Re: STOCKS: An unnerving thought

From: john grigg (
Date: Sun Apr 16 2000 - 15:19:46 MDT

Eliezer wrote:
I had a similar image the other day, but more closely related to the actual
subject. I imagined this incredible pyramid scheme, with everybody putting
money in and hoping desperately to be able to guess when it would collapse
-better than the rest of the suckers. Then, when the pyramid starts quaking,
they see that there's another one to jump to that's still going up. But they
quickly drive that one to the limit as well, so they then jump back to get
in on the bargains in the first one. Problem is that there isn't much new
money available from anywhere, so this oscillation is just a predictor of
the imminent general collapse.

Eliezer, I have a song to share with you and the rest of the people here,
that addresses these very issues. I thought you might get a kick out of it.

Look for the full studio version of the song "There's gonna be a reckoning"

Also, I have a repost from the Cryonet by John de Rivaz, who is an
englishman with some perceptive views on what is going on right now in Wall
Street and how the U.S. tax code is threatening the financial viability of
entrepreneurialism and profit-making.

best regards,

John Grigg

Message #13558From: "John de Rivaz" <>
Subject: A note on the falling stock market
Date: Sat, 15 Apr 2000 16:12:56 +0100

Investors who read cryonet will hardly fail to have noticed that tech stocks
have taken a tumble over the past couple of weeks. However be aware that a
bear trap is developing, according to a leading investment newsletter. Intel
are set to release better than expected results on Tuesday, and Microsoft's
*trading* results (as opposed to Gates' tiffs with the lawyers) on Thursday
are likely to be up-beat. The fall of stock quotations will make no change
to the flow of news from the bio-technology sector, much of which will seem
like sci-fi or magic to people who have not been following events closely.

However I hope that quotations will not shoot up with unrealistic speed, but
rise gradually as the news comes in over the next few months. But if they do
go up and down like a yo-yo you can either be a bookmaker and sit back watch
your stocks go up and down but with an upward bias, and let the punters take
the losses, or you can be a punter and try and beat the markets, selling on
highs and buying back on lows. As with gambling, *some* punters will make a
lot of money, but most will lose. Unlike gambling, the tax authorities will
take a lot of money from the punters. Even those who lose in the end will
have years where they make money, and their portfolios will be raped of
these gains by gains taxes.

According to Lord Rees-Mogg in The Sovereign Individual, the US has one of
the most savage tax regimes in the world.

Rees-Mogg and James Davidson write:
>>The Drawback of Nationality Taxation
Unless there is an astonishing and almost miraculous change in policies, the
successful investor or entrepreneur in the Information Age will pay a
lifetime penalty of tens of millions, hundreds of millions, or even billions
of dollars to reside in the countries with fiscal policies like those that
have enjoyed the highest living standards during the twentieth century.
Absent a radical change, the penalty will be highest for Americans. The
United States is one of just three jurisdictions on the planet that impose
taxes based upon nationality rather than residence.

The other two are the Philippines, a former U.S. colony, and Eritrea, one of
whose exiled leaders fell under the spell of the IRS during its long
rebellion against Ethiopian rule. Eritrea now imposes a nationality tax of 3
percent. While that is a pale imitation of the U.S. rates, even that burden
makes Eritrean citizenship a liability in the Information Age, current law
makes U.S. citizenship even a larger liability. The IRS has become one of
America's leading exports. More than any other country, the United States
reaches to the corners of the earth to extract income from its nationals.

If a 747 jetliner filled with one investor from each jurisdiction on earth
touched down in a newly independent country and each investor risked $1,000
in a start-up venture in the new economy the American would face a far
higher tax than anyone else on any gains. Special, penal taxation of foreign
investment, exemplified by the so-called PFIC taxation, plus the US
nationality tax, can result in tax liabilities of 200% or more on long-term
assets held outside the United States. A successful American could reduce
his total lifetime tax burden as a citizen of any of more than 280 other
jurisdictions on the globe.

The United States has the globe's most predatory soak-the-rich tax system.
Americans living in the United States or abroad are treated more like assets
and less like customers than citizens of any other country. The American tax
regime is therefore more anachronistic and less competitive with success in
the Information Age than those of even the notoriously high tax welfare
states of Scandinavia. Citizens of Denmark or Sweden face few legal
obstacles in realising their growing technological autonomy as individuals.

Should they wish to negotiate their own tax rates, they are free to elect to
(move and) pay taxes in Switzerland by private treaty, or move to Bermuda
and pay no income taxes at all. A Swede or a Dane who wishes to pay high
taxes because he believes the welfare slate is worth what it costs is
actually making a choice. He can elect to be taxed at any rate that prevails
in any other jurisdiction in the civilised or uncivilised world. To change
his tax rate, he need only(?) move. Technology makes such a choice easier by
moment. Yet that option is denied to Americans.

Holding a U.S. passport is destined to become a major drawback to realising
the opportunities for individual autonomy made possible by the Information
Revolution. Being born an American during the industrial period was a lucky

Even in the early stages of the Information Age, it has become a
multimillion dollar liability.
To see how great a liability, consider this comparison. Under reasonable
assumptions, a New Zealander with the same pre-tax performance as the
average of the top 1 percent of American taxpayers would pay so much less in
taxes that the compounding of his tax savings alone would make him richer
than the American would ever be.

At the end of a lifetime, the New Zealander would have $73 million more to
leave to his children or grandchildren. (or spend
on the cryopreservation of himself and his friends and family) And New
Zealand is not even a recognised tax haven. More than forty other
jurisdictions impose lower income and capital taxation than New Zealand.

If our argument is right, the number of low-tax jurisdictions is likely to
rise rather than fall. All of them will provide an advantage as a domicile
over the United States, worth tens of millions, if not hundreds of millions,
over a lifetime.

Unless U.S. taxes are reformed to become more competitive with
those of other jurisdictions, and are no longer levied on the basis of
nationality, thinking persons will renounce U.S. citizenship,
notwithstanding the obstacles imposed by Clinton's exit tax.<<

Sovereign Individual by James Dale Davidson and William Rees-Mogg

Sincerely, John de Rivaz

my homepage links to Longevity Report, Fractal Report, my singles club for
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