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Jeff Nielson is from Canada and is a writer/editor for Bullion Bulls Canada (http://www.bullionbullscanada.com/#content). He has a personal background in law and economics. Bullion Bulls Canada provides general macro-economic and political commentary, since the precious metals markets are among... More
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  • Silver and Germ-Warfare

    For those expecting an explosive piece of investigative journalism, tracing some sinister link between silver and “weapons of mass destruction”, my apologies. When it comes to “germ warfare”, silver’s role is entirely a defensive one.

    In my last commentary which dealt with silver’s soaring industrial uses, I received a number of comments and questions concerning (in particular) silver’s anti-microbial properties. As someone who is also just learning about these industrial applications, I was unable to provide good answers to some of these questions, and so it was time to do some research.

    In the months that have passed since then, I have not only looked at several of the companies using silver as an anti-microbial agent, but I have also learned a little more about the biological aspects of this application. As a result, I can now explore this subject in greater detail – and provide readers with a more comprehensive analysis.

    The first point to make about this technology is that I had (erroneously) referred to this previously as “anti-bacterial” technology, directly implying that it was only effective against bacteria. As I quickly discovered, silver has much broader “anti-microbial” properties – meaning that it kills not only bacteria, but also molds and fungi. This broad spectrum of anti-microbial effects obviously means that the applications for this technology are also much more numerous than I had previously suggested. However, higher dosage requirements for these other microorganisms may tend to reduce applications in these areas.

    The next point to make here is that this anti-microbial effect is produced through the release of silver “ions”, the active agent which kills microorganisms. These ions can be released in different ways (and different rates), depending on the precise composition of the anti-microbial substance.

    In the case of silver, the three main categories of such substances are “ionic additives”, salts, and metals. The primary difference between these substances is the rate at which they release silver ions, and (conversely) the “durability” or length of time that these substances can maintain their anti-microbial effect. Thus, the type of silver anti-microbial treatment used will depend on the nature of the product being devised.

    In the case of “silver body-washes”, and other single-use applications, the silver ions would be delivered through ionic additives, which release these ions at the greatest rate/speed – and are completely soluble in water. On the other hand, with anti-microbial treatments which are intended to be durable (such as clothing or upholstery with these anti-microbial additives), it is important that the ions be released much more gradually – so that the anti-microbial effect lasts for as long as practically possible. For these applications, the “metals” based products are most appropriate.

    In between are the salt-based anti-microbial products, which are less water-soluble, and thus have a slower release of ions than ionic additives and a greater duration of effect.

    More specifically, I was introduced to a Swiss company, HeiQ Materials, which “manufactures high performance textile effects for the most demanding functionalities”. To explain this in greater detail, HeiQ manufactures “microcomposite” silver- additives which can be used to add anti-microbial properties not only to textiles, but also to medical devices and plastic coatings.

    There are several facets to HeiQ’s business model (and products) which should greatly excite silver investors. Most-notably, HeiQ does not manufacture anti-microbial clothing, or upholstery, or many similar products where anti-microbial, silver-based technology can be introduced. Instead, it manufactures an additive which can be relatively easily assimilated (through customized formulations) into the manufacturing processes of companies which are already manufacturing such consumer and commercial products.

    What this means is that this emerging technology can be incorporated into our economies far more rapidly than if each individual manufacturer needed to design and engineer their own anti-microbial products, one by one. The other aspect of HeiQ’s silver-based technology which I found especially exciting was that it is an extremely flexible technology.

    In the case of anti-microbial textiles, it can either be essentially woven into these textiles or applied to the surface in a coating. The trade-off here is obvious. Weaving the silver into the textile results in a slower rate of ion-release, and thus greater durability. Applying this to the textile surface increases the rate of ion-release (and the potency of the anti-microbial effect), but with a decrease in durability as a consequence.

    As a reminder to readers, in commercial terms there are two very different uses for this technology. Polyester-silver sportswear uses this technology to make sportswear garments odor-resistant – since it is the growth of bacteria which produces odor (through perspiration).

    Otherwise, its anti-microbial properties are health-related. Armies provide soldiers with silver-laced socks to prevent or at least retard many forms of foot-infections (and undoubtedly these soldiers also appreciate the anti-odor effect). Beyond this, the ability to incorporate this into both clothing, bedding and upholstery means that the potential uses (and locations) of silver-based anti-microbial textiles are virtually infinite, but naturally begin with hospitals, labs, doctors’ offices, and all other health-care facilities where there is a need to prevent/control “cross-contamination”.

    I have previously openly speculated that the next (gigantic) market which could be “penetrated” with such products is the transportation sector. Reinforcing this assertion was a recent news item which alerted people in North America to a dangerous, nearly untreatable form of bacteria – which is being “imported” across the ocean through the increasing rate of “medical tourism”.

    For those unfamiliar with this term, it is a relatively new economic phenomenon where people (primarily Americans) are traveling to other countries to obtain medical treatment of various sorts – because they are unable or unwilling to bear the expense of obtaining such treatment in the United States. For economic reasons, India is a very popular destination for such travelers – and also a home to this deadly bacteria.

    This provides two, separate incentives for incorporating this technology into at least some forms of transportation, with trans-oceanic flights being an obvious starting-point. Not only could this be seen by airlines as cost-effective with respect to potential legal liability for the spreading of diseases among passengers, but governments now also have a motive for introducing such technology: reducing the “mobility” of highly-resistant and/or dangerous microorganisms in being transmitted continent-to-continent, through travel.

    With the ability to introduce this technology either into or onto textiles, this allows various corporate and government entities considering such technology to choose the optimal level of cost-effectiveness when using these anti-microbial textiles.

    The capacity to incorporate this into plastics (via coatings) adds an utterly new dimension to this technology. Household items for food-storage and food-preparation immediately leap to mind, as well as an infinite variety of uses in the nursery – for health-conscious new parents. Then there is the commercial side of the food industry. From food-manufacturers all the way to restaurants, there will obviously be an enormous demand for such products – providing they can be delivered to potential users as a cost-effective innovation for their businesses.

    On the other hand, as I have pointed out previously, when it comes to the issue of legal liability, what is and isn’t “cost-effective” can literally change over-night. If this technology is a viable way for these businesses to reduce the risks of health hazards to the “consumers” of their products, and these businesses choose not to do so, our legal system (and its judges) have demonstrated on many occasions in the past that they are ready and willing to impose hefty legal damages against companies judged to be “negligent” in not taking advantage of such health-protection.

    The ability to coat medical devices with this anti-microbial protection is both a time-saver (in reducing the time/effort needed to keep such instruments sterile) as well as obviously reducing the number of infections transmitted in this manner.

    Adding to the long list of potential, silver-based anti-microbial products are paints. In particular, the ability of such paints to greatly retard the spread of mold makes this product enormously appealing to a wide variety of users.

    Just recently, a reader pointed me toward another interesting angle on this subject: gold. In particular, an article on the World Gold Council web-site discusses the recent discovery that the addition of gold particles to silver-based anti-microbial products increases their durability, through retarding the rate at which ions are released.

    It was inclear from the material I saw whether this was viable technology at current bullion prices (most particularly, the gold/silver price ratio). However, with ardent silver bulls (like myself) expecting the current, extreme gold/silver ratio to collapse dramatically in the years ahead, this combination technology may be a valuable industrial tool in the future.

    At the same time, I must also provide a cautionary note for investors. Silver-based technologies are not the only option when it comes to anti-microbial textiles. I came across another company which manufacturers an anti-microbial treatment for the garments of hospital workers, and does not use silver-based technology. While this technology is also apparently suitable for sportswear, there does not seem to be nearly the same number of potential applications for this non-silver technology.

    According to HeiQ, silver is a relatively new product for use with textiles. Alternative technologies include quaternary ammoniums, and Triclosan (which has been recently de-listed from Oekotex, an international testing and certification system for textiles). Silver is purportedly the “biocide” product with the broadest bacterial-killing spectrum, and the most “wash-fast” technology – which presumably means treatments which maintain efficacy after washing/laundering.

