Here's an interesting link to a story about wealth inequality in Sweden, which persists despite high taxation. Clear message: wealth/asset taxes might change this, but they will be hard to design.
The Hedgehog Party Motto
Eliminate Taxes on the Poor
Lower Taxes on the Middle Class
Lower Taxes on the Rich
Raise Taxes on the Wealthy
Here's an interesting link to a story about wealth inequality in Sweden, which persists despite high taxation. Clear message: wealth/asset taxes might change this, but they will be hard to design.
For a variety of well known reasons, many public and private pension plans are underfunded. The effect of underfunding is a long and drawnout process, because the plans can consume their assets (for a time). to meet current funding. Eventually this gambit runs out as we see in this posting. http://www.pionline.com/article/20120419/REG/120419842/in-apparent-first-a-public-pension-plan-files-for-bankruptcy
The Federal Reserve policy of zero interest rates is having a large future effect on the ability of pension funds to meet their obligations. A large fraction of pension fund earnings comes from interest. Plans to refinance mortgages and extend low student loan rates will also hit pension fund earnings hard.
The good news: The effects of these ruinous policies won't be felt until well after the next election. If all of us had the planning horizon of a politician, life could be much simpler.
The math of our financial crisis is very simple. Very few assets have been leveraged to serve elite banks and financiers. It starts with fractional banking and progresses to exaggerated deficit spending. The Financial Times has a good article today. http://www.ft.com/cms/s/0/7a2fe9a0-e04f-11e0-ba12-00144feabdc0.html#axzz1YJ9rutg8
The endgame approaches when banks and financial institutions are run solely for the bonuses of employees.
There are several things that could have prevented this debacle...not least the Hedge tax.
Keynes developed an elegant theory; easy to understand; and readily adopted by the political classes. It was an easy sell to the public, because it seemed like a short cut to easy street.
It was doomed to failure from the getgo. The reason was not found in convoluted economic theory and arguments. The reason is simple and irrefutable. It provides political cover for deficit spending...deficits now vs. surpluses later.
Deficit spending, of course, became an easy addiction. Like all drug habits, it consumed everything in sight.
We have four great public enterprises in the US...Social Security, Healthcare, Education, and Defense. Two articles in today's Dallas Morning News shine a light on the political and accounting fraud in Social Security and Healthcare. Similar articles could be written about Education and Defense. The bottom line...voters have been led by the delusion that we can afford these programs in their current form.
The first article is by Scott Burns. The key paragraphs follow.
Now Social Security needs cash to pay promised benefits. This is not how it looks on the books. The Social Security Trustees Report for 2010, for instance, estimates that the program will cost $729.6 billion this year. Income for the year is estimated to be $840.8 billion, including $118.1 billion of "interest" on trust fund assets. That sounds like a healthy surplus — $111.2 billion. Indeed, total income for the program is projected to exceed costs until sometime between 2020 and 2025.
What's the problem?
The interest income is funny money. It is not cash. It is a book entry, an IOU from the Treasury. On a cash basis — taxes in, benefit checks out — the program is in deficit. When Social Security asks the Treasury for actual cash, the Treasury won't have it.
So where can the Treasury get the cash? It can borrow it from someone else — like China. Or it can ask the Federal Reserve to expand the program of "quantitative easing" and print money.
Worse, it will be doing this year after year because the trust fund, functionally, is a fraud. Every dime of the $2.6 trillion of contributions and credited interest will have to be borrowed, printed or raised in new taxes. End quote.
The second article discusses the scope of cost shifting in Healthcare. This article compares charges to cost in hospitals in Texas. The results are stunning.
http://www.rr.com/local/topic/article/rr/4473267/47493046/Gap_between_hospitals_costs_and_charges_sparks Cost shifting is the practice of shifting the much of the cost of Medicare, Medicaid, and indigent care to private insurance or the uninsured. In simple terms, private insurance premiums bear a 20-40% hidden tax to support underpayments in government programs.
The implications are enormous. The avenues for inefficency and corruption are endless. But the implementation of Obamacare will be the real tipping point. Millions of government sponsored patients will be added to the rolls. Their underpayments will be forced into the premiums of private insurance. The collapse of private health insurance will be almost immediate. The effect on healthcare will be devastating, and the cost of public care will escalate 20-40% or more.
Give politicians credit. Their ability to serve up freebies to a gullible and greedy public should never be questioned.
We have recorded a blow-off top in silver, and, to a lesser degree, gold and crude oil. We have also arrived at a tipping point on the Euro and the stability of the European Union. Credit spreads for Greece, Ireland, Portugal, and Spain are at or above those recorded prior the the 2008 meltdown. Our own financial and budget problem continue to spin out of control with no relief in sight.
It is at moments like these that you can appreciate the awesome power of the financial elites. Consider first the political scene. In 2008, we repudiated the Republicans, and followed with a 2010 repudiation of the Democrats. The Tea Party hovers as a potential third party. You would expect that this environment would produce real "change."
True, the Democrats and Republicans are locked in a duel over spending and budgets. The Democrats largely support the status quo on expenditures and want to "tax the rich." The Republicans largely want to "cut spending and taxes" and "unleash the free markets." But if you step back a bit and analyze the discourse, you find that very little has changed. Good intentions aside, both of these positions essentially support the elite financial institutions, ultra rich, and elite corporations. How can this be so?
Taxing the rich is harder than it seems. When tax rates go up, the super rich and elite corporations suppress income; move income to more friendly jurisdictions; and pay politicians to create more loopholes, credits and exemptions. Professionals and small to medium business take a direct hit. This is a further advantage for the elite corporations, because their competition is weakened. The primary effect is to reduce overall business activity and lower tax collections. In any case, the math just doesn't work. There aren't enough rich to tax.
Cutting spending is harder than it looks. Witness the recent failed attempt to cut $38 billion from the multi-trillion dollar 2011 budget. Now the Speaker of the House has upped the ante to "trillions" of dollars of cuts in the debt ceiling debate. In truth, this is empty rhetoric. Social Security, Medicare, Medicaid, and Interest are most of the budget. And they can't be materially changed without a fundamental political shift.
"Unleashing the free market" is code for lowering tax rates. Fundamental reform of the tax code would trigger new economic growth. But the elites profit from our convoluted tax code and regulation, and average Americans are split. Reduction of the top rates is unlike to happen or matter, and fundamental reform is out of reach politically.
