IMF Discusses A Super Tax Of 10% On All Savings In Eurozone

One of the latest reports from the IMF discusses a super taxation of 10% on savings in the Eurozone. That would solve the debt problem in most sovereign countries. It would be an alternative of higher taxes or spending cuts.

The economists who wrote the paper hasten to say that it is a theoretical proposal. Still, it appears to be “an efficient solution” for the debt problem. For a group of 15 European countries such a measure would bring the debt ratio to “acceptable” levels, i.e. comparable to levels before the 2008 crisis.

The report itself is embedded at the bottom of this article. In the last section of the report, on page 58, right before the appendices, it says:

The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”— a one-off tax on private wealth—as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, and—until he changed his mind—Keynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth tax—on bondholders—that also falls on nonresidents)

There is a surprisingly large amount of experience to draw on, as such levies were widely adopted in Europe after World War I and in Germany and Japan after World War II. Reviewed in Eichengreen (1990), this experience suggests that more notable than any loss of credibility was a simple failure to achieve debt reduction, largely because the delay in introduction gave space for extensive avoidance and capital flight – in turn spurring inflation.

The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth(*).

(*) IMF staff calculcation using the Eurosystem’s Household Finance and Consumption Survey; unweighted average.

Indeed, Keynes makes his appearance in the report as well.

One should note that the first paragraph of the report right away debunks the myth that politicians and main stream media try to sell, i.e. the crisis is contained and the positive economic outlook for 2014.

High debt ratios amid persistently low growth in advanced economies and emerging fragilities in the developing world cast clouds on the global fiscal landscape. In advanced economies, with narrowing budget deficits (except, most notably, in Japan), the average public debt ratio is expected to stabilize in 2013-14. Yet it will be at a historic peak (about 110 percent of GDP, 35 percentage points above its 2007 level). Simulations show that maintaining the overall budget at a level consistent with the IMF staff’s medium-term advice would bring the average debt ratio to about 70 percent of GDP by 2030, although in a few countries it would remain above 80 percent. However, the large debt stock, the uncertain global environment, weak growth prospects, and the absence of well-specified medium-term adjustment plans in systemic economies like Japan and the United States complicate the task.

One of the graphs (page 14) is also noteworthy. It simply shows the unreliability of the forecasts of institutions. Even the report refers to it by saying “Relative to previous projections, fiscal deficits are somewhat larger in most countries, reflecting a weaker economic environment.”

debt projections vs actuals 2013 money currency

GoldSilverWorlds staff concludes that our fundamental vision has yet another time been confirmed. The black hole in the monetary world, which is called “banking”, is not capable of controlling its own devil, which is leverage. Our monetary system is based on debt based credit. Central banks have deteriorated the situation since 2008/9 and are now caught between a rock and a hard place. Prepare yourself, the reality is that more bail-ins, confiscation and financial repression is coming, contrary to what the good news propaganda tries to tell. Physical precious metals are the safest way to protect.

(Original source: dutch media site NOS.nl; Courtesy of GoldSilver.com bringing this article to our attention)

 


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  • JamesLove

    Studies show that the government would run much more efficiently if 10% of all IMF members would be shot.

  • Kenny Chong

    “If it is introduced before people are able to withdraw and given that it is clear it is a one-time tax, then it should not have disturbing effects on people. It could be seen as a “fair” measure.” Seriously, I wonder if IMF is living on another planet.

  • Mitch1955

    I believe Cyprus was the test case. They got away with it. Now expect bail-ins, savings taxes, confiscation, whatever will be necessary to fill the black whole of the banking industry. Money under the mattress and in physical precious metals will save you. It’s becoming so blatantly clear; don’t say you were not prepared.

  • Jib

    you forgot a zero my friend….100%!

  • PublicAdvocate

    If I got it straight, Wall Street schemed a crooked system of financial recklessness that led to an economic crash, or a capitalist manufactured economic meltdown. In doing so it managed to rid itself of competition and cheated homeowners out of hundreds of thousands of dollars, wiped out 401Ks and wiped out other third party controlled savings, sucessfully robbing people around the world with impunity.

