The Beginning Of The End
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During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

The American Free Market System At WorkHow would America ever survive without the central planners in the Obama administration and at the Federal Reserve?  What in the world would we do if there was no income tax and no IRS?  Could the U.S. economy possibly keep from collapsing under such circumstances?  The mainstream media would have us believe that unless we have someone “to pull the levers” our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve.  Between the Civil War and 1913, the U.S. economy experienced absolutely explosive growth.  The free market system thrived and the rest of the world looked at us with envy.  The federal government was very limited in size, there was no income tax for most of that time and there was no central bank.  To many Americans, it would be absolutely unthinkable to have such a society today, but it actually worked very, very well.  Without the inventions and innovations that came out of that period, the world would be a far different place today.

It is amazing what can happen when the government just gets out of the way.  Check out all of the wonderful things that Wikipedia says happened for the U.S. economy during those years…

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.

An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.

Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.

In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production.

When hard working, industrious people are given freedom to pursue their dreams, great things tend to happen.  The truth is that we were all designed to create, to invent, to build, and to trade with one another.  We all have something that we can contribute to society, and when families are strong and the invisible hand of the free market is allowed to work, societies tend to prosper.

It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913.  The following information comes from Wikipedia

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873.  The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.

Wouldn’t you like U.S. GDP to double over the course of a decade now?

So why don’t we go back to a system like that?

In 1913, the Federal Reserve and a permanent national income tax were introduced.  Today, the unelected central planners at the Federal Reserve totally run our financial system and the U.S. tax code is about 13 miles long.  The value of our currency has declined by more than 96 percent since 1913, and the size of our national debt has gotten more than 5000 times larger.

Meanwhile, control freak bureaucrats seemingly run everything.  Almost every business decision is heavily influenced either by taxes or by the millions of laws, rules and regulations that are sucking the life out of our economic system.

My favorite example of how suffocating red tape in America has become is the magician out in Missouri that was forced by the Obama administration to submit a 32 page “disaster plan” for the rabbit that he uses during his magic shows for kids.

It is no wonder why we don’t have any economic growth.  The central planners in the federal government are killing our economy.

And the central planners over at the Federal Reserve are killing our financial system.  In school we are taught that the Fed was created to bring stability to our financial system, but the truth is that they have been responsible for financial bubble after financial bubble, and now Federal Reserve Chairman Ben Bernanke has created the largest bond bubble in the history of the world.  When that thing bursts, and it will, we are going to see financial carnage on an unprecedented scale.

Unfortunately, the truth is that the Federal Reserve never has been looking out for the interests of the American people.  It was created by the big banks and it has always worked very hard to benefit the big banks.  During the Fed era, the big banks have become the most powerful economic entities on the entire planet.  Our entire economy is now based on debt, and the big banks are at the very center of this debt spiral.  The following is an excerpt from a recent article by Paul B. Farrell

Today’s world includes four Wall Street banks each with assets over $1 trillion, each more than Goldman. Plus eight other big global banks each have over $2 trillion total assets, including, among the 100 largest, Barclays, HSBC, Deutsche, ICB-China and Japan’s Mitsubishi.

Yes, this new world is changing fast. Back in 2008 the world’s financial banks were in ruins. Wall Street sunk into virtually bankruptcy. Goldman and its Wall Street too-big-to-fail co-conspirators had trashed the global economy, triggered a virtual depression, and Wall Street’s casinos lost over $10 trillion of Main Street retirement funds.

And as we saw back in 2008, the Federal Reserve is going to do whatever is necessary to prop up Wall Street.  Most Americans never even heard about this, but during the last financial crisis the Fed secretly loaned 16 trillion dollars to the big banks.  Those loans were nearly interest-free and those banks knew that they could get basically as much nearly interest-free money as they wanted from the Fed.

So how much nearly interest-free money did the Fed loan to normal Americans?

Not a single penny.

That would be bad enough, but it is also important to remember that since 2008 the Fed has actually been paying banks NOT to lend money to the rest of us.

What is it going to take for the American people to start demanding that the Fed be abolished?  They are absolutely destroying our financial system.

Meanwhile, the central planners in the Obama administration have been doing their part as well.  During the second quarter of this year, the number of Americans working between 30 and 34 hours per week fell by 146,500.  During that same time period, the number of Americans working between 25 and 29 hours rose by 119,000.

Why is this happening?

Well, the Obamacare employer mandate will apply to workers that work at least 30 hours each week, so employers are starting to cut back on the hours their employees are getting in order to comply with the law.

But this is just one example out of thousands, and most Americans already know that the U.S. economy has been crumbling for many years.

In fact, things have gotten so bad that even 53 percent of all Democrats believe that the American Dream is dead even though Barack Obama is residing in the White House.

