". . . a republic, if you can keep it."
Before he died in 2007, well-known Hollywood director Aaron Russo made the documentary America: Freedom to Fascism, about the legality of income tax, the federal reserve, privacy and tyranny.
In this old interview, Aaron Russo makes some very serious accusation against the government about the control of money, the war on terror, 9/11, privacy and tyranny.
“[I]n Washington, the software giant’s chief executive, Steve Ballmer, made it clear that the company’s charitable views don’t extend to paying what it considers unfair U.S. tax rates: Ballmer threatened to move more jobs overseas if President Obama prevails with his proposal to end tax breaks on foreign earnings.” (Read more from LA Times)
One of my favorite things about bartering is that it becomes difficult for government to stick their greedy, stupid paws into our transactions and take away a share for foreign wars, domestic spying, bank bailouts, etc.
“With trust in the world’s currencies at its lowest point in recent memory, bartering has reemerged as a possible solution to the credit crunch. All but forgotten, bartering predates any modern form of currency, and arose naturally in the ancient world as the primary means of economic exchange. Today, there are a number of barter systems in place alongside replacement currencies that operate on a local level in cities or small rural villages. Whether these approaches come from a hot Web 2.0 startup or a tiny Thai village, they are changing the economic landscape. Here’s a look at some of the most promising. . . . .
. . . . While few might stop to think about the legal ramifications of bartering, it should be noted that even though it seems informal, bartering is a transaction just like any other. For those trading goods or services of a marked value, a contract ought be used to protect both parties. According to SMU Law professor, Mary Spector, every aspect of the exchange should be outlined, for example, with regards to pet care being exchanged: ‘Would [four hours of pet care] mean grooming the pet? Walking the pet? How many pets would be involved? Is it just dogs or would it be dogs and fish?’
Similar to the legal ramifications, there are also tax implications of barter-based commerce. According to the IRS, ‘If you conduct any direct barter – barter for another’s products or services – you will have to report the fair market value of the products or services you received on your tax return.'” (Read more from mint.com)
“The hiring of private firms to provide ‘independent’ advice to both the Treasury Department and the Federal Reserve raises concerns about potential conflicts of interest, according to a letter written by the Project on Governmental Oversight (POGO) and delivered to key members of Congress.
. . . .
‘POGO is concerned . . . about the conflicts of interest that could arise if these fund managers are also investing in the same types of assets for their private clients.'” (Read more from huffingtonpost.com)
The line bw government and business is now perverted. The best thing government can do is stay out of it, and leave us all alone.
“One of the more disturbing actions on the part of the Washington establishment has been the blatant disregard for property and contract rights. First, consider the case of Chrysler. The government, while coming to the aid of a dying Chrysler, lobbed offers to its lenders, the bondholders. A group of dissident bondholders spurned the government’s offer that would have given them a minuscule stake in the company while the UAW received a majority ownership position.
In response, the president denounced the bondholders, publicly proclaiming their obligation to sacrifice and referring to them as ‘vultures’ because they insisted on maintaining their rights as senior creditors. Chrysler’s bondholders, by law, are secured creditors, and they hold a senior ranking above unsecured creditors or shareholders in a bankruptcy or reorganization. Yet they were vilified and bullied for refusing to agree to a shoddy deal. Some of the holdout bondholders finally did buckle under; they dropped their legal challenge and agreed to the government’s lowball offer, but only because they were strong-armed by Washington’s bully tactics. Thomas Lauria, the attorney representing the group, stated that his clients weren’t able to ‘withstand the enormous pressure and machinery of the US government.’ Thus the senior creditors were plundered while ownership was redistributed to the UAW, whose members are junior creditors. This makes a mockery of US securities law.
The bailout and ensuing appropriation of General Motors is no less tragic.” (Read more from mises.org)
“Social Security is a “pay-as-you-go” system. This means that when you work, the government takes your money and gives it to Social Security recipients. In order to get workers to accept this system, the government promises to take other people’s money and give it to you when you retire. Think of it as an exponentially larger version of Bernie Madoff’s Ponzi scheme.
As long as a lot of people die before collecting any benefits, or die without collecting many benefits, the system is financially sound. . . .
