Are you feeling rich?
I hope not. Because if you are, get ready for the Australian government to snatch that wealth from you.
Actually, even if you don’t think you’re rich, chances are the government does.
The Emperor Henry Tax Review final report is imminent. And as we’ve warned during the last year, you’re not going to like it.
Almost on cue the government has started leaking some of the possible conclusions to ‘sound out’ the reaction. News Ltd obliges the government with a typical lapdog headline “Simpler tax system that targets the rich.“
If you’re not worried by that headline, you should be. Remember, it was only ten years ago that ‘rich’ in Australia was anyone earning above $50,000 per year. Adjusted for inflation, that ‘rich’ wage is now the equivalent of $68,000.
So if you’re earning around or above the $70,000-$80,000 level make sure you’re holding firmly on to your wallet. Because one way or another the Government, the Treasury and the Tax Office is about to plunder your pay packet like a pack of wanton pirates.
But before I go any further, just a quick aside.
We were going to tackle the latest decision from the Bank of England (BoE) to increase its money printing programme.
That’s the programme that involves creating money out of thin air in order to buy back UK government bonds and therefore injecting cash back into the economy.
The bankers like to call it quantitative easing, or as Diggers & Drillers editor Dr. Alex Cowie prefers to call it, “theft!”
But once we saw the ‘taxing the rich’ news this morning I’ve decided to hold the Bank of England news over for another day.
Until then, just consider this. In 1976, the UK government went begging to the International Monetary Fund (IMF) for £2.3 billion. In today’s money that’s the equivalent of around £12.4 billion.
At the time it was labeled as an embarrassment for the UK, with claims it made the UK technically insolvent.
Well, in practical terms apart from the much bigger number, there is little difference between the £2.3 billion bailout in 1976 and yesterday’s announcement that the Bank of England will increase its money printing programme to £200 billion.
In other words, if the UK was technically insolvent in 1976 then it is actually insolvent today.
But we’ll have more on that next week…
Because today, well, I just couldn’t let the latest phase of the government tax grab pass by without comment.
Make no mistake, when the Treasurer and Treasury Secretary make seemingly off-the-cuff remarks about what the review “may” contain they aren’t playing a guessing game. They know exactly what’s in the report.
It’s just a case of figuring out how far they can go with the theft of your money.
As I say, this is something we’ve warned about since late last year when the stimulus spending started and when the tax review started to gain pace.
The tax and super review are nothing more or less than a scheme to increase taxes. All the talk about lowering company tax rates and taxing the rich really means everyone will be hammered for more tax.
Perhaps the most dangerous comment in Wayne Swan’s speech was this part as quoted in The Australian newspaper:
“It’s astounding that more than 70 per cent of Australian taxpayers pay someone else to complete their tax return – more than any other country… We shouldn’t be content with a system that is so complex that an average person with simple tax affairs feels unable to do their own tax return. That’s why I’ll be especially attentive to any recommendations that make lodging a tax return easier. In fact, given today’s technology, and the ability to pre-fill forms with data electronically, I’d like to hear how a person could complete their tax return with just a few clicks of a mouse.”
Guess what? We’d like to see the tax system made easier too.
Much easier.
How about just abolishing the whole damn thing? That would be easy. You get to keep every cent that you earn, rather than having half of it stolen from you by the government.
Unfortunately that’s not what Mr. Swan has in mind. He wants the tax system to be made easier in another way.
A way that means you shouldn’t have to complete a tax return at all. That the Tax Office will just take the money from you, and all you’ll need to do lay back and say “that’s fine” with a click of a mouse.
Of course, if there’s any chance you’ll need to claim a tax refund then we’re sure there will still be all manner of hoops for you to jump through.
We’ve always thought it’s amusing how easy the Tax Office makes it for you to pay tax.
When you start a new job you’re given a simple one page form – you fill out your name, address, tax file number, tick a few boxes, sign it and voila! It’s done.
Almost immediately the government is pilfering your pockets for cash.
Contrast that to the multi-page form, supplements, schedules and 60-plus page instruction booklet when it comes to trying to get some of your money back.
It’s no wonder 70% of Australians use a tax agent.
But any attempt to make the system simpler so that it will “save you time” should be resisted at all costs.
We don’t like governments. We don’t like their interference. And further more we don’t like them stealing your money.
However, when government starts talking about making things easier, their only real concern is to make it easier for them to take your money.
That’s why, when the Tax Office launches its new ‘simple’ tax return system you should avoid it like the plague.
