The president of the Vatican Bank is warning that higher taxes are not a solution to the current economic crisis."During a prolonged crisis, inheritance taxes, new forms of taxation or …
He has the freedom to speak, but you are probably right: “So?” I would be more interested in what economists such as Ben Bernanke have to say about the economy. Simply because the Vatican Bank’s president is Catholic doesn’t necessarily mean his opinions are superior to non-Catholics!
Why is that? He doesn’t seem to have a good track record in his predictions (like home prices will never drop, low interest rates will spur more lending, people aren’t interested in gold,etc.). Seems like consumer sentiment is a better indicator of the economy than these Princeton Keynesians.
Regardless of how you view the accuracy of Bernanke’s predictions, one thing you can not deny is the power he has to unsettle markets. A mere statement from him can either make or break the markets. That was the underpinning of my previous post. No investor is going to give one iota about what the Vatican Bank president is saying. However, they will consider seriously what Bernanke has to say.
*P.S: I’ve always wondered…and this is a sideline question…how would investors react if Bernanke came out and said a Depression was imminent for the global economy? I really find it so fascinating that these people hold such power that even a few words from their mouth can drastically alter the state of the economy as we know it. Same goes with other individuals like Warren Buffett.
The article quotes him as saying:
“During a prolonged crisis, inheritance taxes, new forms of taxation or similar alternatives reduce or wipe out resources for investments, discouraging the trust of investors, penalizing the cost of the public debt and the possibilities of its renewal at its expiration,” writes Ettore Gotti Tedeschi. “In this context, imposing taxes on property and on income is equivalent to a suicidal anti-subsidiarity of the state to the citizen.”
“High taxes penalize saving, generate distrust in the ability to stimulate recovery, hit families and prevent the formation of new ones, as well as creating uncertainty and precariousness in employment,” he adds. “In short, they lay the foundations for another phase of unsustainable development.”
Looks like Tedeschi has read the Social Encyclicals and Aquinas on economics.
Frankly, I like the guy. As a (partial) descendant of Alpine Italians, who southern Italians derisively accuse of being “those Germans”, how could I possibly dislike a guy with a name like “Tedeschi”?