About Me

In writing the "About Me" portion of this blog I thought about the purpose of the blog - namely, preventing the growth of Socialism & stopping the Death Of Democracy in the American Republic & returning her to the "liberty to abundance" stage of our history. One word descriptions of people's philosophies or purposes are quite often inadequate. I feel that I am "liberal" meaning that I am broad minded, independent, generous, hospitable, & magnanimous. Under these terms "liberal" is a perfectly good word that has been corrupted over the years to mean the person is a left-winger or as Mark Levin more accurately wrote in his book "Liberty & Tyranny" a "statist" - someone looking for government or state control of society. I am certainly not that & have dedicated the blog to fighting this. I believe that I find what I am when I consider whether or not I am a "conservative" & specifically when I ask what is it that I am trying to conserve? It is the libertarian principles that America was founded upon & originally followed. That is the Return To Excellence that this blog is named for & is all about.

Sunday, May 8, 2011

Response - How The FairTax Will Be Passed

Below is a response from a subscriber to ReturnToExcellence.net & a FairTax supporter to the subject message that contains many points that will undoubtedly be presented in future messages re the debt ceiling & the 2012 FY budget.
Yes Cain debates well and yes, a FairTax (FT) champion, preferably a President, may provide the best odds for FT passage.

U.S. financial circumstances however may present a FT opportunity QE3 this year. How?

Consider that

1 – US requires additional $4-5 billion per day to finance its debt
2 – Federal Reserve has been financing perhaps as much as $4 billion per day since November 2010.
3 – Private estimate US consumer inflation range from 6% to over 10%.
4 – US main creditors (besides Fed) China and Japan are in process of decreasing their US treasury holdings
5 – IMF and G20 are actively assessing alternatives to the $ as global currency
6 – S&P lowered their expectations regarding US debt risk
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.
8 – Fed repeatedly states that it will stop printing $'s to purchase US Treasuries (end of QE2) June 30.

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.

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:

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.

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.

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.

Let us then make the case positioning the FT as a serious 2011 alternative.

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/

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