But this is just the beginning.  Things are going to get much, much worse.  We are going down the same path that Greece has gone, and the unemployment rate in Greece has just hit a new all-time record high of 27.6 percent.

That is where the U.S. is headed eventually.  Decades of very foolish decisions are catching up with us.

The primary reason why all of this is happening is debt.  As a society, we simply have way, way, way too much debt.

The biggest offender, of course, is the federal government.  Since 1970, federal spending has grown nearly 12 times as rapidly as median household income has, and since the year 2000 the size of the U.S. national debt has grown by more than 11 trillion dollars.

When government debt gets too large, it has a profoundly negative effect on an economy.  The following is an excerpt from an outstanding article by Lacy H. Hunt, a Ph.D. economist

*****

Here are the studies, starting with the one with the broadest implications:

  1. “Government Size and Growth: A Survey and Interpretation of the Evidence,” from Journal of Economic Surveys. Published in April 2011, Swedish economists Andreas Bergh and Magnus Henrekson (both of the Research Institute of Industrial Economics at Lund University) found a “significant negative correlation” between size of government and economic growth. Specifically, “an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate.”
  2. “The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area,” in European Central Bank working paper, Number 1237, August 2010. Cristina Checherita and Philipp Rother found that a government-debt-to-GDP ratio above the threshold of 90-100% has a “deleterious” impact on long-term growth. Additionally, the impact of debt on growth is nonlinear – as the government debt rises to higher and higher levels, the adverse growth consequences accelerate.
  3. The Real Effects of Debt, published by the Bank for International Settlements (BIS) in Basel, Switzerland in August 2011. Stephen G. Cecchetti, M. S.Mohanty, and Fabrizio Zampolli determined that “beyond a certain level, debt is bad for growth. For government debt, the number is about 85% of GDP.”
  4. “Public Debt Overhangs: Advanced-Economy Episodes Since 1800,”by Carmen M. Reinhart, Vincent R. Reinhart, Kenneth S. Rogoff, Journal of Economic Perspectives, Volume 26, Number 3, Summer 2012, pages 69-86. The authors identified 26 cases of “debt overhangs,” which they define as public-debt-to-GDP levels exceeding 90% for at least five years. In spite of the many idiosyncratic differences in these situations, economic growth fell in all but three of the 26 cases. All of the instances, which lasted an average of 23 years, are included in the paper. They found that average annual growth is 1.2% lower for countries with a debt overhang than for countries without. The long duration of such episodes means that cumulative shortfall from the debt excess—i.e., several years in a row of subpar economic growth—is potentially massive.

*****

But it isn’t just federal government debt that is the problem.  The rest of us have way too much debt as well.

If you can believe it, the ratio of private debt to GDP was 273.3% for the twelve months ending in the first quarter of 2013.

That is an astounding figure.

And as Hunt explained, having too much private debt is also very bad for an economy…

In Too Much Finance, published by the United Nations Conference on Trade and Development (UNCTAD) in March 2011, Jean Louis Arcand, Enrico Berkes, and Ugo Panizza found a negative effect on output growth when credit to the private sector reaches 104-110% of GDP. The strongest adverse effects are for credit over 160% of GDP.

The second is the 2011 BIS study authored by Cecchetti, Mohanty, and Zampolli. They found that private debt levels become “cancerous” (in BIS economic advisor Cecchetti’s own words) at 175% (90% for corporations and 85% for households)—just slightly more than the UNCTAD study.

When you add our private debt to GDP ratio of 273 percent to our federal debt to GDP ratio of 101 percent, you get a grand total of 384 percent.

This is how we have funded the false prosperity of the past couple of decades.  Essentially, we have been putting our good times on a credit card.

And as anyone that has ever tried to live on credit knows, the good times eventually run out.

But this is what the Federal Reserve was designed to do.  It was designed to get the U.S. government trapped in a debt spiral from which there would never be any escape.

It is not an accident that our national debt has gotten more than 5000 times larger than it was when the Fed was originally created.  This is what the bankers wanted the system to do.

They wanted a system that would extract wealth from all of us through taxes, transfer it to the government, and then transfer it to them through interest payments.

We never needed a central bank, we never needed the IRS and we never needed an income tax.  America would be doing just fine without any of them.

But instead, America chose to go down the path of collectivization and central planning, and now we are heading toward the biggest economic disaster in the history of mankind.

  • MichaelfromTheEconomicCollapse

    Do all of you think that the U.S. could survive today with no central bank, no IRS and no income tax?

    Michael

    • PoliticalMindPrisoner

      Nope! It would cause a civil war since taxpayers’ monies are used to suffice the salaries of public workers, and that would bring about union protests.