    Naturally cost-effectiveness will be an important factor in the future of these competing technologies. Silver-bulls may be worried that a sudden spike in the price of silver could kill-off innovation and expansion in the use of silver as an anti-microbial agent. This greatly depends upon the precise application involved. With respect to these silver-based products, research conducted by HeiQ shows that (depending on the product) silver is used in concentrations ranging from 1/1,000th (by weight) to only 10 ppm (parts per million).

    This is consistent with my own previous calculation regarding the silver used in polyester sportswear. By weight, such products only use 1/40,000th of silver, relative to the weight of all other inputs. This means (as I have often observed before) that such silver-based products will  be extremely price-inelastic. What that equates to is that the demand for such products will change very little – even with very large increases in the price of silver. Given this parameter, price does not appear to be the most important determinant in a longer term analysis of which is the superior technology.

    In summary, the combination of flexibility and efficacy seems to provide a significant advantage to silver-based technology in the “battle” against microorganisms – and especially bacteria – while its price inelasticity means that demand will stay strong, even in the face of large increases in the price of silver.

    With “super-bugs”, and new issues such as “medical tourism”, the importance of such technology can only grow with time. This puts silver in the unique position of being a good which may not only save you financially, but also may save your life.

    [Disclosure: I hold no position in HeiQ Materials]



    Disclosure: none
    Sep 22 10:57 AM | Link | Comment!
  • Preventing Your Government From Stealing Your Gold

    With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is “do I think the U.S. government will steal [their] gold again?” My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again.

     

    With U.S. debts and liabilities exceeding $100 trillion, while all the gold inside the U.S. is worth considerably less than $100 billion (at current values) even a quadrupling of the gold price from today's price would still make it totally inconsequential in restoring solvency to the U.S. government. If the government were to stoop to directly (and openly) stealing from its citizens, it would be much more likely to pillage their bank deposits, which are more than ten times as large as their gold holdings.

     

    However, there is a further point which I should have made which relates to this issue. Specifically, even without formally “confiscating” our gold, all of our governments have already created a vehicle to steal a portion of our gold: our taxation systems. The pretext our governments use/will use to steal our gold (and silver) via taxation is “capital gains”. This is such a perversion of the concept of a “capital gain” that such tax treatment for gold and silver is simply evil.

     

    Keep in mind that if you buy “physical” bullion and sell it for a “profit” that most of that “gain” is merely the money you didn't lose by foolishly storing your wealth in our paper, “fiat” currencies. In other words, there was not a “capital gain” for your gold or silver, but more properly there was a capital loss on all paper currency.

     

    Once we recognize this obvious truth, it leads to another, equally obvious truth. If the government believes it has the right to tax our “capital gains” we make in gold versus paper, then it must allow claims made on the commensurate capital losses in our paper, “fiat” currencies versus gold.

     

    In fact, our tax codes refuse to acknowledge those equally valid “capital losses” - and for an obvious reason: it would amount to receiving a tax deduction for “inflation”. Since inflation is the vehicle which governments and bankers use to steal our wealth in the first place (which creates the need to buy gold and silver), the last thing they want to do is to slow down that theft.

     

    Actually, governments do the exact opposite. Inflation pumps up nominal prices and nominal wages – increasing the total amounts of both sales and income taxes. No, our governments are too addicted to stealing to allow us to claim “capital losses” on our paper currencies. And they are so hypocritical and evil that they also intend to tax our gold and silver: the only means of preventing theft-by-inflation.

     

    Having demonstrated that our tax system has a double-standard which is so perverse as to be genuinely evil, I now intend to explain to readers how to legally avoid such perverse taxation. Bear in mind that I offer this advice having studied tax-law, and in order for the advice to be valid, readers must follow every aspect of this strategy, precisely as described.

     

    To explain the legal, tax avoidance strategy for gold and silver bullion, I must first explain how our governments “justify” stealing our gold and silver with taxes. To begin with, we help them perpetrate this taxation double-standard by foolishly using terminology which supports their interpretation. We talk about “buying” and “selling” bullion with our paper, “fiat” currencies, when what we are really doing is converting one currency into another.

     

    For any who attempt to foolishly maintain that gold is not a “currency”, I need only point out that every central bank in the world holds gold as “currency”. While these central banks don't hold silver as “currency”, there are two factors involved. First, as I have explained in previous commentaries, global stockpiles of silver have almost been totally exhausted – because silver has been so grossly undervalued, for so long. And because silver remains grossly undervalued, any government holdings of silver as currency would be literally nothing more than “spare change”.

     

    To illustrate how we buy/sell other currencies without generating either “capital losses” or “capital gains”, I'll use a simple example. If we go on a vacation to Mexico, we would not talk about “buying” pesos for that vacation, and if we did so, we would be using the term inaccurately. Instead, most people would simply say they need to “get” some pesos, since all they are doing is converting their dollars (or euros, or yen) into another currency (along with paying an inevitable commission for the transaction).

     

    In other words, if we talk about our gold and silver like they are “commodities” rather than currencies, then this allows our governments to deem these holdings as commodities, not currencies. However, even people who routinely swap one currency for another must pay taxes on their gains – because they are formally deemed to be “trading” those currencies. In other words, the people who regularly trade in currency markets also treat their currencies as “commodities”.

     

    It should be noted that those currency-traders are allowed to claim capital losses when one of their currency trades goes bad. This reinforces my earlier point that if governments are going to tax the “capital gains” of our gold and silver versus paper, that both logic and justice demand that they also allow our capital losses on that same paper.

     

    Irrespective of these different rules, the first stage in legally avoiding taxation of our gold and silver is to treat these holdings as “currencies” not commodities. But it is not enough to simply “talk the talk”, you also have to “walk the walk”. What do I mean by this?

     

    To begin with, you cannot “trade” gold and silver. As I explained earlier, if you trade gold and silver at all, you forfeit your opportunity to avoid taxation. You can never “sell” any of your bullion. For those who cannot accept this first principle, you may as well read no further, as none of the rest of this strategy will apply to you.

     

    This should not be too onerous on people. First, most precious metals investors understand that the “physical” gold and silver they are acquiring isinsurance. By definition, this should be something which people automatically hold onto, until needed. Secondly, for those who want to trade in this market, you have literally hundreds of gold and silver miners to choose from (along with mining-ETF's) which are not only direct “plays” on gold and silver, but which provide natural leverage through the very nature of their business models.

     

    My own policy with respect to my precious metals portfolio is simple: I hold my bullion, and I trade my mining stocks.

     

    Once people have accepted the principle of never “selling” their bullion, the next imperative is the form of your bullion. I buy only legal tender, minted coins. As I have explained previously, it should not be necessary to do this in order to prove to tax authorities that our bullion is a currency, not a commodity. However, with any legal system which could permit such a perverse double-standard in its taxation, we must also go to this extreme.

     

    There is a second reason why I prefer coins to bars, even though it means paying an extra premium in my purchases: assaying costs. Anyone who holds gold or silver bars outside of a registered storage facility may be forced to pay assaying fees if/when they decide to convert their bullion back into paper currency. A bank safety deposit box is not a “registered storage facility” - even though that same bank may very well have their own “bullion vault” which is such a facility.

     

    My fear with respect to holding bars is that the same banksters trying to steal our wealth today through inflation (and who are rapidly destroying their own sector) may decide to move into the “assaying business” tomorrow – in order to steal some of the wealth of those who were prudent enough to protect themselves with precious metals. Potential assaying costs could easily exceed the premium one pays for coins (today), by many multiples.

     

    I hold legal tender, minted coins, and I don't “sell” them – so I can't be considered a “trader”. I have thus legally established that my bullion is currency not commodity. So far, so good. However, astute readers will have already seen a gap in my strategy: no “end game”. It's great to store your wealth in bullion to prevent theft-by-inflation, and to do so in a way which legally avoids your “insurance” from being taxed. The problem is how do you ever utilize such wealth?

     

    Perhaps a few have figured out the simple answer to this question. You do exactly what you do with your other currencies: you “spend” it. This is the final component in this insurance strategy which “completes the circle” in terms of acquiring insurance (i.e. bullion), protecting your wealth (the so-called “capital gain”), and then enjoying the benefits of your prudence – without the government immorally, unjustifiably stealing its own “cut”.

