Bear Mountain Bull

Mish tells us about “Three Ideas That Should Scare The Hell Out Of You”:

– Anatole Kaletsky is proposing to Punish savers and make them spend money.

– Obama Says ‘If Paul Krugman Has a Good Idea … Then We’re Going to Do It’

– Time Magazine is making The Case for Bigger Government.

None of them are necessarily good, but that first one sounds like a total disaster in the making. A “savings tax”?? Are you freakin’ kidding me?? Lemme see — you taxed me when I earned the money, and you’ll tax me if I spend the money. Now you want to tax me during the time I keep the money too?

Mish quotes Mr. Kaletsky and comments:

Near-zero interest rates and even a tax on bank deposits are necessary to force those with cash to use it productively.

Instead of reducing taxes on interest payments, the Government could tax all bank deposits and other risk-free savings. This would create a negative risk-free interest rate, encouraging savers either to invest in property, shares and other productive assets – or simply to save less and consume more. In either case, the result would be more consumption and physical investment, less unemployment and faster recovery from the slump.

Good Lord. We are in this mess because everyone (the state, corporations, households) went on a reckless spending spree. There is overcapacity in homes, autos, retail stores, nail salons, restaurants, and damn near everything else. Only a complete fool would propose taxing savings. Unfortunately, I have no doubt Bernanke is playing with this idea in his head right now.

These days I hear a lot of things that scare the hell out of me — a lot more than just these three. As governments at every level struggle with their budgets, the idea of tax, tax and more tax is gaining traction (link via Galleycat) You can pretty much be guaranteed that if NY wins that case in the end, a wave of new internet sales taxes will sweep across the country like wildfire.

The ’slippery slope’ looks more like a sheet of solid ice.