The IMF Talks About The Big C

Recent events have made it very clear that America is incapable of making the necessary reforms to avoid its looming debt/currency crisis. Avoiding making the tough reforms now will only make the reforms  more severe when they are forced upon the nation and the world in the not-too-distant future. These severe reforms will involve a lot of pain to the vast majority of Americans and citizens throughout the world who will be forced to partake in them because they are unaware of what is going on and as a result have not prepared for what is coming. Wealth confiscation will be one of the required reforms or tools to deal with this crisis.

The ground is being prepared by various governments and the IMF--the epitome of free markets supporters, said sarcastically -- for wealth confiscation in America and in the rest of the world. In America, wealth was confiscated during the Great Depression and recently there has been talk and preparation for confiscating retirement accounts and laying the foundation for bail-ins; and in the rest of the world you have plenty of recent examples of wealth confiscation in Argentina, Cyprus, and Poland. Additionally, you have a plethora of examples in history where bankrupt governments have confiscated the wealth of their citizens.


The IMF is aware of the economic situation the world finds itself in and the inevitable need for wealth confiscation and massive tax increases. As Forbes magazine points out, the IMF recently:

The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets. 

The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”— a one-off tax on private wealth—as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). … The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away. … The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth. (page 49)

You can read the report here. At pg. 40 the IMF laments the fact that wealth is mobile and then it talks about the need to tax wealth differently according to how mobile it is: 

The modern history of recurrent wealth taxes, however, is not encouraging. Relief and exemptions—for land, for instance, and family-owned businesses—creep in, creating avoidance opportunities, as do ferociously complex aspects of the legalities (in dealing with trusts, for instance). Financial wealth is mobile, and so, ultimately, are people—generating tax competition that largely explains the erosion of these taxes. There may be a case for taxing different forms of wealth differently according to their mobility—meaning a higher rate on nonfinancial wealth (largely real estate) than financial. In fact, it appears that both forms of wealth are quite large (Figure 23) and, perhaps surprisingly, that nonfinancial assets are very important for the very wealthy (Table 13). Substantial progress likely requires enhanced international cooperation to make it harder for the very well-off to evade taxation by placing funds elsewhere and simply failing to report as their own tax authorities in principle require"  pg. 40

The report is revealing and provides a glimpse of what to expect in the not-too-distant future. What does this mean for you? If you don't educate yourself and plan accordingly, you can expect to loose a significant portion of your savings, retirement, and other assets through direct confiscation and/or indirect confiscation through currency debasement and inflation. History provides a detailed map of what to expect regarding wealth confiscation. The writing in on the wall. 

A Federal Europe By The Back Door

Here is clip in honor of the late Margaret Thatcher who warned against the Euro.

And here is a clip of Nigel Farage speaking the truth about the European Union and discussing the recent wealth confiscation of the people of Cyprus. (This is a portent of what will happen in the next economic crisis here and around the world.)

The current economic crisis in the EU was predicted by some of the finance ministers of the various European nations that signed up for the Euro. They had wanted to create a political and economic union that would have created a united states of Europe. They couldn't get the political union by consent of the European people, so they settled for an unsustainable economic union that would force the political union on the people of Europe through an economic crisis:

  "On 1 January 1999, with the introduction of the an important part of national sovereignty, to wit monetary sovereignty, was passed over to a European institution...The introduction of a common currency is not primarily an economic, but rather a sovereign and thus eminently political act...political union must be our lodestar from now on: it is the logical follow-on from Economic and Monetary Union,” then German foreign minister Joschka Fischer told European Union lawmakers just days after the introduction of the euro in 1999.
Fischer was not alone, with many of the founding members of the euro zone making it clear that the single currency was significant as a stepping stone to political union.

"The single currency is the greatest abandonment of sovereignty since the foundation of the European Community...it is a decision of an essentially political nature. We need this United Europe...we must never forget that the euro is an instrument for this project” said Felipe Gonzalez, then Spanish prime minister. Even those who opposed the idea and refused to join agreed that the euro had little to do with economics.

"A single currency is about the politics of Europe. It is about a Federal Europe by the back door,” John Major, the former U.K. prime minister, said two years before the euro was born and six months before being routed at the polls by Tony Blair.

Historian Niall Ferguson wrote in this weekend’s Sunday Times that the euro’s founding fathers were well aware that the introduction of the euro would lead us to a crisis very like this one. [Emphasis is mine.]

