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Volcker: Raise Taxes to Curb the Deficit
Paul Volcker says that the U.S. will probably need to raise taxes to curb the deficit.
Specifically, at a speech to the New York Historical Society, Volcker said that America should consider imposing a "value added tax" - a type of national sales tax used in Europe - and also carbon or other energy-related taxes.
Of course, Herbert Hoover raised taxes in 1932, with disastrous results for the economy.
More importantly, instead of raising taxes or cutting services, why don't we just stop unnecessary wars, unnecessary bailouts and unnecessary interest costs - and claw back the ill-gotten gains from the too big to fails?
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Folks.. none of our financial geniuses are listening to Volcker. Taxes will go up after mid term elections or even wait until after the next presidential elections. Benny and Timmy have it all rigged for now. All i can figure with this market is that everyone in the world would rather own big american companies with strong balance sheets with banks that are all backstopped and rigged to earn than anything else out there.
Yeah, more's the pity. Too much of the financial seems to have it figured that it's OK for everything to go to hell, so long as they've got theirs stashed away. I suppose there were plenty of Europeans thinking the same way in 600 AD, too. "A Canticle for Liebowitz" is looking more like prescience every day.
Having lived through the Carter era, I used to have great respect for Volcker for his role in stopping the Carter inflation madness. In 1979 my machine tool business couldn't provide a quote to a potential buyer with validity beyond 30 days, in a business that usually had a 3 to 6 month cycle between proposal and purchase order. Our business was in chaos, utter chaos. By 1983 life was bearable again. But to hear him now saying that we need to RAISE taxes convinces me that senility is a fact of life, or somebody has bought him lock-stock-and-barrel. He cannot not remember that Reagan's tax cuts revived the economy in the 1980s, and that revival boosted revenues to the Treasury by a pretty considerable amount. Unless he's gone senile, or has been bought and paid for. Sad; very, very sad.
The State will never miss a chance to raise taxes.
The State will never cut spending.
You can stop the wars, and cut the military in half (or all together); you can stop the bailouts and interest costs; you can claw back the money from the TBTF's and then some; you can empty every deep pocket in the country on top of that.
This will not fix anything. The spending will continue; the taxes will go up (and new ones created, i.e., carbon and VAT); nothing will be solved.
What is an unnecessary war? Or, a better question would be,"What is a necessary war?"During the cold war, the left's refrain was, "Better red than dead." If a necessary war is one where you are attacked, then all wars are necessarily necessary because someone is always attacked in any war.
I don't recall Hoover raising taxes. Congress raised taxes. Congress also tried to get a national sales tax twice but failed both times, thanks to the Republicans who were the minority party after the 1932 elections. During the very worst part of the depression Nov 1933 to Jan 1934, Congress was not even in session, and Hoover did nothing.
Um, Hoover wasn't even in office in 1933/34. Hoover is hardly blameless, but the great nadir of the economy in that period was solely Roosevelt and the gang of Harvard educated worshippers of Communism and Fascism for whom he opened and held open the doors. Like the current Occupant, FDR was an economic numbskull, who would let any wild-eyed scheme that was presented to him see the light of day, since he didn't know a bad idea from a stale biscuit.
Listen, Blankfein, when you post here please do so under your real name.
You are truly silly.....
Summers needed a potty break from the SPY futures trading desk, so he had Volcker float the VAT air-biscuit. Buy the dips, dips. No other direction but up!
The way to crush the bourgeois is to grind them between the millstones of taxation and inflation.
– V.I. Lenin
I would have to agree with Volcker.
Cheap fuel has created malinvestment on a biblical scale - that cheap fuel has been sustained by the actions of a expeditionary force in the Persian gulf which has been subsidised by both the American taxpayer and the greater globe acceptance of the dollar system.
Of course the tax would have to go back into the coffers of the treasury as the so called carbon levy is dubious at best and would be destined to reward the financial sector.
But then again I am European and we are now paying 1.30 Euro per litre which I believe is not enough.
