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UncleNasty -> RE: Can some one PLEASE break this down for Me? (5/8/2008 8:46:38 AM)
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quote:
ORIGINAL: NoVacancy
UncleNasty,
That was very interesting and informative about fiat currency and it's value compared to gold. This was something I had never heard before.
Another thing that I think gets a bum rap is progressive taxation. Most conservatives are very anti-tax....period. But taxes are very important and Kirren this is something very important that you can learn also. YES there is rampant waste in the government and we should take steps to define and stop the waste, but cutting taxes, especially for those at the very top of the wealth pool, is fundamentally unfair to the rest of us down the line, who then have to pick up the burden of their tax cuts. Most republicans will disagree vehemently with me about this.
Progressive taxation - taxing the wealthy at higher rates than the poor - is a moral issue. Like many moral issues, it sparks heated debate. The debate is borne of conflicting worldviews, values and understandings of values. But when we undertand the values and ideas that underlie our position on issues, these arguments appeal to the great majority of Americans whose worldviews borrow in various ways from both progressive and conservative values.
America's government has at least two fundamental functions, protection and empowerment. Protection includes the police, firefighters, emergency services, public health, the military, and so on. Empowerment includes the infrastructure needed for business and everyday life. Roads, communications systems, water supplies, public education, the banking system for loans and economic stability, the SEC for the stock market, the courts for enforcing contracts, air traffic control, support for basic science, our national parks and public buildings, and more. We are usually aware of protection. But the empowerment infrastructure, provided by taxes, is usually taken for granted, hidden, or ignored. Yet it is absolutely crucial, a fundmental truth about America and why America provides opportunity.
Taxes are part of our common wealth, what we all share. Protection and empowerment serve the common good. Because of our common wealth, we are all protected and America's empowering infrastructure is available to all. THAT is a fundamental American value. The common wealth should serve the common good. It benefits everyone.
Citizens are financially responsible to maintain this common wealth. If we shirked this responsibility, we could not maintain our roads, fund our schools, protects ourselves from military threats, enforce our laws, and so on. Equally important, we could not create prosperity for ourselves, because we would have no protection of our intellectual property, no oversight of our markets, no means to enforce our contracts, no way to educate most of our children.
Several main progressive values support the idea of progressive taxation. One is the belief the the common wealthy should be used for the common good. Another is respnsibility, the responsibility that citizens have to pay for the benefits we receive from our common wealth. And still another is fairness. These values intertwine on the question of progressive taxation.
Few people dispute this responsibility at some level. Disagreement generally arises ove the amount and the relative apportionment of the responsibility. Differing concepts of fairness drive this debate. While many progressives say it is only fair that those who earn more, pay a highter percentage of their earnings as taxes compared to those who have difficulty making ends meet. Conservatives respond by asserting that it is unfair to "punish" the financially successful by making them pay more.
An important point of lost in this debate is an appreciation that the common wealth, which our taxes create and sustain, empowers the wealthy in myriad ways to create their wealth. We call this compound empowerment - the compounded use of the common wealth by corporations, their investors, and other wealthy indviduals. Consider Bill Gates. He started Microsoft as a college dropout and has become the world's richest person. Though he has undoubtedly benefited from his unusual intelligence and busineness acumen, he could not have created or sustained his personal wealth without the common wealth. The legal system protected Microsoft's intellectual property and contracts. The tax-supported financial infrastructure enabled him to access capital markets and trade his stock in a market in which invetors have confidence. He built his company with many employees educated in public schools and universities. Tax-funded research helped develop computer science and the internet. Trade laws negotiated and enforced by the government protect his ability to sell his products abroad. These are but a few of the ways in which Mr. Gate's accumulationg of wealth was empowered by the common wealth and by taxation. As Warren Buffet pointed out, he likely couldn't have achieved his financial success had he been born in Bangladesh instead of the United Stats, because Bangladesh had no banking system and no stock market.