What be the result of this duel? Probably a stalemate that leads nowhere. Who profits from the stalemate? The same old banks, elite corporations, and super rich. They can avoid taxes, they are first in line for subsidies, they are first in line for credit, and they can maximize the use of leverage. Best of all, when they screw up, the average taxpayer bails them out. Just in case you think the Democrats (or Republicans) are the hope for reform, I'll remind you that the same people representing the same elite financial interests are in charge of the Federal Reserve and Treasury just as they were in 2007.
The top of this pyramid is the major financial institutions. By allowing them to borrow at 0% interest rates, they have been subsidized to the tune of 100s of billions of dollars. They are covering their massives losses from the financial meltdown on the backs of average Americans in the form of future taxation, reduced entitlements, and inflation. Nobody is covering the losses of the average taxpayer. The money has already been stolen. The current action just arranges the form of wealth transfer.
This piece is titled "Financial Crime Inc. If the elites that are running the finances of our country do not qualify as a criminal enterprise...nothing does.
This piece from Newsweek by Jacques Attali is a good summary of the origin and growth of public debt. The use of public debt by the ruling classes to amass power and wealth cuts across all ideology and forms of government.
Two things are clear: Once a country achieves a certain level of debt, default is inevitable. The default is most often accompanied by war. implosion, and/or revolution.
The seeds for sovereign debt default are everywhere in the West plus Japan. In the previous post, I posited that the trigger for the default of these debts would be the loss of reserve currency status by the US dollar. Most world trade is financed by the dollar, and there is no ready replacement for it. The "basket of currencies" proposed by China, Russia, and the Arab states is mostly made up of currencies that are likely to suffer debt default or are not freely traded. The basket is not a ready subsitute for the dollar.
Global trade would shrink in the short to medium term, because of the lack of international credit. The twin deficits of the US would exacerbate our problem. The cost of imports would soar, and the normal export growth would be stymied by weakened international trade.
The US is in a politically weak position to respond to this crisis. The recent election did not create a constituency for radical reform. Mainly, it was a demand for the reinforcement of the status quo. It will take more economic hardship or another election to create the necessary public support.
A historical barometer of financial governance is the price of gold. In past seven years, gold has gone up in price over 500%. How can we gauge the price of gold in light of current economic and political conditions?
First, a few historical benchmarks. The price of gold was $18-20 per ounce from 1807 until 1930. The price rose during the depression until FDR fixed the price of gold at $35 per ounce in 1935. This price held until the late 1960s. The price rose to about $100 per ounce in 1973. The US went off the gold standard in 1974, and the price peaked at about $800 in 1980. A twenty year bear market ensued, and gold bottomed at around $300 per ounce 1997-2002. Another rally started and gold rallied to its current peak of $1400.
Prior to the past decade, the 70s was the most violent gold bull market (priced in dollars). Taking the 1973 price ($100), the price advance was 600-800% (depending on whether average or peak prices are used). Using that same measure and a starting point of $300, $1800-2400 is a projected top.
Some of the economic drivers for this gold bull market are similar to the drivers of the 70s bull market. In the 70s, there was rapid growth in private credit and public debt. In the 2000s, there was rapid private credit growth until 2007, then very rapid growth in public debt and trade deficits. A major difference in the two periods is inflation. In the seventies, there was rapid inflation. In the 2000s inflation has been more subdued because we have reached a multi-generational peak in credit creation.
The question? Has this gold bull market run its course? The bull market ended in 1980 when the Federal Reserve slammed the brakes and broke the inflationary spiral. The drivers for this gold bull market are the twin deficits (trade and budget). The housing bubble burst, and private credit collapsed. To forestall a depression, the Fed and Congress are doing everything possible to promote private credit expansion. The twin deficits continue to expand.
The Achilles Heel in this process is the status of the dollar as a reserve currency. So long as the dollar is the world reserve currency, the Federal Reserve will simply print money to support the growth of the twin deficits. This policy is supposed to ignite real economic growth which will then bring deficits back under control.
My forecast is that this policy will ultimately fail. In the short run, while the dollar maintains its value, some growth will result. In the medium run, the twin deficts will swamp economic growth. The new Congress will not be able to manage the deficits. Dollar weakness will drive gold much higher The 70s gold bull market will pale in comparison. The collapse of the euro-zone will add more fuel to the fire.
There have been a number of tipping points in the past ten years. The 9/11 attack, the Afghanistan and Iraq wars, the subprime financial crisis to name a few. These events and others have received exaggerated news coverage. However, there are other tipping points that have occurred that will be more important in the longer run.
Tipping point #1: Social Taxes in the US are no longer in surplus. Social Security payments were taken into the general budget to obscure the extent of budget deficits in the 1970s. It has taken more than 30 years to expose the folly of this policy (supported by both parties). Now our gargantuan budget deficits are exaggerated even more as general revenues will be required to make social payments.
Tipping point #2: Japan is often used as an example of how a country with very large budget deficits and debt (over 200% of GDP)that can remain financially viable. Japan's ability to finance its debt is driven by three factors. 1) The Japanese have historically been great savers. 2) Japan runs large trade surpluses. 3) Japanese debt is purchased by Japanese citizens. The mechanism that purchases Japanese debt is the Japanese Postal Service. Savers put their money into accounts, and the Service purchases government debt. The Japanese population is aging rapidly, and retirees are drawing down their postal accounts. The Japanese Postal Service assets are in decline.
Tipping point #3: China is a trade and investment juggernaut. Over the past 20 years, it has been directly or indirectly responsible for most of the growth in global trade. Cheap labor has made Chinese goods very competitve the world over, and China has generated vast trade surpluses. These surpluses have been used to purchase many resources and the debt of other countries...especially the US. Despite large trade surpluses with the US, China is now running trade deficits.
These tipping points have occurred in the three largest economies. All of them have a common effect. They increase the need to sell bonds, and they reduce buying power for bonds. Bonds have been a great investment over the past year or two. Deflation lowers interest rates and increases the value of bonds. This happy result depends on the perception that fiat currency will retain its value. Be ready for the day that that perception changes.
Yaron Sadan shares his fears of the US Treasury market in this article. http://www.minyanville.com/investing/articles/treasury-10-year-china-japan-middle/5/26/2010/id/28480
His arguments about the possible mechanism of failure of these markets are strong. Of course, timing is the question. No one can forecast that event with certainty.
Many state and local bond issues are in more precarious condition than US Treasuries. But all are joined together in the same orgy of debt.
George Will has another good column today - here. His reference to Greece as a society with (in the words of Rep. Paul Ryan) "more takers than makers" struck a chord with me.
It's dangerous for a democracy to allow the population of "takers" to grow unchecked. They turn out in force at election time, and they're adept at squashing any effort to curtail their benefits. Witness Greek "takers" protesting, rioting and killing in an effort to protect their access to government largess.
This disease infects all democracies to a degree. It gets out of hand, though, when the costs of "takers" is hidden from the "makers," those who generate the "goods and services that produce the social surplus that funds government." How does this happen? When there's no mechanism that links spending directly and visibly to taxation. Legislators, influenced by well-organized "takers," weaken this link by complicating the tax code, refusing to raise taxes broadly to cover spending, or simply borrowing rather than taxing.
The result? The army of "takers" grows, while the dwindling population of "makers" sits by ignorantly, absent from the voting booth and national debate because they've been anesthetized from feeling the expense of dangerously expanded government spending.
The Hedge Tax is the tool powerful enough to restore the link between taxing and spending, and save democracies from the "takers" disease overwhelming Greece today and threatening to overwhelm the United States in the near future.
There are so many things wrong with the European bailout of Greece (and others). The long term effects on the standard of living in Europe: the value of money; and the corruption of the financial system to name a few.
At times like these, it is probably just as well to join the celebration of the financial and political rats that have made a big score today. They separated taxpayers (including US taxpayers) from $1 trillion of their money. The following ilustration is from "The Rats are in the Cheese." It sums things up nicely.
This piece by James Glassman points out the fatal flaw in the debate over financial reform. http://blogs.reuters.com/james-pethokoukis/2010/05/05/4-ways-congress-caused-the-financial-crisis/
Our representatives in congress and administrative officials in both parties were prime movers and enablers of our financial crisis. Apparently, the best way to avoid political fallout is to not mention that fact in the debates for reform. Our political elites are trapped in a time warp of old politics and new financial realities. This paralysis will not serve us well.
This article by Bill Bischoff describes some of the many problems related to Targeted Tax Policy. http://www.smartmoney.com/personal-finance/taxes/the-road-to-tax-reform-starts-here/ The Hedghog agrees with most of the points raised.
However, the idea that tax reform can begin with a few steps is just wishful thinking. Election cycles come and go. Politicians are powerful (and weak). Special interest pleadings go on and on. The needy are perpetually needy. Whatever reform that is devised is simply undone or revised to be unrecognizable.
Without limitations on the reach of politics, welfare states eventually go out of fiscal control. The Hedge Tax was devised to force the balance of taxes and expenditures. But it was also devised to put all citizens on the tax rolls in a way that focused voter attention and ended class warfare on taxes.
It might take a near revolution to implement such a plan. When viewing the video of the Greek crisis, that day seems closer.
A major driving force of manias is broad participation. The Enron debacle failed to demonstrate that point. Regulators, accounting firms, consultants, banks, congress, stockholders, directors, Enron management, and every single employee were culpable in the run up to failure. All of the above parties had a big financial stake in the continuation of the Enron bubble. Except for top management and a major accounting firm, none were punished by regulators or laws. The rest escaped with a major financial hit and blamed others for their losses.
In the Markoplos interview cited in the post below, the deflection of responsibility and blame continued in the subprime debacle. Markopolos was a trader in New York and knew many of the players personally. While trying to warn a fund manager of the fraud, another point was starkly revealed. The fund manager recognized the possibility of fraud, but he had such a large stake in the success of Madoff he felt he could not afford to pull his clients' money. This astonishing denial underlines the power of a mania once it takes hold of a market.
As we continue the buildup in a sovereign bond bubble (which may have years to run), try to remember this lesson.
Harry Markoplos is one of my heros because of the courageous work that he did exposing Bernie Madoff. I couldn't resist watching a recent CSPAN interview even though I hade seen most of the material previously. The interview illuminated an important lesson that has not been well studied.
Markopolos believes that diversification and better financial regulation are the keys to eliminating future financial system upsets. He is wrong about the effectiveness of "improved" financial regulation. That is odd, because his book exposes the indifference of the SEC and the CFTC to the subprime crisis. We have 40 years of evidence that prove that financial regulation is UTTERLY WORTHLESS. When the chips are down and fraud is rampant, don't count on the FSLIC, FDIC, SEC, Federal Rerserve, or the Congress. They oversaw the Savings and Loan meltdown of the 80s; the tech bubble of the 90's; the mortgage bubble; and the subprime crisis. They didn't "discover" any of these problems until they blew up. On the contrary, they largely encouraged them. They were UTTERLY WORTHLESS.
All of these financial failures collapsed under their own weight with help of a few individuals and financial speculators. Financial regulators, in many respects, enabled and enlarged the problems. In their role as protector of the public and the taxpayer...they were UTTERLY WORTHLESS.
The proposed financial reform is really a red herring. It deflects attention from the politicians that are fully culpable in these crises and shifts attention to a few big private miscreants. Will the new regs work? They will for quite awhile, because the public is so badly burned that they trust no one. The cost will be high. Regulations, taxes, fees, extra accounting and mis-allocation of resources will all take their toll. Politicians will preen in front of TV cameras and gather a lot of campaign contributions.
Is there a better way? Like most of our current issues, this one could be solved with a pencil, piece of paper and no taxpayer money. The current FDIC insurance of deposits encourages deposits at the worst institutions because they pay the highest interest rates. Worse, depositors are indifferent to the risk because deposits and accrued interest are fully insured. Change the law so that public insurance covers just 95% of deposits. Depositors will pay attention, and bad practices will be exposed much sooner. The insurance will be strong enough to prevent depositors from going broke, but they will no longer be indifferent to the risk to their money.
This is a link to a recent column by Andres Oppenheimer of the Miami Herald. http://www.dallasnews.com/sharedcontent/dws/dn/opinion/viewpoints/stories/DN-oppenheimer_20edi.State.Edition1.2687c3a.html
There has been rapid growth and intense interest in medical tourism in recent years. At a recent medical tourism conference in Los Angeles, there 200+ speakers and over 2000 attendees. Dozens of countries are touting their medical care and supporting contruction of thousands of hopital beds to serve these tourists. Powerful interests are betting that millions of US citizens will seek health care outside the US.
It is not immediately clear how this business model might translate to serve US patients covered by Medicare or Universal healthcare. The Miami Herald article identifies the key. The US Health Care Financing Administration could be authorized to pay for US beneficiaries "living" in Mexico (or other accredited places). Presto! Costs are lowered by 50% or more.
Competition is a good thing to improve service and lower cost. The problem is that US medicine is structured so that it cannot compete. The effect of such a payment policy would be to shutdown significant parts of US medicine. The complex maze of regulation, third party payments, and the legal system defies reform. US based providers with be hard pressed to compete with foreign providers that only had to "accredit" hospitals and doctors. Could health care be out sourced? Like heavy manufacturing?
A quietly negotiated deal between country presidents and a simple administrative change to the payment regime could set the process in motion. It isn't hard to imagine a substantial decline in US based specialists. Was this a great country or what?
Richard Fernandez captures the disconnect between the Washington elite and the Tea Party in this piece. It is a little long but worth reading to the end for the closing quote. In their own way, the mainstream Republicans fail to grasp what is happening. They see the Tea Party as an opportunity for political exploitation rather than adaptation.
Michael Kinsley published an article in the Atlantic Monthly. http://www.theatlantic.com/magazine/archive/2010/03/my-inflation-nightmare/7995/
The article makes a number of good points. First, fiat money is not real. It exists only in the imagination of the user. Should that imagination fail, as it nearly did in 1980, then fiat money becomes valueless.
A second point is...if government can generate inflation, it can be profitable. In 1979, the US government ran a $40 billion deficit. At the end of the year, the national debt was $830 billion. However, that debt, because of the 13% inflation that year was only "worth" $732 billion. $98 billion minus $40 billion yields a tidy $48 billion profit.
The $48 billion did not come out of thin air. It was stolen from the general public and future generations in the form of price inflation. This is a very good form of theft, because it is so nicely separated from the crime in time and place. Do price comparisons of anything...1980 and now.
What can go wrong? Nothing apparently. All of our major prognosticators are projecting 2% inflation as far as the eye can see. Do you believe it? Michael Kinsley and the Tea Party do not. Strange bedfellows. Vast numbers of the middle class have stood still or regressed economically for the past 30 years. All the while, the economy has put in good growth. Now we are asking for great sacrifice by the middle class. Really, what can go wrong?
The need for inflation is desperate. Governments worldwide need it, home owners need it, all debtors need it. If the public would just accept stable wages, benefits, and soaring prices (read...collapse in the standard of living), there is light at the end of the tunnel. If they don't, then many nation states will collapse, and we will have created a receipe for global violence.
McKinsey recently produced a report that analyzed the current debt markets and projected financing needs over the medium term. This is a definitive effort that provides a basis for understanding our financial future. http://tinyurl.com/yc5druv
The second article by Gordon Long analyzes the trends in maturity of public and private debt. It provides a clear picture of the crunch in debt refinance that should occur in 2012. http://www.minyanville.com/businessmarkets/articles/economy-interest-rates-swaps-us-banking/4/5/2010/id/27613?page=2
The Federal Reserve and Treasury are the backstop for these markets. They are providing the stability for private and public bond sales which, in turn support the stock market. Barring an accident, stability could continue through most of 2012. It would be a mistake to assume that money creation cannot be effective in the medium term.
Two links supplied by Paul Kedrosky underline the risks in the bond market. http://paul.kedrosky.com/archives/2010/04/the_next_crisis.html http://paul.kedrosky.com/archives/2010/04/step-up_bonds_a.html
The first deals with the risks in the municipal bond market, and the second explains the rise of a new debt formulation...the step-up bond. Both of these markets are supported by vigorous bidding by pension fund managers. Are they crazy? They are not crazy...they are just desperate for yields.
The combination of rising pension obligations, the market meltdown last year, and low interest rates have undermined the stability of pension funds. Managers have turned to higher risk bond pools to meet funding requirements.
This will end badly, but the end of bubbles are hard to predict. We may have MUCH lower interest rates and much higher stock prices before something gives.
James Grant has written the Interest Rate Observer for 28 years. I always thought he was pretty dour, and his prognostications are always pretty negative. He really is pretty funny in this youtube video. http://www.youtube.com/watch?v=JiwmBpzLXUE&feature=player_embedded
The idea that the US could lose its AAA credit rating has moved to the mainstream.
The complexity of the recent health care legislation is a pre-existing condition. Unfortunately there is no mandated insurance policy to protect the citizen against unforseen threats to his/her health by this legislation. Rather than enabling a smooth transition to a state controlled system, it is likely to ignite a sudden upheaval in the health care system. The resulting political firestorm is likely to singe everybody.
Thousands of analysts are reading and trying to understand the implications and costs of the legislation. No doubt, dozens of potential disruptions will be revealed that will call the viability of the bill into question. The hedgehog likes to keep things simple. With private insurance coverage guaranteed for pre-existing conditions, why shouldn't everyone under the age of, say, 50 (or maybe under the age of death), simply cancel their health care insurance? Why shouldn't every employer with under 50 employees (or maybe every employer) simply drop coverage?
The glib response is..."We anticipitated that and included a fine for failure of responsible parties to procure insurance." But at this point political realities intervene. 1) Initial fines are much lower than the cost of insurance. If they were higher, resistance by lower paid workers would be intense. 2) Basic policies are going to be comprehensive and expensive. Persons making less than $50,000 per year can't afford them, and the proposed subsidies are unlikely to offset the choice of no health insurance. 3) As participation in private insurance collapses, only sick people remain in private insurance. Suddenly, private insurance premiums soar.
We already the see the possible effects of selecting out the young and healthy from insurance pools. The Recession has caused the layoff of many young workers. They previously paid health insurance premiums (or their employer provided insurance), and needed little or no health care. Health insurance companies are already asking state regulatory agencies for huge premium increases. It is economically rational, because their premium collections are lower and their costs are more or less constant. When universal healthcare is implemented, the young and healthy will select themselves out of private health insurance. Private health insurance will simply disappear.
Some opponents of healthcare say that this is the intended design of the universal healthcare legislation. Proponents may or may not agree. No matter, the health bureaucracy is completely unequipped to respond to this amount of change. Should private insurance collapse in a short period of time, the results could be catastrophic.
