Indholdsfortegnelse for Issue 978 i MoneyWeek

Regular readers will know I have a tendency to look for the downside in most investment situations. But from an investor’s point of view, it’s very hard to be anything other than deeply relieved about last week’s general election result. Regardless of who you voted for, you have to accept that the outcome delivers on the thing that markets crave more than anything else – some certainty. We now know that the UK isn’t about to embark on a campaign of wholesale renationalisation. We now know that most voters aren’t naive enough to look at a seemingly endless list of electoral bribes and simple solutions to complicated problems without wondering about the credibility of those making the promises. And we now know that whatever else happens, Britain will leave the…

A group of Franciscan nuns in Spain stand accused of the illegal sale of religious artefacts, reports The Times. A 13th-century statue from the Our Lady of the Angels convent in Granada has appeared in an antiques catalogue priced at €350,000. The dealer said he bought it from a “private individual” for €100,000, saying “I wouldn’t dream of going to a convent to buy, because it’s illegal”. Businessman Stephen Shalson is suing the owners of London’s Heron Tower for £100,000, after going without broadband for two years, writes The Daily Telegraph. In 2014, Shalson, 70, bought a £3m luxury flat in the tower, but had to log in at the local library until aconnection was finally installed in 2016. Heron Residences argues that broadband provision was not in the terms…

Oil has hit a three-month high above $65 a barrel following Trump’s China trade deal. That is a level not seen since September’s drone attack on Saudi Arabia briefly knocked out some 5% of global supply. Brent crude is up about 21% for the year, but still below April’s 2019 high of $74.5. Oil bulls were given further cheer when Saudi Aramco’s stock briefly soared above the symbolic valuation level of $2trn on the Saudi Tadawul index, notes Avi Salzman for Barron’s. Yet Bernstein analysts reckon that at current prices the company is worth closer to $1.36trn. Political influence makes it “hard to argue that Aramco’s current price is a true ‘market price’”. Oil exporters’ cartel Opec gave further encouragement to the bulls this month after agreeing to new production…

A major market milestone has been reached on Wall Street. Tech giant Apple, following a 70% share-price surge this year, has eclipsed the value of the entire US energy sector, says Robin Wigglesworth on ft.com. Apple now boasts a market capitalisation of almost $1.2trn, while the S&P 500 Energy index stands at $1.12trn. OIl prices have been hampered by signs of slowing global demand, while Apple has shrugged off fears that trade tensions would dent sales and profits thanks to a strong performance from its wearables division: Apple Watches and Airpods helped give revenue an unexpected fillip in the third quarter. Apple has regained its position as America’s most valuable listed company from Microsoft, worth $1.16trn.…

Japan’s car and lorry parts manufacturer Bridgestone has a finger in several promising pies, says WirtschaftsWoche. Its main business is tyres, which account for around £25bn in annual sales. The market is growing by around 4%-5% a year as the number of vehicles worldwide rises. Tyres for electric vehicles, which tend to be heavier than conventional ones, is a promising new field. The fleet management division isdoing well too. Chips embedded in tyres can gauge wear and tear and bolster profitability by reducing breakdowns; the recent takeover of satellite navigation group Tom Tom helps it keep track of fleets more easily. The stock is on just 11 times 2020 earnings and yields 3.7%.…

By buying Canadian rival Cineplex, Britain’s Cineworld has decided to be “predator rather than prey” as the industry consolidates amid competition from “big-spending streaming platforms”, says Alice Hancock in the Financial Times. The deal will allow it to tap the $770m annual revenues from the Canadian box office. The acquisition comes after the company announced that it had missed full-year revenue forecasts, blaming a “disappointing run of film sequels” in the first half of 2019. The deal has already “raised eyebrows” given Cineworld’s “heavily indebted balance sheet” due to a previous $3bn purchase of US cinema operator Regal at the end of 2017, says Oliver Gill in The Daily Telegraph. While the company insists that Cineworld “can cope with this debt” because it is a “very strong cash machine”, its…

Return on equity (ROE) is a useful measure of how good a company is at turning money that belongs to investors into profitable activity. It is calculated by dividing the company’s post-tax profits (also known as net income) by the value of its shareholders’ equity (which is the amount of money that would theoretically be available to pay to shareholders if all its assets were sold and its debts paid off). Amore efficient company will typically have a higher ROE – although sustainable ROEs vary between industries and sectors, so you should compare the firm to close peers to get an idea of how well it is performing. Let’s assume Company A has profits of £100m and equity of £500m. That gives it an ROE of 20% (£100m ÷ £500m).…

