The New Barbarossa?

Christopher Houseman

George Osborne’s emergency budget tomorrow will coincide with the anniversary of Hitler’s decision to invade Stalin’s Soviet Union in 1941.

Those of us who, on the one hand, grieve “New” Labour’s sovietization of British society and the UK economy, wait with some trepidation on the other for the new Chancellor’s pronouncements.

The coalition government is reportedly keen to raise income allowances but will at the same time penalise any attempt to translate this extra income into investment capital by slashing non-business CGT exemptions and raising CGT rates. Meanwhile, the combined result of reported plans to raise VAT with recent cuts in the number of tax inspectors is a subsidy of the so-called “black” economy. No doubt, this subsidy will be further enhanced by the usual rises in taxes on petrol, diesel, alcohol and tobacco.

When combined with ongoing efforts to artificially depress interest rates, the unmistakable end result will be to encourage people to keep spending as much or more than they earn, but to try to do so “off the books”. And no doubt any future reversal of the proposed war on capital gains will involve encouraging capital formation under the control of large financial institutions. I can think of no outcome more likely to disillusion coalition members and the wider electorate alike in the longer term.

In 1941, some people hoped that Operation Barbarossa could somehow result in both sides losing. Sadly, until control of the money supply (at the very least) is wrested from the political system’s cold dead hand, such a hope will again be too much to ask for.

All in all, it sounds to me like a good time to go long on gold, silver and ferry companies (the booze cruise boost), and short on the FTSE in general and off licence chains in particular.


  • Oddly, some of the booze shops in Calais are closing. The exchange rate and the disguised impoverishment of Britain is ruining the booze cruise trade.

  • Not to worry. I dare say there are still more than a few left, and that they’ll certainly enjoy a boost if the UK’s medical dictators get their way about British supermarket special offers on beer, wine and spirits.

  • “Sadly, until control of the money supply (at the very least) is wrested from the political system’s cold dead hand such a hope will again be too much to ask for”.

    Absolutely. The separation of money and State
    always has been, at least in my humble opinion, the single most important issue facing liberty seekers. In the absence of such a separation, any and all political & economic ‘reform’ remains largely cosmetic in effect (and intent?).

    Overall though, there seems to be only a marginal interest in this vital subject.

    Any thoughts as to why, or am I simply wrong?

    A. Dean

  • @A. Dean
    I agree with you that a true separation between the State and the money supply is an essential precondition for a sustainably free society.

    Why are the masses so indifferent (for now)? May I suggest the following as possible explanations:
    – Most people think the money question is too “big” for them to see by what means they can change matters.
    – Failing that, people think the money question is too complicated and mysterious for them to know what to support instead.
    – In “good” times, while most people believed that fiat money was desirable, they wondered what the fuss was about.
    – In “bad” times, as long as fiat money hasn’t lost all value, many people keep hoping things will get better again without drastic changes to the way material wealth is stored, measured and traded.

    If they can find ways to address these difficulties with clarity and an appealing warmth of tone, the once-despised “gold bugs” and free money folks may yet defeat the fiat banksters.

    Best wishes

    C. Houseman

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