Posts Tagged ‘Taxation’

How much does 1 gram of pure gold cost ?

Thursday, November 28th, 2013

Who said that only wealthy people could afford buying gold ?

  • Save from 1 gram of gold per month
  • Secure storage in Swiss vaults – FREE*
  • No administration or signup fee
Sign up for the LSP for free

Gradually build your wealth by simply buying each month a minimum of 1 gram of physical gold, for your LinGOLD Savings Plan (LSP) and benefit from freestorage in Swiss vaults outside the banking system.

How to save with the LSP?

  • Connect to your LinGOLD account or create a new account
  • Signup free to the LSP programme
  • Buy each month a minimum of 1 gram of pure gold
  • The gold you have bought is fully referenced : bar code, photograph, certificate of ownership
  • The gold is stored in a Swiss vault outside the banking system
  • You are free at any time to increase or reduce the amount of your savings, or you can unsubscribe from the LSP with no charge or prior notice.
Minimum Purchase 1g pure gold per month*
Maximum Threshold Unlimited
Storage Charges Free*
Signup Fee None
Availability Immediate Resale
Minimum Engagement None

*The storage charges levied on your gold stored in the LSP are FREE, on the condition that you buy a minimum of 1 gram of pure gold per calendar month, before the last day of each month. If the minimum monthly purchase is not made, storage charges will be applied, currently £4 per month per 200g total weight stored.

What are the products that fall within the LSP?

  • All the fractions of pure gold (1 g, 10 g, 100 g) issued from bars or gold investment coins (Britannia, Sovereign, Napoleon 20F, Napoleon 10F, Panda, Vera Valor, etc)
  • A whole coin : Vera Valor 1 ounce
  • A 1kg bar of pure gold

For further information on the LSP.

Manipulation of financial markets ?

Wednesday, November 27th, 2013

What’s happening with the London gold fixing ?

First, Bloomberg reported that the U.K.Financial Conduct Authority (FCA) was investigating over the way gold prices were set every day in London, as the main bullion-trading centre in the world based on information from the LBMA.

Now it is the BaFin, German’s financial supervisory authority, who is actually investigating into suspected price-fixing of benchmark gold and silver prices.


One should ask ?

The facts :
It would seem that the London fix, benchmark rate used by mining companies, central banks and other companies to buy, sell and value gold, may have been subject to manipulation over the past few months.  According to some traders interviewed by Bloomberg, it seems that ‘insider trading’ around the gold fixing is potentially possible as dealers and customers exchange information. That should lead to a wider investigation into how global rates are being set.
Remember last year when the London interbank offered rate – LIBOR – was being manipulated. Would other financial markets be manipulated ?
Similar investigations would be under way in the Uk and US, no sources

actually confirmed that point.
It wouldn’t be the first time prices are being manipulated.


Your savings in a safe place

Tuesday, November 26th, 2013

Traditional investments are at risk because they are inextricably linked to the world wide web of paper debt that exists in futures, bonds, hedges and spread bets.

Pension funds, banks, stock markets and even countries are using your investments to pay off their own debts rather than to seek a profit for you.

These paper investments are all at the mercy of the debt cycle and could be lost completely or become worthless at any time. What happens when these massive debts are called in and can’t be repaid ?  This will happen but nobody knows when. How bad will it be ? How long will it last ? Politicians publicly pretend it can’t happen because they couldn’t handle the panic and their main preoccupation is preserving power or surviving their ‘shift’.

Did you know?

- You can still buy a new car today with the same weight of gold as you needed to buy a new car 90 years ago.

- 300 years ago 2 oz of Gold could buy a cow, the same amount as you need today!

- Current devaluations are decreasing your ‘paper’ savings, investments and pension funds

- Since  2000 stock markets have slumped while the price of gold has increased more than 5 times’s commitment to doing things differently is exemplified through its ‘Vera Valor’ gold coin.  The ‘Vera Valor’ is the first ethically produced coin made from “clean extraction” gold, which is 100% traceable from mine-to-mint.’s vault storage facility is based in the highly secured facility of Geneva Freeport and is independently audited to ensure total propriety and counterparty.

investment in lingold

investment in lingold


Tuesday, May 14th, 2013

The Gold Spot is a regular feature in which Mark Rogers excerpts a passage from his reading as the Text for the Day and then comments on it.

Extract from CURRENCY WARS: THE MAKING OF THE NEXT GLOBAL CRISIS by James Rickards, Portfolio/Penguin, New York, 2011

The continuation of the trend toward a diminished role for the dollar in international trade and the reserve balances begs the question of what happens when the dollar is no longer dominant but is just another reserve currency among several others? What is the tipping point for the dollar? […]

Barry Eichengreen is the preeminent scholar on this topic and a leading proponent of the view that a world of multiple reserve currencies awaits […] the plausible and benign conclusion that a world of multiple reserve currencies with no single dominant currency […] this time with the dollar and the euro sharing the spotlight instead of the dollar and sterling. This view also opens the door to further changes over time, with the Chinese yuan eventually joining the dollar and the euro in a coleading role.

What is missing in Eichengreen’s optimistic interpretation is the role of a systemic anchor, such as the dollar or gold. As the dollar and sterling were trading places in the 1920s and 1930s, there was never a time when at least one was not anchored to gold. In effect, the dollar and sterling were substitutable because of their simultaneous equivalence to gold. Devaluations did occur, but after each devaluation the anchor was reset. After Bretton Woods, the anchor consisted of the dollar and gold, and since 1971 the anchor has consisted of the dollar as the leading reserve currency. Yet in the post-war world there has always been a reference point. Never before have multiple paper reserve currencies been used with no single anchor. Consequently, the world […] is a world of reserve currencies adrift. Instead of a single central bank like the Fed abusing its privileges, it will be open season with several central banks invited to do the same at once. In that scenario, there would be no safe harbour reserve currency and markets would be more volatile and unstable.

Comment: It is hard to fathom such an unrealistic expectation of lead currencies, swilling about supporting each other and every other currency, as being somehow optimistic and benign; Rickards is not saying that he thinks they would be by using these terms, he is pointing up the authors of these expectations as hailing them as benign: what could go wrong, we’re all good chaps…aren’t we?

Rickards’s view is of a piece with Gustav Cassel’s point (quoted in Gold on the Outbreak of the Great War), that “the responsibility for the value of the currency, in cases where the gold standard has been abandoned, must exclusively lie with those in whose hands rests this provision of the means of payment.” The point being that this is an astonishing level of trust to put into the institutions of government, not just moral trust, but a trust that the necessary calculations, observations and measurements can be made consistently and continuously to keep things afloat and stable. The euro is a very good object lesson that both these sorts of trust are misplaced, which is putting it mildly…

From an Austrian School point of view, the goodness of the humans in charge is irrelevant: it is the utterly impossible nature of the task that is the stumbling block. But it is just there, of course, that the immoral temptation to swing things to the state’s advantage comes to the fore – again as shown up by the euro.

Where there is no reference point, no anchor, no solution is feasible… which is why we keep getting  more of the failed nostrums. Which leads on to a very interesting observation: why taxes must go up in an economic world divorced from the gold standard.

Politicians are incapable of managing monetary affairs (see the article linked to below on The Mess We’re In: Why Politicians Can’t Fix Financial Crises). The gold standard prevented them by and large from acting on economic hubris. Unconstrained by gold, bewildered by their failures, corrupted by their power, they turn to the one nostrum that lies unfailingly to their hand: taxation. That is why it is found important at times of high and progressive taxation to denounce “avoiders” as selfish cheats who won’t do their bit for their fellow citizens (see my The Moral Dilemma at the Heart of Taxation). So the gold standard not only prevented printing money, it also held down taxation. Another reason to vote for gold!

For the raison d’être of these articles on read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Monday, April 29th, 2013

livre3DReview by Mark Rogers

Gold, A Different Point of View by Paul McGowan

With a Preface by Bill Bonner

Published by Ferrington in association with

Following the drop in the price of gold a few weeks ago, record sales of gold coins were reported (see here, and here for a rise in its price). The publication of this little book is therefore timely and pertinent.

There may be many people who would like to hold some gold but are dissuaded by the thought of large and expensive ingots. But bullion is not the only way in which to invest in or purchase gold. Yet as the author states: “Gold is not just ingots. The common response to gold is that it is only for the wealthy: those heavy bars, alluring though they may be, are simply unaffordable.”

This book argues that this view of gold is misguided and misinformed: there are affordable routes to investment in gold.

Although short the book contains a wealth of information. There is an introductory chapter giving a brief history of gold’s 6,000 history, which includes its denigration by politicians and academics in the twentieth century; Keynes for example thought it a “barbarian relic”. Proudhon, Marx, Lenin, Hitler all denigrated it, and to this day it troubles the likes of Ben Bernanke and George Soros.

Gold’s function as a stabiliser of value and its use over time as actual currency coin in circulation suggest that gold is today an alternative currency, and this first chapter ends with a comparison of gold with modern economies, noting that the latter are not working, while attempts to remonetize gold are afoot in, for example, Utah.

There is also discussion of the vexed problem of clean extraction with some useful information about the certificating process that reassures investors that their gold has been mined under the highest standards.

Chapter Two, “Gold, the last bastion of individual freedom”, examines the role that gold may play in hedging one’s investment portfolio, as well as its potential as a regulating device, controlling the whims of politicians and central bankers. This chapter contains a concise guide to the problems of paper currency unsecured against tangible value, with the inevitable consequence that savings are eroded and destroyed and more and more paper is required to purchase fewer and fewer goods. In other words, paper currencies are a direct attack on people’s individual control of their lives, rendering it harder and harder for them to provide for themselves, their families and their futures. We have been here so many times in history, with the latest example being the eurocrisis, that it is nothing short of scandalous that the political and academic classes cannot see the lessons to be so plainly learned.

Gold on the other hand “observes a constancy. With one ounce of gold you can almost buy today the same quantity of basic goods as at the time of the Roman Empire or Egyptian civilization. Inder the Pharaoh Tutmosis III, one needed the equivalent of 2 ounces of gold to buy an ox. Today, 2.5 ounces would be needed. Inflation has been rather weak in 4,000 years!”

This is a salutary reminder of gold’s stabilising power, which is just the very thing that the modern politician resents about it.

A strong bullish potential

The importance of gold in the contemporary world is underlined by an examination of those countries which invest heavily in it, both at the national as well as the individual level. Russia, China and India are at the forefront of this investment, with others, such as Vietnam, making significant moves in this direction. There is a useful digest of information about these countries, the role gold has traditionally played in them and how they are managing their portfolios at present. This analysis clearly establishes trends which are not going to vanish: China indeed buys enormous quantities of it, even though she also produces it.

These markets ought to assure the potential gold investor that while prices do indeed fluctuate, bullish potential is always there in gold, and has been for most of human history. Any falls in the market have identifiable causes – for example, the wedding season in India sees a rise in prices. Indeed, this analysis is testimony to the fact that we have had 6,000 years to observe people’s behaviour with gold and make it one of the easiest assets to manage.

An Investment Portfolio

Nevertheless, the author does not argue that gold should be the sole asset in one’s portfolio, far from it. Instead it should be looked on as the preserver of a portfolio’s value, that depending on the scale of one’s other investments a relevant proportion should always be kept in gold to support the rest of the portfolio.

There is a very useful chapter on investments other than gold, such as arable land and forestry, fine art and fine wines. These all have valuable potential (after all, we all need to eat), but each has significant drawbacks which are clearly and carefully spelled out. Gold’s position as being free of such drawbacks means that it is essential to invest in it, as a hedge against the dormant disasters in the rest of one’s investments.

And gold enjoys an enormous potential over any other investment, including in things such as diamonds that might seem to share some of gold’s economic potential. Gold is superbly versatile. Cut a diamond, and much of it is waste; melt an ingot of gold, and you still have the same amount of gold.

Gold Coins

The heart of the book is in its last chapter which really gets down to brass tacks – or gold coins! Coins represent gold at its most versatile, allowing even those who do not have huge fortunes to start saving in gold. While one ingot is beyond the reach of most, a single coin, perhaps purchased at the rate of no more than one a year, is a realistic and feasible option.

The book contains a wealth of information on tax regimes; storage; what to do and what not to do in actually physically handling coins and how to transport them; what to look out for as enhancing a rare numismatic coin’s value and what depletes it – all fascinating information in itself, and eminently practical.

“If we had to state only three reasons to buy: gold is a recognized and accepted safe haven throughout the world, demand from the emerging countries is strong and the total demand over the mid to long term is reliably forecast as being higher than the supply.”

The book is available on Amazon in a Kindle version (price: £5.14). Those readers who would like the printed version, should send a cheque for £12.50 (includes p+p) made out to: Ferrington, and send it to: Ferrington, Bookseller & Publisher, 24 Shipton Street, London E2 7RU. The book is also available as Buy It Now on eBay.


Tuesday, February 5th, 2013

By Mark Rogers

Developing economies. Less developed countries. Third world countries. And then of course, developed economies.

But is there not a question being begged by these terms?

Let us look again at what I characterised as Keynes’s self-indictment:

“We take as given the existing skill and quantity of available labour, the existing quality and quantity of available equipment, the existing technique, the degree of competition, the tastes and habits of the consumer, and disutility of different intensities of labour and of the activities of supervision and organization, as well as the social structure.”

I call this a self-indictment because it displays an extraordinary degree of complacency and ignorance about how economies work (see the previous article in which I examine Lord Bauer’s response to the Keynesian approach).

What is fundamentally wrong about the Keynesian starting point is that not only is it not a starting point, it isn’t even an endpoint: this paragraph posits a certain stasis as the foundation of an economy. It is true historically that economies can stagnate and thus civilizations disappear, but any functioning economy, such as those Lord Bauer discovered when he left the academy and looked at what was actually happening in West Africa and Malaya, is dynamic, in short developing.

Looked at from the other end, the idea of “development” as a comparative term also suggests that there is an end result, i.e. something called a “developed economy”. But as we have seen in The Knowledge Economy, the western economies are headed on a path to what we could call “de-development”. With heavy government regulation and intervention, with QE, with the loss of paper trails in, for example, the subprime mortgage crisis, the legal underpinning of a free economy seems to be in freefall. I suppose that is one form of dynamism, but it is not a desirable one.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Monday, January 28th, 2013

By Mark Rogers

George Osborne, Chancellor of the Exchequer, has started quite a trend; the words “avoidance” and “evasion” are routinely used synonymously by politicians and journalists alike, and have by now mutated amongst the public at large into a general disparagement of those who “don’t pay their taxes” – even when there is no legal requirement to do so!

A case in point. At the local charity shop for which I sort the books, there is a persistent complaint that the charity doesn’t pay taxes on donated goods. This arises in the context of complaints about prices. It is a charity for a UK cause (you wouldn’t catch me supporting with my time the more problematic charities such as Christian Aid and Oxfam) and routinely receives donations of clothes from one or two of the large clothing chains. The obligation on the part of the charity is to sell them for around one-quarter of their retail value.

Even so, customers complain that £50 is too expensive, even though the original mainstream shop price for quality coats, for example, is £200. It doesn’t matter that customers are told they are under no obligation to buy; that they can always go to Primark if they want to pay less; or that the retailers expect their donations to make a proper difference to the charity’s turnover.

Far from accepting that these are reasonable points, the charity is routinely abused for not paying taxes, although not only are charitable donations exempt from tax, tax is recoverable at 25 pence in the pound if donated by a tax-paying donor under the Gift Aid scheme.

Now this is only right and proper: it would be utterly invidious for the state to tax gifts made for relief, especially as many charities, local hospices for example, fill crucial gaps that the unwieldy welfare state is unable to supply.

I even spotted a poster in a remainder bookshop window the other day: “CAN PAY, DO PAY, WE PAY OUR TAXES.” Lewis Carroll in Sylvia and Bruno imagined a protest march in which the burden of the demand was: “Less Bread! More Taxes!”

That could stand as the epitaph for the welfare state!

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Sunday, January 27th, 2013

By Mark Rogers

A recent story in the London Evening Standard announced that first time buyers are expected to stump up a £100,000 deposit. Thus, evermore young, first time buyers are being denied their place on the bottom rung of the housing ladder – or that is what at least it is usually called: edge of a bottomless abyss might be more accurate, and something from which they should be glad they have been saved!

A question that might at first blush seem curious: if there is a housing shortage, why are there so many estate agents? There are parts of London where they even cluster together. However, this is easily explained. Many of the properties on offer will not be unlived in – they will be the homes of people wanting to move for the sake of employment or retirement, and perhaps many more will have been put up for sale to realize their value, given that they were bought not merely to be lived in but primarily as an asset. The real explanation of the number of estate agents is that there are few buyers because most people, especially that class of “first time buyers” or rather would-be first time buyers, cannot afford the prices.

Estate agents earn their bread and butter from management fees for lettings: the houses for sale are the window dressing. Which is one among several factors that explain the high cost of housing: fees on sales are adjusted to take account of the length of time the house is on the estate agents’ books.

Another thing that the number of estate agents indicates in economic terms is the relative lack of information in the market: houses are expensive partly because there is no proper market in them, and therefore the information about what houses are worth – their prices – is limited. (See here, here and here for further discussion of the problem of the modern mortgage.)

Nevertheless, the modern fashion is to own – or at least to aspire to own. This is historically unprecedented. Most of the time, most people rented. Families who acquired houses, or who bought plots of land to build their own, usually did so towards the end of the pater familias’s career in upper middle class families who had acquired serious money. The house was then left to the children, so over time the number of people who owned their own homes increased, but slowly.

Why Rent?

Many families rented for their entire lives. And this in turn meant that there was a real market in housing, because renting meant that the market was flexible, price-sensitive and therefore price informative, and, crucially, not sodden with debt, i.e. a mortgage on your future which your income may never catch up with because of inflation.

Properties rented were owned in terms of the Common Law: what you were buying with your weekly or monthly rent was a lease with an almost full entitlement to property rights in respect of the inviolability of your privacy and the contents of the property that you brought into the house: landlords could not, for example, demand unilateral access while the current rent was paid in full, or demand that certain objects not to their taste were excluded. Landlords of course owned the property in the fullest sense of the term given that they had the right to sell it – but even this ultimate test of ownership was circumscribed by the rights of the resident tenants. So for the ultimate owner, the property represented two things: a current income, and a future saving.

The great advantage of renting was that the tenant’s obligations were contracted serially under the terms of the lease, which meant that, provided proper notice was given and dilapidations were duly paid for, the owner of the lease, i.e. the tenant, could leave the property at whim or out of the necessity of looking for work.

Leases were therefore one of the engines of a free and flexible economy. And they also have the advantage that they are a regular provider of price information.

One must wonder then if one of the reasons politicians are keen on promoting home ownership is that the modern mortgage is in fact a means of control over the home-owning population without the state actually having to nationalize their property…

In this context it should also be remembered that Victorian prosperity did, as mentioned above, mean a gradual increase in home ownership and homes therefore being left to descendants. However, the invention of inheritance tax in the late nineteenth century combined with modern inflation – which brackets houses into inheritance tax even though the residents’ incomes do not reflect that nominal, inflated value – have, all the while the politicians sing the virtues of home ownership, denied homes to an increasing number of inheritors.

And another problem arises with the so-called “homeless”. There are a lot of vendors of the Big Issue but they are not homeless: their hostel rooms or their flats are provided by the local authority and their rents are paid out as benefits by (and of course to) that same authority. The real homeless, the people who sleep on the streets, are either mentally disabled or young people who have fled home, in many cases state institutions. So once again in an economy dominated by the welfare state, it is all a matter of juggling with words, rather than material fact.

These considerations once again prompt reflections on what it is we really value and how that value is measured: as pointed out here, our money is not really money, and our mortgages are not real mortgages.

And once again, the question arises: when will this house of cards collapse? The eurocrisis is allowed to drift, quantitative easing underpins access to cash while piling up crisis for the next generation, politicians urge the banks to lend, and banks remain free of the consequences of moral hazard…

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Saturday, January 26th, 2013

They must be worse than blind who cannot see with what undeviating regularity of system, in this and in all cases, they pursue their scheme for the destruction of every independent power … The design is wicked, immoral, impious, oppressive: but it is spirited and daring. It is systematic; it is simple in its principle; it has unity and consistency in perfection. In that country entirely to cut off a branch of commerce, to extinguish a manufacture, to destroy the circulation of money, to violate credit, to suspend the course of agriculture … does not cost them a moment’s anxiety. To them the will, the wish, the want, the liberty, the toil, the blood of individuals is nothing. Individuality is left out of their scheme of Government. The state is all in all.

Letters on the Regicide Directory 1796

Quoted by Christopher Booker and Richard North as the epigraph to their book The Castle of Lies: Why Britain Must Get Out of Europe, Duckworth, London 1996

For an article by Mark Rogers on the cult of the state, click here.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Friday, January 11th, 2013

By Mark Rogers

Keynes was notorious for believing that savings, especially in a welfare state, were a form of selfishness. Alan Greenspan, quoted in the previous post, pointed out that: “The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.”

The implications of that last remark are that everyone is depersonalised, for it surely applies to those who wish to be wealthy, to those who wish to fend for themselves whether they are particularly rich or not. People are no longer regarded as autonomous individuals, capable of taking responsibility for themselves and their families and friends. So Greenspan’s insight needs modification: that there be no way for anyone to protect themselves: the wealthy are assaulted in their wallets to subsidise the rest and the rest are subsidised to keep them docile: everyone loses out.

The slogan “the personal is political” is, like so many slogans, not merely obfuscatory – what does it really mean, or rather what purpose does it serve? – but, taken at its ostensible face value, is the opposite of the truth: politics is the impersonal, and the greater the state intrusion into ordinary life, the more impersonal it becomes. Government departments deal with aggregates, and in doing so must strip people of their individuality; the more a person or family relies upon the state, the less they are dealt with individually. It is statistics that are housed not humans, or as Jane Jacobs put it housing is thought of “as a collection of separate file drawers”.

The idea that owners of wealth should have no way of protecting themselves is overtly clear in the attacks upon individuals who have allegedly avoided paying taxes. Indeed, the entire taxation machinery of the modern Western welfare state is designed to reverse the traditional notion of accountability: it is we the citizens who must be called to account for ourselves, rather than that the state is held accountable to us. One result is the eurocrisis.

At the heart of this enormous problem lies a fallacy that Ronald Reagan drew attention to, and it goes a long way to explaining why crises such as those engulfing Europe are proving so hard to deal with: “If no one among us is capable of governing himself, then who among us has the capacity to govern someone else?”

