[kitchencabinetforum] GLOBAL DEPRESSION AND GLOBAL DEBT JUBILEE

Growth cannot come from government spending, but only from elimination of VAT and drastic reduction of taxes, regulation, licensure, bureaucracy, and political corruption. http://venitism.blogspot.com

Obama plans to introduce a federal VAT of 16% to cover his increased socialist spending! In two years, he plans to increase it to 23%. Paul Volcker has engineered the American VAT. All citizens should avoid and evade sales tax and VAT all the way! If you live in USA, you should refuse paying sales tax, and if you live in Fourth Reich, you should refuse paying VAT. If a shop owner does not respect your refusal, go to the next shop. In this depression, you can find myriad shops to accommodate your refusal, pure and simple!

VAT is killing the goose that laid the golden eggs. VAT is the major culprit of depression, the #1 source of misery. VAT is the cacothanasia of economy! Vatdodging is heroism! If you are a real patriot, you should revolt against VAT, buying products online from companies that evade VAT. Remember, your government is your worst enemy! The freakish government of Greece stole my computer and my life! The largest online retailers offer top quality products at deep discounts without VAT. Only stupid consumers pay VAT! Some fantastic VAT-free offers are on the venitism blogspot. http://venitism.blogspot.com

Governments and central banks are increasingly resorting to a form of taxation that helps liquidate the huge overhang of public and private debt and eases the burden of servicing that debt. Such policies, known as financial repression, bring consistent negative real interest rates, yielding less than the rate of inflation, that are equivalent to a tax on savers.

The three largest credit rating agencies (CRA) – Moody's, Standard & Poor's, Fitch – are the messengers. You just cannot shoot a messenger! Most institutional investors have regulatory fiduciary requirements that necessitate the use of credit ratings as part of their daily business. They may think that the three CRAs really have no useful insights, but they still need to use their ratings. So this business is pretty much like any business that is given a legislative right to serve. CRAs could not have possibly been more wrong on their ratings of U.S. mortgage debt instruments. Chimps throwing darts are much better than pseudoexperts are!

History's first sovereign default came in the 4th century BC, committed by ten Greek municipalities. There was one creditor: the temple of Delos, Apollo's mythical birthplace. Jesus Nazarene talked many times about forgiving debts, and this has influenced many Christians of our times.

Many pullpeddlers and rabblerousers are pushing for a global Debt Jubilee, in order to pull the world out of the present global depression. But governments cannot force Debt Jubilee, which is a massive haircut of all loans, including mortgage and credit card debt. The notion of a Debt Jubilee dates back to biblical Israel where debts were forgiven every fifty years or so. Debt forgiveness would help borrowers get through the pain of deleveraging sooner rather than later.

Any haircut must confront the issue of moral hazard, the appearance of giving a gift to an unworthy borrower who simply made unwise spending choices. Institutional investors have fiduciary obligations and they can't necessarily agree to haircuts solely because it may be good social policy. A forced haircut would only result in a much higher cost of capital going forward and result in much less credit to more risky investments.

Kleptocrats cannot understand that stimulus funds stimulate government, not the economy. Downturn in a business cycle is painful but necessary medicine for restoring equilibrium to the economic system. Reject further lowering of the interest rate (stimulative monetary policy) or any other attempts (for example, deficit spending or stimulative fiscal policy) to stimulate demand. http://venitism.blogspot.com

It is not clear that providing warnings during a boom ever does anything. Smart investors usually know when a bubble is forming, but they also know that there are great amounts of money to be made, fast, if one can stay in until just before the bubble bursts and then get out. Investors who are not as smart see money being made and jump in, usually too late, and fail to jump out.

We saw in the 1990s that the lure of a fast buck was not overcome by messages concerning the dangers of what Alan Greenspan called irrational exuberance, no matter how trusted the source. But even more fundamentally, the libertarian perspective counsels politicians to do nothing at a time when all their instincts are to show voters that the government is doing something.

Throughout history, there have been hundreds of government bankruptcies. Look at Argentina and Russia, for example. But in none of these cases did the entire financial system collapse. Of course, the financial industry likes being able to collect hefty risk premiums without risk. But, it can't be right for Germany's taxpayers to prop up the banking sector under the guise of saving countries or the euro.

The last two stress tests of European banks are a joke, because they did not take into account the expected bankruptcies of PIGS, especially Greece. PIGS are floundering under the sheer expense of bailing out and reforming their financial system, going belly up. We now know the stress tests were nothing more than a placebo for the market! It was fraud, pure and simple!

Most information available on most government issues originates within the government. The basic reasons for the good press the Federal Reserve Board has had for many years has been that the Federal Reserve Board is the source of 98 percent of all writing on the Federal Reserve Board. Most government agencies have this characteristic.

Parliaments should abolish VAT and sales tax on bullion coins and repeal the legal tender law, which requires everyone to accept central bank notes as payment for debts. This will open up monetary competition, ending the monopoly of fiat money.

A bailout is a perverse transfer from poor taxpayers to rich taxpayers. America's Founding Fathers surely never envisaged that the federal government would take money from one group of Americans and give it to another group. Yet much of the federal budget is devoted to redistribution programs.

Bankruptcy will allow these companies to restructure to a more cost effective format, and it will allow them to trim the fat from their overhead so that they may once again become productive and profitable without risking trillions of dollars in taxpayer money. Overall, letting these companies go into restructuring, instead of preserving the status quo with taxpayer funds, is best for the long-term economic stability of both these companies and the nation.

Stimulus spending is like morphine. It might feel good in the short term for the beneficiaries of the money, but it doesn't help repair the economy. And it causes more damage if it gets in the way of a proper recovery.

If dollar devaluation becomes too pronounced, Washington threatens to kill the goose that lays the golden eggs: namely, the dollar's reserve status. If that were to happen, a global financial crisis of staggering intensity would surely erupt, the resolution of which would not favor the United States.

Fiat currencies trade people's freedom and security for the government's freedom to squander the wealth of the nation on wasteful pet programs, wars, and corruption. This is why the freedom of the people is so intertwined with a sound monetary unit. This is also why we like gold and silver, and supporters of big government hate them.

A serious threat to the euro has emerged, because financial markets lost faith in major debtor countries Spain and Italy. Investors must be able to afford to spurn certain investment opportunities, and this is only possible when there are better alternatives. But within Europe, the chances of finding suitable alternatives are limited. Even if all international investors were to view Germany as the only safe haven on the continent, not all potential lenders would be able to get a piece of the action.

Most crises are similar. There is a stage of boom and bubble before the bust and the crash. People will see the value of certain assets like homes or equity go up, then they will use these assets as a collateral for borrowing too much and therefore you have a build-up of leverage in the financial system. And then, once the bubble goes bust, the value of the assets falls and people are stuck with all this debt they can't repay.