May 14, 2010
Human trait is to avoid changes. The life in the Mediterranean countries has always been easier than in the North. This worked fine as long as these countries had their own currencies. The gradual loss in the value of these currencies did not register in the minds of their populations. This kept the people from the North happy while spending their summer vacations in the South. Of course the people of the South noticed this and started settling with a little higher pay raises each year. Still the even lower exchange rates kept the people from the North coming.
People can tolerate huge imbalances in a society like earlier in Brazil where people just accepted 30% to 40% monthly inflation as a norm when their pay was automatically corrected to fix this "problem". The climate there is perfect and land is available to grow food and with this fact not too many were hungry to create big waves.
In Europe, the sealing of the monetary union in 1999 changed this all in the south. Forcing the budget rules of EU to take effect immediately in the south, the Mediterranean area, would have meant political suicide. So the politicians adhered to the old practices hoping to change them slowly but the years came and went and nothing wa done.
The two Banking Empires realized this to be a major weakness in EU. With this it remains essential that the US dollar remains as the only reserve currency of the world. This is the most powerful antidote against all financial losses. The demand of dollars will simply grow with growing economies and with that the USA can print them for free just to satisfy the needs without any impact to the actual value of the dollar.
These two Banking Empires have not been idle in EU area either. We have discovered members from e.g. Goldman Sachs & al., working on questionable lending practices for years with Greece to hide their real budget deficit from the EU regulators. It was easy as the bankers needed only to exploit the desires of the politicians to stay in power. The longer this could be hidden the more difficult the situation would grow for the EU to handle.
The goal of these Banking Empires is global domination. They already control the USA and the UK and currently only the strong EU can prevent this from happening
In the UK the financial assets of the City Banking Empire are six (6) times larger than the GDP ( FT, April 2010). The US Banking Empire assets are reportedly at 60% of GDP ( the graph below shows it at 40%). People at large in the USA have misconception that the Federal Reserve Bank or short FED is part of the US government. FED (established in 1913) is a private for profit central bank of the USA owned 100% by this US Banking Empire (that in turn is partially owned by City Banking Empire). These two were behind the planning, creating, packaging, securitizing, and selling the worthless US mortgages to the unsuspecting investors around the world.
Today the combined assets of these two Banking Empires add up to at least to US$ 20.5 Trillion. When leveraged at a prevailing practice ratio of 30:1 it represents a financial power of US$ 600 Trillion. Is it an accident that the global derivatives markets happen to add to the a value that is between US$ 600 - 700 Trillion?
From the above graph we see the City Banking Empire decision to take over the UK economy to have started already in 1970's. It is not an accident that the same power grab started in the USA 20 years later. As said these two Banking Empires are tied together with a history spanning over two hundred years with real power residing in City. Is this why the newly elected presidents and prime ministers when talking first time claim to maintain the special relationships between the two nations.
To understand the connection between two Banking Empires we must go back to year 1815 and Napoleonic wars in Europe and the outcome of the battle in Waterloo.
The well connected Baron Nathan Rothschild was at the time hiding the wealth of European sovereigns from Napoleon and with this he had immense financial fire power in case an opportunity would arise. Fortunate to our Baron and unfortunate to the English financial establishment a huge storm was over the English channel and only Rothschild's messenger was able to cross the channel with knowledge that Wellington's had won. The reports from the battle field to Crown had pointed to a defeat to Wellington. When markets opened Rothschild's brokers started indiscriminately selling of everything and driving the markets to panic. After a while unknown other Rothschild's agents started secretly buying everything they could find and when the news later that day arrived from Waterloo Nathan Rothschild owned it all, he had succeeded in cornering the UK markets. With his new position Rothschild demanded and got the controlling stake to the Bank of England and all it's gold reserves rumored to have been about 3,000 tons.
Fast forward to the year 1913 and finally after about 100 years of lobbying heirs together with other European and US bankers received the full ownership over the newly established Federal Reserve Bank of the USA or FED.
After the WW I it was obvious to all that WW II would follow as soon as Germany would be ready. The close call to UK during WW I Rothschild's concluded that gold from the bank of England had to be moved to a safer place in the USA. As both the UK and the USA had their currencies backed by gold this was an easy task. UK was now weakened by the war and with the enormous rebuilding effort nobody paid attention on the ever increasing interest rates both in the UK and the USA. The highest interest rate on sovereign debt in the USA attracted the wealth from the UK in huge quantities and when the currency could be exchanged to gold the USA did just that. The high interest rate era forced Britain to it's knees and created the 1929 great depression in the USA. This war ended after practically all gold was moved to the USA. The UK had to abandon the gold standard and so the USA did the same.
The politicians should have learned by now from how the USA Banking Empire handled the financial crisis stemming from the worthless mortgages and just copy this process:
Note: The Banking Empires of the USA and the UK will fight this change to their last breath as this change will strengthen the EU and will raise respect to ECB and Euro that at the end will emerge as a second reserve currency in the world followed by the Chinese currency. This change will nullify the excessive benefits the USA has enjoyed for decades when the dollar has been the only reserve currency of the world.
April 25, 2010
So far it is not found in any democracy, oligarchy, fascism, or even communism.
The best working democracy we know is in Switzerland which has only a part time government and all it's decisions can be turned over by referendums. It looks strange on the surface but it actually responds best to the will of the people and not the will of the aristocracy or wealthy.
The taxes in the real world regardless of the country are controlled by thousands of pages of totally hypocrite tax code in the name of making tax systems fair while serving best the wealthy. Only few care what happens to those who can not afford the tax lawyers and must make unnecessary and excessive tax payments that make their life just a misery.
The USA has detailed tax statistics by income groups available in the internet thanks to the tax collector, the IRS. The graph below covers the latest available tax year of 2006:
The income is on the x-axis and on the tax rate on the y-axis. State taxes are not part of this and vary from Alaska actually paying money to its residents while the other States tax them at various rates.
The real Federal tax rate is 28% if you calculate that as the share of the federal budget from the GDP. It is obvious from above that the federal income tax is not enough in the USA. Hidden taxes and fees must be collected one way or the other to fill this gap. These include among others, various business taxes, duties and fees. These all end up hidden in product prices and deceive people believing that their taxes are low. The average Federal "income" tax rate is around 15%-17% (above graph) but this does not included the hidden taxes from 11% to 13% to fill the budget gap.
This simple trick makes people happy when they hear of high tax rates in other countries. However, they never hear that in these high tax countries the normal pension reaches 60% to 70% of the last year's income and that the higher education and health care are paid by these same taxes. They also do not know that 4- 6 weeks paid vacation is a norm and that you must take it.
A large portion of the US tax burden is hidden keeping the population unaware that they pay them. This hidden part is not the sales tax that are added to all prices in the stores.
In the graph above people earning over $2,000,000 per year pay taxes at lower rate than the meritocracy represented by the middle and upper middle class. Most have no idea that they are being robbed by the highest tax rate in the country. They never realize this discrepancy as the armies of lobbyists keep on spreading horror stories of the even higher tax rates for the wealthy including them.
To fix it all the following principles must be in a new tax code:
The wages and salaries mean nothing to the wealthy. Warren Buffet, one of the wealthiest in the world, wanted to show this to the American people when he in an interview told that his secretary will likely have a higher tax rate than he. He takes a yearly salary of US$ 100k from Berkshire-Hathaway and with this he belongs to the top 30% of wage earners in the USA - a pittance for one of the world's richest men. Without deductions he would pay 22% taxes for this salary but of course he has some.
There is another part to this story. His paycheck of US$ 8,300 (minus all taxes, health care and pension obligations) would give anybody a reasonable living but now Mr. Buffet has also another income stream from his personal investments. This "other job" pays him currently an estimated US $42,500,000 as dividends, interests, etc., taxed at 15%.
The same pattern applies to all wealthy people on this planet. Their real income is capital income and not wages nor salaries. Mr. Buffet was unusually honest when he told also that he would not mind paying a little more taxes but the US tax code and his lawyers just prevent it.
The recent financial crisis revealed a bunch of millionaires acting as hypocrites by stating "seriously" in Congressional hearings that they will work for only one dollar or nothing until their companies are back on their feet forgetting to mention their real income.
The US tax system does not differ that much from those in other countries and corresponding graphs can be generated for all of them.
It is surprising to find out tat after you deduct from incomes such compulsory expenses, like taxes, housing, food, transpiration, education and health care what is left represents the same percentage in all countries. Of course in the poorer countries people can not afford to such luxuries like HD TV's in every room, BMW's for the children and alike.
When the tax code is hundreds or thousands of pages long it is built to suit for the wealthy and it can not be corrected by adding pages. It must be replaced. This process is going on already in some democratic countries and some have even switched to computer age making tax payments as pleasant as it ever can be. The tax payers only check a computer printout for missing items and if all is there they do nothing at all beyond paying more if they owe any or checking their bank account that they received the correct payment. Below is the simplified principles of the current US tax system and where this all has led us: