Comments are now coming in from those in central banks and governments, which ones I will not mention. They can see the proposition, but ask how can we actually reach the proposal? I do not expect that we can create such a reform without the pain. In the United States, we would need a constitutional amendment to repeal the 16th Amendment. That becomes possible ONLY in the middle of a crisis.
I reported in the Greatest Bull Market during 1931 chapter that on the “very floor of the Congress echoed words claiming that even a dictatorship was better than the pains of depression.” Turn up the stress and you will accept anything to stop the PAIN. This type of political change becomes possible ONLY during a crisis. This is the Wave of Creative Destruction.
So what seems impractical today suddenly becomes the answer just like TARP. They pass something in 2 days not even knowing the details. So practical flies only in a crisis – not now. All we can do now is start the debate so the IDEA is out there. This is why I moved the conference up to set this in motion BEFORE the crisis hits.
Another central banker asked was it really possible to eliminate taxes? Would the state replace direct taxes with indirect? Yes, we are no longer on a commodity barter system. The wealth of a nation is its people not how much it gets back in taxes.
Eliminating debt that we have no intention of paying off which every central banker concedes is insane behind the curtain. So why do we borrow historically with no intention of paying anything back? Keep in mind that I have stated this is FEDERAL, whereas taxes would be still imposed locally unless we extend the proposal to all levels, which is going to be very hard if not impossible. That would be the best goal. Reorganizing cities into regions and reducing local government structures will reduce the cost of government. Maybe one day we will see that.
The question not being asked here is WHAT IS THE ALTERNATIVE? More and more taxes, lower and lower growth, higher and higher unemployment until we reach revolution? The likelihood of ANY other reform is ZERO that will provide any sort of balance that would correct the economic nightmare in which we find ourselves.
We either default on all debt or we monetize all debt, and taxes will continually rise back to insane levels of greater than 70%. The average German already pays more than 50%. How much can the people endure?
What will cause some solution to be adopted is only PAIN. The greater the PAIN then the greater the solution. This is designed to STOP authoritarianism. If this does not take place, don’t worry about reading this blog. I myself will get the hell out and wait for the mushroom cloud to appear. I cannot see any hope to save society without a debt-equity swap. Where such things have failed as in Russia, are different circumstances. They were used in the form Soviet Satellites to make the transition from communism to capitalism. They restricted participation to domestic holders. Nevertheless, it worked. This is the ONLY way out. We just continue to perpetually borrow and raise taxes, hunt money, and end the world economy by government greed or we try to prevent insane disaster. There is no alternative here.
