The Federal Boondoggle Continues

It's 2013.  Obama and his cronies are still in office and the federal deficit has grown to $16,700,000,000,000.00 and still climbing as the federal union keeps raising taxes, borrowing from the Federal Reserve by exchanging Treasury Bonds and T-Bills for freshly printed fiat Federal Reserve Notes backed by nothing and worth less and less in purchasing power.  Inflation is very noticeable now and more businesses are failing, more people are filing bankruptcies in record numbers, and foreclosures are backed up by the thousands in many states.

Unemployment benefits were extended several times (now up to 73 weeks), paid for partially by raising the federal unemployment taxes on businesses from .8% of payroll to 6.2% of payroll--a a whopping 675% increase of this payroll expense item on top of other state rate increases--and partially from borrowing from future generations.

Businesses are hurting not only because of these payroll tax increases but inventories are still high because people don't have the cash to buy the nonessential products they used to buy, so revenues are down while the cost of goods (materials used to manufacture the products) is increasing due to the devaluation of the dollar.  It's a vicious cycle that causes retailers to order fewer goods, manufacturers to reduce production and layoff workers so the unemployment ranks swell and even fewer people have the money to buy more products.  Moreover, the suppliers to the manufacturers, the producers of raw materials and components, have to cut back as their sales figures drop.  The same is true of service industries, the engineers that develop new products or modify the old; the software developers; the truckers and railroad workers, even restaurants and entertainment outlets.  Casinos have tightened their slot machine payouts and reduced their incentive programs.

But there are lots of new opportunities for contrarians to make money betting on the losing side of the proposition by shorting stocks or buying put options on the stocks of floundering businesses or by picking up cheap foreclosures or bank-owned properties and renting them to former home buyers.

As people cut back on local shopping to save money on gas, more of them are shopping online, so entrepreneurs who sell stuff online are making a killing.  Meanwhile states are losing sales tax revenue so are pushing harder and harder to tax Internet sales which currently are taxed only if sold in the state in which they are physically located.  Interstate sales can not be taxed without amending the federal constitution, something I hope never happens. The Internet is the closest thing to free trade in the world and is beyond the reach of most money-grubbing politicians regardless of country or state.

Where this will end is anybody's guess, but my extensive research convinces me that it will not end well.  Unless our politicians start facing reality and start cutting down the size, scope, and cost of government, the nation is doomed to continue borrowing and printing phony money until our credit is exhausted and like Brazil, Argentina, Greece and other countries in the past, we default on our debts (go bankrupt) and start over again.

It's time for the People to holler, "We've had enough, and we're not going to take this anymore!"  Fire the politicians and lawyers and start America over again with no formal national government but 50 sovereign and independent States (nations) free to operate as their individual citizens choose, remembering Jefferson's words that "the government that governs least, governs best."  Little Iceland did it a few years ago and is thriving today after returning to a gold-based currency.

Government's ONLY function is to protect the natural rights of its citizens--those being the rights to life, liberty, property, and contracts.  Services such as road and bridge building and maintenance, street lighting, sewerage treatment, police and fire protection, and other public services should be paid for from property taxes and use taxes and not from borrowing (read robbing) from the next generation.

Natural law makes no allowances for the unfit.  In the wild, animals either feed themselves or die so that only the strong survive to reproduce the next generation.  Droughts and famine keep over-population in check.  Floods and forest fires clear out the weakest vegetation.  The same should hold with economics.  Recessions should clear out the under-performers and make room for newer, stronger, or better-managed companies.  But when the government starts meddling in business, subsidizing the failures and propping up the lenders who took on too much risk, they interfere with the natural cycles and only make matters worse.

Welfare should be left to private charities funded by voluntary contributions from those willing to support the nonproductive members of society and not forced from the productive who may be opposed to supporting them.  Retirement should be the responsibility of the individual and the employer.  If the workers put the current 7.65% of their wages, matched by the same amount from their employers, into an annuity with any reputable insurance company, their return on investment and monthly income after retirement would be substantially higher than they can ever get from the Social Security system, and the money they accumulate in their annuity policy can be passed on to their heirs, rather than left to the government to mismanage.

Until next time.

Joy and abundance,

Cory Layne
Reno, Nevada, America