More lies about your taxes…

http://www.sovereignman.com/finance/more-lies-about-your-taxes-9891/

The Bill Clinton Myth

http://www.mises.ca/posts/blog/the-bill-clinton-myth/

However this is a misunderstanding of the difference between spending by private individuals and political spending.  Government is incapable of being run like a business.  Enterprise is based off the principle of satisfying voluntary patrons with no guarantee of success.  Even in a hampered market economy where corporations receive special privileges via the state, the consumer remains the kingmaker.  On the other hand, government receives all income through coercive measures.  Profit and loss accounting is of little concern when losses are borne by the taxpayer and profits are immediately devoted to political projects.  Should the public Treasury run low, tax collectors can be sent forth to shakedown the unpresuming citizens.

When it comes to rational economic calculation, public officials need not worry about spending money effectively. To attribute increased revenue being taxed away from the private economy with robust growth misconstrues how wealth is created.  Government doesn’t create wealth; it merely transfers it between parties.  Similarly, it only consumes capital that has already been produced.  Because society existed before the state and because the state functions off of what it pilfers from society, public expenditures do not add to net wealth.  In order for one tax dollar to be spent, it has to be first taken from the pocket of a taxpayer.  Whatever subjective desires could have been achieved by that dollar become overridden to satisfy the whims of the political class.

The fact that the economy didn’t stagnate under higher taxes during Clinton’s term in office doesn’t demonstrate that taxation has no harmful effects.  Economies aren’t closed experiments where one variable can be introduced and the effects observed.  There are far too many factors at play.  Concrete theories based off certain truths must be applied in such a way to interpret date and wring sense out of it.  Good economic conditions weren’t a result of heightened taxes but instead prevailed in spite of them.  While the productivity gains from the newly widespread use of personal computers and the internet had a positive effect on growth, another factor often goes unmentioned.  The later-half of the 1990s may be looked back upon as golden years but much of the gains experienced by the stock market were not representative of organic growth.  A significant amount of investment came not from natural causes but from monetary manipulation by the Federal Reserve.

Like the decade that preceded the Great Depression, productivity gains which drove consumer prices downward masked the amount of monetary stimulus being pumped into the economy.  When the bubble collapsed, Greenspan once again turned to the printing press to bail himself out.  Instead of causing a bubble in the tech sector, the burst of inflation made its way into the housing sector.  By the time the housing bubble popped, Greenspan left the chairmanship of the Fed to great acclaim.  Milton Friedman writing in the Wall Street Journal declared Greenspan had “set the standard” for Fed chairmen in maintaining stable prices and growth.  In actuality, he and his colleagues of the Federal Open Market Committee were responsible for the continuation of the boom-bust cycle and current Great Recession.

Today, Clinton still takes credit for Greenspan’s manipulated boom.  His supporters on the left love nothing more than to point at his presidency as vindication of the backwards theory that higher taxes equal more growth.  Clinton wasn’t a policy wonk; he was a politician who dipped into the Social Security trust fund to give an appearance of balancing the budget while the national debt still climbed higher.

Through all of his financial scandals, womanizing, aggressive foreign policy approaches, and possible cover ups, it is actually fitting that Clinton is still looked to by the political establishment as someone worthy of respect.  He is representative of F.A. Hayek’s timeless lesson: in government the worst rise to the top and state power corrupts.

Norcini - If History is Any Guide, This is Going to End Badly

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/23_Norcini_-_If_History_is_Any_Guide%2C_This_is_Going_to_End_Badly.html

GE tax affairs put Immelt in political spotlight

http://www.ft.com/cms/s/0/4f1ab962-5ca5-11e0-ab7c-00144feab49a.html#axzz1IKeWT2wy

The Interesting History of Income Tax," by William J. Federer

Thanks to Brian Stone for finding this:

By William J. Federer
© 2011 WorldNetDaily.com

Editor's note: The following quotes are published in the book, "The Interesting History of Income Tax," by William J. Federer (Amerisearch, Inc., P.O. Box 20163, St. Louis, MO 63123, 1-888-USA-WORD)

"It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now ... Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
– John F. Kennedy, Nov. 20, 1962, president's news conference

---

"Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government."
– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964
"In today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues."
– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: "The Economic Report Of The President"

---

"It is no contradiction – the most important single thing we can do to stimulate investment in today's economy is to raise consumption by major reduction of individual income tax rates."
– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: "The Economic Report Of The President"

---

"Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate."
– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.

---

"A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues."
– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

---

"I have asked the secretary of the treasury to report by April 1 on whether present tax laws may be stimulating in undue amounts the flow of American capital to the industrial countries abroad through special preferential treatment."
– John F. Kennedy, Feb. 6, 1961, message to Congress on gold and the balalnce of payments deficit

---

"In those countries where income taxes are lower than in the United States, the ability to defer the payment of U.S. tax by retaining income in the subsidiary companies provides a tax advantage for companies operating through overseas subsidiaries that is not available to companies operating solely in the United States. Many American investors properly made use of this deferral in the conduct of their foreign investment."
– John F. Kennedy, April 20, 1961, message to Congress on taxation

---

"Our present tax system ... exerts too heavy a drag on growth ... It reduces the financial incentives for personal effort, investment, and risk-taking ... The present tax load ... distorts economic judgments and channels an undue amount of energy into efforts to avoid tax liabilities."
– John F. Kennedy, Nov. 20, 1962, press conference

---

"The present tax codes ... inhibit the mobility and formation of capital, add complexities and inequities which undermine the morale of the taxpayer, and make tax avoidance rather than market factors a prime consideration in too many economic decisions."
– John F. Kennedy, Jan. 23, 1963, special message to Congress on tax reduction and reform

---

"In short, it is a paradoxical truth that ... the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
– John F. Kennedy, Nov. 20, 1962, news conference

---

"The largest single barrier to full employment of our manpower and resources and to a higher rate of economic growth is the unrealistically heavy drag of federal income taxes on private purchasing power, initiative and incentive."
– John F. Kennedy, Jan. 24, 1963, special message to Congress on tax reduction and reform

---

"Expansion and modernization of the nation's productive plant is essential to accelerate economic growth and to improve the international competitive position of American industry ... An early stimulus to business investment will promote recovery and increase employment."
– John F. Kennedy, Feb. 2, 1961, message on economic recovery

---

"We must start now to provide additional stimulus to the modernization of American industrial plants ... I shall propose to the Congress a new tax incentive for businesses to expand their normal investment in plant and equipment."
– John F. Kennedy, Feb. 13, 1961, National Industrial Conference Board

---

"A bill will be presented to the Congress for action next year. It will include an across-the-board, top-to-bottom cut in both corporate and personal income taxes. It will include long-needed tax reform that logic and equity demand ... The billions of dollars this bill will place in the hands of the consumer and our businessmen will have both immediate and permanent benefits to our economy. Every dollar released from taxation that is spent or invested will help create a new job and a new salary. And these new jobs and new salaries can create other jobs and other salaries and more customers and more growth for an expanding American economy."
– John F. Kennedy, Aug. 13, 1962, radio and television report on the state of the national economy

---

"This administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes ... Next year's tax bill should reduce personal as well as corporate income taxes, for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital ... I am confident that the enactment of the right bill next year will in due course increase our gross national product by several times the amount of taxes actually cut."
– John F. Kennedy, Nov. 20, 1962, news conference

The financial con

http://www.zerohedge.com/article/financial-con-decade-explained-so-simply-even-congressman-will-get-it

Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise.

1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.

3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.

4. Leverage each $1 of actual capital into $100 of high-risk bets.

5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.

10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.

Jeff Gundlach, DoubleLine

Jeff Gundlach quotes:

Job growth in the government sector, he said, is virtually self-defeating from a fiscal standpoint. “Government workers are being paid with taxes on borrowed money,” he said. “If you are going to create government jobs, you are just borrowing more money. Those aren’t real jobs.” The net result is that we are mired in a jobless recovery.

Chris Christie: New Jersey Reaganism

http://online.wsj.com/article/SB10001424052702303828304575180270979668714.html

Greece outlawing cash transactions

As part of their movement toward "austerity", the Greek government is outlawing cash transactions and levying higher taxes, including enacting a value-added tax (VAT), increasing the capital gains tax, and repatriated funds. They are also cutting wages of some state employees by 50%.

In essence, they are trying to eliminate the black market, while shutting down their borders from further capital flight. This is the playbook for bankrupt sovereign governments. US citizens take note--this movie will be playing in a theatre near you.

http://globaleconomicanalysis.blogspot.com/2010/02/greece-outlaws-cash-transactions-above.html

GE and the US government are broke

General Electric and the US government are bankrupt, according to Porter Stansberry.

We've been telling our friends for months that sooner or later the U.S. Treasury secretary would come out and publicly say something ridiculous in defense of the U.S. dollar – much like a banana republic's finance minister on the eve of devaluation. Today, we got our first actual taste... On Sunday, Geithner said the U.S. "will never" lose its triple-A credit rating. Never is a very long time. And if you believe the representative of a bankrupt government, there's a bridge in Brooklyn you should look into buying...