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

2012: Tax, the Euro and the Gold Standard: A Roundup

Monday, January 7th, 2013

By Mark Rogers


In a move practically designed to prove my assertion that the Inland Revenue is behaving more like the Stasi than a branch of democratic government, it was announced on Friday 4 January that the H.M.R.C. was publishing the names and photographs of some of the worst tax “cheats” of the previous year. Yet the lack of clarity persists: “The Government invested £917m in tackling tax evasion, avoidance and fraud in 2011-12, with an additional £77m planned over the next two years. ‘Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don’t,’ said Exchequer Secretary to the Treasury David Gauke. ‘We hope that publishing these pictures will help get across that it always makes sense to declare all your income, and tax dodgers are simply storing up trouble for the future.’”

While the news report does give details of an overtly criminal gang, the persistence in lumping together criminals on the one hand and dodgers and avoiders on the other is deeply worrying; the latter are people who have committed no crime. Until and unless the law is specifically changed the pursuit of those who legally avoid paying tax is a direct assault of the rule of law. And it will not do to pass legislation criminalising avoidance: avoidance only takes place because the tax code is too large, too multifarious, too unfair and too confiscatory. It would be an even graver assault on the rule of law if criminalising legal behaviour was to be the government and parliament’s preferred option rather than a serious overhaul of the tax code. But then expecting that is like expecting the EU’s commissioners, politicians and bankers to sort out the euro mess.

The Euro

Where is the promised resolution to the Euro crisis, specifically the problems in the first place of Greece? The European Stability Mechanism merely defers the inevitable, but true to form, the EU’s political class is congratulating itself that “something is being done”.

In his book America Alone: The End of the World as We Know It (Regnery Publishing, Inc. Washingto, 2008), Mark Steyn makes the following observation: “The progressive Left can be in favour of Big Government or population control but not both. That mutual incompatibility is about to plunge Europe into societal collapse. There is no precedent in human history for economic growth on declining human capital – and that’s before anyone invented unsustainable welfare states.”

Thus a decline in the European demographic, which was predicated on the welfare state providing for all and giving a better standard of living which in turn is often taken to mean fewer children, is ensuring that the welfare state is collapsing while its beneficiaries demand more – see, for example, the Greek reaction to “austerity”.

But was “Europe” on any of its models ever going to be sustainable? In an interesting article from an old Encounter that I recently picked up, much food for thought suggesting that the answer was no from the beginning is to be found in an article by François Bondy, The Sick Man of Europe is .. Europe (Encounter, Vol. X, No. 6, June 1958). While he is talking about NATO, rather than the emergent political arrangements that would eventually become the EU as we know it, it must be remembered that The Europeans leapt under the NATO nuclear and military umbrella on the specific assumption that the Americans would be footing the bill; this in turn, allowed France to pursue her squalid little colonial war in Algeria, while allowing them all to begin that slide into welfarism, the effects (or rather, defects) of which are now manifest. Bondy says this of the relations that the Europeans and the Americans thought they were entering into at the time:

The truth is that, in essentials, the West Europeans have relied on the United States for their defence, and that N.A.T.O. is the instrument, not of a partnership, but of a receivership.” [My emphasis]

That note of insolvency struck right at the very beginning!

He also goes on to be very prescient about how things would fall out: “A great and present danger would arise out of an unequal division of privileges, responsibilities, and burdens among the European states; this inequality could generate new national hatreds and rivalries, and make of Europe simply a greater Balkans.”

Which is exactly how to describe the quite deliberate plan to bring this state of affairs about through the melding of the “hardcore” euro currency countries into a fiscal “heartland” for the EU. He goes on to ask: “Balkans or Switzerland? Perhaps neither goal is likely to arouse enthusiasm in the citizens of that Europe which discovered the modern world, established it, and ruled it for so long. But Balkanisation will only be the fate of those who are themselves ready for it, and prefer to be a shrunken power rather than a small state.”

And this was said in 1958.

And the gold standard, what has that to do with welfarism?

The Gold Standard

“The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. … The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty understanding the statists’ antagonism toward the gold standard.” (Quoted in, The Coming Collapse of the Dollar and How to Profit from It, James Turn and John Rubino, Doubleday, New York, London etc., 2004)

Well said, that man! But who was that man? No less than Alan Greenspan, whose views clearly cover the span between what he said in 1966 in an essay, “Gold and Economic Freedom”, and his own genial oversight of “an unlimited expansion of credit”, no doubt thinking the while that this was because this had to be done to counter the expansionist ambitions of the welfare statists, but with, inevitably, the same result.

But as a succinct description of what in effect has happened in the banking crisis, his first sentence is spot on, and this may yet be revealed as not only the way the crisis evolved, but of the very motor at the heart of it, the politically expedient manipulation of the LIBOR.

And the future of the gold standard? We shall see if the Utah sound money scheme catches on in other States in the U.S.A. And we shall see if the arguments for its return start stacking up in the minds of those whose minds need to accommodate it. But the really serious question is if Basel III, if, when, implemented does turn out to be a tentative restoration outside the political system, and if indeed it does turn out to be a de facto gold standard, how will the politicians react?

Basel III is difficult to interpret, and so far this year the main news about it is that the Reserve Bank of India has declared that it is to defer implementing it for at least a few months.

How strange it is that the most perceptive remarks about Europe’s decline and the warning about the welfare state’s destruction of wealth should have been made in 1958 and 1966 respectively. History indeed is a gold mine!

For more on tax go to: STARBUCKS AND ALL THAT TAX, which also contains a link to a brief summary of my arguments and a link to all the previous articles on tax.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Friday, December 28th, 2012

By Mark Rogers

Globalization: what is it but an activity that is as old as civilization – simply a modern name for trade? Joseph Addison’s paean to its virtues stresses the civilizing effect it has, bringing together merchants from every clime and culture, who, in furthering their own mutual interests, enhance everything from landscape to palates to manners and morals.

