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Archive for September, 2011

 

Bonds issued for public projects are the bread and butter for established politicians. This is what keeps the “old boys club” in power and keeps new blood in check. There is no cleaning up politics without dealing with this, especially on a local level. This is where real reform should be focused as it is the cause of local corruption, special favors, and high taxes. Without ending this, there will be no reform.

If you really want to end “bond issuance” and the corruption that comes with it, you need to end the monopoly of the government in such areas as education, roads, utilities, bridges, and many other things deemed as a “public good”. This would require a sift to a laissez-faire environment, which does not seem to be envisioned by anyone, including the tea party.

If anything, such entities that require such bonds need to be able to stand on their own merit otherwise they should not exist. But how do you convince people who think it is not ok to plunder their neighbor for a public good? How do you teach them that plundering is not a Christian principle or even American for that matter? I suppose that the artificial expansion of currency has done its damage.

But in absence of this artificial expansion and because of heavy regulations, the economy may be painful enough for a new vision. After all an argument can be made that everyone would be better off with the complete separation from government funding and non accountable regulations since people are “feeling” it or will with government default. Without new loans to circulate, the illusion of prosperity is lost.

And I see new debt issuance for such projects as no different than bailing out the banks with free money who, after all, underwrite a lot of such debt obligations. Why create or fix anything if you can “refinance”, especially if there is no accountability and backed by other people money. This is one of the main reasons why most of the current infrastructure is unsustainable. There is no accountability when you can just issue debt with no recourse and on the backs of others. But the real question remains; how can new debt be issued and sustained given the state of the economy today. And what happens when it defaults. So again, economics may force a change and provide such motivation.

But I would think that this would lead into ideas such as privatizing the roads, infrastructure, utilities courts, etc. So, I think economics can provide the seeds for such a movement. But there needs to be a vision, not new regulations and partnerships with government. Otherwise it is doomed to fail. If you want to stop the problem, you must get to the root cause. And this would require the protection of private property rights, including the removal of the government shield for government employees.

If you think about it, such things should be privately owned, whether through individuals investors, customers, or through some type of self-contained cooperation. In this way, people are not plundered, are able to hold others accountable, and have some say in the matter. And government can still exist and set up protections of individual private property rights, which will lay a basic foundation and standards for such projects. But regardless, such projects need to be completely separated from government, especially the funding and agency regulations that derived revenue from such projects. I would think that this would be key in the matter. Funding for such projects should come from these entities own savings, revenue streams, private investors, and/or individual loans and not commercial banks.

If you notice, many local governments are “partnering” up with businesses and implementing regulations that keep competitors away. Why? Because governments needs the revenue, which mean these things have stopped working. But government should not be allowed to partner up with anyone, nor derive revenue from things like inspections, permits, taxes on services, regulations, penalties, and fees.

The only revenue source should be from direct taxes, which should be leveled equally on a per person basis based on needed revenue, but be voluntary. This would make government more accountable and help restore liberty, while ushering a new era of innovation and creativity that creates real prosperity for all, especially the poor. If you take away the ability for local government to collect revenue from such things, you take a huge step in the right direction.

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Illusion of prosperity

In order to understand the financial crises, you must understand how money is created and circulated through the economy.  It is all done through consumer loans with money created out of thin air.   For the longest time, the illusion of prosperity has been brought to you by loans not buy wealth and production.  Inflate the money supply and it seems like initial prosperity until the bills come do.  Take away the creation of credit out of thin air and very few things that exist now can be sustained.   This is what is really going on.   An entire economy with lots of industries that would otherwise not exist, have been built on a house of sand.

The united states died a long time ago but with hardly a notice.  For the longest time the us has been built on property confiscation, counterfeit money, and phony IOUs.  We have actually become a socialist nation masked by  loans.  In actuality the government owns just about everything in our lives and our future all because people just want to get along for the “common good”.  Individual Liberty has been replaced by economic freedom and high paying jobs.  And wealth has been replaced by the accumulation of ever depreciating dollars.   But none of these things can be sustained as economies are driven by innovation, creation, and the pursuit of profit.

But sadly, this has all been an illusion.  Currently, the creation of money leads to the destruction of wealth for the masses and concentration for the elite few.  It has all been a big lie. Debt based on nothing leads to nothing.  Afterall, what do you collect?  It is the same as building castles in the sand.  Until recent history, money was based on tangible things because fiat currency destroys nations.  It has all happened before although not on such a grand scale.

The financial crises is really a crises of government because government refuses to shrink.  But the real fault lies with the population who decided a long time ago it was just to plunder their neighbors.  Who really cares as long as one has government benefits.  You see as more and more regulations and payroll taxes are passed, both businesses and consumers are forced to deal with higher cost.  And how do they deal with it?  WIth more loans.  But for those on fixed incomes and no access to loans, like the unskilled and elderly, eventually cannot even pay for things like food, which means more government programs.  And the government collects higher taxes revenues from those who did get the loans.  For them, it is nothing more than a revenue generating machine, concentration and growing more government.  But again, who really cares if it is for the common good, right?

But what about the government?  What about the debt? Why does one have to pay taxes if the government can just print the money?  If I were you I would ask this question to every politician, afterall what is QE?  And if printing money is so bad, why is the government and bankers allowed to do it?  It all has been a big lie.

The debt is lager than anyone can comprehend.  If the united states prints the money, it means massive inflation.  If it continues, there is not enough money to collect from taxes.   Currently, the debt is so large that even if it collected all the money in the world, it still could not pay off the debt.  So, it seems that at some point their will be strategic default.   But who will get defulted upon?  This will be the Great question. There also could be war which would, sadly, eliminate entire populations and with it obligations.  This has historically been default of choice, but who can other governments plunder to pay their debt.  It is a new ball game now.

However, what if the dollar replaces the Euro?  Afterall, without a bailout many European banks will disappear.  This is not good for the leadership and dependent populations.  Mabey then could the US print out the money and replace this currency?  This might temporally balance things out.

In ether regard in the long run, the problem will not go away.  The problem is the inflation caused by the it is the artificial creation of money.  For those that say there is not enough gold to support the economy, how much wiser is it to support an economy with debt created out of thin air?  Afterall there is a natural limit to money.

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