Monday, August 3rd, 2026. Manco 64, home of alternative economics and contrarian views. Well, today we're going to look at statists. Yes, the people who run governments, and they can be on the left or right. They all resort to legal plunder, which is a concept that Frédéric Bastiat wrote about over 150 years ago. I'm going to recommend this book and I'm going to go through the foreword later on after I talk about the current fallacy that we're seeing here in the UK. And I have to say it doesn't just apply to the Labour Party, Labour government and socialists. It applies to the Conservatives as well. They were in power for 14 years and nothing was done about the size of the state or taxation. They're just statists as well, with a different uniform. It's like football teams or soccer teams using different uniforms. They're both at the same game.
Here in the UK we have a new Chancellor of the Exchequer, who's the equivalent of Scott Bessent, or Secretary of the Treasury. His name is John Healey. I'd never heard of the guy until they appointed him. Apparently he was in the Treasury during Gordon Brown's reign as Chancellor. So that ended up really well, didn't it? Gordon Brown, the man who thought he had conquered boom and bust. The man who sold half the country's gold. But if you look at his background, he doesn't even have an economics background, this John Healey character. And he basically now is blaming private businesses for inflation.
There's an article here and it's actually coming from the Guardian. There's some other ones in the Telegraph, but I'll pick the Guardian, which is a left-leaning newspaper. It says: “Healey's profiteering warning on food and fuel risks row with retailers. Chancellor says the government wants to prevent shoppers being taken for a ride at the pump or till.”
I mean this is so rich coming from a guy who's in charge of raking in all the tax from you. I've had a look here. The total tax take of the UK government is 40% of GDP. Yes, 1.2 trillion pounds. The thing about the UK government is it's a monopoly. It's enforced by force, right? You don't pay the tax, you go to jail. But private businesses, they compete with each other. This 40% includes taxes like income taxes, National Insurance, interest income, dividends and other government income.
I've looked here at total government spending. Yes, government spending. And how do they spend? Well, they have to tax. Total government spending is around 45% of GDP. They only tax 36.3% of GDP. Well, total government receipts is 40%. So their deficit is around four to five percent of GDP. That's why the currency is going down the toilet. That's why people are struggling to buy things cheaper. Well, everything's getting more expensive because the value of the currency is going down. It's a simple law of supply and demand.
And before we go over that article, just want to bring up something that Felix Somary, who was the Raven of Zurich, said. I recommend that biography, The Raven of Zurich, Felix Somary. There's a free PDF online. He said many years ago the following: “The state alone is responsible for inflation. Inflation without government, or indeed against government, is impossible.”
Let's quickly go through this article and then I'm going to go through some more numbers that show that this guy is just having it on. He's just trying to pass the blame to private business, to people who actually compete.
John Healey, the Chancellor, has said the government is standing by to prevent the public from being taken for a ride at the pump or the till as the Iran war continues to hit prices. Well, what's hitting prices is not the Iran war. Yes, temporarily it might, but it's that four to five percent deficit spending for like 10–15 years that they do. That's what hit prices. And who started the war? Was it the supermarkets? No, it was Israel and the government of the United States, and the UK government is helping, allowing the US government to use its bases to keep this war going. So again, government to blame.
While he said that there had been no significant evidence of so-called price gouging during the crisis, he used the weekend column to tell big retailers that ministers were watching closely for any signs of profiteering. Healey faces a difficult economic balancing act as the energy price shock caused by the month-long conflict in the Middle East reignites the cost of living. Last week the Bank of England kept UK interest rates on hold as it warned that a further escalation in the Iran war could drive inflation above 4% next year, adding to the financial pressures on households.
Well, here's another institution that is the major inflation machine: the Bank of England. They were given in 1694 the power to create currency and credit out of thin air, and the banks that work with the Bank of England do the same. Yet they're blaming the Iran war for inflation. No, we've had inflation for decades and they might tinker with the prices, which is really not inflation. It's the consequence of the prices through the statistics. But we all know that things compared to 20 years ago are a lot more expensive, and that's how they do it gradually, so that people only kind of notice things. Younger people, they're born and that's what the price is. But what they don't like is the acceleration.
And I mean this is not just socialist or left-leaning governments that try to blame businesses for inflation. Remember back in the 70s Nixon put price controls, rent controls. It doesn't work of course.
So just wanted to go through some numbers here. It's quite outrageous really because I had to look at how much of the cost of fuel is taxed in VAT here in the UK. And by fuel I mean gasoline and diesel at the petrol stations or gas stations as they call it in the UK. And guess what it is? 50% is tax and VAT. It says here fuel duty is 52.95 pence per litre. VAT 20% on the entire retail price including the fuel duty. So VAT is charged on top of another duty — or well they call it a duty. It's a tax really.
For example, if the petrol costs 160p per litre at the pump, fuel duty will be 52.95. Pre-VAT price including the duty will be 133.33. VAT will be 26.67. The total tax will be 79.62. So basically half of it is government taking it from you and they're blaming the retailers. It's just outrageous really.
And I had a look as well at supermarkets. What proportion of goods sold at supermarkets in the UK are charged VAT? It says there's no official government statistic for that, but a reasonable estimate is that around 65 to 75% of supermarket sales by value are zero-rated for VAT. Well that's good, but around 25 to 35% of supermarket sales by value are subject to the standard 20% VAT. So they come to the conclusion that for every £100 you spend a week in the supermarket, you're paying about £5 to £7. That's the government right there. And I'm not even talking about all the rules and regulations, all the employment rules, all the National Insurance that the supermarkets have to pay for their employees, and the employees as well. They pay National Insurance, income tax, corporation tax for the big supermarket chains and for the petrol stations. It's just outrageous really.
