Tuesday, December 11, 2018

North Korea nuclear bomb test: South Korea may deploy ‘most powerful US tactical weapons’ in response

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by Samuel Osborne, The Independent:

South Korea has said it will consider deploying the most powerful US tactical weapons after North Korea claimed to have detonated a hydrogen bomb in its sixth nuclear test.

Moon Jae-in, South Korea’s President, called for the “strongest possible” response to the nuclear test, including new UN Security Council sanctions to “completely isolate” the North.

Seoul and Washington also discussed deploying US strategic military assets to the Korean peninsula, South Korea’s national security adviser Chung Eui-yong said in a news briefing.

South Korea’s presidential office said the security chiefs for Seoul and Washington had spoken following North Korea’s sixth nuclear test.

A spokesman said US National Security Adviser HR McMaster spoke with Mr Chung, his South Korean counterpart, for 20 minutes in an emergency phone call about an hour after the detonation.

China’s Foreign Ministry urged North Korea to stop its “wrong” actions.

The ministry said in a statement on its website that China resolutely opposed and strongly condemned North Korea’s actions, and urged the country to respect UN Security Council resolutions.

Japanese and South Korean officials said an earthquake detected near the North’s test site was around 10 times more powerful than previous detonations, and concluded the North had conducted its sixth nuclear test.

It was the North’s first nuclear test since US President Donald Trump took office, and marked a direct challenge to Mr Trump, who hours earlier had talked by phone with Japanese Prime Minister Shinzo Abe about the “escalating” nuclear crisis in the region.

North Korea said in an announcement on state television that a hydrogen bomb test ordered by leader Kim Jong-un was a “perfect success” and a “meaningful” step in completing the country’s nuclear weapons programmes.

The bomb was designed to be mounted on its newly developed intercontinental ballistic missile (ICBM) the North said in the announcement, which came hours after the US Geological Survey (USGS) reported a 6.3 magnitude quake.

Read More @ Independent.co.uk

Freeport McMoRan Shareholders Learn a Key Resource Lesson the Hard Way

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by Marin Katusa, Katusa Research:

As I write, copper for September 2017 delivery is trading for $3.07 per pound. The red metal is at 2-year highs. It’s up over 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} over the past year.

In other words, it’s a bull market in copper.

And that’s why the following statement is so crazy: One of the world’s largest copper producers just lost one of the world’s greatest copper mines.

This week, the Indonesian government and major miner Freeport McMoRan reached a “settlement” where Freeport’s ownership stake in the colossal Grasberg mine (located in Indonesia) will be reduced from 90.64{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 49{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. The reduction in ownership will go in favor of the Indonesian government, which feels it deserves a larger share of the mine.

Grasberg is one of the world’s largest, most productive gold and copper mines. Building it required $12 billion in investment. And the Indonesian government essentially just stole about 42{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of it. Freeport tried to fight the move, but ultimately Indonesia said take a partial reduction or we’ll shut down the mine and move towards a 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} reduction. To be fair to Indonesia, it says it will pay Freeport shareholders for its stake. But it will surely be at a ridiculously low price… and Freeport will no longer be a majority shareholder (which is worth a huge amount of money).

However you paint it, it’s a major loss for Freeport shareholders over the long-term. They’re learning the hard way that it’s essential to base your resource investments in resource-development friendly countries like the U.S., Canada, and Australia… while being very wary of selected countries in Asia, the former Soviet Union, and Africa.

In other words, they’re learning why they should put my AK-47 Indicator to use.

Over the past decade, I’ve written a lot about how nationalization is one of the biggest – yet most underrated – dangers for resource investors. While nationalization comes in many forms, it is essentially a government breaking legal contracts and stealing from a business and its shareholders.

As cash-strapped governments look for emergency sources of revenue, they often turn to confiscating physical assets like oil fields, gold mines, and copper mines. Doing so is typically an easy sell to the public. Much easier than stealing a beer or some candy. The government can say the oil or gold is part of the country’s natural heritage. The politicians get the added bonus of sticking it to Whitey.

Early in my investment career, I really enjoyed the excitement of risking capital in exotic lands like Indonesia. The site visits were exciting. But as I wrote in an educational piece that could save you a fortune called How To Use The AK-47 Indicator:..