No one likes filling out forms, but in this case your response to the tax office should be, “That’s ok, I think you’ve stolen too much, I’m happy to fill out all your crazy forms. And even if it turns out you need to steal more money from me then I’m still happy to still fill out your crazy forms and make you wait.”
But of course, the tax grab is just the first phase of the ‘making it simple’ plan. The big money-spinner for government is superannuation.
Once the government is done with regulating the life out of the financial services industry, the public will realize they have nowhere to go for advice, and nowhere to invest their super money.
The only option will be for the government to save the day with a ‘Super Aged Pension’ option.
Hand over your super money to the government in return for a defined benefit pension.
It’ll be a scheme offering a better outcome than the current aged pension of course, and at least you’ll never have to worry about the performance of your super fund again.
Not only that but you’ll also have the “privilege” of investing in new school buildings, a road or two, and a bridge or three. Plus anything else the government deems to be “nation building.”
Quite how a new school gym is going to provide you with an income in your retirement we haven’t figured out yet. But we’re sure they’ll bluff their way through it.
And the spend it now, spend even more later crowd will love it…
So will the managed funds, infrastructure funds and construction companies.
As usual, the big losers on the deal will be you and every other taxpayer.
Believe me, there is worse to come with this tax and superannuation reform.
Cheers.
Kris.
60-Second Market Round Up
by Shae Smith
The S&P/ASX200 closed down yesterday by 32 points to 4,508. After a positive night in the US, the ASX200 has opened much higher.
On Wall Street the Dow Jones Industrial Average had its highest point gain since July 15, up 204 points, closing at 10,005.96. News that productivity was higher than economists expected and lower unemployment claims drove 29 of the 30 stocks that make up the Dow to finish up.
In Europe the FTSE100 finished the trading day up 17 points, to 5,125.64. The gain was mostly because of the strong start in the US. However, there has been mixed reviews regarding the quantitative easing program, which is basically just printing more money.
The Nikkei lost 1.29% yesterday, falling to 9,717.44, its lowest close in a month.
Gold remains high, but didn’t move much yesterday.
The price of gold in Australian dollars is trading at $1,198.59, while in US Dollars it is trading at $1,089.88. And the price of silver in Aussie dollars is $19.13 and in US Dollars it is $17.39.
It was the same with the currency market overnight.
The Aussie dollar versus the US dollar, remained around the 91 cent mark, trading at USD$0.9102, but did show a slight gain against the Japanese Yen JPY82.58.
Crude oil closed overnight at USD$79.70.
For the biggest movers on the market yesterday click here…
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Yes, Nick, that is the keyword: confidence. People often ask and speculate about WHEN hyperinflation is likely to hit a currency, and the thing is that there is no absolute or pre-determined way to know such a thing. It depends on when confidence is lost in that currency, and confidence can be manipulated and massaged for a long long time, but when it all of a sudden goes, it is like a dam bursting – all hell breaks loose as more and more people head for the exit, which of course is never wide enough when there are only sellers and hardly any buyers.
And, yes, gold’s steady and persistent rise indicates to me also that there is steady and persistent buying going on in the background. Since the common man in the street is not buying at the moment, not yet, my guess would be that there must be some absolutely huge pools of institutional paper money trying to find safe haven. When central bankers are prepared to buy hundreds of tons of gold at market, like we have just seen India do, something must be up.
Well said cb. When the man in the street starts rushing to buy gold, you can be very confident that it will be too late. China is slowly buying so as to not spook the market. that way they can buy it at the better price.
you must also keep an eye on the USD Index (US dollar value). It’s diving hence the gold price in USD is rising. In AUD terms it hasn’t moved much. This is not the move I am referring to. Gold will show it’s own worth very soon. Hence the “currency confidence” we are referring to.
i cant see how the US loses?
USD continues to fall then
a) they increase exports – good to pay off debt
b) Gold goes up and for every $1000 increase in price equates to an extra $250 billion dollars (they have 8000 tonnes) – good to pay off debt
Today i read an article that says Venezuela has entered the currency market and begun to support the strength of the USD – they all know (Asia, middle east, latin america) that their only advantage is their weak currency
with shares, commodities, oil, gold all going in the opposite direction to the US dollar then it may be a good time to buy USD because if the markets are spooked it could shoot up – as long as the US dont manipulate it and hold it down
All of that is true, GB. But each to his own. I, for one, do not feel like catching falling knives. Do you? Many say that the USD is due for shooting higher, and that it will surprise on the upside very soon. It may be so. But then again, it may not be. Given the treachery and the management of news cycles, I do not trust any of these predictions.
