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IMF: 'This is Our Last Wake Up Call for Your Savings'
Do you remember? The IMF set off the public and the media in October by stating in a report that it would be a great idea to invoke a one-time levy on the savings of the public to get governments' finances in the industrialized world back on track. That message or that 'theoretical exercise' as the IMF called it then, did not sit well with most people and it resulted in a media frenzy. A few weeks later they did try and failed at damage control, which was nothing more than public embarrassment. Meanwhile we have reached 2014 and yes, we have a new document commissioned by the IMF, from two Harvard economists, Carmen Reinhart and Kenneth Rogoff.
IMF: high time for financial repression
Both Harvard economists are not beating around the bush. The idea that the mountain of government debt in the industrialized world is controllable and can be solved over time with enough economic growth is completely unrealistic. Next to that it appears that politicians are suffering from collective memory loss. In Europe and the US, in the period between both World Wars, countries also defaulted. The current mindset that defaults are only reserved for Emerging Markets is completely incorrect, according to Reinhart and Rogoff.
Both economists state that the mountain of debt from the industrialized world is at the highest level in the last 200 years. And that is a problem, a problem which cannot be resolved by economic growth exclusively. The Eurozone's debt amounts to 95 percent of its GDP and the US is almost at 110 percent. Ultimately, the Eurozone is not that far behind at the rate at which debt is growing. You can bicker about the level at which debt is impossible to pay back, but the consensus is that this lies somewhere between 90 and 100 percent for the industrialized world, because of its low growth figures (1 - 2.5 percent).
Turnkey solution
'Fortunately', both Harvard economists have a turnkey solution. Before we get into the details we want to emphasize that this report is commissioned by the IMF. That gives the IMF at least the possibility to distance themselves from its contents, if hell breaks loose once more. For now it remains quiet, however. Most media channels, and especially the MSM, did not pick up the (at least to us) explosive report. In these financial times, nobody appreciates sleeping journalists we would think, but who are we to judge.
Back to both Harvard economists and their 'solution' for the government debt, which has increased beyond belief. The solution is very simple: financial repression. It does not sound pleasant and it isn't indeed. It is a cocktail of: (higher) inflation, capital restrictions, default and a savings tax.
Let that 'solution' settle in your stomach. It does not sit very well does it? Again we have the cursed savings tax, again the absurd capital restrictions. And according to both Harvard economists, a form of restructuring (default) of debts that have gotten out of hand should come on top. Probably you, as an investor/saver do not own government bonds, so you do not lose sleep over all of this. Well, that might not be so smart: the odds are high actually, that you are building your pension, and subsequently, the odds are high that your pension fund does own government bonds.
IMF thinks it is smart
The question is: what do we do with all of this? What do we do with an IMF, led by a highly accredited, charming lawyer, who just played the same old trick on us? First the organization starts with a 'theoretical exercise', only to deny completely that the IMF is aiming for your savings. And now this report, commissioned by the IMF and from the hand of two not undisputed Harvard economists, which features once more the savings tax and capital restrictions.
Does the IMF truly believe it gets away with this? Having a report written by two Harvard economists, that have made crucial calculation errors in an earlier report 'Growth in a Time of Debt'. And despite that the report was happily used by Olli Rehn, the financial head honcho of the European Commission.
Watch your savings!
Let us put forward that we also believe that the government debt has gotten out of hand in many countries. On top of that there is a whole array of artificial constructions with guarantees, debt displacements, etc. that naturally do not offer any solution to the mountain of debt in itself, but have to be seen for what they are: smoke screens.
That 'something' needs to happen, is clear. That we would ultimately all be better off with a financial system that survives, is also crystal clear. However, swinging capital restrictions, one-time levies on savings, to just then continue with the same people as if nothing happened on the same path: that should be out of the question right? Old top exec from De Nederlands Bank, Lex Hoogduin, came up with a creative proposal: a 1 percent norm. The government needs to spend 1 percent less every year, structurally. The proceedings of these structural budget cuts then need to be used to lower taxes. Creative, certainly. Maybe a little bit too simple, but definitely on a better track than our two Harvard economists.