     

    To illustrate this final principle, we can simply return to the previous example of someone going on a vacation to Mexico. However, let's add some additional facts to this scenario, in order to fully illustrate the taxation repercussions (or rather the lack of such). Let's assume that our hypothetical “vacationer” is also a savvy investor, who plans ahead.

     

    Six months before his vacation, the value of the peso dips suddenly. Knowing he will need to hold some pesos six months from now, he obtains his pesos today. Over the next six months, the peso rebounds in value, and the pesos obtained by the vacationer are now worth significantly more than when he originally acquired them. Nevertheless, when he goes to Mexico, and spends his pesos he does not trigger a “capital gain” in the eyes of tax authorities.

     

    There are two reasons why there is no taxation in such scenarios, one a matter of principle, one a matter of practicality. With respect to principle, the vacationer has done nothing to rebut the presumption that he was merely acquiring currency to spend, rather than trading that currency like a commodity. The simple fact that he planned ahead to time his acquisition of currency does not make this a “capital gain” - as ordinary prudence is not taxable.

     

    Let's add some additional details here. The vacationer does not use-up all his pesos during his vacation, and in fact has a significant amount left over. He simply hangs onto those pesos, and then when he returns to Mexico for another vacation, three years later, the pesos he is holding have appreciated even more. When he spends the remainder of those pesos, and realizes even larger gains on the transaction that gain is still not taxable.

     

    In part, this simply reflects the fact that there is no “expiry date” on his original act of prudence, and more importantly he has never violated the presumption that he acquired his pesos as a currency, not a commodity. However, there is a second consideration at work here: practicality. Given the amount of travel which takes place in the 21st century, and the vast sums of money spent in tourism (in billions of transactions), it would be impossible for the government to even attempt to tax such (supposed) “capital gains”.

     

    This practical consideration applies equally to our bullion. Even if we “spend” our bullion individually, and especially if bullion-holders collectively choose to “spend” rather than “sell” their bullion, it would be very difficult for our governments to even attempt to monitor such transactions.

     

    The response to critics of this strategy is obvious: it's currently almost impossible to systematically “spend” bullion in our societies/economies. My reply is equally obvious: as I stated earlier, people should not be spending their “insurance” today, period – because it is not yet needed. More importantly, by the time we do need to rely upon our precious metals insurance, in that future-world we will have no problem at all in “spending” our bullion.

     

    Those who understand economic fundamentals (and economic history) know that every experiment with “fiat” currencies (going back 400 years) has ended in economic disaster. There has never before been an episode in history when the entire world has been on a “fiat currency” monetary system. The mountains of leveraged-debt which the bankers have been permitted to create (due to the absence of a gold standard) are also unprecedented in history.

     

    This current, global monetary system must fail, and history tells us that it will be a collapse of epic proportions. What no one in the world can say today is whether such a collapse will occur five days from now or five decades from now (though logic dictates it will be much, much closer to days than decades). However, before (and likely long before) total collapse occurs, inflation will begin to spiral out of control – meaning that it will have reached a magnitude where even the most gullible sheep no longer believe the phony “official” inflation numbers which our governments are still able to pass off on the (currently) ignorant and apathetic masses.

     

    Stating that “high inflation” will soon be universally recognized is essentially the same thing as saying that people will begin to understand the foolishness (i.e. economic suicide) which comes from having your wealth in some paper form. Spiraling inflation also directly implies a spike in the price of gold and silver (from current price-levels).

     

    In our future world, where high inflation ravenously devours our paper wealth, while gold and silver are (finally) universally recognized as the best forms of wealth-insurance available, it will not only be simple for people to “spend” their gold and silver coins, but there will be vendors offering premiums to buyers who use gold or silver for their purchases.

     

    The reason for this is that by the time such a future evolves, the supplies of real bullion will already be so thoroughly exhausted that anyone trying to buy gold and silver on the open market will be forced to pay very large premiums to convince reluctant sellers to accept (rapidly-depreciating) paper in return for (rapidly-appreciating) bullion.

