In this Institute of Economic Affairs podcast, IEA Head of Media Reem Ibrahim interviews Tom Clougherty, the IEA Executive Director, and Kristian Niemietz, the IEA's Editorial Director.
I have to take my hat off to you all!… that podcast was brilliant. How you state your points and views is remarkable. Precise and authoritative. I’d like to add to it if I may. …You talked about the banking crisis of 2008 and how it came about. In simple terms it was a run on the banks as some lost their money on iffy debts, gambling people money and sub prime mortgages. They basically ran out of money! And the other Banks refused to bail them out! So it was left to the Governments to, not so much bail them out, but buy their asset after the fire sale! Lehman, Washington mutual and Bear Sterns in the he US. In the UK HBOS, RBS, Northern Rock, Alliance&Leicester and Bradford & Bingley, not to forget Lsndisbanki and UBS and credit Suise and the buy out of TSB and others like NatWest. Barclays came close but was saved with a Middle East deposit and there must be more! Now when we see these institutions listed we can see the real effect of losses! Real life failure and people’s deposits lost! This whole debacle was because of the big banks letting the risk taking banks fail! As an example! As they brought the business into disrepute. The Government as a bank of last resort failed! It just bought up the embers!! The risk taking banks played roulette with their depositors money but worse, risked the leveraged mortgages of millions of people. But you must see that the money lost was not the Banks. Nor was it the Governments! No, it was you and I. The people have to pick up the bill. It doesent change, banks treating depositors money like their own! Bernie Madoff style! And let’s face it on gambling! At least with mortgages there is a house! Neither of you said all this. The worrying thing is they are starting to do the same again! Regulation in itself is to make the gamblers stop! Or make it hard for them. That’s the point of regulation. But, the factors of Banks, Pension Funds and Capital investments is the same world wide! They think the money is theirs! And they all think risking it is great because the returns are brilliant! But it’s still Bernie Madoff style all again! For someone to win, someone has to loose! It’s double sided bookkeeping! It’s the economy that suffers because whilst they play with our money, it’s not in the pot. Look, old style banking is the Wild West in America! One Bank looked after the towns money in a ruddy great safe for a small fee! It was great! No risks! But nowadays they take risks and leverage. But worse, gamble and worse still, charge a fortune and pay themselves more than they deserve! …and still do it must stop! As it will happen again but, this time there is no bank of last resort as the government is bankrupt. So we need a proper restructure. The business failed then and it will definitely happen again! Banks are Reckless! But the one inevitability is that the money ends up somewhere. Just remember my previous remarks, for a looser there will be a winner. Normally the clever one who started with the most money not risked! … now tax… I have written much before. You nearly recognised it in your podcast by touching on the subject of illusion taxes. One such illusion is income tax and NIC. Both being wrongly assumed that, it’s paid by the worker? It’s not! It’s paid by the employer!! Although it’s calculated on wages it’s definitely paid by the employer! It’s a fantastic trick! Because it has ‘income’ in it! It’s a lie! The workers think they pay tax! Just like a wage, the employer has to factor in this all encompassing figure in their willingness to employ their staff! And in turn it has to be a factor in their price costing of their profits to afford it. So it’s in the end, the consumer who has to pay for that income tax and NIC via profits! But it isn’t the employee! It’s the same with a self employed person! In their case it’s paid by the worker after he has billed for his work and got paid. But knowing that cost, he or she had already calculated that cost and passed it on to the payer or the consumer! So the worker hadn’t paid income tax or NIC. The consumer has! Or more to the point, by SPENDING the consumer has paid tiff the income tax and NIC. What is common to both is SPENDING! For everyone to earn you must have money! And for everyone to earn taxes you must have money. And for everything to work you must have money! In fact an economy can’t run unless there is money. And the flow is SPENDING the money. But, you must factor in how much? For example, if you had a population of 60 million you need more cash than one of say of 1 million. But once you have made that calculation the next consideration is for a fair exchange of work using money for a fair exchange of each worker! Now here it starts getting silly! Because say a train driver gets £70k a year when a bus driver only gets £35k a year of a nurse gets £25k a year! You have to ask is this fair? Well obviously not! So in exchanging work we have to think better! Hard work needs rewarding. Brains needs it too. But it gets worse! Our economy has to work like a piston engine firing on all cylinders! Now it can happily run if the fuel tank is full and is topped up! But our engine in the uk is firing on 2 cylinders, if we are lucky because there’s no fuel in the car! It’s splitters along and could come to a halt. We seem to be in a position where we can’t afford the fuel at times. That’s because the fuel we need ( money) is being held do the government can’t get to it!it’s all sitting in the Fuel Banks, so to speak ( mixing more than metaphors) being sat on instead of in the tank to run the car! The same apples to money! It’s in the Banks and not in the pockets of people, being used and passed around in daily spending. Spending as it goes around triggering tax! Triggering more taxes than just one single tax payment! It creates many more exponentially as it gets spent! You assume wrongly, all money is in play all of the time…. It isn’t! It’s being held unspent idle and unused in the Banks instead of in pockets driving the economy! It’s that simple!!!!!! If those who have