Each worker’s income below about $106,800 is taxed at a 12.4 percent rate. There are no deductions for this tax. All income is taxable income. Even those in the lowest income brackets have roughly one-eighth of their income taken from them to fund the Social Security system.
Few workers, however, understand the tax burden of the Social Security system. On their paychecks, they see that 6.2 percent of their gross pay goes to pay for Social Security. What they don’t see is that employers match this tax payment with an equal 6.2 percent payment. It may seem that employers are paying half of the Social Security taxes, but that’s not the case. Even though the employers are legally liable for one-half of the tax, they shift the tax onto workers in the form of lower gross wages. Therefore, the Social Security tax burden, 12.4 percent of each worker’s gross pay, falls on workers. Half of this burden is hidden from the workers.
Currently, the Social Security Administration is running a budget surplus. . . .
What has happened to this surplus? The SSA took in $180 billion more than it spent in 2008. However, the federal government spent this $180 billion on other programs. Since the funds were spent on something other than Social Security, the government declares that it loaned itself the $180 billion, calling such “lending” intragovernmental debt. . . .
Think of this type of lending for a moment. The federal government is in debt to itself. Compare this to debt in the private sector. No business declares that it’s deep in debt because it loaned itself money. It’s the same with families. Parents don’t lay awake at night trying to figure out how to repay the money they loaned themselves. The government, however, thinks that it makes perfect sense to collect $100 of tax revenue, spend the $100, and then declare that it now owes itself $100. This scheme is not limited to Social Security. Currently, federal intragovernmental debt for all programs totals $4.3 trillion. . . .
Making the system sustainable will require higher taxes or benefits reductions. These reductions could be achieved by either reducing the benefits per recipient or reducing the number of beneficiaries — say, by raising the minimum age requirements. The solution is to give workers a negative rate of return on the money that is taken from them. It would also help if some workers collected no benefits at all. Workers who are taxed and then die before collecting any benefits are a boon to the system. Maybe the federal government should rethink its war on tobacco.
This system is a massive income-redistribution scheme, taking one-eighth of most workers’ incomes. The total tax burden is hidden from the workers. The tax revenues have been used to cover the deficits in the rest of the government’s budgets, and the only way to make the system sustainable is to give the participants a negative rate of return on their money.
The Social Security system has run its course. It’s unfair and it’s economically destructive. It’s time for the program to be abolished.” (Read more at mises.org)
Note: The Social Security Act was signed into law August 14th, 1935 by FDR. In terms of liberty, the WWII generation was not our greatest, but our worst.
It’s been a long, hard battle, but I think the liberty message is here to stay.
“The failure of the U.S. to uphold its commitments under the Bretton Woods Agreement to redeem the dollar for gold at $35 per ounce was the primary cause of the great inflation in all the world’s currencies. Just to recap events: In 1944 the allied powers agreed that the dollar would serve the same role as gold for the purposes of international currency settlements after World War II. At that time the U.S. owned (or safe kept for allied governments who were at war and whose territories were threatened by invasion) most of the gold reserves of the allied central banks. As long as the U.S. would keep its dollar to gold ratio at the agreed-upon $35 per ounce ratio, central banks around the world could settle their trading accounts in dollars. These central banks would maintain an agreed-upon ratio of dollars to their local currencies just for this purpose. The world would be on a ‘gold exchange standard’. If one country inflated its currency, its trading partners would demand dollars in exchange far in excess of the profligate country’s ability to pay. It would be forced to deflate. Just as the case under a true international gold standard, that country’s prices would fall, its exports would increase, thus generating dollar reserves and all would be back to equilibrium. The key to this whole program was the promise of the United States itself not to inflate. But, of course, this is exactly what it did.