So why is it scorned and despised by so many, especially in the rich west?

Martin Wolf in “Why Globalization Works” (first referenced here) provides a useful list summarising the attitudes of the anti-globalizers, the first three of which I will deal with in this article. His summary is an accurate one of these views, so equally accurately does he indicate their incoherence.

“The critics make the following more or less specific charges against market-driven globalization.

“It destroys the ability of states to regulate their national economies, raise taxes and spend money on public goods and social welfare.

“In the process, it undermines democracy, imposing in its place the rule of unaccountable bureaucrats, corporations and markets.

“It amounts to an abdication of power by benevolent democratic governments in favour of predatory private corporations.”

Underlying assumptions

The first thing to notice about these attitudes is the underlying assumption that the modern democratic state is benevolent and rational and that its primary function is the regulation of the economy in order to tax the productive and furnish what are laughably known as “public goods and social welfare”.

The second underlying assumption is that modern democracies are accountable, and that it is corporations and markets that somehow are not. On the contrary, the collapse of accountability is manifestly evident in the euro crisis and the concomitant collapse of the European project, yet far from behaving in a responsible, accountable manner, the politicians are desperately trying to cling onto their power and privileges.

In the U.K. we have seen how politicians brazenly justified their expenses, in the process demonstrating their ignorance of the legal system. In one of the more scandalous moments of that preposterous saga, when one of the overtly criminal M.P.s was on trial and facing the prospect of jail if convicted (which he duly was), more than one hundred M.P.s wrote the judge a letter to try and influence the outcome of that trial, pleading with the judge not to sentence him to prison. One simply does not do this to an English common law judge: he duly ignored them, but that it was possible for so large a number of M.P.s to bring themselves to behave in this way shows a sorry disregard for our constitution – but then, at least since the Second World War, that disregard has become increasingly the parliamentarians’ mode of proceeding.

Markets, on the other hand, are engines of accountability, through bankruptcies and competition. That we may not see those who run companies, and anonymity is largely how free societies function, they are nevertheless under the remorseless pressure of their customers and competitors to provide the goods and services desired.

State Worship

The most important thing about these assumptions is that they amount to an unquestioning assumption that the state is the proper director of human affairs, and that ordinary humans are not – the ordinary person is not trusted, and the greater his wealth, the less trustworthy he is deemed. This is a preposterous view, and a dangerous one. I have quoted before Paul Johnson’s dictum that the ability of the state to wreak great evil has been amply proved; whether it is capable of good is open to considerable doubt.

Take two recent stories in the press. I have dealt with the first already in several articles about tax avoidance, the latest twist to which is the transformation of a parliamentary committee, the Public Accounts Committee, which is meant to hold the government to account, the proper function of M.P.s, instead turning on taxpayers and in accusatory mode devising ways to hold the public to account. We had also earlier seen how H.M.R.C. was devising means to use schools to snoop on tax avoiders.

A yet more recent story of the government turning on the people is the revelation this week of a costly scheme to monitor every child taken to an A. & E. Department for signs that its parents are trying to hide evidence that it is being abused. The National Health Service, that is, is being turned into a Stasi-like instrument to intrude into family life. This gross violation of privacy is based on an illusion. After the prominent publicity given to the deaths of battered children such as Jasmine Beckford, Victoria Climbié and Baby P, public inquiries were held. In spite of the detailed evidence in the findings of specific neglect at best, malign acquiescence at worst, combined with ignorance and lack of care, on the part of the social workers, each inquiry came to the same conclusion: that there had not been sufficient sharing of information between the relevant branches of the state.

So now in the fullness of time, some bright spark in the government has seen how the NHS can be turned into an information gathering and disbursing scheme – entirely neglecting two essential facts: the male abusers of infants are not the children’s natural fathers (mothers may hide the evidence of abuse, but this is because they are either mentally deficient, as Baby P’s showed every sign of being, or simply scared) – this is common knowledge, but is routinely overlooked. The second is that a highly abused child is more likely to be imprisoned at home than be taken to hospital. When a social worker did manage to get Jasmine Beckford and her sister into hospital, the police were adamant that they should not be returned. The social worker over-ruled them, and the police acquiesced (why they didn’t take advantage of that hospitalization to arrest the step-father I have never understood).

There is ample evidence that when the state reaches a certain size, and has acquired powers of intrusion into daily life by nationalizing health and education, its functionaries become a coterie, acting in their own interests at the expense literal and figurative of the general public. That the state in this form should be trusted with our welfare is belied by history, the same history that shows the most dangerous religion ever invented is the cult of the state.

Re-inventing the wheel

The present writer indeed agrees with those who object that globalization “destroys the ability of states to regulate their national economies, raise taxes and spend money on public goods and social welfare” and hopes that destruction proceeds apace. To quote the American commentator Michael Ledeen: “Faster please!”

Joseph Addison was right to see in the mercantile classes of his day the great benefactors of mankind: we in our day have seen the “benevolence” of the state in action, not least in those developing countries the anti-globalizers weep for where state aid has created destitution, and where restoring trade and expanding markets have repaired the ravages of that aid.

Not for the first time in the late twentieth and early twenty first centuries have we been required to re-invent the wheel – under the baleful glare of those who think it shouldn’t have been invented in the first place.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES


Monday, December 17th, 2012

By Mark Rogers

In one of my earliest articles for this website, I broadly condemned the corruption of the British political elite and centred that attack on the professionalization of Members of Parliament and delegated legislation. The irony of these two assaults on our constitutional liberties is that at the same time as recognizing membership of the House of Commons as a paid profession, Parliamentarians ceased to be Parliamentarians and instead delegated their responsibilities to the government. The latter sits in Parliament as of right as being composed of elected MPs, and the upshot of this is that the ancient privileges of the House, which one protected it from the executive, are now used to protect the executive from the House!