Cheap fuel created WHAT ? Cheap fuel has created a pattern of investment, but to call it malinvestment is beyond incredible. It has created the fantastically successful and comfortable world we live in. Do an input-output diagram without a cheap liquid fuel for transportation and just see what you get. It'd be a world with a 19th-century technology, without a shadow of doubt. If you define coal as "cheap fuel", then you go back to using wooden sailing ships to get from Europe to anywhere worth going. Is that what you want?
And since Europe gets almost all of its' oil from the Middle East, maybe you ought to be thanking your lucky stars that the USA has undertaken to defend the M.E. oil sources from the rapacity of the Saddam Husseins of the world. If we were not doing this for you, you'd have to do it yourselves. Which is, of course a basic credo of the Socialist - never do for yourself what you can take from another by force or by fraud.
Dork of Cork, forsooth!
Fuel cheap or otherwise is not technology it is a input (vital input) that goes into a machine. Of course I agree with you that it has created a comfortable existence but to continue to shovel most of your wealth into increased consumption at the expense of building capital is the road to perdition.
As for oil in the middle east it will be spent regardless like all wealth - the question is how it is spent.
Will it create more wealth or will we choose to destroy yourself in a consumption orgy.
I do not quite follow your last comment but if you are accusing me of being a socialist because I want real savings for the future you need to recap on the whole capitalism thingy.
You need capital before you can become a capitalist
To reply to your inane remarks would require too much time.
Sorry, but my time is much too valuable for the likes of you.
Read some, please....
Is that the best you can do - if you must attack my analysis then do so in whatever manner you so wish but it is best to tackle the ball and not the man.
This happens with a carbon tax and or a Iran war and you will see the Western States riot. We have no public transit to speak of and I expect it to resemble The Road Warrior around $10 a gallon. I could pay no problem and live right next to where I work, but when it takes 4 hours salary for an unskilled worker to commute you will see a lot of "fun".
Shit why not 100000000% taxes on energy? Would be a more "sustanaible" lifestyle? I'm sure our "betters" would love to have us make in rural villages scraping a life out of dirt, and it would be "green".
What's wrong with letting the market decide, and letting the market have a solution? If the market says $10 a gallon so be it we will be forced to adapt, but why cause a crisis on purpose? And $10 could happen with the combo of VAT, Carbon Tax, inflation, Iranian War. Hell might go above that.
The market does not recognize a finite resourse.
Also the excess housing built during the credit boom may have been built regardless of fuel tax prices but their locations are generally unsustainable as a result of low fuel prices - they will be demolished and revert to farmland.
Even ardent libertarians believe in some form of national defence - this requires taxes - they are also nearly always anti -imperialistic in their world view.
A empire that abandons its global energy resources and reverts to a frugal republic needs to be practical in its use of energy.
Since taxes are necessary in any state it may be best to increase taxes on consumption goods it imports from abroad , although a weaker currency may also help to eliminate your trade deficit.
I think Volcker's comments are significant since his views seem to hint that the US is about to give up its unipolar/reserve currency status.
This also comes after the US stated it would not automatically retaliate with nuclear weapons after a chemical, biological strike (reported in the FT today) - this has obvious implications for former vassal states under the US nuclear umbrella.
Japan is the country that will be most affected by these changes as it has no nuclear deterrent , its economy is geared to service a declining America , little gold , no oil or deep water navy and it has a gigantic dragon across its narrow sea belching smoke and soot.
Expect Japan to change radically perhaps in a chaotic fashion as its tightly controlled populace suddenly spin and spin in this new world of deglobalisation.
Fireworks are almost inevitable
Dork: The market does not recognize a finite resourse.
So a hot blond who owns a liquor store would not be able to command a premium in the dating market?
I'm pretty sure supply and demand are still functioning as price drivers.
Mercury - hot blonds in liquor stores invoke irrational responses from the other market participants - it is never wise to use a combination of the small brain and liquor - the economic externalities from such interactions can be devastating for the parties involved. Unplanned Pregnancy can severely reduce the capital base of the customer.
