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Cyprus Scandal: Meaningless Distinctions

Very quickly, before I get another email or some other communication about the Eurozone Financial Crisis and the decision by Cyprus and whoever else to take money from deposits in banks to help do whatever it is they want to do.

…So far as I know. No need to educate me on the finer points.

When I first saw the news I was like, yea, the State steals (and murders and tortures and threatens agression and imprisons and makes war and inflates the currency). What’s new?

So let me get this straight. You know that paycheck you get every week or two that has a gross amount followed by a list of line items like “witholding,” “deduction” this and “tax” that?

THEY’RE EUPHEMISMS, STUPID!

What, so if the whole paycheck was deposited in your bank account and then those same amounts immediately deducted, it would make a material difference? How about if the scheme for doing so amounted to 3.8 million words (the length of the US tax code, 4 times longer than the complete works of Shakespeare)? Would that help? And let’s say you could hire an accountant, spend hours answering questions, filling out forms, and filing them so you get a tiny percentage of that money back. Does that assuage?

Taxation is Theft. I’ve been writing that on the Internet since 1992 and I’ve never been confused about it, nor have I ever engaged in meaningless distinctions.

That is all.

Richard Nikoley

I'm Richard Nikoley. Free The Animal began in 2003 and as of 2021, contains 5,000 posts. I blog what I wish...from health, diet, and food to travel and lifestyle; to politics, social antagonism, expat-living location and time independent—while you sleep—income. I celebrate the audacity and hubris to live by your own exclusive authority and take your own chances. Read More

25 Comments

  1. A.B. Dada on March 30, 2013 at 19:59

    I spoke about Euro problems back on my old blog in 2000 or so. I said something like this: if you take away a nation’s ability to inflate their currency, poorer nations will find themselves bankrupt.

    The US dollar is inflated every day. It depreciates, every day. When I opened my first savings account in 1982 or so, I was earning almost double digit interest. On a basic savings account, with no minimum.

    Today, I earn 0.01% (yes, 0.0001 on the dollar) for a $25,000 deposit. So right off the bat, USD inflation is costing me probably 7-8% in natural interest I’d be getting.

    And that isn’t theft?

  2. Richard Nikoley on March 30, 2013 at 20:00

    I added it to the list of other agressions.

  3. Craig on March 30, 2013 at 20:44

    We can hope that at least the legitimacy that people confer on the state is at least called into question at this point since the euphemistic use of words used to hide the theft are revealed in full clarity. The cloaked (but fully armed) robbery of the people by the political means is the primary reason for the state to exist, any notion that the state exists to protect us is finally being revealed as a mirage.

  4. Brooks on March 30, 2013 at 21:07

    Gee, I wonder if the State would feel threatened if a stateless non-physical currency that cannot be counterfeited, traced or seized were to emerge?

    “Give me control of a nation’s money and I care not who makes its laws.”

  5. Richard Nikoley on March 30, 2013 at 21:13

    I’m not sure what to think of bitcoin yet, Brook. Been a long time. It was about ’95 I think when I first read about “digital cash” but my impression is its too nebulous for the average joe to trust it.

    Yet….

  6. marie on March 30, 2013 at 22:28

    Richard, Cyprus and the wider Euro crisis this year area doing wonders for bitcoin and I’m thinking now that the average joe is trying it . . .
    but who knows, because acceptance isn’t the only problem, the US government is getting involved now. It’s supposed to be ‘regulated’ like a foreign currency for currency exchanges (ostensibly responding to concerns about drug trafficking) though not regulated for direct sales transactions, so still like cash there.
    Meanwhile, private currency enterprises (eg.Mt.Gox, Coinlab) are expanding it’s acceptance and availability in NA.
    http://news.cnet.com/8301-1023_3-57576928-93/bitcoin-hits-record-exchange-values-with-cyprus-banking-crisis/

  7. anand srivastava on March 31, 2013 at 00:07

    Guys, stop relying on govts to keep your money safe.

    If you give loans to banks, and they go underwater why do you think the govt should step in and save you. Yes the deposit is a loan to the bank. It is an investment. It is not SAVING. Get this through your head. The Banks owe you nothing, except interest IFF they stay above water. It is like investing in a company, if it goes down you lose your money, simple.

