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We are always told that the Olympics should not be political. Our government refused to mandate a boycott of Beijing because they have no control over the British Olympic Association. The Iraqi team last I saw was waiting to hear whether they could go because the Iraqi government recently sacked the entire national Olympic committee. We're not supposed to score political points over this "greatest show on earth" of "amateur" sporting prowess.

So why are so many politicians spending fortunes of our money falling over themselves to be in Beijing? Troughs...pigs...hmmm, spare ribs!

James Graham has done the short version of the Georgist objections to Conservative Plans over Stamp Duty and Inheritance Tax and, whilst I have blogged in the past about why we should indeed abolish IHT completely, I spotted this yesterday on "The First Post" which I think highlights a common confusion about IHT and, in particular, "real property" - ie your home...

Arguments for and against inheritance tax:

ARGUMENTS FOR (abolition/reform):

Inheritance tax no longer fulfils its original intention. Initially designed to raise money from the very wealthy, it now penalises more and more members of the middle classes. The very wealthy, however, can often afford financial guidance and find ways to avoid having to pay.

If that's what people are basing the inherent unfairness of IHT upon then I think they are wrong. Whilst one cannot argue with the second sentence (and the LVT solution would solve that fairly) I am not at all sure from the history of the various Estate Duty, Capital Transfer Tax and then Inheritance Tax regimes leading up to now that the tax was in fact "initially designed to raise money from the very wealthy".

In 1857 tax was due on estates above £20, though apparently rarely collected unless the estate was over £1,400. Using the RPI these two sums equate to just £1,200 and c£90,000 in 2006 prices, or £33,000 and £857,000 using average earnings indices. No, given the discussions around the various ways of levying land taxes in the People's Budget of 1909, I believe that death duties were intended to capture land value increases in a way that would not impact on the owner while they were alive.

It just so happens that around the turn of the 20th century, most land was in the hands of the "very wealthy" - landlords and large real estate holdings. Now, whilst it is much more widely spread, the increase in land values, seen especially in the past decade, are still a problem which the lifting of IHT thresholds will not address, in fact as James Graham points out, will exacerbate.

One other of the arguments for abolition in the First Post article goes as follows:

In taking a share of money from people who have already contributed income and capital gains taxes, inheritance tax is a form of double taxation.

This too is to misunderstand the nature of property price rises, where the increase in values comes from and so on. The property owner has not paid tax on the capital gains in their first home at least. Nor have they paid income tax on that increase. They may (but not necessarily I suppose) have paid income tax on the money used to buy the property in the first place. Nor have they contributed much, if anything, to the increase in value. That comes about because the location becomes more popular - more people need to have access to that location or ones like it. It is a monopoly profit in a zero sum market. Contrast this with the profit made from healthy economic investments such as equity in companies which only arise because someone, the company, is creating additional wealth.

Yet in attempting to take the family home out of IHT the Tories are doing precisely the opposite of what is fair and equitable. The monopoly "real property" profit the family is allowed to keep, whilst healthy investment assets are more likely to be taxed, if anything is. Of course I do not believe in waiting till someone dies before collecting the land value from the estate. It should be, as Adam Smith, Milton Friedman and Winston Churchill suggested the main or only form of taxation. Such would keep house prices down, allow people to save the rest of their income in productive assets instead, and be difficult to avoid, even for "non-doms". Then abolishing IHT would make sense, taking all the other productive capital assets out of what is a pernicious tax.

...and we still don't seem to know what to do about bankers!

The Bank of Scotland, whatever is now left of it, is 312 years old. That of England just two years older. Ever since the banking system has been built on state protectionism, corporate welfare, monopoly privilege and, at its heart, a gigantic fraud.

The fraud was that a goldsmith could give both you and I receipts for my gold stored in his vaults and make money on both - from me a fee for keeping my gold, from you interest on the receipt you had borrowed from him. Indeed they found they could duplicate this so frequently, fraud upon fraud if you like, that though gold is perhaps regrettably no longer the basis of our money, the "hardest money", real "hard cash", amounts now to just three per cent of our total money supply in terms of everything we all have collectively borrowed and deposited.

To be fair, most goldsmiths at least issued notes of their own. Customers - both depositors and borrowers - chose which goldsmith to bank with on their reputation. If they became overstretched, issued what was felt to be too many receipts for the same gold, their notes would be less desirable in trade, there may even be a "run" when all the receipt holders tried to get their "real" money, the gold, out of the bank, which of course had much less gold than he had issued such receipts for. Nowadays, however, what they create and destroy in their lending business is denominated in the national currency, a currency issued nominally at least, by the state and guaranteed by the state.

This means it is no longer a private affair between a bank and its customers as to whether their business practices jeopardise their customers' savings; it is a problem for us all. We have ceded control of the supply of money issued in our name to private businesses whose main aim is to make profit for themselves and who, in the course of that otherwise noble pursuit, play fast and loose with the very air the entire economic system requires to function. And states protect them, bail them out as seems about to be the case in the US to the tune of almost countless billions, because they have to guarantee the currency they have so little control over.

Regular readers will know I am very fond of a quotation from Josiah Stamp, Liberal politican, Chairman of the Midland Bank in the 1920s and reputedly second wealthiest man in Britain in his lifetime:

"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again.

"However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits."

It rather seems to me that with the events of the past few days, we may be "taking the earth away from them" (or, more accurately and nauseatingly, buying it back from them) which they have stolen from us with their inflationary approach to money, but leaving them the power to create those deposits all over again with which, in the next bubble, they will buy it all back again.

Everyone seems to think that money has somehow been pretty constant. The way it works I mean, not whether we call it shillings and guineas or pounds and pence. But the current confidence trick really began with the depression of the 1930s and the work of two extremely wealthy, powerful men in the US who persuaded the government of their day to set up the system that enabled them to create "our" money according to their corporate priorities. The results of John D Rockerfeller and John P Morgan Jnrs' work was the Federal Reserve and the rapid ramping up of fractional reserve banking, and the eventual demise of real solid backing for that currency.

If the current crisis really does turn out to be the "big crunch" at the end of the cycle begun by that 1930s "big bang" we should be ready with policy to replace that fraudulent, anti-competitive, oligarchical system, designed by the very wealthy to keep them that way for little actual productive work with something different. Entirely different. I do not detect any mainstream politicians with the cojones to say so. Our governments and politicians are but eunuchs to the bankers, and the longer that continues, the more the vast majority of us will suffer.

I don't normally watch the "One Show" but I forgot to turn over today and Andrew Neill is on giving his take on the budget. I loved this one line in particular:

"This is a good budget for the Colombian Medellin Cartel"

He is right when he says that an ecstasy pill is now cheaper than a pint and a line of coke cheaper than an alcopop, and probably right that trying to attack binge drinking by increasing the cost will simply mean the real bingers take more pills or lines instead.

For me, cheaper alcohol simply means that when I do drink, which is not often, I can get a better quality of wine for the same money. Why should I be penalized?

Tough liberalism is what we need.