Category Uncategorized

Dec 4 2017

The Trump Tax Cut, the Pass-Through, & Multinationals


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Dec 4, 2017 by Martin Armstrong

The Trump Tax Reform is a very major deal. There are seven brackets in today’s individual tax code. The Senate version of the Trump Reform is not a windfall for the rich lowering their bracket from 39.6% to just 38.5%. The seven tax brackets currently are:

10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

Changes individual income tax brackets will be:

 

– 10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
– 12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
– 22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)
– 24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)
– 32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)
– 35% (over $200,000 to $500,000; over $400,000 to $1 million for couples
– 38.5% (over $500,000; over $1 million for couples)

The House bill, by contrast, only calls for four brackets: 12%, 25%, 35% and 39.6%.

Both the House and Senate bills nearly double the standard deduction. For single filers, the Senate bill increases the standard deduction to $12,000 from $6,350 currently; and it raises it for married couples filing jointly to $24,000 from $12,700. This will be a very big tax benefit for the low end. It will also reduce the number of people who itemize their deductions to get more deductions which complicate matters for most people.

However, currently, you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. Both the Senate and House bills eliminate that option. Large families with three or more children will probably not benefit from this change. The Average number of people per household in an American family in the United States from 1960 to 2016 consisted of 2.53 people. So for the average household, this will still be a tax cut.

Nevertheless, the Senate bill increases the child tax credit to $2,000 per child, up from $1,000 today, and above the $1,600 proposed in the House bill. This will help ease the pain for bigger families. The age limit will be available for any children under 18, up from today’s under-17 age limit. But it reverts to under 17 again in 2025, a year before the increase is set to expire on the bill. This is crazy since the 17-year old cannot vote and cannot be drafted. Yet, the Senate bill also greatly expanded the eligibility for the credit by raising the ceiling on the income thresholds. Currently, the credit starts to phase out in the higher brackets. For married tax filers, that ceiling was set at $110,000 and the Senate has raised it substantially to $500,000. What does change is the subsidy. If you pay no tax, you get no credit whereas today you get $1,000 even if you pay no taxes. 

For the first time, people taking care of their parents as dependents in old age have not been able to deduct them from the children credits. Now, these people will get a new $500 nonrefundable credit per dependent. Under the House bill, there would be a new $300 per person credit for parents and dependents over 17.

The biggest controversial provision is eliminating the deduction for state income tax. This has been bantered around for decades. It has finally come to reality. I recall in New Jersey when the income tax was put in, the sales promotion was it would cost you nothing because you would be able to deduct it from the federal income tax. This has been a major gripe in Washington for it has unjustly incentified states to spend without limit increasing state income tax at the expense of other states. So this will finally eliminate that deduction and at last, those living in insanely taxed states like New England area and California, will wake up and realize their local government has been squandering the money on themselves. With a rise in population, taxes should decline, but they only keep going up in New York and California without end.

The real estate killer is also here. Up to now, those who itemize deduction have been deducting their property taxes as well as their state and local income or sales taxes. There have been many who called for this to be eliminated for it too is subsidizing reckless local spending with no accountability. Every municipal government has usually all the top management expenses for salaries and pensions. This has driven so many to abuse the legal process transforming their police into revenue agents who no longer protect society, but exploit it for their own salaries with tickets and fines.

While the original Senate bill called for a full repeal of the property tax deduction, it was amended to preserve an itemized deduction for property taxes but only up to $10,000, which is identical to the House measure. Once again, those in big houses or the high taxed states paying more than $10,000 in property taxes will for the first time feel the real cost of their local corruption.

The Senate bill would still let you claim a deduction for the interest you pay on mortgage debt up to $1 million. The House wants to cap the loan limit at $500,000 for new mortgages. Since the House and Senate bills both sharply increase the standard deduction, the percent of filers who claim the mortgage deduction would decline significantly anyway. If this were eliminated along with property taxes, we would see a real estate crash that would make the S&L Crisis look trial run. No doubt, Trump understand that one unlike the Democrats back in the 1980s.

Interestingly, there are some changes that will impact the real estate market and take the froth off the surface. The Senate bill makes two important changes on home-related financing. It disallows interest deductions for home equity loans. And it lengthens the time you must live in a home to get the full tax-free exclusion on your gains when you sell it. Therefore, this will impact the borrow against your home market all over the radio if they tell the consumer the truth that a home equity loan will NOT BE DEDUCTIBLE. Additionally, this will impact the home-flippers as well who have been calling their income capital gains when they are flipping homes as a business.

The Senate kept the Alternative Minimum Tax (AMT), but it raises the amount of income exempt from it. The AMT originally was intended to ensure the richest tax filers pay at least some tax by disallowing many tax breaks at the high end. Now filers making between $200,000 and $1 million today will have to pay the tax. So once again, it is not a windfall for the rich.

