“You don’t want to take rights away from people… Every now and again you feel those rights are being abused and you say, ‘Do we take rights away or do we just put up with the abuse?’ My response to it varies day to day.”
That’s the Australian Financial Review (AFR) quoting Australian Tax Office (ATO) commissioner, Michael D’Ascenzo.
And the answer is simple. If you don’t want to “take rights away from people”, don’t.
What’s the ATO commish grumbling about?
It seems he’s not happy for people to exercise their right to, erm, challenge ATO tax decisions. The AFR calls these challenges “spurious.”
In another article in the AFR the commish complains says this about taxpayer reaction to delayed tax refunds last year:
“I don’t think they were listening. You could argue we could have sent the message better, but I just don’t think when people don’t want to hear… it still wouldn’t have got through.”
Arrogance? Or just plain dumb. I’ll let you decide.
In honour of the ATO’s “good work”, last year the Australian mint released a 20 cent coin. It was to commemorate the 100 year anniversary of the ATO.
Money Morning reader Eve brought our attention to it thanks to an email she’d received:
The wording on the coin states, “Working for all Australians.” The comment in the email offers an alternative: “It should read… ‘Bleeding all Australians’.”
Meanwhile, on the other side of the world, the New York Times wrote:
“The new House Speaker, Representative John A. Boehner [Ed note: pronounced 'Bayner' apparently!] of Ohio, denounced the attack in an early Sunday appearance in West Chester, his hometown, and said it was a reminder that public service ‘comes with a risk.’”
Ah, the heroic public servant. Working amongst a hail of bullets.
There you have an example of two types of violence.
One that involves an individual shooting a public servant…
And another that involves public servants taking private property from individuals by force. And they have the nerve to grumble when taxpayers complain about it!
Make no mistake; violence against anyone in a free society is unacceptable – unless it’s in self-defence. But it should go both ways.
One politician taking a bullet to the head makes front page news as an attack on democracy and freedom. Yet when the nation state perpetrates an act of violence against millions of its citizens by forcing them to hand over private property, it’s a sign of democracy and freedom.
How does that work?
As we figure it, it’s all part of this idea that governments and public servants know best. They know what’s best for you – and don’t you forget it.
This could be why the Reserve Bank of Australia (RBA) decided to sell two-thirds of its gold in 1996 and 1997… just before gold hit a 15-year low… and just before it began 10-year bull run that saw the price triple:
The RBA’s Top Trade of 1996
Source: goldprice.org
Even so, for a couple of years the RBA goons must have thought they were trading geniuses… as the gold price sunk below AUD$400 an ounce.
The thinking behind the gold selling spree is revealed in this document on the RBA website. You can click here to read it… [Note: you may need to click the link twice... for some reason it doesn't work the first time you click!]
Some of the choice comments in the report include:
“Gold can no longer be regarded as something ‘special’…, it should be managed as just another component of official reserve assets.”
“Central banks traditionally hold gold because of its ability to be used in the event of a crisis in the international financial system; it is the only reserve asset that is not a claim on some other government, international institution or bank. However, over the past two or three decades, the world has experienced a number of economic ‘crises’, but gold played no part in coping with them. The continuing development of the international financial system means that the economic or financial circumstances which would require us to call upon our gold holdings for economic reasons look increasingly remote.”
After a number of arguments about why gold supply can keep pace with gold demand, the RBA notes:
“All this suggests that it would be optimistic to expect sizeable increases in the price of gold in the near term. As such, there is likely to continue to be a significant opportunity cost in holding gold.”
In other words, the RBA thought it could make more money selling gold and buying something else.
Finally:
“How much gold should be sold is a matter of judgment. It is possible to mount a case for selling it all, but short of this there is scope to sell about half the gold and still have reasonable holdings by world standards.”
Looks like the RBA got over excited and sold two-thirds of it.
But that’s OK, because the RBA claims:
“We have very large reserves of gold in the ground and the question arises as to why we would want to hold much in central bank vaults.”
Golden Hamburgers
Of course, it’s a nonsense idea that gold in the ground is worth the same as gold in a vault. If that’s true you could argue a cow in a field is the same as a hamburger in a bun.
I don’t need to tell you that isn’t the case.
Gold has value because it’s hard to find and potentially expensive to recover. That, my friend, is why it’s the ultimate unit of money. That’s why it’s been coveted and stored and used as a medium of exchange for thousands of years.
If gold in a vault is the same as gold in the ground then the gold in the vault wouldn’t be worth as much. Why?
Because if you could easily dig for your own gold rather than buying it from someone who has used their capital and resource to recover it then why wouldn’t you? You could then sell it on the market at full value and clean up.
But gold is hard to recover. And it’s scarce. The capital and labour required to recover gold is huge. And even after investing in the capital there’s no guarantee you’ll even find any gold – let alone recover it.
So for the RBA to say gold in the ground is the same as gold in vaults is just plain ridiculous. Gold, like all other resources is worth nothing until it has been recovered.
I can tell you that from the experience of analysing small-cap mining stocks. And I’m sure Diggers & Drillers editor Dr. Alex Cowie would agree. A prospective gold mine only gains value based on whether the gold is recoverable.
If the gold isn’t recoverable then no investor will invest in it. The greater the chance of recovery, investors will place a greater value on it.
If resources in the ground were worth the same as resources in a vault then mining companies would never go bust. It’s the risk of the resource not being recovered that provides the investor with the opportunity to make money.
This is proof pen-pushers at the RBA are no better than anyone else at predicting the future direction of markets.
Yet time and again RBA officials mesmerise people with predictions for financial markets. The support of the banking sector. And it’s belief in the Aussie housing market.
RBA Gets it Wrong Again
But how’s the track record looking?
The RBA thought it a good idea to sell gold just before a ten-year bull run.
It thought the banking sector was strong, even though the RBA admits it had no idea what two of Australia’s banks were doing behind closed doors.
And like most other central banks and the mainstream, the RBA also failed to predict the financial crash in 2008.
Now, its last hope is to pin its flag to the Australian housing market.
But after talking down the chances of a crash – and refusing to admit housing has been fuelled by a credit bubble – the RBA must be feeling uneasy at this news:
“44% jump in property listings point to price falls in 2011”
Oh dear! There goes the housing shortage.
Time and again, the RBA has been proven wrong about the economy and shown to be ignorant of what’s happening behind its back. Yet these guys have the most influence over the Australian economy.
So maybe the Australian economy is a ‘Miracle Economy’ after all. As far as we can see, it’s a miracle it hasn’t collapsed already with these goons pulling the levers.
But don’t expect their luck – if you can call it that – to hold up much longer.
Odds are it’s going to be a choppy year ahead for the Australian and global markets.
Regards,
Kris Sayce
For Money Morning Australia
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Not sure, but you’re probably right there JB.
Drew
No research institution who investigated any holocaust “denier” claims would ever get funding.
The same story applies to the global warming scam. any scientist who dares challenge the BS being spouted will have his research funding cut immediately.
Nice one Chris – Most of our large gold mines have been sold off and foreigners own possibly 40-50% of the rest so what is the RBA backstop worth? Also I wonder how much of that above ground gold bullion that is left, is it leased out to assist the USA banksters and scammers? Just to make a buck! (Might explain why US Fed was so quick to fund our banks in 2008)
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