Theoretically, the U.S. should have been placed in the same position as any other country that inflated its currency–instead of running out of dollars, the U.S. would run out of gold. Its gold reserves did dwindle, which should have set off alarms at the International Monetary Fund, which was charged with the job of auditing the gold supplies of the U.S. and ensuring that it honored its obligations. But the IMF did not do its job. Why? This enters the arena of psychology, but I imagine that the Cold War had something to do with it. The U.S. alone was capable of protecting the Allies from the growing Soviet threat. Perhaps the Allies and the IMF felt an obligation not to criticize their protector. Who knows? But once France got the atomic bomb and a president—Charles de Gaulle—who felt comfortable acting as an equal on the international stage, it no longer felt that it needed to cow tow to the U.S. So in 1963 France demanded to be repaid in gold for its ever-increasing stockpile of dollars. This should have instilled much needed fiscal and monetary discipline in the U.S., but it did no such thing. President Johnson committed the U.S. to fighting a foreign war AND instituting new welfare entitlements—his ‘guns and butter’ policy. In 1969 President Nixon could have reversed this policy, but he feared that the inevitable recession would mean the loss of a second term, so he simply reneged on Bretton Woods and ‘closed the gold window’ in 1971. So much for U.S. honor and prestige!” (Read more from patrickbarron.blogspot.com)
Save Some Jobs by Destroying Many More
“Much of the Obama administration’s rationale for bailing out GM is that such actions will save American jobs. This is just one of the many unfortunate fallacies that stem from our century-old fiat money system.
Prior to the formation of the Federal Reserve System the American populace would have scoffed at such nonsense that the government can or even should tax all Americans in order to save the jobs of some Americans. It would have been apparent to anyone in the age of the gold standard that the government can give away only what it takes from someone else, exacting its overhead cost and throwing uncertainty of the future into the mix to boot. In the case of the GM bailout, the benefit will accrue to the unions, who bear primary responsibility for the systematic destruction of the American automobile industry since the 1930s. But the fact that we are no longer on a gold standard does not eliminate the economic truth that all of us who are not members of the United Auto Workers are being robbed by our government for the union members’ benefit.
The GM bailout perfectly illustrates why government gets away with this assault on the American taxpayers’ pocketbook. The benefit is concentrated and easily identified and quantified. The billions of bailout money will keep plants open and salaries flowing, at least for awhile. Smiling autoworkers–not all of them union members, of course—will be happy that they still have a job. I have no doubt that the mainstream media will interview them and allow them to relate how happy they are with the government’s actions.
But no one can interview the people whose jobs were lost or never created when the capital that would support them has been funneled to GM.” (Read more from patrickbarron.blogspot.com)
Inflation Will Harm the Economy, Not Spur Recovery
“On Wednesday, May 20th Rich Miller of Bloomberg News reported that two well-known economists–former White House adviser Gregory Mankiw and Harvard professor Kenneth Rogoff–recommended higher inflation to spur the U.S. economic recovery.
One would think that after so many decades of boom/bust business cycles and depreciation of the dollar to a mere fraction of its worth even Harvard economists would rethink their Keynesian philosophy. Inflation can occur only through the medium of exchange, of course, as too much money chases too few goods. It is caused by an expansion of the money supply, which one must assume is the desired mechanism for Mssrs Mankiw and Rogoff. But expansion of the money supply is what got us in this mess in the first place.
The artificial lowering of the interest rate spurred more long-term projects than could be completed with the limited resources at hand. More money will perpetuate and exacerbate this malinvestment by keeping capital destroying businesses in operation for a few more months. But more money will not cure the underlying problem. On the contrary, it will make it worse and make the necessary recession longer and deeper, meaning it will take years rather than months and cause higher unemployment and more loss of capital than would otherwise be the case.
The recession, of which higher unemployment is a manifestation, is an essential and inescapable process that must occur for the REAL economy to recover. Money losing businesses must close their doors and people must find work in profitable firms.” (Read more from patrickbarron.blogspot.com)
“The end of the recession is in sight, according to a new survey of leading economists.
While the economy is showing signs of stabilizing, the recovery will be more moderate than is typical following a severe downturn, said the National Association for Business Economics Outlook in a report released Wednesday.
The panel of 45 economists said it expects economic growth will rebound in the second half of 2009.” (Read more from cnn.com)
Brought to you by the people who Censored Ron Paul and lied us into Iraq.
There is a popular cluster of myths surrounding our Great Depression:
1) It just happened unexpectedly. (Crashes, including the one in 1929, are the predictable and inevitable consequence of inflationary monetary policies.)
2) Hoover made it worse by not helping. (Hoover intervened massively and continuously.)
3) FDR’s New Deal rescued us. (FDR continued and expanded Hoover’s interventions, close to the point of fascism.)