The clash between the Senat and the House comes into play really with the death tax. Unlike the House bill, Senate Republicans have not proposed repealing the estate tax. Instead, the Senate proposed to double the exemption levels. Death Taxes have been destructive when it comes to trying to keep a family small business or farm going. The founder has paid taxes their whole life. Then when they die, the government wants to prevent you from saving for your family after you are gone. This has resulted in selling off farmland to pay taxes and the consolidation of farming into the hands of big corporations. Likewise, small businesses are in the same boat.

The other clash between the Senate and the House is medical expenses. Currently, those who itemize their deductions may include their medical and dental expenses that exceed 10% of their adjusted gross income. The House bill eliminates that deduction, while the Senate bill retains it and temporarily lowers that 10% threshold to 7.5% for tax years 2017 and 2018.

Obamacare mandate to buy health insurance is included as a repeal to reduce the taxes on the youth. It is estimated to save money since fewer people who qualify for subsidies if they actually bought insurance. Currently, they pay the Obamacare Tax and are subsidized.

 

The big issue will be with business. The Senate bill, like the House bill, cuts the corporate tax rate to 20% from 35% today. But the 20% rate would not take effect until 2019 under the Senate proposal. The delay would reduce the cost of the measure in the first 10 years. But this will also reduce the likelihood of an economic boom short-term. The Senate Republicans did make it possible for businesses to immediately and entirely expense new equipment for five years. This the morons think will be beneficial to the economy. Not everyone is into heavy equipment. Reducing the corporate tax rate will allow companies to expand and hire more high-end staff rather than buy equipment. They are obviously living still in the old world of heavy manufacture.

Most U.S. businesses are set up as pass-throughs, and not corporations. That means their profits are passed through to the owners, shareholders, and partners, who pay tax on them on their personal returns under ordinary income tax rates. Both the Senate and House bills lower taxes on the business portion of a filer’s pass-through income. The House bill dropped the top income tax rate to 25% from 39.6%, while prohibiting anyone providing professional services, which will include lawyers and accountants. The professional services groups will not be allowed to take advantage of the lower rate. It also phases in a lower rate of 9% for businesses that earn less than $75,000.

The Senate bill lowers taxes on filers who pass-through their business earnings by letting them deduct 23% of their income, up from 17.4% originally. The 23% deduction would be prohibited for anyone in a service business — except those with taxable incomes under $500,000 if married ($250,000 if single). There is a carve-out. Should the owner or partner of a pass-through operation also draws a salary from the business, that money would be subject to ordinary income tax rates.

In order to curb people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the Senate bill would automatically limit the deduction to half of the W-2 wages of the pass-through entity or its share to the individual taxpayer. The W-2 rule would not apply, however, if the filer’s taxable income is under $500,000 if married, $250,000 if single.

The big change will be how the US-based multinational corporations will be taxed. Currently, U.S. companies pay taxes on all their profits, regardless of where the income is earned. They’re allowed to defer paying U.S. tax on their foreign profits until they bring the money home. This is why there is such a vast hoard of about $3 trillion overseas.

Without question, the “worldwide” tax system puts American businesses and citizens at a huge disadvantage when other nations (except Japan) tax income earned in the place you are domiciled. The theory is fair. Taxes are supposed to be for your “fair share” of services provided by the government. If you are not living there, then what is your fair share of services that you do not use? ZERO! Foreign competitors come from countries that do not tax worldwide income and they can compete to get projects to build dams in China and beat American firms every time. I testified before that very issue in front of the House Ways and Means Committee back in the 1990s.

The Supreme Court in 2015 held that the Maryland income tax was unconstitutional because it did not allow a resident or corporation to deduct taxes paid to other territories on its income derived out of the state (See: COMPTROLLER OF THE TREASURY OF MARYLAND v. WYNNE ET UX., 575 US _ (2015)). The Supreme Court previously held in  Central Greyhound Lines, Inc. v. Mealey, 334 US 653, 662 (1948), which invalidated state tax schemes that might lead to double taxation of out-of-state income in violation of the Commerce Clause.

The entire problem stems from the fact that Congress never defined “income” in the legislation. That left the door open for the Supreme Court to determine what was and what was not income. As a result, the Court decided in Eisner v. Macomber 252 US 189 (1920) to address that question. The starting point was their reference to the dictionary. “Income may be defined as the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets.” The Court then went into a lengthy explanation as to how this definition applies to a stock dividend which the case was all about. In the end, the Court decided that the stock dividend was not taxable because it was merely a book adjustment and was not “severable” from the underlying stock. In other words, income would not be realized until the stock itself was sold.

After the Eisner decision, what emerged was a new question. The next challenge reached a climax in 1924 when the Supreme Court ruled in COOK v. TAIT, 265 U.S. 47 (1924) brought by a U.S. citizen living in Mexico that taxing non-resident citizens on their global income was indeed constitutional. This is the paragraph that has severely ignored the foundation of territorial jurisdiction recognized by the entire world.