Vladimir Bukovsky states that the European union is the new Soviet Union:

The European Union is template for the coming world government that will be forced upon the people of the world in the coming economic crisis.

The Fed Is Helping To Bailout Europe

I came across this article describing how the the Federal Reserve is helping to bailout Europe and what this is resulting in:

On Tuesday, March 26, 2012, I was invited by Ron Paul and his staff to assist a meeting of the Domestic Monetary Policy and Technology Subcommittee of the House Committee on Financial Services.[...]

The hearing dealt mainly with the Fed's currency swap with the ECB, which amounts to a covert bailout of European banks.[...]

During the financial crisis between 2007 and 2009, the Fed had bailed out European banks mainly through direct loans to subsidiaries in the United States. In order to conceal the bailouts, the Fed now uses mainly currency swaps. In the swap, the Fed sells dollars to the ECB and buys them back later at the same price, receiving interests. This construction resembles a dollar loan to the ECB at about 0.6 percent (0.5 percent above the federal-funds rate). The ECB can then use these dollars to lend them to troubled European banks. At the hearing the Fed officials did not deny the obvious: the bailout of European banks by the Fed. Rather, they claimed that the bailout was basically a free lunch for US taxpayers, as they would get an almost-risk-free benefit in the form of the interest on the swap.[...]

Let's have a look at these startling arguments. First, there ain't no such a thing as a free lunch; not even for the Fed, the ultimate money producer.[...] One cost of the swap operation acknowledged by the officials in the hearing is the moral hazard created. Banks and governments worldwide may expect that the Fed will come to save them, too, especially if they are well connected with the US financial system. So why be prudent?

The article then goes on to point out what bailing out bankrupt welfare nations through the IMF and the Federal Reserve is resulting:

The highest cost of the swaps, though, may be something else. Through the swaps, the Fed is helping the ECB to bail out European banks that finance insolvent and irresponsible governments. The Fed is indirectly bailing out countries like Greece, Portugal, and Spain, debasing the dollar. Thanks to the bailouts, the political project of the euro continues. Without the swaps, some European banks might have failed, and with them their sovereigns. Thanks to the swaps, the eurozone stays intact.

The project of the euro leads to an ever-increasing rescue fund, and gradually toward a fiscal union and more centralization. A European financial government and the European super state, which would most likely abolish tax competition in Europe, are on the horizon. The highest cost of the Fed policy, therefore, may be liberty in Europe.[...]

Finally, the Fed claims to be prudent. But how can the Fed know the point at which it is no longer prudent to bail out foreign banks? How can it know when the costs of the bailouts start to exceed the benefits to the US public? How can they know what is best for the United States? Interpersonal-utility comparisons are arbitrary. Thanks to the bailouts, some banks may win, some stock owners may win, but at the cost of liberty in Europe and to the detriment of dollar users. Moreover, bailouts produce moral hazards, crises, and losses for individuals in the future. Yet the Fed claims to know what to do: social engineering at its best — or, as Hayek would put it, a fatal conceit on the part of central (banking) planners.

In sum, the Fed has assumed the task of bailing out the financial industry and governments worldwide by debasing the dollar. Fed officials claim to know that the bailout-swaps are basically a free lunch for US taxpayers and a prudent thing to do. Thank God the world is in such good hands.

The whole article is a worth reading. This last main points of the article state some of the main arguments that I have against the IMF/World Bank, the Federal Reserve, and central banking in general: that is is allowing the continuation of failed socialist economic policies and failed welfare states to the effect of helping to set up a global economic system based on central planing/socialism. Whether this is by design or simply the result of hubris on the part of the central banks does not change what is happening. ("The Creature From Jekyll Island" is worth reading to learn more about central banking in general.)

The World Bank Makes Recommedations To China

I have plans to do a more in depth post on the IMF and World Bank and how they promote socialism and state-dominated economies under the guise of free market language. In the mean time I will do a short post that illustrates, to an extent, this point. I readily admit that the stated goals of the IMF and World Bank do make it sound as if their policies are promoting free markets; but when you examine more closely their recommendations you can see that they do not advocate nor promote free markets but instead promote a state-controlled economic system where the state uses the market mechanism to advance its agendas and goals. Part of this is using state control in the form of market incentives, like carbon taxes, to promote sectors of the economy that the state deems worthy to be promoted . This is opposed to a free market system where the market is the entity determining which sectors will dominate. A perfect example that illustrates this point is the recent report by the World Bank that forecasts that the China will become the world largest economy before the year 2030 and make recommendations on how the Chinese should reform their economy:

China must relax its grip on industry and move towards a free-market economy, the World Bank said on Monday in a report that forecast the country would become the world's largest economy before 2030.[...]
An executive summary of the 400-plus page report, made public by Zoellick, had six broad recommendations for Beijing: strengthen a market-based economy, foster innovation, go "green", provide social security for all, improve the fiscal system and seek mutually beneficial relations with the world.