    Yes the proper way in Cyprus would have been to NOT give the 10B Euros to the bankrupt Cyprus banks and save the depositors. They should have properly lost all their money. But the rich NORTH magnanimously gave them a big loan, which is theoretically possible to pay back. Yes the 17B would be impossible to pay back. Remember they went to Russians to pay them the money so that Russian money would be saved. But Russians knew it was a lost cause. They wouldn’t throw good money chasing the bad one. Still the NORTH is taking that risk.

    And what they get in return, everybody is just blaming them for taxing innocent peoples money. INNOCENT. Nobody who depends on govt to save their backs in Innocent in my opinion.

    Remember the order of the future. Put only as much money as you need for the next few months in the banks. Do not hold anything else there. It is a recipe for disaster. And it is particularly a disaster in the present times.

    There are only 3 places you can put your money for long times, land/real estate, stocks, or store of value items like gold, large diamonds, work of rare art, antiques, you get the picture. Of course gold is the only item available for the poor masses.

    Bank is definitely not one of them. Banks were never meant to keep money for long term. They were meant to keep money for your immediate needs. If you misuse them, you get what is coming for you. Yes they will try to get more money by hook or crook, is it any different than any other business.

    Yes bit coin is another store of value item, but is vastly inferior to physical gold. Remember Physical gold is a store of value item, but paper gold is not a store of value, problem there is a counter party.

    A B Dada: Actually taking away the ability to inflate is the best thing you can do to a nation. This way you force them to be competitive. The people cannot then sell their future for their present. Unfortunately, foreigners loaned too much money to the banks in Cyprus. This caused the problem. The good thing is that slowly foreigners will realize this is a stupid way of storing their money.

  8. anand srivastava on March 31, 2013 at 03:23

    Another thing people do not realize is that Germans are actually poorer than French, Italian and other underwater peripheral people. Why is that? Because not being artificially rich is important for having a healthy balance sheet. The peripheral countries will slowly realize it. Yes many INNOCENT people will get shafted, but shit happens. Just wait for the shit to happen in US/UK/Japan, and the austerity in Europe will look positively heavenly.

  9. anand srivastava on March 31, 2013 at 03:49

    Richard: I don’t think taxation is theft, but yes for it not to be theft, it must be utilized properly.

    I really believe that we need a cross between Communism and Democracy, which is completely decentralized. Basically you create communities of communities. A hierarchy of communities. The leaf node has sway over the individuals. The higher level you go the levels have lesser influence on the individual. ie taxation is collected at the leaf node, and higher level communities tax lower level communities. This is just a simplification, but yes it must be something like this, for it to be sustainable, and for taxes that make sense.

  10. anand srivastava on March 31, 2013 at 04:49

    I should have said, taxation need not be theft.

  11. Gary on March 31, 2013 at 08:05

    “Taxation is Theft. I’ve been writing that on the Internet since 1992 and I’ve never been confused about it, nor have I ever engaged in meaningless distinctions.”

    um taxation is a contribution to society, what kind of society do you want to live in without mandatory contribution? … wouldn’t there be more strife and anarchy than we’ve got now!

  12. Richard Nikoley on March 31, 2013 at 08:26

    “mandatory contribution”

    Laf.

  13. Elenor on March 31, 2013 at 08:46

    Doesn’t bitcoin rely on the internet? You know: servers, wires, lines, equipment — all owned by big corporations and govt?!
    Anand writes: “money for long times … stocks…” Stocks?!? Really? You mean those *concepts* (based in fiat money) traveling around in the ether that the BANKS manipulate and let “the people” play around on the fringes?
    Does anyone REALLY think “our” govt wouldn’t (won’t!) do this to us as well? Maybe not this month — but do you think it’s not coming?! The more desperate things get, the more heavy-handed the govt gets! Reaching into your bank account to take more than they took before you put there (Bravo Richard, for pointing that out!) seems unlikely?! Not in THIS world!

  14. Joseph Fetz on March 31, 2013 at 09:37

    Gary, if taxes were merely a contribution to society, then why is it that it is done at the point of a gun?

    If I point a gun at you and tell you to give me your money otherwise I will kill you, we would call that theft. However, if I instead lobby my politician to instate laws that do the same thing, somehow this changes the theft dynamic? That is not logically consistent. Further, that more or less people favor it does not in any way lessen the fact that this act of taxation is theft.

    Further, how would eliminating taxation ensure more strife or “anarchy*”? This you do not explain. Somehow, having a voluntary society, where theft and other aggressions are prosecuted equally, no matter who the culprit is, this equates to “strife and anarchy”? Once again, that’s not logically consistent.