Instagram “influencers” – people who have cultivated a “personal brand”, have large numbers of followers on the image-based social media platform and who get paid to promote companies’ products – don’t need a particularly huge audience to make money, says the Daily Mirror. To earn the average UK salary of £29,000 a year, they need to have amassed 42,585 followers and post eight posts and eight “stories” per month. If they post half as often, they will need 108,200 followers. To earn the National Living Wage (£16,010), they need just 19,050 followers. The average age of an influencer is 28, 77% are female, 71% have a degree, and a quarter of influencers say their parents “don’t understand” what their job entails. The average number of hours worked is just 30…

“[People used to] say, ‘You’re handsome. You should be a model.’ But it didn’t make sense to me… ’We are in the gutter. How could I be a model?’...We couldn’t pay our rent; we couldn’t keep the lights on; we had to steal food just to eat.” Jeremy Meeks (pictured), whose prison mugshot went viral, leading to a career as a model, says people had always noticed his looks while he was a teenage member of one of California’s gangs, quoted in The Sunday Times “My mum helps me manage my life and I have to answer to her if Idon’t save. I bought an Audi TT sports car recently and had to put it past her first.” Model Eyal Booker, 24, quoted in The Sunday Times “Politics is the…

Shares in Rolls-Royce slipped by more than 4% last week after activist investor Bradley Singer announced that he is giving up his seat on the board, says Alan Tovey in The Daily Telegraph. Singer, chief operating officer of US investor ValueAct, was appointed to Rolls’ board in 2016 after his company amassed an almost 11% stake in the company. Singer is leaving early (his contract expires in 2021), but he appears to feel he has done enough for now, noting that Rolls-Royce was “on a solid path forward”. The business has restructured, selling off its marine divisions and most of its nuclear businesses. Singer joined the board after the share price had halved. ValueAct owns 9% of Rolls, a stake worth around £1.1bn.…

If you’re approaching retirement, think twice before exercising your right to take 25% of your pension fund savings as a tax-free cash lump sum. If you’re a member of a final-salary scheme, the tax-free lump sum available to you on retirement depends on a “commutation factor”. This is the formula that determines how much cash you qualify for and, just as critically, how much annual pension income you’ll forgo by taking the money. The higher the commutation factor your scheme offers, the more generous it is. But the factor also gives you a rough idea of how long you have to live to miss out overall by taking the cash. A commutation factor of 12 broadly means that 12 years into your retirement you’ll have given up more in regular…

GB Group (LSE: GBG) is a technology company that focuses on fraud prevention, compliance and identity verification, using tools such as machine learning and facial recognition. It is based in Chester, but now operates globally and claims to be able to verify the identities of 60% of the world’s population. In its latest update, which saw revenue and profits ahead of expectations, the company said that overseas sales had surpassed UK ones for the first time and now comprise 57% of the total. The share price has risen by 70% in the last year.…

John Rigas was born in Wellsville, New York, in 1924. He served in the second world war and graduated with a degree in engineering, later buying a cinema in a town in Pennsylvania. In 1952 he bought the local cable television station for $300, naming the new company Adelphia Communications Corporation. By borrowing large sums of money to fund takeovers, Adelphia was able to expand beyond the local area, eventually becoming one of the largest providers in the US of cable television, long distance telephone calls and then later broadband internet. What was the scam? Rigas took Adelphia public in 1986, but he retained ownership of his own private family ventures. Rigas and his family persuaded a group of bankers to lend these family ventures money on condition that the…

The Wolf of Wall Street Directed by Alexander Wright Running until 19 January 2020 Tickets from £59.95, immersivewolf.com The 2013 Hollywood film The Wolf of Wall Street, starring Leonardo DiCaprio as the penny-stock fraudster Jordan Belfort, was a big hit, making $392m at the box office, as well as being nominated for five Oscars. It is, as the FT puts it, the “relatively true story” of how one man manipulates the markets to make tens of millions of dollars, devouring most of the drugs in Long Island before being sentenced to 22 months in jail. Alexander Wright and Ciaran Bagnall have created an immersive theatre production based on the film, currently running in a network of disused hotel rooms near Moorgate in central London. The idea is that, instead of…

