Taxes have begun to cross the point of no return in New York City. New York City is losing its middle class faster than at any time since the Great Depression. While the rich get richer from investments and the poor get richer from increased social benefits, the loser is always the middle class.
The latest US Census data reveals that NYC is losing 100 residents each and every day as people are simply fleeing in search of a better quality of life where the local governments are less oppressive.
What is beyond reason is normally the price of anything declines if you buy it in quantity. Corruption in government works in reverse. The taxes you pay in cities are always higher than in the suburbs where you would think you should be paying less because there are more people contributing. Governments just defy logic.
As the middle-class leave, everyone else will suffer. The rich get richer from investments which are generally are tax-free until you sell them, except in real estate. The poor get the benefits so they do not contribute. It is the average worker who pays payroll taxes who the governments can count on until now. The tax-increases have been relentless, the ever-rising living costs accelerated by real estate taxes and insane healthcare increases every year, and wage reductions as technological advances help replace workers without pensions and healthcare costs. The middle-class who have any brains left are looking for greener pastures. just to survive. The Democrats always promise the world and will raise taxes on the rich, but that never seems to lower taxes for the middle-class. Taxing the rich only enriches the politicians.
The rich can move their investments to more favorable jurisdictions, but the wage earner cannot transport their labor to a more friendly environment without moving themselves. The poor do not have to leave as long as the benefits keep coming. But sooner or later, the house of cards collapses for all that will be left are government employees and those demanding benefits
The commentary that has appeared in Forbes calls for the only solution is to outlaw pensions. This is actually what will happen. Because there is no resolution, the government pensions will demand to raise taxes and then there is never any reform in government so the end game is one major economic confrontation – the people v government. They really cannot grasp that the crisis is profound. For every person who retires, the government hires a replacement. The cost of government explodes exponentially. The system is doomed and this is what is going to rise up into civil unrest.
Federal governments can create money but state/provincial and local government can only raise taxes. In Germany, the lessor governments are petitioning the federal government for a bailout since already 40% are effectively broke. It is this desperate letter we received from California trying to claim we must pay taxes simply because Amazon may store some reports or DVDs in their California warehouse. If you buy something from Amazon, they send it to you and collect whatever tax. They remit the tax and we do not mail the products nor receiver the taxes collected. We would have no idea what tax would be owed to California. Obviously, we have no choice but to inform Amazon to remove all our products from California. If everyone is compelled to do the same, then there go those jobs in their California warehouse.
There is no rational reasoning with these people. They will simply destroy the economy because they are greedy and beyond hope. What will happen is drastic. Do companies not residing in California simply refuse to do business with anyone from California? Already we cannot send printed reports or books to Australia. Amazon refuses to deal with Australia because of taxes and our Australian clients can only get downloads. Eventually, Australia will impose internet taxes and that will only isolate Australia.
According to GOBankingRates, to afford a house now in California it requires $89,280 annual salary. This is the highest in the nation and is a warning that taxes are pushing the limit in California to the point that house will enter a very sharp decline as people keep trying to leave. This chart is interactive and you can click of each state to look at what is required. An interesting exercise. The cheapest state is Ohio where you need an annual salary of 28,800 to survive.
France is now preparing to use chemical weaponsagainst its own citizens around Paris to counter-attack the Yellow Vest rioters as their anti-Macron protests continue after 5 weeks. This chemical is a debilitating powder that can be spread over an entire area of the size of six football fields in ten seconds. So far, the police have arrest well over 150 people and they have used both tear gas and water cannons. President Emmanuel Macron’s administration is showing its increasing desperation to maintain power. The use of such chemical weapons could backfire dramatically.
France is the highest taxed population in the industrialized world. We are receiver numerous accounts from readers there from cities outside of Paris where there are major protests and violence taking place that people have been unable to leave their homes while others report they cannot reach them. It appears that much of the protests outside of Paris are not being reported in mainstream media. This type of media blackout has been standard in hopes of preventing others from joining.
There was a major protest in 1932 known as the Bonus Army were veterans from World War I had demanded the bonus the government promised them. They occupied Washington and then President Herbert Hoover allowed the army to roll in tanks to get rid of the protesters. That even played a major part in Hoover losing the election to FDR. Macron between study his history. There is serious potential here that we are witnessing a major political change coming to France.
QUESTION: Hello,
Since the Fed ‘created’ ‘money’ after 2008 that was then deposited back at the Fed by the recipient banks ( say,75% of it), it is not easy to see why the Fed is to blame for the credit explosion since 2008- nor for the very slow ( like a paralytic centipede) hike in Fed Funds that seems already as I write to be seen as a problem.