Over the past 17 years, I’ve been all over the world—often to places that many people would never dare to go. Besides Iraq, I’ve traveled to Kosovo, Venezuela, Russia, China, Argentina, Colombia, Mexico, Turkey, Nigeria, Kenya, Ethiopia, and dozens of other countries.

Yet if you read my work and look at my portfolio these days, you’re sure to notice a lack of “third world” excitement that many resource investors crave.

As a new resource investor, it’s hard not to get interested in the excitement and drama that comes with investing in far-off lands. After all, many countries in Africa, Asia, and South America are less picked over by exploration geologists. You get to visit new places and meet interesting people. And the prospect of finding the next giant gold deposit in some jungle is just plain exciting. All these things got me on many plane trips.

Yet, now…after many successes and many mistakesI tend to avoid places where people hold AK-47s in the streets.

All the travel I’ve done…all that time spent on planes…has shaped my portfolio and the research I write today… which overwhelmingly features companies that I can take my friends and family to visit the operations, safely.

In other words, after flying millions of miles on planes and visiting more than 100 countries, I’m right back home. But the reason I invest so heavily in Canada and other English-speaking countries isn’t nostalgia for where I’m from…it’s strictly a matter of making money.

I’ve learned the hard way that if you’re interested in making money, you need to trade excitement for boring old rule of law and a simple respect for business.

The places where people with AK-47s walk the streets tend to be the places that have very few of the roads, bridges, power lines, railroads, and ports needed to transport raw materials. That kind of infrastructure is critical for turning resource deposits into free cash flow. The places where people walk around with AK-47s also often lack contract laws, property rights, and worst of all, respect for human life.

If you’re reading this, there’s a good chance you live in the U.S. or Canada. As much of a SOB as you think the politician in your state or province is, trust me, he has nothing on the average lunatic running a third-world country. Or think of it this way: if Donald Trump doesn’t like you, he sends out a nasty tweet. If your average third world dictator doesn’t like you, he sends out a hit squad.

Read More @ KatusaResearch.com

Van Halen, M&Ms, And The Next Market Downturn

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by Adam Taggart, Peak Prosperity:

The planet-sized egos of rock & roll performers are legendary.

Few things symbolize this better than the outrageous requests they often make when on tour.

These requests are referred to as “riders”, and appear in the contract a tour venue receives in advance of the artist’s arrival. These contract riders specify the physical conditions that the singer/band requires to be in place before arriving to perform. Stage lighting settings, sound equipment, furnishings, etc — that kind of stuff.

And these rider requests can get pretty funky – often extremely so — when it comes to backstage perks the performers want.

For example: A wooden pond filled with koi carp (Eminem). A driver who will not speak or make eye contact (Katy Perry). 20 white kittens and 100 doves (Mariah Carey). Seven dwarves (Iggy Pop). 50,000 bees (Slayer). A sub-machine gun (Mötley Crüe). And, yes, even a great white shark (Hank III).

The practice of making these kind of outrageous demands stems from a rider Van Halen inserted into the contract for its 1982 world tour, which insisted on a bowl of M&Ms to be provided backstage, but with all of the brown M&Ms removed.

As this image below of the actual rider shows, the band was very explicit in its seriousness about this:

Once the media got whiff of this, it had a field day roasting the band’s narcissistic chutzpah. A new high-water mark of diva capriciousness had been established, which quickly became legend. A feat of prima donnapampering that subsequent performers have been trying to top ever since.

But as crazy as it sounds, Van Halen’s “no brown M&Ms” rider had nothing to do with caprice. There was a solid rationale behind it.

In fact, it was quite brilliant.

The Importance Of Effective Indicators

Van Halen’s 1982 world tour was a massive production, involving a tremendous amount of gear and technical complexity. The contract the band sent in advance to venues was so thick due to all the details within, it was referred to as the “Chinese Yellow Pages”.

Non-compliance with the requirements in the contract could have serious consequences that could ruin the show, or even jeopardize lives.

So when the band rolled up to its next venue, it needed a quick way to determine if the stage crew there had complied with all of the specifications within its contract.

