Crony Capitalism; a discussion

What is Crony Capitalism vs Real Capitalism
A discussion between economists Russ Roberts and Michael Munger.

War Is A Racket

If you have not seen the video, it shows that every war since the 1898 Spanish America War including WWI and WWII were started by either false stories and/or criminal activities and events done by those in our own government to make it look as if we have been aggressed upon. Even the Civil War was precipitated by wealthy special interest and with the Union military antagonizing the south into defending itself. The first shots fired by the south were in self- defense.

Why? War is very profitable for those who make weapons and the supplies even things like food for the soldiers. Over 139 million military combatants have lost their lives in just the 20th century, of course, most of them certainly not the children of those profiting from the wars. They are of course at Harward or Yale with college deferments.

You Want To Do What?

With the Federal budget especially, but also state and local, if Citizens could pick and choose which social programs they want to pay for and how much they want to contribute to each one, it would at least give us some semblance of a democracy. 

Look, there is no one greater than I that fears the voting majority because they are not being educated and there is no reason for the ruling class to educate them, and actually just the opposite. The stupider the voters are the more they can be taken advantage of.   

With politicians making the decisions, knowing darn well they are serving the wealthy special interests instead of the majority, the benefits of our democratic republic are negated. We’re simply an oligarchy, controlled by wealthy special interests pretending to be a democratic Republic like the Roman Empire and ALL other nation-states before us.

Can you imagine politicians having to actually prove to the voters that a war is needed with the citizens getting to decide if the truth is really being told to us? Would we have engaged in Desert Storm or Syria?

We have the technology to do this, it’s the political will I am worried about. These putzes can’t even get a simple 1 man 1 vote election correct. That’s because sadly we have the inmates running the asylum; oh right, we’re calling it a swamp now. Elon Musk and SpaceX can send rockets into space and land them safely, and we can get a friggin computer system to count the votes correctly?   

The Sliding Scale of Socialism

Socialism; what is it anyway?       

Socialism can be explained as the number of total social programs enacted, times the financial costs to taxpayers; the more costs associated with the programs and their total numbers, as a percentage of gross domestic product, the greater the level of socialism.  So it’s a sliding scale depending on how many total social policies the government has enacted.

In simpler terms, the larger the government is, the more taxes are needed to pay for all the social programs and the more socialist your society would be considered. The lesser the number of taxes and social programs, the less socialistic your society would be considered. Many economists suggest, the larger the government and greater costs of the required taxes, the less per capita production there is; which would be an inverse relationship. However, we’re not here to debate the ideologies. We’re here just to understand what it really is and means and define the term socialism.       

Governments usually provide various services that are an expense to society. Although many deem socialism and communism as antonyms, this author prefers to look at socialism as a percentage of the economy where government services and products are provided, to the percentage provided by the private sector production. This is not perfect for a variety of reasons but can be used as a generality but surely don’t use it to compare different countries.  There are many things that make countries wealthy and there are many things that make countries poor.  If we knew what these were, we would have likely fixed the poor countries already. Lots of theories abound, but never take them a fact.  Knowing what is in the best interest of the majority is a fool’s errand.            

The primary deference between communism and socialism is private property rights. When there are no private property rights, the government then owns everything, and everyone worked for the government, that is communism. Whereas Venezuela, with its private-public partnership as many called it, is a mixed economic model as economist call it. It is a combination of a robust government sector and a substantive private sector, trying to work in harmony. This is a problem for a number of reasons, as Venezuela is experiencing but once that a discussion for another day.    

The bigger the government is without property ownership being held by the State, the more socialistic. Over the last 30 years or so, the government has been buying up more and more real estate so once homes, lands, businesses, commercial buildings, and rents are owned by the government, that is communism with everyone works for the government. Under socialism, private property rights are still in the hands of theCitizens, it’s just that the property and various activities are taxed to payfor the government, The more total taxation as a percentage of total productiveoutput, GDP, the more socialistic your society would be.       

As an example, many may not consider prisons and jails to be part of socialism, because it is a needed entity yet the fewer people incarcerated the less socialism and fewer government costs there would be. Of course, the more people you have incarcerated the larger the correction system must be to manage, feed, cloth, shelter and try to educate the prisoners.    

The balance between the size of the private sector and the size of government differs in societies with mixed economies, thus it can vary and therefore is a sliding scale.   

Socialism can be visualized in this authors opinion as a sliding scale. With minimal government (libertarianism) to the left and communism, total government to the far right. The Democratic Party would be right of the Republican Party “theoretically”, but in reality, they are very close to one another and much closer today to the far-right communism than to the far-left,  libertarianism.      

