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IceCap Asset Management April 2011 Market Outlook: "A Picture Is Worth 1.8 Trillion Words"

Tyler Durden's picture


From IceCap Asset Management

Well, how will Obama balance his budget? Without cutting any spending, he could simply double taxes for everyone – but that wouldn’t work; he’d have to tax the poor and the rich. Since the top 5% of wealthy Americans are already paying over 58% of total US taxes collected, raising their tax burden will likely force them to move to Canada (the land of lower taxes and really good money managers). Meanwhile, raising taxes for the poor isn’t really a good way to get reelected in 2012. So, what does Obama do? Using his Nobel Peace Prize as inspiration, he crafts a plan that will cut spending by $4 trillion over the next 12 years. Then, using his teleprompter for guidance, he orates this plan to congress and the American public in the smoothest of silk possible. It was a great plan, until his very own Vice President, Joe Biden, falls asleep during the speech and on national TV at that. But in hindsight, this was actually smart as it deflected attention away from the details, and as we all know – the devil is in the details.

Full note. (pdf)

IceCap Asset Management Limited Global Markets April 2011


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Sat, 04/30/2011 - 03:53 | 1223462 legal eagle
legal eagle's picture

Yes, smoke and mirrors work best. Want a change, end the empire.

Sat, 04/30/2011 - 10:14 | 1223763 Rogerwilco
Rogerwilco's picture

The Palace at Versailles had a hall of mirrors that was popular with the court and visitors. Why can't the White House have the same, for budget negotiations and such. Of course overuse might lead to installation of other forms of entertainment. Here's a real crowd pleaser:

Sat, 04/30/2011 - 14:04 | 1224204 eisley79
eisley79's picture

I'm canadian, and canada sure as heck is not the land of low taxes.  We pay more tax then americans on everything.

More income tax, more state(provincial) tax, more sales tax, more sin tax(alcohol, cigarettes, etc), more tax on gasoline, more environmental fees, more surcharges, and on and on.

But we dont pay for health care, our drugs are way cheaper because we buy en masse through socialized medicine, and there are a lot less profiteering infrastructure (toll roads, etc).

Sat, 04/30/2011 - 20:54 | 1224699 NidStyles
NidStyles's picture

I would suggest you go read it again.

Sat, 04/30/2011 - 22:49 | 1224847 ceilidh_trail
ceilidh_trail's picture

eisley- you should ride the toll road that circles above toronto. $40 to driveabout 40 miles and no sign advising what the toll would cost- all automated, I got a bill in the mail here in the states like a year later threatening my driver liscence if I didn't pay- crooks on both sides of the border...

Sat, 04/30/2011 - 04:01 | 1223465 legal eagle
legal eagle's picture

What we need is free markets where the profits And Losses go to those taking the risk. Socializing banker and hedge fund losses reduces their purported tax rates to, well, next to nothing. If the income that is taxed comes from the taxpayer how can any rate of tax be too high? If $100 goes from taxpayer to bank bond holder and they pay an 85 tax rate, didn't they just get a 15 dollar bonus? Until you stop the madness, the tax rates will make no sense and distort all usual incentives.

Sat, 04/30/2011 - 07:38 | 1223558 SWRichmond
SWRichmond's picture

What we need is free markets where the profits And Losses go to those taking the risk

Imagine that.

Socializing banker and hedge fund losses reduces their purported tax rates to, well, next to nothing.

Actually, it is a kind of "Advance Earned Income Credit" for the bankster classes, where they achieve an effective negative real tax rate.  In other words, the existence of the tax system is a net positive for them; it places a floor under their incomes.  This is its real purpose, of course.

Sat, 04/30/2011 - 17:39 | 1224483 Banjo
Banjo's picture

legal eagle: Exactly. Well done what you wrote is clear, direct and simple.

It STRIPS away the nonsense that the "rich" are paying all of the taxes.

It also explains why the top 10% own 80%-90% of all the assets.

Sun, 05/01/2011 - 13:33 | 1225671 plane jain
plane jain's picture

Ah...poor little rich taxpayer.  How do they ever manage?  What's that you say?  The top rate is less than it was in the "greed is good" '80s when Reagan hiked payroll taxes?


It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.

Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners.  That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.



Sat, 04/30/2011 - 04:07 | 1223466 legal eagle
legal eagle's picture

In other words, until the gravy train stops, don't expect too many who benefit from our Central Planning to run away.

Sat, 04/30/2011 - 04:18 | 1223470 Sokhmate
Sokhmate's picture

aaaand it's gone. it's gone it's all gone.

Sat, 04/30/2011 - 04:19 | 1223473 alexwest
alexwest's picture

v.v. .sloppy
do those guy run real money ? i'd NOT trust them..

p13 ' in 2010 year us goverment took about 2.4 trln in receipts', actully if its financial 2010 that ended in sept 2010 then recepits are 2.161 trln ..

in reality its even less cause US goverment counts interest on SS money as receipts too ..

#2 p13 too
' mandotary spending that CANT REMOVED LEGALLY'
what kind of idiot would write that kind of nonsense?

everything what goverment/congress do is according the law and can be removed/modified/altered by law..


Sat, 04/30/2011 - 04:22 | 1223474 Urban Redneck
Urban Redneck's picture

Monetary debasement is ubiquitous.  Through the FED's brilliant marketing campaign, they have made QE synonymous with "money printing."  Since no one would believe that removing Xerox®  machines from offices would eliminate photocopying, why do they believe that eliminating QE®  programs from the FED would eliminate monetary debasement? 

Sat, 04/30/2011 - 08:20 | 1223594 disabledvet
disabledvet's picture

obviously the market doesn't think so so as is normal in "these times" horse sense appears.  I'm only "speculating" of course but if i were to answer for Professor Bernanke I would say "it all comes down to jobs."  That is the only measure of growth in an economy that I think is understandable to any government official and for any statisical measure of GDP.  Only Tom Keene of Bloomberg (of course--he's got intellectual horse sense up the...well, you get my meaning--"rubber hits the road" of he mind) asked the simple question "where's the discussion about jobs."  And he did so from day 1 of the Obama Administration...which was ruthlessly silent on the subject.  In short "he immediately understood the problem of the debt and deficit and immediately saw what was needed to be done to get cracking on it."  Unfortunately "he's from New York" where "things are measured by getting things done."  When I presented my term paper to Tom Keene...which consisted of a single sentence as is my wont (it said simply "create a ten million man Army and tell 'em to suck it up") i took note "there was silence."  What he didn't understand is that I understood how DC works and have no clue how New York works (though I think i'm learning on that one.)  In short "if there's a problem we'll wait for it to go away" is the DC way.  So far my DC analysis is looking pretty good and "i'm learning the ways of New York City" to boot.

Sat, 04/30/2011 - 05:21 | 1223499 The Navigator
The Navigator's picture

What a stupid fuck - rescind your own ObamaCare and you solve so many problems: budget, taxes, confidence in the economy and cut $??Trillions in 5 years.