And that’s why the “no brown M&Ms” rider was inserted. The band could simply hop off the bus and check the candy bowl. If they found brown M&Ms, they knew the contract hadn’t been carefully read. And then they’d immediately call for a full-line check of the entire set.

As lead singer David Lee Roth detailed in his autobiography:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

Genius.

Through its rider, the band had created a easy-to-monitor and trustworthy indicator. No brown M&Ms, and the show was likely set up to go smoothly. But if otherwise, don’t perform until the entire venue is scrutinized for other missed requirements.

The lesson to take from Van Halen’s wisdom is that having good indicators is key to achieving success.

This is also extremely true for the world of investing, where you are deploying capital based upon an expected future return. How do you determine when it’s a good time to enter into an investment? Once in it, how do you monitor the conditions supporting your rationale for holding it — are those changing? And if so, are they getting better or worse? When should you exit the position?

For all of these questions, the better the indicators you use, the more accurate and informed your decision-making will be. And the better your returns as an investor will be.

Read More @ PeakProsperity.com

China ready to crush the petrodollar and reserve currency with new oil contract backed by Yuan and gold

by Kenneth Schortgen, Daily Economist:

On Sept. 1, a new report out of Asia is signaling China is ready to make their next move against the Petrodollar, and the next step in their plans to bring about a return to gold backed finance.

According to sources, China is preparing to roll out a new oil contract that will be denominated in Yuan, and convertible with physical gold.  The collaboration will take place between the two markets of the Shanghai Gold Exchange and the Shanghai International Energy Exchange.

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry. 

The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars. 

China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. 

“The rules of the global oil game may begin to change enormously,” said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT. 

China has long wanted to reduce the dominance of the U.S. dollar in the commodities markets. Yuan-denominated gold futures have been traded on the Shanghai Gold Exchange since April 2016, and the exchange is planning to launch the product in Budapest later this year. 

Yuan-denominated gold contracts were also launched in Hong Kong in July — after two unsuccessful earlier attempts — as China seeks to internationalize its currency. The contracts have been moderately successful. 

The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. “It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Macleod said. – Nikkei Asia

This plan to replace the Petrdollar has been at least four years in the making, and below is a transcript of an article I wrote back in 2013 regarding this scenario.

Read More @ DailyEconomist.com

WHAT CONTROLS THE WORLD

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from Stefan Molyneux:

How to Smuggle Gold and Get Caught

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by Peter Schiff, Schiff Gold:

Almost every morning as I scour the interwebs for gold news, I run across a story about gold smuggling. It’s big business, you know. Particularly in countries like India that have high import tariffs on the yellow metal. Just yesterday, customs authorities arrested a father-son duo at the international airport in Delhi.

In fact, according to an article I read about smuggling, gold is the fifth-most smuggled item in the world. It ranks higher than food, cigarettes, and cash.

It’s a lucrative business, as you can imagine. People want gold, and they’ll go to great lengths to have it. But smuggling isn’t as easy as you might think. You have to be clever.

Take our dynamic Indian duo. They apparently just tried to hide two gold kada, two gold chains, and two belt buckles weighing a total of about 1,700 grams in their suitcase.

Come on guys. You can’t just shove some gold in your suitcase and hop a flight to India. Well, you can. But you’re going to end up in jail like these two. If you want to get your smuggled stash past customs, you have to think more creatively.

And believe me – some of these gold smugglers have.

We’ll start with some basics. You can sew gold into secret compartments in your clothes. This is pretty crude, but effective, especially if you chose garments that people generally won’t want to stick their hands in – like your drawers. Or you can play the religion card. Police in India arrested two women with 20 kilograms of gold hidden within their burqas. I’ve seen reports of Hindu men hiding gold inside their turbans.

Hiding gold in clothing can be effective. Still, it doesn’t really top the creativity chart. But one smuggling group took the clothing thing to the next level. They mixed gold powder with rubber and made insoles that fit inside their shoes. I don’t want to think about what that smelled like.

Then there are the smugglers who go with the “hide it in plain sight theory.” For instance, one group got busted trying to smuggle in gold disguised as beading on handbags.

Smugglers have also figured out ways to literally make suitcase parts out of gold. A little paint, or a coating of cheaper metal and viola, you have an ordinary looking piece of luggage that’s worth thousands. Customs agents have found gold frames inside suitcases. On group made wire mesh out of gold and slipped it between layers of fabric. When viewed through the airport scanner, it looked like a normal part of the luggage. People have even put gold inside suitcase wheels.

Another option is hiding gold inside everyday items. One guy stuffed gold chains inside tubes of toothpaste. The picture shows the chains coated in toothpaste. Can you imagine the mess the guy made getting the gold inside the toothpaste tubes? His street name should be “sticky fingers.” But at least the gold smelled cinnamony fresh – unlike the shoe gold.

Another smuggler put gold inside the lining of a brass flower pot. A particularly innovative chap melted gold down, formed it into tiny seeds and stuck it inside dates – as in the fruit. That gives new meaning to the term “seedy criminal.”

Now, these are all pretty good ideas. But let’s get real. These people didn’t want it bad enough. If you’re serious about smuggling your gold, you put it inside you. This is a good hiding place. I mean, it’s not easy to look inside a person, right? And this also brings us back to the whole “places people don’t want to stick their hands” thing.

But of course, there are drawbacks.

For instance, the New York Daily News reported on an Indian businessman who swallowed 12 gold bars. This might shock you, but it gave him a tummy ache. So, the guy went to the hospital. Now, at this point, you figure he’d probably come clean. Nope. He made up a story. He told doctors he swallowed a bottle cap after a fight with this wife.

I don’t understand this story. First off, why would anybody do that? “Ohhhh! You make me so mad! I’m eating this bottle cap!”

Yeah! That’ll show her.

Secondly, what did he think was going to happen? Did he believe the gold bars would  magically morph into a bottle cap during surgery? Guess what. That didn’t happen. The doctors found gold bars when they operated.

“Wait. Did I say bottle cap? I meant gold bars.”

Read More @ SchiffGold.com

FM gold enough to banish poverty’

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by Federico D. Pascual Jr., Philippine Star:

WAY BACK in 2009, former first lady Imelda Marcos told this columnist and three other newsmen that her family’s wealth, most of it in gold kept in 177 banks abroad, is enough to rehabilitate the Philippines and lift Filipinos from poverty.

A big question is how to bring back the hidden hoard while everybody is debating whether or not the wealth was stolen by then president Ferdinand Marcos, and what part of it should be turned over to the Philippine treasury.

Why would the family offer (they do not say “return”) their wealth accumulated over 50 years to be used to improve the quality of life of Filipinos? Because, Imelda told us, that was the wish and instruction of her late husband.

The Marcoses’ avowed intention, while laudable, did not ring true to me, because I did not sense even just a hint of a concession that part of the wealth was tainted. Also, the paucity of details left me guessing.

Imelda showed us what appeared to be instruments supporting her claim to incalculable wealth waiting to be tapped. The documents were laid out neatly on long tables in two large rooms adjoining her penthouse in Bonifacio Global City.

What needs to be done to open the Marcos trove? She beat around the question, but my understanding was that it would be unlocked once another Marcos becomes president. Or if a fair deal is struck with the government.

Read More @ PhilStar.com

Astronomers detect 15 signals from mysterious object in distant galaxy

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by Nicole Mortillaro, CBC News:

‘It’s kind of perplexing,’ says Canadian astronomer who first discovered source to be repeating

While looking for signs of intelligent life in the universe, astronomers have detected 15 fast radio bursts from a distant galaxy.

These poorly understood phenomena are short pulses of radio emission, just milliseconds long, believed to be coming from rapidly spinning neutron stars or black holes in distant galaxies. A less popular theory is that they’re signs of extremely powerful spacecraft from alien civilizations.

This particular fast radio burst (FRB), called FRB 121102, is of particular interest as it is the only known one to be repeating, something that astronomers can’t yet explain.

Earlier this month, astronomers using the Green Bank Telescope in West Virginia (a collection of radio telescopes) not only found 15 more bursts, but found them at a higher radio frequency than was ever observed before, the astronomers said in their findings published in The Astronomer’s Telegram

“It’s not surprising that we’ve found 15 more from this source; we’ve been detecting many of them over the past few years,” Paul Scholz, an astronomer who studies FRBs with the Dominion Radio Astrophysical Observatory in Penticton, B.C., told CBC News. “The one thing that’s unique about these [new ones] is that they are at a higher frequency than we’ve ever seen before.”

 This illustration shows a sequence of FRBs captured by the Green Bank Telescope. (Breakthrough Initiatives)
This illustration shows a sequence of FRBs captured by the Green Bank Telescope. (Breakthrough Initiatives)

Scholz, who was not involved with the new discovery, was with McGill University when he and a team of astronomers discovered FRB 121102 to be a repeater. In 2016, a McGill team was able to locate the source of the strange FRB.

At the time the signals left its host galaxy, Earth would have been two billion years old, less than half its current age. The only living things on the planet would have been single-celled organisms.

Solving the mystery

As though the object wasn’t strange enough, it also behaves like no other FRB. Typically, objects that emit similar signals, such as pulsars, do so in a smooth fashion across many frequencies. But that’s not the case with FRB 121102.

“So it’s kind of perplexing,” Scholz said.

Scholz said that there could be reasons such as the signal being distorted between its source galaxy and Earth.

Read More @ CBCNews.com

Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength And The Rothschilds Get Out Of The Stock Market

by Jeff Berwick, The Dollar Vigilante:

It feels like I am having financial Déjà vu as I write yet another blog about bitcoin hitting another all-time high! This one is kind of special though!

Our favorite currency just hit $5000 USD!

And Bitcoin Cash continues to trade above $600.

Meaning, if you owned bitcoin on August 1st and haven’t sold it yet, you now have a total value of over $5,600 of bitcoin and Bitcoin Cash!

And, 82.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of people who own Bitcoin Cash after the August 1st fork have yet to sell their BCH.

On August 28th we wrote an article entitled “Cryptocurrencies Hit All-Time Highs, Gold Spikes Higher As Investors Flee The Stock Market” and in it we mentioned how the last ten weeks of US equity capital outflows which equated to roughly $30 billion coincided with a $47 billion capital inflow into the cryptocurrency markets.

And the precious metals continue to show strength with gold currently sitting at $1324 USD per ounce and $17.73 for gold and silver respectively.

In light of that fact, we got to thinking, what kind of capital movement is going on outside of the US stock market? It turns out, quite a bit in fact.

From Bloomberg:

“European equity funds suffered their biggest outflows in 26 weeks as a continuing rally in the euro heightened investor concerns over the region’s exporters.

Investors pulled $1.4 billion from the region’s stock funds, Bank of America Merrill Lynch said in a research report, citing EPFR Global data. That was the second consecutive week of outflows.”

It was just as we had suspected, investors are moving out of international stocks as well, which makes us wonder what they are expecting to happen? Do they foresee a large correction?

That the total market cap of cryptocurrencies sits at all-time highs around $178,134,988,499 gives us a clue that people are likely losing confidence in the fiat system and at the same time recognizing the crypto space as a great opportunity to both profit and protect themselves in the event of a crisis in fiat paper.

Read More @ TheDollarVigilante.com

The Donald’s Seinfeld Tax Plan – A Big Show About Nothing

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by Davis Stockman, Daily Reckoning:

Someone should remind the Donald that he actually is President and that it’s high time he accomplished something. Anything.

Back on April 21st, for example, he promised that a core feature of his platform — a sweeping, pro-jobs tax reduction — would be soon unveiled.

Trump said the tax reform package will be introduced on “Wednesday or shortly thereafter,” just before his 100th day in office. While the president would not reveal details about the tax plan, he did say that the cuts will be “bigger I believe than any tax cut ever.”

Well, we’ve passed the eighteenth Wednesday since that promise. What was actually delivered back then, of course, was a one-page statement of vague principles, fond aspirations and apple pie.

So in Springfield, Missouri this week, the Donald is launched tax reform efforts again. And yet again the White House spin brigade has already made clear that it’s all about tone, not substance.

That is, he will orate about tax fairness and closing loopholes, but not name any. He will promise big rate reductions but not say how big and for whom. He will promise to liberate jobs by slashing the corporate tax rate without explaining exactly why that will result in more jobs rather than more stock buybacks. And there were no numbers about how the implied trillions of revenue lost over the next decade will be paid for.

Instead, Donald puckered himself up into a meld of Huey Long and Jack Kemp while preaching up a storm in favor of the “little guy”. A reference to the average worker who purportedly is being crushed by the Federal income tax and who gets tangled in the complexity of the IRS code without a high-priced tax lawyer alongside loophole-savvy financial advisors.

Accordingly, the Donald is going to “unrig” the tax code for these little guys, thereby keeping faith with the millions of dispossessed citizens of Flyover America who voted for him last November.

Except that narrative is essentially nonsense. This isn’t 1981. There is no raging inflation and bracket creep propelling the middle class into tax tyranny. In fact, owing to indexing and large increases in the standard deduction and personal exemption over the last 35 years, the income tax has essentially morphed into a Rich Man’s Levy.

The Donald’s song and dance about tax simplification and reduction comes right out of the well-thumbed GOP hymnal. It speaks little to the blue collar folks — in places like the western Pennsylvania steel country, industrial Ohio, the Michigan auto belt and the manufacturing towns of Wisconsin and Iowa — who on the margin accounted for his electoral college victory.

The Donald, Tax Plan Rhetoric and the Gong Show

Trump’s tax reform airball will promise to make filing with the IRS more palatable to tens of millions of citizens who, apparently, find it inconvenient to shell out $25 to file their Federal income tax return with TurboTax.

Among the 148 million income tax filers, the bottom 53 million owed zero taxes in the most recent year (2014), and the bottom half (74 million) paid an aggregate total of just $45 billion. That amounted to just $8 per week per filer.

If you take all filers with AGI (adjusted gross income) under $100,000 per year, you end up with 122 million taxpayers or 83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the total. Upwards of 85{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of this group uses the standard deduction. So they are not caught up at all in the puzzle palace of IRS code that the Donald denounces.

The 122 million taxpayers — who make ends meet on less than $100,000 of income — paid a total of just $278 billion in income taxes during 2014. That was just 6.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of their $4.3 trillion of AGI.

To be very clear, there was still $4 trillion left in the collective pockets of these 122 million taxpayers — even after the IRS had its way with them!

Even if a Keynesian demand side tax cut was a good idea, which it isn’t, the fact is there is not much more that could be put “back in their pockets” by income tax cuts.

The truth is that the Laffer Curve has gone missing. At average tax rates of under 7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, the bulk of US wage and salary workers (83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) are not facing prohibitive disincentives to work or production.

By contrast, the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or 6.2 million filers paid $802 billion in Federal income taxes. That amounted to nearly 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total Federal income tax payments, and resulted in an average tax rate of 24{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} on the group’s $3.3 trillion of AGI.

That’s not to object to putting some of that $802 billion back into the pockets of the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Many of them are small businessmen and the proverbial” job-creators” who make the economy grow, and who also file sub-chapter S business taxes. But incentivizing the job creators in this manner should not be financed on the backs of future taxpayers via borrowing. It must be paid for with spending cuts as a first resort, and less onerous taxes — such as consumption taxes or VAT (if necessary).

The Fed vs Trump’s Tax Plan

The Fed has generated such gigantic financial bubbles and caused all financial assets to become so massively overvalued that incentives for the rich are not really in short supply.

Federal Reserve Chair, Janet Yellen and the other Keynesian economists on the Fed have generated more “trickle-down” wealth and rewards than the Gipper could ever have imagined back in 1981. The $45 trillion in household wealth gains since the 2009 bottom vastly overshadows any possible benefits from lower tax rates, even at the top of the income ladder.

Even Trump’s Goldman duo of Gary Cohn and Steven Mnuchin are saying that there will be no “net cut” for the top tier of households.

If the bottom 83{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} don’t pay much tax in the first place, and if the top 4{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} who pay most of the taxes are not to be indulged for social policy/equity purposes, what’s the point of the whole income tax cut charade?

The Goldman geniuses are chasing themselves in a circle trying to cut the rates and broaden the base. But what it actually amounts to is amateurish stumbling around the K-Street corridor where every single “loophole” they propose to close is shot down.

Read More @ DailyReckoning.com

How to Make Waterproof Matches?

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from CrazyRussianHacker: