Comment from Ontario
COMMENT: Mr. Armstrong
Your statements about having to crash and burn were borne out by the recent election in Ontario Canada where the Liberals, admittedly one of the most corrupt governments in Canada, having doubled the deficit in about 11 years, were handed a majority government because they promised the moon to everyone, including no cuts to any civil service jobs and a brand new provincial pension plan (a new payroll tax).
Your statements about having to crash and burn were borne out by the recent election in Ontario Canada where the Liberals, admittedly one of the most corrupt governments in Canada, having doubled the deficit in about 11 years, were handed a majority government because they promised the moon to everyone, including no cuts to any civil service jobs and a brand new provincial pension plan (a new payroll tax).
People did not care about the corruption so long as party time kept rolling with new pensions and no cuts to the government.
Unions played an astounding part in the election, spending millions of dollars on TV and media ads about how society was going to fall apart if anyone tried to deal with the deficit. Fiscal responsibility was equated with a form of right-wing extremism. It truly is unbelievable that a populace could become so stupid.
Thanks for your blog. Can you give any insight into Canada’s place in what is coming? Certainly, I see no future for Ontario but bankruptcy.
B
REPLY: There seems to be no exception to the crash and burn. Politics has become so corrupted everywhere thanks to Marxism that this is what the civil unrest will be about. What started in Ukraine and Thailand is spreading everywhere. Canada will see civil unrest in line with the USA after 2015.75. You cannot keep promising everything that is never funded. A moron would figure that much out one day.
Migration – Discrimination – Language
COMMENT
Dear Mr. Armstrong,
I wanted to comment on your article, but WordPress will not let me log in, so I thought I’d write an email.
I respectfully disagree with your ideas in this article. Come live in Southern California. These people are coming for the free $$$$: Food, housing, SNAP, WIC, etc., etc., etc. They are NOT big on education and create havoc for our school systems. We are stooping to the lowest common denominator. How can you not see this?
Also, I respectfully disagree with your comparison to prior immigrants. Please note that those were LEGAL immigrants, coming from first-world societies, and these immigrants shared our ideas. I can assure you that is not the case with immigrants from Mexico, Central and South America.
Yes, they are hard-working, but they expect the government to provide. This is totally destructive to our economy. I just do not see how you can ignore these differences and gloss over them as if they are the same as the Italians, Irish, et al. The immigrants from south of the border are much more gimme than these other people EVER were. Perhaps you need to live here to see it. And I love them as a people: They love their families, they are kind and loving and sweet. Perhaps by the third or fourth generation they will exit the gimme crowd, but I still think they will drift left, to socialist values, as that is their heritage.
Thank you for your writings and analyses. Though I may not always agree with you, many times you have illuminated a subject so that I more clearly understand it. In this case, you do miss the boat.
Respectfully,
LV
REPLY: What you are saying is correct. The point I am making is they see this as opportunity for them. They are not fleeing taxation in Mexico. There were no laws preventing the immigration during the 19th century. The comparison is only theMOTIVATION being OPPORTUNITY rather than fleeing for taxes.
There is a difference socially between those who came BEFORE the New Deal and after. There were no grand government programs previously. True, the welfare state today can provide the added incentive to come, but this is still in the category ofOPPORTUNITY. As the economy in Europe has turned down from 2007, we are getting a glimpse of what will hit the USA in mass after 2015.75.
In Europe, the Spanish are Migrating to Germany for Welfare. This is the toxic side of Marxism. We see the same heated debate raging now in Europe. Restrictions on people from Bulgaria and Romania freely moving into Europe ended on January 1st, 2014. This has triggered a fierce debate about the aim and purpose of the European Union for the very same reasons. People are there for the OPPORTUNITY and transferring the benefits back home. This new era of Marxism has changed a lot and has increased the influx. The idea that the EU would create the same American melting pot has utterly failed because they did not understand that there has to be a common language for that to take place. The idea was set forth in the official EU guide_to free_movement.
I often point out that BEFORE the New Deal, what made America work wasDISCRIMINATION. Of course people immediately assume I am being racist. The truth is quite different. Whoever was the LAST off the boat was ALWAYS discriminated against. That was actually good, because ABSENT the social programs, what took place was to find a decent paying job it forced whatever group to speak English. Today, ask a white American what they are and they will respond half German, Irish, Italian, French, or whatever. They do not say American unless outside the USA. This is the melting pot for in Europe you do not see Irish and Italians marrying as a general common trend as you do in the USA.
