What Level of Debt
QUESTION:
Martin Do you mean only on a federal level? Would people’s home mortgage be wiped away? I would think not but if it’s a true reset who knows Regards,
JCL
ANSWER: The ONLY debt is Federal, not private and not state or muni. They will trade as is on the market. This will end the subsidies for inefficient munis and any tax-free status would be limited to state levels.
This will eliminate federal consumption of money and free up money for the private sector. The Feds compete against the private sector for money and they have done a fantastic job of making people believe gov’t debt is secure when in fact no government ever pays off its debt. Truly a great con-job. You pay MORE in interest rates because they get the best rate under the false pretense government debt is the best when in fact historically it is always the worst. How many haircuts have already been imposed in Europe on sovereign debt of Greece and others? One giant lie that will end up very badly.
We either deal with the problem, or suffer the consequences. There is NO ALTERNATIVE. Everyone’s pension is gone or we address the problem realistically. We need a debt-equity swap restructuring.
Why We Need the Crash & Burn
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 13th 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 thePAIN. 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.
Polls show Americans Do Not See Putin as Much More of a Threat Than Obama
New Poll in USA shows the American people see Putin as only slightly more imminent threat than Obama himself. This is what I have been saying. There is NO DIFFERENCE between the Russian people and the American people. Russian have migrated to the USA and you meet many people from there. Some flew to Princeton for the Solution Conference to my surprise for I thought we would have attendees only local. We filled the room and people had to stand for we exceeded the 300 capacity.
Our sessions have ALWAYS been international events. The fact people can come together at our sessions from around the world show we are not different from one-another, this is only in the minds of our political leaders. They play chess with our lives – the Pawn of Finance.
The same thing with Snowden. Politicians call him a traitor for he exposed their illegal activities to the people. That must mean that the people are the enemy or else their theory of treason is wrong.
This latest poll that shows the people do not see Putin as the evil empire and Obama as the White Knight here to save society, reflects reality.
We are at the PEAK of the political cycle. So this should be where corruption is outrageous. The political process is now at its worst. From October forward is when we need people more than ever to stand-up on the Hill. If there is nobody there on our side, there may be nothing left at the end of the day.
We cannot Escape the Past Until We See The Future
COMMENT: I watched the Solution Conference and your explanation of two monetary systems being barter and representative was insightful. I can see why the goldbugs hate you and how they are trapped in yesterday’s world of a barter economy. You have a lot of work ahead of you for this is truly revolutionary. You have seen the next step in our evolutionary process that we have actually moved beyond the need for taxes. You are starting to be widely known in Germany. This is where your message resonates the most for those of us who see austerity is wrong for it too is still an antiquated concept based upon a barter economy.
Looking forward to your European tour
WV
REPLY: Thank you. True, this message is lost on so many fighting the last war. I agree there are those so pessimistic they cannot see beyond their cave walls. As long as they still live in this distorted vision of a barter economy, we cannot escape to freedom. They tax us to death to get back money as if it were still some commodity because that is the way it has always been done. Well, here is this new invention of an airplane and we can fly. We do not have to tax people when money is no longer a barter system. The wealth of a nation is its PEOPLE.
The Communist Manifesto was an 1848 political pamphlet by Karl Marx and Friedrich Engels. The Communist Manifesto summarizes Marx and Engels’ theories about the nature of society and politics, that in their own words, “The history of all hitherto existing society is the history of class struggles”. They did see only a piece of the puzzle of wealth. They saw that not even gold had value except for the labor involved in mining it and refining it. They wrongly saw only the labor and not the ideas that also create wealth.
Henry Ford’s introduction of the assembly line created the manufacturing age, but they saw this as exploiting the working class and focused upon the profit of Ford without crediting it was his vision that created the opportunity for labor. They also were blind to the increased production lowering the price of automobiles for the consumer and changed the entire economy from a train based system to a far more expansive mobility. They were stuck on this one aspect that a commodity’s value was determined by the cost of labor to produce it. They ignored entrepreneurship and that the consumer demand determines price.
You can manufacture something where the cost of production is too high and thus there is no demand. This is how the unions destroyed their own jobs. The Communist Manifesto focused on this narrow idea of value being labor and thus the capitalist society would eventually be replaced by socialism, and then finally communism.
We are still operating by Marx-Engels’ philosophy. We attack those who create jobs and discourage entrepreneurship. We tax people progressively following Marxist philosophy and we continually reduce our economic growth with expanding the cost of government. This is the collapse of socialism that is evolving. We cannot escape this 19th century thinking until we embrace the simple fact that money is no longer a commodity barter system by the TOTAL PRODUCTIVITY of a nation, which includes all aspects from the idea like Ford who has a vision to the common worker for grooms your lawn.
Those who cannot leave behind the 19th century hold the rest of us back and endanger our future for we cannot escape the repetitive cycle of boom and bust until we see the whole and learn like Joseph’s advice to the Pharaoh – live with the cycle. This is one of the Ten Commandments – never covet your neighbor’s goods. As long as we violate that fundamental law, we will never have a society that is fair or functions with respect of human rights.