Opiate of the masses

Has the “tea bag” has become a modern day opiate of the masses.

The April 15th “tax revolt” was based upon a premise that the budget of the federal government is paid for by public tax dollars. As with all opiates, the feeling may have been great but no true journey was taken.

The Federal income tax collected in 2008 totaled $1.2 trillion. The October 2008 Bank Bailout alone cost $0.8 trillion.

The total cost of collecting these income taxes is estimated to be $68 billion.

Our expenses related to maintaining the defense of our military empire costs about $1 trillion per year.

So, let’s add up the numbers above. Income taxes collected in 2008 came to about $1.2 trillion. The expenses for 2008 noted above come to almost $1.9 trillion.

Did I leave anything out? Oh yeah -- the cost of operating the federal government, social security, social programs, and interest on our debt.

So…..wait a minute. The federal government spends a whole heck of a lot more than it takes in? How does that work?

Let’s go back to 1971. President Richard Nixon signed an executive order stating that the currencies of the world would no longer be tied to the value of gold sitting in their vaults. From that point on, the value of most of the currencies of the world became “pegged” or tied to their relative value compared to the U.S. dollar.

In short, that meant that the U.S. no longer was restrained by the amount of gold sitting in vaults in Fort Knox. Now we could create money out of thin air. A measure of the amount of money being “created” was a Federal standard known as “M3”. Don’t worry about what “M3” means because as the US money supply continued to grow exponentially, President Bill Clinton simply decided that the Federal government would no longer report the “M3” measure of how much money we are “creating” out of thin air.

So, here is the “opiate” part. Daily public conversation about the national economy is punctuated by extensive arguments about who is good or bad -- the Democrats or the Republicans. Who are the good people who require less taxes from the population and who are the bad people that require more taxes from the population?

But the “conversation” about the philosophical differences amount to watching TV and drinking beer and fighting over the remote while your house burns down. It doesn’t really matter who has the TV remote in their hand, now does it?

The fact of the matter is that each and every year, our Federal government “spends” far more money than it takes in from income tax.

Here are a couple of facts to ponder. Federal spending has increased steadily since 1965 regardless of Congressional leadership. Since September 11, 2001, nominal Federal spending has increased 97.6 percent. Since 1965, Federal spending has increased 334% but the median income has only increased 35%. (source: The Heritage Foundation)

Historically, if you look at the fate of currencies over thousands of years, two points stand out. Number one is that all currencies fail and go away. (The US dollar will be no exception.) Number two is that the primary purpose of income tax is to give to the prevailing currency the illusion that the currency has some intrinsic value to it.

So go ahead and argue about whether the remote control should be in the hands of a Republican or a Democrat. Meanwhile, do I smell the house on fire?

Steve Saville, The Speculative Investor, wrote recently that, “Based on traditional lead times, the substantial monetary inflation that has occurred over the past seven months probably won't start to become evident in the prices of everyday goods and services until 2010.”

“The effects of monetary inflation will work their way through the economy over the next few years, but the theft is happening right now. We suggest that the deflationists stop going on about how the amount of money created 'out of thin air' is small compared to the declines in asset and debt prices (and thus encouraging the Fed to counterfeit money at an even faster pace), and start emphasizing the problems inherent in the inflation.”

Here is the link to the full Steve Saville article: http://news.goldseek.com/SpeculativeInvestor/1240898820.php

James Turk (author of “The Coming Collapse of the Dollar”) recently wrote an article entitled “A Short History of the Gold Cartel”. It makes for a long quote here but you really should read his entire article.

“Governments want a low gold price to make national currencies look good. Gold is recognizable the world over as the ‘canary in the coalmine’ when it comes to money. A rising gold price blurts the unpleasant truth that a national currency is being poorly managed and that its purchasing power is being inflated.”

“This reality is made clear by former Federal Reserve chairman Paul Volcker. Commenting in his memoirs about the soaring gold price in the years immediately following the end of the gold standard in 1971, he notes: “Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.” It was a mistake because a rising gold price undermines the thin reed upon which all fiat currency rests – confidence. But it was a mistake only from the perspective of a central banker, which is of course at odds with anyone who believes in free markets.”

“So how does the US government manage the gold price? They recruit Goldman Sachs, JP Morgan Chase and Deutsche Bank to do it, by executing trades to pursue the US government’s aims. These banks are the gold cartel.”

“There was an abrupt change in government policy circa 1990. It was introduced by then Federal Reserve chairman Alan Greenspan in order to bail out the banks back then, which like now were insolvent. Taxpayers were already on the hook for hundreds of billions to bail out the collapsed ‘savings & loan’ industry, so adding to this tax burden was untenable. He therefore came up with an alternative.”

“Greenspan saw the free market as a golden goose with essentially unlimited deep pockets, and more to the point, that these pockets could be picked by the US government using its tremendous weight, namely, its financial resources for timed interventions in the free market combined with its propaganda power by using the media. In short, it was easier to bail out the insolvent banks back then by gouging ill-gained profits from the free markets instead of raising taxes.”

See the full article by James Turk here: http://news.goldseek.com/JamesTurk/1241449200.php

So what does all this mean? In short there is the conversation that you and I have on the street about money, free markets, and taxes. Then there is what is really going on behind the black curtain known as the Federal Reserve and the United States government. The single, lone voice of truth about these matters inside of Washington is Congressman Ron Paul. You can easily search on-line for videos of Ron Paul speaking at length about this topic.

The current economic crises in the United States can only resolve itself one of two ways. Either the banking system (and the Federal Reserve) is allowed to collapse or else free market capitalism will disappear. Restated, either we stand behind a “free market” or we allow the US government and the Federal Reserve to own the financial system.

While we waste our time drinking tea and arguing about who is a “Democrat” and who is “Republican”, our free market economy is disappearing before our very eyes. And, the economic structure determines the political structure. A state run economy can not allow a true democracy. Which is why our big-picture financial planning occurs behind a black curtain.

It is time for us, the citizens, to recognize that our currency, our economy and political system has been completely taken over by an elite group of bankers and profiteers. Rather than blindly go along with the quick fix “bandaid” of trying to create another credit bubble, we need to let the banking system collapse and let the Federal Reserve collapse with it. Our only other option is to let those very same elite bankers and our Federal government complete their decades-old scheme of a state-run economy. If we the people do not demand the short-term pain of financial collapse right now, we will have handed away the keys to our free market system and our historic republican form of democracy forever.

We need to stop arguing amongst ourselves about the petty topics of “national politics” and start talking about the real problems of a free market capitalist democracy on the verge of permanent death.