Watching Geithner lie through his teeth reminded us of July 2008, when Fed Chairman Ben Bernanke assured us Fannie Mae and Freddie Mac were "adequately capitalized" and "in no danger of failing." One month earlier, I'd written an issue of my newsletter (Porter Stansberry's Investment Advisory) titled "Freddie Mac and Fannie Mae Are Going to Zero." I was watching Bernanke's testimony on TV in a hotel room on the 30th floor of the Four Seasons Hotel in Las Vegas. I could literally see more than $100 million worth of bankrupt real estate from my window – more than enough to bankrupt both Fannie and Freddie. As an investor, I had a simple choice to make: I could believe a government bureaucrat, who is in charge of running a paper money system backed by nothing by confidence... or I could believe audited financial statements and my own two eyes. I chose the latter.

More recently, I've been warning investors both our government and our biggest conglomerate (GE) are broke. On Friday, Moody's seemed to agree with me, warning the current deficits are unsustainable. Geithner and Bernanke will undoubtedly beg to differ. However, anyone who has ever paid interest on any debt before is welcome to simply look at the numbers and ask themselves a few basic questions... How can so few taxpayers be expected to repay more than $20 trillion worth of debt? How can a democracy where most people don't actually pay taxes ever be expected to run a balanced budget? Why would anyone expect America to repay its debts when millions of our consumers and a large number of our biggest companies are going bankrupt?

Big problems like these are easy for investors to ignore. And many investors will ignore these problems – for a long, long time. I can't tell you when, exactly, the scary numbers behind GE and our federal government will cause investors to take action. But I can tell you when that time comes you won't want to be holding dollars or GE bonds. And I can tell you with 100% certainty both GE and the federal government are going bankrupt within the next five years.

Lies and omissions

http://usawatchdog.com/real-deficit-numbers-and-real-consequences/

The reason why I ask is the government uses accounting gimmicks to make just about every number it puts out look better than what it really is. For example, the most recent Consumer Price Index for inflation was officially 2.7%; but if you compute inflation the way Bureau of Labor Statistics did it in 1980, the inflation rate would be 9.7%. The same goes for unemployment. Officially, it stands at 10%; but if computed the way BLS did it prior to 1994, it would come out to 21.9%. (source: shadowstats.com)

I asked economist John Williams of shadowstats.com to weigh in on last year’s record $1.4 trillion of red ink for the “real” deficit number. Williams told me, “It was closer to $2 trillion because they knocked off $500 billion with accounting gimmicks.”

In its latest budget, the White House is projecting $1.56 trillion in red ink, and that is another new record! What will the “real” deficit be when the year is over? Williams says, “With a weaker than expected economy, the 2010 deficit likely will top $2 trillion…”

No matter how the government does its accounting, the actual deficit will have to be financed. America will have 3 choices: (1) raise taxes to the moon in a very bad economy, (2) get foreigners to buy more debt, and (3) monetize the debt. (print money to pay the bills) Williams chooses what’s behind door #3. In his latest report he says, “…worse-than-projected borrowing needs for the U.S. Treasury likely will trigger increasing flight from the U.S. dollar. At such time as that moves to a panicked level, and U.S. Treasuries increasingly are dumped or otherwise shunned, the Fed will have little choice but to monetize the Treasury debt, becoming the buyer of last resort for Treasuries. Those circumstances should lead to mounting inflation woes and flight-to-safety outside the U.S. dollar, particularly to hard assets such as gold and silver…”

There is another possible consequence to record deficits–higher interest rates! Countries around the globe with high deficits are starting to see interest rates rise. For example, Greece is facing a huge debt load and interest rates there are skyrocketing. In a recent article from “Money and Markets,” analyst Mike Larson put it this way, “Imagine what would happen if Uncle Sam’s borrowing costs shot up like they have in Greece — by 60 percent! Imagine what that would mean for the cost of car loans, mortgages, and other products whose rates track Treasury yields! And imagine the impact on an economy still struggling to recover from the Great Recession! This is the next big story that few people are talking about.”

The founder of “Money and Markets,” Dr. Martin D. Weiss, went on to say, “…unless the Obama administration and Congress can somehow ax the budget or find a new gusher of revenues — both extremely unlikely anytime soon — collapsing U.S. bond prices and sharply higher long-term interest rates are unavoidable.”

The most recent record breaking budget does not take into account what we will spend in the continued bailout of failed mortgage giants Fannie and Freddie. The two were nationalized last year and, on Christmas Eve, the Treasury decided to give them both unlimited bailout funds for the next three years! There is a total of $8 trillion in liability.

