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Discussion: (4 comments)

  1. The US has an extensive tax problem and slow or no growth is one of the side effects…

  2. Neither. The U.S. has a liberty problem. It has led to a debt and regulation problem. The goal should not be to restore “growth” to bail out debt and the politicians’ lifestyles. The goal should be to restore liberty to bail out lack of liberty.

  3. First of all the sum of the unfunded liabilities plus total federal, state, corporate, and household debt stands at more than $100 trillion in a $16 trillion economy. Approximately half of the tax revenues that are collected go out to pay for the Pentagon, the off budget war expenditures, CIA, foreign aid, VA, interest on accumulated war debt, NASA military programs, NSA, DHS, and other military related issues. At the same time you have a massive problem with SS and Medicare funding as there is nothing in the trust funds and monthly outflows grow to be greater than monthly revenues.

    The way I see it the most reasonable approach is default. Let the bond markets fail by refusing to honour debts. Without the ability to borrow governments would have to live within their means and would have to show taxpayers the true costs of the programs that they are supporting. Go back on a hard money standard and allow private institutions to compete with the Federal Reserve in the field of money creation. While there would be a major collapse the recovery would be swift once the bloated government programs and unnecessary regulations find their way into the dustbin of history.

    Of course, you could also try legalizing drugs and using the tax revenues to fund some of the bloated programs that are threatening the country. That is what happened in the 1930s when the end of Prohibition put an end to the property tax riots. Combine that with the end to all of the unnecessary wars and you will have more revenue and less expenditures. That would allow the day of reckoning to be postponed for another decade or so.

  4. Todd Mason

    The Fed is printing money, in QE3 to date, but no where near what would be necessary for a true policy of tracking NDGP. It is attractive because it shifts part of the burden to foreign investors who hold US debt for safety or currency considerations. It seems to me, though, that it would pouring gasoline on that uncertainty thing unless Congress shows some signs of valuing country over party.

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