The UAE government came under tremendous pressure by the dealers that the VAT was killing their business. The government has responded dropping the VAT (Sales Tax) on gold, diamonds, and precious metals for investors. Taxing such products is, in reality, taxing money the same as if it bought bonds or stocks. Not everyone buys stocks just as not everyone buys gold. Taxing gold and not stocks is a form of investment bias

QUESTION: Mr. Armstrong; You have said that Brexit is good for Britain and that the financial center could never move to Paris or Frankfurt and survive. Can you elaborate on that topic for us Brits?

GS

ANSWER: It is amazing that the politicians are so clueless and the heads of the banks are far too often just talking politics. London is bigger than all the financial centers in Europe COMBINED! Because of regulation being consolidated in Britain, it even beats New York City – a fact that is often overlooked. The United States has SEVEN regulatory agencies that compete with each other for power compared to one for Britain. London still wins hands down.Neither Frankfurt nor Paris even has the infrastructure to function as London does

The Cologne Institute of German Business sees in the planned European deposit insurance is simply incapable of proving protection against a bank crash in Europe. The EU deposit guarantee is simply not practical under any concept of austerity. The Eurozone still has inherent significant risks in the balance sheets of European financial institutions. This is primarily because where the USA took the bad loans from the banks and stuffed them into Freddie and Fanny, in Europe, the bad loans are still on the books of the banks. Systemically, this has been the leading problem why Europe has been unable to recover and Quantitative Easing merely robber savers of their income and it failed completely to stimulate the economy. Banks were still reluctant to lend and people would not borrow if they did not have confidence in the future.

The proportion of bad loans is so different between the individual banks that a joint deposit guarantee leads to a permanent transfer mechanism. This is a complete disaster and pulls the EU apart. As the worse banks are in Southern Europe, Northern Europe will see this as a bailout for the South. Therein lies the very crisis and why the structure of the Eurozone from the outset has been such a complete disaster. All national debts of member states should have been consolidated and that should have become the European National Debt. Thereafter, member states should have been on their own. But that common sense design was ignored for political purposes. Any consolidation of debt was seen as a bailout for weaker member states. This inherent disparity simply remains intact with no solution in sight.

The recapitalization costs for eliminating non-performing loans (NPLs) just in Cyprus will still consume 2.4% of GDP in that member state. In Greece, any recapitalization will cost 2% of GDP and in Italy 0.8%. The disparity among members smacks of transfer payments which have been a sore subject behind the design of the Euro. A closer look at Italy reveals that more than 10% of the balance sheets of Italian banks constitute bad loans. The cost to bailout Italy is put at €189 billion while Spain comes in around €100 billion and even France will be €85 billion. In Germany, the bad loans amount to about €48 billion

While nobody wants to talk about it, the obvious issue is why has Deutsche Bank not been merged with Commerzbank? The bad loan problem a derivatives problem would simply not be solved even by such a merger.

Is it any wonder why politicians have looked to bail-ins rather than bailouts

QUESTION: You said the US had a two-tier monetary system under Bretton Woods. Can you explain that one, please?

DHJ

ANSWER: When Roosevelt confiscated gold, he created, in reality, a two-tier monetary system quite frankly as the medieval city of Florence. The Great Financial Panic of 1344 was when the value of silver rose dramatically blowing out the silver/gold ratio. Silver was used locally for the normal people. Their wages were paid in silver. The gold florin was used for international trade and companies had to keep actually two sets of books with accounting in each separate currency.

When Roosevelt confiscated gold, he devalued the dollar from $20.67 per ounce of gold to $35. Gold remained the unit of account for INTERNATIONAL transactions. While the last silver dollar was at first still minted, it was decided to end that production as well. Therefore, the last U.S. silver dollar to be struck was that of 1935. Nonetheless, the government then maintained silver as a backing for the currency domestically and issued Silver Certificates until 1963.

When the price of silver was rising with just about all other commodities during the early 1960s, the pressure was mounting on the financial system. President Kennedy authorized the abandonment of silver as a backing for the currency. He allowed the silver certificates to be redeemed for silver bullion. However, the minimum lot accepted for redemption was 5,000 for this was the size of the silver bars.

Therefore, in 1963 is when we see the beginning of the end in the two-tier monetary system. Between 1964 and 1971, the gold standard remained intact until President Nixon was forced to close the gold window ending the convertibility of dollars to gold internationally.

So, you see, the United States maintained a two-tier monetary system like Florence, silver for domestic use and gold for international trade. The difference was that when the silver/gold ratio broke, people were laid-off and unemployment soared. The people stormed the palaces of the bankers, plundered them, and then set them on fire.

A new technology is underway in the construction of the first robot cargo ship. This will be the first unmanned cargo ship to set sail. It is being constructed by Rolls-Royce. There is a catch. The international laws on shipping were set in place because of unions. As is, international shipping law states that ocean-going vessels must be “properly” crewed. What is the definition of that “properly crewed” will be something for the courts to decide. If a robot can construct a car, does that mean it is not a proper car? Therefore, fully autonomous, unmanned ships may currently not be allowed in international waters under the present interpretation, but that is definitely something subject to challenge in a legal proceeding.

As such, the Yara Birkeland, its official name, will operate close to the Norweigan coast at all times for now between three ports in the south of the country. If that goes well, then look for this to become a new challenge to the interpretation of old Marxist union laws.

QUESTION: You ignore that Trump will create a deficit of a trillion in one year with his tax cuts for the rich. What do you have to say about that one!

HT

ANSWER: So what? Obviously, you probably are a CNN watcher. They never said anything about Obama who created the first trillion deficit and maintained that throughout his presidency between 2009 to 2012. What does it matter? Nobody ever intends to pay it back. Just in case you just noticed, that is the least of our problems. Try talking about the Pension Fund Crisis that will hit all the people directly. The Trump deficit will put money back into the economy directly whereas the Obama deficits were never something that actually stimulated the people directly. It was like Quantitative Easing – welfare for the bankers, not the people.

I have warned that one of the clever ways taxes are raised is by changing the definition of the rich. We can see that when FDR came into office, the definition of the rich became $5 million because he was planning to introduce the payroll tax and everyone had to pay. That was a lot of money when a Cadaliac cost $600. After the war, the definition dropped dramatically. Then we see in the ’90s, the definition was raised to $250,000.

However, this is called “household” income. They have already begun to apply this to people with disability. If a parent is disabled and is living with a child, the government wants to reduce the social security benefit because the “household” income is too high, So in a clever way, the government is denying you social security benefits if your combined income with you children exceeds their threshold.

The talk behind the curtain is that since children over 30 are living with their parents, the “household” income should now include all children living with their parents. Of course, they fail to see that they are creating a crisis by forcing children out the door who cannot afford an apartment by sending their parent tax rate higher. They never consider the social impact of taxation.

For the Health Insurance Marketplace, a household usually includes the tax filer, their spouse if they have one, and their tax dependents who are children they claim. Under Medicaid and the Children’s Health Insurance Program (CHIP), they have adopted this new definition of household income called Modified Adjusted Gross Income (MAGI). The government is defining households and income for the purposes of determining eligibility for benefits based on everyone in the house.

If you got divorced on December 31st, the tax code will be applied to a single person at a higher rate for the entire year. If you claim Head of Household as an unmarried person for tax purposes, the qualifying person is limited to your son or daughter or eligible foster child – not even your parents.

Beware of applying the definition of “household” income to the income tax. That is clearly another thing on the Democrat’s wish list.