Renderings- You, in the VAT, Now

[don]

How a Value-Added Tax Could Work

http://www.nytimes.com/interactive/2...t-graphic.html


be afraid, be very afraid....

With the deficit at record levels, economists are suggesting a value-added tax, a broad tax on goods and services collected at every step along the chain of production rather than solely by the consumer at the end. Here’s how it could work in the simplest sense:

Transaction	Base cost	Value-added tax
1 A fabric store sells silk to a tailor			The tailor pays the fabric store $11, and the store remits $1 to the government.
2 The tailor sews a dress and sells it to a retailer			The retailer pays $33 for the dress. Instead of sending the full $3 to the government, however, the tailor gets to subtract the $1 of taxes he had already paid to the fabric store.
3 The retailer sells the dress to a shopper			The shopper pays $55, but because $3 in taxes have already been paid by the fabric store and the tailor, the retailer only pays the government $2.

[bcassill]

Re: Renderings- You, in the VAT, Now

If they'd get rid of the income tax, I might be for this given that certain items, like food, would be exempt to make it less regressive. But, of course, we know that will never happen. No, they will tax you where you live (property tax), tax your labor (income tax), tax you for eating and clothing yourselves (sales tax), and tax you for the very air you breath (carbon tax). VAT is just another way to pass a higher tax onto the backs of the poor and middle class. Of course, we have to cut the capital gains tax so the Wall Street fat cats can safely re-invest their wealth back into the American economy (i.e. move their illegal proceeds to an off-shore bank account).:p

[World Traveler]

Re: Renderings- You, in the VAT, Now

bcassill, EXCELLENT summary of how America's oligarchs think.

[Jay]

Re: Renderings- You, in the VAT, Now

If they'd get rid of the income tax, I might be for this given that certain items, like food, would be exempt to make it less regressive. But, of course, we know that will never happen. No, they will tax you where you live (property tax), tax your labor (income tax), tax you for eating and clothing yourselves (sales tax), and tax you for the very air you breath (carbon tax). VAT is just another way to pass a higher tax onto the backs of the poor and middle class. Of course, we have to cut the capital gains tax so the Wall Street fat cats can safely re-invest their wealth back into the American economy (i.e. move their illegal proceeds to an off-shore bank account).:p

I would think the end game is a currency they can control that has no capital flow issues, i.e. a new global reserve currency controlled by the IMF, that can be consistently inflated at a rate of 5%. A global hidden inflation tax. No other taxes needed beyond those to control social policy and keep people in line. The global warming taxes, VAT, and debt servitude serve this purpose well while also effectively wasting overcapacity, a function war also provides. Those in power end up locked in at control of the helm with a 5% permanent seignorage tax. It's going to happen in most of our lifetimes. The alternative is massive instability and infighting by titans which is not a pretty picture. We are far enough down this road that TPTB have no choice if they want to save their skin. The beauty from their perspective is that they get to stay on top without the messy questions of a real war.

[ThePythonicCow]

Re: Renderings- You, in the VAT, Now

I would think the end game is a currency they can control that has no capital flow issues, i.e. a new global reserve currency controlled by the IMF [Yup!], that can be consistently inflated at a rate of 5% [Huh?].

A U.S. debt funded reserve currency will become a World debt funded reserve currency, I agree.

Despite some predictions by such goldbugs as Bob Chapman, I don't see TPTB replacing the U.S. Dollar as the national currency of the United States. At most, late in the game, after the Fed's role of world banker has been supplanted by the IMF, the Fed could be (finally, a day late and many dollars short) be abolished and "Federal Reserve Notes" be replaced with "U.S. Treasury Notes" or some such. By that point, it wouldn't really matter. Rather I expect that some IMF-derivative basket of currencies, backed by the debt paper and currency exchange reserves of many nations, will become the world's "meta-currency", in which terms international settlements commonly occur.

I presently anticipate that I do not want to hold gold the day this IMF meta-currency arrangement is announced. This meta-currency moves us further from a hard currency monetary system. International financiers such as in the IMF are no friend of gold.

However I don't (getting back to your comment) see this "constant 5% inflation." They couldn't do it if they wanted (can't measure inflation that accurately or even agree on what it is), and centralized authorities are notorious for not wanting to self-limit their powers.

[Jay]

Re: Renderings- You, in the VAT, Now

A U.S. debt funded reserve currency will become a World debt funded reserve currency, I agree.

Despite some predictions by such goldbugs as Bob Chapman, I don't see TPTB replacing the U.S. Dollar as the national currency of the United States. At most, late in the game, after the Fed's role of world banker has been supplanted by the IMF, the Fed could be (finally, a day late and many dollars short) be abolished and "Federal Reserve Notes" be replaced with "U.S. Treasury Notes" or some such. By that point, it wouldn't really matter. Rather I expect that some IMF-derivative basket of currencies, backed by the debt paper and currency exchange reserves of many nations, will become the world's "meta-currency", in which terms international settlements commonly occur.

I presently anticipate that I do not want to hold gold the day this IMF meta-currency arrangement is announced. This meta-currency moves us further from a hard currency monetary system. International financiers such as in the IMF are no friend of gold.

However I don't (getting back to your comment) see this "constant 5% inflation." They couldn't do it if they wanted (can't measure inflation that accurately or even agree on what it is), and centralized authorities are notorious for not wanting to self-limit their powers.