Same thing happened not very long ago with gold when last time it started bumping its head up against the millenial resistance line, and even gold bugs were advising their followers to sell out of their positions and buy back again later on a pullback. I was shaking my head, as I could not believe such folly, when the signs were clearly there of the Beijing put. This was quite clearly articulated at the time by several sources, and I even referenced Max Keiser’s discussion of it in this forum at the time. Some of you might even remember it.
Anyhow, gold never pulled back properly, but powered through 1k USD to where it sits now. And what I am suggesting here about the expected and much talked about and badly due USD surge is that it may well not happen. Those who are desperate to get out, will want you to believe that the USD is ripe for a rally, because they want idiots to start buying the USD in volume, so that they can get more of their money out into gold and whatever else they fancy. I do not know this, of course, but I am just saying that with the fundamentals of the USD, it would be like trying to catch a falling knife if you went long on the USD at this point.
But then again, some are good at juggling, and falling knives will suit them perfect.
Ah, and about the US Gold Reserve, frankly, I am not so sure that it is still there. It has certainly not been audited for decades and all attempts for a proper audit have been resisted by the powers that be tooth and nail. Many credible and serious followers of gold and the US Federal Reserve System believe that a lot of that gold has been leased, and sold, over the decades, as part of the Fed’s program to control the gold price. Alan Greenspan himself said so, so how much gold has been leased, never to be returned, because it has been sold long time ago, nobody really knows, and consequently nobody really knows how much of that supposed gold reserve is still there, and those in charge of it will not allow an audit.
Leased gold is nothing but gold long gone, that much is for sure. Plus, who knows how much of the physical gold still left there is under how many claims by the banksters or other parties through the gold swop schemes that has been operating between the various reserve banks. The answer is, that nobody who would like to know, can know, but that is only half of it. The other half, I suggest, can justifiably looked at this way: When the wolves have been guarding the sheep, would you take their word as to how many sheep there are still left in the barn?
Of course not. In fact, you would have to fear much much worse than what you are being told. And the same goes, I would suggest, where the US Federal Reserve and the Goldman Sach’s alumni lead US Treasury reports are concerned on the gold reserves left in their care.
Very true cb…what do you think will happen to the price of gold when the truth about what you have stated gains momentum, and gaining momentum it is.
cb – i am talking short term
My thoughts: leading up to the G20 meeting on the weekend the USD strengthened and stocks fell. The question investors wanted to know was ‘will the g20 governments continue to stimulate?’ and they are going to continue. Since then the USD has weakened and stocks have risen
Eventually they will stop stimulating and i believe investors will head for the exits and dump stocks, when they do they need to convert their stocks into something – it could be gold, pigs, chickens or USD. The only currency that can really supply that amount of demand is the USD. Gold shouldn’t fall but there just isn’t enough of it to make it a possible conversion medium. Short term, this could lead to a strong rise in the USD unless the gov blocks it
However, if you dont think there will be a sizeable correction in the markets then this wont happen
GB – thanks, this is how I understand and see it:
- insofar as the Wall Street banksters and hedge funds are borrowing sh!tloads of cheap as free USD from the Fed to sell it for the carry trade, they will have to buy the lot of it back if and when USD interest rates rise for whatever reason. At that point there will be likely to be a short squeeze and the USD will shoot sky high because of it. Through the carry trade they borrow USD, which they then spend to buy other currencies, shares, commodities, and whatever is promising a higher return than what they are paying in interest on those borrowings, but all of that then will have to be bought back to be repaid in USD, so when the carry trade reverses, then anything that they have inflated with the carry trade should fall in price against the USD.
As for corrections and future crises, yes, we will get more of those, for sure. It is all part of the strategy employed by the banksters. They have planted hundreds of thousands of derivative financial bombs and they will blow these up when it suits them, even threatening suicide and systematic collapse in order to frighten the politicians into handing over to them more bailout cheap and free money. It is a shell game to get more and more money out of the tax payer, and pension funds, and super savings, and wherever there is still a scent of savings left. Now they are on the verge of failing, now they are doing great. When paying themselves bonuses, they will be doing just fine. As soon a bonus season passes, they will engineer another crisis. And guess what: they are getting, and they will continue to be getting away with it at your expense and mine.
The other part of the strategy is to hit us all with a massive and relentless energy tax through the so-called CPRS – the carbon pollusion reduction scheme. Rudd and Wong should be tried for treason for the sheer bastardry they propose to perpetuate on this nation. If you want to get across the scam and bald faced lies of the climate terrorists, then you only need to watch some of these videos:
http://www.globalclimatescam.com/?page_id=10
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