For Gods Sake - send the DEA into Wash DC and cut off the fucking drugs to these crack whores. And give them a damn lesson in math 101.

Sat, 04/30/2011 - 09:05 | 1223649 Chuck Walla
Chuck Walla's picture

But, but without Obama care, the elite can't rule us so completely, all for our own good. We plebes are so ungrateful.

Sat, 04/30/2011 - 14:14 | 1224219 The Navigator
The Navigator's picture

That's right - how in the world did we ever last so long as a species without big government.

Sun, 05/01/2011 - 00:37 | 1224973 johnnynaps
johnnynaps's picture

Contrary to your followers' need Math 101! Because, the Economy was doing so well before Obamacare? Funny, how everyone was just fine in 2006 while the real estate fraud wasn't called out for what is was.

Sat, 04/30/2011 - 05:26 | 1223501 Hive Raid
Hive Raid's picture


Drastic austerity measures, including cutting the untouchables, to eliminate the budget deficit.

No more deficit, so debt stabilizes at say 20 T.

Interest rate to 3%, so annual interest is 600 B. That's out of total (current) federal tax revenues of 2-3 T.

Perpetually recycle all debt principal into new debt.

It's not pretty, but it doesn't look like total collapse or debasement. In which case, no Zimbabwe and no running to the hills. And, perhaps a slower increase in silver due mostly to rising industrial demand.

Am I missing something here? I'm a noob at econ.

Don't get me wrong, I've got 2 years of Costco rice and beans and an embarassing amount of ammo, but why would this not work?

Cutting programs is not palatable now, but if the situation is impossible, then it would have to be forced. At that point, "social tensions", i.e. "demographic" tensions would seem the most significant threat relative to the financial.

Sat, 04/30/2011 - 08:32 | 1223608 Bob Sacamano
Bob Sacamano's picture

 "social tensions", i.e. "demographic" tensions would seem the most significant threat relative to the financial.

Some would say this is exactly what BHO wants - exacerbate the problem (or at least do absolutely nothing to slow it down), foster more financial and social "crisis" in order to create the need for "immediate" and "bold" action by expanding government to unseen levels.  This plan has been in play during the first term and he will have nothing to lose in the second term -- so he is setting the table for some fun starting in 2013.

Sat, 04/30/2011 - 11:57 | 1224014 sschu
sschu's picture

foster more financial and social "crisis" in order to create the need for "immediate" and "bold" action by expanding government to unseen levels.

This is a plausible scenario.  It may also include (but is not limited to):

1. "Confiscation" of 401K/retirements, maybe via converting them to USG bonds of some type and 100 year terms.  Ever listen to Jeremiah Wright?

2. Crisis is impetus for "everyone" working for and becoming dependent on the government.  Hence a permanent majority for the ruling elite.

3. Eventually complete centralization of power in government to regulate and control your entire life.  Education, housing, health care, livelihood will all be controlled and regulated by a centralized bureaucracy that answers to no one.

You and your children's lives just changed forever.  OBTW, in order to mollify the prols, a few of the bourgeois will be sacrificed along the way, some sort of modern day guillotine will become fashionable and on TV Wednesdays during Prime time.

Life as we know it is about to abruptly change, not sure many are ready.


Sat, 04/30/2011 - 22:01 | 1224787 StychoKiller
Sun, 05/01/2011 - 00:39 | 1224976 johnnynaps
johnnynaps's picture

The US has more resources, better housing, and the most militaristic empire the world has ever seen. We will not be Zimbabwe. As for demographic tensions, don't be such a pussy and call it as it is (or as Merkel, Cameron and Sarkozy have) multiculturalism is a failed experiment!

Sat, 04/30/2011 - 05:44 | 1223504 Urban Redneck
Urban Redneck's picture

The chart on page 10 brings to mind one of the systemic failures that led to the last credit crisis.  Most of the analysis of the causes of the credit bubble burst has focused on the structural failures, and not the mechanics of credit analysis that led to the structural failures.  Risk models based on nominal rate changes, and which ignore relative rate changes, cannot correctly model a borrower's future ability repay when the current interest rate paid is close to zero.


In simple English, the US is a borrower with a HUGE mortgage, that mortgage is structured as a SHORT TERM INTEREST ONLY MORTAGE that needs to be refinanced on a REGULAR BASIS.  Furthermore, the homeowner keeps adding rooms onto his house, so at each refinancing the principal amount increases, instead of remaining constant or being paid down.  The slice of the graph representing current interest expense on page 10 is relatively small, but what happens to the borrower when the mortgage rates rise? 


A borrower with a $100,000 interest only loan at 0.18% (current 1 YR Treasury yield) pays $15 per month on that mortgage.  While the US isn't Greece or Portugal, when the FED reversed the post-9/11 ZIRP it raised rates from 1% to 6.25% before the collapse of the GSEs.  If the same borrower goes to refinance the $100,000 mortgage at 6.25% ($100,000 would assume an immediate BALANCED BUDGET in the US) - his monthly payment increases from $15 to $520.83 an increase of 3300% in the monthly mortgage payment.  Now go back and look at the chart on page 10 again.


It really doesn't matter whether a rating agency classifies the US as a prime or sub-prime borrower, a high debt load initiated at near zero interest rates cannot be refinanced at significantly higher interest rates, any credit risk model that states otherwise is broken.


You can use the calculator below to run your own scenarios.  The 12 month MTA and CMT actually only increased to around 5% in early 2007, and the total outstanding US debt is distributed along the Treasury curve.

Sat, 04/30/2011 - 08:35 | 1223612 disabledvet
disabledvet's picture

"like teaching an Offensive lineman for the NY Giants to do ballet."  VERY delicate.  Again "growth must be restored to the economy" which is "jobs, jobs, jobs."  But there are other "both personal and public measures of growth" as well that to say the least "work against this policy." Sudden and soaring growth for example stands out.  Indeed as I right this Chairman Bernanke could be getting enormous amounts of data from Japan as money supply over there is aboslutely soaring due to the Fukushima nuclear disaster.  Consider it a "test run" you might say.  And "as if from nowhere" a "Silver Surfer" so to speak has appeared in the form of a parabolic move in the price of silver: precious metal that exists in massive quantities.  "Imagine the current value of SLV."  And that of course is "the poor man's gold."

Sun, 05/01/2011 - 00:49 | 1224982 johnnynaps
johnnynaps's picture

And, no one every thinks to point the blame at the average dopey American. My wife and I are the only ones with a 15 year mortgage. Our condo is the cheapest out of everyone else's dwellings. Math=we won't have a mortgage in 10 years and our taxes will always be below all my friends due to our assessed value. As for saving on interest, we save $57k by going 15 year on a $125k mortgage. Which means, my wife's fat, pompous bitch friend who bought a brand new house for over $300k will probably pay almost 3 times what we save just in interest. FINANCE BITCHEZ!!!!

