Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

[GRG55]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

GRG, did you not see the little bit of legislation passed earlier this year?



Note that the US is also one of the few nations to tax citizens no matter where they live AND WHERE THEIR INCOME COMES FROM. Thus HEART is a natural combination with this policy and could be said to constitute a form of capital control. After all, why bother holding the money in when the government can get the tax benefit irregardless?...

Not being a US citizen or resident I do not follow the minutia of US tax law. However, I don't actually see anything inconsistent in the HEART legislation. Yes, the US [unlike most other jurisdictions] takes the position that having US citizenship entails certain responsibilities and obligations regardless of residency status, and taxes based on citizenship. However, I understand that the income taxes that non-resident US citizens pay is lower than they would pay otherwise (from my casual discussions with US expats living in the Arabian Gulf while I was there). I also understand that several years ago that "discount" was reduced, but not completely eliminated, by Congress.

Also, it is not uncommon for countries that tax citizens on residency, rather than citizenship, to tax unrealized capital gains on all [non-sheltered] holdings of every kind, including real estate, as of the date of departure of the country [this is how Canadian law works in this situation, BTW].

I do not see that the US is "holding money in" as I am not aware that any US citizen or resident has any restriction from taking money out of the country, provided they follow the tax code. No different from other OECD jurisdictions as far as I know.

[c1ue]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

However, I understand that the income taxes that non-resident US citizens pay is lower than they would pay otherwise (from my casual discussions with US expats living in the Arabian Gulf while I was there). I also understand that several years ago that "discount" was reduced, but not completely eliminated, by Congress.

US citizens working abroad and residing abroad used to have a $75K exemption on taxes. However, since these citizens are also paying local taxes, the net benefit is for most to just wind up paying taxes as locals.

Also, it is not uncommon for countries that tax citizens on residency, rather than citizenship, to tax unrealized capital gains on all [non-sheltered] holdings of every kind, including real estate, as of the date of departure of the country [this is how Canadian law works in this situation, BTW].

These regulations in other countries do exist - but I ask when they were implemented.

Norway, for example, only passed this law in 2006.

While HEART itself isn't a severely blatant form of capital control, on the other hand I would ask WHY this regulation was suddenly passed.

Are large numbers of US citizens forgoing their citizenship and avoiding capital gains taxes? Or are expected to?

Where's the problem this is intended to fix? Or the loophole being exploited?

A capital gains tax on gains made while a foreigner is resident in another country - I can understand that since the foreigner is supposed to be paying local taxes (i.e. acting as a citizen). When the foreigner leaves, he/she loses the citizen-like tax status and the capital gains is understandable.

This precedent is perfectly fine for a US citizen forgoing citizenship, but again where's the smoking gun?

[GRG55]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

US citizens working abroad and residing abroad used to have a $75K exemption on taxes. However, since these citizens are also paying local taxes, the net benefit is for most to just wind up paying taxes as locals...

Unless they are resident in the Arabian Gulf, in which case they do not pay local taxes on income or investment gains. ;)

These regulations in other countries do exist - but I ask when they were implemented.

Norway, for example, only passed this law in 2006...

Not sure when Canada created that law, but it was well before Norway...that I do know from personal experience.

While HEART itself isn't a severely blatant form of capital control, on the other hand I would ask WHY this regulation was suddenly passed.

Are large numbers of US citizens forgoing their citizenship and avoiding capital gains taxes? Or are expected to?

Where's the problem this is intended to fix? Or the loophole being exploited?...

Let's look at this from the other direction. Before this legislation what was the mechanism whereby an American citizen could renounce his/her citizenship? Has this perhaps actually made that step easier? [I am wondering, for example, why so many 1960's draft dodgers hiding out abroad didn't just renounce their citizenship?]

A capital gains tax on gains made while a foreigner is resident in another country - I can understand that since the foreigner is supposed to be paying local taxes (i.e. acting as a citizen). When the foreigner leaves, he/she loses the citizen-like tax status and the capital gains is understandable.

This precedent is perfectly fine for a US citizen forgoing citizenship, but again where's the smoking gun?

