Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Capital in the Twenty-First Century Flawed Theory That's Torching the Best-Seller List

Stock-Markets / Financial Markets 2014 Jul 03, 2014 - 12:57 PM GMT

By: Money_Morning

Stock-Markets

Peter Krauth writes: I really do hate to say this, but the government threat to your assets is growing... again.

We've seen it happen in Cyprus, where bank accounts were "raided" to bail-in the country.

We've seen it in Argentina, Poland, Hungary, and other nations where private pensions were nationalized to help the countries' ballooning debts and deteriorating sovereign credit ratings.


I even warned you that the new MyRA accounts could be a shrewd way to get at your savings, and that the IMF was floating the idea of a "capital levy - a one-off tax on private wealth..."

Well, now a French "economist" is using his best seller as a platform to advance a tax "plan" centered on your wallet...

The Flawed Theory That's Torching the Best-Seller List

A new book, Capital in the Twenty-First Century by Thomas Piketty, has already spent 74 days in the top 100 as an Amazon.com best seller. Despite reaching its fourth printing, it's still regularly selling out.

That's not something you can often say about a book on economics.

Piketty spent 15 years accumulating and researching data on wealth inequality. The nearly 700-page tome was well-received in the U.K. and America.

His work even earned him the title of "rock star" economist, and his book tour landed him a meeting with Treasury Secretary Jacob Lew, a lecture at the IMF (surprise), and a talk to Obama's Council of Economic Advisers.

So what could he be saying that's perking up so many high-profile ears?

Well, his theories lead him to conclude that under capitalism, the rich consistently get richer and that this inequality is perpetuated and inevitable.

His solution to this problem is simple: Eat the Rich.

How? Impose rates of 80% on anyone earning $500,000 or more, 50% to 60% on incomes starting at $200,000, an annual wealth tax of 10% on large fortunes, and a one-time assessment up to 20% on smaller accumulations of existing wealth.

One of the most relevant charts from his book looks at the proportion of wealth owned by the top 10% of Americans from 1910 to 2010.

Co-founder and former CEO of Cambridge Associates (a global investment firm), Hunter Lewis, offered his thoughts about the data:

"What we actually see are two peaks for high earners, right before the crash of 1929 and again before the crash of 2008. These are the two great bubble eras in which government printed too much new money, which led to a false and unsustainable prosperity. These were also crony capitalist eras, as rich people with government connections used the new money to become even richer or benefited from other government favors."

Interestingly, and perhaps not so surprisingly, Capital in the Twenty-First Century was not well-received in his home country of France.

I'm guessing that's because of their recent experience with Piketty-like reforms. Socialist President Hollande imposed a 75% tax on millionaires which, despite being challenged in court, just needed tweaking to be considered legal.

Thanks to a 2011 one-time levy on incomes for French households with assets over 1.3 million Euros, 8,000 families paid taxes exceeding 100% of their income. Another 12,000 paid over 75%.

Famed actor Gerard Depardieu fled France to become a citizen of Russia, causing then-Prime Minister Jean-Marc Ayrault to call him "unpatriotic."

Here's What's Really Disturbing... and What to Do About It

But perhaps what's most disturbing about Piketty's work is the doubt about his data's integrity.

An investigation by the Financial Times found "data problems and errors in Professor Piketty's work. These include unexplained entries in his spreadsheets, cherry-picking data sources, and transcription errors. Taken together, these problems seem to undermine his conclusion that wealth inequality is rising in the U.S. and in Europe."

Piketty, it seems, casts aside the fact that in a capitalist system people deal with each other on a voluntary basis, leading him to disregard the laws of economics to reach his desired conclusions.

If you're concerned about Piketty's causal relationships (with their damaging impact on people's perception of "appropriate" fiscal policy), here's what you can do...

Once again, you need to take appropriate steps to safeguard your assets against both inflation and confiscation:

  • Own and invest in hard assets like gold, silver, energy, and real estate
  • Hold plenty of cash
  • Diversify internationally

The risk with high-profile opinions to establish a global wealth tax is what I like to call "repetition fatigue."

Eventually, after enough reiterations, ideas like this become increasingly mainstream and acceptable - a dangerous outcome.

In the end, if common sense doesn't prevail, the immutable laws of economics will.

I think Margaret Thatcher summed it up best when she said:"The problem with socialism is that you eventually run out of other people's money."

Source : http://moneymorning.com/2014/07/03/stop-this-threat-to-your-income-in-its-tracks/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

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


Post Comment

Only logged in users are allowed to post comments. Register/ Log in