Government may be behind Bubble Markets

Government may be behind Bubble Markets

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No.109).

 

#bubble market, #market crash, #share market, #investment mania, #capital gain, #tax, #duty, #government,

Government may be behind Bubble Markets.

The arguments here use data and laws for only Australia but they are supposed to be applicable to other similar countries.

1. Government makes money on all transfer of wealth and all betting.

Let us say that any share trading market is only a place with zero sum for gains, just like a legalized casino (but with less requirements for transparency and fairness). There will always be winners and losers.

The government collects stamp duties on all transfer of wealth (ownership of shares) and betting (based on Contracts for Index Trading and Call and Put Options for shares).

The winners pay stamp duties and taxes on capital gains. The losers can ONLY deduct their capital losses against any current or future capital gains OF THE SAME NATURE!

That means you cannot deduct capital losses from shareholdings against capital gains in gold investment!

If a shareholder get very dispirited and decide never to own shares again, the Government win on the capital gain taxes he already paid on his IMAGINARY gains (during the growth of the Bubble)!

2. Government collects non-refundable stamp duties and capital gain taxes on all form of IMAGINARY capital gains.

During the bubble phase, most capital gains are imaginary and the government is quite happy collecting stamp duties and capital gain taxes on those imaginary capital gains!

3. There is more trading during any crash.

A crash of any market is only a (equitable or otherwise) transfer of wealth.

The computers for Share Trading have been overloaded and shut down in past crashes due to hectic trading. There will be obligations to complete the transfers of wealth after the trading.

A government always collect more stamp duties during crash despite its lip service that it shares the anguish of losers.

4. Australian government has been pumping up bank shares.

a. It allows shareholders to bet that bank shares would rise (by buying Call options and Selling put options) but penalize those shareholders who have “Put options” (by disqualifying them from offsetting company taxes against their personal income taxes)

b. It prohibits day traders (of shares) from selling first and buy back later the bank shares they don’t have. However it does not stop day traders from buying first resell later with the money they may not have ! (You are not allowed to sell in the morning the overpriced bank shares and buy them cheaper in the afternoon to fulfill the obligation caused by the contract in the morning).

5. Conclusion.

Just follow the money then people can see that Australian government benefits more from Bubble Markets than from “Fair Markets”. It may advise caution to investors but actually it may enjoy the money it collects from Bubble Markets of any form (for shares, real estates, bitcoins, tulips, gold, etc…).

Therefore it may be unnatural to expect a government to stop the growth of any bubble in its markets. It may actually have lent a hand to their growth!

Figure: Predicting a share market crash is really difficult.

Figure: Tulips (currently at $2 a bulb).

Figures: 1 ounce gold slab.

References

[1]. A satirical guide to signs of an impending crash for small investors,

[2]. Signs-pointing-to-an-impending-crash-for-small-investors,

[3]. Bitcoins-tulips-sparkling-diamonds-fiat-moneys-and-gold,

[4]. http://riggedgame.blog/2018/02/06/largest-cryptocurrencies-plunge-50-80-372-bn-gone-in-1-month-will-it-hit-the-us-economy/

[5]. http://riggedgame.blog/2018/02/11/the-game-truly-is-rigged-admits-economist-magazine/

Added after 2018 Mar 05:

[6]. https://riggedgame.blog/2018/03/05/democrats-gutting-wall-street-reform-follow-the-money/

[7]. https://www.thestreet.com/investing/why-red-hot-ipo-market-will-soon-bring-financial-carnage-14665587

[8]. https://dailyreckoning.com/you-should-fear-the-emerging-market-debt-bubble/

[9]. https://counterinformation.wordpress.com/2018/09/14/central-banks-have-gone-rogue-putting-us-all-at-risk/

[10]. https://wolfstreet.com/2018/09/18/just-how-exuberant-is-the-junk-credit-market/

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Bitcoins, Tulips, Sparkling Diamonds, Fiat Moneys and Gold

Bitcoins, Tulips, Sparkling Diamonds, Fiat Moneys and Gold

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No.106).

#Bitcoins, #tulips, #diamond, fiat money, #gold, #investment, #investment mania,

Bitcoins, Tulips, Sparkling Diamonds, Fiat Moneys and Gold.

You may want to store your earning surplus for rainy days. Here are a number of easy options, including those of the current and past investment manias! They are gold, fiat money, sparkling diamonds, tulips and bitcoins.

1. Bitcoins.

Imagine a club with limited number of equal ranking memberships (less than 10 million memberships). The memberships are transferable (can be resold), you can buy more than one membership, and memberships are well protected from counterfeiting

(using Blockchain technology).
Currently the price for each membership is higher than $1000US and keeps on rising. Memberships from competing

similar clubs are also booming.
How much would you pay for one membership to belong to the club? US$16000 or US$10000 or US$1000 or US$100 ?
The club is now known as the Bitcoin Owners Club. Competing clubs are for owners of other crypto-currencies.

2. Tulips

Figure: Tulips (currently at $2 a bulb).

Tulips are beautiful flowers which require skillful cultivation and are perishable.There was an (informal) club of Tulips owners in Holland. Anyone owning a beautiful tulip is automatically its member (You don’t need to grow the flowers yourself, you can buy them from anyone and they are good until they perish!). This informal club flourished then quickly dissolved itself in Holland. The phenomenon is named the Tulips Investment Mania.
Obviously people have to grow tulip flowers to harvest them and the total number of tulips is limited as their total mass cannot exceed the mass of our plannet Earth!How much are you prepared to pay for a beautiful Dutch tulip now?

There were numerous analogue repeats of the tulips mania in Vietnam. They did not use tulips but used instead chameleons, quails, specific types of fish in fish tanks. Those manias all ended up in the same way.

Figure: Any other flowers can also be used to start a mania.

3. Sparkling Diamonds.

Figure: Glass model of a “brilliant cut” diamond.

The sparkling diamonds are mined and marketed by De Beer Group. Its successful marketing slogan is “Diamonds are forever”. You pay high price for any diamond but you would be lucky to get half of that money when reselling the diamond immediately after buying.

Nevertheless, girls are still asking their husbands for diamonds!

4. Fiat money

Figure: Fiat money can always be used to pay taxes. .

You are forced to receive your salary in the fiat money of the country you are living in!

Fiat money may partially “perish” due to inflation or may (very rarely) appreciate due to its scarcity.

Fiat money can always be used to settle your taxes, service fees and fines with your government whereas tulips and bitcoins cannot.

Figure: Modified photograph of a note of US$100, the best known fiat currency in the World.

5. Gold.

Figures: 1 ounce gold slab.

Gold is a compact commodity. It can be swapped for any other commodity when there is a need.

There is always a demand for gold everywhere and the supply cost is almost constant in human history. So gold can be bought as a form of compact property and sold when required.

6. Conclusion

You have now been informed to make some choice with your earning surplus. Be warned, it may PERISH with your wrong choice.

The next level of questioning is how can someone fool so many people in those Investment Manias

References

[1]. https://en.m.wikipedia.org/wiki/Bitcoin

[2]. https://en.m.wikipedia.org/wiki/Tulip_mania

[3]. https://survivaltricks.wordpress.com/2017/01/12/your-fiat-money-part-2/

[4]. https://survivaltricks.wordpress.com/2017/04/28/gold-for-storing-wealth/

Added after 2018 Feb 05:

[5]. https://irishinfosecnews.wordpress.com/2018/02/05/the-new-gold-rush-a-look-inside-cryptocurrency-fraud/

[6]. http://riggedgame.blog/2018/02/06/largest-cryptocurrencies-plunge-50-80-372-bn-gone-in-1-month-will-it-hit-the-us-economy/

[7]. https://wolfstreet.com/2018/02/05/largest-cryptocurrencies-plunge-50-80-372-bn-gone-in-1-month-will-it-hit-the-economy/

[8]. https://venitism.wordpress.com/2018/02/08/cryptocurrency-2018/

Added after 2018Feb20:

[9]. https://wolfstreet.com/2018/02/18/blockchain-stocks-completely-disintegrate/

[10]. https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html

[11]. https://centinel2012.com/2018/04/17/the-bubble-of-1825-was-also-a-contagion/

[12]. https://business.financialpost.com/investing/investing-pro/nothing-can-save-venezuela-from-its-economic-fate-not-even-a-cryptocurrency

[13]. http://lawrieongold.com/2018/11/30/how-the-bitcoin-bubble-burst-could-lead-to-a-new-golden-era/

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