Sat, 04/30/2011 - 05:54 | 1223516 jtaskinen
jtaskinen's picture

I voted True Finns, as I believed they would bring change to the way things have been handled in the past, most by the idosts of National Coalition.

Now I am very sad that the True Finns are becoming more like the bankster/corrupt Portuguese/Greek etc supporters.

If they vote yes, there will be a riot. This is how I sense the mood.

I hpe they will not eat their word.

Sat, 04/30/2011 - 06:54 | 1223532 Moe Howard
Moe Howard's picture

If they betray you brother, look for lamposts or telephone poles to hang them from. The banksters are making that the only answer we have left.

Sat, 04/30/2011 - 06:02 | 1223517 Hushups
Hushups's picture

As fucked up as everything is, I really could not help but burst out into laughter at the section headline of "Nobel Prize for economics will not be added to the mantel." The truth hurts, but it's also only funny when it's true.

Sat, 04/30/2011 - 07:12 | 1223538 Kickaha
Kickaha's picture

From Picture 1, total credit is $354 Trillion.  That number has presumably been created by fractional reserve lending by privately owned entities, although I suppose it should include government-created credit, also.  I also suspect that the truth of the matter is that the rise of derivative securities and unreasonable margin usage represents most of that number (i.e. the financial "house of cards", the collapse of which supposedly would return us to the stone age).

Ice Cap estimates that total additional government created credit since 2008 is estimated at about $6T.

The newly created credit is still a small but not insignificant amount of the total M3 money supply. 

According to Picture 1, total credit has declined about $20T since 2008.

While a chart showing the parabolic increase in the size of the Fed balance sheet is dramatic, it is misleading in terms of being an indicator of inflation.

How is debt created by the Fed different than debt created by fractional reserve lending? Does the recipient of that largesse notice any difference in how those dollars spend?

If the total amount of money (defined as available credit and currency) has actually declined by $20T since 2008, monetarist theory would lead me to conclude that we are currently in a period of mild deflation.

That deflation seems concentrated in the housing market for reasons unclear to me.  Perhaps speculative wealth has simply fled that sector in view of an obvious oversupply, exagerating the price deflation in housing while causing upwards price distortions in other areas, including both stocks and PM. 

As pointed out in the Ice Cap analysis, the
Fed is struggling to maintain the money supply by printing money because they can no longer lower interest rates to positively affect private bank fractional reserve lending.

How can hyperinflation occur when credit destruction is proceeding 300% faster than Ben's printing presses are churning out money?

If there is no hyperinflation, are all you folks holding PM based purely on sentiment? 

It is very interesting how folks here, and in the articles suppled by ZH, can put together facially credible arguments for huge deflation and massive hyperinflation, and then flip-flop from one side of the debate to the other overnight, or predict that both will happen in the near future.

Maybe WB7 could give us Ben as a one-armed Capt. Powell, steering a fragile wooden dingy down a flood of printed currency through the rocks of credit collapse, at the bottom of a canyon too steep to permit any other way out.

Sat, 04/30/2011 - 08:45 | 1223629 UninterestedObserver
UninterestedObserver's picture

The problem is WHERE the credit is being destroyed(Joe 6 pack) and where it is being created (banks,govt,etc). Looks like the worst possible scenario.

Sat, 04/30/2011 - 08:48 | 1223630 disabledvet
disabledvet's picture

most people "flip-flop" when it comes to tomorrow.  that's why they "call it tomorrow."  what you fail to point out is that "prices are rising" and in the case of silver "absolutely soaring."  needless to say you have no understanding of New York because unlike government "they don't look at money as a piece of paper."  Telling DC as is there wont of late that "Congress should be arrested," while noble, is telling indeed.  I like to think of it as "the question they will not ask because they already know the answer is true:" and that is "gold is money."  Period.  You may call that "sentimental" of course--but you don't strike me as a guy who just finished his dissertation on the mathematics of protein folds.  And while it might be fun to watch Ben "crash his little boat on the rocks" the "Silver Surfer is a sad and lonely man who has mysterious powers and brings death to entire civilizations." 

Sat, 04/30/2011 - 09:05 | 1223647 Matto
Matto's picture

You are wrong, and yes i do know why.

Sat, 04/30/2011 - 09:29 | 1223683 Matto
Matto's picture

Some quick tips because it is late here and well past my bed time


1. You must take available credit out of your money supply computations to guage actual money in use.


2. Once used, credit is money (not before) and it is not destroyed by asset deflation even though it is created during asset inflation. Think about that - the money already spent is out there even if say a property developer folds and his untapped existing lines of credit are cancelled..


3. As the market problem of asset price deflation takes hold there is less assets for the exisiting money supply - monetary inflation within asset/economic deflation.


4. As the asset deflation takes hold (via sentiment or fundamentals or whatever) the money (capital) moves from risky/leveraged positions  to more secure ones. This can include currency and can precipitate its dumping (velocity up).  


5. To top it off the process of making the banks whole for their bad investments is actually the further monetization of assets - more money for less assets - A mirror of the problems being played out in the whole market!



Sat, 04/30/2011 - 15:38 | 1224347 Kickaha
Kickaha's picture

"1. You must take available credit out of your money supply computations to guage actual money in use."

I think I understand your point.  But I think it is sort of a "snapshot" of the situation rather than a description of a dynamic and ongoing process.  As to whether or not potential usae of credit should be 100% discounted is a proposition which I think is open to debate.  Combine that with issues of velocity, and you quickly reach a point where measurement of the money supply becomes almost metaphysical, like trying to count the angels dancing on the head of a pin.

Your point does highlight one of the aspects of the current crisis.  While the banks have the money to loan, they are not loaning it out, hence there is good reason to consider a huge portion of M3 as being "on the sidelines" right now and not really countable as money.  The banks could be making loans.  The fact that they are not is really quite disturbing.  It is an indication that they either don't believe the debtor will repay the loan, or that he will do so with inflated dollars.  This lack of faith in the supposed "recovering" economy contributes mightily to the public's perception that there really is no recovery underway.


"2. Once used, credit is money (not before) and it is not destroyed by asset deflation even though it is created during asset inflation. Think about that - the money already spent is out there even if say a property developer folds and his untapped existing lines of credit are cancelled.."

True enough, although, once again, in a dynamic process credit will not remain available if the collateral gets devalued by deflation.  Lines of credit will be reduced if the collateral value is diminished.  I see this as one reason for eliminating mark-to-market accounting.  A lot of those securities have been pledged as collateral to obtain credit, which has then probaly been leveraged to some extreme ratio to enhance perceived speculative outcomes.  The accounting change allowed credit to continue to exist.  I think this was terrible, but I am sure the TBTF banks loved the idea.

"3. As the market problem of asset price deflation takes hold there is less assets for the exisiting money supply - monetary inflation within asset/economic deflation."