“The contention was rejected that a citizen’s property without the limits of the United States derives no benefit from the United States. The contention, it was said, came from the confusion of thought in ‘mistaking the scope and extent of the sovereign power of the United States as a nation and its relations to its citizens and their relation to it.’ And that power in its scope and extent, it was decided, is based on the presumption that government by its very nature benefits the citizen and his property wherever found, and that opposition to it holds on to citizenship while it ‘belittles and destroys its advantages and blessings by denying the possession by government of an essential power required to make citizenship completely beneficial.’ In other words, the principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen. The consequence of the relations is that the native citizen who is taxed may have domicile, and the property from which his income is derived may have situs, in a foreign country and the tax be legal-the government having power to impose the tax.”

This holding that a citizen of the United States is forever an indentured servant of the country and can never escape taxes even if they left the country permanently. This defies every principle of the Constitution and the American Revolution for previously, if you were British and killed someone in Paris, the French could not prosecute you because you were the “property” of the king. They sent you back in chains and told the English king what you did and beg his vengeance. The ruling in Cook goes against territorial jurisdiction and is inconsistent with every other ruling on jurisdiction since inception. But once it is concerning taxes, the Supreme Court reverted to you are the property of the state.

With that Eisner definition of income, was any income not clearly covered by its terms deemed to be nontaxable? In Helvering v. Bruun, 309 U.S. 461 (1940), the Court addressed the question of whether or not a lessor recognizes income from the receipt of a leasehold improvement made by a lessee during the lease when the improvement reverts to the lessor at the end of the lease. The Court ruled that the value of the improvement was taxable, noting that NOT every gain need be realized in cash to be taxable. There was a clear increase in the taxpayer’s wealth, and this increase did not have to be severed to recognize such increase as income for federal income tax purposes. This ruling could wipe out profits in BitCoin since it is marketed as a currency and that means it would be taxable even if you did not cash-in BitCoin. Then in Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), the Court severely qualified Eisner ruling that punitive damages recovered under a violation of anti-trust laws were included in gross income.

The Senate bill proposes changes to move the U.S. to a territorial system. which is long overdue. Congress NEVER authorized worldwide income taxes. That was the Supreme Court which simply ruled that they never said no. It also includes a number of anti-abuse provisions to prevent corporations with foreign profits from gaming the system. Companies will be required to pay a one-time low tax rate on their existing overseas profits — 14.5% on cash assets and 7.5% on non-cash assets such as equipment abroad in which profits were invested. This is slightly higher than the 14% and 7% rates in the House bill.

 

While the Trump Tax Reform will certainly not benefit the rich, the critics who simply argue the national debt will rise are just arguing nonsense. The national debt will continually rise because there is NEVER a balanced budget and there is NEVER any intent to ever pay off the debt. Up to now, the benefits go to the rich who donate big bucks to both parties and never to small business who do not lobby or to the average person. This is a much fairer way of dealing with the issues and of course, the Democrats will vote against it simply because they like the high taxes and handout tax exceptions behind the curtain for donations and law revisions like Hillary promising the bankers the moon.

Dec 4 2017

Politicians & Kicking the Can Down the Road


Armstrong Economics Blog/Politics

Re-Posted Dec 4, 2017 by Martin Armstrong

QUESTION: Hi Marty,

Thank you for replying to my earlier question about The Crash & No Bid. It as very insightful towards the mechanics of markets. I have a new question for you regarding how Politicians “kick the can” as long as they can expecting the next people in line to pick up the tab… and never pay!

I was told by my uncle that the reason why politicians were lowering interest rates was so that they could keep increasing their perpetual deficit. But- since we have hit the turning point in interest rates and that rates are on the rise do you foresee politicians promoting hyper-inflation while fixing payable amounts on things like “pensions”? I believe that if they can dilute / water down money through inflation that the pension funds would then appear to “be on budget” (kicking the can further down the road, and also creating civil unrest)?

The way I see it is that if politicians were using low-interest rates to create cheaper money, could their next move potentially be diluting the huge quantity of money ….. cause they have nowhere else to go! (along with the hunt for taxes)

NG From Vancouver Island, Canada

ANSWER: I completely understand that from the outside looking in, it appears that the politicians are kicking the can down the road because they KNOW what will happen. It also appears that they have created lower interest rates to allow them to reduce their borrowing costs and spend more. I hate to burst everyone’s bubble here, but the truth is MUCH WORSE. All of these assumptions and conspiracy theories are based upon the common foundation that they PRESUME the politicians even understand what they are doing. They are NOT that intelligent. Sorry!

Politicians have absolutely ZERO perspectives on the future. They assume that whatever trend is in motion, will remain in motion. When I have been in meetings around the world and asked about the policy of borrowing year after year with no intention of paying anything back, I get the blank stare as their eyes glaze over. I then point out again, there is absolutely no plan to ever pay down even a small portion of the national debt. I then state you do know you cannot keep borrowing like this forever? I follow this up with the question, you do know that at some point you will not be able to see public debt? That finally gets the response! Yes, a company or individual cannot do that, but we are the government.

They actually believe their own lies. They believe that their debt is AAA and people will buy it forever above all else no matter what they do. When I say that have never been the historical case, I get the classic statement – this time it’s different!

The lower rates have been maintained by7 the central banks. But the Fed is caught between a rock and a hard-headed place called Congress. The Fed cannot control long-term rates. The best they can do is try to “influence” long-term rates and they did that by buying in 30-year bonds. The understands that the lower rates are undermining the pension system. It may be helping government spend more, but politicians control fiscal policy and the central bank controls only monetary policy. No central bank can stabilize the fiscal spending.

Therefore, this will simply erupt like a financial volcano and that is when my phone turns red hot. All of a sudden, the screams all sound the same. You can tell them this will happen. Nobody will risk their career to prevent a crisis. They love the crisis for they then promise to always get the guy that caused it even when it is them. There are no mirrors. They simply blame people in the private sector every single time.

 

Nov 15 2017

Rebranding Kim Jong-un Will Likely Be a Key Part of The Strategy…


Re-Posted from The Conservative Tree House on November 15, 2017 by

Almost everyone understands the term “re branding”. Don’t laugh when you consider the possibility of re-branding Kim Jong-un; and more importantly, as an outcome, the entire geopolitical architecture of North Korea.  Rebranding takes time. This type of re branding takes silent and subtle persuasion.

It’s not a short term process, but look for indicators like this to ever-so-slowly morph. China’s Xi Jinping seeding ploughshares over missiles needs careful and controlled fertilization.

Business suits replacing General’s uniforms would be very good for the people of North Korea. Ultimately that’s an honorable goal.

We’re talking about massive amounts of distrust and psychological misinformation to overcome – because China previously benefited from using/supporting North Korea as a hostile proxy province toward the collective enemy.   That historic approach and use of N-Korea was the winning hand for China.

President Trump has changed the dynamic.

The winning economic hand for China, specifically Chairman/President Xi Jinping now rests on being able to change the direction of the DPRK and Kim Jong-un.

Kim Jong-un’s sense of self and disposition has been defined by rockets, military and such.  His personal currency is ‘loyalty’ and how ‘loved’ he perceives himself to be in the eyes of his audience.

In order for China to generate enough influence (toward the larger objective of shifting away from militaristic endeavors) Chairman Xi Jinping will now need to shift emphasis on what generates Kim Jong-un’s currency.  Loyalty and love must be achieved by alternate methods.  Seeds must be planted, fertilized and nurtured.

Turning rockets into ploughshares is a good strategy.

[…]  “Here in Seoul, architectural wonders like the Sixty-Three Building and the Lotte World Tower — very beautiful — grace the sky and house the workers of many growing industries.

Your citizens now help to feed the hungry, fight terrorism, and solve problems all over the world. And in a few months, you will host the world and you will do a magnificent job at the 23rd Olympic Winter Games. Good luck. (Applause.)

The Korean miracle extends exactly as far as the armies of free nations advanced in 1953 — 24 miles to the north. There, it stops; it all comes to an end. Dead stop. The flourishing ends, and the prison state of North Korea sadly begins.

Workers in North Korea labor grueling hours in unbearable conditions for almost no pay. Recently, the entire working population was ordered to work for 70 days straight, or else pay for a day of rest.

Families live in homes without plumbing, and fewer than half have electricity. Parents bribe teachers in hopes of saving their sons and daughters from forced labor. More than a million North Koreans died of famine in the 1990s, and more continue to die of hunger today.

Among children under the age of five, nearly 30 percent of afflicted — and are afflicted by stunted growth due to malnutrition. And yet, in 2012 and 2013, the regime spent an estimated $200 million — or almost half the money that it allocated to improve living standards for its people — to instead build even more monuments, towers, and statues to glorify its dictators.

What remains of the meager harvest of the North Korean economy is distributed according to perceived loyalty to a twisted regime. Far from valuing its people as equal citizens, this cruel dictatorship measures them, scores them, and ranks them based on the most arbitrary indications of their allegiance to the state.

Those who score the highest in loyalty may live in the capital city. Those who score the lowest starve. A small infraction by one citizen, such as accidently staining a picture of the tyrant printed in a discarded newspaper, can wreck the social credit rank of his entire family for many decades.

An estimated 100,000 North Koreans suffer in gulags, toiling in forced labor, and enduring torture, starvation, rape, and murder on a constant basis.

In one known instance, a 9-year-old boy was imprisoned for 10 years because his grandfather was accused of treason. In another, a student was beaten in school for forgetting a single detail about the life of Kim Jong-un.

Soldiers have kidnapped foreigners and forced them to work as language tutors for North Korean spies.

In the part of Korea that was a stronghold for Christianity before the war, Christians and other people of faith who are found praying or holding a religious book of any kind are now detained, tortured, and in many cases, even executed.

North Korean women are forced to abort babies that are considered ethnically inferior. And if these babies are born, the newborns are murdered.

One womans baby born to a Chinese father was taken away in a bucket. The guards said it did not deserve to live because it was impure.

So why would China feel an obligation to help North Korea?

The horror of life in North Korea is so complete that citizens pay bribes to government officials to have themselves exported aboard as slaves. They would rather be slaves than live in North Korea.

To attempt to flee is a crime punishable by death. One person who escaped remarked, “When I think about it now, I was not a human being. I was more like an animal. Only after leaving North Korea did I realize what life was supposed to be.”

And so, on this peninsula, we have watched the results of a tragic experiment in a laboratory of history. It is a tale of one people, but two Koreas. One Korea in which the people took control of their lives and their country, and chose a future of freedom and justice, of civilization, and incredible achievement. And another Korea in which leaders imprison their people under the banner of tyranny, fascism, and oppression. The result of this experiment are in, and they are totally conclusive.

When the Korean War began in 1950, the two Koreas were approximately equal in GDP per capita. But by the 1990s, South Koreas wealth had surpassed North Korea’s by more than 10 times. And today, the Souths economy is over 40 times larger. You started the same a short while ago, and now you’re 40 times larger. You’re doing something right.

Considering the misery wrought by the North Korean dictatorship, it is no surprise that it has been forced to take increasingly desperate measures to prevent its people from understanding this brutal contrast.

Because the regime fears the truth above all else, it forbids virtually all contact with the outside world. Not just my speech today, but even the most commonplace facts of South Korean life are forbidden knowledge to the North Korean people. Western and South Korean music is banned. Possession of foreign media is a crime punishable by death. Citizens spy on fellow citizens, their homes are subject to search at any time, and their every action is subject to surveillance. In place of a vibrant society, the people of North Korea are bombarded by state propaganda practically every waking hour of the day.

North Korea is a country ruled as a cult. At the center of this military cult is a deranged belief in the leaders destiny to rule as parent protector over a conquered Korean Peninsula and an enslaved Korean people.

The more successful South Korea becomes, the more decisively you discredit the dark fantasy at the heart of the Kim regime.

In this way, the very existence of a thriving South Korean republic threatens the very survival of the North Korean dictatorship.

This city and this assembly are living proof that a free and independent Korea not only can, but does stand strong, sovereign, and proud among the nations of the world. (Applause.)

Here, the strength of the nation does not come from the false glory of a tyrant. It comes from the true and powerful glory of a strong and great people — the people of the Republic of Korea — a Korean people who are free to live, to flourish, to worship, to love, to build, and to grow their own destiny.

In this Republic, the people have done what no dictator ever could — you took, with the help of the United States, responsibility for yourselves and ownership of your future. You had a dream — a Korean dream — and you built that dream into a great reality.

In so doing, you performed the miracle on the Hahn that we see all around us, from the stunning skyline of Seoul to the plains and peaks of this beautiful landscape. You have done it freely, you have done it happily, and you have done it in your own very beautiful way.

This reality — this wonderful place — your success is the greatest cause of anxiety, alarm, and even panic to the North Korean regime. That is why the Kim regime seeks conflict abroad — to distract from total failure that they suffer at home.

Since the so-called armistice, there have been hundreds of North Korean attacks on Americans and South Koreans. These attacks have included the capture and torture of the brave American soldiers of the USS Pueblo, repeated assaults on American helicopters, and the 1969 drowning [downing] of a U.S. surveillance plane that killed 31 American servicemen. The regime has made numerous lethal incursions in South Korea, attempted to assassinate senior leaders, attacked South Korean ships, and tortured Otto Warmbier, ultimately leading to that fine young man’s death.

All the while, the regime has pursued nuclear weapons with the deluded hope that it could blackmail its way to the ultimate objective. And that objective we are not going to let it have. We are not going to let it have. All of Korea is under that spell, divided in half. South Korea will never allow what’s going on in North Korea to continue to happen.

The North Korean regime has pursued its nuclear and ballistic missile programs in defiance of every assurance, agreement, and commitment it has made to the United States and its allies. It’s broken all of those commitments. After promising to freeze its plutonium program in 1994, it repeated [reaped] the benefits of the deal and then — and then immediately continued its illicit nuclear activities.

In 2005, after years of diplomacy, the dictatorship agreed to ultimately abandon its nuclear programs and return to the Treaty on Non-Proliferation. But it never did. And worse, it tested the very weapons it said it was going to give up. In 2009, the United States gave negotiations yet another chance, and offered North Korea the open hand of engagement. The regime responded by sinking a South Korean Navy ship, killing 46 Korean sailors. To this day, it continues to launch missiles over the sovereign territory of Japan and all other neighbors, test nuclear devices, and develop ICBMs to threaten the United States itself. The regime has interpreted Americas past restraint as weakness. This would be a fatal miscalculation. This is a very different administration than the United States has had in the past.

Today, I hope I speak not only for our countries, but for all civilized nations, when I say to the North: Do not underestimate us, and do not try us. We will defend our common security, our shared prosperity, and our sacred liberty.

We did not choose to draw here, on this peninsula — (applause) — this magnificent peninsula — the thin line of civilization that runs around the world and down through time. But here it was drawn, and here it remains to this day. It is the line between peace and war, between decency and depravity, between law and tyranny, between hope and total despair. It is a line that has been drawn many times, in many places, throughout history. To hold that line is a choice free nations have always had to make. We have learned together the high cost of weakness and the high stakes of its defense.

America’s men and women in uniform have given their lives in the fight against Nazism, imperialism, Communism and terrorism.

America does not seek conflict or confrontation, but we will never run from it. History is filled with discarded regimes that have foolishly tested Americas resolve.

Anyone who doubts the strength or determination of the United States should look to our past, and you will doubt it no longer. We will not permit America or our allies to be blackmailed or attacked. We will not allow American cities to be threatened with destruction. We will not be intimidated. And we will not let the worst atrocities in history be repeated here, on this ground, we fought and died so hard to secure. (Applause.)

That is why I have come here, to the heart of a free and flourishing Korea, with a message for the peace-loving nations of the world: The time for excuses is over. Now is the time for strength. If you want peace, you must stand strong at all times. (Applause.) The world cannot tolerate the menace of a rogue regime that threatens with nuclear devastation.

All responsible nations must join forces to isolate the brutal regime of North Korea — to deny it and any form — any form of it. You cannot support, you cannot supply, you cannot accept. We call on every nation, including China and Russia, to fully implement U.N. Security Council resolutions, downgrade diplomatic relations with the regime, and sever all ties of trade and technology.

[…] It is our responsibility and our duty to confront this danger together — because the longer we wait, the greater the danger grows, and the fewer the options become. (Applause.) And to those nations that choose to ignore this threat, or, worse still, to enable it, the weight of this crisis is on your conscience.

I also have come here to this peninsula to deliver a message directly to the leader of the North Korean dictatorship: The weapons you are acquiring are not making you safer. They are putting your regime in grave danger. Every step you take down this dark path increases the peril you face.

North Korea is not the paradise your grandfather envisioned. It is a hell that no person deserves. Yet, despite every crime you have committed against God and man, you are ready to offer, and we will do that — we will offer a path to a much better future. It begins with an end to the aggression of your regime, a stop to your development of ballistic missiles, and complete, verifiable, and total denuclearization. (Applause.)

A sky-top view of this peninsula shows a nation of dazzling light in the South and a mass of impenetrable darkness in the North. We seek a future of light, prosperity, and peace. But we are only prepared to discuss this brighter path for North Korea if its leaders cease their threats and dismantle their nuclear program.

The sinister regime of North Korea is right about only one thing: The Korean people do have a glorious destiny, but they could not be more wrong about what that destiny looks like. The destiny of the Korean people is not to suffer in the bondage of oppression, but to thrive in the glory of freedom. (Applause.)

What South Koreans have achieved on this peninsula is more than a victory for your nation. It is a victory for every nation that believes in the human spirit. And it is our hope that, someday soon, all of your brothers and sisters of the North will be able to enjoy the fullest of life intended by God.

~ U.S. President Donald Trump (Nov 8, 2017)

This speech was delivered in Seoul, South Korea.  However, the most important audience was in Beijing China.

Nov 10 2017

USA Media Ignores Historic Prime Time Broadcast of Official Beijing Welcome For President Trump…


Re-Posted from The Conservative Tree House on November 9, 2017 by

In 1989 the communist regime of China delivered one of the more infamous authoritarian displays of brutality in modern history. The Tiananmen Square protests of 1989, commonly known in mainland China as the June Fourth Incident, were student-led demonstrations in Beijing, the capital of the People’s Republic of China. In response the communist regime crushed the student uprising and hundreds were massacred.

Almost thirty years later, it’s now 2017, and in the exact same place, on the exact same streets, the Chinese government played the U.S. national anthem while broadcasting -for the first time ever- to their own country:  the welcoming ceremony of a state visit by a U.S. President and First Lady at the Grand Hall of the People’s Republic of China.

During prime time TV viewing (8:30pm EST) you would think this historic moment, this historic contrast (liberty crushed / liberty celebrated), should easily garner U.S. media attention.  You might think that, but you would be wrong.

Actual trumpets sounded the regalia as a U.S. President exited the limousine in front of the Great Hall; but not a single U.S. network, broadcast or cable, showed the historic moments of the ceremony when President Trump and First Lady Melania Trump arrived.

Thirty years ago, China was controlling broadcasts and hiding uncomfortable events on that location. In 2017 it’s the U.S. media apparatus doing the hiding. Has the worm turned 180°?

Central Beijing 1989 – Look closely at the front of the tank column.

It has been almost a generation, and those under 40-years-of-age might not remember, but the incredible events in Tiananmen square captured the attention of the world (mostly from smuggled footage).  June 1989 also provided one of the most iconic images of the struggle for freedom in history: “Tank Man”.

So it was stunning last night to see that same roadway and central square in front of the Great Hall of the People’s Republic filled with the sounds of trumpets, the Star Spangled Banner, joyful children and the arrival of a U.S. President actually broadcast LIVE on Chinese State TV.

The significance was not lost on international viewership outside the U.S.

WATCH:

.

.

Nov 9 2017

Ferguson Riots Have Another Face – Police Raise 23% of Revenue in Fines


Armstrong Economics Blog/Corruption

Re-Posted Nov 6, 2017 by Martin Armstrong

The town of Ferguson made headlines as riots appeared. Who will not forget the police with military gear acting like an invading army. Many supported the police and much of the Black Lives Matter movement began there. The story nobody wanted to tell was that the police of Ferguson have a real attitude problem that sparked the riot. That is because they are trained to raise money for the town. Ferguson uses police and the Courts to prey on its residents to raise money and 23% of its entire budget is based upon writing tickets and handing out the maximum fines. They then jail people who can’t pay.

Ferguson expects to raise $3.09 million of projected $13.26 in revenue from fines and fees. They use the police to raise money. For example, an unmowed lawn in Ferguson will be fined between $77 and $102, though in some other cities it’s a $5 offense. Take a 2-week vacation, and you have a ticket when you come home.

This is the entire problem. No government should be allowed to fine people PERIOD! You should be ordered to pay to a charity of your choice – but not to the government. Remove the “money” from their incentive and we will return the rule of law to what it should be – justice.

Nov 1 2017

Spain Invades Catalonia – Nullifies the Democratic Vote


Armstrong Economics Blog/SPAIN

Re-Posted Nov 1, 2017 by Martin Armstrong

The Spanish Police have invaded Catalonia and the rigged high court of Spain nullifies its independence. It really is astonishing when you compare these actions to Russia and Crimea. At least Crimea the population were Russian speaking and not Ukrainian. Here we have Catalonia has had its own language from before the existence of Spain and have always regarded itself as separate and autonomous.

The action of Madrid are hailed and the constitution is the entire basis for the denial of human rights in Catalonia. Politicians have been carving the world and declaring borders for power. They have ignored language, race, religion and everything else for political power. Nobody ever says that is somehow wrong.

This is what is going on in Europe. Brussels is determined to eliminate borders, federalize Europe, and they hope in one or two generations, they will surrender language and culture to a central power.

Oct 31 2017

Tucker Carlson Expands on Podesta Source Story – Shares Podesta Group Threats Against Him….


Re-Posted from The Conservative Tree House on October 30, 2017 by

Against the backdrop of the Paul Manafort indictment, Fox News host Tucker Carlson expanded on his exclusive source insight (from a former employee) into the Podesta Group and the lobbying activity on behalf of Russian interests.

Additionally, Mr. Carlson shares the legal threats he and his broadcast have recently received from lawyers representing Tony and John Podesta and the DC Lobbying Group they founded.

.

Tucker Carlson and Jonathan Turley (George Washington University Law School) discuss Special Counsel Robert Mueller, his ongoing investigation, the indictments from earlier today, and both ultimately come to the same conclusion CTH shared earlier,

Being intellectually honest it appears that Mueller is focused on the bigger, and more dangerous, dynamic surrounding foreign lobbying efforts and payments to DC politicians therein to shape U.S. policy.  Toward eliminating those lobbyist payments, the legal cases against Paul Manafort and Tony Podesta are tools to send the Swamp a message to stop.

Sep 21 2017

Spain Invades Barcelona & EU Shows Its Fascist Character


Armstrong Economics Blog/European Union

Re-Posted Sep 21, 2017 by Martin Armstrong

 

Spain has invaded Barcelona sending in an army of 16,500 as pretend riot police to effectively suppress and intimidate the people. Armed police have seized almost 10 million ballots for the referendum to shut down any democratic process showing the entire world that Spain is still fascist and that is really supported by Brussels. The Spanish police have beaten citizens as if this were some third world dictatorship demonstrating the democracy is truly dead in Europe.

Catalonia represents a fifth of Spain’s 1.1-trillion-euro ($1.32 trillion) economy and enjoys wide self-government, although key areas such as infrastructure and taxes are in the hands of central authorities. The region has about 5.5 million eligible voters.

 

The Spanish police have raided several print works and newspaper offices in Catalonia hunting for voting papers, ballot boxes and leaflets to be used in an October 1st independence referendum which Madrid vehemently opposes. Madrid has revealed its true nature to the entire world on center stage and this is starting to show up in our models for Europe.  The Global Market Watch picked up patterns yesterday warning that there is trouble in the wind.

Thousands have taken to the streets in protest of what is clearly a full blown restoration of Spanish fascism. Meanwhile, shorting Spanish bonds has been outlawed. The free markets have been utterly destroyed. The ECB is buying all Spanish debt trying to pretend that confidence in Spain is strong. Clearly, any institution holding Spanish debt at this point should sell it to the ECB before it is too late.

The EU is starting to shape up as you can check in, but you cannot check out. This is certainly more of a fascist system than democratic. This is reflecting the serious political issues for the EU looking into the next few years.

Sep 16 2017

The Confusion in Gold


Armstrong Economics Blog/Gold

Re-Posted Sep 16, 2017 by Martin Armstrong

QUESTION #1: [_____] says that the dollar will collapse because with the debt ceiling gone – no more buyers of Treasuries in the markets and only the Fed Reserve buying – inflation goes to the wazoo. All over USA. care to comment?

