The zero-interest-rate tax strips the interest income from savers and hands it to government, and morally justifies this as stimulating the economy through deficit funding. FULL ARTICLE by Sarel Oberholster
Source link: http://archive.mises.org/11098/the-cruelest-tax-of-all/
The Cruelest Tax of All
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“Would a saver willingly agree to an economic environment of zero interest rates?”
That’s the interest rate I would earn by putting my money under my mattress. Given that banks charge fees for just about anything, you earn a negative interest rate by putting your money in the bank.
You no longer save money at the bank. You use the bank to facilitate the receiving of your paycheck and to facilitate credit card and debit card transactions.
The bank is no longer a place to save, it’s a high tech place to spend and withdraw money.
If you want to save wealth, buy gold (or by stocks and pray).
In the early 1980′s, a bank was a superb place to save money. And while earning a hefty interest rate, you could get served by a human being. I miss those good old days.
Hey. Once you give them the moral right to tax ANYTHING, you’ve given your approval to mass theft. Don’t act surprised when they think up an even more disgusting way to collect that plunder.
End taxation now. No more theft by the state.
I commend you on this excellent article. I see nothing to dispute in your reasoning, and even the simplest among us should be able to understand your argument. You should publish this outside this community. Thanks for the Thanksgiving day treat!
Magnifique! Wow! What a great article. As another commented, it bristles with truth and clarity. I consider myself an advanced student of economics (MA equivalent earned through reading the books more often than not now published by the Mises Institute), with a Phd in tax thievery and a licsensed-by-God counselor in goverment addiction, but I had never thought of this tax. Thanks.
I agree with other posters. This is a very elegant little article that should be published outside of the community. Good luck with that though. The real problem is that so many people are barely hanging on to their debt that the political system will respond to keep interest rates low and home ownership incentives in place well before savers are heard. So we can expect continued gaming of the political system by politicians seeking reeletion to screw savers and non-home owners, until this circus comes to its sorry and perhaps inevitable end.
A 0% interest rate is a 100% tax.
Price controls..
In Greenspans book The Age of Turbulence there’s a passage on page 297 where Greenspan describes his debate with Li Peng:
“He responded by asking how, if the United States was so devoted tounregulated markets, I could account for Nixon’s wage and price controls in 1971. I was delighted that the knew to ask. Not only was he connected to the real world, but also, for a reputed hard-liner, he sounded almost reasonable. I acknowledged that price controls had been a bad policy and that their only saving grace had been to reaffirm that such controls don’t work. I added that we had not been tempted since.”
Thus does Greenspan (who at that time was controlling interest rates) say that we don’t have price controls.
Thank you for this excellent article! I do wonder, though–what will the be the title of the article you’ll write after they force negative interest rates on us?
Great article. So how do you tell people in a couple sentences how 0% interest rates and government intervention is a regressive tax? Or is it?
Excellent piece! It’s great to see an article on Mises.org from a fellow Safa
I do hope you’ll contribute more.
Yes, it’s cruel.
Low interest rates, inflation, and taxes have destroyed the middle class. Yes, past tense, as in gone…
The middle class are people who aspire for a better life through working and saving. While some may start with a month to month existence, earnings on savings and wage growth (as the economy grows) will exceed basic living costs. Compounded savings will move income from a small surplus to enough for business creation capital, thus increasing the growth in the economy.
Unfortunately three obstacles block this compounded savings:
- taxes
- inflation
- risk
Some have moved savings from fixed income to equities and real estate to avoid the taxes/inflation of fixed income only to get hit with much higher hidden risks.
Now they are moving back to fixed income, just to be hit with inflation.
Looking to the future and considering the US financial situation, it appears the worst is still ahead, but considering the amount of debt around, the saving / compounding middle class is already gone…
And the business capital is gone too, along with the businesses, and the jobs…
“Robbing the saver is immoral.”
Nothing new there, it’s being going on since at least when the Federal Reserve was created.
However what was not mentioned was what moral precept allows for this thievery? It’s the morality of Self Sacrifice, Sacrifice of the good and productive to the spendthrifts preached from all platforms that every Priest or Politician stood upon, with very few exceptions.
The public in general is in agreement with this moral precept and wholeheartedly supports it. Politicians spout Self Sacrifice day in and day out. Very few understand the immorality of this and are completely baffled when they are robbed of their savings.
This of course leads to very dire economic consequences in the long run when those that perpetrate this immoral system are themselves consumed by each other, as is happening now.
good summary article on the Dubai situation and how it may impact the gold sector going forward, given that it has performed so well but is unique from all other asset classes because many people still view gold as real money: < href="http://www.goldalert.com/">Gold Price Dives to $1,138 on Dubai Default
sorry, link got messed up in previous comment, here’s the story again: < a href="http://www.goldalert.com/">Gold Price Dives to $1,138 on Dubai Default
Don’t look now, but gold recovered almost as quickly as it fell. The dollar moved higher as gold dropped on the initial news of the Dubai default “as investors sought safety.” I don’t know what the dollar has done since, but I suspect it will continue to tank when people realize their flight to safety is on a plane with a drunken pilot, co-pilot and navigator (Obama, Bernanke and Geithner)..
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