it don’t spend it all, two things happen. That unspent money doesn’t get Spent and it doesn’t pay any tax. The longer it stays outside our working pot, the longer we suffer but crucially the pot that pays tax is devoid of it so the government doesn’t earn enough in tax take! Money unspent contributes nothing to our economy nor does it pay tax! There is the problem! But the best is yet to come…. You have to better at explaining how tax is triggered! Because there lies the illusion tax theory in actual practice! It’s no longer a theory! Tax is only triggered by Spending or money moving. So if it isn’t spent or not moved it contributes nothing to the tax take! Nothing!!! Whereas money spent and spent within the pot to others fulfils its optimum journey to creat tax, after tax, after tax, into the exchequer! As it is spent by all in the same month. It’s the money not spent and held for years that destroys our economic ability to recover and keeps us in this holding pattern of doom or a death spiral as it’s becoming! We need more of our money rotating in the economy to trigger more spending on wages, on buying and to keep businesses afloat! Without spending it’s doomed. And guess who doesn’t spend the most? The rich who sit on it all! Not the poor! They spend everything, but not those who get too much of it. It’s that money that is desperately needed by us all. A bit like Barclays that needed the deposits from the Middle East! A transfer of wealth except we shouldn’t have to ask or borrow as it’s our money and it’s shouldn’t be Held onto! Hold on to the goods not the money! Be rich off that. Unless you understand that you will forever go round in circles! One last thing!…. Reem,….you constantly state that the top earners pay 30% of our tax bill. You must take note! They don’t pay it!!! Their businesses pay it! And their businesses pay it from the profits they take off their consumers! So it’s us consumers who pay it! But because they don’t spend all their wages each month they don’t actually pay any Vat or duty! Or any other related tax triggered by spending! Their business spends on wages so a calculation is made and their business pays the tax! I would guess that if they were to actually spend their wages back, they would pay vastly more in vat and duty! Outweighing that 30% income tax you state! Remember income tax is just 25% of the cake. There is still 75% of other taxes from spending that could be gotten if they spend it! More tax comes from spending than you see as income! If you start to see it’s not actually the employee who pays tax it’s spending by the employer then 100% of tax is from spending and those top earners pay nothing from their unspent money! None! Please explain to the listeners how tax is triggered and what triggers it and be clearer if more tax is needed to be taken then it has to be generated from spending using all our money not just a tiny bit of it! Our economy relies on money being spent. Without money being spent we fail to trigger the tax take we need. So we need all our money in play and we need it being spent not idle in the hands of gamblers who think it’s theirs! Kind regards.
….. Bring back exchange controls to stop our money going abroad! It has to be held and spent here in the UK. …
I have to take my hat off to you all!… that podcast was brilliant. How you state your points and views is remarkable. Precise and authoritative. I’d like to add to it if I may. …You talked about the banking crisis of 2008 and how it came about. In simple terms it was a run on the banks as some lost their money on iffy debts, gambling people money and sub prime mortgages. They basically ran out of money! And the other Banks refused to bail them out! So it was left to the Governments to, not so much bail them out, but buy their asset after the fire sale! Lehman, Washington mutual and Bear Sterns in the he US. In the UK HBOS, RBS, Northern Rock, Alliance&Leicester and Bradford & Bingley, not to forget Lsndisbanki and UBS and credit Suise and the buy out of TSB and others like NatWest. Barclays came close but was saved with a Middle East deposit and there must be more! Now when we see these institutions listed we can see the real effect of losses! Real life failure and people’s deposits lost! This whole debacle was because of the big banks letting the risk taking banks fail! As an example! As they brought the business into disrepute. The Government as a bank of last resort failed! It just bought up the embers!! The risk taking banks played roulette with their depositors money but worse, risked the leveraged mortgages of millions of people. But you must see that the money lost was not the Banks. Nor was it the Governments! No, it was you and I. The people have to pick up the bill. It doesent change, banks treating depositors money like their own! Bernie Madoff style! And let’s face it on gambling! At least with mortgages there is a house! Neither of you said all this. The worrying thing is they are starting to do the same again! Regulation in itself is to make the gamblers stop! Or make it hard for them. That’s the point of regulation. But, the factors of Banks, Pension Funds and Capital investments is the same world wide! They think the money is theirs! And they all think risking it is great because the returns are brilliant! But it’s still Bernie Madoff style all again! For someone to win, someone has to loose! It’s double sided bookkeeping! It’s the economy that suffers because whilst they play with our money, it’s not in the pot. Look, old style banking is the Wild West in America! One Bank looked after the towns money in a ruddy great safe for a small fee! It was great! No risks! But nowadays they take risks and leverage. But worse, gamble and worse still, charge a fortune and pay themselves more than they deserve! …and still do it must stop! As it will happen again but, this time there is no bank of last resort as the government is bankrupt. So we need a proper restructure. The business failed then and it will definitely happen again! Banks are Reckless! But the one inevitability is that the money ends up somewhere. Just remember my previous remarks, for a looser there will be a winner. Normally the clever one who started