    I like how Spooner handled this issue of taxation:

    “The fact is that the government, like a highwayman, says to a man: ‘Your money, or your life.’ And many, if not most, taxes are paid under the compulsion of that threat. The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful. The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a ‘protector,’ and that he takes men’s money against their will, merely to enable him to ‘protect’ those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful ‘sovereign,’ on account of the ‘protection’ he affords you. He does not keep ‘protecting’ you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave.”

    * I understand that you’re using the term “anarchy” to mean disorder and chaos. However, anarchists such as myself use that term merely to mean “no arbitrary rulers or simply no archons”. All services that the state provides can easily be provided by private actors within a market who rely upon voluntary exchange, this is true of any service that consumers demand. One doesn’t need to institute a monopoly to provide such services, nor does one need to steal in order to provide such services. Further, such a system that relies upon monopoly and theft is surely less efficient at providing such services than those which provide them through private voluntary exchange, because they are not reliant upon people to voluntarily request such services or withhold such request.

  15. Richard Nikoley on March 31, 2013 at 09:59

    I would add that at the time Spooner wrote that, circa 1860s I believe, there was no federal income tax.

  16. Gary on March 31, 2013 at 10:46

    Joseph

    whether it is done by gun or not, surely society needs everyone who can to contribute? what happens to the less fortunate if it is every man for himself, we are not living in a small tribal group, this is civilisation, can you rely on every person to care for every single other person? all humans are selfish, with no common bonds being made why are you gona care if the next stranger dies of starvation o the street? … you need a society, you need mass contribution, else anarchy!

    btw i don’t care for this society we live that much either, but i believe in taxation(contribution).

  17. Joseph Fetz on March 31, 2013 at 12:12

    Gary, so you believe in theft. That’s all you had to say.

    However, you act as if private charity would not exist in the absence of state-enforced welfare. I think the Mormon Church and their system of private-voluntary welfare services pretty much refutes this claim. Also, if society demands that there be services for those in need, wouldn’t this demand also exist in the absence of a state-instituted system? It is not as if just because you get the state out of the business of providing welfare services, that all of the sudden people don’t demand anymore. After all, the demand for charity already exists (if this were not true, a government welfare system would not exist at all), the question is whether such a system should be by voluntary and just means, or by unjust means by way of theft and spoliations (legal plunder). You seem to be confusing society with the state, when in fact they are entirely different things. Also, if people are more able to keep their earnings, would this not serve to uplift those who are on the bottom rungs of society? Would it not give those who wish to voluntarily be charitable to have more means to do so? You clearly are living in a world of fallacy and have not thought this through with much rigor.

    Richard, it was written in 1867. I’m not sure whether or not there was an income tax that particular year, but I do know that an income tax was instituted by the Revenue Act of 1861, which was then replaced by the Revenue Act of 1862. However, clearly the income tax is not the only means by which the state engages in legal plunder through taxation (theft).

  18. Richard Nikoley on March 31, 2013 at 12:57

    Joseph, been many years since I looked into it, but was under the belief that the actual income tax of about 1.5% if I recall, was 1913.

    Correct where needed for a thank you.

  19. Joseph Fetz on March 31, 2013 at 17:27

    I was just remembering that the first real income tax was instituted during the Civil War, and it was initially around 3%. Obviously, this tax was not used for any type of welfare such that Gary seems to support, instead it was used to fund the murder of some 600,000+ people (obviously, we both know that the state murders just as much as it steals, so this is not a surprise). I know that this income tax was later repealed, I just don’t remember what year that occurred (it’s been a while since I’ve read about this particular period, as well).

    Obviously, there was also a stealth tax that came by way of the Greenback during that period, which was inflated some 70-75% while it was in use (or about 20% per annum). While not an actual tax per say, inflation does transfer wealth from those of the general population to those that are the first receivers of such sums because they get to have use of it before the price system has adjusted to reflect this increased supply of money.

    In any case, I felt that Spooner’s quote helped to drive the point home that at base there really is no difference whether it is the common thief or the state taking your money at the point of a gun, it is still theft. Sure, people like to complicate the matter to try to cover the true nature of taxation, claiming that it is some collective or societal good, or the like, but theft is still theft no matter how you want to sugarcoat it. And often, people like to confuse society with the state, which often the source of not only their confusion on this matter, but also the double standard that they apply to the actions of the state. Of course, you and I both know that all actions of the state are rooted in force and violence, so we don’t have this confusion on the matter.