The last word has definitely not been spoken here. The fact that the IMF just a few months after the last debacle comes out again with a political, explosive report, is a clear wake up call for every investor and saver. The financial need among the different governments is high, too high. And the day that politicians will recognize that is coming closer each day, with the necessary consequences to follow for your financial future. And that means most importantly: watch your savings! There will be a levy, we are sure of it. Probably in the form of a 'one-time solidarity tax'. The 'theoretically calculated percentage of 10 percent' by the IMF, is moreover not realistic in our opinion. Furthermore, we believe they will not stop when they have touched your savings: they will most likely take your entire capital into account, of which your savings are just a part.
Damage control is essential. And that is best achieved by spreading your capital. To be continued...
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I've posted about this before.
What people don't seem to understand is that they don't owe the money, governments do.
See 'Odious Debt'
In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.
I have posted very similar comments here and elsewhere over the last several years. It is my contention that one interesting approach would be to declare publically (I'll let others figure out the best way to do this) to the world that the US citizenry hereby repudiates all debts incurred by the .gov/Fed/corporations on behalf of the citizenry as odious debt AND that any debt incurred going forward before this declaration is recinded (which will happen if/when we get our Republic back) will also be considered odious and that foreign buyer's of US debt will NOT be paid back principal or interest.
Not suggesting my idea will solve any major prolems, but it will create FUD and a precedent/basis under which the debt can officially be defaulted upon in a post-collapse or other appropriate time.
That we now have a congress that admittedly doesn't read the bills it passes-there is a legitimate argument here.
if/when we get our Republic back)
What a quaint concept......
Perchance to dream comes to mind....
A dream it may well be....but if we cant even dream it, then what chance does it have of becoming reality?
It does not have a chance of becoming a reality...at all. The Grand Experiment of the United States FAILED.
It degenerated into what we have today. To attempt to turn back the clock and restart it would give you a failure. Repeating an experiment will give you the same results.
You can choose to live in a dream if you want. I will choose the reality no matter how bleak.
THERE ARE NO POLITICAL SOLUTIONS.
One thing's for sure.
Government is the problem, so more government is very unlikely to be the solution the the problem.
Because, as always, POLITICS IS EVIL.
One cannot use a tool of evil to craft a wholesome society.
http://en.wikipedia.org/wiki/Gunboat_diplomacy
Maybe the people dont owe the money but there are more and more leaches out there who seem to think they are entitled to other peoples money.This thinking leads to higher government debt that continues to grow. When you have 47 Million plus receiving food stamps and Millions on other government programs, eventually we end up where we are today. We saw what happened to Greece and yet fail to take the necessary actions that might prevent us and the world from ending up in the same boat.
Our Loser in Chief must love what the IMF is thinking. Afterall its not much different then what Obama wants. Spreading the wealth or redistribution. Problem comes when those with the wealth decide they no longer want to play the game of growing their wealth. its the middle class who end up being dragged down and then we have just two classes. Rich and poor.
". . .the invalidity of contracts signed under coercion."
How about the invalidity of no contract at all? I certainly never signed one and long ago seceded mentally and emotionally from a "state" of affairs so corrupt and rapacious that no one has, nor has ever had, a moral obligation to accede to its demands.