• Labour has spent more than ten years attacking Tory leaders asoutof-touch Old Etonians, but Boris’s landslide shows that it is Labour that has been out of touch, says Stephen Pollard in the Daily Express. Voters “couldn’t care less where someone went to school”, but they do care about “what people say, what they do – and what they want to do”. Johnson must deliver on his promises to the “neglected north”. The region “has never really been given the same attention as the south”. Between 2008 and 2018, “public spending on transport was £739 per head in London, but only £305 in the north”. Johnson intends to spend “£100bn on infrastructure projects in the north”. Now the prime minister must “deliver the goods”. • Presents, food, drink and outfits…

£180,000 The amount a handwritten draft of the lyrics for Elton John’s hit Your Song sold for at auction. The song was originally released in 1970 and written by John’s longtime collaborator Bernie Taupin. 300m The number of times Let it Go, a song featured in Disney’s hit film Frozen, has been played on Spotify. It’s Disney’s most played song on the music-streaming service and is estimated to have made around £1.1m in revenue since its release in 2013. £26.9bn How much the UK is planning to spend on Christmas presents this year, according to personal finance comparison website finder.com. Around 60% of us are planning on cutting our spending, and around 50% are expected to spend £250 or less. The average adult will spend £512.85. £8m The amount a…

David Kowitz, an American hedge fund manager, has been ordered to repay Sotheby’s the £4.5m he received as his share in the sale price of a painting that the auction house now says is a fake, reports The New York Times. Kowitz and art dealer Mark Weiss bought Portrait of a Gentleman, attributed to Frans Hals, in 2010 and sold it via Sotheby’s to American collector Richard Hedreen a year later for £6.7m. But recently Sotheby’s declared it a fake, rescinded the sale, and refunded Hedreen the sale price. Weiss settled with Sotheby’s earlier this year. But Kowitz, who runs Fairlight Art Ventures fund, refused, insisting it was genuine. The judge disagreed. “The nice thing is that [the] court decided in Sotheby’s favour on every single point,” said Paul Lomas,…

Washington has finally agreed to “stop punching itself in the face”, says Bloomberg’s David Fickling. Markets cheered at the end of last week on the announcement of the long-awaited “phase one” trade deal between America and China. The MSCI All-World index hit a new all-time high on Monday on the resulting euphoria, with the Eurostoxx 600 following suit for the first time in more than four years. A scary summer The trade news provides a good bookend to the year, says John Authers on Bloomberg. On 1 August Donald Trump announced the planned pre-Christmas tariffs via Twitter, heralding a difficult summer for markets. The inversion of the yield curve later that month left many fearing impending recession. The 15 December tariffs had thus become something of a market totem, making…

Three to buy Burberry The Sunday Telegraph Chief creative officer Riccardo Tisci’s new product line-up has proved a hit with customers and helped drive double-digit percentage sales growth during the first half of the financial year. A new emphasis on recycled materials – including fishing nets – is boosting Burberry’s environmental credentials, while its global footprint is increasingly orientated towards faster-growing markets such as China. A 24.9 price/earnings ratio is high, but the auspicious prospects justify a premium valuation. Expect the stock to become “even more fashionable among investors”. 2,120p Learning Technologies Group The Sunday Times This Aim-listed corporate online trainer helps the likes of L’Oréal and the Royal Mail to improve staff skills. Management is now concentrating on moving into related markets, as shown by recent acquisitions of talent…

• Infrastructure group Costain has issued another profit warning after “taking a £20m hit on a project to turn a stretch of road in the Brecon Beacons into a dual carriageway”, says Ben Marlow in the Daily Telegraph. While the “odd setback” is to be expected, the botch jobs “seem to be piling up at an alarming rate”. With estimated annual profits “now less than a third of original forecasts”, the dividend must be “seriously at risk”. CEO Alex Vaughan insists the rest of the business is “performing well”, but we’ve heard that before. • Mike Ashley’s strategy of “taking advantage of rivals’ agony to make acquisitions” might be starting to work, says Andrea Felsted on Bloomberg. Sports Direct’s shares have jumped by 27% “on the first good news for…

“The ‘Corbyn discount’ is gone and we have more clarity on Brexit” This time last year, Britain looked virtually ungovernable. Theresa May had just survived a “no confidence” vote in the House of Commons, but her days as prime minister were numbered. With open rebellion in her own party and no way to pass her Brexit deal without getting entangled in one party or another’s thicket of “red lines”, the UK was gridlocked. Fast forward to today. With the Conservatives, under Prime Minister Boris Johnson, securing a majority of 80 seats – far more than expected – Britain now has its first “solid majority government” in 14 years, as Helen Thomas of BlondeMoney puts it. Not only that, it’s the first such Conservative government in 32 years. It is no…