    It’s quite easy for people like Gary to feel benevolent when it is other people’s money at stake. Obviously, real benevolence comes through voluntary charity, certainly not from the point of a gun or the threat of being thrown in a cage. Of course, many people glorify the state like they do in any religion, so it is not surprising that they don’t look at the matter from a logical perspective, instead the state is some magical entity that can make all of the worlds ills corrected by merely passing a law or paying tribute and tithing to it.

    BYW, I really liked this post. I don’t often comment, but I do often like to stop by to read your blog. You’re an intelligent man and I like to read the thoughts of intelligent people. Honestly, even though I do pride myself for my ability to make certain logical connections, I hadn’t looked at the Cyprurs situation in quite this way. Of course, you’re entirely correct in your reasoning here, and I will probably use this example if the subject comes up in conversation in the future. So kudos to your for that.

    Until next time, take care. All the best to you and Bea.

    Joe

  20. Joseph Fetz on March 31, 2013 at 17:31

    Oh yeah, I almost forgot. It appears that Billy Beck and I have a mutual friend. It’s a small world.

  21. Gary on March 31, 2013 at 18:01

    Joseph

    no i don’t believe in theft, theft is abuse. i believe that large groups(ie. civilisation) require a structure above and beyond familial culture, taxation is a mandatory contribution to that structure, if you removed taxation you would have no structure and no common bond, you are left only a bunch of competing groups and inevitably strife. and that is the peaceful model, tyranny is a whole other animal, and it isn’t gona be better!

  22. Gary on March 31, 2013 at 18:05

    btw i wasn’t commenting on the cyprus thing, which could well be theft. only the statement that richard made about taxation is theft.

  23. Richard Nikoley on March 31, 2013 at 20:14

    Very interesting NYT Op-Ed by David Stockman, for Reagan budget chief.

    http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html

    The bottom line: we’re toast. Everyone’s fault.

  24. anand srivastava on March 31, 2013 at 21:03

    Agreed Richard. This is the final stretch towards hyperinflation. The rubber is about to hit the road. The massively printed money is finally entering the markets. There is not much left to delay the crisis. 2-3 years tops.

    The market will become very positive with the infusion of all that money. You will hear only good news now, till the moment you enter into hyperinflation. Corporations will still be making a lot of funny money, but for the people they will not be able to buy their bread with even thousands of dollars.

  25. Alex on April 4, 2013 at 04:19

    Anand,

    “The massively printed money is about to enter the markets?” you want to elaborate on how this magically happens/the transmission mechanism, because QE did nothing of the sort.

    It was simply an asset swap: bonds,etc for bank reserves at the central bank. Reserves don;t magically trickle into the economy. Post-gfc the private sector began deleveraging (for good reasons — too much private debt) and the public sector picked up the slump in spending to prevent an even greater recession. In fact, as a matter of accounting, the deficit/spending will increase as we hit a recession because of the automatic stablisers (increase in transfer payments, decrease in tax revenue=debt as a % of GDP will increase).

    Re hyperinflation:
    It’s more than just a monetary phenomenon. In almost all cases of hyperinflation you will find the following exogenous shocks:

    – a ceding monetary sovereignty (foreign denominated debt, e.g. Weimar republic -(reparations=foreign denominated debt; Zimbabwe)

    – Extraordinarily unusual social circumstances (war, regime change, etc) – Weimar, Zimbabwe

    – High public mistrust (low levels of gov trust). – Weimar, Zimbabwe

    – Rampant corruption -Zimbabwe

    – collapse in the domestic economy (contraction in output/productivity) – Weimar, Zimbabwe

    – breakdown in the tax system – Weimar, Zimbabwe

    I see none of this currently in the US. Inflation, as you rightfully mention, is a constraint (the major constraint) but it’s no where near hyperinflation-raise-the-alarms-level. Plus, there’s still a lot of scope for real-output to be increased, given the high unemployment. Money isn’t chasing too few goods.

    The market seems to agree as well: USA CDS remain among the lowest in the world and bond yields remain relatively low.

    None of this is to suggest that reckless spending/debt is without consequences. But the debt that is problematic is private debt, not public debt. Unlike the government, private households and firms really do need to fund their spending. A household can’t simply credit its bank account on whim; nor can a private firm. When private debt can’t be paid, economic crises can occur, as recent events have made clear.

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