I doubt this is going to make much difference in the citizenship statistics one way or the other. Renouncing one's citizenship, especially for an American, is a significant step. And the presumed benefits of permanently abandoning ones homeland are actually negative to marginal for most everyone. Just ask Marc Rich.

[jtabeb]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

"rather than think tank wonks or appointed bureaucrats"

Yes, I was talking about them, no elected offical could dare utter this right now.

My point is that in a deflation scare, the goverment gets the opportunity to make a faustian bargin with the people (one they "can't refuse", as they say).

Here is the pitch as I envision it, "these programs are insolvent and are being done away with for the good of the country... necessary...impossible fiscal situation etc. ..., we have given you the taxpayer the chance to take a refund on your withholdings or lose them and your benifits when these programs fail"

It will be presented as a people's referendum, the choices given will be "$0 and no benefits" or "$60,000 and no benefits", let the people choose, right? This way it is not a "political decision" it is the popular will of the people which the government *cough* reluctantly acquieses to.

Ash, does that explanation make more sense?

JT

[LargoWinch]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

When I see things like this, it feels a lot more like depression than inflation...

The TSX (Toronto) lost 22% of its value since mid-June.

Index data delayed 15 min. DJIA 11,304.50 -206.24 NASDAQ 2,218.79 -50.97 NIKKEI 12,400.65 -223.81 RUSSELL 711.96 -20.90 NYSE 7,923.71 -244.91 TSX 12,203.16 -431.48 USD 79.37 -0.08 Crude Oil 102.89 -3.45

Even PMs are getting hammered:

Sep 09, 2008 15:18 NY Time Change Silver 11.44 -0.62 Platinum 1224.00 -99.00 Palladium 235.00 -24.00

I guess the question is what will the CBs do next? Cut even more? More checks?

and then... massive inflation in 3-5 years. Good job CBs. First the depression left followed by inflation hook from the right.

This is the most volatile market by far since I started investing. It feels like cash is the only safe heaven now.

[jtabeb]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

It feels like cash is the only safe heaven now.

That is IN-FREAKING-TENTIONAL on the part of the CBs. Make sure that you blinders are off, because whiplash is a bitch!

[GRG55]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

When I see things like this, it feels a lot more like depression than inflation...

The TSX (Toronto) lost 22% of its value since mid-June.

Index data delayed 15 min. DJIA 11,304.50 -206.24 NASDAQ 2,218.79 -50.97 NIKKEI 12,400.65 -223.81 RUSSELL 711.96 -20.90 NYSE 7,923.71 -244.91 TSX 12,203.16 -431.48 USD 79.37 -0.08 Crude Oil 102.89 -3.45

Even PMs are getting hammered:

Sep 09, 2008 15:18 NY Time Change Silver 11.44 -0.62 Platinum 1224.00 -99.00 Palladium 235.00 -24.00

I guess the question is what will the CBs do next? Cut even more? More checks?

and then... massive inflation in 3-5 years. Good job CBs. First the depression left followed by inflation hook from the right.

This is the most volatile market by far since I started investing. It feels like cash is the only safe heaven now.

I'll bet Jim Rogers is buying the commodities that have seen the most liquidation; and watching the rest closely This has been underway well before mid-June.

[Supercilious]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

That's my take for what it's worth. You have to keep the dollar intact to preserve dollar hegemony. If enough credit is destroyed (debt is defaulted) the demand for dollars keeps increasing. This is happening at a very fast rate so the fed can print at a very fast rate and as long as they stay below the dollar demand thereshold in their new printing, all is well (for them).

Yup. You said it better than me. The Fed printing rate may be a just function of credit destruction rate.

I think EJ and JK are correct, they just agree with out knowing it.

I agree. They are are both correct but each is looking at a different side of the same coin ( a 1 Bonar coin ... of course )

The question is will they be FORCED to increase printing faster than the dollar demand threshold allows.

I'm not sure anybody is FORCING them to do anything. The Fed hold all the strings.

It may be that at this moment the whole debate inflation/deflation/disinflation is completely irrelevant because the determining variable are elsewhere, respectively the dynamics of the internal distribution of the liquidity pyramid.

