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Guest Post: The End Of The Statist Quo
Submitted by David Galland of Casey Research
Here at Casey Research, we have been rather negative about the economy for many moons. To be otherwise in the face of the decades-long trend toward ever more government – along with its increasingly destructive and expensive meddling in the free markets – would have been foolish. And, so far, we have been right.
However, I for one am beginning to see some light at the end of the tunnel.
It won’t happen overnight, and maybe not in the next five to ten years, but it increasingly appears to me that the government’s disastrous “problem solving” that has brought us to this place is approaching a limit. Case in point, governments the world over are now engaged in an insane race to the bottom for their currencies – which will only gain speed if the Fed goes ahead with a new round of quantitative easing. Should the Fed persist with this latest madness, countries all over the globe are likely to step up their own interventions – but that may very well lead to the fiat system breaking down completely, to be replaced by something more tangible.
Likewise, given the increasingly dire need to spur economic growth, we could soon see an end to the growth in bureaucracy and the fire hose of taxes and regulations that those bureaucrats have been spraying over the global economy for decades.
Put another way, having squandered so much of human progress through counterproductive policies, any leader that wants to retain power – and they all want to retain power – is soon going to be forced to return to policies that have been proven to allow businesses to blossom.
This sea change won’t happen all at once – and probably not without the global economy first going through a dark and troublesome period. But I have to believe that we’ll soon see a widespread recognition that there are problems to be solved, and opportunities to be captured, by breaking from the herd. Thus, while one state tries to raise taxes to “solve” its budget problems, another will see the opportunity for growth to be had by lowering taxes. While one government passes more regulation to pander to a favored group, another will repeal legislation to lighten the dead hand of government in order to favor all.
In reasonably quick order, the governments that reduce, rather than increase, their burden on their business communities will see their economies begin to prosper while others stagnate – just as they always have. The United States in its youth provides the paradigm of this principle, but Hong Kong, Singapore, Dubai, and a handful of other, less pure examples prove the point as well.
In support of this general theme, subscriber D.W. recently sent along an interesting piece on boom times in a Swiss canton that is picking off the hedge fund managers being chased out of the UK by the 50% tax now being levied on earnings of over £150,000 a year.
And I quote…
Switzerland's tempting tax regimes attract UK firms
Thirty minutes from Zurich and dotted with traditional dairy farms, it might seem an unlikely location for some of Britain's biggest hedge funds.
But it is one of a number of Swiss regions competing to offer ever lower tax rates in a bid to tempt British businesses to relocate.
The hills are alive with the sound of cowbells - and construction workers.
The village, in the area of Höfe in Schwyz is clustered around a shimmering lake which reflects the lush green, rural backdrop.
However the scenery is also now increasingly dominated by building sites as it reinvented itself as a hedge fund centre by offering low personal tax rates to attract cash-rich fund managers.
Spa hotels and up-market furniture retailers are springing up on the outskirts to cater for the new clientele.
Why am I so confident that following another round or two of desperate, last-gasp efforts to maintain the statist quo, we’ll see a shift to a global competition based on free-market policies and hard money?
Simply because when there is only one path left, the choice of where to go next becomes obvious.
Or as one anonymous pundit so well put it…
"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title."
The very real problems now confronting the world – most of which were created by politically motivated politicos trying to solve real and manufactured problems for favored constituents – have now reached the point where they can only be solved by lowering the burden of government on entrepreneurs and letting the free market do what it does best.
The countries that are first to jump on this bandwagon, or that are most vigorous in shedding their layers of obstructionist regulations and taxation, are going to be those that win the day. Conversely, any country that stubbornly tries to hold on to the statist quo is headed for even more serious troubles as its productive elements ship off to more favorable turf.
Investment angle? Watch the news for signals indicating that a particular government is turning toward freer markets, smaller governments, and lower taxes – then pile in. Getting in early on such a turnaround could be hugely profitable, just as leaving money tied up in the markets overburdened by stubborn statists is a sure ticket to a big loss.
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NON-QUO BITCHEZ!!
Here is to hoping the solution does not produce a global fiat instrument instead.
This is what I currently expect will befall us.One currency to rule them all, and in the darkness enslave them.
Indeed, something less tangible but more controllable, based not even on paper, but electrons. RFID money anyone?