Surely it is the banks who truly created the money ( out of nothing as usual) by financing the purchase of EXISTING assets at ever-rising prices (and also consumer spending) rather than new business expansion?
In other words, the fault is at the bottom to be laid at the door of the banks. They created the wrong kind of credit bubble ( not that any such is ever a good idea).
What say you, Sir?
Many thanks
B.
ANSWER: There is a deeper problem that nobody addresses. The entire Keynesian philosophy of increasing the money supply was based upon the practice whereby private money was being created during each crash since 1857. It worked perfectly. Here is a Depression Scrip for $1 to supplement the money supply during a crisis. There was nothing wrong with this concept.
The original design of the Federal Reserve in 1913 was PERFECT!!!!!! It “stimulated” by purchasing corporate short-term paper which created an elastic money supply. The paper naturally matured and thus the money supply contracted. When Congress usurped the Fed in World War I and ordered it to buy only government bonds to fund the war, they NEVER returned the Fed to its original design.
Changing the structure of the Federal Reserve has altered everything. Now the Fed “stimulates” buying government debt EXCLUSIVELY! It buys in that debt it THINKS from the banks, but foreign governments were selling it to them as well – particularly China. Therefore, the money NEVER made it directly into the economy. The banks complained to the Fed so it then created excess reserves DEFEATING the very Quantitative Easing.
Therefore, the structural alteration of the Federal Reserve for World War I transformed the theory of Quantitative Easing into an INDIRECT stimulus rather than DIRECT. They “hoped” the banks would lend but NEVER did. Interest rates did not decline on credit cards and consumer loans in proportion to what the Fed was doing. The entire stimulation theory fails BECAUSE the Fed does not act directly with the economy and relies on the banks.
I have been warning that raising taxes is DEFLATIONARY because you are reducing the net disposable income. Governments simply cannot get that through their head. In Romania where protests over political corruption have been unfolding, the government revealed its plan to try to comply with EU austerity raising they hope 10 billion lei ($2.5 billion US) in extra revenue. The market response has been a dramatic crash in Romanian stocks as they plunged and bond yields spiked the greatest in the past several years.
This is where the austerity is destroying the European economy. Romania is attempting to reduce its budget deficit that is pushing the country beyond critical EU thresholds. This new tax will include a tax on the banking industry. This is having an immediate knee-jerk reaction where foreign investors are bailing out. Using global warming as an excuse as in France, new taxes on energy and telecommunications companies are included. The government is also reducing social benefits in the retirement system also due to the pension crisis which is worldwide.
This is all part of a Global Contagion is the COLLAPSE in Confidence we see into January/February 2019.
I sat down with Dr. Bill Warner to discuss the Crusades vs. Islamic Jihad, his definition of Political Islam, and why criticizing and informing on Islam is nowadays labeled as bigotry. I really enjoyed the talk. Hope you enjoy it, too. 🙂 Patreon: https://www.patreon.com/apostateprophet Paypal: https://www.paypal.me/apostateprophet
The European refugee issue just will not go away no matter how hard the politicians try to cover-up their mistakes. Now Charles Michel, the Belgian Prime Minister, resigned on Tuesday after his government collapsed in the face of opposition to his signing of a UN migration pact. Michel found himself abandoned after he lost the support of the Flemish nationalist party in his coalition. The opposition fears that this UN migration agreement would open the door to even greater migration. There will have to be a snap election in January. Otherwise, the next Belgium election is due in May.
QUESTION: Mr. Armstrong: I have watched in amazement how you connect all these elements. Everyone I spoke to agreed this was your best WEC ever. You have said the Fed needed to raise rates because of the pension crisis and it would have nothing to do with inflation but it has to normalize rates to help pensions. Then we have the ECB refusing to raise rates. Would you please comment on the Fed’s actions yesterday? Is this a central bank war?
OM
ANSWER: I understand this can get confusing because there are so many people who talk without any real-world experience. The Fed MUST raise rates to help the crisis in Pension funds. It raised the Fed Funds Rate (what banks charge each other) 25 basis points to 2.25-2.5%. While the Fed indicated there would be two more rate hikes in 2019, what has gone over everyone’s head is exactly what I have been warning about. We are witnessing indeed not a Currency War that people claim over trade since I do not see any actual counter-trend manipulation attempts as was the case with the G5 back in 1987.