This is one of the great misunderstandings as to which political ideology is far right and which one is far left.  As an example, fascism appears to occur when the costs of government get too large in relation to the amount of production or GDP, the gross domestic product as I noted previously. The major fascist nations of Germany, Italy, and Japan during WWII all were highly socialistic with high levels of militarism compounding the size and costs of government. To enforce all the taxation as GDP wains from the expansion of the government sector, those in government enforcement become harsher and penalties such as incarcerations and fines stiffer as wages drop and taxes rise. Basically, the government is squeezing the profits out of the private sector to pay for the increased costs of government. Additionally, in the 20thcentury, with the advent of fiat currencies put in place around the world,governments could simply print more money to pay for the additional costs of an expanding government, but this debases the currency without increased productivity causing the devaluation of the currency which results in eventual price inflation, the rising of manufacturing and consumer prices. Where this author believes government central planners make a huge mistake, is crediting the production by private companies contracting with the government, as part of the GDP calculations when a bridge, jet fighter or a school is an expense to society. As an example, if all children were primarily educated via home computers, the costs of building schools could be eliminated. I am not saying this is a good or bad idea, its just an example of identifying costs and expenses associated with the government where the physical school itself is built by some private sector construction company but actually paid for by taxes. Today, we add the costs of building the school as GDP when it is an expense to our society making it appear that our society is more productive than it really is. A society cannot be more prosperous by increasing expenses as our society has seen since the 2008 Great Recession, with the cost of the Federal Government alone reaching $4 trillion annually with $1 trillion of that being printed with interest charges passed onto the taxpayers. 

To learn some more about it go to wikipedia and evaluate my analysis with theirs. 


Capitalism v. Statism/Free Enterprise v. Government

We have not been a capitalist society now for many years and crony-capitalism, the term the media has adopted, is really a disguise for what is in reality, one or a combination of the three primary entities, socialism, fascism and communism, referred to collectively as Statism by some economists.

There are several methods involving government revenue to create massive levels of redistribution of wealth required for a fascist system to come into existence. Whereas Communism uses direct ownership of the means of production to get the money to the centralized political point, Fascism uses taxes, fines and regulatory fees to achieve this. What makes a country more socialist or fascist depends primarily on the level of militarization and the police state apparatus; the later requiring oppressive levels to effectuate the collection of the higher levels of taxation, regulations, and controls to maintain the flow of money from the Citizens via the redistribution of wealth into a centralized political point, a/k/a the U.S. Treasury Department in the case of the United States. It is then divvied up to special interests based on political influences such as campaign contributions, lobbying, and fund-raising efforts. Then you have the massive bureaucracy administering and overseeing all the redistribution of wealth schemes.

Many believe because there are private sector companies involved in our system we have capitalism. Perhaps to some small degree, but our money isn’t even free market derived anymore and many of our most prominent corporations are to one portion or another government contractors, negating the positive effects that capitalism would have on our society. The more the government intervenes in the market, the more the effects of capitalism are negated. Hence, the term in The Wealth of Nations “unfetters” free markets, referring to capitalism, meaning lacking government interventions.

Grant you that the law and corporations are in collusion, but without the laws mandating the various social policies, the corporations would be much less powerful because it is the government interventions that grant them the benefits or subsidies. We have to have trade and free enterprise, but we are better off without the government interventions. Every social democracy around the world is having essentially the same problems the United States is having because all the nation-states are essentially doing the same things. We have long understood why socialism, fascism, and communism (Statism) don’t work, yet it is the nation-state that promotes it, surely not capitalism in and of itself. A true capitalist would never want government interventions, but statists love them.

One should always keep in mind that libertarian capitalism promotes self-discipline and the nation-state promotes authoritarian discipline. You must decide which one do you want to teach your children and that the enemies of liberty are almost always those granted privileges or benefits by the nation-state.

Take the survey and find out where do you stand on the issues: The Nolan Survey

Total US household debt soars to record above $13 trillion; could we Default

Add in the $20.5 trillion of Federal Government Debt and the combined debt of all States, Counties, and Municipalities of $3.098 Trillion, the total debt comes to over $37 Trillion.

“Since the day of Alexander Hamilton, the United States has never defaulted on the Federal debt.” The private debt is another issue and the defaults during the 2008 housing collapse and subsequent credit collapse should tell you something.

That’s what we budget-watchers always say. It’s a great talking point. One that helps bolster the argument that default should not be an option in Washington’s latest debt limit showdown.

There’s just one teensy problem: it isn’t exactly true. The United States defaulted on some Treasury bills in 1979 (ht: Jason Zweig). And it paid a steep price for stiffing bondholders.

States & Local Debt $1,184.0 State $1,914.6 Local $3,098.6 Total

Stock Market Panic and Volatility; what are the real reasons?

© H. Skip Robinson – February 7, 2018

The short answer is really pretty simple: the investors of the world know that “MANY” of the people, it’s companies and the various government jurisdictions of the United States of America are all up to their eyeballs in debt. The U.S.A. is the largest debtor nation in world history, yet few of the political, social or business leaders are seriously considering doing anything to lower the debt. Instead, everyone keeps spending like its 1925 or 2005.

