QUESTION:
Can you please explain
how your Solution is different than what Central Banks around the world are currently
doing and appear to be poised to expand on? And how it changes anything?
As I understand it
your plan is to exchange all national/ soverign government debt for private
equity credits, which smells a lot like a second currency, and abandon federal taxation
to save pensions and the economy. Your plan is to simply print enough
dollars to fund the federal government.
ANSWER: Central banks are monetizing debt, this
much is true. However, that accomplishes nothing for they cannot return the
system back to a pre-2007 state. They leave the debt intact and a rise in
interest rates will blow up the budgets, to which governments will then target
more aggressively in tax collection.
By doing a
debt-to-private equity swap, that is substantially different from constructing
more roads, buildings, or Dunkin Donuts. Investment in infrastructure is a
short-term impact and does not create long-term jobs. You have to keep building
to maintain employment and those things do not contribute to the creation of
national wealth as they too consume it. True, building a plant will enable a
business to create wealth. By itself, a building is a depreciating asset that
ultimately needs to be replaced.
A debt-to-private
equity swap would be the creation of small business, which employs 70% of the
civil work force. The major companies have reached saturation levels and are
buying their own shares back. So, we are not talking about swapping $17
trillion of debt for more Apple, Amazon, PayPal, or IBM shares. We are talking
about creating an opportunity to fund small business, which the banks gave up
on for if they do not have 120% collateral, they cannot borrow from banks.
Venture capital creates wealth and this is substantially different.
Additionally, we can
see that up to 70% of the national debt is accumulative interest expenditures.
The central banks are not eliminating the debt; they are buying it and leaving
interest still payable, which will maintain the tax collection. The debt will
continue to rise and so will taxes, sucking in everything like a black hole,
and diverting capital from creating employment consumed purely by bondholders.
Detroit went bust when pensions consumed more than 50% of total revenue.
Government could not raise taxes and the pensions kept sucking in everything to
the point where public services collapse. You pay taxes for nothing.
If we eliminate taxes,
we will restore our liberty and eliminate FATCA, restoring the world economy.
The private equity swap would convert Social Security into a national wealth
fund that really invested, creating jobs for the youth and the displaced
government workers. Eliminate tax collection and it would shrink government by
33%, not to mention save the world economy and our liberty.
This is just the
start. Central banks quantitative easing does none of this. On top of that,
they will come after your assets to pay the bondholders who convinced them they
fail unless they are paid. Additionally, the cost of labor would decline by 50%
by eliminating taxes and people would then fund corporations. Corporate taxes
are very destructive for the very same capital is taxes three times. You buy
shares with after tax dollars. The corporation pays taxes. It pays a dividend
tax, and then the shareholder pays income tax on the dividend. Eliminate that
and people will secure their own future pensions with equities. This would
create a huge domestic job market and it will cause companies to bring jobs
home where it will be more efficient.
Printing money to fund
government capped at say 5% of GDP will be a huge reduction in government.
Eliminate taxation and we will reduce government. There were SEVEN agencies
that all approved the CDOs the banks sold which blew up the world in 2007. Not
a single one of them understood what they were approving. There should be ONE agency,
not SEVEN, and it would be cheaper to pay for expertise in a single
agency rather than lawyers who know nothing, yet think they do. The savings in
reducing the size and servicing the debt will more than offset the cost. Plus,
you are trapped in the old idea that increasing money supply automatically
creates inflation. Sorry, even QE1-3 proved that theory is dead wrong. As long
as people save or hoard, increasing the money will by no means cause prices to
rise. The money supply MUST increase with the population or
you get DEFLATION.
That is just skimming
the surface. Those who are living in the 16th century and say, “oh just
printing 5% to pay for government is horrible and inflationary”, I say you will
pray on hands and knees for inflation by the time they are done confiscating
everything you have to pay the bondholders. Wake up. This is the 21st century.
This entry was posted
in Future
Forecasts, Q&A, Taxes, The
Current Economy and tagged Central
Banks, debt-to-private
equity swap, Eliminate
Taxes, FATCA, Reduce
Government, The
Solution by Martin
Armstrong. Bookmark the permalink.
Source:http://www.armstrongeconomics.com/archives/33760
Comments
If
reading this gave you a headache, you’re not alone. But, it did remind me that
I was once told that terminating the Federal Reserve would not cost much,
because we owed most of the money to ourselves. Somehow I think that arcane
comment has some bearing on the pea and shell game proposed above. It never
occurred to me that the world could simply declare bankruptcy to eliminate
their governments. Here are some good comments on this by Herman Talmadge III
posted on New Republican Leadership facebook:
(Talmadge) 70% of the
national debt is accumulative interest expenditures. The central banks are not
eliminating the debt; they are buying it and leaving interest still payable,
which will maintain the tax collection. The debt will continue to rise and so
will taxes, sucking in everything like a black hole, and diverting capital from
creating employment to being consumed purely by bondholders. Detroit went bust
when pensions consumed more than 50% of total revenue. Government could not
raise taxes and the pensions kept sucking in everything to the point where
public services collapse. You pay taxes for nothing.
If we eliminate taxes, we
will restore our liberty and eliminate FATCA, restoring the world economy. The
private equity swap would convert Social Security into a national wealth fund
that really invested, creating jobs for the youth and the displaced government
workers. Eliminate tax collection and it would shrink government by 33%, not to
mention save the world economy and our liberty.
This is just the start.
Central banks quantitative easing does none of this. On top of that, they will
come after your assets to pay the bondholders who convinced them they fail
unless they are paid. Additionally, the cost of labor would decline by 50% by
eliminating taxes and people would then fund corporations. Corporate taxes are
very destructive for the very same capital is taxes three times. You buy shares
with after tax dollars. The corporation pays taxes. It pays a dividend tax, and
then the shareholder pays income tax on the dividend. Eliminate that and people
will secure their own future pensions with equities. This would create a huge
domestic job market and it will cause companies to bring jobs home where it
will be more efficient.
Printing money to fund
government capped at say 5% of GDP will be a huge reduction in government.
Eliminate taxation and we will reduce government. There were SEVEN agencies
that all approved the CDOs the banks sold which blew up the world in 2007. Not
a single one of them understood what they were approving. There should be ONE
agency, not SEVEN, and it would be cheaper to pay for expertise in a single
agency rather than lawyers who know nothing, yet think they do. The savings in
reducing the size and servicing the debt will more than offset the cost. Plus,
you are trapped in the old idea that increasing money supply automatically
creates inflation. Sorry, even QE1-3 proved that theory is dead wrong. As long
as people save or hoard, increasing the money will by no means cause prices to rise.
The money supply MUST increase with the population or you get DEFLATION.
That is just skimming the
surface. Those who are living in the 16th century and say, “oh just printing 5%
to pay for government is horrible and inflationary”, I say you will pray on
hands and knees for inflation by the time they are done confiscating everything
you have to pay the bondholders. Wake up. This is the 21st century.
Norb
Leahy, Dunwoody GA Tea Party Leader
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