What is Your Line in the Sand?

You know the proverbial saying, the straw that broke the camel’s back.  What acts by the federal government would you consider intolerable, oppressive, or despotic to finally say, enough is enough?  How much of your personal and economic liberty, your individual rights must be taken through government acts for you to stand up and take action?  What is your line in the sand?

Economic Liberty and Property Rights

Today, the government takes what you earn through various taxes to spend on welfare, warfare, and thousands upon thousands of so-called federal programs.  Federal, state, and local income taxes are one portion of the total tax picture.  There is also social security (Old-Age Survivor and Disability Insurance) and Medicare.  There are property taxes.  There are estate taxes.  There are excise taxes (alcohol, tobacco, gasoline).  There are sales and use taxes.  There are fees (vehicle registration, permit fees, telephone fees, etc.).

There are corporate taxes which are not truly paid by corporations but passed on to the consumer to pay.  Corporate income tax expense is just another expense like payroll, electric, or office supplies.  Those are passed on to you.

Then there are regulations enacted by agencies that result in additional expenses by corporations.  Those costs are also added into the products and services you buy.  According to the Americans for Tax Reform tax freedom day occurs around the third week of August.  That means for 2/3rds of the year you work to pay for federal, state, and local government.  The remaining 1/3rd of what you earn the government, through the good graces, allows you to keep.

Let’s suppose the government confiscated 100% of your earnings.  Government bureaucrats send you a monthly check for your living expenses.  Would you continue to work under these conditions?  What if you refused to work and government threatened to imprison you?  What if government physical takes you and puts you in a government work program and forces you to work?

Under any of these conditions are you not enslaved?  Today, if you work 2/3rds of the year to pay for government you are 2/3rds a slave.  Through the use of the law government takes whatever they decide they want.  They have no fear of reprisal.  The people foolishly believe that their government wouldn’t do this to them.  Even more naively the people cling desperately to the false hope of “getting my guy elected”.  Election after election the same strategy fails to reap any lasting rewards.

Moreover Congress’s abject abuse of the commerce clause and general welfare clause has restricted citizens by limiting economic choices.  Government tells us what light bulbs to buy, what cars we can drive, the amount of water we can use in our toilets and shower heads, etc.  In the latest attempt government has attempted to fundamental alter the relationship with the citizen by forcing citizens to enter into a contract for a product against their will.  That is the individual mandate in the Obamacare law.

Lastly, I will briefly mention government control of the economy through the Federal Reserve.  The Fed controls the money supply and interest rates.  As a result the Fed has substantial control over employment and unemployment, credit, liquidity, prices, and the value of a Federal Reserve Note.  Most importantly, the Fed and the government work hand in hand for their own ends.  Monetary policy and fiscal policy are related because annual government deficits of one trillion dollars and a public debt of fifteen trillion dollars forces the Fed to institute zero interest rate policies (ZIRP).  These policies keep the interest on the debt as low as possible but it also punishes the net producers (savers).  Since interest rates are below one percent and the real inflation rate has hovered between five and eleven percent for the past twelve years, savers are punished.  The real rate of return is negative.  People have no incentive to save.  People must either consume or they must increase their risk in other investments.

Ultimately, the problem boils down to the use of a fiat currency that serves two primary purposes; an indirect medium of exchange and as a store of wealth/purchasing power.  Government and banks need their dollars returned nominally.  Meaning they only need the dollar returned.  What the dollar can purchase is irrelevant.  We need our money returned in real terms.  That is after the real inflation rate is factored in.  Because government has run up such a large debt and continues to add trillions of debt every year, the Fed makes monetary policy decisions that favor government and the banking system while harming the saver.  The other critical factor is money itself has absolutely no value.  You cannot take a Federal Reserve Note to the bank and get anything of value. It’s only value is that it can be used to purchase things of value.