When I put my tin foil hat on, I think of a hammer drill mechanism, where Wall Street generates the shocks that allows the Fed to drill and advance further in the vaults of the foreign banks and in the wallet of Average Joe (probably that wallet is completely pierced on both sides by now).

The whole issue of inflation/deflation/disinflation is nothing else that the secondary effect of vibration felt in the hand holding the hammer drill.

So as we have discussed before, this is a POLICY decision. Just imagine a statement like " we have cancelled social security for you, but here are all of your paid-in premiums back" (to the tune of $50,000 for a 10 year working slob like myself). Throw in a medicare cancellation refund as well and you are talking another $10,000. Point is, Gubment balance sheets now look AWSOME! (even with the trillions or so of immediate debt this would require. The reduction in future liabilities more that makes up for the present day increase.)

Yup. I couldn't agree more with you here. IMHO there is a huge difference between what the Fed says and what the Fed actually does.

And if one turns off the tube (where Creamer monkeys are talking nonsense) and look carefully with at what the Fed actually does, the direction in which things are moving becomes obvious.

[phirang]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

Yup. You said it better than me. The Fed printing rate may be a just function of credit destruction rate.





I agree. They are are both correct but each is looking at a different side of the same coin ( a 1 Bonar coin ... of course )



I'm not sure anybody is FORCING them to do anything. The Fed hold all the strings.

It may be that at this moment the whole debate inflation/deflation/disinflation is completely irrelevant because the determining variable are elsewhere, respectively the dynamics of the internal distribution of the liquidity pyramid.

When I put my tin foil hat on, I think of a hammer drill mechanism, where Wall Street generates the shocks that allows the Fed to drill and advance further in the vaults of the foreign banks and in the wallet of Average Joe (probably that wallet is completely pierced on both sides by now).

The whole issue of inflation/deflation/disinflation is nothing else that the secondary effect of vibration felt in the hand holding the hammer drill.



Yup. I couldn't agree more with you here. IMHO there is a huge difference between what the Fed says and what the Fed actually does.

And if one turns off the tube (where Creamer monkeys are talking nonsense) and look carefully with at what the Fed actually does, the direction in which things are moving becomes obvious.

USA Inc. can't get cheap debt with gold over $900. Just not gonna happen.

For the record, central bankers have MASSIVE amounts of data. They have data you never even heard of. They literally know, everything. Yup, they are as close to omniscent as it gets. I am not being facecious here. You think the BIS didn't foresee this problem in Janurary?

Therefore, since CB's know everything and definitely knew than FNM was up shits creak probably since say Janurary, it makes sense they first acted with a short-term liquidity shock by lowing FFR. Now, with the recent bailout, the balance-sheet shock(shock, i.e. impulse response function) is addressed WITHOUT new money flow YET. By letting inflation expectations dampen due to the inevitable economic slowdown, which they KNEW was coming, they could move spec money back INTO treasuries and keep debt cheap for USA Inc. Pretty damn smart, eh, and ruinous for inflation hedges, which the Fed knows all depend on credit which, of course, was contracting!

BY THE TIME we get truly inflationary spending, wage pressure(watch that Boeing strike: you bet your ass the Fed is) and deflationary expectations should keep yields low, with a lagged reaction to higher money supply and depreciated labor value.

And lagging is victory, as the expectation THEN is for asset prices to recover and interest rates to increase accordingly and assets taken off the gov's BS.

[ASH]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

"rather than think tank wonks or appointed bureaucrats"

Yes, I was talking about them, no elected offical could dare utter this right now.

My point is that in a deflation scare, the goverment gets the opportunity to make a faustian bargin with the people (one they "can't refuse", as they say).

Here is the pitch as I envision it, "these programs are insolvent and are being done away with for the good of the country... necessary...impossible fiscal situation etc. ..., we have given you the taxpayer the chance to take a refund on your withholdings or lose them and your benifits when these programs fail"

It will be presented as a people's referendum, the choices given will be "$0 and no benefits" or "$60,000 and no benefits", let the people choose, right? This way it is not a "political decision" it is the popular will of the people which the government *cough* reluctantly acquieses to.

Ash, does that explanation make more sense?

