Tanya Becket, the BBC interviewer, was talking to George Soros. I think you all know who George is. Billionaire Investor, almost causing the collapse of the British Sterling by selling it short etc.
He made two very interesting comments:
1. The world needs a new Bretten Woods system. You may not remember but Bretten Woods established a global stable monetary system where currency was pegged to within +/- 1% of Gold (at $35/ounce) and weaker currencies like the Italian lira to +/- 3% of the gold price. Well, BW collapsed in 1971 when the USA pulled the dollar off the gold standard. The dollar then became the international currency.
2. The world needs an archetect like John Keynes. Father of Keynsians economics, he calls for greater government spending (sound familiar). Gordon Brown in the UK is a follower of Keynes. The UK is literally broke. Even during the best capital intake, the UK was spending far more than it was receiving in tax (probably accounting for borrowings). While in the states, I saw something on PBS which said the US could safely borrow more money !!!
Lastly, a US friend said that he was advised by another friend that the government may require people to take their private pensions (read 401K or IRA) in the form of an insurance annuity. Well, this is how the UK private pension system is structured. You save your money tax free, and when you want to take it beyond 59.5 years of age, you can take 25% tax free and the rest has to purchase an annuity (by the time you hit 75). As you may not know, annuities carry very big front end loads (re commissions). Annuities work out OK if you take them at 60 and live to 100. Not good if you take it at 65, and kick off the next day. Reason, all of the remaining money stays with the insurance company. Yes, there are alternatives etc but that is beyond my discussion at this point. At this time next week, I may have more on this.
But if you think the money is growing and you are getting the total benefits, Gordon Brown in one of his first moves as Chancellor of the Exchequer, started taxing the private pension funds 3%. So if the fund has 500 million in it, and has a good year where it makes 100, then 3 million goes off to pay the government. I assume each contributor then receives 97% of the total profit, less other costs.
Just a speculative thought, it makes one wonder if this is another way the US government will help to pay for health care?
Overview of the first two points:
- Is Soros saying that the world needs to take the $$ off as the international currency? What will happen to the dollar in international terms if that happens remembering the world is a flood with euro dollars (a collapse and huge inflation?).
- Is Soros saying that only government spending is OK, and should be followed at the expense of private growth?
One of my thoughts with the establishment of the Euro would be that the overall goal of the Euro was to peg the Dollar, Euro at 1/1 and the Yen to the Dollar / Euro at 100 / 1.
Comments anyone?
He made two very interesting comments:
1. The world needs a new Bretten Woods system. You may not remember but Bretten Woods established a global stable monetary system where currency was pegged to within +/- 1% of Gold (at $35/ounce) and weaker currencies like the Italian lira to +/- 3% of the gold price. Well, BW collapsed in 1971 when the USA pulled the dollar off the gold standard. The dollar then became the international currency.
2. The world needs an archetect like John Keynes. Father of Keynsians economics, he calls for greater government spending (sound familiar). Gordon Brown in the UK is a follower of Keynes. The UK is literally broke. Even during the best capital intake, the UK was spending far more than it was receiving in tax (probably accounting for borrowings). While in the states, I saw something on PBS which said the US could safely borrow more money !!!
Lastly, a US friend said that he was advised by another friend that the government may require people to take their private pensions (read 401K or IRA) in the form of an insurance annuity. Well, this is how the UK private pension system is structured. You save your money tax free, and when you want to take it beyond 59.5 years of age, you can take 25% tax free and the rest has to purchase an annuity (by the time you hit 75). As you may not know, annuities carry very big front end loads (re commissions). Annuities work out OK if you take them at 60 and live to 100. Not good if you take it at 65, and kick off the next day. Reason, all of the remaining money stays with the insurance company. Yes, there are alternatives etc but that is beyond my discussion at this point. At this time next week, I may have more on this.
But if you think the money is growing and you are getting the total benefits, Gordon Brown in one of his first moves as Chancellor of the Exchequer, started taxing the private pension funds 3%. So if the fund has 500 million in it, and has a good year where it makes 100, then 3 million goes off to pay the government. I assume each contributor then receives 97% of the total profit, less other costs.
Just a speculative thought, it makes one wonder if this is another way the US government will help to pay for health care?
Overview of the first two points:
- Is Soros saying that the world needs to take the $$ off as the international currency? What will happen to the dollar in international terms if that happens remembering the world is a flood with euro dollars (a collapse and huge inflation?).
- Is Soros saying that only government spending is OK, and should be followed at the expense of private growth?
One of my thoughts with the establishment of the Euro would be that the overall goal of the Euro was to peg the Dollar, Euro at 1/1 and the Yen to the Dollar / Euro at 100 / 1.
Comments anyone?