Lets take a look at #3. Here are a two illustrations of FDR’s New Deal policies:
Roosevelt supporter-turned-critic John T. Flynn, in The Roosevelt Myth (1944), wrote:
The NRA [National Recovery Administration] was discovering it could not enforce its rules. Black markets grew up. Only the most violent police methods could procure enforcement. In Sidney Hillman’s garment industry the code authority employed enforcement police. They roamed through the garment district like storm troopers. They could enter a man’s factory, send him out, line up his employees, subject them to minute interrogation, take over his books on the instant. Night work was forbidden. Flying squadrons of these private coat-and-suit police went through the district at night, battering down doors with axes looking for men who were committing the crime of sewing together a pair of pants.
“A hapless New Jersey tailor named Jack Magid became nationally famous after he was arrested, convicted, and imprisoned by the code police for the “crime” of pressing a suit of clothes for 35 cents when the Tailors’ Code fixed the price at 40 cents. The NRA was ruled unconstitutional by the U.S. Supreme Court on May 27, 1935.” (from mises.org)
“Executive Order 6102 is an Executive Order signed on April 5, 1933 by U.S. President Franklin D. Roosevelt ‘forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates.’ The Order required most people to deliver on or before May 1, 1933 all but a small amount gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of Executive Order 6102 was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both. Because of this forced immediate sale of gold to the Federal Reserve at the government set price of $20.67 per troy ounce, this Executive Order is often referred to as the Gold Confiscation of 1933. Shortly after this forced sale, the price of gold from the treasury for international transactions was raised to $35 an ounce.” (from wikipedia.org)
Predictions from seekingalpha.com:
Prediction one. The twenty-five-year equities bubble pops in 2009. U.S. and foreign equities markets will stop treading water and realign with economic reality. Stock prices will cease to reflect the “greater fool” mentality and will return to being a function of dividend yields, which have long been miserable. The S&P 500 will sink below 500. In a bid to stem the panic, the government will enforce periodic “stock market holidays”, and will vastly expand the scope of its short-selling prohibitions—eventually banning short-selling altogether.
Prediction two. With public pension systems and tens of millions of 401k holders virtually wiped out—and with the Baby Boomers retiring en masse—there will be tremendous pressure on the government to get into the stock market in order to bid up prices.
Therefore, sometime in 2010, the Federal Reserve will create and loan out hundreds of billions of fresh dollars to the usual well-connected suspects, instructing them to buy up stocks on the public’s behalf. This scheme will have a fancy but meaningless name—something like the “Taxpayer Assurance Equities Facility”. It will have no effect other than to serve as buyer of last resort for capitulating smart-money types who want to get out of stocks entirely.
Prediction three. Millions of new retirees—including white-collar people with high expectations for a Golden Retirement—will be left virtually penniless. Thousands will starve or freeze to death in their own homes. Hundreds of thousands will find themselves evicted and homeless, or will have to move in with their less-than-enthusiastic children. Already strained by the rising tide of the working-age unemployed, state and local welfare services will be overwhelmed, and by 2012 will have largely collapsed and ceased to function in many parts of the country.
Prediction four. “Quantitative easing” will fail to restart previous patterns of lending and consumption. As the government sends out additional “rebate” checks and takes ever-more drastic measures to force banks to lend, hyperinflation could take hold. However, comprehensive debt relief via a devaluation of the dollar is even more likely. This would entail the government issuing one “new” dollar for some greater number of “old” dollars—thus reducing both debts and savings simultaneously. This would make for a clean slate a la Fight Club.
As there are many more debtors than savers in the U.S., the vast majority would support devaluation. The Chinese and other foreign holders of our bonds would be screaming mad, but unable to do anything. Every country that has not found a way out of dollar-denominated reserve assets by 2012 will see its reserves eliminated.
Prediction five. The government will stop pretending that it can finance continuous multi-trillion-dollar deficits on the private market. By late 2010, the sole buyers of new U.S. Treasury and agency bonds will be the Federal Reserve and a few derelict financial institutions under government control. This may or may not lead to hyperinflation. (See prediction four).
Prediction six. As the need for financial industry paper-pushers declines and people have less money to spend on lawyers and Starbucks (SBUX), unemployment will rise until the private sector has eliminated all of its excess capacity and superfluous or socially needless jobs. The government’s narrow unemployment figure (U3) will rise into the high teens by late 2010. The government’s broader unemployment figure (U6) will cease to be reported when it reaches 25 percent—it will simply be too embarrassing. Ultimately, one in three work-eligible Americans will be unemployed, underemployed, or never-employed (e.g. college grads permanently unable to find suitable work).
Prediction seven. With their pension dreams squashed, and their salaries frozen or cut, police and other local government workers will turn to wholesale corruption in order to survive. America’s ideal of honest, courteous, and impartial cops, teachers, and small-time local functionaries will have come to an end.
Prediction eight. Commercial overcapacity will strike with a vengeance. By 2012, thousands of enclosed malls, strip malls, unfinished residential developments, motels, truck stops, distribution centers, middle-of-nowhere resorts and casinos, and small-city airports across America will turn into dilapidated, unwanted, and dangerous ghost towns. With no economic incentive for their maintenance or repair, they will crumble into overgrown, plywood-and-sheet-rock ruins.
Prediction nine. By the end of 2010, tens of millions of households will have fallen behind on their mortgages or stopped paying altogether. Many banks will be unable to process the massive volume of foreclosure paperwork, much less actually seize and resell the homes.
Devaluation (as mentioned in prediction four) could ease the situation for those mortgage holders still afloat, but it would also eliminate any incentive for most banks to stay in the mortgage business. In any case, the housing market in many parts of the country will lock up completely—nothing bought or sold.
With virtually no loans being made, even the government will finally acknowledge that most banks are fundamentally insolvent. A general bank run will only be averted through a roughly one trillion-dollar recapitalization of the FDIC, courtesy of new money from the Federal Reserve.
Prediction ten. As an economy is never independent of the society within which it functions, the next few paragraphs will focus on social and political factors. These factors will have as much of an impact on market and consumer confidence as any developments in the financial sector.
Whether rightly or not, President Obama, having come to power at the dawn of this crisis, will be blamed for it by over 50 percent of the population. He will be a one-term president. In response to his perceived socialization of America, there will be a swarm of secessionist and extremist activity, much of it violent. Militias and armed sects will be more prominent than in the early 1990s. Stand-off dramas, violent score-settlings, and going-out-with-a-bang attacks by laid-off workers and bankrupted investors—already a national plague—will become an everyday occurrence.
For both economic and social reasons, millions of immigrants and guest workers will return to their home countries, taking their assets and skills with them. The flow of skilled immigrants will slow to a trickle. Birth rates will plummet as families struggle with uncertainty and reduced (or no) income.
Property crime will explode as citizens bitter over their own shattered dreams attempt to comfort themselves by taking what is not theirs. Mutinies and desertions will proliferate in an increasingly demoralized, over-stretched military, especially when states can no longer provide the educational and other benefits promised to their National Guard troops.
There will be widespread tax collection issues, and a huge backlash against Federal and state bureaucrats who demand three-percent annual pay raises while private sector wages remain frozen or worse. In short, the “Tea Parties” of tomorrow will likely not be so restrained.
This is why I blog.
“Ludwig von Mises was never able to get a paid academic post in the U. S. He was shut out of American economic journals, and boycotted and ridiculed by the establishment – all because he told the truth, without fear or compromise, when it wasn’t fashionable to do so.
[Robert] Heilbroner, however, has never been anything but fashionable. A professor at the New School for Social Research, his lecture fees are high and his books sell well, especially his history of thought, The Worldly Philosophers, which glorifies Marx and Keynes and never mentions the Austrians.
Like John Kenneth Galbraith, Heilbroner has gotten rich by attacking capitalism. And also like Galbraith, every time he writes a book, the reviews in the top media read like sales copy.” (Read more from lewrockwell.com)
“A brief obituary appears in the New York Times, courtesy of The Associated Press: ‘Robert Heilbroner, 85, Economist and Writer, Dies.’
Absent from this brief death notice is, perhaps, one of Heilbroner’s most famous formulations. Upon the collapse of 20th century socialism, he said: ‘Mises was right.'” (from mises.org)