Thursday, 7 April 2011

IMF bureaucrats in favor of capital controls

The iron law of bureaucracy manifests itself when the pampered and unelected bureaucrats of the IMF start to allow capital controls as a policy tool for governments that have run out of ideas. The increasingly mad spending spree that has been fostered by politicians of all parties since the early 1970s has hit a wall and rather than realise that their policies are unsustainable the political establishment - cheered on by the media and 'experts' - resorts to more and more desperate measures. When a country starts on the slippery road towards state control there is no way but to progress more and more deeply into a morass of regulation. Each step requires more detailed control, each measure has to be policed, interpreted and so on until each activity is only possible under detailed conditions set by the political 'Kommissars'. Capital controls open a temporary reprieve to the control freaks that dominate our lives already to a large extent and investors are well-advised to take the necessary steps before they and their investments are trapped in some 'welfare paradise' where welfare means a fat political class ruling over a peasant population that is just treated as a tax cow. Already some 'developed' states tax 60 per cent of the average (!) wage earner's income - happy were the days when the 'poor' medieval peasant had to pass a tenth of his produce to his landlord.

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