STOP PAYING FOR DEMOPUBLICAN LOPDOGS OF THE SUPER-WEALTHY AND
VESTED INTERESTS, that would be good ... However the article is deceiving.
Submitted by Tyler Durden on 04/30/2014
Author: Charles Hugh-Smith of OfTwoMinds
blog
Brief Introduction by Hugo Adan. April 30, 2014
The title is deceiving…
Here the point is How to kill poor middle classes to save the rich. Not
poor, not problem, is the logic.
The solution is to create a bad medicine.. and kill them. Read it anyway, this
is the logic of most demopublican, same neo-cons… same mother: the super-packs.
Real solution: just get out of the trap demo-reps and fight
for a third option: a PEOPLE’S FRONT TO REBUILT AMERICA, otherwise abstention
is the solution. Not legitimate government will make legitimate the demand to
replace the current political and economic system.
-----------
There is nothing fancy about these three solutions. They
shift the incentives away from speculation to earned income/productive work,
they lower regressive taxes on the middle class and working poor and they do
not restrain legitimate enterprise and wealth accumulation. They eliminate
complex systems (the Federal Reserve and the tax code) and put money in the
hands of tens of millions of households rather then the top .1%. Yes, they
are utopian, but only because we keep electing the same bought-and-paid-for
Demopublican lapdogs of the super-wealthy and vested interests.
I have covered
rising income/wealth inequality for many years in dozens of entries. Since Thomas Piketty's new book has
catapulted the topic into the media spotlight, it's a good time to list
solutions that go deeper than Piketty's proposed global wealth tax--a proposal
he characterizes as utopian.
Every solution is
utopian, because the Financial Aristocracy and their central bank cronies have
democracy by the throat. There is no
legislative way to change the Status Quo when political power is for sale to
the highest bidder, and central banks are issuing nearly-free money to the
financial oligarchy that owns the political machinery.
But listing
solutions is still important, because it reveals just how far from democracy,
rule of law and free-market capitalism we have fallen. I have been describing various aspects
of widening inequality in recent entries:
I propose three
straightforward solutions that will systemically rectify wealth and income
inequality.
1. Rather than
add taxes to fund more social welfare--in effect, placing a Band-Aid over the
tumor--let's start by removing the source of rising inequality: the Federal
Reserve. I laid out
in detail how the Fed's policies have enriched the top .1% at the expense of
everyone else in Want to Reduce Income/Wealth
Inequality? Abolish the Engine of Inequality, the Federal Reserve (January
28, 2014)
This boils down
to the Cantillion Effect: new
money is injected into the economy at specific points, creating winners and
losers. Those with access to the new money (in the Federal Reserve's policies,
those with financial power) gain immensely and everyone far from the free-money
spigot loses purchasing power.
There's no
mystery here: if trillions of dollars are available at near-zero interest rates
to those at the top of the pyramid, they will benefit accordingly.
This chart shows
how access to the Fed's free-money spigot causes the very top layer of owners
of capital to outpace their less-wealthy peers: while the top 10% has outpaced
the bottom 90% and the top 1% has outpaced the top 10%, the real action is at
the very pinnacle of wealth holders: the top .1% has outpaced the 1%, and the
top .01% has outpaced the .1%.
See image : Income Inequality Achieves Escape Velocity after the 1%: http://www.oftwominds.com/photos2014/income-inequality4-14a.png
Were the Fed abolished, the top holders of financial wealth would no longer have access to unlimited sums of free money, and the asset bubbles that are the essential engines of wealth inequality would all collapse, along with the vast majority of the top holders' phantom wealth.
The collapse of asset valuations would impact middle-class holders of IRAs, 401Ks and pension funds invested in asset bubbles, but the real losers would be those at the top who own most of the phantom financial wealth.
2. Eliminate the
6.2% Social Security payroll tax paid by employees and employers, and print the
money to pay Social Security benefits in the Treasury. I described this solution in How About Ending Social Security and Paying Retirees with
Cash? (November 15, 2013).
The basic idea is
this: rather than
borrow money into existence via the Federal Reserve, abolish the Fed and print
the new money directly. There is no interest to be paid on this new money, and
so the financial parasites have nothing to gain from its creation.
This would wipe
out the most regressive tax on the working poor, and benefit all employers. Each currently pay 6.2% of wages, so
eliminating Social Security taxes would give every worker an immediate 6.2%
raise and every employer a 6.2% reduction in labor overhead. (The 1.45%
Medicare tax each pays would remain in place.)
The newly issued
$800 billion a year would flow directly into tens of millions of individuals'
accounts, where the the majority of it will be spent in the real economy.
As for those who
claim creating $800 billion a year would spark runaway inflation: the Fed has
printed over $3 trillion in the past five years, and inflation is mostly a
result of asset bubbles and cartel pricing (sickcare, college tuition, F-35
aircraft, etc.), not new money.
Abolishing the
Fed would trigger a deflationary collapse of asset bubbles. Printing $800 billion and distributing
it to tens of millions of households would only counter some of this
deflationary wave. The $800 billion annual distribution is simply too small to
create inflation in a $16 trillion economy that is undergoing a cleansing of
trillions of dollars in phantom wealth at the top of the wealth pyramid.
3. Tax unearned
income at much higher rates than earned income. The vast majority of the New Nobility's
income is unearned income from rents, interest, dividends and capital gains.
Taxing unearned income is in effect a wealth tax because only those who own
income-producing assets have unearned income.
It would be easy
to set up a simple tiered tax structure that reduces income taxes for
households with less than $250,000 annual earned income and offsets that
reduction by raising the tax on unearned income above some level that enables
small entrepreneurs and middle-class households to accumulate capital--for
example, unearned income such as interest, dividends and capital gains would be
taxed at the same rate as earned income up to $100,000 and then rises to much
higher rates above that level.
There is nothing
fancy about these three solutions. They
shift the incentives away from speculation to earned income/productive work,
they lower regressive taxes on the middle class and working poor and they do
not restrain legitimate enterprise and wealth accumulation. They eliminate
complex systems (the Federal Reserve and the tax code) and put money in the
hands of tens of millions of households rather then the top .1%.
Yes, they are utopian, but only because we
keep electing the same bought-and-paid-for Demopublican lapdogs of the
super-wealthy and vested interests.
--------------
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