Mar 9 2019

IRS & The Hunt for Taxes Worldwide

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 9, 2019 by Martin Armstrong

COMMENT: Marty…: My respected Australian broker in Sydney, to my horror today, has, for the first time, just asked me to supply the USA Internal Revenue Service with my Tax File Number because of a new requirement in the W8-ben form, otherwise he advises me that I will run the risk that they may withhold 30 percent of my sale proceeds every time I sell my shares. This is completely different to tax being held on dividends paid by stocks that I may hold, which was the previous legislation which may still be applicable.

I present the following reasons why this new requirement is abhorrent:

Firstly it is illegal under Australian Law to disclose ones TFN to third parties let alone foreign governments, even so-called friendly ones like the USA! This is an affront therefore to Australian Law! Secondly if one doesn’t disclose one’s correct number the USA shouldn’t be able to corroborate this information without the collusion and illegal consent of the Australian Tax Office! If the Internal Revenue Service then disputes the correctness of the TFN then this would prove the illegal collusion, I would submit.

Thirdly and most importantly, no sane foreign investor would give his correct TFN to the USA when investing in the USA because he would be putting his head in a noose and asking to be hung for not eventually paying the correct capital gains tax and so when the news of this new requirement is leaked out investment in stocks and other businesses will cease and so will the economy of the USA.

Unfortunately I don’t have a copy of this new W8 form which presumably will have to be filed annually, but you, … should be able to get to the bottom of this very real threat to the USA economy and its previously flexible investment regime, which I submit is about to be ruined, possibly by a minor bureaucrat or more sinisterly by a government functionary, with probable Democrat socialist tendencies who wishes to crush the Trump and Republican’s rule and introduce Communism!!

Meanwhile, I don’t know whether to agree to my broker’s demands or not, so I hope you have enough contacts in the USA to get this extremely offensive deterrent to investing in the USA removed ASAP! A brief receipt of this important message would be appreciated!

Yours Truly,

JN, your client and retired lawyer (LLB.SYD.UNI.)

ANSWER: I suspect that they are either being overly cautious or they believe you are connected to an American someway by birth or marriage. In 2015, the IRS changed the due date from June 30 to April 15, starting with 2016 filings in 2017 concerning foreign assets. In recent years, many taxpayers omitted foreign bank account reports when they should have filed them. Many taxpayers just didn’t realize it. Some had financial interests in family accounts offshore if they were foreign nationals before moving to the USA. Or some taxpayers married a foreign person gaining that financial interest. Others may have international retirement or insurance accounts that they never realized were subject to Foreign Bank Account Reports or FBAR reporting.

The FBAR rule states “a financial interest in, signature authority or other authority over foreign financial accounts.” Traders and executives of hedge funds and other financial institutions and trustees typically have signature authority or other authority over foreign financial accounts triggering FBAR filings for them even though they are not personal accounts. Naturally, the IRS has a very highly complex and nuanced penalty regime in connection with late or incorrect FBAR filings.

Chances are that your broker somehow believes you have some connection that requires a FBAR filing. I attempted to wire a friend about $6,000 in Asia and HSBC refused to put the wire in his account. They stated that they could NOT confirm that I did not have some interest in his personal account. I had to send him a check. I can wire money to a foreign corporation, but I cannot send money to an account of any individual. This is all part of this hunt for taxes which is beyond belief. Every time I return from overseas, the questions are specific (1) my profession for economic profiling, and (2) how much money do you have on you.

Mar 8 2019

Is New York Trying to Take Over Tesla By Removing Elon Musk with the help of the SEC?

Armstrong Economics Blog/Corruption

Re-Posted Mar 8, 2019 by Martin Armstrong

The biggest potential scandal that would take place is the consistent cover-up of the way New York courts have been used to strip any competitor in the financial industry outside of New York so whatever business they created is usurped by New York. The Michael Milkin of Drexel Burnham scandal of insider trading resulted in the destruction of one of the oldest brokerage houses in the nation that was based in Philadelphia which use to be the financial capital of the United States until J.P. Morgan moved it to New York City at the start of the 20th century.

They destroyed the biggest futures broker REFCO which was located in Chicago. It had been Chicago where futures really began for that was the marketplace of commodities. REFCO was charged in New York courts and destroyed. The business was largely absorbed by M.F. Global which went bust and was protected because it was New York. The head of MF Global was former Goldman Sachs who was never prosecuted for his illegal trading. If you are from outside New York, you go to prison and the company is always absorbed by New York. If you are from New York, you walk away like Corzine did untouched. He only paid a fine of $5 million when clients lost hundreds of millions.