The difference in the OPPORTUNITY that we do see looking closely pre-New Deal and post-New Deal is the absence of the drive to speak English. The melting pot is gone and what we are getting is a division between English and Spanish. This is not good long-term and will fuel only social unrest between the two communities when the economy turns down very hard.
The Hunt for Money
COMMENT: Hi Martin; thank you very much for your informative blog, i started reading at the beginning of the year and it’s the only one I make sure never to miss a single post. You are the first person I recall mentioning that $3,000 transactions are being kept an eye on. Here is another strange case. Two of my friends and I were in a car going to Montreal and at the border after the usual question of how do you know each other, are you carrying any weapons and how long you are staying, the following was asked: Do any of you have over $1,000 in cash? We all looked at each other, then nodded our heads NO. Everyone still thinks $10,000 is the magic value, not even close as you have been saying all along.
Additionally on the way back home to NYC we had to stop at another Border Patrol stop about an hour south of Canada. It looked like a combination of New York State and New Hampshire (because of the plates) Park Rangers bringing a 65 mph Highway 87 to a halt. NH does NOT border NY to make this checkpoint really strange as they said “Border Patrol”. Add all the speed traps every 20 miles a long the way and it’s hard to imagine that 95% of the people can’t see the growing Police State in front of their eyes.
So glad you’re doing this blog and how you find the time to write all this content.
REPLY: We will crash and burn. History is truly our guide for it offers a catalogue of outcomes and solutions. It repeats because human nature never changes. Every government ends up confiscating (consuming) the wealth of the people. I do this in hopes that if we can all spread the word, when we do crash and burn, there will be a choice. We either go into the darkness and end up total mindless drones and government becomes the complete authoritarian state, or we move into the light of freedom as they did in the 1700s. It is coming. We cannot stop it. This is why liquidity is at 50% of 2007 levels. People are hoarding what they do have.
As of January, if you buy a car for example, and you have roots in New Jersey and Pennsylvania, you have to pay the sales tax of the highest and then the dealer has to carve up and New Jersy gets its 7% and 1% goes to PA. This just started now in 2014.
Spain Collapsed from the Richest Nation to Among the Poorest With the Help of Debt Not Hyperinflation
QUESTION: Am I correct in saying that Spain collapsed because of debt and not hyperinflation?
Thanks;
SD
ANSWER: YES! The history of Spain is a classic example of economic and fiscal mismanagement. Christopher Columbus was the greatest example of a politician today. He embarked upon a journey not actually knowing where he was going, and yet amazingly when he did get someplace, he did not know where he was. Then he returned not knowing where he had even been calling all the people Indians and he accomplished all of this using the taxpayer’s money in Spain.
Spain became the richest nation in Europe thanks to wanderings of Columbus. Nonetheless, the amazing Decline and Fall of Spain is perhaps the greatest lesson if someone wishes to write “How NOT to Manage Government For Dummies.” The Spanish became both the richest nation yet the greatest debtor, not that dissimilar from the United States and succeeded in ending up as the poorest.
However, Spain became a serial defaulter beginning in 1557 followed by 1570, 1575, 1596, 1607, and 1647 ending in a 3rd world status without hyperinflation. Their economic model was one of conquest and plunder, rather than developing domestic industry and a viable economy. The lesson to be learned from Spain is precisely what Adam Smith wrote in his 1776 Wealth of Nations:
“Like an improvident spendthrift, whose pressing occasions will not allow him to wait for the regular payment of his revenue, the state is in the constant practice of borrowing of its own factors and agents, and of paying interest for the use of its own money.”
Spain was far from a nation united. In 1469, Ferdinand II born in 1452, was heir to the throne of Aragon and he married princess Isabella of Castile in a political union. The marriage in October 1469 aided not merely the union of both states, but assisted Isabella to take the throne of Castile. Eventually, the two grew to love each other despite the political union. Ferdinand II was the son of John II. He came to the throne of Aragon upon his father’s death in 1479. This is when the Spanish Inquisition was established in 1478 and Roman Catholicism was the state religion outlawing all others. This led to the expulsion of the Jews in 1492.
For centuries in Europe, prosecutors had been extorting confessions and even Shakespeare noted in his play the Merchant of Venice that the practice of torture will make any man say anything. The European practice of trial by Inquisition became notorious. The Spanish Inquisition under Tomas de Torquemada (1420-1498), over the objections of the Pope, was used for the confiscation of wealth and personal hatred that served Spain – not the Vatican.
Torquemada usurped the Inquisition from the Church being an advisor to the Spanish Crown thereby benefiting the state making it the Spanish Inquisition.Torquemada convinced the Spanish Crown that the Moors and the Jews were threats to the state, and once he usurped the Inquisition, he quickly expanded its subject-matter jurisdiction far beyond heresy and apostasy, into witches, sorcery, sodomy, polygamy, blasphemy, usury, and a host of other offenses that he envisioned. This had the impact of causing the economy to decline as people hoarded cash and were afraid of showing too much of anything without political connections.
The expulsion of the Jews led them to flee to Amsterdam and as a result, this set in motion the decline and fall of Spain. The Jews developed insurance, banking, and the first stock exchange all in Holland and eventually it was the merger of the Dutch and English in 1689 that transfer that knowledge to Britain giving birth to the Bank of England in 1694 and the London Stock Exchange.
As Spain moved toward bankruptcy, they turned to much more aggressive confiscation of wealth using the law interwoven with religion. The more they turned against their own people for money, the more capital fled and hoarded. Spain thus collapsed in massive deflation.
Consumption Tax – Will It Ever Return?
COMMENT: Dear Martin, One of the knocks against a consumption tax has always been its potential effect on the deficit. It seems that argument is now irrelevant in the age of QE. This is the perfect time to move to a consumption tax (esp. w/ IRS scandal)
GB
REPLY: We did a lot of research into taxation. I testified before Congress on why capital was moving international driven by taxes. I explained that it was not even the actual tax rate inasmuch as it was the constant changing tax policy in the USA that drove capital away. In the real world, companies have to establish what is called a BUSINESS PLAN and stick to it, unlike Congress. This constant raising and lower of the tax rate has done far more damage to our economy long-term than anyone wishes to admit.
Politicians blame corporations for just trying to avoid taxes and accept no responsibility for creating an environment where there is no stability. Other countries lure corporations in by giving them guaranteed tax rates that are not just lower, but are FIXED for decades. Our politicians are all about manipulating numbers to make people think they did something. They will use the criminal law and the IRS for political survival. There is no stability because it is all about them not the country.
This is simply human nature and until we stop this Marxist view of the world that society has a RIGHT to the property of anyone on a changing basis and look at reality, there is no hope of creating economic stability. Nobody in their right mind would buy a house for $100,000 where the seller can change the price raising to $1 million by keep raising the final price on an ongoing basis as you are making payments. How can you contract for a mortgage or plan your future retirement? You cannot constantly keeping changing the terms with each election. This is like renting an apartment where the landlord has the right to raise the rent whenever he need money. You cannot then demonize the renter for not agreeing to these terms. Yet this is what we do to multinational corporations. Instead of looking at what we are doing wrong, we blame everyone BUT those in charge,
At Princeton Economics, we put in a major effort to try to bring this point of economic stability to the real forum. You will recall the whole debate on the Flat Tax. The up-front point-man on that issue was Steve Forbes who was running for President. Steve was a good guy, but was on board with the Flat Tax. Governor Jim Florio never saw something he did not think could be taxed. I took the middle ground in this debate at Princeton University for a Consumption Tax. I actually won Florio over by pointing out that Social Security was just a tax and we now were borrowing from the average person and not even giving them interest for their use of their money we call a refund check.
We produced an extensive report on the Consumption Tax back in 1996. The thrust of this was an effort to try to prevent what we are starting to go through now. History repeats and there is always a massive deflationary implosion because government ends up consuming so much money it sucks the life-blood out of everything. The Founding Fathers were very smart and they forbid DIRECT TAXATION to preserve our liberty. The difference between a Consumption Tax (indirect) and Income Tax (direct) is rather simple. The first government does not need to track you whereas the latter income tax you have an obligation as an economic slave and they own you and your labor. It is a matter of freedom.
I was working with Bill Archer who was the Chairman of the House Ways and Means Committee who was for a Consumption Tax and Dick Army who was for a Flat Tax. They were both Republicans but would not sit down together. I ended up shuffling back and forth between them. I was in the office with Dick. He had his feet up on his desk wearing his cowboy boots and smoking. Dick said it rather simple. He could not support a Consumption Tax for unless the Constitution would be Amended to remove the right to tax income, “when the Democrats get back in” (cycles) we would end up with both income and consumption taxes.
I gave up. Dick was correct. I realized that we simply just had to go down this path until we crashed and burned. There would be no stopping this freight-train from hell. So to all of those who send emails asking what if government would listen, my response is they cannot not and will not. They will follow the invisible hand in their own self-interest to survive and keep raising taxes to try to sustain that power until everything collapses. That is just the way it has to be.
Sorry. We are going to have to hide under a rock and come out after everything collapses.