The Fed has to choose between deflation and inflation.  The Fed chooses to inflate rather than allow asset values to deflate (which increases our purchasing power).  When the Fed inflates our savings, our store of wealth/purchasing power decreases.  Just over four years ago the base money supply was roughly 800 billion dollars. Today that is roughly 2.7 trillion dollars.  There is roughly 70 trillion dollars of claims on money today.  The debt to money supply ratio is 27 to 1.  It is in the government’s best interest to inflate, but it is not in our best interest.  Eventually, this rate of inflation will accelerate as the Fed must continue to print money (directly, or by purchasing Treasury securities outright).  The current graph of the base money supply since 1913 is in the upward portion of an exponential trend.  This is the 400 pound gorilla in the room nobody wants to talk about.  This will continue to accelerate at a pace Americans have never seen in their lifetime.

Here are some revealing and salient facts.  Wages in constant dollars have dropped from an average of $49,000 in 1971 to $47,000 in 2010.  What cost $1 in 1971 costs $5.32 in 2010.  What you could buy for $1 in 2010 would have cost you only 18 cents in 1971.  From 1961 to 2010 the S&P returns were 3100% on a nominal basis.  On a real basis the returns are negative 2100%.  In real terms and constant dollar terms wages are falling, prices are rising, and our savings(store of wealth/purchasing power) is declining.

What is your line in the sand?  Precisely how far will you allow government to go before you stand up for your economic liberty and property rights?

Personal Liberty

Over many decades we’ve had a front row seat to witness the bureaucratic herd in Washington, D.C. run roughshod over our unalienable and civil rights.   Just since the 9/11 attacks the government has formed a massive security apparatus under the guise of keeping us safe.  Parts of the Patriot Act and the National Defense Authorization Act are two primary examples.  A bill was signed into law authorizing the government to arrest and detain you if you are within a certain distance of any government official under Secret Service protection.  Congress is considering a bill that would require every automotive vehicle to have a black box device (like what is in airplanes).  Congress is considering a law that would revoke your passport if you owe more than $50,000 in taxes without even a trial or a hearing.  Then of course there is the dreaded Transportation Security Administration (TSA).

Government dictates what food we can grow or consume.  The Food Safety Protection Act was passed two or three years ago which creates new regulations particularly harmful to small farmers.  Now, government has invaded our personal choices by dictating our diets or other eating habits.  The past year we’ve seen assaults on trans-fats, salt, sugar, junk food, fast food, etc.  The heavy hand of government is felt in elementary schools where student’s lunches are confiscated and children are forced to eat foods prepared at school.

Through programs like Agenda 21 and under the auspices of some phony environmental crisis like global warming or climate change our freedoms are violated.   This impacts everything from food and water choices, to transportation, housing, land use and disposal, septic systems, etc.

Government indoctrination centers, a.k.a. public schools, force children to attend failing schools.  Parents have no choice in the school their child attends.  Curriculum is dumbed down to the point that a high school education is essentially worthless.  In Carroll County, 59% of high-school graduates attend Carroll Community College and 70% of that group requires remedial English and Math.  The mere mention of anything related to God or religion is taboo.  Everything from the clothes you wear, to all aspects of behavior are regulated.  Lifestyle choices are forced into the school systems.  Children are taught how to put condoms on cucumbers.

What is your line in the sand?  How far must government intrude on your personal liberty?  Does government have to take 100% of what you earn?  Does government have to control all property?  Does government have to tell you how many children you can have, force abortions on people, or sterilize people?  Does government have to jail people without cause and deny them a right to a jury trial?  Does government have to confiscate your firearms?  Does government have to cause enough inflation to destroy your savings/purchasing power?  Is it when you have to beg the government for food to sustain you and your family?

What act(s) by government need to happen for you to finally say, enough is enough?

This is a difficult question to answer.  Experience has taught us that mankind chooses to suffer rather than alter or abolish their government.  Experience has taught us that all countries and empires that continually consolidate power into one central authority and debase their currency don’t survive.  History has a 100% record.  For some the answers may be self-evident.  For others the answers may not come easily.

Take some time and think about it.  What is your line in the sand?


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Filed under Economy, Philosophical

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