tag:blogger.com,1999:blog-3776665703590564248.post7938553436347501361..comments2024-03-27T01:57:19.605-04:00Comments on Return To Excellence: How The FairTax Will Be PassedReturnToExcellence.nethttp://www.blogger.com/profile/18149859814999976879noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3776665703590564248.post-83591333737040175182011-05-08T19:35:59.663-04:002011-05-08T19:35:59.663-04:00Yes Cain debates well and yes, a Fair Tax (FT) cha...Yes Cain debates well and yes, a Fair Tax (FT) champion, preferably a President, may provide the best odds for FT passage.<br /><br />U.S. financial circumstances however may present a FT opportunity Q3 this year. How?<br /><br />Consider that<br /><br />1 – US requires additional $4-5 billion per day to finance its debt<br />2 – Federal Reserve has been financing perhaps as much as $4 billion per day since November 2010.<br />3 – Private estimate US consumer inflation range from 6% to over 10%.<br />4 – US main creditors (besides Fed) China and Japan are in process of decreasing their US treasury holdings<br />5 – IMF and G20 are actively assessing alternatives to the $ as global currency<br />6 – S&P lowered their expectations regarding US debt risk<br />7 – Odds are low that Congress will pass a deficit reduction measure as part of debt ceiling extension that will increase the confidence of our creditors and the IMG/G20 in the risk of investing in US Treasuries.<br />8 – Fed repeatedly states that it will stop printing $’s to purchase US Treasuries (end of QE2) June 30.<br /><br />If 7 and 8 occur, expect the 10 year Treasury Bill to jump from 3 ½ % to over 6% in a week. Without the Fed, interest rates will automatically go up to reflect real inflations with pressure to jump to over 10% week 2 given risk of poor returns (per falling $) or outright default. <br /><br />The first few days of such a scary but very possible crisis may result in an emergency session of the world’s (yes – G20 and IMF) involvement in addressing a high probability of a $ collapse. Here is where the FT may present itself as a significant and immediate measure to stabilize the $. How:<br /><br />A – via 0% federal corporate tax rate, position the US overnight as an entrepreneurial friendly haven. Foreign and domestic investors and venture capitalists would plan to take advantage of this; hence $ would stabilize.<br /><br />B – save $450 billion per year (reference: economist Art Laffer) due to abolishment of the IRS. That $ reducing the debt will result in more private entrepreneurial opportunities. <br /><br />A & B may then prevent an economic Armageddon and offer the US with another opportunity to fix its financial house. This would entail cutting bloated government and privatizing bankrupts entitlements. <br /><br />Let us then make the case positioning the FT as a serious 2011 alternative.<br /><br />For more details about threat of US Dollar collapse please read my review of Damon Vickers Jan 2011 book “Day After the US Dollar Collapses” http://economics501.wordpress.com/2011/01/Ted Hruzdhttp://economics501.wordpress.comnoreply@blogger.com