You mean like with a chip implanted into your hand or forehead?
It seems like those that attempt to bring "order out of chaos" would take the chance to implement global fiat beholden to no sovereign nation, but as always there are various players competing.
In this case, of course only one group (the most prominent currently being the Anglo-American banking establishment) would have control of the global fiat, and if you aren't in this group maybe your ONLY option would be to oppose it, and instead support sound money and return to real free markets.
We can only hope.
http://psychonews.site90.net
Read our latest PsychoNews story, The Currency Wars, Part 3
I think the Western power elite likely want a one-world currency (and one-world government), but I don't see the BRIC countries and Western countries agreeing any time soon to go that route. I think they each want the upper hand.
Would you be happy with a one-world, gold-backed currency?
I would like a hard currency, like gold,silver,copper and nickle.
But I don't want a global currency or global government.Global government is too dangerous for my tastes, and would restrict freedoms too much.
A global currency would have to be controlled by someone...and that much power would corrupt faster than you can say megalomaniac.
"A global currency would have to be controlled by someone...and that much power would corrupt faster than you can say megalomaniac."
Exactly.
They're not doing a very good job of "controlling" this one.
Read: http://fofofoa.blogspot.com/
Any honest currency must:
1. Be convertible.
2. Be issuable by anyone.
The chances of the elites ever promoting such a thing? Zero.
They may not promote it, but there are some things which cannot be stopped.
If we look at the scoreboard of the history of civilization it seems the elites have had their way the majority of time through the ages, so I do not see why it "cannot be stopped". Second, why should the elites promote money of any kind? If you have slaves then you don't need money, just a work schedule for the slaves and distribution of basic goods and services to keep the slaves pre-occupied with.
My own nutjob conspiracy theory is that I expect "they" will try to phase out money sometime in the future as some corrupt capitilistic and selfish folly and failure which keeps the world in poverty, causes global warming, causes war, and causes warts to grow on your nose. Money will be purely reactionary and neanderthal for the new world which is far more progressive. Hell, they have already succeeded in making the masses of the recent generations believe that their pretty paper is real money and that gold & silver is not money. When the paper money fails it will just make it easier to demonize the whole matter. Money is used by individuals to decide on their own what they personally want from the market place. What elite needs this amount of free choice? Give the prols an inch and they will take a mile. Instead, they will just decide for us and tell us what we need, and it will be sold as the best utopia ever. Too much freedom and individuality is dangerous to an existing power structure. A system with more collectivism and directed group think is such a wonderful tool for elites.
Too bad the latter makes the former impossible (i.e. the more people that can issue a currency, the less likely it will be accepted in exchange).
Not if everyone knows that some actual work had to be completed by the issuer, which is what gives a hard currency its value in the first place.
eg. If I pan for gold in my local river, refine it and then pour bars, it doesn't matter that it is my stamp on the gold, because anyone who cares to can test the quality of my completed work.
Regards
I'm not broke.....matter of fact far from it. That region in Switzerland sounds a little like a place I spent some time this summer. Hamilton, Bermuda. I was struck by the beautiful estates and mega yachts. Then I saw a "roach coach" in the city. When I asked what all the people were doing around it I was told that it was distributing free meals to the poor.
Quite a contrast.
I asked a cab driver how he could afford to live in Hamilton. He told me that his family had owned his house for decades. They had purchased it when a working man could afford to buy a home there. He told me he was getting ready to retire but couldn't afford to live in Bermuda. He's moving to Tampa.
It occured to me that cab fare might be set to rise in Hamilton.
M.R.
They sure solved that whole Glass-Steagall problem alright. Nipped that derivatives regulation in the bud too.
As opposed to the ones in it to meet chicks?
Watch the news for signals indicating that a particular government is turning toward freer markets, smaller governments, and lower taxes – then pile in. Getting in early on such a turnaround could be hugely profitable
Copy That!. Next election here maybe? But we can accelerate it now. CUT OFF THE HEAD OF THE SNAKE! Take it all out of BAC and shut them down.
Casey has always been the wiser. Thanks
It seems naive in the extreme to hold as an article of faith, that inter-regional competition on tax rates - and concomitant capital flight through tax arbitrage - will be the thing that forces the State to back the fuck off and get the fuck out of all'n our bidness.