Lysand Spooner knew whereof he spoke, in other words, when he called bullshit on constututionalism and thus on statism itself:
The Constitution has no inherent authority or obligation. It has no authority or obligation at all, unless as a contract between man and man. And it does not so much as even purport to be a contract between persons now existing. It purports, at most, to be only a contract between persons living eighty years ago. And it can be supposed to have been a contract then only between persons who had already come to years of discretion, so as to be competent to make reasonable and obligatory contracts. Furthermore, we know, historically, that only a small portion even of the people then existing were consulted on the subject, or asked, or permitted to express either their consent or dissent in any formal manner. Those persons, if any, who did give their consent formally, are all dead now. Most of them have been dead forty, fifty, sixty, or seventy years. And the constitution, so far as it was their contract, died with them. They had no natural power or right to make it obligatory upon their children. It is not only plainly impossible, in the nature of things, that they could bind their posterity, but they did not even attempt to bind them. That is to say, the instrument does not purport to be an agreement between any body but “the people” then existing; nor does it, either expressly or impliedly, assert any right, power, or disposition, on their part, to bind anybody butthemselves.
Morevoer,
As taxation is made compulsory on all, whether they vote or not, a large proportion of those who vote, no doubt do so to prevent their own money being used against themselves; when, in fact, they would have gladly abstained from voting, if they could thereby have saved themselves from taxation alone, to say nothing of being saved from all the other usurpations and tyrannies of the government. To take a man’s property without his consent, and then to infer his consent because he attempts, by voting, to prevent that property from being used to his injury, is a very insufficient proof of his consent to support the Constitution. It is, in fact, no proof at all. And as we can have no legal knowledge as to who the particular individuals are, if there are any, who are willing to be taxed for the sake of voting, we can have no legal knowledge that any particular individual consents to be taxed for the sake of voting; or, consequently, consents to support the Constitution.
http://www.lewrockwell.com/1970/01/lysander-spooner/no-treason-the-const...
Another interesting concept is 'Unconscionable Contract'
Fits fiat money perfectly
Unconscionability (known as unconscientious dealings in Australia) is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract.
Understood, logicalman, but again, what contract is any of us a party to?
None, nada, zip, zilch, zero.
It's all organized, propagandized coercion that has nothing to do with free and voluntary contract other than the unconscionable abrogation of it.
And the longer it goes on, the more that humanity lurches toward an evolutionary dead-end.
"what contract is any of us a party to?"
I believe that's the point, Dick.
And yours is what, exactly? Are you arguing for or against mine?
Please explain.
They're ALL invalid contracts for the reasons both of you pointed out. Personally I prefer the odious debt angle b/c it really plays to the sob sister crowd, but that's a personal preference. My point is it's not an either/or proposition. You're both pointing out in different ways that government debt is wrong on so many levels, it boggles the mind.
Nice Lysander Spooner reference, BTW.
Even if you signed a contract, if there wasn't full disclosure before you signed it and the other side brought no consideration to the table, the contract is invalid.
You are correct in your assertions, however, if you didn't sign it, it doesn't apply to you.
The unconscionable contract idea could be used very effectively against the IRS, if there was a system of law still in place.
Unfortunately, there isn't, just a legal system that has been corrupted beyond belief.
Enjoyed the brains dialog you guys got going. I've got another solution, albeit much more simple: If someone touches my money, I kill them.
Someone is "touching your money" They are eroding its Purchasing Power and have been doing so ever since you came into possession of it. That is the Federal Reserve Bank.
Last time I checked Volcker, Greenspan, Bernanke and, now Yellen, are still alive. Nobody has killed them.
How is your "simple solution" working out for you?
Of course you will want to get away with it, right? Don't advertise it.
How many have you killed so far, willwork?
Just curious.
What Contract or better yet what Budget? Since Obama took control, there hasn't been a budget provided by the Democratic Senate. Its spend and more spend and don't worry about how were going to pay it back.
I always thought the govt would go after your pension / 401k first. Yeah, we need to help you invest in govt bonds cause no one else will buy them and you know it's all for the children and we want you to be financially secure in retirement........fuck that.
"I always thought the govt would go after your pension / 401k first"
I think its a non-issue since the Fed is printing to buy and hold Gov't bonds. If the Fed didn't buy, then they would have gone after 401Ks/Pensions. I doubt Politicans will target savings as it would cause riots and the population would quickly vote out the politicans out of office. In the EU, they only targeted distant EU members, such as Greece and Cyrus which is about 1000 Km away from France, Germany and the rest of northern Europe. I very much doubt that Germany and France will target savings of their own citizens, not if the politicans don't want their head put into a guillotine! They can get away stealing from distant neigbors, but its difficult when you target your own people.