Geoffrey Wheatcroft, in his book The Strange Death of Tory England (first referred to here), puts some numbers of these derelictions.

He quotes the Tory grandee Julian Amery: “When I was young, a man would go into parliament because he was somebody. Now a man goes into parliament to become somebody.” That this is not a nostalgic grouse is borne out by some significant points. There are fewer by-elections, which means that MPs hang on to their seats. “During the parliament of 1918-22 there were108 by-elections, in 1931-5 there were sixty-two, in 1992-7 there were seventeen and in 2001-5 there have been six, which is to say the number has plummeted from a yearly average on twenty-seven to fifteen to three to one and a half.”

There is the failure to use Commons procedure to bring down governments or throw out Prime Ministers. Wheatcroft comments: “Every British government between 1837 and 1874 fell following a vote in the House of Commons, a golden age when parliament really was master of the executive. During the twentieth century that happened just twice. … By the late twentieth century, politics had become a trade, and a well-rewarded one; being an MP was a nice little earner.”

The salary of an MP, as I argued in the article linked to above, is the original source of the corruption. At one time parliament was full of people who had outside interests in many fields, and therefore the House of Commons was truly representative of the electorate. While a Register of Members’ Interests exists, that register is a farcical indication of where we stand now: members should have outside interests, in the real economy, deriving their income from those interests and not in an underhand way (which the register is designed to forestall). They would then have a better grasp of the likely impact of the legislation they so sloppily pass on the wider economy. With universal franchise, the House ought to be full of plumbers and electricians, booksellers and oilmen, housewives and chocolate factory owners et al… Instead we have, by and large, a dreary litany of lawyers and trade unionists.

The other source of the “nice little earner” are the expenses MPs may claim, both legitimately and as well as illegally, even criminally as the expenses scandal revealed. These are accompanied, in Wheatcroft’s words, by “perks, handshakes or severance pay [severance pay!] for MPs who lost their seats, and pensions, which would once have been considered a grotesque idea but which were now an accepted mark of that professionalization. If MPs acted as they had so often in the past, and voted openly to bring down a government, it would be likely to precipitate a general election, when many of them might lose their seats and no longer be able to pocket those expenses.”

An interesting gloss on this problem is Wheatcroft’s comment on a puzzlement that Roy Jenkins voiced in his biography of Gladstone. In the nineteenth century prime ministers found it difficult to keep their Cabinet ministers who kept resigning for apparently trivial reasons, but in the twentieth century, when a minister should clearly go, it is hard to persuade him to. This, says Wheatcroft, is simply another manifestation of the professionalization of political life. Cabinet ministers in the nineteenth century had lives beyond politics with other sources of income (even though MPs were not paid, ministers were handsomely emolumated).

With nothing else to do, the modern MP sits in Parliament, incompetently overseeing the drafting of legislation that is incoherent and unnecessary, unaware of the impact of such legislation because only tangentially connected to the world outside politics, and unwilling to hold the executive to account for fear of losing pay and perks. A sorry but true description of the Mother of Parliaments in her descent to being the whore of a venal democracy.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST


Thursday, December 6th, 2012

By Mark Rogers

In the wake of the concerns raised here, it appears that The Times has a few readers who are more analytical than some of its editorialists. The day after the somewhat sententious leader about the moral duty of multinational companies, the Letters to the Editor pages carried some very sensible observations.

First, Amazon’s sales to UK customers are made by a Luxembourg based company, and all buying and selling and pricing decisions are taken there. All that is operated in the UK is a delivery system, and, comments the writer of the letter, Heather Self, a chartered tax advisor based in Cheshire, “it is not surprising that profit margins are small”. As one who knows the publishing industry, I know exactly what she means.

She goes further: “The report [“Taxman targets Google”, The Times, December 3] also refers repeatedly to ‘revenues’ (ie, turnover), when – as every small business knows, this is a very different number from profit, on which tax is charged.”

As another reader points out, corporation tax is only one of a host of taxes that corporations pay, none of which are avoidable and so no-one tries: “VAT, excise duties, business rates, PAYE, employers’ and employees’ national insurance,” Julian Pilcher, Hampshire. While the PAYE is tax taken on behalf of the taxman from the employees, this is done so at the corporation’s expense.


As if the hollow moralising of MPs was not enough, on December 4, the Telegraph ran a story on how delighted Nick Clegg, the Deputy Humbug, I mean Prime Minister, is that £2 billion pounds of British aid money is finance Third World “green” projects, including wind turbines in Africa. This, says Clegg, is fantastic news.

Just the week before, some industries had some “fantastic” news: they are to be shielded from green energy costs, while households are not.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST


Monday, December 3rd, 2012

By Mark Rogers

[As I shall be referring to past articles on taxes, here is the link to a short summary of their argument with an index of all those other articles: The Moral Dilemma at the Heart of Taxation.]

Before examining the latest round of political opportunism and hypocrisy on the subject of taxation, as well as the moral earnestness of a certain newspaper, I propose two new words: should what companies such as Starbucks, Google and Amazon and individuals who engage in protecting their wealth from the ravages of the state be accused of tax evadance or avoision? It used to be the case that “evasion” was illegal while “avoidance” was legal. While this was a definition that depended mostly on bad legislation and even worse Bill drafting, even these distinctions are now lost. Politicians and journalists alike will use both words to describe the perfectly legal activity of avoiding taxes [see above mentioned articles].

The Public Accounts Committee has just published a “damning” report on its interrogations of representatives of Starbucks, Google and Amazon. The Chairman of this committee is Mrs Margaret Hodge. More on her later.

Both the Committee’s report and today’s Times of London lead editorial make much of the morality or otherwise of the companies’ behaviour. We shall address that later too, but first must note that The Times makes a very peculiar distinction:

“When a corporation seeks to reduce its tax bill, it does so with a veneer of self-justification. … An individual, meanwhile, may legitimately seek to manage his or her own taxes out of sheer prudence.”

First, in common law, a corporation is a legal person. Second, is The Times saying that corporations do not act out of “sheer prudence”? Third, the Chancellor, George Osborne, was recently reported as making much the same points, when, in a preliminary outline of his Autumn Statement to be delivered on December 5th, having once more [see above articles] denounced “aggressive” avoidance, as an afterthought he hoped that the Starbucks review of its U.K. tax position would not lead it to conclude it should shut up shop and retire from these shores. Exactly!

Government sneaks

The government is pursuing tax avoidance schemes and threatening legislation that will compel providers of such schemes to expose their clients, even though none of these people, providers and clients alike, are criminals or engaging in practices that are illegal – unlike the MPs who are condemning them, those MPs who thought nothing of hoodwinking the public with their illegal manipulation of their expenses schemes, with all the lying and dishonesty that involved. The providers and clients of avoidance schemes are not even being dishonest. And the government that is threatening them is the same government that taxes the poorly paid, even those on the minimum wage, squanders vast sums on benefits, squalid hospitals and lousy schools, etc… a very long et cetera, as the singer Adele noted [see Jimmy Carr and His Terrible Error in the index of tax articles].

And it gets worse: “Up to two million people are to have their credit files secretly checked under a crackdown on tax evasion to be unveiled by George Osborne to help raise another £10 billion.” This is from a report in today’s Telegraph. It goes on: “Credit reference agencies will cross-check details of the income people declare on their tax returns against their spending patterns to identify ‘high’ and ‘medium’ risks of both illegal and legal tax avoidance.” This is shocking, but doubtless HMRC will reward the credit ratings agencies handsomely having co-opted them into its Stasi-like operation. This is a very serious corruption of the body politic. And I wonder what exactly is implied by “risks”?


Kelvin MacKenzie, also writing in the Telegraph, makes this point: “Sick and tired of subsidising folk from the rest of the country? You belong to a select club – the club of the hard-working, clever and creative people living in London and the South East who single-handedly are giving the rest of the nation a standard of living they can’t, or won’t, create for themselves.”

That seems a good enough place to start examining why this issue has suddenly been turned into a moral one.

The Times leader quoted above goes on: “Lower tax bills, [the corporation’s] officers may argue, mean lower bills for its customers and higher returns for its shareholders – who in turn ought to be paying tax. The reasoning, invariably, is false, for even corporations have moral duties.”

This is sheer intellectual, and moral, incoherence: first, the leader does not even mention the huge swathes of job creation, both directly in the form of, say, Starbucks’ own employees and indirectly through the supply chain – which explains Osborne’s concern that paying more tax may shut a multinational company down. And of course it should be noted that throughout that chain of employment, taxes will be being collected.

The most incoherent aspect of that statement, though, is that a true reasoning along economic lines of the effect on jobs and prosperity is viewed by The Times as immoral, as “a veneer of self-justification”. But that is just how companies, big and small, operate. And why shareholders should be pilloried in this way reveals further moral and economic confusion; they are after all the people who invest their money and, quite rightly, expect a return – or why invest? And amongst those profit-seeking shareholders in major corporations are many of the big pension funds – those same pension funds which have been despoliated by the state: first by Gordon Brown’s so-called windfall taxes, and more recently by the millions wiped off their funds by QE.

But let us consider morality and taxes in one of the most shocking exposures of state corruption, the grooming for sex by Asian gangs in the north of England of underage girls. This was going on in the full knowledge of the agents of the state, the social workers who had responsibility for these girls, many of whom were in care, and the police, and all this while these agents of the state were, and still are (heads have not rolled), drawing their pay – from the public purse funded by the taxpayer. Morality anyone?

And what about that Chair of the Public Accounts Committee, Margaret Hodge? While we’re on the subject, this is that same Margaret Hodge who, as Leader of Islington Council, covered up homosexual grooming by some of her own social worker employees of boys in Islington care homes (and who, in the full knowledge of this failure to protect the vulnerable on her watch, Tony Blair, sickeningly, appointed Minister for Children).

Margaret Hodge was also one of the more exploitative manipulators of her expenses as revealed in the MPs expenses scandal. Morality, forsooth! Why should Starbucks subsidise her with its taxes??

“The Barking and Dagenham Sentinel - being delivered free to all homes in Barking – has dealt a crushing blow to the hopes for re-election of Margaret Hodge. Hodge stands revealed for her record on the Iraq war, her expenses claims and her failure to deal with serious child abuse when she was Head of Islington Council. The paper suggests that the ‘hold your nose and vote Labour’ approach would be immoral and inappropriate  in this instance. Many principled anti-racists are rejecting Hodge and instead intend to vote for the Green Party. Other committed Labour supporters are deciding to stay at home as no  genuine, principled Labour candidate is standing in the Constituency.” This is part of a report on Chairman Hodge, which can be found here; other reports here and here.

So morality is a mug’s game in politics; as Harold Macmillan once said, if the public wanted morality it should get it from it bishops, not its politicians.

Paul Johnson in his book A History of the Modern World from 1917 to the 1980s, makes the cogent point that the evidence that the state can do great evil is the history of the twentieth century; whether the state can act for the welfare of its citizens is dubious – evidence for this is not encouraging.

Starbucks and Amazon, shopkeepers both, are of immense benefit to the nation: Margaret Hodge and her ilk are not. The Public Accounts Committee, a spending committee, should revert to its proper parliamentary and constitutional function of keeping the government accountable, not assist it in its raids on private and productive wealth.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST