery spread widely by public serpents.

Your federal government officials in Washington think this is a good idea for Amerika -- vote against every democrat you can.  When Ob@ma and the democrats talk about helping small businesses but then tax people who make over $250,000, please understand: they are one and the same.  They talk cooing sounds for sound bites and main stream press headlines while STABBING these people in the back through their actual policies.

This VAT tax combined with FIAT currency masquerading as sound money, deficit spending and runaway welfare state entitlements is why Europe’s economies cannot EVER expect recovery.  The structural reforms necessary to restore wealth and income growth will destroy the special interests which control the public sectors.  So you can expect the collapse in the economies to resume.  Recovery relies on increased DEMAND from consumers, but without rising economies, WAGES cannot rise.

In conclusion:  You can expect the US economy to resume its collapse NOW.  In fact, it has resumed its freefall, a 27% drop in home and auto sales are canaries in the coal mine.  Job creation in this environment is a fairy tale.  You can expect up to 1 million small businesses to CLOSE their doors in the next year and take 5 to 10 MILLION jobs with them.  And reversal or repeal of finreg and OB@MACARE WILL NOT bring them back! 



Unemployment is turning up and it will relentlessly RISE and smash the previous peak as the expiration of current TAX RATES and the obscenities called FINREG and OB@MACARE, implemented in the last two years by Washington DC, come home to roost:

Take a look at what the banksters and the terrorists in the beltway have brought you in this interactive video of spreading unemployment: http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

As Porter Stansberry correctly points out, there are no incentives left to create wealth in Amerika.  Socialism is in full bloom and misery spread widely can be expected to blossom as well.  The policies which needed to be implemented during the global-financial crisis and deep recession to foster growth were ignored.  As White House Chief of Staff, Rahm Emanuel, said:  “A crisis is a terrible thing to waste”… they didn’t and…

Instead, more taxes, more regulations and more government were implemented, deepening the crisis and crippling future ECONOMIC and employment prospects.  Trillions have been and are being printed to hold up the economy, support crony capitalists and expand government at the expense of the wealth-creating PRIVATE sector.  The economy in real terms is in free fall; in nominal terms (by misstating inflation) it is BARELY growing.

 Gold-backed, absolute return alternative investments with the potential to thrive in up, down and sideways markets are part of the solution.  Volatility has been and is set to SOAR.  As  the unfolding depression is priced into markets, stocks, bonds, currencies and commodities will ZOOM up and down to REFLECT the insanity of our socialist progressive leader’s policies.  Buy-and-hold is dead; an actively managed investment by professionals is essential to meet the challenges of today’s markets.  This is what I do. ( http://www.TraderView.com/consult/ )

I will be doing a webinar on gold-backed, absolute return investments in the next several weeks, watch for links to register to attend in upcoming editions.  Tedbits is also about to release a video book entitled: “When HOPE turns to FEAR” which will ONLY be for available to registered subscribers of Tedbits.  Subscriptions are free at www.TraderView.com/subscribe/ .  Don’t miss the next edition of Tedbits: Depression written into law series…

By Ty Andros
TraderView
Copyright © 2010 Ty Andros

Hi, my name is Ty Andros and I would like the chance to show you how to capture the opportunities discussed in this commentary. Click here and I will prepare a complimentary, no-obligation, custom-tailored set of portfolio recommendations designed to specifically meet your investment needs . Thank you. Ty can be reached at: tyandros@TraderView.com or at +1.312.338.7800

Tedbits is authored by Theodore "Ty" Andros , and is registered with TraderView, a registered CTA (Commodity Trading Advisor) and Global Asset Advisors (Introducing Broker). TraderView is a managed futures and alternative investment boutique. Mr. Andros began his commodity career in the early 1980's and became a managed futures specialist beginning in 1985. Mr. Andros duties include marketing, sales, and portfolio selection and monitoring, customer relations and all aspects required in building a successful managed futures and alternative investment brokerage service. Mr. Andros attended the University of San Di ego , and the University of Miami , majoring in Marketing, Economics and Business Administration. He began his career as a broker in 1983, and has worked his way to the creation of TraderView. Mr. Andros is active in Economic analysis and brings this information and analysis to his clients on a regular basis, creating investment portfolios designed to capture these unfolding opportunities as the emerge. Ty prides himself on his personal preparation for the markets as they unfold and his ability to take this information and build professionally managed portfolios. Developing a loyal clientele.

Disclaimer - This report may include information obtained from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made to ensure its accuracy or completeness.  Opinions expressed are subject to change without notice.  This report is not a request to engage in any transaction involving the purchase or sale of futures contracts or options on futures.  There is a substantial risk of loss associated with trading futures, foreign exchange, and options on futures. This letter is not intended as investment advice, and its use in any respect is entirely the responsibility of the user. Past performance is never a guarantee of future results.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Steve Cousins
05 Sep 10, 12:17
How VAT works

Here in Europe VAT is not as bad as the author describes it.

While it is true that VAT is charged by the seller "at EVERY STAGE of production", what the author does not mention is that each commercial buyer is able to reclaim any VAT paid on his purchases.

It is only the consumer (a non-commercial buyer) who can not reclaim the VAT. The end result is the net VAT paid on a product is only that charged by the last seller in the supply chain.

Using a similar example to that used by the author:

If a mill buys cotton from a cotton producer, the producer might charge the mill $10 plus $2 VAT (20%). The producer pays the government the $2 VAT he collected. The mill would pay the $12, but reclaim the $2 VAT from the government. Net VAT collected by the government is therefore ZERO.

The manufacturer then buys the cotton from the mill for $20 plus $4 VAT. The manufacturer pays the $24, but reclaims the $4 VAT. Net VAT collected by the government is therefore ZERO.

The manufacturer then sells the product to a retailer for $80 plus $16 VAT. The retailer pays $96, but reclaims $16 VAT. Net VAT collected by the government is therefore ZERO.

The retailer sells the product to Joe Public for $160 plus $32 VAT. The retailer hands over the $32 VAT to the government. Joe Public gets to pay the $32 VAT (20% in this example) as he can not reclaim it. Net VAT collected is 20% of the final transaction.

So VAT is only effectively charged once. Retail products only increase in price by one VAT charge, not multiple VAT charges as suggested in the article.

And Yes, it is very inefficient and costs the country a fortune to collect and reclaim all the VAT at every stage of the supply chain. It also keeps numerous VAT inspectors busy checking up on businesses. Yet more unwanted government.

The only exceptions I am aware of is that very very small businesses do not have to register for VAT (and thus do not have to become unpaid tax collectors). Such a business is unable to reclaim any VAT paid on purchases and does not charge VAT on any sales. Such businesses can not compete when in the middle of a supply chain, but can do ok at either end.


mike
06 Sep 10, 05:10
cost of T-shirts in Europe

Last time I checked, the reason that things cost more here is Europe is that suppliers are allowed to control prices further down the distribution channel than they are in the US.


avraam jack dectis
06 Sep 10, 19:47
misleading charts

The charts are amazingly misleading.

Gold is an intrinsically worthless metal that is only good for the occasional electrical connection. It is a repulsive substance torn from the earth by extremely toxic processes.

The GNP to expenditures chart should show ratios, not absolute numbers.

Tax rates were far higher in the decades following WW2 and the economy boomed.

.


greg
09 Sep 10, 06:41
misleading article

This whole article is misleading. Andros misinterprets causes and effects while throwing out red meat (red herrings and shiboleths) for knee-jerk right wingers to goose step to.

These folks are tapping into public pessimism in order to promote their own "consulting" and "advising" businesses. Thus, it's doom doom doom all the time in cracker barrel economics land.


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