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Thursday, March 28, 2024

John McLaughlin Predicts National Sales Tax To Be Instituted By Early 2011; Will It Be Catalyst For Next Major Recession?

Courtesy of Tyler Durden

At 27 minutes into his show, John McLaughlin predicts that Obama “will enact a new national sales tax in January, February or March of 2011.” As we pointed out recently, tax withholdings, contrary to what the budget office or flawed groupthink will have you believe, were down in February and March compared to 2009. Alas, Obama will have no choice but to institute some form of VAT unless he has absolute faith that China will buy US debt into perpetuity. Yet what people in D.C. should remember, is that Japan’s hike of the VAT in 1997 and increase in out-of-pocket medical expenses is often credited with prompting their 1997 recession.

Here is an update of weekly gross tax withholdings from the TDS: we are currently over $13 billion below 2009 on a cumulative basis.

From IESEinsight:

“By 1996, the economy was strengthening, and so, in 1997, Japan took new steps to reduce its deficit: it removed the income tax reduction, increased the consumption tax and increased out-of-pocket medical expenses.  The result? A major recession, the most serious since World War II. It seems Japan reversed its fiscal course too soon.”

Will Obama follow Japan into the rabbit hole? Or will the stimulus driven recovery fizzle long before then? Keynesianism has always worked in the past. However, never in the past did developed countries have total debt + off balance sheet entitlement program unfunded liabilities running at 500%+ of GDP. How much longer must we suffer this failed experiment in making bankers rich beyond even their wildest dreams before someone who understands the fatal flaws of John Keynes’ theories is put in charge (preferably not a member of either corrupt party).

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