No.  Changing the value of an asset does not vaporize the asset itself.  In a stagnant economy, entropy will gradually decrease total assets, and with a static money supply, and a super-tight credit environment, the same money will chase an ever-decreasing supply of assets, and prices will rise.  Sounds like stagflation to me.  Assuming that available credit is not being converted into money to combat asset entropy, but also assuming the Fed is printing more money, I would agree that more inflation is inevitable and the direct result of Fed policy.

I would note that I have already taken the position above that reduction in asset values will by itself produce credit contraction, since less collateral value means smaller lines of credit.  In the absence of credit, the rate of new asset creation will diminish.

End the end, I'm not sure we see things all that differently here, but maybe we are analyzing the same general process from slightly different assumptions as a starting point.


"4. As the asset deflation takes hold (via sentiment or fundamentals or whatever) the money (capital) moves from risky/leveraged positions  to more secure ones. This can include currency and can precipitate its dumping (velocity up)."  

 Hmmmnnn...seems like this might be the crux of the matter.  Is any asset truly secure at any purchase price?  Even if the asset appears secure, you can still lose a lot of money if your entry point is an overpriced one.  The premise that people will "move money" is just another way of saying there is a monumental rolling ball of speculative capital careening through the markets.  Obviously, this pool of speculative capital can go long PM and short the dollar. Or vice versa.  Agreed that it would be an increase in velocity, which would be inflationary.

"5. To top it off the process of making the banks whole for their bad investments is actually the further monetization of assets - more money for less assets - A mirror of the problems being played out in the whole market!"

Agreed.  It is paying them in cash for the full value of an asset which has been massively reduced in value due to counterparty risk disasters. I'm not sure which alphabet-soup named program is doing this, but it is certainly inflationary.

On balance I would lean in favor of inflation.  In fact, I think its intentional, if only to reduce the minimum wage in terms of real spending power, to aid in the payment of federal debt obligations, and to screw with the Chinese.

I am not convinced that the combination of credit destruction and currency printing is going to produce hyperinflation or the complete destruction of the currency anytime soon.

Sat, 04/30/2011 - 23:17 | 1224849 Matto
Matto's picture

Good commentary. On hyper-inflation: no one knows the future but the US has been exporting its inflation for years, the dollars are out there either in paper or digital and if they are repudiated by the holders a tipping point in the currensea can easily be reached off the existing $$ supply. I heard the other day that 60% of the worlds currensea is USD. If someone could confirm that i'd love to double check if its true, most likely the cake is already baked on this one.

One of the my main points on inflation/deflation is that broad money measures is actually broader than the true money supply in use at any one point and includes near cash assets and untapped available credit. If you use the collapse in broad money measures it will look like monetary deflation but is actually near cash asset deflation. The collapse in available unused credit only exacerbates the asset deflation (assets cant be bid up any further) and does not impact the existing money supply, only repayment does that (default just means the money stays in circulation rather than being paid to the bank against the loan, the bank reduces its income so the cash stays out in the economy rather than going to bank shareholders as dividends - the bank taking a write down on yet another asset, not cash).

"No.  Changing the value of an asset does not vaporize the asset itself.  In a stagnant economy, entropy will gradually decrease total assets, and with a static money supply, and a super-tight credit environment, the same money will chase an ever-decreasing supply of assets, and prices will rise.  Sounds like stagflation to me"

Yes - stagflation. Financial assets can be vaporized and other assets can be impaired to such a degree that wealth, not money, is destroyed. In a leveraged society this can occur very quickly leading to asset/economic deflation + currensea inflation (by relation to the asset base) hence stagflation and possible hyperinflation.


So is hyperinflation a derivative of stagflation? hmmm just thought of that. I guess it depends on the circumstances and the way they try to fight it.


"On balance I would lean in favor of inflation.  In fact, I think its intentional," Yes probably, but there is no reason to believe that central planners have the skills to manage such a complex system successfully. Most likely they just manage to defer the day of reckoning as each participant in the system also labours individually to keep the system intact. History is repeat with attempts though and our current financial system being the ripe old age of 40 this year, i'd argue that we are screwed royally. (the new sytem being required because they fkd up the last one, which was far more stable in nature than the present). The telling tale is in the last point we've discussed- converting bank assets to cash during an asset deflation, that is the hyperinflation catalyst right there.



Sat, 04/30/2011 - 10:38 | 1223833 Kayman
Kayman's picture


"How can hyperinflation occur when credit destruction is proceeding 300% faster than Ben's printing presses are churning out money?"

1. You are staring at hyperinflation right now. The criminal speculator class are running paper assets and PM's to the moon, with the money Bernanke stole from your grandmother.

2. The " I used to work for a living" class are jobless or underemployed and are watching their housing wealth crumble before their eyes.

This story is a political story and not an economic story.  This is perhaps the greatest theft of wealth ever perpetrated.

Sat, 04/30/2011 - 15:53 | 1224365 Kickaha
Kickaha's picture

I was a young man when short term rates hit 21% or thereabouts in the Carter era.  Nobody called that "hyperinflation".  I think the annualized inflation rate, ex-housing, is about 9% right now.  I'm sure I'm doing anything better than the BLS by intentionally excluding a large expense from the inflation calculation, so, including housing, the rate might be quite smaller than 9%.  You see an out-of-control, accelerating spiral. I don't think the data supports that conclusion, yet

Yes, it certainly is political.  Why give the banksters the .25% loans?  The gov knows they are all zombie banks. I would prefer taking them down for being insolvent, and to counteract the credit destruction, send every citizen a fat fiatsco check, and hope inflation remains at a livable level afterwards.

It will take awhile for the TBTF bank assets to be reallocated to solvent banks, but the citizenry would have the fat fiatsco check to help them whether the storm.


Sat, 04/30/2011 - 07:36 | 1223554 pcrs
pcrs's picture

I think the main receiver of the 1.8 T$ is government. Gvt is the bubble. They hired an army of TSA perverts at 70k$/year. They bought tons of equipment for subjugating their subjects and dropping Tomohawks on foreign subjects. They increased regulators, stamp issuers and allowers.

Sat, 04/30/2011 - 07:34 | 1223556 earnulf
earnulf's picture

We have already reached the point of no return.     Everything from this point on (actually we may have missed the point to jump from this runaway express a long time ago and just now realized that we missed our stop) is just pablum to calm the masses before something unexpected happens and the whole thing collapses like a termite riddle structure.

ZIRP is allowing us to rolll over and add to debt at artificially low rates.    Even so, nearly 20% of revenues are consumed just to pay the outstanding debt

CBO revenue figures for the next four years assume a surging revenue stream from income taxes and social security taxes, better than ten percent for the next couple of years.   Yeah, right, in this economy reciepts will just Tsunami!    Meanwhile spending stays bascially neutral yet we still add between 7-900 Trillion dollars of new debt each year at artificially low rates

We can no longer tax our way out (without a revolution or mass immigration) or cut enough entitlements and defense spending (everything IS on the table) without the same.     So instead of facing our problems, we literally paper over them and proclaim everything is just hunky-dory.

Each of us has the responsibility to take care of ourselves and those we choose to help (friends, family).    Those who rely on the government to take care of them will get to catch this runaway locomotive at the end of the tracks which conviently end halfway across the gorge where the bridge was stopped for lack of funds.

Sat, 04/30/2011 - 08:45 | 1223631 Bob Sacamano
Bob Sacamano's picture

Very well said.

Wish there was the will to change spending habits in both public and private sector, but sadly I believe those in government actually do represent the American people -- most just do not want to face any harsh reality.  The people are generally very weak, short-sighted infants who really do not want to figure how to get through life on their own -- they need help at every turn and those in government (who all want more government power) are happy to "help" them.  

Sat, 04/30/2011 - 22:16 | 1224810 StychoKiller
StychoKiller's picture

Until retirees and soon-to-be-retired people realize they paid for a pig in a poke (in this case, more like a pyramid scheme!), there will be no political will to deal with Social Security, Medicare & Medicaid!  Sorry folks, but you were lied to:



Sat, 04/30/2011 - 08:02 | 1223577 Hotspur
Hotspur's picture

Since when does Canada have lower taxes than the U.S.?

Sat, 04/30/2011 - 08:06 | 1223583 billwilson
billwilson's picture

What Canada does have is a lower deficit and lower debt/gdp, because Canadians actually  are willing to pay taxes for what they receive (and we all do get health care - unlike the f&cked up system the US has).

For now Canadina pay higher taxes (and get more in return) ... but with the massive refusal of Americans to pay taxes (i.e. just put it on the national debt credit card) this may not be true for long.


Sat, 04/30/2011 - 09:01 | 1223645 disabledvet
disabledvet's picture

"there is no more unitary polity in all of history than the American Republic" although the Roman Republic sure was pretty effective and so were a couple of the French ones.  Needless to say "those are American legions" fighing abroad and i can tell from reading you you have no clue of "their standards."  they had them when i was there and from what i see and (barely) hear "they have them even more so today."

Sat, 04/30/2011 - 11:31 | 1223947 sun tzu
sun tzu's picture

and we all do get health care - unlike the f&cked up system the US has

Can you tell me why over 100,000 of your fellow Canschmucks come to the USA each year for medical procedures? Wait until your old and need major surgery and they tell you to fuck off. Your sorry ass will have to fly to India or Brazil to pay for your Canadian healthcare. Why did Liberal MP Belinda Stronach go to the US for her cancer treatment instead of using the non-fucked up Canschmuck hospitals?

If you weren't so fucking stupid, you would realize that there is no way to tax the deficit away. Total federal spending was at $3.7 trillion. Total federal tax receipts was at $2.2 trillion. The middle class tax rates would go from 25% to nearly 50% plus another 7.65% for payroll taxes plus state income taxes, sales taxes, real estate taxes. A person making the median income of $50,000 would have about $12,000 left to live on for the entire year after taxes. That's enough for an apartment and they can eat out of the dumpster. At least they will have "free" healthcare.

Correct me if I'm wrong, but don't you Schmucks have over $500 billion on your national credit card? We'll send you our 20 million illegal immigrants and see how your healthcare system deals with that.

Sat, 04/30/2011 - 08:04 | 1223580 billwilson
billwilson's picture

What a bunch of idiots. Do people actually pay for this drivel? I guess anyone on the internet can spew whatever crap they want, but come on Tyler. - this is pure crap.

Sat, 04/30/2011 - 09:21 | 1223663 High Wire
High Wire's picture

This is the second uber partisan post in as many days and I'm left wondering if zerohedge hhas decided to abandon a Libertarian bent in favor of something friendly to the faux two party nonsense.  Obama does so many awful things, why are we discussing stuff that is under Congressional domain?

I can only imagine that your advertisers prefer it.  A shame.  No one likes to see a nice blog go to hell.




Sat, 04/30/2011 - 11:36 | 1223973 sun tzu
sun tzu's picture

Obama's policies are anti-libertarian. It would make sense that his policies come under attack more. Federal government spending has doubled over the past 10 years. So where's the money going? We're not getting twice the amount of government services.Was the government so small in 2001 that we had to double government spending 10 years later? End the wars and cut all spending back to 2001 levels adjusted for inflation. It's as simple as that. 

Sat, 04/30/2011 - 13:29 | 1224132 blunderdog
blunderdog's picture

Both party's policies are anti-libertarian, though, which is why the partisanshit is so tiresome.

Sat, 04/30/2011 - 15:06 | 1224297 sun tzu
sun tzu's picture

One is more anti-libertarian than the other. Libertarians want less/smaller government. Which party recently passed ObamaCare with the final goal being the full control of all healthcare?

How many libertarians are in the Democratic Party?

Many of the Republicans are also bank-owned, but at least there are some like ron and Rand Paul who oppose empire-building, nanny-statism, and The Fed. 

Sat, 04/30/2011 - 17:06 | 1224440 blunderdog
blunderdog's picture

Brain-dead.  You can only make such a claim by ignoring the previous administration's extremely antilibertarian policies that accelerated our progress into warmongering police-state. 

Carry on.

Sat, 04/30/2011 - 09:18 | 1223667 Long-John-Silver
Long-John-Silver's picture

A visual representation of where the economy is headed and the attitude of TPTB as executed by Major Kong.

Sat, 04/30/2011 - 09:57 | 1223729 max2205
max2205's picture

He will say:

This is a teachable moment

We have to act like adults


Do the people's work

Spend to improve education, infrastructure, clean energy

I I I I and I

Sat, 04/30/2011 - 10:19 | 1223781 Stuck on Zero
Stuck on Zero's picture

My wife should be very proud of me.  Why?  I saved $480K by not buying a Lamborghini!  Yep.  That's incredible savings.

Sat, 04/30/2011 - 10:22 | 1223784 Bazooka
Bazooka's picture

I read this report while taking a crap.

What a worthless piece a states the obvious, nothing new, nothing truly analytical and then recommends readers to be alert.

I wiped myself with this report after my crap.

Sat, 04/30/2011 - 10:21 | 1223791 Bazooka
Bazooka's picture

IN other words,

It was both good and original...except what was good wasn't very original and what was original wasn't very good.

Sat, 04/30/2011 - 10:27 | 1223800 Contra_Man
Contra_Man's picture

With Elections Canada average cost per election of $300,000,000 Cdn. (4 elections in 7 years) is yet another example of out of control $1.2T Cdn. taxpayer-funded, dark-veiled government spending that is just more political and crony back-door Q.E. 98.5 lite taxpayer-aided stimulus/spending/bribery for Canada's corporate power elite to keep their democratically influenced rules of an electorate without proportional representation.  


Sat, 04/30/2011 - 10:43 | 1223847 JW n FL
JW n FL's picture



*** "Since the top 5% of wealthy Americans are already paying over 58% of total US taxes collected" ***


1st off you stupid fuck... this line of thinking is what has the Country ALL fucking backwards..


1. The Top 5%.. pays 58%.. source it.


2. The Top 5%.. has a 0.25% FED Window to draw down from or the effects of a 0.25% Window.. either, or.


3. The 0.25% FED Window that the Banks Draw Down From.. DOES in Fact! cost all Tax Payer 6%.. in the debt created by the Government that the Populace has to pay.. so a FUCKING Subsidy for the AAA Rated Corporations Again!


4. and on top of the 0.25% FED Window.. the 6% carry that “We the People” suffer.. I offer the Banks Deposits Earn 800% more than that “We the People”


5. Do you know what it cost “We the People” so that those Taxes could be collected? $3.5 Trillion to get in return $255 Billion, which the U.S. Tax Payer Backstops EVERY FUCKING PENNY OF! So that the Top 5% can pay a 0% to max 15% Tax Rate? While the poorest in the Country pay 30%? Fuck You!


6. All of the TARP / TALF like programs that the U.S. Government barrowed from the FED to pay for.. at 6%? That “We the People” have to fucking backstop PLUS! Pay for!


This is the *** "Since the top 5% of wealthy Americans are already paying over 58% of total US taxes collected" *** that you are pining for? Or let’s be honest.. you want the ones who want to be those people.. the aspiring wanna be’s! the broader, hopeful Middle Market that wants to be sold the dream! You want the Boca Raton crowd! Because they dream of being the Palm Beach Crowd! Poor, poor little non-taxed loop hole threading scumbags! Fuck them, at least try for a better clientele’!



Look I understand you are trying to make a buck, feed the kids.. Whatever.. But reaching the middle market with lies is just bad business. Sell Canadian Dollars / Silver / Gold / Oil / Hunt Leases / Snow Trips? But don’t fucking quote some Wanna be Republican Tax Number in the first 20 words if you don’t want your teeth kicked in.


And so that you may better understand the demo you are speaking too.. Multi-Family Private Equity Office Consultant, of which the Company bares MY Family Name. So I don’t get to fuck off with other peoples Monies as much as I get to listen to my Family Bitch if a Penny is lost.



Spend! $3.5 Trillion to produce $255 Billion in GDP growth (7% efficiency!) Federal Reserve Paying Banks Interest Rate That Is Eight Times Market Rate


“Matt Taibbi” Explains How Wall Street Works and how Wall Street Wives Grabbed $220 Million in TALF Funds!    Bloomberg FED Release of Loan Info $15 Trillion  Rolling Stone FED Loans Gadaffi    Treasury Direct $14 Trillion Outstanding Debt  $15 Trillion in Loans made by the FED  Treasury Direct $14 Trillion Debt /   $15 Trillion in Loans /  / ='s $29T General Electric $14.2 Billion in Profits, Pays $0 in U.S. Taxes

$39M Dollar Lobby in 2010 $14B in Profits =’s NO TAXES PAID!

$10 billion sale of F.D.I.C.-backed debt


The 10 Biggest Tax Cheaters! We Do NOT! Need Spending Cuts! We Need Corporations to Pay Taxes! 12 Corporations who Spent $1 Billion to Lobby / Bribe the Lobby Whores so they would pay little to no Federal Taxes!


Republicans Block! A Push by Democrats To End The Tax Break for Sending U.S. Jobs Offshore!


Sat, 04/30/2011 - 12:14 | 1224041 rocker
rocker's picture

JW in FL ....... I thinks I'm beginning to like the way you think.  The media spin is outrageous and far from reality.

         GE pays no taxes as Jack the Hack Welch is on CNBC one morning crying how GE needs tax breaks.

          What he is really saying is, We want the government to pay for our existence as the gov does with big oil.

Sat, 04/30/2011 - 21:30 | 1224760 JW n FL
JW n FL's picture

the bitch is (like below) is from little people who want to believe that one day! one day it will be them! leading the pack! one day it will be them paying $0 Taxes!


The game is fixxed, I have said this 100 times and every time the junks come a flying.. so be it!


You need a $100m to know what broke really is like!


and once people give in to the reality of that statement, they will far better understand the real issues at hand.. as opposed to just thier lil perespectives.

Sat, 04/30/2011 - 15:19 | 1224300 Rogerwilco
Rogerwilco's picture

I'm in the "top 5%" because I own a couple of successful businesses. Sorry to burst your little fantasy, but I can't borrow money at .25%, and I probably pay more income taxes every quarter than you paid over the past five years.

I don't like the fascist bastards like Immelt or Blankfein any more than you, so don't try and lump me in the same category with your populist bullshit.

Sat, 04/30/2011 - 21:27 | 1224756 JW n FL
JW n FL's picture

does that mean you need a P.A. account to run things out of so you can get down to the 10% - 15% range?


do you need some help with structure or maybe a good cpa?


do you have an irravocable trust? you need one.


and as well known as I am here... I tell you plainly that you will need more than a couple of businesses to comprehend what I have to spend a quarter.


let me know if I can help you with some of the more simple things to protect what you have.

Sat, 04/30/2011 - 11:06 | 1223901 I am Jobe
I am Jobe's picture

America bend over, vaseline will be provided by the folks you elected into office.

Screw the MOFO's and start hanging the bitchezzz before they loot more. Stop the empire and stop this nonsense.


Got to go, Lindsey Lohan special is on and must see this.

Sat, 04/30/2011 - 11:29 | 1223958 boiltherich
boiltherich's picture

"Since the top 5% of wealthy Americans are already paying over 58% of total US taxes collected, raising their tax burden will likely force them to move to Canada..."

Since the top 5% of wealthy Americans now own 75% (or more) of all wealth they can pay a fair share of the tax burden or they are MORE than welcome to move to Canada or anywhere else for that matter, just leave the goodies (assets) at the door on the way out because their wealth came from the USA and it's going to remain here should they decide to decamp.  Let them find out, in a different nation, what it is like to start out with nothing and make their way to the top just like 95% of Americans are trying to do right now, with zero success. 

Almost ALL of those "top Americans" inherited their wealth, or have gotten wealthy from unearned income which includes hundreds of billions per year paid out to them in the form of interest on government debts at all levels, and that is nothing but a transfer from poor to rich.  Welfare for the privilege of lending money to the government that the government never should have borrowed and would not have borrowed except the rich have the power to force the government to run deficits, thus borrowing, thus interest paid to those with enough money to do the lending.  The wealthy pay into the government alright, but most of what they pay in is in the form of loans (bond investment) which are repaid with interest. 

Every American should be treated equally, we should none of us pay taxes, we should all just lend to the government and get it back with interest.  The very concept of people who are essentially broke, or people in actual poverty, paying anything in taxes is appalling.  Our financial and government revenue/tax structures do need immediate and drastic restructuring, like a mandatory balanced budget with zero exceptions, but no matter what the propagandists for the elite claim you cannot pay for the most powerful and complex government on the planet by demanding those with nothing to pay do all the paying.  It all has to be paid for by those with something to pay.  I can't fathom why that single economic reality escapes the wealthy! 

Just like I can't fathom how the rich could possibly believe that cutting entitlements will some how help the situation, strangle the entitlement system and you will simply trigger social unrest equal to or worse than the French Revolution.  Nearly all entitlements are recycled back into the economy in the same month they are paid out, you want to collapse the economy cut entitlements and get an overnight lesson in the multiplier effect.  There are a few things that could be done to help the situation though, means test all payouts.  Ah, but then you really hear the wealthy bitch.  Because they have a cap on how much they have to pay in with no cap on how much they can collect, sweet work if you can get it!

Nationalize medicine, or it will bankrupt us, it already has.  Healthcare is a right of all citizens, and providing it at the dollar amount demanded by for obscene profit private healthcare is just no longer going to work.  America could spend half as much as it now spends on healthcare for a better quality and really universal system of care.  Individuals and corporations, small businesses would be entirely free of insurance premiums, copays, and covering uncovered costs, government programs like Medicaid, Medicare, Prescription Drug Program, all of those would be eliminated in favor of a comprehensive system, and the trillion per year (with interest) they now eat would be applied to the new smaller program. 

And that is just the beginning, imagine the fat we could cut from DOD, from NASA (and yet have a better space program) from billions and billions in farm subsidies and corporate welfare, FIX EDUCATION, the old frontier days of pioneering, working your spread hard and reaping/keeping your wealth from the sweat of your brow are long over with, almost no new fortunes are made that way, almost all wealth is already owned and passed on by inheritance, grown by unearned income, and sheltered by a tax system that will kill the USA for good within 3 years. 

Sat, 04/30/2011 - 12:45 | 1224075 cxl9
cxl9's picture

they are MORE than welcome to move to Canada or anywhere else for that matter, just leave the goodies (assets) at the door on the way out because their wealth came from the USA and it's going to remain here should they decide to decamp.  Let them find out, in a different nation, what it is like to start out with nothing

You sound very angry. Wonder why. What makes you think that anyone will "leave the assets at the door on the way out" when they move out of the country? I certainly did not. I took them with me. I started with a successful business in Portland, Oregon. The high taxes and anti-business environment (and unattractive tattooed women) eventually drove me across the river to Washington state, which lacks an income tax. When the "tax the rich" ballot measures started to make their appearance there, I saw the writing on the wall and moved out of the country entirely (not to Canada however -- I went south), and I took my business with me. Since Americans are (unjustly) taxed on their worldwide income, regardless of where it is derived, I still pay Federal taxes (but no state taxes). In my new home country, I am planning to buy a number of all-cash small businesses, and because the cost of living is so much lower, I expect to significantly reduce or even eliminate my U.S. tax burden. So tell me again how you're planning to get at me and force me to pay what you think is my "fair share" comrade? I guess someone else is going to have to pay for ObamaCare and banker bailouts. It won't be me anymore.

You make a number of mistakes. One is thinking that the government can impose taxes on people and they have no options other than to pay them. There are always options. Another, more fundamental, error you make is believing that you have a right to someone else's wealth. You don't. Stop spending so much time envying the success and money of the "top 5%" (who for the most part are simply hardworking professionals).

Finally, a mistake you make is to believe that if the "rich" just paid their "fair share" (whatever that means) then you would somehow benefit. Suddenly, you would have a nice place to live, a good car to drive, quality medical care, and a 32-hour work week (or maybe no work week at all). The poor would be fed and clothed, the homeless would be sheltered, fields of daisies would spring up under the shining sun. Unfortunately, none of this would happen. You could tax the rich 100% and that wealth would simply disappear into the vast black hole of government spending, and no one would be any better off. You'd still be driving your crappy car, working your crappy job, fighting the class war from your crappy apartment. Move on, comrade.

Sat, 04/30/2011 - 15:16 | 1224319 Urban Redneck
Urban Redneck's picture

I guess we know what happened Ben Stein's students after Ferris Bueller's Day Off- some of them forgot about the Laffer Curve and moved to ZH

Sat, 04/30/2011 - 17:32 | 1224478 trendybull459
trendybull459's picture

yes,americans lazy,untill its too late,they do not like to think,they were tought not to think and result-they are mad,stupid and lazy,you are right-money allways not enough to governments,its uncontrolled and it going into the black hole,they will allways find the reason why its dissappeared

Sat, 04/30/2011 - 17:38 | 1224488 trendybull459
trendybull459's picture

Absolutly right,black hole,as more money you hide-is better,giver to poors some of your 10%,so you clean in front of God!

Sat, 04/30/2011 - 12:10 | 1224030 cxl9
cxl9's picture

raising their tax burden will likely force them to move to Canada

How would moving to Canada help? Americans are taxed on their income worldwide, regardless of where it is derived. You can move to Canada, but you'll still owe American taxes. The United States is one of the few countries in the world that taxes its citizens in this way; and it is, of course, manifestly unjust.

Sat, 04/30/2011 - 14:56 | 1224285 sun tzu
sun tzu's picture

You would have to renounce your citizenship to get away from the taxman

Sat, 04/30/2011 - 15:13 | 1224313 Rogerwilco
Rogerwilco's picture

No, a law signed in 2008 allows the government to assess an exit tax on any citizen renouncing their citizenship. The tax is due and payable immediately on the book value of all assets (including unrealized gains) worldwide, and there is no judicial appeal.

Sun, 05/01/2011 - 01:05 | 1224993 Urban Redneck
Urban Redneck's picture

Yes Bush- the last NIGGER president.

Actually, the law also applies to Permanent Resident (Green Card) holders who move away - so no more cheap doctors, to replace the Obummer Care retirees, or engineers will want to migrate to the US.  The law is the height of ineptitude in addressing the immigration problems that both brands of DC whore love proselytisingabout.  It's a good thing all our manufacturers are also outsourcing the engineering white collar jobs otherwise we would have even more idle factories. 

That said, the 2008 law is for fools, and it is effects mitigated with some basic strategery.    

Sat, 04/30/2011 - 15:16 | 1224315 Urban Redneck
Urban Redneck's picture

That's one way of doing it

Sat, 04/30/2011 - 12:13 | 1224035 harlanaladd
harlanaladd's picture

...on April 18, 2011 S&P did the unthinkable – they officially“warned” the World that the US has too much debt and their deficitsare too large. The market response to this bombshell was predictable – everything declined except for gold.

Huh? Maybe for the first 45 minutes, but then but then it was the same old BS rally. Still, good graphics of why we're ultimately fu..d, though. 

Sat, 04/30/2011 - 12:20 | 1224046 onlooker
onlooker's picture

Joe Biden falling asleep is an omen. Most of America is asleep and does not have a clue about the political or economic Nation they live in. What information that is available is spun and limited. The masters and their media can not let the masses have too much information or be too educated (USSR stated tactic).


So, if in the information age, if you start to learn some stuff, then you understand how dumb you were before you learned it and realize how little you know. It is MHO that we have a fairly transparent Supreme Court and the rest is questionable.


We may be in an early transition of getting ahold of some information about what rules the Nation. The LARGEST problem is twofold. First is the greatest inequity of Mankind. Humans run from dumb to smart and from reasonable to evil. Second, there is not time in the day to read all the information that one needs to understand what it is. and ZH are two sources that are fairly compact and attempt to be honest.

We need more, but as any teacher will tell you, teaching is difficult because of the retards. Here at ZH, we have flashes of light that go away because they burn out like a comet.


We are fortunate to have Tyler to lead this band of brightsters and fools. It is more than it seems.

Sat, 04/30/2011 - 13:31 | 1224136 blunderdog
blunderdog's picture

It's all so simple and all so stupid I just can't resist mocking.

Since the top 5% pay 58% of all taxes, then just double THEIR tax rate and we'll have 116% of current tax-revenue generated and we can start paying down the deficit.


Sat, 04/30/2011 - 14:58 | 1224289 sun tzu
sun tzu's picture

Apparently, it's not as simple as you. 

Try the math again.

Sat, 04/30/2011 - 15:00 | 1224290 sun tzu
sun tzu's picture

Apparently, it's not as simple as you. 

Try the math again.

Sat, 04/30/2011 - 15:00 | 1224291 sun tzu
sun tzu's picture

Apparently, it's not as simple as you. 

Try the math again.

Sat, 04/30/2011 - 17:08 | 1224444 blunderdog
blunderdog's picture

Mind the "save" key, gramps.

Sat, 04/30/2011 - 16:49 | 1224417 linrom
linrom's picture

The reason why the math does not work out is because that 58% accounts for ONLY 34% of AGI. If you doubled their tax rate, they would pay 74% of Individual Income Tax and their tax rate would be 41.4%.


If you doubled top 25% income tax, you would bring in additional $900 billion dollars, yet their tax rate would be ONLY 31%. Then if you cut defense spending by about $300 billion, you have almost a BALANCED budget.


Please don't listen to liars who pull facts out their ass to mislead the American public.

Sun, 05/01/2011 - 01:18 | 1225007 Urban Redneck
Urban Redneck's picture

You obviously don't live anywhere near the top income tax bracket in the US.  Stop pulling facts out of your ass.

Sat, 04/30/2011 - 13:53 | 1224187 Jovil
Jovil's picture

At a time that the politician refuse to act like responsible adults and have become "The best government can buy" the Fed will have to print another $2.5 trillion to purchase the bonds that China now is not buyins, as well as Japan, the Middle East states, the Russians, etc. This makes up over 47% of the bonds they buy every year and the Fed is going to have to purchase them with dollas falling from the sky.

Sat, 04/30/2011 - 16:11 | 1224388 linrom
linrom's picture

Yet another example of "stats out of my ass" by an elitist  "hired gun" who misrepresents facts. Top 5% of income earners payed on average 20.7% income tax on their share of of 35% AGI in 2008. Yes, it is true that what they payed in taxes comes out to 58%, but if I pay $0.05 out of $0.10 taxes collected, I too can boast that I paid 50% of all taxes.

Furthermore, that 58% does not represent ALL taxes. Individual Income Taxes account for less than 50% of taxes collected by the Federal Government and even smaller share when compared to the magnitude of taxes paid by little people such as Social Security, sales taxes, real estate taxes, fuel taxes, license fees, airport fees, FCC fees  etc in aggregate(law of large numbers.)

But also, AGI is not a good measure of taxable income as it only respresents an amount that is not exempt from taxation--and why do rich elites spend billions on tax avoidance---because AGI is only a small part of what they should be paying taxes.

In all likelihood, the real taxable rate that elites pay is not more than 10%.

I am not some financial service worker--you can take this to a bank!

Sat, 04/30/2011 - 17:23 | 1224461 blunderdog
blunderdog's picture

There are two things which make the whole "tax-statistics" discussion worthless.

1) Whichever side picks such specific datapoints SOLELY for their value as rhetorical devices, not because they do anything to describe the world.

2) The upper-end demographic slices are all skewed because they imply that "top 5%" represents a group with similar characteristics.  Even the top 1% is WAY too many people to pretend there could be any common cause on taxation.  It's more like the top 0.01% should have a category all to itself, because that's where the big money starts showing up.  I have income below the individual earned median, and I have *more* in common with a friend of mine pulling in $250K/year than HE has with someone receiving $30 million/year.

Some folks just love to fight over scraps.

Sat, 04/30/2011 - 22:29 | 1224820 StychoKiller
StychoKiller's picture

Fsck all that!  It's the spending, stupid!

Sun, 05/01/2011 - 00:24 | 1224960 Bob Sacamano
Bob Sacamano's picture

Agree.  Tax rates have been flat for a decade and spending has gone through the roof and the left sees it as a tax rate problem. 

But as a compromise, a condition to debt ceiling hike should require agreeing that any "deficit reduction plan" consist of 4 parts spending cut and 1 part taxes.  Also the plan horizon can not exceed 8 years and at least 40% of the 8 year deficit reduction takes place in the first 4 years.  These plans that save money in 20 years are worthless.




Sun, 05/01/2011 - 00:54 | 1224986 blunderdog
blunderdog's picture

I don't object to destruction of the state.  It's going to destroy the economy too, but I'm already broke.

If you really want to end spending, do your part and stop paying your taxes.

Don't be a pussy about it.

Sun, 05/01/2011 - 01:40 | 1225020 virgule
virgule's picture

There's a question that has been bothering me for a while:
- gold has been going up since the start of QE
- gold believers (incl me) are convinced this is due to debasement of the currency, increasing risk of default, increased demand of central bank reserves and possibly preparations for a new currency.
- everyone is convinced that, when QE2 ends, stock markets and commodities will suffer serious and possibly huge losses.

Question: why does almost no one believe that gold will behave as another commodity first, and will go down like any other commodity at the end of QE2?

PS: I am not talking about financial entities selling their gold reserves to pay off other liabilities/redemptions during a hypothetical crash (this will cause a temporary drop, of course, but would be a very temporary effect), and I eliminate the option of preparation for default / new currency (these events are unlikely if QE2 does really end, and before QE3 starts - that's another story)

Sun, 05/01/2011 - 03:08 | 1225066 blunderdog
blunderdog's picture

Question contains a false premise.  It's not that the bugs don't believe it will go down.  They believe it will go down less or less rapidly than the other commodities.

If there's a commodity crash and gold corrects 50% while other "commodities" correct 75%, that's a huge gain.

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