In which case we must I suppose need the government to step in and tell us what is really valuable (as opposed to what market participants perceive as being valuable) and set prices accordingly.
Exceptions will of course have to be made to set aside some of those scarce resources to <ahem> service the national interest.
Quick, securitize that product!
Dupe
Hmm am I seeing a new market? CSO...Collateralized Sexy Obligations...Quick get Dimon and Blankfein on the phone I have the next bubble!!!
This is a bubble every man on earth can get behind! I have a feeling RoboTrader would DOMINATE this market :)
er's chasing ed's fo sho .. and I don't think gender has much to do with the selection for some and gender definitely has nothing to do with those that can create, mark, manage and service these pools of assets and the resultant cash flow.
Clearly not. The government must allocate such a rare resource...to me!!! :)
So the market doesn't understand resources. So the Saudis don't know that oil is running out, man those Arabs must be stupid. Why don't we pay them in magic beans? "HAHAHA You idiots don't know resources are finite"
Please markets make the decision far more rationally then any government ever could. Tell me that your government should be trusted with fuel prices or mine. Both are merely a looting arm of banks at this point.
And no not all libertarians believe in national defense. I could give a shit. If there is a for defense people could pool resources to get it voluntarily instead of having a gun to their head and extracted from them for their own good. Read up on Rothbard. And I'm far more worried about my own military then cave men 1/2 a world a way. Would you willingly path for those lunatic demons murdering unarmed children miles away from the safty of their attack chopper?
But since only the gov can make decisions about resources why not let them? And if the government decides that most of the population must die so the rest can live better lives is that bad? Of course they won't kill them, just deny them the necessities of life. After all farming uses oil (energy dependant industry), so skyrocketing food prices are natural, maybe some people have to die. Behold the glory of the state controlling resources http://en.wikipedia.org/wiki/Holodomor http://en.wikipedia.org/wiki/Great_Chinese_Famine
Look at that child in the Holodomor article and then tell me of the virtue of the state running the show!
You didn't understand the Western States. You will shatter and ruin lives by doing that. Or do you believe that sometimes that's okay for a "Great Leap Forward"?
Yeah the market is sure stupid. Good thing we have government control to show us the way! Now which way to the mass graves?!?!?
EDIT: Also since all resources are finite are you calling for gov control and price setting for everything? Labor is finite, lumber is finite, oil is finite, coal is finite.
Oil is capital when it is consumed that capital is gone forever unless it is used to create more energy capital.
As for the Arabs and Persians they are consuming oil that is Subsidised and is only a few cents a litre - this fiscal policey is extremely wasteful as with simple measures they could increase their exports or better yet preserve their resourse base for longer. These former desert herders have little concept of building capital - their culture is to move on to the next oasis (not unlike the present western culture). They are only now considering to power their electricity with alternative fuel resources now that half of this bounty is gone!
Indeed a large % of increased oil consumption is in the OPEC countries while the wests consumption is dropping due to price pressures.
As for the benefits of a militia defence good luck with that - modern armies will cut you down like livestock going to the slaughterhouse.
And please do not bring the morality play of children being killed by dog soldiers into this - the blood that is being spilled is for oil and it will remain so until we at least make a effort to find a alternative or huge efficiency.
Also just because the US pursued a disastrous energy / foreign policey does not mean that all governments should fail in their duty and indeed some have at least partially succeeded in this endeavour.
It is a strategic goal of government to both defend the state against its enemies and to provide secure energy for its citizens - individuals or small groups are incapable of achieving these goals.
Wait so is coal not consumed? Uranium? Really all energy?
So tell me should the government control all energy?
And why on God's earth would the gov look for an alternative? Gov wants power and questing over a resource is a great route to power.
You let the gov price set for energy and you give them all control. Again why not shunt most people back to the iron age and let the scientists research an answer? Should have plenty of time then, and really who cares if they suffer, it's a national emergency. You know maybe even lure in tourists to see how iron age people lived, what an economic boon! After all we need to look at the big picture right? I'm sure they wouldn't take advantage, governments don't do that. Oh and how is NAMA treating you? Glad to know Gov is working for us huh? Good thing we can trust our governments to right by us! :)
Are you willing to trust your government? If you are that's great, I'm sure they will take good care of you. May your shackles rest lightly upon you.
Of course all energy that is used is consumed regardless of use but it still matters much how this energy is used.
Consider late 18th century Europe - its a relatively advanced agricultural economy with a surplus allowing sophisticated production on a local level. But tensions were building and indeed eventually exploded - its surplus was being eaten by more and more consumption and if the whole economy was based on day to day consumption and a hand to mouth existence then James Watt would have never found the time to build the steam engine.
The point I am making is that societies for the last few hundred years have moved from a wood to a coal then a oil base - they never could be a historical event where a 17th century inventor could create a internal combustion engine and then 30 years later people are driving to the mall -the capital base would not have existed and other sciences such as material sciences would simply not be around.
The present energy crunch is clearly a product of monetarist dogma which creates money from credit and not from a capital base but now in a crisis there is a role for fiscal mechanisms that actively reduce consumption - however these methods are useless without a comprehensive reform of the banking sector.
A fiscal input does not equate to full control , also so much can change with the appropriate price pressures - trams in urban areas , trains again carrying consumer goods to regional centres , compact cities closely surrounded by agriculture , nuclear energy plants would have there true value recognized as the price and form of real capital is altered and therefore much more would be built to realise this bounty.
The late stage welfare economics that have surrounded us are dying - their metrics regard increased consumption as good regardless of final use.
We dig elements such as copper out of the earth - create vast McMansions and profit from the consumption and inflation of such materials . This madness is beginning to end - there is change afoot.
As for my government well it was always inept and corrupt. Also unlike the US we are much closer to centres of power and are too small to fight the vast resource's of London , Rome ,Frankfurt New York etc. In truth we have been essentially British for 2 centuries and our Independence experiment has been another disaster where we exchange British rule for Brussels control - life is never simple for a small country.
The advantage of NAMA is that it is forcing us to reduce consumption - my rejection of it is that our reduced consumption will not be used to build our capital base but will leave the country to sustain the lifestyles of London , Germany and the rest of the surplus saving EU countries.Unlike Japan our debt is external and therefore is a form of colonial tax.
The illumaniti supressed many alternative energy sources to promote their big oil business. THEY should be paying us for the ecological damage they have done and the lives they have ruined by supressing alternative energy.
Now you want to punish us further by siding with your captors.
Well stick us in a VAT of oil, and get ready to pay a fortune for your oil produced and shipped food.
joe’s congressperson is a republican; mary’s congressperson is a democrat; joe’s congressman steals from mary; mary’s congressman steals from joe; mary & joe get robbed; joe hates the democrats; mary hates the republicans; both congressman get re-elected to life terms; joe and mary are stupefied. etc., etc.
americans are supposed to hate persians;persians are supposed to hate americans; etc., etc., israelis are supposed to hate arabs; arabs are supposed to hate israelis; etc., etc.
fear-based, something-for-nothing debt explodes; etc.
cartels, oil, trickle down economics; etc.
Mary & Joe go broke, hire another set of politicians, get divorced; etc., etc.
entitlements cannot be paid; promises are lies; the best thief wins; trust is lost; the economy is bankrupt.
wow. never saw that coming.
is there a boatload of kids out there, with lots of skills, that we can work as slaves? No? OK, let's have a VAT tax so the nexus can really crawl up everyone's ---.
any other bullets? arrows in the quiver?
no cleaties, no pullie.
under demographic deceleration, increasing the velocity of tax receipts requires an acceleration of debt. The VAT solves nothing, but it gives the socialists some hope, fascists incidental capital control, and the extend and pretenders additional statistics to misrepresent the facts with. Internet transaction taxes and associated control coming to a balloon near you.
