Thursday, February 27, 2014

FACT SHEET: Key Deliverables for the 2014 North American Leaders Summit | The White House

FACT SHEET: Key Deliverables for the 2014 North American Leaders Summit | The White House

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Taxing the rich is good for the economy, IMF says - Business - CBC News



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Taxing the rich is good for the economy, IMF says - Business - CBC News

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From the Guardian: IMF study finds inequality is damaging to economic growth

Freddie thought you might be interested in this link from the Guardian: IMF study finds inequality is damaging to economic growth

International Monetary Fund paper dismisses rightwing argument that redistributing incomes is self-defeating

Phillip Inman, economics correspondent

Wednesday 26 February 2014

The Guardian


The International Monetary Fund has backed economists who argue that inequality is a drag on growth in a discussion paper that has also dismissed rightwing theories that efforts to redistribute incomes are self-defeating.

The Washington-based organisation, which advises governments on sustainable growth, said countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly.

Backing analysis by the Keynesian economist and Nobel prizewinner Joseph Stiglitz, it warned that inequality can also make growth more volatile and create the unstable conditions for a sudden slowdown in GDP growth.

And in what is likely to be viewed as its most controversial conclusion, the IMF said analysis of various efforts to redistribute incomes showed they had a neutral effect on GDP growth. This last point is expected to dismay rightwing politicians who argue that overcoming inequality robs the rich of incentives to invest and the poor of incentives to work and is counter-productive.

The paper, written by Jonathan Ostry, the deputy head of the IMF's research department, and the economists Andrew Berg and Charalambos Tsangarides, comes after several years of heated debate over the path that developed and developing countries' economies have taken since the financial crash and whether their recoveries are sustainable.

Anti-poverty charity Oxfam welcomed the report, saying it shows "extreme inequality is damaging not only because it is morally unacceptable, but it's bad economics".

It added: "The IMF has debunked the old myth that redistribution is bad for growth and demolished the case for austerity. That redistribution efforts -essential to fight inequality- are good for growth is a welcome finding. Low tax and low public spending are clearly not the route to prosperity."

It is 18 months since the IMF published its controversial view that government cuts to public-sector spending were having a larger detrimental effect than previously thought. The paper, written by its chief economist, Olivier Blanchard, was incendiary and sparked denials in London and Brussels where calls for austerity were strongest.

Heated debate over Blanchard's analysis has continued ever since, with many economists claiming that assumptions used in the critique were flawed.

The authors of this latest report can expect the same backlash, especially in the US where the Tea Party has defended tax cuts for wealthy individuals and studies show most of the country's income growth since the crash has gone to the richest 1%.

Last year the UK's coalition government cut tax on incomes over £150,000 from 50p to 45p after a debate over the negative effects on growth of high taxes on wealthy individuals.

The French president, François Hollande, has come under severe criticism for raising the tax on incomes above €1m to 75% from business groups that claim it will hit GDP and discourage wealthy investors from staying in France.

The report's authors said the study, which excluded so-called market interference such as banker bonus caps and increases in welfare spending, showed the largest redistributions of income had negative effects on growth, but were offset by the benefits of lower inequality.

"We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect."

They said the traditional view that efforts to redistribute incomes would have a corresponding and most likely detrimental effect on growth was unfounded.

"Rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect, counting both potential negative direct effects and positive effects of the resulting lower inequality," they said.

In an interview later Ostry said it was his belief that the inclusion of higher welfare payments would only support the argument in favour of redistribution.

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SPDR Gold Trust (ETF), iShares Silver Trust (ETF): Calls For A Global Currency To Replace The U.S. Dollar | ETF DAILY NEWS

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SPDR Gold Trust (ETF), iShares Silver Trust (ETF): Calls For A Global Currency To Replace The U.S. Dollar | ETF DAILY NEWS

Home > Calls For A Global Currency To Replace The U.S. Dollar

Calls For A Global Currency To Replace The U.S. Dollar

February 7th, 2014

dollar etfThe former chief economist at the World Bank, Justin Yifu Lin, is advising the Chinese government that the time has come for a single global currency.  Lin, who is also a professor at Peking University, says that the U.S. dollar "is the root cause of global financial and economic crises" and that moving to a "global super-currency" will bring much needed stability to the global financial system.  And considering how recklessly the Federal Reserve has been pumping money into the global financial system and how recklessly the U.S. government has been going into debt, it is hard to argue with his logic.  Why would anyone want to trust the United States to continue to run things after how badly we have abused our position?  The United States has greatly benefited from having the de facto reserve currency of the planet for the past several decades, but now that era is coming to an end.  In fact, the central bank of China has already announced that it will no longer be stockpiling more U.S. dollars.  The rest of the world is getting tired of playing our game.  Our debt is wildly out of control and we are creating money as if there was no tomorrow.  As the rest of the world starts moving away from the U.S. dollar, global power is going to shift even more to the East, and that is going to have very serious consequences for ordinary Americans.

Sadly, most Americans don't even realize what is happening.  These comments by a top adviser to the Chinese government should have made front page news all over the nation.  I had to go to China Daily to find the following excerpt…

The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.

"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."

Lin, now a professor at Peking University and a leading adviser to the Chinese government, said expanding the basket of major reserve currencies — the dollar, the euro, the Japanese yen and pound sterling — will not address the consequences of a financial crisis. Internationalizing the Chinese currency is not the answer, either, he said.