This is a brand new Central Bank War that nobody seems to get I suppose since I may be the only person who actually speaks to central banks outside the USA. All the various central banks and the IMF have been lobbying the Federal Reserve since 2014 pleading with it NOT to raise rates. I have stated many times that the rate hikes by the Fed have NOTHING to do with economic growth, inflation, or trying to stop a speculative bubble in stocks.
The lobbying behind the curtain against the Fed raising rates has been very intense. What is most interesting is that BECAUSE of what the New York boys did to me, outside the country it has been a badge of honor and a CONFIRMATION that I am NOT one of them and am independent. Hence, I meet with central banks outside the USA because I am someone who knows the real game behind the curtain, have 30+ years of real-world experience, and work internationally. That has made me fill a rather unique role with a front row seat to the world. I have written before: “The talk behind the curtain remains that the Fed is still under pressure to PLEASE don’t raise rates. The lobbying continues from the IMF, ECB, and Emerging Markets.” (see Aug 2, 2018, Post).
I cannot say this any stronger! The Fed is dealing with reality. It MUST raise rates, not for the economy but in order to NORMALIZE interest rates because lowering rates makes it cheaper ONLYfor borrowers while it destroys the philosophy of saving for your retirement when you cannot earn enough interest to buy a nice dinner. Then pension funds are going belly-up like the fish in a polluted pond. State pension funds then turn to their respective governments who then raise taxes lowering the standard of living (i.e. California & Illinois). The ECB is trapped and I have warned that it is the ONLY central bank that can actually go bankrupt because all central banks do not have the same structure. I have made it clear that by their very own standards, the ECB itself is insolvent.
At the end of 2017 in the USA, total household debt exceeded $13 trillion. Total non-financial business debt stood at $6.1 trillion at the end of 2017. The Fed’s balance sheet was $4.4 trillion of which $2.4 is US Treasuries – the bulk of the rest is simply excess reserves. The national debt stood at $20.5 trillion at the end of 2017. That meant the actual Quantitative Easing was not $4.4 trillion, but $2.4 or about 10% of annual GDP compared to Europe at 20% and Japan over 100%. If we look at this perspective, this means the money supply is $41.6 trillion just using the debt. If we then add M2 (all accounts & money market accounts) which stood at $13.8 trillion at the end of 2017, this brings us to a liquid money supply of $55.4 trillion. The Fed’s balance sheet does not even reach 10% of that figure and the QE portion is less than 5%. Now, do you understand why the goldbugs were dead wrong on hyperinflation?
Now let us add the stock market, which is liquid. That reached $30 trillion by the end of 2017. Therefore, the liquid assets/cash position stood at $85.4 trillion at the end of 2017. Now let us add total personal real estate (homes) in the United States which stood at $31.8 trillion. If we include illiquid real estate, now we are up to $117.2 trillion. We are NOWHERE near possible hyperinflation!
I will state this ONCE AGAIN!!!!!!!!
Poster in London
Raising rates is NECESSARY for the Fed also realizes that come the next economic recession, the only tool they have is to lower rates. They do NOT share this theory running around that full employment will only take place with NEGATIVE rates at -4% to -5%. The ECB is looking at that BECAUSE they cannot raise rates. Why do you think the IMF is now telling everyone to adopt cryptocurrency? That way they end hoarding and can ENFORCE negative rates. Where politicians in Australia have called for the removal of the $100 bill claims cash is for criminals, the Reserve Bank of Australia (central bank) has defended the embattled $100 note arguing that criminals prefer $50.
Trump wanted the wall with Mexico to stop the drug trade. The Democrats call him a racist for that, but they advocate eliminating the $100 bill as well. Lawrence Summers, a former economic adviser to President Obama and ex-Treasury secretary, say get rid of the $50 bill as well. They argue cash is for criminal in the drug trade, but then call Trump a racist for wanting a wall. Summers is spouting out pure propaganda since he admits that getting rid of the $100 bill, or even the $50, won’t eliminate crime and corruption, but would make it harder for criminals to launder money. I am no fan of Larry Summers. I believe he is a very serious danger to the world economy. He was a primary architect of the modern U.S. financial system that collapsed in 2008 and was among the first to advocate negative interest rates. Summers second in line in the U.S. Treasury in the 1990s under President Clinton and Treasury Secretary Robert Rubin. He advocated the repeal of Glass-Steagall and appears in the photo when Clinton signed that act (on the left).