JT

Thanks. It makes plenty of sense, but I'm not sure it can be done without complete cooperation amongst all the politicians of both major parties. The problem I see is that "no benefits" happens gradually down the line, and therefore is subject to "he said -- she said". By this, I mean that the political proposition is vulnerable to other politicians saying that the two choices are not the only choices, and that there is in fact the third possibility of people receiving their benefits. So long as someone is willing to tell the public that everything will be alright and they can have their benefits -- while suggesting those who say otherwise are wealthy reactionary liars -- most of the public will be inclined to believe it. I well remember Democrats holding forth at length a few years ago to the effect that there was no entitlements crisis -- in effect, that Republican calls for Social Security reform were based entirely upon a trumped-up problem. This is not intended as a pro-Republican statement -- merely my recollection of the most recent and memorable example of this type of thing. It may be true that the "reforms" proposed by the Republicans served the interests of the FIRE industry -- and did not really address the real problem -- but it was patently false to assert that there was no real problem. I just don't see the political percentage in telling people they can't have their entitlements a few decades from now (which is basically true), when one can get voted into office today by telling people those benefits are safe. Much safer to get elected now, and let some other shmoe pay out in depreciated dollars and disguise the default during their tenure in office.

[LargoWinch]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

I'll bet Jim Rogers is buying the commodities that have seen the most liquidation; and watching the rest closely This has been underway well before mid-June.

Do you have a good question for him? I am meeting with him in early October (1st or 2nd unsure) as part of my professional society...

I was thinking to ask about something like the "inflation vs deflation debate" and see whats he thinks.

Any of you iTulipers have a good suggestion?

If it is recorded, I will upload on Utube.

[phirang]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

Do you have a good question for him? I am meeting with him in early October (1st or 2nd unsure) as part of my professional society...

I was thinking to ask about something like the "inflation vs deflation debate" and see whats he thinks.

Any of you iTuliper have a good questions suggestion?

If it is recorded, I will upload on Utube.

I would ask him the following:

1) Walk through his arguments for commodities in general: is it because of a population increase, or is it a result of a wealth-transfer from the West to the more populated East?

2) Isn't China constrained by the US' ability to consume? If the dollar crashes, isn't that a nightmare scenario for China, or is he assuming that the US won't be able to re-industrialize quickly enough or secure resources, i.e. have the third-world conundrum of not enuf hard currency to import?

3) Wall st says China's banks are a disaster: everyone knows this. Why WON'T they blow up and bring down China with it? (I think the gov is more involved than ppl think, and do have some control over this).

4) Where does he park his cash? Yen? What does he do for income while he waits for his commodities to perform? YTD, his indices have done horribly, and so is he sitting on munis or what? The BoJ won't let the Yen appreciate, and will slaughter savers to keep exports a hummin'. Ask him about that.

5) How will China weather the coming downturn? Everyone is going to be affected, and they don't have enough reserves to bail-out the economy for years. What is the next step for China's economy, aside from graduating to a less energy-intensive profile?

[Jay]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

Do you have a good question for him? I am meeting with him in early October (1st or 2nd unsure) as part of my professional society...

I was thinking to ask about something like the "inflation vs deflation debate" and see whats he thinks.

Any of you iTuliper have a good questions suggestion?

If it is recorded, I will upload on Utube.

I would like to know how he feels about Peak Cheap Oil, and where oil prices are going; in the near and middle terms.

[Supercilious]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

Thanks. It makes plenty of sense, but I'm not sure it can be done without complete cooperation amongst all the politicians of both major parties.

Of course it can't be done without complete cooperation amongst all the politicians (with few notable exceptions) of both parties.

But cooperation amongst all politicians is not enough. There is a need for a scare factor ... 1907 scare ... creation of the Federal Reserve System. ;)

[phirang]

Re: Jack Crooks Calls For Deflation And Long Term Bull Market USD. [wtf]

Of course it can't be done without complete cooperation amongst all the politicians (with few notable exceptions) of both parties.

But cooperation amongst all politicians is not enough. There is a need for a scare factor ... 1907 scare ... creation of the Federal Reserve System. ;)

The Society for the Advancement of Natonalization of Losses and Privitizations of Profits. :eek: