Michael Maloney: "We Pay Tax for the Privilege to Have Currency"

For those of you who may have thought I was full of it. Here is Michael Maloney explaining how currency is created.

Excellent piece well worth the few minutes you will spend watching it

Why Tax?

For several months now I have been disturbed by this question: Why does the State tax its “citizens”? After all, fiat currency is created from the ether by the State and taxation is, on its face, a quasi limitation to the State’s popularity with the tax cattle. It is true that the State transfers wealth from a segment of the population to those who it favors in order to remain in power. It is also true that it uses the currency to not only buy votes but to buy favors. But all those things can be as easily done by just “printing” the currency they need.

*        Side note, I placed “printing” in quotes because a vast majority of currency is not even printed today, but just added as zeroes and ones in bank computer systems.

This question has been a constant distraction. A splinter in my mind; that although temporarily ignored, it resurged in the darkness as I tried to shut down my brain for the night.

Why tax at all?

I know, I know, if they only print the currency like Muggabe, they destroy the currency. So what? Fiat currency is not money, but a convenient method of exchange based on the violence of the State and the confidence game inflicted on the cattle. They can destroy the currency today and issue new currency tomorrow. They hold a monopoly on its production so they have no concerns from competing currencies. In addition, modern cattle would happily accept any new currency, that is issued after the chaos of hyperinflation, like a fat man at a buffet table. So why tax?

Then it hit me. The answer is so clear that I am ashamed I did not see it before. It has been sitting there at the edge of my vision like a threatening shadow or a melody that you cannot get out of your head but that you just can’t name. It’s as simple as it is evil. Perhaps that is why I did not see it before. Perhaps, even after centuries of evidence to the evil of the State, I still refused to accept it. Yet, there it was, staring at me; winking a malicious little wink that mocked me with its ugliness and evil.

The purpose of taxation is not to collect your surplus production. That is just a side benefit. The purpose of taxation is CONTROL. The State controls your decisions, actions, property, production, your very life through taxation! It is so clear now. They don’t really care about the paper or digits they extract from you. No, those are inconsequential. They do not care about the national debts numbers or the bond holders or any other of the distractions the magician is using to redirect your eyes away from the real purpose. They are using the power to tax in order to control you forever!

You are born into bondage. It does not even matter if you are born outside on the US. If your parents are servants, so are you. You go to a State mandated school. Your parents have no choice in the matter. The property taxes extract the money that they would have used to send you to a private school. Even then, the private school must follow the State mandated education or face the loss of their business license. You graduate from high school and are told, if you want to get anywhere in life, you must have a college education. So you get deeply into debt and attend four more years of propaganda and indoctrination. Then you are told: “Owning a home is the American Dream”; so you get a 30 year mortgage and tie yourself to a geographic location and a job or two to pay for it. So, let’s say you want to save enough to escape bondage. No Siree.. 

The more you make, the more they will tax from you.

You will pay taxes for schools you don’t want to send your kids to. You will pay taxes for police to monitor your behavior. You will pay taxes to defend “The Nation” from evil terrorists in IraqAfghanistanPakistanNorthAfricaetc. You will pay taxes to fund the TSA so when you travel, you can have your body groped by a Federal Agent. And even if you move out of the country, you must still pay taxes for services you are no longer receiving or desire, on income you are not making in the country. And then, you reach your golden years and you are a dependent of the State’s plunder of your grandchildren’s production. 

You are, in effect, an Indentured Servant.

Taxes are both a behavior modification tool and a fly trap to keep you from ever escaping.

Why Capitalism is worth defending

From "Whiskey and Gunpowder":


As Obama demonizes the wealthy and pitches a dozen plans to restructure the economy, opponents of this program need a reminder of what exactly we’re fighting for. We are resisting bureaucracy, central planning, and encroachments on our freedom and communities. Yet this does not get to the heart of the matter. We are not only an opposition movement, countering the president and his partisans’ agenda. More fundamentally, we stand in defense of the greatest engine of material prosperity in human history, the fount of civilization, peace, and modernity: Capitalism.

It is simply a fact that capitalism, even hampered by the state, has dragged most of the world out of the pitiful poverty that characterized all of human existence for millennia. It was industrialization that saved the common worker from the constant tedium of primitive agriculture. It was the commodification of labor that doomed slavery, serfdom, and feudalism. Capitalism is the liberator of women, the benefactor of all children who enjoy time for study and play rather than endure uninterrupted toil on the farm. Capitalism is the great mediator between tribes and nations, which first put aside their weapons and hatreds in the prospect of benefiting from mutual exchange.

Read the full article here: Why Capitalism is worth defending

Congress Critter Moran caught in a contradiction

There are no contradictions in nature. If you find a contradiction, check your premises, you will usually find that one of them is incorrect - John Galt

Armstrong Economic Forecasting

Posting a link to an excellent report by the folks of Armstrong Economic Forecasting. Well worth your time.

http://armstrongeconomics.files.wordpress.com/2011/07/armstrongeconomics-gold-final-frontier-071311.pdf

Economic Armagedon and you

Re-posting a brilliant simplified video I found in you tube. Thank you to the gentleman who prepared it.

The Gold Standard and Freegold – A discussion of freedom

There has been a lot of talk lately on the web about the return to the gold standard. In order to have a rational discussion on the issue, we must first determine what is the gold standard, what are the advantages and disadvantages to it and is there a better alternative.

First, the gold standard is generally defined as a currency fractionally based in gold reserve, not to hard money gold based economy. Not gold coins in circulation, but gold backed currency. In the modern definition of the gold standard, the legal tender currency would be based in gold deposits held by the bank and fully exchangeable for gold in the bank’s vault on demand. A depositor would deposit his gold in the bank and be paid interest on this deposit. The bank, using fractional reserve banking, would loan out gold certificates against the deposited gold. A gold based currency has worked in the past to provide a limitation to the size of currency in circulation. The anti-gold backing pundits use this as its main disadvantage by stating, somewhat correctly, that there is not enough above ground gold in the world to conduct the vast amount of trade that happens in the modern world. This argument is made from a strict static view of commerce and trade.

No, there is not enough gold to back the economy of the world if you value gold at $42.20 an ounce, the laughable “official exchange” rate. Laughable even when the government exchanges gold through its mint to selected dealers at somewhat true market price of over $1500 an ounce. Nor is there enough gold if priced at ten times that price $15,000 an ounce. And if you were to add, not just the currency in circulation, but the credit and derivatives in existence, the task would become even more insurmountable.

FOA and FOFOA have quoted prices of over $50,000 an ounce in order to gain parity with the current amount of currency in circulation. I suspect that once you include the shadow banking and underground economies, the number would be several magnitudes higher. But the fallacy is using the dollar as the reference point instead of using gold as the reference point. It is an easy trap to fall into. We have been conditioned for many years to think of the value of products based on the officially sanctioned currency. We see a 3,000 sq ft home in Houston and think, $250,000 dollars. We see a nice economy car and think $15,000 dollars. So it is easy to see it as impossible to replace this with gold. Imagine if you had to buy a car and could pay ¼ ounce of gold, a small coin, or buy the house for 4-5 ounces of gold. Sounds implausible right? We are conditioned to think in dollars.

Those in favor of the gold standard argue correctly, that the gold standard by its nature, restrains the government from the massive expansion and deficit spending of the welfare state. They argue that without the ability to exponentially create currency out of thin air, it would be impossible for the government to expand beyond the surplus production of its citizens.  This, by the way, it’s the main point of opposition of the gold standard by welfare statists. They argue that the government would be unable to make the “necessary investments” in the “people” if restricted by a hard money standard.

Both arguments are correct, based on their respective goals. But they both fail in the basic premise. That currency, especially government fiat currency is money. It is not.

All fiat currencies are a mechanism to steal your wealth.

Every day, you and I accept electronically generated digits in exchange for our labor. These electronic coupons serve their limited purpose of exchanging labor for wealth. But the failure is our desire to equate currency with money. We fail to understand that fiat currencies always explode into devaluation. We do not see that, as the currency is devalued by our Federal Overlords, our labor is devalued along with the currency. This is theft. There is no other way to describe it. The Aristocracy of pull is organized into rival gangs whose purpose is to be at the top of the ponzi scheme that is plundering your labor.

They don’t mind slavery, as long as they are the ones holding the whip.

Although the gold standard might restrain the government from indirectly stealing your wealth thru inflation, even under a gold standard TPTB would find a way to keep plundering your labor. The leaches are not going to go away. Their free ride is an accepted way of life and too many of us have come to accept it.

The solution is not to attempt to make currency a simile of money. Fiat currency is an artificial construct designed to keep you in bondage. You cannot make a poison into goodness. A compromise between food and poison always kills the host.  The solution is to understand the limited purposes of currency and then act accordingly.

Divest yourself of the idea that currencies are money or even worst, wealth.

Stop participating in the Ponzi.

You must relearn the meaning of wealth and money. You must rethink your goals and your strategy to get there.

Wealth is the products, tools and knowledge that man needs to live.

Money must maintain its exchangeability with wealth at as a minimum the same rates as to when you saved it.

Investments are wealth purchased that produce residual income above the original effort or the value of the money invested.

Currency is just a method of exchanging your surplus production for another’s surplus production.

Credit is the anti-wealth. Credit borrows from your future production in order to provide wealth today.

The validity of any of those forms is dependent upon two factors, your purpose and timeline.

 If your purpose is just to get by until next paycheck, currency can serve that very limited purpose. Understand that currency is subject to theft by TPTB by design. Your currency will rapidly devalue and be subject to taxation not only at production, but anytime you exchange it thru different forms. Taxed when you first produce it (income tax); taxed when you purchase wealth or money (sales tax); and taxed again if you convert money or wealth back into currency (capital gains tax).

 If your intention is to save your surplus production for your near term use, as in the next 1-15 years, keeping your surplus production in wealth makes sense. Think about it. If you are saving your surplus production in order to exchange it for your most basic needs, then saving it in the form of the actual needs, before it loses purchasing power, is the smartest strategy. Shelter, energy, food, water and clothing are your most basic needs. Why would you store your surplus production in a medium that loses purchasing power in order to purchase those needs in a year or five when you could purchase them now and limit your loses? Purchasing and storing food, as an example, can provide future food. You will need to eat in the future. You are using some of your production for food. Why not buy extra food and store it? This method has the advantage of protecting your surplus production against TPTB. You cannot be taxed on the can of beans in your pantry. As long as it has not expired, it retains its value to you as food. Same is true of clothing, furniture, spare light bulbs, anything you know that you will spend currency in sometime in the future.

If your intention is to store your surplus wealth for over 20 years, to include passing it to the next generation, money is the most efficient method of storage. Money can provide similar protection than stored wealth with some distinct differences. Money is portable. You can take an ounce of gold with you a lot easier than 1500 notes worth of rice and beans. It provides flexibility. It is easier to trade an ounce of silver for five gallons of gasoline than you could trade a 50 pound bag of rice for the same 5 gallons of gasoline. It is also less subject to natural disasters and easier to store. Its timeline extends across several generations. Disadvantages? Money could be subject to confiscation. Money is subject to market disruptions. If there is no gasoline to be had, money will not get you any.        

Can gold and silver be money?

Let us look back at the 1964 example. I’ll quote myself from an earlier post here:

“If your father would have saved 10,000 dollars in silver coin (real money) in 1964, he could have given you $360,000 in Federal Reserve Notes today. And that is at zero risk. He could have stored it in a box in the attic and still increased his ability to exchange money for wealth.”

Yes, gold and silver do meet the long term preservation of surplus production requirements. Gold and Silver can be used to build intergenerational wealth. You can store gold for 40 years and hand it over to your children for them to store and pass along to their children. Gold can be used to provide capital investments in wealth production tools or instruments. As an example, gold can be accumulated for 20 years in order to buy that bar in Key West you have been dreaming of. Or to provide your grandchild with the education he could use to produce a critical commodity for his future wealth.

And here is where Freegold enters the picture. Freegold is gold unbound to currency. Gold used as money but without a direct relationship to the financial markets. Gold used as pure money. Imagine that you can save ten ounces of gold today. Now imagine that in the future, gold is not valued in currency and not subject to transference into currency before it can be used for the purchase of wealth. You could buy a used car for an ounce of gold and your seller could purchase a year worth of grain for his family with that same ounce. Gold as a universal method of exchange completely separated from government dictates, influence or theft. Gold can provide free men voluntarily trading with freemen a true measure of value.

That is why I am opposed to the gold standard and prefer Freegold instead. The gold standard would only serve as a means to reviving or extending the life of a currency that is controlled by the government and designed with theft in mind.

Currency, even if propped up by gold, serves the money changers; Freegold serves the producers of wealth.