He was also there arguing the creation of “too big to fail” theory to support wholesale bailouts without any criminal prosecution for frauds. He fought against the regulation of derivatives which later played a key role in the financial crisis orchestrated by Goldman Sachs. He became Secretary of the Treasury under Clinton 1999-2001 when Rubin left after fulfilling his reason to leave Goldman Sachs – the repeal of Glass Steagal. Summers then held the position as President of Harvard 2001-2006 during the administration of George W. Bush seriously calling into question the worth of a degree in economics from Harvard. Allegedly, Summers left Harvard after a no-confidence vote by the staff following the loss of some $1.8 billion in Harvard endowment funds to a derivatives deal gone bad reported by Reuters. After that fiasco, Summers became the Director of President Obama’s Nation Economic Council. So after that loss at Harvard, he is qualified for the White House to advise on economic policy from 2008-2010 and played a key role in bailing out the U.S. banking system.
Larry Summers is the guy who publicly admitted he cannot forecast the economy because it is too complicated for academics. Summers is also the architect of negative interest rates. He has stated that the natural interest rate remains BELOW zero even with the QE measures sterilizing any action of the Fed. Reducing short-term interest rates is the Fed’s greatest power according to Summers under Monetarism to bring about full employment during recessions. However, the Fed has been hamstrung by this zero-lower boundary resulting in a weaker recovery thus far. Consequently, Summer sees the larger problem is that this is not a short-term issue but systemic. He argues that should another recession hit right now, the Fed will be impudent. This is what Summers warned of in his speech at the IMF.
“Imagine a situation where natural and equilibrium interest rates have fallen significantly below zero,” Summers said. “Then conventional macroeconomic thinking leaves us in a very serious problem because we all seem to agree that whereas you can keep the federal funds rate at a low level forever, it’s much harder to do extraordinary measures beyond that forever, but the underlying problem may be there forever.”
Summer is the man behind the curtain wanting to eliminate cash and making money national cryptocurrencies to ENFORCE negative rates. If you eliminate paper money, you eliminate bank runs. You eliminate hoarding of money (cash) and that would allow Summers to enforce a -5% interest rate stealing your money which would enrich the banks on top of the taxes you pay to the government. I am not alone in my criticisms of Summers (see Atlantic) where may see him as unyielding, unrepentant, and arrogant. He was the there at the Treasury when Clinton eliminated the right to file bankruptcy on student loans.
It was the Clinton Administration that aided the bankers for on October 7, 1998, when President Clinton signed theHigher Education Amendmentsof 1998 (the 1998 HEA), which provided federal funding for education loans at a reduced rate of interest. However, Clinton sneaked in the 1998 HEA two specific changes regarding the collection of student loans that is a brewing part of the Sovereign Debt Crisis today for students cannot discharge student loans in bankruptcy and 65% cannot find a job in what they paid for. This has funded WORTHLESS education at outrageous prices creating a welfare system for academics to propagate stuff like global warming to screw us with even more taxes, and then bankers can lend money to students and turn them into economic slaves for life. Then in 2014, Summers admitted that student debt was slowing the housing recovery and the broader economic recovery. Student loans are preventing graduates from buying a home because of their debt position which will take decades to pay off at 7%+ interest rates. This man is EXTREMELYdangerous to all our liberties.
People ask me why I do not go into politics or take a political position to make a difference. First of all, I can make a living myself and do not need to rip off the country. Then there is the problem that I have real-world experience and do not come from the academic side with only theory. I actually advised under contract on portfolios that amounted to 50% of the US national debt (see testimony before Congress). I have experience which is not really a requirement these days in Washington. Plus I would lose my independence which is something I really cherish. One person cannot change the system. Look at Trump. The entire establishment is out to get him. Vogue Magazine even hates his wife – which is really a first. Every major media is marching in tune to drive Trump from office. There were 67 countries represented at the WEC event this year in Orlando. The press would spin that as I am advising people against the United States. They would turn my international experience into treason today.
It really is very astonishing how brain-dead politicians are. The latest stats are showing that residents are increasingly fleeing New York, Los Angeles, and Chicago. The perpetually rising taxes are just getting insane. We just received this notice ourselves about taxes due in California. Apparently, they must have subpoenaed Amazon to see who has merchandise they are storing in California. First of all, we have no idea where Amazon stores what it sells of our products or to whom. You pay Amazon – not us. To claim that since Amazon is storing something of ours in California means we are now doing business in California is completely nuts. They collect the taxes and ship whatever someone purchases – not us!
If every state acts in this manner, quite honestly it is time to just close the doors. What is next? They will want income taxes on anything we sell in California on a per item basis? The accounting will cost more than the tax we collect or have to pay.
This is a sure fire way to destroy the economy all because those in governments are incapable of managing even a bubblegum machine. The hunt for taxes will destroy everything.
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This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
Centinel2012 