We Await Silent Tristero's Empire
When will you finally figure out you lost, lose, and always will lose. There are too many people that understand the importance of what we are doing and the great benefit to society. You are outnumbered and outwitted. Go crawl back into your bunkers where you belong. Bring your gold and your guns with you. We won't need them up here. Besides, look at what happened to the Russian's when they tried to stop us. Do yourselves and your families a favor, stop your madness. I do not think any of you enjoy the prospect of pushing daisies prematurely.
Yeah well, to paraphrase Marla:
You suck at central planning!
Back in the day, "da Boss" often said in Chicago, we needed to do it for the children. Didn't really matter what the hell was happening. Stopped the press cold.
Do it...raise taxes. I'll enjoy the show. Lets really test the mainstrem economist theories. Add carbon taxes and a VAT and why not start a war with Iran too?
Someone picked up a bit of hopelessness in the comments? that ain't hopelessness...I just want to see the collapse sooner rather than later so that I can enjoy some of the upswing afterwards...We have to prove these theories out. Right now the world is still Keynsian and people still have faith in politicians.
The remnant must continue to buy silver-gold and improve there standings in the community, be good neighbors and be able to explain some Rothbard and Bastiat.
The American people will not tolerate what is now obvious and transparent criminal anarchy in Washington.
Raising taxes to bail out the trading positions of Wall Street bankers and to keep foreign bond-holders from having to suffer portfolio losses is obviously in conflict with the US Constitution.
Many people on this blog are busy trying to figure out how to trade on the macro theme of "USA descending into for-profit-mob-run-police-state." This is short sighted. Good luck trying to collect when there are no longer banks or courts or rule of law.
Yes. It is a world that no longer can afford the investment bankers.
Lord Acton: The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.
What will happen when the US adopts Canada's health care, education system, banking system and tax system? Will it be the end? Get ready for 55% marginal income taxes and more regulation to make you dizzier than a bee stuck in a Coke bottle. Don't worry, you'll survive and grow to like the nanny state, just like we do in Canada. Our politicians have lulled us into believing that the federal government will take care of all our problems.
So whom do you want to take care of our health problems? Maybe insurance companies? Maybe other corporations? What world do you live in?
How about physicians (the providers)? Talk to your doc about his perspective on a solution. I did, and was pleasantly surprised.
Bartertown has fine doctors, btw. They still need their lawns mowed... kids and pets watched... cars maintained... groceries delivered... the possibilities are endless. Pretty soon anything of value will beat what they'll see from Medicare reimbursement.
Pretty soon anything of value will beat what they'll see from Medicare reimbursement.
heh. And don't forget the settlement structure of current = 180 days.
Leo, what about those Cuban cigars?!
Raise taxes on who? Who or what is left to raise taxes on? Who has money left besides the Rockefellers, Rothchilds and Bilderbergers? The big grab for the last zinc filled penny.
VAT. Yeah right. Illumaniti whore.
End the Fed.
I would reccomend this is objected too as much as possible, Here in the UK in the 70s needed an IMF bail out, This came with an introduction of a 6% VAT Tax, Today it is now 17.5% and its poised to go higher,
This tax gets better, Here we have about £2.50 per gallon fuel tax plus VAT hence a crippling fuel tax. Over $8.00 a gallon, I trust this may be overlooked by the MSM
The cost to business red tape is another inflationary area.
The UK is bust again even after such a tax, I would suggest everyone in the US makes as much noise as possible.
Bingo.
And you'll notice the UK still has a "conservative" party too.
They're the ones who want to keep the VAT at 17.5% instead of 18%
Terrific. I can't wait to rush to the polls for that one.
I bet Cameron will bump it to 18.5% to help continue the Brown program with respect to RBS, HBOS/Lloyd's and the rest of the UK financial services sector.
Not sure where kneejerk anti-tax ideology really gets us at this point. We've had it for 30 years and it's been half of the problem (along with runaway spending.)
We have to cut spending and raise taxes. Every adult knows this. Unfortunately, there are no adults in Congress.