So, why not just keep borrowing more and more money to pay our way out of the debt? Because we’ve been doing this for the last 20 years and it obviously hasn’t worked and the majority are worse off today for it?

We’re in so much debt that:

  1. The U.S. Dollar has lost around 13% of it value and that’s against other devaluating currencies on the Dollar Index (DXY) in just the last year. This is a major indicator of price inflation.
  2. China has publicly stated that it is not going to continue to buy any more U.S. Treasuries in the future and we do not truly know, as some suggest, if they are bluffing or not.
  3. Japan is already now the largest holder of U.S. Treasuries and is having to buy their own government securities as well. Japan has the largest Debt to GDP ratio (325%+/-) of any country in world history that has yet to go bankrupt. It’s theoretically insolvent.
  4. Nations such as the BRICS; Brazil, Russia, India, China and So. Africa are beginning to trade both oil and other goods and services outside the U.S. dominated central banking system with its clearinghouse at the Bank of International Settlement. This list is growing to include a number of Asian, Middle Eastern and even countries like Venezuela. The desire for holding U.S. dollar-denominated assets such as cash and Treasuries is waning throughout the world. These countries and the list is growing, don’t even want to trade in U.S. dollars anymore.
  5. S. productively, except for military hardware and other defense goods and services, has drastically declined over the last 20 years with over 4,500 factory closures in just the last 12 years.
  6. The U.S Federal Government is in debt over $20 trillion and this is expected to continue. Its unfunded liabilities are so high, we are having to guess the number with some estimates at close to 100.
  7. The U.S. “annual” Federal Government Budget is approx. $4 trillion and $1 trillion of that is expected to be borrowed this year as tax cuts and loss of revenue occur.
  8. The Federal Reserve Bank of the United States has now purchased $4.7 trillion worth of Government securities. (a combo of Mortgage Backed and Treasury).
  9. America’s Gross Domestic Product (GDP) is substantially based on a war economy, being both the largest producers of military goods and services as well as the largest exporter.
  10. The City of Detroit is having to by back $55 billion of its own debt, it issued as part of its bankruptcy proceeding, cutting into its reserves. Cities are not supposed to be able to go bankrupt but or legal system is having to make exceptions to this law.
  11. Many States, Counties, and Cities are also near insolvency with States like Illinois and New Jersey facing massive debts and loss of revenues.
  12. Puerto Rico, a U.S. Territory is insolvent economically and is physically in massive disrepair from a recent hurricane.
  13. Massive levels of student loans, auto loans, mortgages and credit cards debt are funding our societies continued demand for foreign goods. However, 100,000,000 million Americans are now living at or near the poverty line, making them poor consumers except for the very basic goods and services.
  14. The trade deficits are growing with just about every trading partner of the U.S. because we are consuming way more then we produce.
  15. Low paying service jobs now dominate the marketplace with productive jobs disappearing with all the factories.
  16. Many other social democracies around the world are suffering from the exact same problems the U.S. is having as if their leaders are mimicking the U.S. system. (bad idea?)
  17. Government controlled education is having a profound negative effect on our youth in both creativity and skills as standardized testing dominates the industry.
  18. Violence, theft, and incarcerations all continue to increase as especially the lower socio-economic classes are being pushed into financial insolvency.
  19. Even though those people now collecting unemployment compensation is below 5% according to the U.S. Government, Shadowstats, one of the more respected statisticians, including those having given up trying to find a job, is reporting total unemployment (U-6) at over 20%.
  20. Business, internet scams and criminal hacking such as identity theft even abound within the government databases with many private companies also reporting data theft.
  21. Law Enforcement is becoming more and more physically aggressive towards the general population trying to maintain law and order with increasing murders and other violent behaviors against innocent and unarmed civilians. As people become more and more belligerent towards authority, it is the police who are the ones on the front line in the clashes between overburdensome government policy and enforcement.
  22. Political corruption appears to now be the norm rather than the rarity. Everyone in the swamp appears to be investigating somebody else with our two-party system unraveling at the seams.
  23. Since the Great Recession, approximately 555 banks that are part of the FDIC, nationwide have failed.
  24. With over 110 different taxes and regulatory fees, most prices of products and services are at all time highs with consumers having to continue to borrow money to pay for the rising costs.
  25. I could keep going with the list, but these give you enough information for a bigger picture.

Now, the longer answer. We either need to drastically change our pollical ways by reducing spending and taxation or we are going to be forced to borrow more money. The question is from whom.  Our banks are loaded up. Other Countries like Japan and China are loaded up. All but the wealthy don’t have the money to contribute. Because of Treasuries now being such a poor investment, the wealthy appear to be willing to take the wild ride in the Stock Markets, instead. With U.S. Treasury yields rising, this means they are going down in value like the U.S. dollar has done over the last year.