In the US they will simply target the purchasing power by printing dollars until toilet paper is worth more. Its an easier and more clandestant method to steal savings. This will probably happen in the EU too, after they run out of southern EU members to prey on.
A lot of pensions are already in government bonds anyway. Especially if you work for the Gubbermint. I don't see how that helps them. They have to do an outright confiscation, as was proposed by Democratic members of Congress back in Dec 2008. They wait for the next big crash (or even engineer it), and they ressurect 2008 legislation to confiscate all 401K's and IRA's and to put that money into Social Secuirty. The "compensation" for the confiscated assets is a monthly SS benefit based on the pre-crash value. And then the Gubbermint inflates with a massive stimulus, so the confiscated assets inflate too. But the Gubbermint holds those assets permanently and reaps all future gains. Note that they can't confiscate all assets, because then there wouldn't be a market to value anything. But they can confiscate all tax-advantaged retirement plan assets that are in stocks, bonds, etc...., and that will do nicely.
I think IRA/401k accounts will recieve much higher deduction penalties first. Now 10 percent could easily jump to an amount overnight where your typical holder will just say, OK, put my facebook/Twitter stock in bonds now.
It is not like your average IRA/401k holder is going to buy gold and silver and put it offshore. Think of it this way. It's like shooting cattle. They enter the stall one at a time and end up on meat hooks on the other side.
"They" are simply trying to force the last cash holdouts into the market before they scalp it.
Exactly. And it’s to hasten Americans down The Road to Serfdom – under the yoke of world Socialism, Lord Keynes’ and the Webbs’ Fabian Socialist dream.
Why else did the International Bankers finance Bolshevism in Russia?
“Jacob Schiff, head of the New York based Kuhn, Loeb and Co. (the banking firm that gave us the Fed), spent $20 million on the revolution… Federal Reserve Director, William Boyce Thompson, gave the Bolsheviks $1 million in the summer of 1917, fifteen Wall Street financiers and attorneys, led by Thompson, went to Petrograd, the center of revolutionary activity.
“After the Revolution in Russia was successful, many American businessmen who supported it went into business with the Soviets. Averill Harriman formed a joint shipping firm with the Soviets. The Rockefeller family became involved in the oil business with the Soviets. From the 1920’s the Rockefeller’s Chase Bank financed business in the Soviet Union.” – Dee Zahner, The Secret Side of History
And not to forget the Gore family roots that massively intertwine with those of the late Armand Hammer’s Jewish Russian roots. Hammer, the Moscow deal-maker of Arm and Hammer household fame, kept in his office a picture of Lenin personally autographed: "To Comrade Armand Hammer from V. I. Ulyanov [Lenin].
Hammer’s family long had ties with Lenin.
Edward Jay Epstein in his book DOSSIER: THE SECRET HISTORY OF ARMAND HAMMER relates how Senator Al Gore Sr. “got the wealth to live in splendor” due to his dealings with Hammer, who made him president of Occidental’s coal division after Gore Sr. retired.
Epstein's original NYTimes article suggested that Hammer's trade with the Soviet Union helped Soviet interests, including espionage, but he had no direct proof, until the damning detail came straight from old Soviet archives. Wrote the Christian Science Monitor: “The account is of a man who bribed and cheated his way to great wealth --- and started with Soviet gold.”
Writes Epstein in “Dossier”: “Hammer came to communism legitimately. His father, Julius, a Russian immigrant, linked up with Vladimir Lenin at a socialist conference in Berlin in 1907 and ‘agreed to become part of the elite underground cadre that Lenin would depend on to change the world.’ A physician by training, Julius built a small drug chain into Allied Drug and Chemical, purveyor of skin creams and herbal medicines.
