Ending Central Economic Planning Will Not Destroy The Country

The current US national debt is around 24.5 trillion dollars, which works out to $200,500 dollars of debt for every income-tax paying citizen in the nation.

If we throw in unfunded liabilities, such as Medicare and Socialist Security, the total rises to $1,381,045 dollars per tax payer.

Even if all US citizens were taxed 100% of their income, it would remain impossible for the US to pay off all of its debt.

The US is currently in the process of defaulting on its debts. The God King has decided to devalue the US currency by 600 billion dollars. Sorry citizen, but you don’t get to vote on this decision; your glorious unelected banker leaders have made this decision for you.

It is telling that if you Google “600 billion fed,” the first site that pops up is a Chinese news agency. China holds around 800 billion of our debt, as do the Japanese. They are extremely concerned about being paid back in worthless dollars.

To this end, they, along with Russia, have decided to start trading oil amongst themselves outside of the dollar system. The dollar is currently backed by oil. In order to buy oil on the major exchanges, one must first purchase dollars, then use those dollars to purchase oil. This ensures the US can continue to export its inflation as it forces foreign nations to hold our money. This neat deal that allows the US to print endless money is coming to an end, and soon the US will be forced to absorb the brunt of its reckless inflationary policies all on its own.

The end of the US empire is no longer an “if” but a matter of “when” – and the “when” is unfolding right now before our very eyes. If the US makes it another year without entering into a hyper-inflationary episode I will be extremely surprised. We are already experiencing the early stages of hyper-inflation with commodity prices spiking well over 10% year over year.

The International Accounting Standards Board’s defines hyper-inflation as a cumulative inflation rate over three years approaching 100% (26% per annum compounded for three years in a row). I think this is an entirely realistic scenario given that the Fed has doubled the monetary base overnight and is currently engaged in an outright devaluation of 600 billion dollars, which is roughly equal to 32% of the total M1 money supply.

Given our current debt levels, we can rest assured that the printing of money will accelerate as ever more debt is created to repay the existing debt.

Since we know that the printing of money leads to total economic chaos, it boggles my mind when people argue that liquidating the debt would result in even greater economic chaos. As if having a non-functional currency is somehow a better state of affairs to deal with.

The purpose of this post is to highlight that liquidating debt (simply writing the debt down as a loss and discharging it from the books, as is done in a bankruptcy) will NOT result in a higher level of chaos than we will experience during an episode of hyper-inflation.

The nation must make a choice right now as to which road we will follow. We can allow the Fed and the Congress to continue on its current path of hyper-inflationary destruction or we can put a halt to it by basically dismembering the federal government.

Since we all know what happens when there is hyper-inflation created by kleptocrats, I’m going to focus on what a legitimate default of the US could look like and its possible outcomes. The following is a rough outline of what a legitimate government default would look like:

First we must recognize that liquidating debt does not destroy any physical resources. The process I’m going to lay out is exactly like a corporation going bankrupt. Think of the US government as a corporation and government workers as its employees. Government land, buildings, national parks, computer systems, office complexes, etc.. etc.. are the “corporation’s” assets.

A legitimate default would begin by wiping out all of the unfunded liabilities, which means the Socialist Security system and Medicare would be eliminated. The money that is currently held in trust would be returned to the tax payers using a standard metric. So those who paid in first and those who paid in the most would get first dibs on the money currently in the trust funds. The money would be paid out in a lump sum until there was no money left, so the younger generation would have to take the brunt of the loss, but they also have the most time to recover that loss.

Obviously along with wiping out the unfunded debt liabilities, this also eliminates the greatest tax burden on middle and lower class workers because payroll taxes would be eliminated. This would constitute an immediate 15% increase in pay for all workers.

The next step would be to end the wars and shut down the vast majority of federal bureaucracies. Most of the federal military itself could be folded into the state national guards and the hardware distributed amongst the states or sold off at auction to foreign nations. The military has epic tons of hardware that has value in the private markets, and a lot of that hardware could be sold to recoup some of the losses and pay back our creditors.

The unused federal bureaucratic offices and hardware would also be sold at auction to the private sector. The money collected would go to paying back our creditors.

The national parks would be sold at auction. The sale of park land for resource development or private park providers would provide a large source of revenue to pay down existing debts.

The goal of liquidating all of the debt, selling most of the federal government’s assets, and eliminating vast amounts of federal bureaucracies would be to get our federal spending levels well below what the government collects in tax revenues. When tax revenues are once again above what the government spends, we can say the nation is in a state of fiscal solvency. The sale of assets would allow us to payback our creditors without resorting to increasing taxes.

Further, the tax revenues themselves must be reduced in order to generate a strong recovery. It is not enough to discharge the debt, liquidate assets, and reduce spending below tax revenue – the cuts must be deeper in order to entice private enterprise to once again begin re-capitalizing America. The tax code itself must also be revamped in order to cut down on costly accounting costs and regulatory overhead. If there must be a violently enforced federal tax, it should be flat and simple – no more than one page of legal text.