And this is not the first time that we have heard these kinds of comments coming out of China.  For example, Xinhua News Agency called for a "de-Americanized world" back on October 14th…

"It is perhaps a good time for the befuddled world to start considering building a de-Americanized world."

That particular news agency is controlled by the Chinese government, and if the Chinese government did not approve of that statement it never would have made it into the paper.

Then in November, the central bank of China announced that it is going to stop stockpiling U.S. dollars.

Most Americans don't want to hear this, but what we are witnessing is a massive shift in global power.  China is catching up to us in a multitude of ways, and they are getting tired of playing second fiddle to the United States.  In fact, China is already surpassing the U.S. in a number of key areas…

-China accounts for more global trade than anyone else in the world.

-China imports more oil from Saudi Arabia than anyone else in the world.

-China imports more oil overall than anyone else in the world.

-It is now being projected that Chinese GDP will surpass U.S. GDP in 2017.

When the rest of the world quits using U.S. dollars to trade with one another and quits lending our dollars back to us at ultra-low interest rates, things are going to start changing very rapidly.

In a previous article, I discussed why having the reserve currency of the world is so important to the United States…

The largest exporting nations such as Saudi Arabia (oil) and China (cheap plastic trinkets at Wal-Mart) end up with massive piles of U.S. dollars.

Instead of just sitting on all of that cash, these exporting nations often reinvest much of that cash into low risk securities that can be rapidly turned back into dollars if necessary.  For a very long time, U.S. Treasury bonds have been considered to be the perfect way to do this.  This has created tremendous demand for U.S. government debt and has helped keep interest rates super low.  So every year, massive amounts of money that gets sent out of the country ends up being loaned back to the U.S. Treasury at super low interest rates.

And it has been a very good thing for the U.S. economy that the federal government has been able to borrow money so cheaply, because the interest rate on 10 year U.S. Treasuries affects thousands upon thousands of other interest rates throughout our financial system.  For example, as the rate on 10 year U.S. Treasuries has risen in recent months, so have the rates on U.S. home mortgages.

Our entire way of life in the United States depends upon this game continuing.  We must have the rest of the world use our currency and loan it back to us at ultra low interest rates.  At this point we have painted ourselves into a corner by accumulating so much debt.  We simply cannot afford to have rates rise significantly.

As the rest of the globe moves away from the dollar, demand for the dollar is going to go down and that is going to cause a lot of inflation – especially for imported goods.  So the days of piling lots of cheap plastic stuff made in China into your shopping carts is coming to an end.

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China pushes mobile payments system, seeks to overtake cash and plastic — RT Business

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China pushes mobile payments system, seeks to overtake cash and plastic — RT Business


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China pushes mobile payments system, seeks to overtake cash and plastic

Published time: February 12, 2014 15:36
AFP Photo / Franko Lee

AFP Photo / Franko Lee

China is developing its first national single mobile payment platform. It's been created to lift domestic information consumption and boost economic growth, and could replace cash, credit and debit cards.

The system has been undergoing trials since the end of last year, China Daily reports.

Very few countries possess an operating national payment platform, Colin Light, China Digital Consulting Leader for PricewaterhouseCoopers in Hong Kong told China Daily. China's mobile platform based on Near Field Communication technology (NFC) has a bright future and potentially could abolish cash and plastic cards.

The platform enables communication between financial institutions that provide mobile payments, and mobile network operators, People's Bank of China Deputy Governor Li Dongrong revealed in an interview on Monday.

Li said 21st century mobile finance is undergoing a standardization process to integrate mobile payment providers into a single system. The NFC-platform "provides a solid infrastructure foundation to help China boost domestic information consumption and make the sector a new driver for economic growth."

Mobile payment arms of China's leading financial organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay have been connected to the country's largest telecom operator China Mobile.

"The biggest obstacle for banks and mobile operators to operate in a unified way is to build scale. You need a scale advantage to reach wide acceptance of payments," said Light.

Wang Weidong, an analyst with iResearch Group, said that despite heavy support from the People's Bank of China, the NFC-based payments so far cannot compete with other internet payment systems simply because "there are not many NFC-enabled smartphones in China".

"To promote proximity payment, you need people to buy mobile devices that are tailor-made to use this technology," Wang said, adding that it would imply changing the habits of people who use traditional forms of payment.

NFC technology enables users to make quick payment by tapping a NFC-equipped device, such as smartphone, on a special terminal at checkout.

So far the volume of payments done in this way in China is quite small, only 0.8 percent, which could be explained by the small number of NFC-terminals, said the iResearch Group. In 2013 third-party mobile payment transaction surged 700 percent to reach $197 billion.

Comments (2)


Mirek Kula 13.02.2014 16:08

"Very few countries possess an operating national payment platform, Colin Light, China Digital Consulting Leader for PricewaterhouseCoope rs in Hong Kong told China Daily. "
Perhaps there is a reason for it.
Also, I understand why PWC would push for this. But who is funding it and based on what economics?

"China's mobile platform based on Near Field Communication technology (NFC) has a bright future and potentially could abolish cash and plastic cards."

Why? Because Colin Light says so.


NIUBI 13.02.2014 02:05

the only way this can work is if you abolish android, and ios, to replace it with a local os. theres no way im entering my address , or banking details into any phone that is run by google, or apple.

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