     

    There will be skeptics who (even without any legal background) choose to reject my interpretation of tax laws. It is also true that governments could change their tax codes tomorrow and attempt to steal the gold and silver from those who try to (legally) avoid being robbed. My reply to that is if/when governments stoop to inventing new “taxation principles” solely to steal our gold and silver that such overt evil must be met with “civil disobedience”. In other words, gold and silver holders can fall back on their second “defense” against having their gold and silver “taxed”: by spending your bullion instead of selling it, you will make it much more difficult for the government to find out that you have avoided their 'legal' extortion.

     

    The average citizens of Western societies are currently being victimized by the most savage wealth-grab by the ultra-rich “aristocrats” (who dictate economic policies to our supposed “leaders”), since the “revolutions” of the 18th century caused us to depose the last tyrants who attempted such mass, economic oppression. This is nothing less than “class warfare” - except the poor and middle-class don't even (yet) realize that we are “at war”, since the ultra-wealthy lack the courage to make a formal “declaration of war”. This may have something to do with visions of guillotines dancing before their eyes – as they recall what happened to their predatory ancestors.

     

    In such an economic “war”, we must use every means at our disposal to repel their various acts of economic “warfare” - including the habitual abuse of our tax systems, as the principal means of stealing-from-the-poor to give-to-the-rich. For those who choose to question the “legality” of tactics, we can simply observe that our “legal” systems have already been perverted past the point of tolerance – for any supposedly “just” and “democratic” society.

     

    I offer precious metals holders a strategy to legally avoid the unjust theft by our governments of their bullion. Should our governments pervert our tax code still further, in order to make such a strategy “illegal”, then it's time to start the next “revolution”.



    Disclosure: none
    Tags: GOLD
    Sep 08 8:54 PM | Link | 4 Comments
  • The Solution to Sovereign Insolvency, Part III: Taxation Salvation

    Is there anyone out there who would like to live in a world with no personal income tax, and no corporate income tax?

    Do investors think that our economies would become more efficient if we eliminated all sales taxes and capital gains taxes? How about living in a world where all those taxes are gone?

    No, I have not been ingesting illegal narcotics. In a world with a wealth tax, all other forms of taxation would be eliminated – as being redundant. Furthermore, across the Western world, $10’s of trillions in wealth would be exposed to taxation for the first time. The obvious advantage of such a tax system (apart from the enormous improvements in economic efficiency) is that with all wealth subject to taxation, the tax rate paid by everyone would decline.

    In Parts I and II, I explained why income taxation is the worst possible basis for a tax system, and also explained why it will inevitably bankrupt all economies – as a greater and greater percentage of total wealth is funneled into fewer and fewer hands, every day. Let me return to the numerical example I used in Part II.

    We’ll take a hypothetical billionaire, who has an annual salary of $10 million/year (greater than that of the average billionaire). As I mentioned previously, even that monster-salary only represents  1% of the total wealth of this individual. Thus, even a 100% (income) tax-rate on a billionaire only has a trivial economic impact on this individual.

    More importantly, (assuming a 10% annual rate of appreciation on assets), this person’s income only represents 10% of his/her annual increase in wealth. What this means is that no income tax system could ever fairly tax such individuals – with the inevitable result that more and more of a society’s wealth is funneled into their pockets every year.

    Now let’s see what happens if we switch to a 5% wealth tax. It is simple arithmetic that a 5% wealth tax would result in the billionaire paying $50 million per year in taxes. In other words, using the numbers of this hypothetical example, a 5% wealth tax would result in 500% more tax revenues for government being paid by this billionaire than a 100% income tax-rate. Best of all, with the ultra-wealthy no longer being able to hide the vast majority of their wealth from taxation, the wealth tax can be set at whatever rate is necessary to stop this relentless plundering of all the wealth of our economies.

    Ironically, the wealthy are always violently opposed to any form of “socialism”: arguing that it reduces the incentive of individuals to “get ahead” or even to work, at all. Obviously, precisely the same argument can be made with income tax: it is a major disincentive to try to raise one’s income. Eliminate income taxation, and we maximize the individual incentive to increase one’s income. This, in turn, would lead to real gains in “productivity” – rather than the pretend-gains in “productivity” which are reported by corporations, each time they slash the compensation of their own employees.

    Hypocritically, despite being grossly under-taxed, the wealthy complain about taxation at least as much as the over-taxed poor and middle-class. They claim that “the only fair means” of taxation is a “flat tax” – i.e. where everyone is taxed at the exact, same rate, regardless of how wealthy they are.

    Well, in a wealth taxation system, the wealthy can finally see their dream come true. With a fair tax system, everyone can be taxed at the same rate. It is also a perfect opportunity to test the integrity of the wealthy. There can be no possible objection to a flat, wealth tax. Should such a proposal be advanced – and meet the much more vehement protests of the very wealthy – this would prove what average citizens have suspected all along. Specifically, the wealthy have never been interested in “fair taxation”, but rather all they want to do is rob all the wealth of society for themselves.

    With wealth taxation, not only would personal income tax be gone, but so would corporate taxation. With all the wealth of corporations contained in the shares of their shareholders, by taxing the wealth of shareholders, corporate income tax would become redundant (a form of double-taxation). Exactly the same argument applies with capital gains and sales taxes.

    With no capital gains or sales taxes, all these tax impediments to commerce (and profit-taking) would be permanently eliminated. This would greatly increase the “velocity of money” in our economies – which, as any economist can tell you, is one of the most-obvious signs of a strong economy.

    Then there is the huge efficiency-gain simply from eliminating most of our taxation bureaucracy. It is only because we have income tax that we are faced with an absurdly complicated system which gets more and more complicated every year. While a wealth tax would devastate employment for tax lawyers and accountants, I’m sure that this is a “risk” which most of us would gladly take.

    As I have continued to stress throughout this three-part series, this is not merely some quaint, academic theory. I have demonstrated (through simple arithmetic) that all income tax systems must bankrupt these economies, over time, as they become totally “hollowed out”. The poor and middle-class get poorer every year, while the very wealthy get much, much wealthier every year.

    Without introducing this tax reform, there is no hope for our economies. This, in turn, means that our societies are heading for exactly the same “solutions” which History has always imposed for these economic meltdowns. Either our “leaders” will start numerous wars – to distract our populations while economic implosion takes place, or we will experience violent revolutions, as the oppressed majority becomes totally impoverished, and has no choice but to take the wealth of the ultra-wealthy.

    Without the introduction of wealth taxation, there is no possible means of restoring tax equity to a society. Furthermore, there could be only one, possible way to delay the bankruptcy of all these economies: through imposing a huge “hair-cut” on bond-holders – who recklessly loaned these $10’s of trillions to governments which never could be capable of producing revenues streams to service those debts (under current taxation).

    Since most of these bonds are also held by the ultra-wealthy, there is no place for them to “hide”. Nearly a century of relentlessly plundering our economies has left only one pool of wealth capable of restoring solvency to Western economies: the illegitimate $trillions held by the ultra-wealthy.

    For bond-holders, a wealth tax is the only means of avoiding either a massive hair-cut on the debt they are holding, or simply sovereign default – where that “hair cut” could suddenly soar to 100%. This leaves all rational bond-holders with only two options: dump the debt they are holding, before it implodes in their hands, or push their servants in government to implement a wealth tax ASAP.

    It is unfortunate that taxation is seen as such a boring and complicated subject by most individuals that almost all members of society avoid even thinking about tax-reform – as being something both unimportant and inconsequential. Nothing could be further from the truth. The reason why all of our tax systems (and economies) are broken is nothing more than simple (irrefutable) arithmetic. The solution for the absurd folly of our current system of taxation is equally simple.

    There can be no excuse for the oppressed masses to be the least interested in taxation reform, as they obviously have the most to gain. The failure of ordinary citizens to rally-around this sensible, viable solution to sovereign insolvency simply guarantees their own, economic funerals.



    Disclosure: none
    Sep 08 12:59 PM | Link | Comment!
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  • Fixed-income investments are totally insane in the current environment, and we can't hold all our wealth in gold and silver bullion.
    May 5, 2009
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