It is instructive to read reports on the effectiveness of the home loan modication program, and the "weatherization" of houses programs of early 2009. They have been complelely ineffective. Very few loans have been modified and very few houses have been weatherized. Rats gather around government cheese, so regulation and rules must be airtight to prevent corruption. Unfortunately, bureaucracies are slow and cumbersome, and the people that need these programs simply cannot access them. This would be uncool if it happened in healthcare.
No one believes that our country can emerge from our current crisis without revision of our tax and spend policy. Spending, particularly on entitlements, has been a third rail for politicians for decades. Any attempt to limit spending (of almost any kind) immediately initiates a TV parade of the unfortunate that need government help.
That leaves taxation as the only alternative. One of the great advantages of the Democratic Party is that the benefits of the program of the day come first. The costs come second. Historically, "taxing the rich" and borrowing have shielded the middle class from the cost effects of government programs. Slow inflation bleeds wealth from the middle class, and the rich gain deductions and and credits to mitigate taxation losses. The electorate senses that this decades long game is nearing an end, and they are surely correct.
Greg Mankiw makes some simple calculations to demonstrate the potential for additional taxation. http://gregmankiw.blogspot.com/2010/03/taxes-per-person.html The prospects are poor. The needed taxation (20-30% overall increases) will surely cripple the competitiveness of the US economy. The ensuing decline in the US standard of living will pour more gasoline on the budding political firestorm.
The current political conflict is playing out in predictable ways. Democrats believe they can establish new spending and co-opt enough Republicans in the next election cycles to dramatically increase taxes to avoid financial collapse. Republicans are simply trying ride the backlash to political majorities with a vague, but unachievable plan to "rollback" recent Democrat legislation.
If the Tea Party successfully establishes a "limited" government theme, both major parties will suffer some disappointments.
My continuing point about healthcare reform is that patients should be driven away from an insurance solution...not towards it. This blogger offers a similar perspective. Think of a $25,000 deductibile insurance policy. The reality is that few under 55 years old would ever exceed the deductible. Of those that did, most would not go bankrupt. They would save enough in insurance premiums to pay off the debt in a few years. Those that did go bankrupt would become charity cases. Our country has a good record of private charity. And the wealthier it is, the more charitable it is.
"Freedom is just another word for nothing left to lose." This line from the Janis Joplin hit song about the drug culture ("Bobby McGee") describes the plight of the Icelanders and their likely vote to default on souverign debt. In the fullness of time, it will likely describe voters in other jurisdictions as governments try to impose draconian measures to maintain shaky financial structures.
Social transfer payments in many jurisdictions are unsustainable. Yet, receipt of those transfer payments are the only wealth or potential wealth that large fractions of the voters possess. There are rapidly approaching majorities of voters in many jurisdictions that have "nothing left to lose."
The financial governance sham is about to be exposed in all of its ugliness and pain. But the voters do have a solution. When the meal has been served and the bill arrives, they can just walk. You could call the action a lot of names, and point out the negative economic consequences, but they will get a clean slate. The well-connected rats and exploiters of our current system will have been vanquished.
The formula for wealth generation is fairly simple...sound money...produce more...save more. If the body politic can reform in a way that promotes these ideas, all will be well.
Iceland has been in the news in recent years because of the failed attempt to become a world financial centre. A few bankers got very rich, but the whole enterprise ended in tears. The current souverign playbook..."let the taxpayers bail out the mess," is not going down well with the voters.
When the load becomes too heavy (as it is in many countries), the voters will likely choose immediate self-inflicted pain instead of generations of poverty. http://www.bloomberg.com/apps/news?pid=20601039&sid=amtqRO5zQX2g
Poor financial governance is an epidemic, and few governments have resisted the disease. The Hedge Tax is a gamechanger. Support it.
Markopolos is making the media rounds to sell his book. Hyperbole doesn't make the charges against Geithner and others untrue. Mish Shedlock weighs in with a summary in this piece. http://globaleconomicanalysis.blogspot.com/2010/03/geithners-illegal-money-laundering.html
It is truly hard to get your mind around corruption and fraud of this scope by public officials. The source of all is poor financial governance. Good governance begins with accountability as supplied by the Hedge Tax.
The wages of poor financial governance is massive fraud. Bernie Madoff perpetrated the biggest (hopefully) fraud in history. This private interview of Harry Markopolos is both frightening and disgusting. He is the man that exposed Bernie Madoff and the failure of a number of major government agencies. http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/2_Harry_M._Markopolos.html
This interview is about an hour long, but you really should listen to it. The growing populist revolt has a source, and it is the corruption in our government. The worst is that the current unrest is based largely on intuition. Soon it will be based on facts and the reaction could be brutal.
The Hedge Tax forces accountability...and it will create new governance.
What is the Tea Party? It is clearly a protest against the current forms of governance. Both political parties have been flummoxed by this movement. The initial response by the Democrats was revulsion followed by unsuccessful attempts to paint the movement as "Astroturf" promoted by Republicans. Mainstream Republicans initiallly dismissed the group as "fringe elements" of no lasting importance.
Both of these responses were serious miscalculations. We warned of this possiblity in an earlier post. We also warned that the group was driven by a disenchanted middle class, not a Libertarian fringe. There is no cohesion for the Tea Party except a distrust of government and many institutions. In many ways, it is a decentralized political insurgency.
Insurgencies, as in the case of Al Qaeda, are difficult to combat. The major parties are organized for setpiece political combat. Consequentially, they are vulnerable to hits in unexpected ways in unexpected places. There is no better example than the "hit" on ACORN by James O'Keefe and Hannah Giles. Unlike Al Qaeda, the Tea Party is not illegal. That just makes it even tougher for the major political parties.
The Democrats have suffered the most initial damage. Or so it would seem. Core Democrat constituencies are sympathetic to the Tea Party, and recent elections have exposed vulnerabilities in the Democratic majority. But the unseating of Republicans in 2006 and 2008 was driven by many of the same middle class voters. In other words, this discontent has been bubbling for some time. It was just unnamed before.
After a lot of initial fumbling, Republicans have very recently hit on a strategy that may absorb much of the Tea Party energy. I'll call it "an indifferent embrace." Mainstream Republicans are now suggesting that Tea Party voters will enter Republican primaries and influence the selection of Republican candidates in the general elections. It is likely that this is a ploy, but it may be that the ploy will play into the hand of the Tea Party. The Tea Party could take over the Republican Party with a fairly broad based independent constituency. This could be very bad news for both major parties as we now know them.
It is also potentially good news for the Hedge Tax. Ultimately, what matters is that the government is more responsive to the voters and less responsive to special interests. There is no better mechanism than constitutionally driven Tax Reform that will permanently restore the power of the voters.
This post by the Belmont Club summarizes the cabal that is our banking system. http://pajamasmedia.com/richardfernandez/2010/02/25/the-last-bubble/ As the post explains, the problem is world wide as interest rates are forced to zero to forestall calamity.
It is unnerving to have a major institution publish this article. We feverish hope they are wrong. But the rats have done their worst for decades.... Support the Hedge Tax
In previous postings, we have been deeply critical of the taxpayer bailout of Goldman Sachs. Our opinion was that it was a secretive back door bailout via the AIG collapse. It was also clear that there was a parade of ex-Goldman execs in the center of the government actions. These names include Hank Paulsen, Ben Bernanke, and Tim Geithner. Months later, the smoking gun has been discovered.
The corrupt financial governance goes on. Support the Hedge Tax Reform
The insane act of the pilot that crashed into the IRS office in Austin Texas had its origin in the convoluted tax code. This article by the TaxProf summarizes how it happened. http://taxprof.typepad.com/taxprof_blog/2010/02/the-austin-pilot-.html
The truth is that almost anyone can be ensnared by the IRS. The thousands of pages of the code, regulations, and rulings are not fully understood by anyone. Some choose to fight the unfair system when it bites, but the system is not designed to lose. And the endgame can be a loss of sanity and life as occurred in this case.
One recurring voter lament is....what happened to the person I helped elect? When he/she got into office, the votes cast did not resemble the campaign rhetoric.
Part of the difference is due to the normal compromise and horse trading that is part of the political process. But, more and more, the difference is due to "Doing Business" in Congress.
Our fragmented tax and spend policy empowers special interests. Those special interests have gained control of our government through massive campaign contributions and the resultant flow of political favoritism. This corrupt process has clearly shifted into overdrive. No one can get elected or re-elected without serving those interests.
As the government role increases and tax and spend is unfettered, the politician that tries to serve the general interest and general welfare is swept from office. Those that remain are those that are best at "doing business."
Support the Hedge Tax.
Corruption of tax policy extends to the local level. This piece from the Washington Examiner examines the effect of property tax exemptions on the tax burden for the less favored. http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Goldwater-Institute-investigation-exposes-dark-side-of-special-tax-deals-84738592.html
At the federal level, the Hedge Tax would eliminate the exemptions for Municipal bond interest (this would take 20 years). Somehow the idea that voters in Iowa should bear part of the burden for a sports palace in Houston seems wrong to the Hedgehog.
Previously, we posted "Largest Short in History." The posting described the obligation of the US Government and Taxpayers for trillions in medical benefits. No funding or reserves for the these obligations exist except for future taxation.
This piece http://www.latimes.com/business/la-fi-calstrs29-2010jan29,0,4882943.story in the LA Times describes the coming shortfall in teacher pensions. This is on top of shortfalls in Calpers (CA public pensions).
Pensions can be described as a market as follows: Retirees demand pension payments. Funding is supplied from trust funds and trust fund earnings. What can go wrong? The army of retirees grows more rapidly because of demographics. Earnings of trust funds fall short because of poor market conditions. Trust funds are underfunded because of budget imbalances.
Step back and look at the landscape of pensions...public and private. All of them fit the model described in the previous paragraph. Public pensions and failing private corporation pensions are technically insolvent in many many jurisdictions.
The silence of political rhetoric has shielded pensioners and the public from this reality. But the market always speaks...even after long periods of silence.
The General Theory of the Hedgehog is that a simplified focus of voter behavior is required to correct our poor financial governance. Fragmentation of taxation and spending has severely weakened the ability of voters to influence legislation. To correct this distortion, we chose constitutional reform of the tax code.
The idea behind the balanced budget, single tax rate, single exemption and asset tax was to create a taxing authority that was 1), largely immune to special interest pleadings, and 2), could be directly understood by the mass of voters. The average voter does not have the time, tools, or interest in deciphering the effects of complex legislation. Arguably, our congressional representatives have lost that ability as well. The Hedge Tax forces a direct up or down vote on overall taxation and spending. Nothing could be more painful to special interests and our current political class. It is the belief of the Hedgehog that this tax plan would generate a new tax and spend regime and a new class of politicians.
The growing discontent with financial governance has broken into the open. Various interests have been deeply challenged and harmed by the recent financial crisis. But the core of the discontent is expressed by a frustrated middle class. The middle class has not fully participated in the robust financial growth of the past 20 years. Moreover, the crisis has fully exposed the structural financial weakness of the mainstream entitlements. This double whammy is the genesis of the populist revolt that we see before us.
The direction for change is undefined. Some are simply expressing anger and discontent, some want revolutionary change in government, and some want restoration of the old credit cycle. Few understand the need for fundamental reform of tax and spend. The risk is that reform will founder along partisan lines and that the economy will renew its decline. Should that trigger a currency crisis, about any political outcome is possible.
The country is desperate for a new leader that can articulate the necessary reform that will allow voters to control the reach of government. This must be accomplished in the face of the decline in the value of entitlements, and the need to assert control over deficit spending. If such a leader appears and is successful, he/she will be a central figure in history for the next 200 years.
The rising tide of populism claimed its first victim in the Massachusetts Senate race. A new Tea Party message was delivered, but the message continues to be garbled.
The detonator for the MA bomb was the sense that government was willing to help any bank or institution that contributed to the crisis. It would try to provide welfare for anybody out of a job. Everybody else, pay your taxes and get back to us later. The stimulus was a boost for mainstream democratic supporters…especially unions. The major effects of stimulus wouldn’t begin until 2010…an election year. Whether this is a fair perception of the administration efforts is beside the point. It is apparently what the majority of voters believe.
Economists and the financial leadership of the administration have to take a lot of blame for this state of affairs. Clearly, there was a belief that a heavy dose of stimulus and continued low interest rates would quickly revive the economy. Unless there is a sudden recovery this year, that belief is obviously wrong.
From a political perspective, we are at a tipping point. The Tea Party is a major new force in the in the country. But the Tea Party is a conglomeration of a lot of different beliefs…doctrinaire Libertarians, Populists, and people afraid for the economy and their jobs. Probably the single force holding this group together is a singular distrust of government and institutions.
Most of the people in the Tea Party continue to rely on government for their social safety net. Most look forward to Social Security and Medicare. Most know that Food Stamps, Medicaid, Unemployment and other social programs should be there if they need them. But, for the first time, there is growing doubt that the government can deliver those promises.
A major fraction of the Tea Party supporters want the FDR New Deal affirmed. “Where are our freebies?” Another major fraction believes that government should be sharply curtailed. “Throw all of the rascals out.” The New Deal depended on freebies. Growing benefits have been delivered for 70 years without adequate consideration of future costs. Demographic and cultural changes have greatly exaggerated this imbalance. Soon it will become clear that benefits will be adjusted either by reforming basic programs or via financial collapse. Will the Tea Party coalesce around fundamental reform? Or will it take a more sinister form and attempt to overthrow the existing order?
Democrats have taken the lead in promoting entitlement programs, but the Republicans have contributed as well. Both parties are in danger of being replaced by a new Tea Party coalition. Changing the message or the “spin” will have very little long term effect, because the financial problems are real and urgent. So far, neither of the major parties has shown any ability to garner broad support for broad reform. Instead, both seem content to pursue power for its own sake.
The Tea Party could be the route to a civilized adjustment. Objective leadership of the new party could forge a new political base. But this new leadership will have to rein in government to make it workable. Will the people trained to receive freebies accept this new reality? Or will our country descend into chaos?
All of this turmoil could have been avoided if financial governance as proposed in the Hedgetax kept voters focused on the general welfare. Instead, we got the result of special interest pandering. January 24, 2010
This NY Times piece confirms a central point of the Hedge Tax proposal. It also explains the political rationale of the widespread support of the current tax code by the very rich. Recall an earlier posting of Warren Buffets support for the inheritance tax (he largely avoids paying it).
The Cap and Trade legislation and the Healthcare proposals before Congress represent more fragmentation of our tax regime. These bills represent a continuation of the massive complexitiy of the tax regimes that we have allowed to be imposed.
Untended consequences are birthed by these initiatives. Consider these examples related to the Copenhegan meetings. I think they represent a permanent disability for manufacturing in the West. Incidentally, the Russians will reap billions from carbon credits, because they are measured from 1990. The Russian economic collapse generated massive reductions in carbon emissions.
... in Eurabia
The EU's emission trading scheme (ETS) may have been the deciding factor in the closure of the Corus Redcar steel-making plant – reported last week , giving the company a windfall bonus of up to £1.2 billion from the plant closure – on top of other savings.
Earlier this year, Corus – part of the Tata Group Europe - disclosed that its UK steel inventory was "close to exhaustion" and analysts are expecting improved earnings from second-half trading as production is increased to meet a rebound in demand.
Mothballing the efficient Redcar plant (with no expectations of its re-opening) thus fails to make obvious commercial sense, especially as Tata bought the plant only in 2007 as part of its strategy to give it better access to European (including UK markets).
However, revealed by The Times today (although the information has been available since June is an illustration of how valuable an alternative product - "carbon allowances" is to the group.
The paper's story focuses on the rival ArcelorMittal group, pointing out that it has accumulated 20.8 million surplus allowances (EUAs) given to it free by the EU. With the carbon price at over £13, they are worth about £270 million. But, with additional surplus allowances up to 2012 and an increased carbon price – expected to rise to £30 - the company could have gained assets worth around £1 billion.
This, even for a company the size of Tara steel, is a considerable windfall, over and above the money it will aready make from the EU scheme. But, with a little manipulation, the company can double its money. By "offshoring" production to India and bringing emissions down – from over twice the EU level - to the level currently produced by the Redcar plant, it stands to make another £200 million per annum from the UN's Clean Development Mechanism.
Our tax regime is moving inevitably to a majority of non-payers of income tax. This is destructiive because in this post http://taxprof.typepad.com/taxprof_blog/2009/12/almost-13-of-tax-.html by the Tax Prof points out, vast numbers of Americans are indifferent to spending and taxation. With a solid indifferent voter base, it is pretty easy to co-opt enough tax payers to pass any spending program.
That is not the whole story. Those people that work pay lots of federal taxes in the form of labor taxes (Social Security and Medical taxes). So not paying taxes is just an illusion. This is a perfect storm for the political rats, because the true nature of taxation and spending is obscured from the voters.
The Tax Prof goes to the heart of the rationale for the Hedge Tax. Citizens will make different and more rational choices if they have a simple choice between tax and spend.
The raging controversies over health care reform and cap and trade are best understood if they are described as tax bills rather than reform. A view of current and projected deficits certainly supports the idea that massive new revenues are required. Of course, politicians would lose a lot of votes if they proposed direct new taxes, and it would hurt even more to propose reduction in spending.
Health care reform and cap and trade are perfect vehicles. They are major "crises;" they are being driven by "greed and miscreants"; and we the people must put a stop to them. This article summarizes the tax features of the current version of healthcare legislation. http://www.humanevents.com/article.php?id=34588 It is hard to argue that it is not a tax bill.
The main benefits of these bills are that they are a major payday for politicians (our public rats). For example, Mary Landreiu (D-La) managed to secure a $300 million payoff for the state of Lousiana for her vote to move healthcare to Senate debate. Think of the endless flood of campaign contributions sure to follow for both parties to fund the fiscal orgy.
Poor financial governance is the origin of these fiscal debacles. It creates and perpetuates them...support the Hedge Tax Policy at www.hedgehogparty.com.
There was a pop tune in the 1950s called "I'm Forever Blowing Bubbles." I think they whistle this tune down at the Treasury. Our leaders of financial governance are forever intervening in markets to accomplish this or that. Inevitably, unintended bubbles form. Bubbles are fun...even beautiful...but then they pop. In our current environment, nobody is unaware of the recent demise of the real estate bubble. But are we aware of the next bubble?
Our economy formed new private credit at a growing rate until 2000. At that time we passed a point of peak private credit for the first time in over 70 years. Until the private sector is purged of a lot of debt, real economic growth cannot continue. The purge is happening in the private sector, but not in the public sector.
No politician or political group can pass up the opportunity to "save the economy and jobs." Start the public money pump! In the old Keynesian model, the public money pump worked pretty well. Liquidity was about all the private sector needed to catch its breath and go on to the next economic peak. After a major private credit peak, the private sector (and money pump) is frozen. The public money pump is not designed to carry the whole load. The Federal Reserve and the Treasury take on the role of the "Wizard of Oz"...just a loud noise from behind a curtain. The Colossus is just an image and a fraud.
When politicians (and citizens) demand that the booster pump become the main pump, all of sudden bizarre things happen...trillion dollar deficits as far as the eye can see; vast increases in the Federal Reserve balance sheet; corruption on a vast scale; social unrest; AND the potential for vast new bubbles.
What is the next bubble? It is unlikely to be stocks or real estate...those recent bubbles are too firmly fixed in mind. My bet is bonds. Right now, there is an infinite market for bonds. Here is how that works. The Federal Reserve and Treasury supply liquidity, loans, and guarantees in abundance. Banks receive this largese, but have no private market in which to lend it. But there is an abundance of government bonds. Borrow at zero percent, lend at 2-4% to a no risk borrower. It sounds like a profitable banking deal to me.
The wild cards are the value of the dollar and the rate of destruction of private sector debt. That is what makes it interesting...you never know when the bubble will pop.
Employer mandates have the effect of mandating the public option. An analysis of the cost effect on small business leads to the inescapable conclusion that a vast number of employers will discontinue offering health insurance.
The secondary effects are mind-numbing. Private insurance will collapse quickly, because public insurance is underfunded and does not bear its full cost. Private insurance will provide a smaller pool for the cost shifting that politicians love.
Physician reimbursements for public insurance are too low. Heavier reliance on public reimbursements will force significant number of physicians out of business or they will choose to retire. The long lines for medical care will begin almost immediately.
A sad day is near...all because of poor financial governance that allows financial ills to form and fester.
This post by the Tax Prof summarizes the effect on marginal tax rates of the proposed health care legislation. Marginal tax rates as high as 80% are creeping into the middle income tax brackets. It appears that some version of the health care bills will become reality, and it underlines the damage that a fragmented tax system can cause. http://taxprof.typepad.com/taxprof_blog/2009/10/80-marginal-.html
Except for reducing "waste and fraud" there is little in the legislation that reduces cost, and a lot that selectively raises taxes. Few are asking "If you can actually reduce waste and fraud, why aren't you doing it now?"
The single rate income tax proposed in the Hedge Tax would directly affect 85% of the taxpayers. The increase would be directly visible, and all of us could decide whether we wanted to increase it to pay for this program.
In our previous post, we opined that precious metals were positioned for a massive short covering rally. That set us to thinking about the largest short postions in history. There is only one contestant.
The US government (and the taxpayer) owns the largest short position in the history of the world...and it is growing. That short postion is in health services through Medicare and Medicaid. It is trillions and trillions of dollars and dwarfs the next biggest short position. That would be for pensions via Social Security.
This is the prime example of our poor financial governance. Support the reform of tax and spend throught the Hedge Tax.
Last year, I thought that there was the possibility that the anticipated currency crisis would begin. I predicted a surge in the price of gold at year end. The conditions were ripe for it, but for a variety of reasons it did not occur. Principle among those reasons is deflation. Deflationary pressures were and are intense. Massive stimulation by most central banks, and mind bending injections of liquidity are holding deflation at bay.
Stagflation is possible under that circumstance, but the Federal Reserve, Treasury, and other allies also managed to dampen the fall of the dollar. Part of the relative stability in the dollar is the cooperation between central banks. No country wants an appreciating currency to dampen exports.
Asians and particularly China are in a bind. They have massive holdings of dollar backed securities. They also have a need for continued exports, although their western markets are substantially weakened because of the recession. Internal consumption and stimulation proceeds apace, but it is unlikely to replace exports over the medium term.
In sum, the conditions this year are much more unstable than last. US deficits, and currency printing are massively higher. At high levels, Chinese officials have condemned the failure of US financial governance. The top financial official was quoted as saying “we hate you guys” in reference to the risk to their dollar holdings.
China is reducing its exposure to the dollar by aggressively acquiring all sorts of commodities and resource producing companies. But they continue to avoid direct attacks on the dollar to protect their large dollar holdings. But the indirect attacks are rising.
Many (including me) believe that the price of gold and silver are aggressively manipulated. Four bullion banks hold more than 50% (and growing) of the short position on the Comex. In the past month, China has begun an aggressive campaign to encourage citizens to buy precious metals. It is working. Over the past 15 years, central banks have been active sellers of gold. Those programs are coming to an end. Some, like Russia, are major new buyers of gold. Metal buyers can ultimately overrun the major bullion bank shorts by taking delivery on the Comex. This would happen despite the almost infinite financing available to the shorting banks. Shorts would have to buy the metal, and it is simply not available in the quantities needed. The metals exchanges could default.
The last hurrah for gold shorts may be coming up. The IMF is predicted to sell 400 tons of gold next week. The market reaction is key. China and Russia are rumored to be buyers of the full amount. The short term market is setup for a hard sell-off. But the price decline may be sharp, and only last a few hours. Or there may be no decline at all. If the price of gold is over $1000 by October 1, 2009, there should be a price explosion. My $2,000 per ounce forecast for December of last year will have been one year early. The citizens of the world are on the verge of fleeing fiat currency. As usual, gold and silver stocks are the best play.
The payback for our failure to manage tax and spend could be at hand.
This post by Chris Martenson shows one small way that the Federal Reserve and Treasury obscure the true condition of our public finance. Bids and bid coverage are important measures of the marketability of our federal debt. Rigging the market so that "buyers" are actually front men for the Federal Reserve ultimately corrupts the whole process. Worse, this nefarious game is hidden from all but the most sophisticated observers.
The US denominates its debt in US dollars - the world reserve currency. All countries have a stake in this unit of interational trade, so our failure at financial governance could be a worldwide financial disaster. The tried and true method of resolving excess public debt is long term debasement of the currency. Witness the loss of 95%+ of the purchasing power of the dollar over that past 90 years. Currently, our public debt accumulation is so rapid that it will take a very large bush to hide this elephant.
This week's auction features the planting of some new hybrid foliage. TIPS (Treasury Inflation Protected Securities) have been a minor feature of our auctions for some time. At the request of the Chinese, they are about to become much larger. The Chinese and others have been grumbling loudly about the risk of devaluation of our currency. TIPS would give them the inflation protection they desire.
This is a clever scheme, because it "kicks the ball down the street." It obscures the fact that this is in reality a de facto denomination of our debt in other currencies. Is a measured decline into a worthless currency the best we can do?
How deperate we are for a regime that can control tax and spend. Support the Hedge Tax.