So, it looks like higher inflation or higher interest rates or both are coming.

AIG bonuses

Unemployed? Try getting a job at AIG or Goldman Sachs, where they are paying themselves hundreds of millions and billions in bonuses. These are the same firms who needed a bailout just to stay alive. Apparently our tax dollars are being put to good use, lining the pockets of bankers gone wild.

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/02/AR2010020203036.html

Lies, lies, and more statistics

When is Obama's chief economist Christina Romer going to start telling the truth on the economy and employment? It's been one year of persistent lies every time she opens her mouth. How stupid does she think we are?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNoUcQ818CqE&pos=4

“We are getting closer to stability in employment. The next step is to finally start adding jobs,” Christina Romer, the head of the White House Council of Economic Advisers, said yesterday on ABC News’s “This Week” program. “I think we are on the path of steady progress.”

Really? The "path of steady progress"? How does she come up with these inane conclusions?

The Department of Labor’s latest unemployment report, which showed an unexpected loss of 85,000 jobs in December, was “somewhat of a setback,” Romer said, “but they are still part of this trend of greatly moderating job losses.”

This was unexpected? By whom?

As one way to pay for the changes, the Senate would impose a 40 percent tax on employer-provided insurance plans that exceed $8,500 for individuals and $23,000 for families...

Great--raise taxes on employers--that should help with reducing unemployment...

“We simply have to put in place rules of the road so that this system doesn’t bring this economy to the edge of collapse like it did a year or so ago,” she said.

Anybody care to wager we won't have another financial collapse?

Warren Buffett on inflation

This author needs no introduction, and his concerns need no preamble.

http://www.nytimes.com/2009/08/19/opinion/19buffett.html?_r=2&adxnnl=1&ref=opinion&adxnnlx=1250679809-vkyiY4/BtTu6cDDesIMy4w

Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

As much as I agree with Mr. Buffett on the abovementioned scenario, I do disagree with this statement:

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

Actually, studies have been performed on the thresholds of deficits and debts as precursors to inflation and currency crises. See my previous blog on this topic.

http://gregnguyen.blogspot.com/2009/10/tipping-point-for-hyperinflation.html

Economist Peter Bernholz is an expert on the subject of national hyperinflations. He has studied all the major cases of hyperinflation since 1980. His conclusion: The tipping point occurs when a government’s deficit exceeds 40% of its expenditures.

Guess what? The U.S. will hit the 40% mark in 2009.

Mr. Buffett may be wrong on the existence of researched hyperinflation data, but he is in agreement that the US is in danger of entering a period of uncontrolled deficit spending and eventual banana republic-style inflation.

Lessons from the Great Depression

They are not the lessons many would surmise. Art Laffer, the creator of the Laffer Curve, theorizes that increasing tax rates do not necessarily increase tax revenues. He's been proven wrong on a few issues, especially after his infamous debate against Peter Schiff on CNBC in 2006. In the live debate, Laffer insisted that the economy and the mortgage industry specifically, were doing fine. Schiff took the opposite side of the debate--that the US economy was headed towards the mother lode of collapses due to unsustainable consumption fueled by debt and false prosperity. Schiff, of course, won that debate--and bet, handily.



In other words, Laffer totally missed the call on the impending financial meltdown.

But Laffer does bring up some good historical points on the Great Depression:

http://online.wsj.com/article/SB10001424052970203440104574402822202944230.html?mod=googlenews_wsj

FDIC (insolvency)

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by:

* insuring deposits,
* examining and supervising financial institutions for safety and soundness and consumer protection, and
* managing receiverships.

According to Kevin McElroy:

Right now the FDIC insures around $4.5 trillion of banking reserves. That’s the money you and I count as “safe” when we deposit it in almost any American bank account.

The actual truth is they insure this $4.5 trillion with just $10.4 billion. That $10.4 billion came directly from the FDIC-insured banks themselves – meaning that it’s an indirect tax on deposits paid by depositors.

Doing some quick math, we can see that $10.4 billion goes into $4.5 trillion 432 times. So essentially, the FDIC insures every $432 of deposits with one lonely dollar. That’s two-tenths of 1% worth of insurance! It’s not hard to imagine a circumstance where that paper-thin cushion gets wiped out.

The FDIC currently insures 8,153 banks. So far this year, 81 have failed – or 1% (in 2007, just three failed). And there are another 416 banks on a watch list. What happens if another 1% fails – or if even two-tenths of 1% fail?

Well, the FDIC has a reinsurer of its own, sort of. It’s called the U.S. taxpayer, backed by the full faith and credit of the Fed’s printing presses. If they can’t tax us enough, they’ll backstop the FDIC with newly created dollars – the very definition of inflation.