The last step in this process is to solidify the currency by once again locking it to a fixed weight of gold. A bank should be nothing more than a warehouse for people’s money. It should not be a source of debt financed inflation; and it certainly should not be administered as a financial cartel by a bunch of kleptocrats. Locking the currency to a commodity will ensure our creditors that we will not devalue the debts we owe to them – which means they will continue to engage us in trade instead of economically isolating us.

As this is being accomplished, there will be vast amounts of people laid off from government jobs. Unemployment would shoot to epic proportions during this period of re-adjustment. Government currently employs around 1/6th of the entire US workforce, the goal should be to get that number down to around 1/100th.

If we look at major US industries that have gone out of business, the above scenario is typically how they go about doing it. They lay off the workforce and sell the remaining usable assets on the market at discounted rates, the sale of those assets goes to pay back their creditors.

When a major US industry goes out of business, there is short period of readjustment, typically only a few months, before those workers and assets are once again put to productive use by profitable businesses. The same would be true for the government’s workers and assets. In a matter of months, foreign and domestic buyers would begin utilizing the labor and resources currently used by government in the production of private goods.

The workers, resources, and other capital goods that the government currently uses ARE NOT DESTROYED in a bankruptcy, they simply change ownership and they are put to a different use by a different owner. – A PRODUCTIVE OWNER THAT ACTUALLY PRODUCES STUFF PEOPLE WANT TO BUY.

The market is radically efficient at reallocating resources to the most productive use. So we could expect to see an explosion in productive economic growth as private industry takes control of the government’s currently wasted resources of land, labor, and capital.

The huge reductions in taxes and regulations would make it far easier for those people with accumulated capital savings to begin building new industries – AND – they would not have to compete with government spending for resources so their operating costs would be radically reduced all around. Ultra low tax rates, ultra low resource costs, and ultra low startup costs would be the result of the above mentioned cuts in government.

Foreign capital would once again flow into America as international industries opened up new factories and mines to access America’s abundant natural resources.

People would be put back to work in short order, but the six month to year long adjustment period during all of this would be fairly brutal. - but I argue not nearly as brutal the economic destruction that would be unleashed from the destruction of the currency.

People must remember that the current government hordes VAST amounts of natural resources. It employs VAST amounts of highly skilled people. It utilizes VAST amounts of capital goods. – ALL of those people, resources, and capital are engaged in non-productive activity.

Government produces nothing that the average consumer wants to buy. The production of “stuff” is what makes countries rich. When a country produces lots and lots of stuff, people can buy lots and lots of stuff for cheap and this improves their standard of living. This is precisely how America came to be an economic super-power in the first place.

Our nation was a nation of producers and our currency was backed by a commodity. Our government was small and limited and our industry was large and productive.

This is THE ONLY WAY a nation can improve the daily lives of its citizens. Since government produces nothing, it can only take from those who produce and give to those who do not produce. This activity of redistributing wealth at gunpoint generates absolutely NO wealth.

Wealth is STUFF – not money.

We are going to learn that lesson the hard way if the people do not quickly put a stop to the criminal government’s actions.

When I try to tell people that this broken fascist system is failing they just look at mean like "sure...another conspiracy nut" or " why should I care. Will it get me a dollar or a Big mac?". The general public doesn't realize how sick and twisted the banker elite are. Its like they are in a sedated day-dream created by the corporate media.

What happens if china or Russia invade us while this inflation is happening? What happens if the bankster cartel pack up and leave? Can we support another war? Will there be another military draft?
What happens to the dollar after they crash it?

I think people won't care until something crazy happens. Like being jailed for wearing ninja turtle boxer shorts like one of those imaginary terrorists we keep hearing of.

When will people wake up? Turn off the football. Put away the beer. Stash the Lesbo Porn. And start to question...

Why do we even need a state?

Can we as a people manage ourselves? Do we need a authoritarian "daddy" to slap our wrists when we act up?

The parasite known as the state is a failing institution. The powerful private interests hijacked it much like a computer virus. The State is no longer for the people by the people. Its for the Bankers by the Bankers.
No ammount of football,cheese burgers,beer,lesbian porno, or FIAT currency will change that fact.


America has to become America again. We are America. Not them.

I would go you one further. I propose debt repudiation. For an explanation of how that would work, see the link.
www.thepriceofliberty.org...

Open Letter to Wen Jiabo and the Chinese Government
By Kyle Bennett
March 16, 2009

You've expressed concern with the safety of the hundreds of billions of dollars of US Treasury instruments that you possess. Your concern is well founded.

They will not be paid in full.

First, while I have your attention, let me state that since you are communist thugs who brutalize your people and have no right to run a country, or even to breath the air of this planet, I have no sympathy for your predicament. Its a shame that some in this country are burdened with the belief that they are in debt to the likes of you, but that is their problem. It is not, generally, a problem the American people are saddled with. We never agreed to be in your debt.

Understand one thing, and though I'm sure you already know it, I will spell it out clearly so there is no misunderstanding. That paper you hold is backed by only one thing: the presumed ability now and in the future of our government to rob or extort from the American people the money that will be used to repay you.

I refer to the paper you "hold", rather than own, because you own nothing. What you were promised was not the property of the people you made your deals with. It was not theirs to offer, and it is not now yours. Your deal was with a relatively small handful of United States officials, George Bush, Alan Greenspan, Ben Bernanke, Henry Paulson, Barak Obama, Tim Geithner, and others. It was not with us. It was with them, and it is with them or their assigns that you will have to deal in the future

reply to post by sonofliberty1776


Debt repudiation of our domestic debts would be a part of the debt liquidation.

When a nation writes down the debts, that is debt repudiation - it is not going to pay them, at least not in full.

However, not repaying our foreign creditors is very bad business. We do not want to get into a pissing match with China or Japan while we are in a currency crisis.

The Chinese bought our debt on good faith, and we owe it to them to at least try and repay most of that debt.

We need their industry to keep us going while we work on rebuilding our own industry.

As I lay out in the post, paying back that debt should be accomplished by selling off our government assets rather than taxing the public.

Originally posted by mnemeth1
reply to post by sonofliberty1776

 

DHowever, not repaying our foreign creditors is very bad business. We do not want to get into a pissing match with China or Japan while we are in a currency crisis.

I disagree. I could honestly not care less than I do about China and their reaction to our saying "get bent".

The Chinese bought our debt on good faith, and we owe it to them to at least try and repay most of that debt.

They bought it from an unconstitutional entity known as the Federal Reserve. The Constitution allows only the US treasury to control our money supply. The Fed is a violation of the most basic laws of our land. If a thief buys stolen property, and the rightful owners reclaim their property, do the purchasers of the stolen property get their money back? Even if they actually did buy the stolen goods in good faith, they are still stuck. Same situation.

We need their industry to keep us going while we work on rebuilding our own industry.

No! We need to go cold turkey and stop buying their crap. This will allow our industries to rebuild more quickly because of larger demand.

As I lay out in the post, paying back that debt should be accomplished by selling off our government assets rather than taxing the public.

We should do neither. The politicians and members of the fed should be tried for treason and punished by death or life without possibility of parole. Their assets should be seized and sold to pay down the debts they incurred. We are the owners of the US government. It is past time we reclaim our property.

reply to post by sonofliberty1776


You say that now, but I reckon you would change your tune if you walked into Wal Mart and the prices looked like Neiman Marcus.

Because that's exactly what would happen if China cut us off from trade.

We would implode overnight.

Further, we should sell off our government assets because they need to be put to productive use. Even if we didn't have debts to repay, those assets should be sold to the private sector so they can be utilized in the production of real goods and services that benefit mankind.

Lets take a fictitious scenario.

Say there is a multi-million dollar office complex that currently houses government workers.

Would it be better to leave that office complex in the hands of government or to sell the whole thing on the market at a huge loss?

Who would buy that office complex and what would they use it for?

PRODUCTIVE BUSINESSES WOULD BUY IT AND USE IT TO PRODUCE PRODUCTS THAT BENEFIT MANKIND.

If I could buy an office complex for a few thousand dollars, I would be in business for myself RIGHT NOW.

Government should be stripped of as many assets as possible.

reply to post by mnemeth1

Most of the federal military itself could be folded into the state national guards and the hardware distributed amongst the states or sold off at auction to foreign nations. The military has epic tons of hardware that has value in the private markets, and a lot of that hardware could be sold to recoup some of the losses and pay back our creditors.

I have a major problem with selling our hightech weapons to any other nation "at auction". Are you insane?

Originally posted by mnemeth1

Government should be stripped of as many assets as possible.

Within reason I can agree. However, that does not apply to high tech weaponry which could then be used against us and/or reverse engineered by china or whoever. The federal government should be reduced to strictly Constitutional duties. All other agencies and related materials should be sold.

Originally posted by sonofliberty1776
reply to post by mnemeth1

 

Most of the federal military itself could be folded into the state national guards and the hardware distributed amongst the states or sold off at auction to foreign nations. The military has epic tons of hardware that has value in the private markets, and a lot of that hardware could be sold to recoup some of the losses and pay back our creditors.

I have a major problem with selling our hightech weapons to any other nation "at auction". Are you insane?

We don't have to sell the weapons.

I personally would like to see them destroyed.

However, weapons are not the only thing the military has to sell.

Military hardware encompasses far more than just weapons systems.

How about those massive NSA data centers?

Those suckers should be sold immediately.

Originally posted by mnemeth1

How about those massive NSA data centers?

Those suckers should be sold immediately.

edit on 21-12-2010 by mnemeth1 because: (no reason given)

Only if all information is wiped first.

reply to post by sonofliberty1776


LOL

of course.

the hardware should be sold, not the software or data.

Good work, still a few issues but it shows that it can be done. The derivative market estimated in the quadrillion dollar range does look very messy, may hold some funds as the kleptocrats are dethroned.

There is a lot of waste in the government, but it does aid in some organisational issues. Water resources and national parks are contentious issues for privatisation. Social security will be important to provide public stabilisation through the transition. Hard to say what is on the other side, it looks like a bottom up instead of a top down approach to the economy is coming.

Judge slams the Fed