Renowned value investor Francisco García Paramés was successful in getting clients to follow him when he left Spain’s Bestinver and set up his own firm three years ago, says El País; he now manages around €2bn at Cobas. “Profitability, on the other hand, has not accompanied [him].” By the middle of this year, Paramés’ global funds had delivered 17 straight quarters of losses – almost equalling the run of 20 down months he suffered from July 2007 to March 2009. The crucial difference a decade ago was that most investors were losing money during the global financial crisis, but today markets are performing well, notes Citywire. Hence Paramés was lagging 1,507th out of 1,511 global equity managers over three years. His luck has not improved much since: a profit warning…

• Actress Reece Witherspoon (right) has hit back at accusations that her and co-star Jennifer Aniston’s salary for the Apple TV+ drama The Morning Show is too high. Each is reported to be earning £2m per episode, says Hollywood Reporter. “Why is that bothersome?” she asks. “These companies are real smart, and if they agree to pay us, they’re doing it for a reason. They probably had a lot of lawyers and a lot of business people decide on that number because they knew they were going to make more than that back.” • Kevin Johnson, CEO of coffee chain Starbucks, could be in line for a £50m payout in three years’ time, says Bloomberg. He will pick up the cash if, by the end of September 2022, the share…

■ Investors in disgraced fund manager Neil Woodford’s flagship Woodford Equity Income Fund will receive their first payments late next month as administrators close down the fund, says the BBC’s Kevin Peachey. They will be told by letter on 13 January how much they will be receiving on their first payout. Hundreds of thousands of investors are facing losses. It’s the first time investors will have access to their money since the fund was frozen in June. The fund’s value has fallen by 18.6% since it was suspended. At its zenith it was worth £10bn. But last week administrators said that £1.65bn has been raised from the sale of 56% of the fund to date, says Tanya Jefferies in ThisIsMoney. A final valuation of the assets will take place on…

What’s the one thing you could do today to increase your wealth in retirement? If you’re a member of an occupational pension scheme, there’s a good chance the answer is simple: move your savings out of its default investment fund. If, like most occupational pension-plan members, your scheme is a defined-contribution, rather than a defined-benefit scheme that pays guaranteed pensions, your pension in later life will depend on how well your money is invested. That comes down to the returns that managers achieve and the charges they deduct. On both counts default investment funds tend to score badly. Switching should pay off Recent research from financial adviser Hargreaves Lansdown suggests that the ten most popular funds with savers who have moved away from the default options in their pension scheme…

Less than half the people who have retired since the introduction of the new state pension in April 2016 are eligible to claim the full value of the benefit, government statistics reveal. Data just released on the 1.1 million Britons receiving this benefit shows that only 44% are being paid the headline rate of £168.60 a week. By contrast, two-thirds of people who retired before April 2016 and receive the old basic state pension get the full amount. So what’s going on? The shortfall reflects the fact that while claimants for the basic state pension only had to make 30 years of national insurance (NI) contributions to get the full amount, the new version of the benefit requires a 35-year record of NI payments for the maximum payment. Missing out…

Pharos Energy (LSE: PHAR) is an oil and gas exploration company that until recently operated as SOCO International. It has productive assets off the shore of Vietnam and a recent acquisition has given it productive operations in Egypt’s western desert. It has also been awarded exploration rights in the eastern Mediterranean off the coast of Israel. The depressed oil price has not been kind to the company, however, with profits falling last year. And despite a history of paying dividends, investors remain unimpressed. The share price has fallen by a third in the past year.…

550 of the UK’s sub-postmasters are celebrating victory in a long-running legal dispute against the Post Office in which it wrongly accused them of fraud after many large discrepancies were found in franchisees’ accounts. However, the problem lay with a flawed IT system, not the sub-postmasters. The Post Office admitted it had “got things wrong” and will pay a £58m settlement. Around 200 staff of a real estate company in Baltimore are enjoying an early Christmas after sharing $10m in bonuses. The average received among the 198 staff was $50,000, and the highest was $200,000. The bonuses were awarded to celebrate St. John Properties having developed 20 million square feet of commercial property space, says The Washington Post.…

Asia-Pacific has seen much faster dividend growth than the rest of the world. Since 2009, payouts in Asia-Pacific (excluding Japan) have more than tripled, rising 216% by the end of September, an average annual increase of 12.9%. Dividends outside the region have also done well, more than doubling over the period in sterling terms (up 121%), but clearly have not been able to match the Asian advance. In the year to the end of April 2020, Henderson Far East Income expects corporate profits across the region to see low single-digit growth, but anticipates dividend growth to be faster than this, because there is room for payout ratios to expand. [Manager] Mike Kerley... says: “A key element of the investment case for Asia is a structural shift that has seen companies…

Business-to-business software and payments company Bill.com has had a successful initial public offering (IPO), with shares priced at $22 soaring to $35 just hours after it began trading in New York, says Donna Fuscaldo in Forbes. Bill.com, which handles small businesses’ financial operations with an artificial intelligence-enabled platform, raised $216m, valuing the group at $1.6bn. The company lost $7.3m in the year to June, but investors are keen on the stock because the small companies’ payments market has been neglected by big players. “With paper cheques still a mainstay of small businesses [in the US],” there is ample scope for payments firms to automate operations.…

International Flavors & Fragrances (IFF) is on the warpath again, says the Financial Times. A year after spending $7.3bn to buy Frutarom Industries as part of its plan “to consolidate the food flavouring sector”, it is splashing out another $26.2bn to buy DuPont’s nutrition and biosciences business. The new company, which will be run by IFF’s CEO, aims to be a “giant” in the flavourings and nutrients industry. It will have an enterprise value of $45bn and annual revenues of $11bn, employing 23,000 people and providing ingredients for “products from vegan burgers to salad dressing to laundry detergent”. While International Flavors & Fragrances has been expanding through acquisitions, DuPont has been going in the opposite direction as it looks to “salvage shareholder value” in the face of a US-China trade…

The election result may have surprised many people, but it’s proved profitable for this column. Only two of the big picture bets – Labour getting more than 204.5 seats and the SNP winning less than 44.5 – failed to pay off.The ones that did win were: Labour getting more votes than the Lib Democrats, Labour getting between 25% and 50% of the vote, Lib Democrats getting less than 20% of the vote, Lib Democrats getting ten to 39 seats and the SNP getting 30-48 seats, and the failure of Nigel Farage to get elected and the Brexit Party to win a single seat. In terms of the bets on individual seats, I tipped 14 out of the 15 constituencies correctly, though admittedly many of them were at relatively short odds.These…

Investing in emerging markets (EMs) has felt distinctly uncomfortable lately. At a time when developed markets are performing well, the MSCI Emerging Markets index is still down by around 6% in US dollar terms since the start of 2018. By contrast, the S&P 500 has gone on to set regular record highs and even the underperforming FTSE 100 is not far off its peak. Value-orientated investors will comfort themselves that emerging markets look pretty cheap. The MSCI EM trades on a price/earnings ratio of around 14, compared with 22.5 for the US and 17 for Europe. You’d expect emerging markets to trade at lower valuations than developed ones because they carry greater political and economic risks. But a gap like that should compensate you for quite a lot of risks.…

Last Thursday, we finally ended the debate. With Boris Johnson re-elected as prime minister with a thumping majority, there is no question now of a second referendum or cancelling Brexit. We will be out at the end of next month. The trouble is, that is just the start of the debate. Amid all the heat and fury, we have hardly spent any time discussing what kind of post-Brexit economy we want. For four decades, British governments have not had much control over immigration, none over trade policy or tariffs, and huge swathes of regulation were handed to Brussels. It won’t happen on 1 February because there will be a transitional agreement, but over the course of the next year we will take back control of those decisions again. What should…

The Tories need a new language Tom Welsh The Daily Telegraph The Marxists have been “routed” and Brexit is now a “racing certainty”, says Tom Welsh, bringing with it the possibility of economic liberation from the “monstrous ambitions of the euro bureaucracy”. But if we now have a government “stuffed with neo-Thatcherites”, the “shift left in our politics” is also “undeniable”. To win over Labour voters, the government promised to invest, spend and subsidise in a way that would once have “been deplored as statist”. This is problematic. There has been little effort to “buttress free-market ideas among the public” and “next to zero thought” as to how those ideas should be applied within a Tory party that is “more working-class and less London-centric”. How can “unrestrained free trade” be…

With bond yields so low, the hunt continues for reliable sources of income that can be packaged up into a fund. The main stipulation for these funds to be regarded as “alternative assets” is that their returns are deemed to be “uncorrelated” to equity markets: insensitive to the economic cycle. Merck Mercuriadis, a music-industry professional, had the bright idea of creating a listed company, Hipgnosis (LSE: SONG) that would buy up the rights to songs and then collect the royalties from music streaming, which has largely replaced physical ownership and permanent downloads as the preferred way to listen. Songs’ enduring appeal After the excitement of first release, endless radio play and chart-topping success, the popularity of “hits” fades but does not disappear. Many songs have enduring appeal that lasts for…

The deadline for the self-assessment tax return, 31 January, is fast approaching, which also means that the number of HMRC-related scams tends to surge at this time of year. HMRC says it received 900,000 reports of attempted fraud in the 2018/2019 tax year, “a staggering figure given that most people don’t bother” to report them. Beware of an email or letter including links to a tax refund or payment claim, says the Tips & Advice Tax newsletter. These messages appear convincing because they usually include an HMRC logo that looks just like the real thing. Watch out for phone calls too. HMRC will sometimes phone, but only after issuing a series of demands, so if the phone call is out of the blue, alarm bells should ring. Note too that…

We believe investors looking for income from UK equities should look for an attractive yield, income growth and, importantly, corporate resilience and growth. Our approach to building a portfolio follows these rules. We split our holdings evenly between what we call “steady-Eddie”, “hidden fruits”, and economic-recovery stocks. Using acombination of differing styles provides diversification and scope for strong performance at various stages of the market cycle. We also believe that seeking out large caps with high levels of dividend cover is crucial to future income and capital growth. Slow and steady wins the race Our so-called steady-Eddie holdings, which are core income stocks with structural growth drivers, are typically lower yielders but offer strong and consistent dividend growth. “AstraZeneca has underperformed, but its valuation has fallen too far” These businesses…

“Vuong is the latest billionaire to be seduced by this most 21st-century of vanity projects” There was a sinking feeling in Hanoi earlier this month when Vietnam’s richest man, Pham Nhat Vuong, entered the electric-car race. Shares in his sprawling conglomerate, Vingroup, fell 2% on news that Vuong had become the latest billionaire to be seduced by this most 21st century of vanity projects and the entire benchmark VN index drooped in sympathy. Vuong, 51, is “so intent on exporting electric vehicles to the lucrative American market in 2021” (not to mention Europe and Russia) that he’s ploughing $2bn of his $9bn fortune into the new VinFast venture, notes Bloomberg. The rest will come from Vingroup. “Our ultimate goal is to create an international brand,” he says – a challenge…

My column this week is a vehicle for mentioning one of the most unusual and fascinating wines of the year. My hope is that this wine becomes the vinous gift that you can give to your trickiest and most well-informed of wine-loving friends this Christmas. They will never have tasted it before, Iam sure, because it is awfully rare, and it will be sure to light up their senses with its deep, throbbing palate and peacock’s tail of perfume. Made from fruit harvested from a three-walled vineyard (Broli in the heart of Valpantena), only the very finest bunches of corvina/ corvinone and rondinella are used for this wine. Using partially dried grapes, to augment the aromas and flavours and deepen the mid-palate enormously, the wine is bottled in a rather…

Daylight Robbery How Tax Shaped Our Past and Will Change Our Future By Dominic Frisby Penguin, £20 This is a book about tax. If your eyes are already glazing over, that’s understandable. After all, it’s a dull and dry subject, is it not? Not in the hands of regular MoneyWeek contributor Dominic Frisby it isn’t. Frisby is a skilled writer and, whatever your political leanings, you will find much to enjoy in this entertaining and educational romp through the history of taxation. Frisby (pictured) shows how the tax system has played a major role in the evolution of modern society. Disputes over the level of taxation, and the way in which it is levied, have sparked anger, division and even conflict – changes in taxation were an important factor in…

Paul Volcker, the chairman of the Federal Reserve in the Carter-Reagan years, died last week. Here we look at his record and offer a salute – and a warning. Volcker was the last honest Fed chairman. When he vowed to end stagflation in 1980, investors should have paid attention. But back then, even we didn’t believe it. Already consumer price inflation had risen over 10%; we expected it to go even higher. Once an inflationary spiral gets underway, there’s no stopping it. At least, that was the thinking in conservative/Austrian economic circles. By taking gold out of the dollar system, Paul Volcker and the Nixon administration had opened the gates of Hell. Now, it was “inflate or die”. Either the feds continued with their EZ-credit, big-spending ways. Or, the economy…