A new IMF currency will be created in the middle of severe economic turmoil that in essence obliterates national sovereignities. It will also be fiat, probably initially tied to a basket of tangibles, but with the inevitable debasement that occurs when a single power controls the money lever. A debasement of 5% is a level that makes all the IMF powers and their subservient governments wildly rich as it would be an effective 5% tax on global GDP, and yet isn't too much to kill the golden goose. The economy would continue on around a neofeudal society. The populace will be subdued and dumbed down working off their debt, worrying about swine flu, global warming, terrorists, the Iranians, where to get their next check from the government, etc. Not pretty but explains a lot of what has been happening. Really the only issue is whether someone of power in a sovereign country gets wind of it and decides to put up a fight instead of putting out a hand.

G. Edward Griffin's original ideas, not mine.

[ThePythonicCow]

Re: Renderings- You, in the VAT, Now

A new IMF currency will be created in the middle of severe economic turmoil that in essence obliterates national sovereignities. It will also be fiat, probably initially tied to a basket of tangibles, but with the inevitable debasement that occurs when a single power controls the money lever. A debasement of 5% is a level that makes all the IMF powers and their subservient governments wildly rich as it would be an effective 5% tax on global GDP, and yet isn't too much to kill the golden goose.

We're in considerable agreement I suspect.

I was reading "5%" as a precise number, between 4.5% and 5.5% given the usual round off conventions. I didn't figure such precision was possible. I suspect you (and Griffin) mean it in a fuzzier sense. If so, or likely even if not, then we agree on what's important, and my overly precise quibbling should be ignored .

Also I don't expect that this new IMF fiat currency will replace the Dollar for domestic use within the U.S. I expect it will become the world's new Reserve currency, with all national currencies including the Dollar based on it. However I see warnings of a wholesale replacement of Dollars for some new currency within the U.S. at my favorite doomster sites, and I cannot be certain that such won't happen. I just don't see why such currency replacement for domestic U.S. purposes would be done.

In short, I don't see us regressing to a hard money gold backed currency anytime soon. I see the Bankster fiat currency being elevated to a world wide scope. Americans will become poorer. It will not be the best of times.

[Jay]

Re: Renderings- You, in the VAT, Now

We're in considerable agreement I suspect.

I was reading "5%" as a precise number, between 4.5% and 5.5% given the usual round off conventions. I didn't figure such precision was possible. I suspect you (and Griffin) mean it in a fuzzier sense. If so, or likely even if not, then we agree on what's important, and my overly precise quibbling should be ignored .

Also I don't expect that this new IMF fiat currency will replace the Dollar for domestic use within the U.S. I expect it will become the world's new Reserve currency, with all national currencies including the Dollar based on it. However I see warnings of a wholesale replacement of Dollars for some new currency within the U.S. at my favorite doomster sites, and I cannot be certain that such won't happen. I just don't see why such currency replacement for domestic U.S. purposes would be done.

In short, I don't see us regressing to a hard money gold backed currency anytime soon. I see the Bankster fiat currency being elevated to a world wide scope. Americans will become poorer. It will not be the best of times.

I probably should have said a debasement goal of around 5% to be clear. The only good times will be had by the connected. Try and break into that crew if you haven't already, it will be tough. Better to have a clear conscience and live off the grid but I don't know if that will be possible for most. A global IMF controlled currency will further the wage competition between third world countries and those who are used to a Hummer in their driveway. There's gonna be a lot of soporifics, distractions, and bare knuckles coming to quell unease. The solution in my mind is live the right way and make a difference in your community and make the best decisions you can amongst shifting sands.

[ThePythonicCow]

Re: Renderings- You, in the VAT, Now

Better to have a clear conscience and live off the grid but I don't know if that will be possible for most.

Yup. I'll take the clear conscience and live not off the grid, but really cheap.

[bcassill]

Re: Renderings- You, in the VAT, Now

In any discussion of a new currency whether it be special drawing rights from the IMF or whatever form it might take, it will be driven by American and European interests, on the one hand, who are interested in defending the status quo vs. the up and coming Asian powers, particularly India and China who want a seat at the table. The powers that be, however, have been at the game a long time and the new players will have to know that game has been rigged in favor of the house. Per EJ's most recent post, the world still runs on dollars so it becomes a game of chicken to see who blinks first: the mercantilist economies of Asia vs. America and her hand picked cadre of allies. Bernanke et al. control the ride, at least for now, although everyone is eyeing the exits knowing full well they can't get off without causing a complete collapse of the system.

It is an interesting time we live in to say the least. Where it all ends up is anyone's guess although I surmise it will end very badly in many parts of the world. Expect to see the continuation of sovereign defaults, the implosion of weak governments, and the occasional shooting war over scarce resources.

That is probably the best case scenario. The worst case is one where we see a continued substitution of the sovereign balance sheet for the imploding private one in a vain attempt to inflate the bubble just one more time. If that pops...well, let's just say I hope you have a private island you can go to to wait things out.;)

[Jay]

Re: Renderings- You, in the VAT, Now

The only good times will be had by the connected.

I should say that what people are used to as good times will likely change. No reason you can't just have a BBQ with the neighbors and listen to some good music. If you have a job that is.