    Without retuning a dime of the stolen wealth of millions, now impoverished by banker corruption, what little that is left to the people is now the target of rapatious capitalists by passing yet another ruthless capitalist’s dream of government assisted ‘legal’ theft via taxing savings.

    In the past one could be certain such corrupt conduct would be cause to raid the banks with pitchfork, tar and feathers to set things right, but now we live in a much more dangerous era of paramilitarized police sworn to “protect and serve” the ruling elite.

  • Mitch1955

    Seems like you got it straight!

  • Chris

    LISTEN PEOPLE – THIS WILL SOLVE NOTHING.

    40 years ago taxes were 1/3 or 1/2 depending on the nation that they are now. They could not balance their budget. As time progressed taxes were incrementally increased, and the BUDGETS WERE NEVER BALANCED. Now some nations have a 80% taxes, and THEY STILL CANNOT BALANCE THEIR BUDGET.

    It does not matter what is done, the governments of the world will be unable to balance their budgets no matter WHAT THE TAX RATE IS.

    Confiscation of personal bank wealth is pure utter bull and treason.

    It will only kick the can down the road a little, then they will come around to seize bank accounts again. They are only going to get maybe 1-2 rounds of this crap before everybody mattresses their money. And when they do mattress their money bank ratios will get destroyed as there will be runs on the banks – leading to many shuttered businesses.

    And the ignorant brain-dead politicians and the ‘economists’ who thought this garbage up will simply shrug – they won’t care as long as they continue to get a paycheck from whatever welfare government excuse of a service that they have attached themselves to.

  • Skip

    Iceland

  • Robin Hood

    And why not FMI people, the richiest people of the planet, pay a 10% of that money that they don’t need to live?

  • mdavis223

    As if Obamacare were not enough of a kick in the nutz. If they go after personal savings or retirement accounts, there will be a revolution.

  • http://www.goldsilverworlds.com/ Gold Silver Worlds

    But there was no revolution in Cyprus neither, right?

  • Tim

    Anyone who doesn’t mattress their money after 1 round of this horseshit hasn’t learned a damn thing and deserves round 2 (and beyond). My worry is they’ll invent a new “10% of all your assets” tax and come after my house/property.

  • Six000MileYear

    Such a tax would wipe out the middle class the most. The rich have their wealth in stocks, bonds, proprietary business ownership, and some cash, but not a large proportion in the bank.. The working poor are living paycheck to paycheck, so they will have a couple of dollars taken. The middle class has the highest % of their wealth in banks, so they would be hit hardest. Nothing quite like knocking a piston out the job-creation engine.

  • Sam

    Robin Hood, all taxes started off as “for the rich” – do you think you’d be exempt from a 10% wealth tax if it were going to happen in your country? Would you object if you and your family were subjected to this? I’m sure you would if you owned any assets, “but I thought it was just for the rich…”

  • Chris Sky

    Nobody will take their money out of the banks, because they will simply install “capital controls” like they did in cyrprus, and you will only be able to take out 300 per day, while they steal whatever they want from your account.

    Cyrpus was flouted as a “10% tax bail in”… meanwhile I know people who’s personal accounts lost over 80% of their entire deposit… even in their BUSINESS ACCOUNTS.

    And like you said…stealing directly from people’s bank accoutns will simply buy a little more time… it won’t “fix” any issue… and they will come back for another 10% and another and another. and people will just be “used” to it by then and roll over and take it up the ass like good little sheep.

    The world has been pacified and is now being “reshaped” in the banker’s image.

  • Chris Sky

    They knew that they couldn’t go after bank accounts in America because it WOULD be a revolution… What do you think Obamacare was for?! the back door tax increase complete with mandatory PENALTY enforced by the IRS! In Europe though… the people will accept the “capital levy” on the bank deposit with simply a few fire bombs through a few buildings. lol

    But in America they had to swindle the people…. so they sent in Barack Obama. OBamacare and his brand new 10, 535 pages of “regulations” just added this month without being able to be read by ANYBODY… but they will vote to make it law!

  • Brianna Aubin

    “Nobody will take their money out of the banks, because they will simply install “capital controls” like they did in cyrprus”

    That just means that everyone smart will get their money out before the tax, and everyone stupid will deserve what they get.