ANSWER: Total nonsense. The USA debt of $20 trillion is a tiny fraction of global debt at $160 trillion. This entire theory does not hold up. Just where is all the money going to run? Gold? Institutions do not buy gold and cannot function with gold, which is not legal tender for even paying your taxes. The only thing that matters is the general public confidence. When the average person on the street no longer trusts government, that is the tipping point.

There is a whole series of people given a choice between a bar of chocolate and a bar of silver. They take the chocolate. Kids line up in Starbucks and pay with their phone – not even cash. Not until you shake the confidence of these people will you see the explosion in markets. That is what took place in the late 1970s. I was there. OPEC created the image of wholesale inflation. People were hoarding toilet paper.

QUESTION #2: What will Fed Balance Sheet Shrinkage do to Gold?

ANSWER: The opposite of what people think. Shrinking the Balance Sheet will be anti-inflationary to the standard reasoning and thus gold should collapse with deflation. However, the Fed has turned away from QE because pension funds are at serious risk. They have run off to emerging markets and bought very long-term paper desperately trying to get their yields up. As the stock market rises because there is no alternative, the Fed politically will be forced to raise rates. They will end up creating inflation with rising rates that will blow interest expenditure through the roof.

QUESTION #3: Since we bounced off the reversal again, obviously this still does not negate a break of $1k and then the slingshot up. But it just seems as if gold is on its deathbed. If nuclear war could not get it to exceed last year’s high, is there anything left in this bag of fundamentals we have been hearing about forever?

ANSWER: I understand. This is what the Reversal System is good at. We stopped within a dime of that number. What will be will be. We are running out of fundamentals to keep buying gold. It’s like the fake news about the storm in Florida that a 15 foot wall of water would destroy the coast. It never came and many people are really angry at the media. How many times can they do this before people no longer listen. Gold is a confidence game – plain and simple. This number is just incredibly important far more than most people dare to consider. I will be doing the gold report soon. It is very critical at this point.

GCNYNF-GMW 9-16-2017

COMMENT: Marty, thank you so much for the past several years of WEC. You have taught me to keep my head in times like this. I bought the gold on the GMW and then sold it against the reversal with a stop just above as you did with the yen in 1998. I had two friends who were buying at the high expecting gold to breakout when I was selling. It was two against one. The majority must be wrong.

Thanks!

See you in Orlando.

ANSWER: The number of long positions verse net shorts in gold reached about 5:1 and you saw what happened – it simply bounced off of the reversal and did not exceed last year’s high. I am always amazed at how people get so bullish and say I am wrong and then within 2 days they lose their shirt. As they say, you can lead a horse to water, but you cannot make him drink. Some people judge the next 10 years by a few days of price movement. That is how the market separates traders from fools

Aug 31 2017

U.S. Chamber of Commerce Admits No Common Ground With Trump on Immigration – Chamber Demands Open-Ended Immigration Must Be Maintained… ion


Re-Posted from The Conservative Tree House on August 31, 2017 by

The open border position of the crony-capitalistic U.S. Chamber of Commerce is only one of the issues that showcases the hidden agenda of their heavily lobbied influence upon Republicans in Congress.  The CoC spends hundreds of millions writing legislation and paying off the UniParty to deliver on their multinational corporate agenda.

In an interview today the Chamber admits their immigration agenda has no common ground with the President Trump administration.  CTH has pointed out this issue for many years, however more people are awake now.

WASHINGTON DC – The Chamber of Commerce admitted Thursday that it is struggling to find common ground with President Trump on immigration, and so far hasn’t been able to find a “sweet spot” on the controversial issue.

“We don’t have a policy paper on immigration. It’s a controversial area,” Randy Johnson, the Chamber’s senior vice president for labor and immigration policy, said at a press briefing Thursday. “We’re trying to figure out where our interests align with the Trump administration.”

He added later that, “Immigration across the board, with some limitations, is a benefit to this country and that is the position of the Chamber.” In contrast, the Trump administration has sought not only to stop illegal immigration but has backed a plan to cut legal immigration in half.

Johnson said the Chamber, the national largest business trade association, was nevertheless “ready to engage with the Trump administration” on the subjects such a merit-based immigration. The chamber would not budge on family-based immigration though, he said.

Johnson said he hoped the president did not end the Deferred Action for Childhood Arrivals policy that allowed children who were brought to the country illegally to remain, though he said the legal principles behind the policy were shaky. (read more)

“Family-based immigration” is code-speak for open borders.  Under the principles behind family migration, once a single family member arrives in the U.S. they can then bring every member of their family, even extended family by marriage, into the U.S.

This process is also called “chain migration”, because there is essentially no end to the unlimited access brought about by relationship.

On DACA (Deferred Action for Childhood Arivals), the U.S. CoC is a big proponent of amnesty and open borders.  The CoC wrote, and then spent hundreds of millions paying congress for, the 2013 “Gang-of-Eight” bill within the Senate.  The CoC held the same position on DAPA (the DACA parents).

However, DAPA was found to have been unconstitutional executive branch overreach by the U.S. Supreme Court.  If DAPA was an illegal Obama executive action, DACA is also.  The difference between outcomes is simply that DAPA was challenged successfully by states; DACA has yet to be challenged in court.