Taxation & Its Role in the Destruction of Our Economy

Martin Amstrong 的諗法真係有時好難明, 須睇多些才可以理解, 原來在債券爆煲後, 佢認為熱錢會流去[流動資產](珍藏、股票、貴金屬), 而[不動產]的物業將會大跌, 因為高(入息)稅率會使好多人離開, 而[不動產]是帶不走的, 但佢係講緊歐美 !

佢認為美股可取, 不過歐洲股就唔睇好, 因為歐洲政府都可以在股票中勁抽稅 !

亞洲股市大家就要識拾生啦, 有歐美業務的就要少沾手為妙 !

www.armstrongeconomics.com

QUESTION:

Thank you for your fascinating blog. I thoroughly enjoy reading your analysis on social, political, financial and historical topics. i would like to make a couple points with questions and get your analysis or feedback on these.

First point: You describe that post 2015.75 (Big Bang), you expect a peak in bonds (safe haven) that will coincide with a low in stocks due to global fear. The eventual collapse in bonds will drive everyone into “private assets” causing a major rise in stocks and commodities due to lack of confidence in government. 

At the same time, you say that government won’t give up the fight on taxation and asset seizure. So, my question is, what good is it to invest in stocks in this private phase if the government will most likely tax all profits to the point of making the investment pointless? Why would people continue to buy stocks then?

Typically when fair rule of law degrades, people hoard and don’t invest, correct?

Thanks for your analysis!

ANSWER:

Historically, this has been the difference between movable and immovable assets, such as real estate. Collectibles, stocks, and precious metals are in the moveable category. Of course this is what governments are now attempting to seize.

The best hedge would be to have assets in terms of stocks in the USA, and certainly not in Europe. It may be harder to engage in a taxation of shares as an asset, whereas in Europe they are much closer to communism and see nothing wrong with taxing assets, not just income.

If we look at the fall of Rome, the first asset class to decline was real estate, as you cannot take it with you when you leave town. Thus, the population of Rome collapsed from 1 million to 15,000 by the Middle Ages. People had no choice and just walked away, unable to pay the taxes demanded.

Taxes are the great destroyer. You are an economic slave if you simply cannot retire without having to pay taxes. Taxes reduce economic growth and lower productivity for they are no different, economically speaking, from some gangster demanding “protection” money to operate a business.