Then there was Frank Quattrone of First Boston was an American technology investment banker who started technology sector franchises. He helped bring dozens of technology companies public during the 1990s tech boom, including Netscape, Cisco, and Amazon.com. He too was hauled to New York and charged criminally for a single email that simply read “clean up your files” which New York used as obstruction of justice. The Department of Justice (DOJ) routinely uses the SEC and CFTC to create multiple prosecutions simultaneously using the different rules between Civil and Criminal procedure to make sure nobody wins.

Yet the corruption runs really deep and since it involves the government itself, there is NOBODY who will even investigate. The DOJ, SEC, and CFTC will prosecute anyone they can get their hands on whose business competes with New York or the New York bankers want for themselves. This is why there are only prosecutions of anyone other than a New York banker for they are simply off limits. Oh yes, there was Madoff. But he walked on water until everything failed. The SEC was told many times about his scheme and did nothing because he was a New Yorker. Why? A New York lawyer laughed and said simply that the policy in New York is: “You don’t shit where you eat!” The NY boys effectively bribe government prosecutors by offering them big paying jobs. Anyone else in the private sector has to sign non-competitive agreements. But when it comes to prosecutors, the bankers simply hire the people who would prosecute them so they will walk on water.

The government lawyers are more interested in protecting the main players to get one of those special jobs from the NY boys as a reward for their protection. Many articles have appeared about the “revolving door” at the SEC. The WSJ, Huffington Post, CNBC, all have reported that this “revolving door” prevents enforcement. Firms routinely hire from the SEC and CFTC and that makes them mindful that you cannot bring a case against the big houses or your career is toast. No law firm will hire someone who has prosecuted a major client. This is just how the regulators are kept in check. Back in 2010, they claimed to be investigating this “revolving door” but of course nothing has ever taken place since 2010. These people can destroy the entire world economy with their shenanigans and there is nobody who will ever investigate. This is why no New York banker ever goes to jail.

Jay Clayton was nominated to chair the U.S. Securities and Exchange Commission on January 20, 2017, by President Donald Trump and sworn in on May 4, 2017. Since joining the Commission, Chairman Clayton has focused he claims on the long-term interests of America’s retail investors while protecting his former clients as always. Clayton came from the law firm who represents the New York Bankers – Sullivan & Cromwell. He joined that firm back in 1995 rising to a partner 2001. At Sullivan & Cromwell, he became a member of the firm’s management committee. He advised numerous companies regarding issues related to the SEC, Federal Reserve, Department of Justice, and other agencies including the New York banks. He brought with him Alan Cohen of Goldman Sachs who was in charge of global compliance. In that role, Cohen would have had the final say on the approval of Malaysia, and Greek deals to just mention a few.

There appears to be an all-out assault against Elon Musk that is spreading between agencies. I have written about the SEC who is demanding Musk be removed as a director of Tesla. They did not seek such sanctions EVER against any of the bankers who really did screw up the entire world or caused the global meltdown in 2007. When the five NY banks were finally charged criminally, no individuals were put in jail and the SEC then exempted them from losing their license. Anyone outside of New York is ground into the dust.

Now the Pentagon has joined in and is reviewing his security clearance because of a pot-smoking incident. Whenever you see agencies starting to gang up on one company and individual, there is something going on behind the curtain. Someone in New York has an eye of Musk and clearly want’s him removed as a competitor. Pay attention to this for in the end, the SEC will demand he be removed to destroy Tesla which will then be absorbed by someone with New York connections. You will see! It is always the same game.

Mar 8 2019

Baby Boom to Baby Bust – The Crisis in Socialism

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 8, 2019 by Martin Armstrong

There is a real crisis in the fertility rate which has fallen to such a low level that all the socialism going forward will simply collapse. What used to be the Baby Boom is now being called the “Baby Bust,” which means that in all first-world countries there is a real crisis for they have insufficient children to maintain their population size. This has been one excuse for allowing the refugees into Europe. As the population dwindles, all the social programs are collapsing for they were NEVER designed properly from the outset. They are based on a Ponzi scheme where they rely on taxing a growing younger population to service the benefits of the older generation. This was the entire scheme behind Obamacare. Force the youth to buy insurance they do not need to reduce the cost for the elderly.

These findings were a huge surprise to those in government. They did not think it was even possible. The joke is that we will have more grandparents than grandchildren. A study published in the Lancet followed trends in every country from 1950 to 2017. During 1950, women were having an average of 4.7 children in their lifetime. The fertility rate all but halved to 2.4 children per woman by last year. They compared countries in Africa, such as Niger, where the fertility rate was 7:1 compared to countries like Cyprus where couples had just one child meaning that would be a 50% decline in population.

Even in Britain, the fertility rate has dropped to 1.7, which is similar to most Western European countries. Anything below 2 children per couple means a net population decline. This data clearly warns that the Ponzi scheme set up first in the New Deal of the Great Depression is no longer sustainable. The cost of childcare has skyrocketed and the rise in taxation has forced women to work, making childcare mandatory, but not affordable for 2 or more children. This creates an unsustainable future for taxation.

Mar 7 2019

Socrates’ Forecasts Are Already Identifying the Approach of a New Business Cycle

Armstrong Economics Blog/Understanding Cycles

Posted Mar 7, 2019 by Martin Armstrong

The Socrates’ Array on Vancouver real estate published back in 2015 picked the high in 2017 and the crash into 2019. The high in the top line was forecasting 2017 rather nicely. Note that things begin to change in 2020-2021. Not that prices in real terms rise, but this is lining up with the ECM turn in January 2020 and the start of a new business cycle. This next one will be more dominated by the decline in confidence in government and the rise of political tension that will be worldwide from separatist movements to the fracture of political parties.

No matter where we look, markets are beginning to reflect a new business cycle is approaching. While this will be one of the focuses at the upcoming Rome WEC May 3rd/4th, the shift in global trends is really amazing. We will also be providing a training session on Channel Moves, which in themselves, is rather rare.

Mar 7 2019

Modern Monetary Theory v Central Bankers

Armstrong Economics Blog/Central Banks

Re-Posted Mar 7, 2019 by Martin Armstrong

QUESTION: Hi Mr. Armstrong et al: Read your blogs daily with great interest & recommend them to all my friends. You’ve absolutely changed my perspective on so many issues. There is a contradictory theme that I & my friends can’t figure out – hope you could respond.

You have an obvious animus with Mr. E Griffin & his “Creature” book.
It’s our observation that both you & Mr. Griffin arrive at more or less the same destination-political chaos & possible currency disruption, as a result of politicians stupidity & short term thinking. You both just take different routes to arrive at similar conclusions.

The RESULTS of this stupidity are more important to all of us little people than the REASONS for all this impending upheaval. Could you respond? It’s quite a conundrum to my group.

Thanks for all you do.

ANSWER: That book all focuses on the elastic creation of money and puts all the blame on the Fed and bankers. I understand that central banks have been demonized and the great conspiracy centers around their ability to create money. Creating money is not really the issue for the amount they have created is peanuts compared to the continued debt created by politicians. Congress just created $1 trillion-plus in December 2015 and nobody noticed.

You now have people proposing the Modern Monetary Theory (MMT or Modern Money Theory) because they have witnessed central banks increasing the money supply post-2007 and have been unable to create inflation. They then use this as evidence that the government can just create money at will and it does not lead to hyperinflation.

The approach of MMT typically seen as an evolution of Chartalism and is sometimes referred to as Neo-Chartalism. They argue that in sovereign financial systems, banks can create money but these “horizontal” transactions that do not increase net financial assets as assets are offset by liabilities. Therefore, they argue that the balance sheet of the government does not include any domestic monetary instrument on its asset side. In MMT, “vertical” money enters the economy through government spending. Since money is legal tender meaning the government accepts it for taxes, this creates the demand for currency. You need the paper dollars to pay the government its pound of flesh.

At the state and local level, we also have fines, fees, and licenses that all combine to also create demand for the currency. This can be a currency issued by the domestic government. Because the government can issue its own currency at will, under MMT it is argued that the level of taxation relative to government spending is, in reality, a policy tool that regulates inflation. Therefore, under MMT, the dreams of Bernie Sanders making everything free becomes possible. Of course, this all ignores the question of control and public confidence.

We need central banks as a clearing mechanism and to maintain reserves of member banks. The problem is that central banks are not all created the same. Jackson destroyed the Bank of the United States, which did not engage in quantitative easing and had no such power to create elastic money. They simply lent money to Jackson’s opponents. The destruction of the central bank resulted in the Panic of 1837 and the sovereign defaults of the states during the 1840s that occurred after the states had issued debt in an attempt to bailout state banks that went nuts without a central bank to control anything.

You ended up with banks creating their own money and they would print notes and sell them at a discount to brokers in New York to circulate notes of banks nobody heard of. The wholesale creation of money did not work well when the government began to refuse to accept these notes for taxes and the sale of land. Once that took place, the value of money collapsed and nobody would accept it. The government refused to accept it because it had already declined in purchasing value.

That book focuses on the central bank and ignores everything else. It is distorting the reality just as MMT is misleading people into thinking they can just print their way out of this mess. The fiscal side of the balance sheet has a national debt that is over $20 trillion and that really just cash that pays interest. Stop worrying about the Fed and look at the entire picture.

Categories: Central Banks

Mar 6 2019

World Economy – Which End is Up?

Armstrong Economics Blog/Central Banks

Re-Posted Mar 6, 2019 by Martin Armstrong

QUESTION: Hey Martin
First of all, great work with the new Socrates. Thank you very much for getting it to us.

You have said that rates are exploding with fed raising rates for the pension funds and because of the lost confidence in government, at least here in Europe.
Am I correct when I take what you have said, as European, to invest in short term US government paper, short term US corporate paper?
That way I won’t get much yield but I get to benefit from the currency also?
Isn’t floating rate paper also good in times like this?

I also get that there is no other place, so the Dow will go up so I want some exposure to that also?
The commodities are bottoming in 2020 so I want to get some exposure to them also?
But how about real estate?

We as small investors don’t have any other choice but REITs, especially apartment REITs and you have talked against them, saying that they are volatile. So is it best to AVOID REITs and that way real estate all together?
Even if it is a hard asset and a inflation hedge? Also as a European it would not hurt to have some USD income?

With the taxes going up and socialists getting in to power all over I guess it is better to invest in accumulating funds instead of distributing ones?
If you could please find the time to comment on this. I know that there are lots of people asking the same questions as I am.

ANSWER: We are all connected. There is no possible way for any country to move counter-trend to the whole. The European Central Bank and the Bank of Japan have destroyed their bond markets. Their stupid idea of Quantitative Easing and lowering rates to zero and negative was under their theory that people would borrow if it was cheap enough. Over the years, I have received calls from banks asking me if I wanted to borrow money. They call because we run high cash balances and have no debt. They always want to lend money to people who do not need it, but that then begs the question, what would I do with it anyway? If you have nothing in mind you want to buy then you are not interested in borrowing. Yes, there are margin loans for investors in shares. But I am talking about borrowing to expand or buy some business. That is what the Central Banks failed to grasp. If there is no CONFIDENCE in the future, you will not borrow at any rate.

The Bank of Japan could simply agree to tear up its federal bonds. That would impact its balance sheet whereas Japanese bonds are not really held outside the country. The ECB, on the other hand, has no such option for the debt it holds is of individual member states since there was never any consolidation of the debt federally. As far as the US Federal Reserve, its holding of federal debt is under 20% of the $22 trillion and 30% of the debt is held by foreign governments with 28% held by interagency. The US could not be saved if the Fed tore up its bonds. It is not enough.

The pension funds are also linked to government debt. Defaulting on government debt would wipe out all pension funds. The interconnectivity is not considered by so many who summarily assume we can just tear it all up.

Rates will rise to start 2020/2021 as the general public begins to see there is trouble in the wind. The Bank of Japan and the ECB have already destroyed their bond markets and there will be no going back. There will be no buyers when they need them. This is why you need to stay short-term as a buyer of debt and if you are a borrower, then lock it in for as long as you can at a fixed rate.

This is a cycle where governments are collapsing. Clearly, stay in the private sector. Blue-Chip corporate debt SHORT-TERM is better than a government. Even during the Great Depression, AAA corporate debt appreciated. The spread above US Treasury dropped from about 1.3% to 0.5% and the US was the safe haven back then as well. It was Europe which defaulted along with South America and Asia.

Real Estate is not a movable asset so it can be taxed and you cannot leave. They will raise taxes dramatically trying to survive. But governments cannot avoid their collapse for nobody is willing to step up and take decisions for the long-term.

Equities are liquid. This is going to be a game between value and liquidity. Remember! The City of Detroit suspended all debt in 1937. They resumed and paid it off with cheaper dollars in 1963. So they claim they never defaulted. Liquidity is also a top priorit

Mar 5 2019

Government Corruption in Municipalities is Off The Charts

Armstrong Economics Blog/Corruption

Re-Posted Mar 5, 2019 by Martin Armstrong

One of the secret tools government pulls is to deny the people the right to vote on key issues they want that are often cloaked in backroom deals. Seattle is a great example of how the local government pulls every trick in the book to hide the truth about what they are really up to. The Seattle Mayor has been caught outright hiding the details of a proposal to allow homeless people to take over public parking lots.

