Ron Paul's analysis is correct … There is an ongoing argument about higher income tax rates for the top 1 percent of us but that is just a diversion from the real problem. Since 9/11, the Federal Reserve cut interest rates to zero and started printing more money to keep our economy from collapsing. But a decade of free money caused a flurry of spending that caused the stock market and housing bubble to inflate and finally burst, leaving a mountain of new debt. – Des Moines Register
Dominant Social Theme: It's taxes, man!
Free-Market Analysis: The above article excerpt would seem to put the "fiscal versus monetary" argument into perspective. It is an argument that, in our view, defines the modern state and what's "gone off the rails."
Are taxes too high? Is that the reason for so much insolvency in Europe and the US?
Why is prosperity draining away? What's the REAL fix?
Our preference would be to explore monopoly central banking when it comes to determining the ills that afflict the modern world. There are 150 central banks now where before, at the beginning of the century, there was only a handful.
These central banks churn out money at an astonishing rate. And from what we can tell, making the mechanism purely public won't help, either. When given the opportunity, people will print as much money as they possible can. Power corrupts. Here's some more from the article:
Rather than tightening our belt to pay down some of this new debt, the government went all in with bailouts for private industries, forcing the Fed to print $3 trillion more worthless money over the past three years.
With this new glut of national debt and a mountain of new worthless money, the money in our pockets buys less every day as prices go up. If the dollar has lost 70 percent of its value since 1970, that's a 70 percent tax increase on all of us.
That is why Ron Paul wants to eliminate the Federal Reserve and that is why we need to listen to him. We need to cut the federal budget or milk and gas will both cost $8 a gallon.
When the Fed "prints" money it eventually circulates. At first it may be lodged in bank vaults (metaphorically speaking) but eventually these electronic digits – money from nothing – will be lent out and the price inflation will be aggravated.
That's a tax, of course, of the most insidious kind. It makes a regular tax look fairly inefficient because an inflationary tax attacks every part of the economy. No part is left untouched.
There are other issues when it comes to modern central banking economies that ought to be scrutinized closely. The Fed – and other central banks – distributes money via commercial banks. These banks are the distribution channel.
Because these banks are the distributors for central banks, they are usually not allowed to go out of business – which means that over time (decades and decades) the financial sector gradually expands like a balloon.
Today, the West's financial sector is surely the world's biggest bubble. Literally dozens, if not hundreds, of world-spanning financial firms should be out of business. But they remain in place, defiantly churning out trillions of dollars in lending over time – money that will further inflate the larger economy.
It is the misalignment of assets and real productivity that is at the heart of this bubble. The whole system foundered and failed in 2008 and the central banks around the world have printed and lent something like an impossible-to-comprehend US$ 50 trillion since then, all in.
The entire system is simply propped up by funny money – money from nothing – that flows from monopoly central banks to designated commercial banks and thence to certain targeted corporations, also controlled by the same elites that control the central banks.
The amount of money that is designated by a handful of powerful people to flow to the Western military-industrial complex, Intel-industrial complex and the prison-industrial complex – not to mention Big Pharma, etc – is truly staggering. It would seem to be in the tens of trillions.
And one needs to remember that taxes are paid out of the same mechanism, printing money-from-nothing. Tax money is formally designated by the bureaucracy. Central banking fiat money is informally directed by a power elite that evidently and obviously is trying to build world government.
At its root, then, the fiscal versus monetary debate resolves itself into a relatively simple paradigm. The same people who control central banks control governments via what is called mercantilism.
The money all comes from private/public monopoly central banks and much of it is formally or informally controlled by the same powers-that-be. Within this larger context, then, it seems a bit naïve to speak of fiscal elements as what needs to be fixed.
One can cut taxes forever. But so long as the larger money mechanism remains in place, Western economies will remain tremendously distorted.
Any job gains will then prove ephemeral because they are being generated within the context of this larger distorted economy and will be subject to the infinitely destructive boom-bust cycle that monopoly central banking always creates over time.
"Fixing" taxes is not nearly as important as re-introducing competition into the larger monetary system. It ought to be privatized and people ought to be able to use the money they choose within their own communities and regions.
Only when money is freed will people be free and prosperous once more.