It boils down to a supply-demand issue. We keep issuing more and more paper money in the form of Government debt and various loans and fewer and fewer investors, even governments want to invest in them because of their diminishing value. You wouldn’t invest in real estate if you thought it was going to go down in value, would you? When Treasury yields rise as they have been doing for over a year now, that means their price you can get for them if you want to sell them, is going down. Who is going to buy an asset when the price is going down, especially the debt of a government that already has $trillion in circulation. The fear is that more and more investors and governments are going to want to sell the Treasuries instead of buying them. If this happened in great enough amounts, it would cause another credit collapse like in 2008. Many people do not think the current international bond markets can withstand another 2008 type credit collapse because we now have well over twice the amount of debt we had then.

I haven’t even brought up the issue of financial derivatives yet because it is really contained in the banking and financial markets and it very complex for the average person to even understand. But if you read about them, it appears the same problems with excess supply and lack of demand are spooking the markets, just like rising Treasury yields are spooking the bond and stock markets.

To me, you do not get out of debt by borrowing more money. Believing that the monetary Gods are going to pull something out of their proverbial hat is why the stock market is so volatile and panic is starting to set in, knowing we really didn’t solve anything by adding on more debt back in 2008.

The Achilles Heel; the IRS Notice of Federal Tax Lien

My discoveries on this issue often plague me as I try to provide them to others, knowing that most will discount them as either “moot”, potentially dangerous to my liberty and somehow, but I don’t know why, theirs, or just a waste of time.

But when you discover a fraud or illegal activities being perpetrated by those in positions of power, is it not our duty to blow the proverbial whistle. To at least make others aware of the unlawful activities.

How about if the actions are so grandiose in their scope and effect, it would have profound implications for our society. How about if it affects our society to the tune of some $1.8 trillion annually. The middle class is being wiped out and we wonder why?

What I discovered can be presented as two separate but contiguous issues. 1. That the government will always refuse to answer two basic questions if you ask them. I’ve tried five different ways, including filing suit again the United States and submitting various  Freedom of Infomation Act requests to get them to answer these questions. The Federal Court even refused to force them to answer and the Supreme Court of the United States refused to hear the appeal, so this is no small matter. Of course, if they won’t answer these two basic questions, there is little chance of them telling you why and of course they never have.

Question 1. “What is the name of the Congressional Act that requires Citizens of the 50 States to pay a Federal Individual Income Tax on their labor when acting in their personal capacity as a private Citizen” and 2. “When was this Act passed into law?” These appear to be pretty straight-forward and critically important questions, right?

So this led me to my second discovery.  I kept asking myself, “why wouldn’t they answer these two important questions”. That prompted me to take a much closer look at all the documents I and others had received from the IRS over the years. Low and behold, not one single document I and others had received, had the Law I had been requesting on it. You thought the proverbial red flag right; actually, I was seeing a white flag in the hands of the IRS Commissioner and his agents but that’s more a fantasy than a reality for now.  It get’s even better. One of the last things I checked was the IRS Notice of Federal Tax Lien (NFTL) that are being filed at the county court levels and the underlying Federal Tax Liens, supporting the filing of the NFTL, as a notice to achieve priority.

Nope, the Law or Statute showing the Act was not on them either. Now here’s the kicker. The law or Statute it represents must be noted on them to be valid as enforceable liens. According to both Federal Statute and Treasury Regulations, the exact phrase for the statute that must be noted on the lien for it to be a valid lien is, “the tax liability giving rise to the lien.” Obviously, all Taxation, for it to be lawful, must be adopted via a government Statute that is lawfully enacted by our legislative bodies, either local, State or at the Federal level. In other words, a government agency just can’t create a tax and be able to enforce it, without it first being properly promulgated through the legislative process and enactment.

So where’s the Legislative Act? Beats me and the Government won’t provide it. FYI: There were well over 2,000 people who participated in the lawsuit.

So, I simply placed some of the Liens I had researched in my book and then just cut and pasted the various elements noted on the liens. So it was pretty easy to provide the evidence for my contention. I take you through it step by step showing each element and the actual text I cut and pasted so you can read and understand it for yourself. I wanted a sophomore in high school to be able to understand it and I think I reached my goal.

Do you want to stop the constant wars and corruption permeating our society or not? In 1950 the entire Federal annual Budget was only $314 billion, surely they can do it now without the Federal Individual Income Tax because they’re still collecting through a plethora of other taxes and regulatory fees, over $1.2 trillion annually. The governments going to bitch and moan, but the waste, earmarks, and pork, if cut, would easily handle most of the cost reduction. That’s what the swamp really is. It’s not necessarily people although there is surely a lot of deadwood and redundancy that could be cut.