Meanwhile in Illinois, one politician wants all politicians to wear body cameras so people will see the backroom negotiations that are filling the swamp. While this proposal sounds like a good idea, there is nothing to stop them from meeting on personal time to take the under-the-table bribes. Even in Florida, a town on the shore suddenly found politicians voting for a major hotel when the people never wanted it. The political chaos and hints of corruption have filled the air that politicians were just paid off to vote against the people in Madeira Beach.

Trying to prove corruption and bribes is difficult. Government knows how to protect itself very well. This merely begs the question, how much longer will the people put up with this treatment? It is starting to look as if 2021 may be the spark that really ignites a major shift in trend following the US Presidential Election in 2020.

Mar 5 2019

Britain & Labour’s Proposal for a Permanent Customs Union

Armstrong Economics Blog/BRITAIN

Re-Posted Mar 5, 2019 by Martin Armstrong

The leader of the British Labour Party, Jeremy Corbyn, is desperately trying to prevent the Labour Party from fracturing and splitting into two parties. Most Labour Party members want a second referendum in the hope that the people would vote to Remain this time around. Many Labour members remain under the impression that the policy agreed at a conference last year was that the party would support a second referendum if it could not force a general election. However, that policy maintained that as “a public vote” was one of the options that had to remain on the table.

Instead of moving that option to the forefront, Corbyn has abandoned that posture and asked for a permanent customs union – one “that includes a UK say on future EU trade deals.” This means that Labour is proposing a new permanent customs union with the European Union (EU) after Brexit which would allow the UK “a say” in future trade deals. Britain never wins any trade deal anyway and it has witnessed nothing but a declining economic trend ever since it joined the EU.

Anyone who would bother to look at trade would immediately see that the EU needs the UK. The biggest market for Germany to sell cars is the UK since it maintains the old-world mercantilist economic model. That means that the UK has a better consumer market that supports Europe – not the other way around. Belgium and the Netherlands have a higher per capita income compared to Britain which is significantly higher than that of Germany. Remaining in the customs union would be a disaster. The UK could not negotiate its own deal with the USA for France would be able to veto it from the start.

Mar 4 2019

Were There Government Defaults in Canada During the Great Depression?

Armstrong Economics Blog/Uncategorized

Re-Posted Mar 4, 2019 by Martin Armstrong

QUESTION: You always mention how there were defaults and suspension of debt during the Great Depression by states and municipals. Was this also true in Canada?

JRT

ANSWER: Oh, yes. Whenever commodities have collapsed, Alberta finds itself in trouble. Central banks look to the national market and not to the regional sectors.

Mar 3 2019

California to Tax Anything & Everything They Can Think Of

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 3, 2019 by Martin Armstrong

COMMENT: Marty,

You have to help us out here. California tried to tax text messages. The feds stopped that.

Now, LA county wants to tax Uber and lyft. They’re already taxing us, I think, for mosquito control. The mosquito control only hands out info too. It does no real work.

This is crazy. Everywhere in California, they’re trying to shake us out of every cent. Is there anything we can do to stop this?

REPLY: Sorry. This is how governments commit suicide. Instead of dealing with the problem and looking at this from the long-term view, all they care about is what is in front of their nose. The attitude is to just raise some tax to meet the next expenditure. They do not look at this and where it ends up. Historically, if Rome had taxed people at 50%, it would have never lasted 1,000 years.

There is no hope in sight. The people are complacent and until they realize that all of these taxes are reducing their standard of living, then and only then will change unfold in the form of massive civil unrest, overthrowing governments, and the end of career politicians. Tax rebellions have been the source of revolution since the 14th century. Governments never learn. They always have to oppress people to expand their own greed and power.

Politicians keep blaming the rich. But no matter what they force the rich to pay, politicians will spend more. Their own pension systems where their state employees never contributed anything are collapsing. There is no possible way to prevent this economic disaster at the state/province and municipal levels. They cannot create money as the federal level can so all they can do is tax people into poverty.

So enjoy life while you can. Governments only look at the immediate future and never tomorrow. Hence, they are doing their best to ensure the decline and fall of everything thanks to their complete mismanagement and self-interest. Representative governments have never worked for once you have career politicians, they will never place the interests of the people before their own.

Centinel2012

De Oppresso Liber

Tag Archives: Panics

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 9, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Corruption

Re-Posted Mar 8, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 8, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Understanding Cycles

Posted Mar 7, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Central Banks

Re-Posted Mar 7, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Central Banks

Re-Posted Mar 6, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Corruption

Re-Posted Mar 5, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/BRITAIN

Re-Posted Mar 5, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/Uncategorized

Re-Posted Mar 4, 2019 by Martin Armstrong

Share this:

Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Mar 3, 2019 by Martin Armstrong

Share this: