Dear Janet Yellan,

As a bankster myself, I’d like to provide some friendly advice.  To keep screwing the American people–to keep them debt-laden and innocently in their place–here’s what you have to do.

1. Cosset the banks at ANY cost. That obviously involves the continuation of quantitative easing.
2. In turn, QE will maintain the share market at false highs. We can’t have it decline.  (That would denote failure in your job at the Fed.)
3. Don’t (i.e. do not) let any further steam go out of land prices across the nation, because that will put the sort of pressure on our banks that brought about the Great Recession in the first instance – and we can’t have a repeat of that.
4. If manufacturing and other non-FIRE sector businesses suffer as a consequence, so be it. You are simply continuing to do what the Fed does by reinforcing the tax system’s bias in favour of the more important FIRE sector (at the expense of productivity).
5. Finally, keep mentioning “the improving American economy”.  That will imbue a sense of confidence in our captive clients, including federal, state and local governments.
6. You will note Australian banks continue to make record profits by staying on-message.

Yours faithfully,

–      Bryan (Bankster) Kavanagh

Ruinous trust in land speculation as the route to wealth has led to expensive houses and inefficient taxes but, far worse, it ended up destabilising the entire global economy.

–          Martin Wolf, chief economics commentator, Financial Times, 8 July 2010

Tony Abbott has called a Royal Commission to investigate alleged union corruption.

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The methods by which a trade union can alone act, are necessarily destructive; its organization is necessarily tyrannical.  – Henry George

Although there’s far more to an economy than interest rate policy, the RBA doesn’t have  happy history with the cash rate.

Stupidity of taxing production

If men want more wealth, why don’t they get more wealth? If we, as a people, want more wealth (and certainly ninety-nine out of every hundred Americans do want more wealth), why are some suffering from the want of employment? Others are at work without making a living. Meanwhile, ninety-nine out of a hundred of the people have some legitimate desire that they would like to gratify. Well, in the first place, if we want more wealth – if we call that country prosperous which is increasing in wealth – is it not a piece of stupidity that we should tax men for producing wealth? Yet that is what we are doing today.

“Our Land and Land Policy”, Henry George, 1871

One way to come to the same conclusion concerning the need for revenues to come from an all-in, single-rate charge on land and natural resource values is to examine where all the tax concessions (read privileges) currently lie.

This was the enlightening topic on Geraldine Doogue’s “Saturday Extra” this morning with professor of law at Melbourne University Miranda Stewart and journalist Brian Toohey.

“While the US as a whole continues its painstakingly slow trudge towards economic recovery …”  [Why does every financial commentary start off like this, these days?]

No, Matthew Murphy, there is no recovery. Got it? No recovery. We’re going deeper into the shit, not coming out of it. Oh, you’re trying to be a cheerleader, perhaps?

You don’t really understand what has happened do you, Matthew?  You and many other financial commentators.

It’s like this. As my report “Unlocking the Riches of Oz: a case study of the social and economic costs of real estate bubbles (1972-2006)” demonstrated, it became fashionable in the west from the outset of the 1970s to wind back land-based revenues and to replace them with more and more taxes on work and productivity. So, people have taken their lead from what tax regimes are telling them to do and have become rent-seekers – because that’s now where the tax breaks are. They’re being quite logical. You’re not being logical, because you’re seeing faux recoveries and believing that economies are miraculously repairing themselves, Matthew. They’re not. There’s still too much household debt around to be able to stimulate demand.

Meanwhile, with nothing, or very little, by way of land-based revenues to keep the lid on land prices over the last forty years, real estate bubbles have grown bigger and bigger – until this God-almighty one we’ve had since 1996.

But people like you, Matthew, are saying the property markets are recovering. Well, that’s very bad, because the bubbles have an enormous amount of deflating to do before economies can be got back to work, but they aint deflated enough, and private debt remains too high.

Matthew, it doesn’t matter how many times Tony Abbott says “Australia is now open for business” there can be no recovery–here or in the US–because there are rotten tax systems to be addressed – along the lines of the Henry Tax Review.

No proper tax reform, no recovery. Got it, Matthew?

Good!

__________________________

ps.  Otherwise, you’re article was OK, Matthew.

No, it’s not.

“We must support Australian products, and stop importing competitors’ goods from overseas where their cost of labour is much cheaper.”

Really? We shouldn’t do trade or business with those whose incomes are lower than ours?

Should a doctor not do business with a tradesman, if the tradesman’s income is lower than his then?  The argument is clearly a fallacious one.

Trade, especially free trade, is a civilizing influence, and history is replete with examples of protective barriers generating trade wars, and worse.

The real response to India and China’ cheaper goods is for the west to un-tax labour and capital in order to keep prices, including the deadweight costs of taxation, down and to switch revenues to land and resource rents which can’t be passed on in prices as taxes are. Also, whereas taxes add to prices and costs,  revenues derived from land and natural resources provide cheaper, not dearer, access to resources.  Tariff policies act to inflate land values and mortgages at a severe cost to productivity.  Excessive debt is the main reason Australian manufacturing is dying. That, and a tax regime that fines labour and capital.

There’s been a gut reaction in favour of ‘protective’ tariffs as a means of retaining industry has been growing in Australia in view of Australia’s continuing loss of manufacturing industries, but we need to look at the facts.

It’s difficult to beat Henry George’s Protection or Free Trade which canvasses the issues thoroughly, but the late EJ Craigie gives a good summary.

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Just the same, beware of upcoming overly-secretive Trans-Pacific Partnerships Agreements (TPPs), which endeavour to pass themselves off as free trade agreements, when they’re certainly not folks!

From MacroBusiness: Chinese buyers receiving the $5000 first home builders’ grant?