Tag Archives: IMF Wealth Tax

Why the IMF has no clue how to deal with the Spaniards and Italians

10/15/2013 Portland, Oregon – Pop in your mints…

As the world continues to bite its collective nails while it waits for the US Government to decide whether to punt the ball down the road another stretch or capitulate on its debt in what we have dubbed “The Ultimate Stimulus Measure,” the IMF is busy scolding the US Government and proposing hack solutions which completely miss the point.

Just try to tax usThe world that the IMF operates in exists only in theory, it is like the perfectly closed system where energy is a constant which is the the basis of many physics theories.  On one hand, the assumption of a closed system is the only way to test a hypothesis.  On the other, to assume that the closed system is a given in real world situations is folly in the physics profession.

While the physics professor recognizes the limitations of his theory in practice and makes the requisite adjustments, these limitations are all too often lost on the IMF and others in the economics profession.  The situation of the latter is dangerous, as for some bizarre reason their theories influence wide-ranging policy decisions which affect the lives of billions based on its closed system fantasy.

Such is the case with the recommendations made in its October 2013 World Economic and Financial Survey which is eerily titled “Taxing Times.”

Taxing Times IMF 10-2013

In the report, the IMF makes two data driven observations:  That the national debt load in certain Euro zone countries is excessive and that there is a certain level of net family wealth in these countries.

Fair enough, however, what happens next is disturbing, for it reveals both the closed system fallacy as well as the arrogance of those at the IMF.  The IMF takes the above two data points and arrives at the following conclusion:

A one time, 10% tax on net family wealth in certain heavily indebted countries would make the national debt loads once again “manageable.”

If you have yet to laugh, cry, or hurl at what we have just described, you may stop reading as you are unlikely to get what follows and reading it will be a waste of time you can otherwise spend watching CNBC or the teletubbies.  Please carry on.

If you are still with us, allow us to heap it on by adding that the IMF believes that this one time family wealth tax would help as it would simply reduce the national debt, specifically in Italy and Spain, who, true to form, have managed to avoid full-scale bailouts suffered by the Irish, Greeks, Portuguese, and Cypriots to this point and gamed the ECB into issuing bonds on their behalf.

This last point should give you, fellow taxpayer, all the information you need to understand why, as ludicrous as a family wealth tax sounds, it becomes even more ludicrous when one thinks that it can be imposed on Spaniard and Italians, who are hands down the world champions in tax avoidance.

The governments of Italy and Spain have managed to have the ECB foot the bill for their respective bailouts to this point.  However, the only reason they need a bailout in the first place is because their citizens are experts in tax avoidance (it is a genetic adaptation acquired during Roman times which has grown stronger and more agile over time, that is all you need to know.)

Now, the IMF, in its infinite wisdom, glances at the problem and a dim light bulb goes on!  If you just tax 10% of each family’s wealth, you can reduce the national debt to an acceptable level!  “Voila,” says Lagarde!  “C’est comment son fait!”

“The genius of the tax,” she continues “is that it is one time only, so it won’t have any effect on investment or savings preferences!  Its perfect, I tell you, perfect!!!!”

This is why she’s paid 300,000 pounds a year, of course, to put two and two together.  At this moment, Christina Lagarde has now transformed into Cruella DeVille, the villainess of Disney fame (a transformation that requires only a slight wardrobe adjustment and a little imagination.)

As word of the IMF’s latest ploy spreads, the few Spaniards who have not opened a Bitcoin wallet called up their grandchildren and asked them to do it for them.

(Wondering what a Bitcoin is?  Check out our reasonably priced e book on the subject here)

By the time any sort of 10% one time wealth tax hits the Spanish and Italian Peoples, there won’t be a peseta or lira, er, Euro to be found from the Pyrenees and Alps to the Mediterranean coast, where avoiding the looting hands of emperors has been a national pastime for over 2000 years.

Stay tuned and Trust Jesus!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 15, 2013

Copper Price per Lb: $3.28
Oil Price per Barrel:  $101.38
Corn Price per Bushel:  $4.37
10 Yr US Treasury Bond:  2.70%
Mt Gox Bitcoin price in US:  $152.89
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,277
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.3%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  15,236
M1 Monetary Base:  $2,689,400,000,000
M2 Monetary Base:  $10,790,700,000,000