What will happen as the economy gets more dire, is a massive fucking WAR. That's the 'go-to' mechanism that has been used since the time of Diocletian (before, even); it wasn't just panem et circences that kept the public mind off the Empire's coin-clipping - it was also the parading of war booty through the Streets and mindless hagiography irected towards those who violated other peoples' lives on behalf of the Empire.
And the proles will lap that shit up as they always have - they will cheer for the slaughter of millions simply because they will have had their empty heads primed by vermin like Jonah Goldberg and that fuckwit who recently called for war to 'boost the economy'.
There is only going to be one way to get T/GDP (and G/GDP) to decline meaningfully: raise the fucking price of being a parasite - which in turn can only happen by degrading the machinery of tyranny. Make the price of being a state thug, too high for the cowards who are drawn to the life as an enforcer for the world's biggest organised crime syndicate.
Otherwise we will have a never-ending parade of Robespierres, Richelieus and Sarkozies... Blairs, Straws and Mandelsons... Obamas, Liebermanns and Roves - parasitic vermin to a man: and of course their hoplites (the guys who love playing Stormtrooper drag, so long as they face fuck-all chance of facing an enemy with remotely equivalent firepower).
Make these cunts sleep fitfully. Make them know that there might be no tomorrow.
To refresh Diderot for the 21st century (church hegemony having been sloughed off): Man will be free when the last politician is bludgeoned to death with the severed arm of the last police sniper.
Humanity must realise that there is no point trying to negotiate with the non-human scum who fill the political sphere; you may as well try negotiating with a guinea worm or an outbreak of Ebola. The only thing that will cause the parasites to draw back, is raising the price of their business model.
And it must be borne in mind that these fuckers will set the world on fire rather than have their output valued at market prices: as with the undermining of church hegemony, there are battle lines to be drawn.
Cheerio
GT
Nice rant, my man. 'Twas not I who junked ye.
Let 'er rip. To quote Chaucer:
Me thinketh it acordaunt to resoun
Well said GT.
Nice rant, GT--I like the way you think!
Agreed on everything except the demise of church hegemony...who do you think manufactures all those Pavlovian buttons for Rove to push?
Make this another contra-junk. You have stated, in admittedly blunt fashion, what really needs to be said.
GeoffreyT - “And the proles will lap that shit up as they always have…”
I like your style. I can see you are not one to mince words. I would only say many useless feeders can still see with their own eyes, think with their own minds, and are yet to be gelded. There is a breaking point…
Post of the day, GT. Thanks!
When a rattlesnake comes into your yard, you don't fetch the kids to show them, wait to see what it's gonna do, or pursue compassionate rehabilitation. You grab a shovel and chop off its head. There is no mystery to what a rattlesnake is about.
I think this gentleman is confused. Hedge fund managers are not entrepreneurs.
Gee, who said there would be a currency race to the bottom, in 2007!!! Moi.
So...what keeps currencies in place is demand. Collapse in demand is always ahead of collapse in currency. Which is why this will take longer than you think. But what provides the lubricant? Unemployment. It's set to zoom next year. That's not on anyones horizon, but it will happen.
Unemployment--yep.
And the Conveyor Belt No. U-6 keeps eventuating, dropping the poor 99ers off the end into the pond. Hilda wants to extend it, but, well, not happening so much.
I'd guess that crunchies are lubricant for tank tracks, but then clogging occurs.
Unemployment increase is on many's radar, aka double dip discussions that have receded.
I'm also with you on the beast taking longer to die/morph than currently envisioned. No hopes here for more than mid-12.
- Ned
Griftopia excerpt from Rolling Stone's excerpt of the book:
Quote: "I was in a meeting where a bunch of American investment bankers were trying to sell us the Pennsylvania Turnpike," he said. "They even had a slide show. They were showing these Arabs what a nice highway we had for sale, what the toll booths looked like . . ."I dropped my fork. "The Pennsylvania Turnpike is for sale?"
/snip
When you're trying to sell a highway that was once considered one of your nation's great engineering marvels — 532 miles of hard-built road that required tons of dynamite, wood, and steel and the labor of thousands to bore seven mighty tunnels through the Allegheny Mountains — when you're offering that up to petro-despots just so you can fight off a single-year budget shortfall, just so you can keep the lights on in the state house into the next fiscal year, you've entered a new stage in your societal development.
You know how you used to have a job, and a house, and a car, and a wife and a family, and there was food in the fridge — and now you're six months into a drug habit and you're carrying toasters and TVs out the front door every morning just to raise the cash to make it through that day? That's where we are. While a lot of this book is about how American banks used bubble schemes to strip the last meat off the bones of America's postwar golden years, the cruelest joke is that American banks now don't even have the buying power needed to finish the job of stripping the country completely clean.
For that last stage we have to look overseas, to more cash-rich countries we now literally have to beg to take our national monuments off our hands at huge discounts, just so that our states don't fall one by one in a domino rush of defaults and bankruptcies. In other words, we're being colonized — of course it's happening in a clever way, with very careful paperwork, so we have the option of pretending that it's not actually happening, right up until the bitter end.
The writer of the article wants to have his cake and eat it, too. He wants to do away with regulations on business to allow the free market to flourish while at the same time bemoaning the end result of lack of regulations that got us to this point to begin with. If you want to see what less taxation and less government get ya, you have only to look at the state of Texas, which is racing ahead of the pack to get to the bottom first in everything - 47th in the nation in education, the growing uninsured, the rates of poverty that exceed national averages. In fact, one legislator said that Texas is fast becoming the equivalent of a 3rd world country. On top of that, it has a $25.2 billion deficit it needs to close, which is about twice the deficit California is struggling with, even though California has a much larger population. Meanwhile the governor castigates the federal government for either wanting to give him money for education and Medicaid or for not giving him money to deploy more national guard to the border - he also wants it both ways. Well, he'll take the Washington money if he can spend it the way he wants to and not for what it is intended for.
I'm pretty sure that's not how the world works, but it never stops some people from trying.
The writer of the article wants to have his cake and eat it, too. He wants to do away with regulations on business to allow the free market to flourish while at the same time bemoaning the end result of lack of regulations that got us to this point to begin with. If you want to see what less taxation and less government get ya, you have only to look at the state of Texas, which is racing ahead of the pack to get to the bottom first in everything - 47th in the nation in education, the growing uninsured, the rates of poverty that exceed national averages. In fact, one legislator said that Texas is fast becoming the equivalent of a 3rd world country. On top of that, it has a $25.2 billion deficit it needs to close, which is about twice the deficit California is struggling with, even though California has a much larger population. Meanwhile the governor castigates the federal government for either wanting to give him money for education and Medicaid or for not giving him money to deploy more national guard to the border - he also wants it both ways. Well, he'll take the Washington money if he can spend it the way he wants to and not for what it is intended for.
I'm pretty sure that's not how the world works, but it never stops some people from trying.
California does have a problem with the escape to Texas. There is no income tax but the sales tax is 8%plus and the property tax has jumped every year except last year with the depression. There is tax and with property it is hefty, unlike California with prop 13/Gann tax freeze.
Education is pretty good and in completion is second to California which does still have the brightest.
I don’t know were you got your facts, but the debt of California cant be paid unless the new Governor Moon Beam Brown can get some moony from Oobama. If not, California will have to default on more than one obligation. Texas is not in a default situation.
California universities are shutting off the Junior College students from enrolling as Juniors---cant get in. The admission is for high school grads and then that is restricted. Classes are restricted so that 5 years and longer is required to graduate to not have a job anyway. I have an engineering student that is in the 5th year and hopes classes will be available so that he does not have to go to 5 ½ years.
Texas is not in default, yet. It does, however, have to find $25.2 billion in the couch cushions come next budget, and it has already been cutting state agencies by 5% to 10% for several years, as well as child health insurance, etc. Texas wants to be the first state to be totally rid of Medicaid - that is how they intend to solve part of the shortfall. Which is fine, I guess - I'd just like to know where they are gonna store all the poor pregnant women, the poor children and the elderly in nursing homes. Probably on the streets, where they store the mentally ill, having cut those programs long ago.
as for education - yes, the colleges are still good, what is 47th in the nation are the public school systems. The cost of tuition into 4 yr state colleges is increasing by double digits though.
Governor Bighair is out promoting his book right now, and even if you buy the book, before you move here you just might wanna kick those tires and look a little deeper at what he's selling.