with the most money not risked! … now tax… I have written much before. You nearly recognised it in your podcast by touching on the subject of illusion taxes. One such illusion is income tax and NIC. Both being wrongly assumed that, it’s paid by the worker? It’s not! It’s paid by the employer!! Although it’s calculated on wages it’s definitely paid by the employer! It’s a fantastic trick! Because it has ‘income’ in it! It’s a lie! The workers think they pay tax! Just like a wage, the employer has to factor in this all encompassing figure in their willingness to employ their staff! And in turn it has to be a factor in their price costing of their profits to afford it. So it’s in the end, the consumer who has to pay for that income tax and NIC via profits! But it isn’t the employee! It’s the same with a self employed person! In their case it’s paid by the worker after he has billed for his work and got paid. But knowing that cost, he or she had already calculated that cost and passed it on to the payer or the consumer! So the worker hadn’t paid income tax or NIC. The consumer has! Or more to the point, by SPENDING the consumer has paid tiff the income tax and NIC. What is common to both is SPENDING! For everyone to earn you must have money! And for everyone to earn taxes you must have money. And for everything to work you must have money! In fact an economy can’t run unless there is money. And the flow is SPENDING the money. But, you must factor in how much? For example, if you had a population of 60 million you need more cash than one of say of 1 million. But once you have made that calculation the next consideration is for a fair exchange of work using money for a fair exchange of each worker! Now here it starts getting silly! Because say a train driver gets £70k a year when a bus driver only gets £35k a year of a nurse gets £25k a year! You have to ask is this fair? Well obviously not! So in exchanging work we have to think better! Hard work needs rewarding. Brains needs it too. But it gets worse! Our economy has to work like a piston engine firing on all cylinders! Now it can happily run if the fuel tank is full and is topped up! But our engine in the uk is firing on 2 cylinders, if we are lucky because there’s no fuel in the car! It’s splitters along and could come to a halt. We seem to be in a position where we can’t afford the fuel at times. That’s because the fuel we need ( money) is being held do the government can’t get to it!it’s all sitting in the Fuel Banks, so to speak ( mixing more than metaphors) being sat on instead of in the tank to run the car! The same apples to money! It’s in the Banks and not in the pockets of people, being used and passed around in daily spending. Spending as it goes around triggering tax! Triggering more taxes than just one single tax payment! It creates many more exponentially as it gets spent! You assume wrongly, all money is in play all of the time…. It isn’t! It’s being held unspent idle and unused in the Banks instead of in pockets driving the economy! It’s that simple!!!!!! If those who have it don’t spend it all, two things happen. That unspent money doesn’t get Spent and it doesn’t pay any tax. The longer it stays outside our working pot, the longer we suffer but crucially the pot that pays tax is devoid of it so the government doesn’t earn enough in tax take! Money unspent contributes nothing to our economy nor does it pay tax! There is the problem! But the best is yet to come…. You have to better at explaining how tax is triggered! Because there lies the illusion tax theory in actual practice! It’s no longer a theory! Tax is only triggered by Spending or money moving. So if it isn’t spent or not moved it contributes nothing to the tax take! Nothing!!! Whereas money spent and spent within the pot to others fulfils its optimum journey to creat tax, after tax, after tax, into the exchequer! As it is spent by all in the same month. It’s the money not spent and held for years that destroys our economic ability to recover and keeps us in this holding pattern of doom or a death spiral as it’s becoming! We need more of our money rotating in the economy to trigger more spending on wages, on buying and to keep businesses afloat! Without spending it’s doomed. And guess who doesn’t spend the most? The rich who sit on it all! Not the poor! They spend everything, but not those who get too much of it. It’s that money that is desperately needed by us all. A bit like Barclays that needed the deposits from the Middle East! A transfer of wealth except we shouldn’t have to ask or borrow as it’s our money and it’s shouldn’t be Held onto! Hold on to the goods not the money! Be rich off that. Unless you understand that you will forever go round in circles! One last thing!…. Reem,….you constantly state that the top earners pay 30% of our tax bill. You must take note! They don’t pay it!!! Their businesses pay it! And their businesses pay it from the profits they take off their consumers! So it’s us consumers who pay it! But because they don’t spend all their wages each month they don’t actually pay any Vat or duty! Or any other related tax triggered by spending! Their business spends on wages so a calculation is made and their business pays the tax! I would guess that if they were to actually spend their wages back, they would pay vastly more in vat and duty! Outweighing that 30% income tax you state! Remember income tax is just 25% of the cake. There is still 75% of other taxes from spending that could be gotten if they spend it! More tax comes from spending than you see as income! If you start to see it’s not actually the employee who pays tax it’s spending by the employer then 100% of tax is from spending and those top earners pay nothing from their unspent money! None! Please explain to the listeners how tax is triggered and what triggers it and be clearer if more tax is needed to be taken then it has to be generated from spending using all our money not just a tiny bit of it! Our economy relies on money being spent. Without money being spent we fail to trigger the tax take we need. So we need all our money in play and we need it being spent not idle in the hands of gamblers who think it’s theirs! Kind regards.