I know that "move towards a free-market" might take our breath away and make us go out and be cheer leaders for the World Bank. Just like saving the environment makes us want to support the environmental movement. But we have to look more closely at the issue. One thing that caught my eye was the "go green" statement. The world bank has bought in to the lie of man-made climate change: "Fifth, while China’s green development strategy is driven almost entirely by domestic considerations, it will make a significant contribution to tackling global climate change." As has been noted before, the green movement is not about saving the environment but is rather about advancing communism and socialism and that there is no man- made climate change. When you take a closer look at at the specifics of the World Bank's recommendations( around page 39), it appears that the belief in man-made climate change is being used to promote a government-led economic system and not a free market system:

A key goal of using market incentives is to harness the creativity and entrepreneurial energy of China’s private sector and state enterprises to protect the environment and turn China’s green industries into an important source of growth by making them world-class innovators and competitors. Market incentives are also the best way to foster efficiency, which, in the case of green development, goes beyond financial efficiency to include resource use efficiency and the reduction of environmental externalities. [...]

Instead, the government should consider market mechanisms such as taxes, fees, tradable permits, tradable quotas, and eco-labeling. In degraded ecosystems, rehabilitation is warranted, especially through expanded payments for ecological services in poor and ecologically important rural areas (for example, upriver watershedsor downriver flood plains).

There is no better place to begin than by ensuring that market prices of goods and services reflect the true cost of production and consumption to society. For example, the price of oil, water, coal, and other natural resources should include a tax to reflect the social and environmental costs incurred with their use. Complementary actions would involve removing direct and indirect subsidies, raising pollution taxes, and canceling export tax rebates for high-pollution, high emissions, and resource-intensive industries. (Indeed, export targets for these industries should also be curtailed, if not abolished altogether.)[...]

Given the global push on climate mitigation, the most effective way for China to establish itself as a global green technology leader is by implementing stringent and effective policies to reduce greenhouse gas emissions and to internalize the cost of carbon emissions in the operating costs of enterprises. Stringent emissions reduction policies, achieved through such diverse market mechanisms as carbon trading, a carbon tax on fuels, technology standards, and regional carbon partnerships, can act as a powerful mobilizing force for innovation in green technologies. This, in turn, will help lower economic costs associated with improving the quality of the environment and help drive overall growth.[...]

To mobilize collective action on environmental protection and climate change, the
government needs to launch mass education campaigns to increase public awareness of these issues and the actions that individuals and households can take to contribute
toward the national effort. China can make emissions reduction and environmental protection a desirable lifestyle, thereby increasing market demand for green products. To do so, it could mobilize nongovernmental organizations, industry associations and the, media. It can also change consumer behavior by providing better information, through energy efficiency labeling for example.

While these recommendations sound good--externalize costs, internalization cost, using market incentives, carbon tax, and etc.-- and even seem like they are promoting the free market, they do not promote the free market and they are not free market based. They instead advocate the state functioning as the mechanism which determines the economic sectors that are to be dominate and how scarce resources are to be utilized.

Communism has proven to be a failed economic system and those that advocate for the communist economic system are no longer advocating for the old version of communism with total state control over the economy, but instead are advocating for more of a fascist economic model where the state determines how scare resources are to be allocated for the purpose of advancing the goals and agenda of the state--usually social justice or environmental justice. It is yet to be seen if the Chinese government will actually listen to the advice of the World Bank, but the main point to take away from this is that the World Bank does not an advocate for free markets. The World Bank and the IMF that were created out of the Bretton Woods conference are evolving into a world central bank that will issue a single currency, just as its founder Keynes had envisioned. A world-socialist-economic system with international organizations like the IMF and World Bank functioning as a world central bank is being created before our eyes.

Angela Merkel - Bankroller of the EU

OK, not sure that the bankroller of the free world should be showing that much cleavage, uhm,  dunno, maybe it gets the perverted old Greek Prime Minister to agree to what she says.

Anyway, Der Spiegel has a very interesting article, showing the German perspective of what is going on in the EU.  At times, it makes you think that the EU will probably spin apart, at other times, it makes you think that, as Melkor thinks, that the EU and the IMF are doing their best to hold everything together and control everything. 

The first paragraph reads like something straight out of a Jeff or Melkor World Domination prediction:

Fearing a lasting burden on taxpayers, the German government is preparing a set of insolvency rules for countries in the euro zone. It would require private investors to bear some of the financial burden and force the affected countries to give up some sovereignty.

But, notice that she's making this proposal because her constituents, the German voters, are pissed off about funding the EU's basket-case economies. So that one paragraph seems to both back-up the World Domination cheerleaders and the local government cheerleader (that would be me).

The whole article is fascinating because it's dealing with things we talk about so much here, not particularly from the perspective of any of us.  More:

The effort is necessary, because important safety measures to protect the common currency are not working. The Stability and Growth Pact, which was intended to nip excessive government borrowing in the bud, proved to be largely worthless. Some of the monetary union's ironclad principles were ignored, including a rule that prohibits member states from coming to the aid of others in financial difficulties. It was only with political tricks of questionable legitimacy that the euro-zone countries managed to ward off the crisis in the short term, but by no means has it been overcome. German taxpayers, in particular, could face enormous burdens if the current measures fail. Under the provisions of the bailout package, Germany has pledged up to €170 billion.

I skipped over the part of where Merkel and her Finance Minister have worked so hard to put together a package, that France can go along with, that sets up new rules for how to manage the crisis and not screw over the German taxpayer. The above paragraph shows that one country in particular is carrying the weight of Europe, and that the rules that were laid down by the international authority were ignored by some member states.

The article is goes into great detail explaining everything that is going on, including the creation of a "Berlin Club" of donor nations. Summary paragraphs:

The concept by no means sells itself. If the project were organized under the auspices of the EU, it would face a high hurdle: The European treaties would have to be amended to establish the Berlin Club, which would require the consent of each individual member. This is not a process governments are keen to repeat after the experiences of the Lisbon Treaty.

Nevertheless, there is no way around pushing ahead with emergency planning, because the situation could come to a head more quickly than anticipated. The aid for Greece is subject to the Papandreou government fulfilling the EU and IMF requirements. The Greek prime minister is full of good intentions, but his measures have been relatively ineffective so far. Although the government is raising taxes and even introducing new taxes, revenues have fallen short of expectations. Strikes, like the one that was staged last Thursday, are constantly paralyzing public life and the economy.

In other words, it is quite possible that Greece will not fulfill the conditions and thus will receive no aid from the European fund. This could lead to a consequence that European leaders have been trying to prevent at all costs: a total national bankruptcy. And, if the reform package has not been implemented by then, it could end up being anything but an orderly process.

What do you guys think?

Get Your Greek Updates Right Here at RTP&GG!

H/T Hot Air - First of two quick steals from Hot Air: Man, we have been ON this issue! 

Anyway, Greece announced its $145 billion rescue plan from the EU and IMF, which is supposed to stave off bankruptcy and stop investors from further panic with other European nations on the edge of disaster: Spain, Portugal, Italy, and Ireland.  In return for the $145 billion bailout (as Hot Air notes, this is 1/6 of Obama's Porkulus package), the Greeks are being severely hobbled:

The agreement is a financial lifeline for a country staggered by repeated budget deficits and economic malaise. In exchange for the loan, Greek government officials have promised to continue an array of reform measures that, among other things, already have cut pensions and raised taxes.

These aren't just little hardships:

The proposed cuts in Greece include a new round of reductions in salaries for state workers, more flexibility to fire them, an increase in the value-added tax from 21 percent to 23 percent, and higher taxes on fuel, tobacco and alcohol. More state-run industries are expected to be privatized, and military spending will be slashed.

There are two questions: 1) will the Greek people stand for their financial disciplining? & 2) will it turn things around even if they can stand it?  Read the Hot Air and Washington Post links to learn more.  Hot Air's summarizing paragraph makes an interesting point:

American voters might be interested to see the scope of this bailout. It’s about a sixth the size of Porkulus, the Obama administration’s efforts to stimulate our economy, and just a little over a tenth the size of our annual budget deficit — and yet the EU and IMF have just about exhausted themselves to provide it. If we don’t fix our own problem, no one will be coming to our rescue.