Rising defaults among residential subprime mortgage borrowers caused the implosion of major money centers over the last 3 years, catalyzing a string of bank bailouts. Prime borrowers are also defaulting in record numbers due to resetting of Option ARM loans. Commercial real estate loan interest rates will also reset starting next year, instigating a bust in that sector as well.

Regional banks will fail because they lend to the commercial real estate markets, but they won't receive bailouts, as they aren't "too big to fail." And fail they will, further dwindling FDIC reserves. The FDIC itself is insolvent, and will require the US Treasury to bail them out.

And round and round we go. More printing of dollars will be needed to shore up our banking system. The back stop to the banking back stop will be the US tax payer. To make matters worse, not only will taxes increase, but inflation will further decrease consumer purchasing power due to US Dollar debasement.

Hello gold and silver.

Consequences of deficit spending

Art Laffer, creator of the Laffer Curve, an economic theory which posits that increases in the rate of taxation do not necessarily increase tax revenue. He has been wrong on financial forecasts before, but this primer on the relationship of explosive government spending and subsequent rising inflation offers some valuable insight:


http://online.wsj.com/article/SB124458888993599879.html

The case for owning gold...

Monetary inflationists from the Austrian School of Economics are in direct opposition to Keynesian economics largely accepted by our Administration, Congress, bankers, central bankers, academics, and mainstream economists.

Hence, the vast majority believe the only escape out of a financial meltdown is to flood the markets with liquidity. Essentially, they mistakenly believe solving a debt crisis with even more debt is the corrective action. It's analogous to offering greater amounts of booze to an alcoholic, and hoping that somehow cures him of his alcoholism. Our current and previous Fed Chairmen, Secretaries of Treasury, Presidents and Congressmen have all espoused these fiscal and monetary policies--some more than others.

So guess who wrote this in their essay back in the day--before he climbed several pay levels within our government:

But the opposition to the gold standard in any form – from a growing number of welfare-state advocates – was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale… Thus, government deficit spending under a gold standard is severely limited.
The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which – through a complex series of steps – the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold…
The law of supply and demand is not to be conned. As the supply of money increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold… The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirade against gold. Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Ready for the answer? It was former Fed Chairman Alan Greenspan, who is commonly roasted today for causing the real estate bubble by implementing easy-money policies earlier this decade. With hindsight, his critics point out that Greenspan caused the mortgage crisis by artificially creating a bubble in real assets, while our country amassed billions in deficit. What those same critics don't mention is that Bernanke, Geithner, Obama, and Congress are all colluding to construct those same deficits--only on a much larger scale. After all, deficits of a few trillion here or there are minor inconveniences, right?

Age and power seem to have corrupted the former Fed Chairman. Although his critics are quick to denounce his policies of the past, they are advocating the same strategy which they are criticizing. The difference this time is that the numbers are horrifically astronomical.

Jack Welch

The former General Electric CEO in a Bloomberg TV interview: "We are going to have increased taxes--and everyone will be taxed." He included companies, individuals, families.

Have a good July 4th weekend everyone.

Are You Sure You Want a Tax Hike?

These are the taxes we are already subjected to:

* Accounts Receivable Tax
* Building Permit Tax
* CDL License Tax
* Cigarette Tax
* Corporate Income Tax
* Dog License Tax
* Excise Tax
* Federal Income Tax
* Federal Unemployment Tax (FUTA)
* Fishing License Tax
* Food License Tax
* Fuel Permit Tax
* Gasoline Tax
* Gross Receipts Tax
* Hunting License Tax
* Inheritance Tax
* Inventory Tax
* IRS Interest /IRS Penalties
* Liquor Tax
* Luxury Taxes
* Marriage License Tax
* Medicare Tax
* Personal Property Tax
* Property Tax
* Real Estate Tax
* Service Charge Tax
* Social Security Tax
* Road Usage Tax
* Sales Tax
* Recreational Vehicle Tax
* School Tax
* State Income Tax
* State Unemployment Tax (SUTA)
* Telephone Federal Excise Tax
* Utility Taxes
* Vehicle Sales Tax
* Watercraft Registration Tax
* Well Permit Tax
* Telephone State and Local Tax
* Telephone Usage Charge Tax
* Vehicle License Registration Tax
* Workers Compensation Tax.
* Telephone Federal Universal Service Fee Tax
* Telephone Federal, State and Local Surcharge Taxes
* Telephone Minimum Usage Surcharge Tax
* Telephone Recurring and Non-recurring Charges Tax

I hope I haven't missed any.