And I've noticed that the new prime minister Andy Burnham is talking about nationalisation. So he wants to decrease even more competition in business. You can bet things are going to get a lot worse if he gets his way. Nationalisation. I mean even President Trump is doing that in the US. The US government is buying companies like Intel and mining companies. I mean that's crazy. What we need is more competition, not more interference.
What else is going on in terms of the government that I wanted to tell you about. So, how much net profit per pound would UK gas stations make? And the number is tiny. They make about 1 to 2% for every pound of fuel sales. So it's almost nothing. It says here that is why most petrol stations or gas stations do not rely on fuel sales for most of their profits. Fuel is often used to attract customers, while the convenience store generates much higher margins. A coffee, sandwich, snacks, or groceries can produce several times the profit of selling an entire tank of petrol.
Well, the other thing I would say as well, we have very high energy prices, not just at the pump, but electricity and gas. And why is that? Is it because of the greedy corporations? No, it's because we have this UK policy which was unanimously passed by an Act of Parliament in 2008, the Climate Change Act of 2008, which basically stops big corporations from extracting natural resources that could power our economy really cheaply, because they tell us that there's an existential crisis called climate change and that we have to stop consuming fossil fuels or whatever. I mean this country has huge reserves of oil and gas in the North Sea. We have a huge amount of coal under the ground. While the Chinese use their coal for thermal energy, we don't. So again, blame the government.
But as I was saying as well, the public is to blame. And why is that? You might find this a bit harsh, but this is where we come to Frédéric Bastiat. And I highly recommend you get this book. You can get a free PDF on the mises.org website, or you can go to the Mises website and buy the book from their shop. It's not a big book. You can read this in a day or even less, a few hours.
It says here about Frédéric Bastiat. So let's go through it a little bit. “It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.” So that's all it is. All these politicians, all these governments in the West these days, all they are is an organised crime syndicate where they extract almost half of your wealth. And then when people realise that they're doing that through inflation and taxation, they blame the people who actually make life a lot easier for you — the private businesses that compete. They might be big corporations. They might be small businesses, but I promise you things would be a lot worse if the current lot in power in the UK get their wish of nationalising even more businesses.
France of 1850 was in political turmoil in the aftermath of the revolution of 1848. The tide of socialism was sweeping the nation. One man stood alone against the tide. The precocious son of a merchant, Frédéric Bastiat, devoured the writings of free trade economists such as Adam Smith and Jean-Baptiste Say, rejecting the popular notions of his day. Bastiat began to speak and write against ideas he believed were undermining the natural harmonies of interest among men. First as an orator and essayist, later as a member of the legislative assembly, he became known for withering logic and devastating wit. He also became isolated politically. The struggle between left and right was for power and plunder. So you see left and right doesn't matter. Yet Bastiat believed that the only purpose of government was to guarantee individual rights and freedom. I totally agree with that. It's not democracy. Democracy is actually this left and right rubbish. It's the tyranny of the 51%.
This is what I wanted to talk about here. It's one of his most memorable epigrams and it's the reason why I said unfortunately we've only got ourselves to blame, because the vast majority of people will accept something for nothing. Yeah, they will accept help from the government but they don't realise what that really means. So this epigram says: “The state is that great fiction by which everyone tries to live at the expense of everyone else.” So there you go.
Make sure you share this far and wide, not just here if you're in the UK, but anywhere else in the world because this is something that's happening, not just here, it's happening everywhere, as I said.
So it's 6:40 a.m. London time. How are the markets doing? Well, I've checked the bond markets first. I think that's really important. The JGB market — the JGB yields are up today. Actually, the 10-year yield is up four basis points at 2.83. The 30-year is approaching 4%. So things are still not great for the Japanese bond market. But for the US Treasury market, the yields are coming off a little bit here, which is a good thing. But I think this is just a little correction in a much worse bear market where yields are going to go a lot higher. Yeah, it sounds confusing. Yields going higher is a bear market because it means that bond prices drop. Right now the 10-year yield is at 4.70. It's down about five basis points. You can probably bet there's a bit of intervention in this market by the powers that be. They use the big Wall Street banks to do that for them. The 30-year is down four at 5.23. I don't think they're going to be able to stop this because the states — and by the states I mean governments in the West — they've abused their power through spending, through inflation, through taxation, and they're going to try to keep these markets manipulated as long as possible, just like they try to keep the precious metals manipulated. And why is that? Well, because these are like barometers of monetary and fiscal corruption. And they're not going to succeed because I think people are waking up, especially the people with a lot of wealth. They're starting to realise this is not good — the smart money. Unfortunately, the public will only get involved when it's a little bit too late.
So this is what I try to do here on this channel, and I'm not trying to sell anything. I'm just trying to warn you and tell you what I've been doing over the years, i.e. making sure I have a little bit of gold and silver outside the system.
So what are gold and silver doing this morning? Well, gold is at 4,062. It's up about 20 bucks. High's been 4,088. The low is 4,040. Yes, we're a bit addicted kind of to looking at the fiat price of gold and silver. I mean, I do it. You probably do it. But I think the best thing is really to keep getting rid of the organised criminals’ currency, the fiat currency, as much as possible. Unfortunately, we need to keep some to pay their extortion fees, you know, the taxes. And if we don't, we go to jail. But at the same time, try to protect yourself. That's all gold and silver are. They're insurance with no small print. It will always pay off. Always pay off. And it never expires, right?
So, with that, I'm going to wish you all a very good rest of the day. Take care.