“When the Bolsheviks seized Russia in 1919, Julius worked with Ludwig Martens, Lenin's de facto ‘ambassador’ in the United States. Julius used Allied, of which Martens was the covert half-owner, to launder sales proceeds of smuggled diamonds --- money that financed the revolutionary Communist Labor Party (CLP) dedicated to ‘overthrowing the government, expropriating banks, and establishing a proletarian dictatorship.’ Julius held card No. 1. The CLP eventually became the Communist Party USA and part of the Communist International (Comintern).
Julius and Rose (Lipshitz) Hammer came to the United States from Odessa in the Russian Empire (today’s Ukraine)in 1875 and settled in The Bronx where he ran a general medical practice and five drugstores.
When his father was jailed for an abortion (abortions until 1973 had been illegal throughout most of civilized man’s history) that in 1919 took the life of the wife of a czarist-era Russian diplomat, in 1921 Armand took over the import deals and left for Moscow in 1921 on the first leg of an odyssey that would make him ‘one of the great con men of the twentieth century,’ in the words Epstein.
sources:
http://www.theforbiddenknowledge.com/hardtruth/armand_hammer.htm
http://www.freerepublic.com/forum/a661957.htm
This is really sick. People live in total denial. His last protege was Al Gore.
And his grandson is a movie star...
http://en.wikipedia.org/wiki/Armie_Hammer
So many dead people... really sick...
"I think IRA/401k accounts will recieve much higher deduction penalties first. Now 10 percent could easily jump"
Yes, I believe that is true. The majority of people are withdrawing from their 401Ks as they need the money to meet ends as food and energy prices have risen while wages have been falling. In my opinion, the 401K is just a hidden way for the gov't to collect more taxes as they know most people will at som point will do an early withdraw and the gov't can collect an extra 10% in taxes. I see no reason why they won't jack this up to 20%-25% in the near future.
The problem with tax advantaged accounts like 401K/IRA is that you can't hold the physical assets yourself. They have to be held by a 3rd party. That means they are easy to confiscate.
You're right. but since they can just print with QExxxxx, they don't need they backlash. Servicebility of debt means nothing to these people anymore.
V V-
Indeed! Plus, continuing the /sarc/: Another reason we need to help you is because you don't know how.
If you like your money, you can keep your money.
More like...
If we like your money we can keep your money.
And we have enough MRAPs and hollow point ammo to believe we can get away with it. Which of dozens of ways to produce the chaos needed to cover our actions will we chose? Decisions, decisions...
Great analysis!
***Not***
What a load of nonsense
Take cover & Download our Free 'Guide to Gold'
Sprout Money offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies from Sprout Money are transformed into the Gold & Silver Report and the Technology Report.
Follow us on Twitter @SproutMoney
What a load of nonsense
Indeed.
well, it depends from country to country.
I'm pretty sure that in France and Belgium they'll torch the banks and hang a banker every 5 minutes.
Nothing will change or motivate people until their children start missing meals. Too many distractions.
see the problem here? four leter word-bank...
your hard earned labor/tyme and you are doing what with it.
fucken - eh go buy that 56 chev...
or 59:-)
Invest in magazines. Lots and lots of high capacity magazines. Great for barter, when the need arises.
worth considerably more when fully loaded with hollow-points
Lots of smart money driving up the price of those collector cars. Gararged and unregistered. Nice inflation hedge, and you can sit in it.
It's not so much smart money as it is too much money.
CYPRUS
Inflation or outright theft, what difference does it make?
Well, there are ways to dodge inflation, or hedge it. A gun in the face is harder to get around.
"Damage control is essential. And that is best achieved by spreading your capital."
I have a better idea. "That is best achieved by spending your capital." If you blow it on wine and women (or in my case Jeeps and Mexican beach property), there's nothing left to steal. And if Ludwig von Mises tells us anything, it's that Humans take Action when governments start the looting and pilfering. Blow your savings now while there's still time.