Ordinary people just drive on the highway; corporations send fleets of trucks. Ordinary people may get a bank load for their mortgages; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors- those who have accumulated enough money beyond basic needs so they can invest - make much more use, compound use, of the empowering infrastructure provided by everybody's tax money. The wealthy had made greater use of the common good - they have been empowered by it in creating their wealth - and thus have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.
This is the fundamental truth that motivates progressive taxation. It is a truth that undercuts conservative arguments about taxation. Taxes provide and maintain the protecting and empowering infrastructure that makes our income possible. Our tax forms hide this truth. They do not indicate the extend to which taxes have created and sustained the common wealth so that you could what you have. They make it look like the empowering infrastructure was just put there by magic and that the government is taking money out of your pocket. The most likely truth is that, through the common wealth, America put more money in your pocket than it took out - by far.
But this situation is threatened by conservative tax policy. Through unfair cuts in taxes paid by the wealthy, through payment for the invasion and occupation of Iraq, and through borrowing abroad to pay for the tax cuts and Iraq, the common wealth is being drained and the infrastructure allowed to fall apart. We need to return to a fair tax policy that recognizes financial responsibility incurred by the compound use of America's empowering infrastructure.
sorry..I got carried away.
Novacancy,
You've made an important connection without seeming to have an understanding of it, that being the relationship to our fiat currency and taxation. By taxation I mean the type those of us living now are familiar with. There used to be other types, which I'll touch on briefly later.
The relationship of what is most commonly known as the Federal Reserve Act and the 16th amendment is of extreme importance, but one that very few are even aware of. There is not space to go into it in detail here. And I'm loathe to drone on about in great detail, a topic most would be bored with for the length.
Still, I feel a need to make several comments.
Shortly after Reagan came into office he appointed a commission to study governmental spending, waste, etc. Called the Grace Commission because of the fellow appointed to head it - Peter Grace I believe he was.
The Grace Commission ultimately determined that not one cent collected through federal income taxes was used to pay for any federal government services or programs. All of the fiat currency the feds steal from your paycheck each week/month/year are eaten up by waste, inefficiency and corruption (is it any wonder the Grace Commission didn't receive much press or air time?).
So if it doesn't come from the collective "us" where does it come from? Again, a big answer, and one that if gone into in great detail would be too lengthy for this forum.
The simple, short answer is through borrowing. And primarily from one source. From the Federal Reserve System. It is important to know that the the Federal Reserve System is not a branch of the Federal Government. It is a private corporation and many of the major share holders are not even US citizens. Since its inception the Federal Reserve System has never been audited. We have no accurate idea of what their books look like.
When the Federal Government needs to borrow more fiat currency (remember, worthless paper, backed by nothing, that the feds force us to use - by "fiat") the Federal Reserve System turns on the presses and prints up another several hundred billion of the things erroneously called "dollars." The cost is about 2.7 cents per bill, regardless of denomination. 1 fake dollar costs 2.7cents. 1 fake 100 dollar costs 2.7 cents.
So, the Federal Reserve creates fiat currency for next to nothing, almost as if out of thin air. You, on the other hand, have to earn your fiat currency through an exchange of your labor, your time, your life. Were you to simply turn on your printer and make your own fiat currency out of thin air you'd be arrested for counterfitting.
There are a couple of really big problems with this set up. One is that when the Federal Gov't borrows from that privately owned corporation they do so at interest. So we're (read that as the citizens - including you) paying not only principle of the loan, but also interest on the loan - a loan that was made by creating fiat currency out of thin air.
The second is that because the Fed Gov't spends way more than it brings in they are continuously having to borrow more and more. That brings more fiat currency into the economy. When you have more of something the value of it goes down. In terms of having more money - fiat currency - it looses its purchasing power and more of it is required to purchase the same goods and services. Basically we call this inflation. Inflation has been institutionalized in our society and economy.
Another way to look at inflation is as a hidden tax, an unknown or unacknowledged tax. If you have an annual inflation rate of 3-4% it doesn't take too many years for the 100 "fiat dollars" you save today to significantly loose their purchasing power. Think about your grandfather complaining about the price of bread, "When I was 12 a loaf of bread only cost a nickle!!!" Inflation is the reason it takes more fiat dollars to buy the same loaf today.
Run away inflation is a real possibilty in this type of banking and monetary structure. Remember the 50 billion fiat dollar bailout of Mexico in the late 90's? That was a result of run away inflation. Have you been keeping up with the financial woes and run away inflation in Zimbabwe? How about Argentina? 6000% inflation. There is no example of a society that converts to fiat currency being successfull. Not one.
Borrowing and debt on the national level are not good things. But it is much worse when control of the "money supply" is in private hands. If the Federal Government, through the Treasury Department, was printing and issuing its own fiat currency one thing we wouldn't have to deal with is interest - and those fees/charges are substantial. We'd still have inflation, but the amount of debt racked up without the interest could be from 1/3 to 2/3 less. Think about reducing your federal income tax bill by that amount and tell me if you'd prefer that.
I know I'm a bit lengthy. Please bare with me a few more moments.
Taxes. There so many taxes we pay that are not usually considered in the tax "equation." Many of these taxes are referred to as fees, but in effect they are taxes. Federal, State, County, City, taxes on your vehicle, on your license to drive, your license to operate a business, professional licenses, taxes for electric, phone, cable, internet, property taxes...... The list is surprisingly long. At the end of the year you've paid between 50-60% of your hard earned worthless fiat currency in taxes and fees. When you add in interest on your personal loans and credit cards, and the hidden tax of inflation, you have almost nothing to show for your labors.
Before the 16th amedment our country seemed to not want for money (and it was real money back then). How on earth did they do that, survive without confiscating from our earnings? Mostly by charging foreigners that were doing business here, by import duties, imposts and tariffs. For 125 years we managed quite well. The idea of eliminating "income taxes" puts many people off. Thought of as being nutty, impossible. Not so. And our history shows us that in no uncertain terms.
Consider the war in Iraq. Rather costly. It is being funded by simply borrowing, by creating money out of thin air. The payments for this debt will be "amortized" over generations into the future. If funding for the war could come only as a result of the Federal Gov't taking it directly out of your pockets, in the form of real money (that which is backed by something of real worth and value - I'm thinking gold and silver) the war funding would never have been approved by us, the people, the real government of our country (remember the people? "We the people...").
A quote from a man much wiser than me, Thomas Jefferson, "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, then banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless in the continent their fathers conquered." Most of the "founding fathers" shared this belief and understanding, and others have made quotes of similar topic, context and import.
Now, let me tie all of this back into the original posters question.
It doesn't matter who the condidates are, what party they come from, or what they say. In the most foundational ways they are cut of the same cloth. Money is the grease of our cultural, societal and economic bearings. None of them (save one) have addressed the issue with anything like honesty and truth. What we are left with to choose from I like to illustrate in the following manner.
Think of our two party system as being more like organized crime. The Democrats are the Gambinos and the Republicans are the Genoveses. They're playing a high stakes craps game. It looks like they're playing against each other - every now and then somebody pulls out a knife and someone gets stabbed. But in truth they're on the same side. If an outside threat comes along they join together quickly (they've had a lot of practice doing this - and its invisible and seemless) and do whatever is necessary to eliminate the threat and keep the game going.
Why do I believe this? Because our fiat currency has lost 96% of its purchasing power in the past 95 years since the Federal Reserve was granted its charter and yet we are still forced to use it as our medium of exchange. Because the wealth of the citizens is being literally stolen from them daily. Because our monetary system is a house of cards. And most importantly because many of our elected representatives are aware of all of this and they continue to do nothing about it.
Due to rising costs and inflation my regular .02 cent fee has increased.
.05 cents please.
Uncle Nasty
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