      And…

      Over 50 million Americans are dependent on food-stamps, so no taxes means no more food stamps.

      But…

      If America could stop importing millions of newcomers a year and allow free market economies, we could be back on track.

      • xander cross

        There is no such thing as a free market.

      • terry1956

        I doubt it would cause a civil war and for those who need help buying food they will get it without the federal government.

    • Graham

      Of course it could. When a government can legitimately coin it’s own money at zero interest and operate in credit rather than debt, why pay a very closely connected cabal of money changers to do likewise at such a high price?

      Coin the money and immediately rebuild and invest in the necessary infrastructure. Create jobs in doing so. Did this not occur in Germany when Hitler turned on the money changers, creating debt free treasury certificates instead?

      Why go to war to suit the bankers, when we can all live in peace and excel as humans? The economy is the people, so why destroy every aspect of their lives until they reach a slave type status?

      How do the American people go about reversing the present status quo? Who controls the military industrial complex? Who controls the intelligence agency’s? Who controls the Police? Who controls the media, big Pharma and black budget projects?

      The ongoing agenda is so far reaching, I believe it is often referred to as the Octopus. Where would one begin to unravel the decades of build up and system abuse? What has driven this agenda?

      Any particular people or groups that the people need to learn about so they can focus on getting rid of them in order to fully re establish the Constitution and take back their country, the united States of America?

      Is the truth jue out yet, or does everybody have to wait a bit longer? When the truth is known by the majority, the quicker the necessary numbers will be able to unite, act and bring about the necessary changes.

      • terry1956

        defense has not added to the federal debt since the late 1940s.If the federal government was had only been for defense( which is the only real reason we need it) since then we would have paid the debt in full by 1980.

    • Mondobeyondo

      *sigh * In 2013? I honestly don’t know.

      All I can say, is that the country would have been far better off if there had never been a central bank, IRS and income tax to begin with.

    • CRAT

      Not under its present form, with the extensive warfare/welfare state. By the way Michael, you are a writing machine! Keep it up.

      • terry1956

        well the welfare state anyway, as far as the federal government.
        Defense has not caused red ink since the late 1940s.
        All the talk about guns and butter causing economic problems in the LBJ years is half right.
        although its doubtful our US government should have been in Vietnam ( the private sector would have done a better job at a lower cost with less damage to life and property than the US government against the communist in Vietnam) it did not have a thing to do with the high price tag of the federal budget.

    • davidmpark

      Yeah, I do.

    • ArigatouGozaimas

      Freedom V.S. Control

      I certainly think it could, and would be better off in the long term for it. In fact, the U.S. economy without such parasites would probably be the greatest in the world.

      The problem is that the IRS and the Reserve System are not isolated from the welfare state. They are integral to the entire system that controls our society.

      Thus, eliminating them in our life times can never happen politically, or even culturally, not where we stand now, not without a massive collapse that would bring a far worse system.

      A return to a free society would take centuries of gradual progress that none of us would live to see. It took the progressives over a hundred years to degrade the free system of the United States into the current aristocratic model, there is no way this could unwind in a decade. I personally think freedom will continue to degrade generation after generation.

      Even if there was a sudden revival, a massive change in the attitudes of the American people toward socialism, you could not simply unwind the welfare state without causing the death and suffering of millions. It’s simple reality, too many people have been bred, indoctrinated, forced, or cultured to depend on it.

      In conclusion, no, I don’t think the U.S. would survive today without the IRS, or the central bank, or the income tax. For all the damage they are doing to society, they are still the toxic glue that holds it together. The unwinding of these systems would have to be gradual to avoid a system collapse.

      And while things could be done to unwind these systems over time, there’s really 0 chance that these steps will ever be taken.

      There needs to be a debate among libertarians about how a society like ours could be moved back towards freedom gradually, without harming the people. The socialists debated how they could gradually move the entire system towards control during America’s gilded age. They were regarded as crazy, but look at how much that movement has achieved. Their methods need to be studied.

      • Mudpie

        Well said and interesting. I just do not know anymore . . .

        Russia sure collapsed quickly. China moved towards capitalism, or a version thereof, quickly.

        Maybe there is hope.

        I would agree that many of us will be shooting zombies if so. Because the parasites will not go down quietly.

      • terry1956

        any recession because of the lack of the central bank, IRS and the federal income tax would likely not last 6 months, probably not even 3 months.
        unemployment would be less than 2% in less than a year.
        growth in buying power could very easily double on average every 10 years or less.

    • MeMadMax

      Today, no.
      The economy is hooked on it like a meth addicict… Maybe post world war 2 was our best chance.

    • Rebecca in TN

      I think it would be for the better, but unfortunately there would be a lot of people starving to death. Nobody knows how to work anymore. Even people with jobs don’t work very hard (the majority of them). When was the last time you shopped at a store, ate at a restaurant, or hired a contractor to work in your house and got truly exceptional service? The average American is lazy and entitled. We would need a serious attitude change.

      • terry1956

        no there will be less people going hungry since the economy will be far better without central control of banking and currency, no internal federal income tax on citizens, most of what the federal government does being returned to the states and people where it never should have left.
        Getting as much as possible of the federal budget from import tax, corporate foreign income tax, and a custom duty tax on new non citizens income earners of 20,000 dollars a year if they make less than 10 dollars an hour and 2,000 dollars a year if they make 10 an hour or more.

    • rhcrest

      Yes

    • grumpyhillbilly

      The way the US is right now I have my doubts. The first reform that needs to happen is to abolish the public schools, and give kids free access to online education. The second reform is to end tenure at all levels of education. Ironically tenure has failed to do what it promise with free thought. People need to learn to critically think before you sever the shackles of the fed and IRS. Perhaps severing the shackles with force them to think, but it seems to me they will just do the zombie riot.

    • Sandbagger

      That depends on whether or not we have the gold we say we do, right? How could we compete with other countries that hold gold if we aren’t cranking out our fiat currency? I’m not a financial person, so am asking this seriously. Would the petro-dollar collapse?

    • Bushisugly

      I think the there should be a central bank, but not the type of central bank we have today. In my opinion the central bank should have one primary task, to make sure that the amount of money in circulation always reflect the size of the population. Instead of a gold standard, there should be a population standard, and the central bank should enforce this standard by printing a given amount of money whenever there is a population surplus, and withdrawing money whenever there is a deficit.

      • terry1956

        Hayek was right central government control of money production has a 2000 plus poor history so its best to end the monopoly.
        Marktets, mutual aid groups and the people will do a far better job plus a far better job with equity development than the SEC/Wall Street public/ private monopoly.

    • xander cross

      When the civil war was the best time for Americans? Lets see, slavery, starvation, people were forced to feed armies, taxes, (yes, many people were taxed hard)? The only way the south made money was by selling my ancestors and their babies to the highest bidder? Michael is completely wrong on this one. His racism is showing.

      • Benjamin Spurlock

        Xander, Michael was speaking of the period immediately after the Civil War, until about 1913- what is sometimes called the ‘Gilded Age.’ I think he would agree with you that the Civil War was by no means the best period in America, for many of the reasons you raise.

        The period immediately following that, however, was an entirely different story.

      • Dave Gustavson

        Straight to the overplayed, pointless race card-bravo! Do some research on the causative factors for the American 1st Civil War. Yes, slavery was considered. The major factors were economic. Heavy tariffs (taxes) on southern cotton going to northern mills making it cheaper for the mills to import is just one example. Slavery had an “expiration date” set in the Constitution. Educate yourself; or is it easier to blame people you view as white for all your ills? My family immigrated legally to the US in the early 1900’s hoping for a better life- what do I owe you? Nothing.

        • terry1956

          For the political class in the north yes it was about the economy mostly but for the political class ( mostly slave owners although most white southern Americans were not slave owners and many of the men were not allowed to vote although they were forced by the political class to do militia duty IE slave patrol).
          There is a great book about the war between the states by Jeff Hummel a historian and a public choice ( the Virginia school) economist called Freeing Slaves and enslaving Free Men.

    • jakartaman

      YES,
      As you all know we should not be taxed on income but only profits. Taxing ones labor is immoral and wrong. It by definition is socialism – especially a regressive tax.
      The FED was put in place to keep the economy on an even keel – a safe guard
      But it has turned into the wolf watching the hen house

    • BonusGift

      Yes. As you point out the real world experiment has been run and it not only worked out but spectacularly so. Those who say some version of “things are different” this time fail to account for the fact that indeed they are but human nature is largely the same and that is what largely drives the results not whether you or I believe the brainwashing memes put out by the mainstream media (e.g., the solution to too much debt is more debt).

    • Sigfredo Mendez

      Just so you know, you income tax has not paid to fix a road EVER! it is straight profit for the bankers, so YOU are paying directly to their pocket

    • Esther

      I just want it to be true. What will happen to the “47%?” Devastation for many of them who really need the security, on the other hand.. a hard lesson like a kick in the butt for many who really do not need it! So many complications! The world aid we provide would be cut off also… But you know, in my house, when we don’t have money, the stark reality is that we don;t spend money. That simple reality is not understood by politicians spending OPM.

      • terry1956

        the 47 % as well as the other 53% except for a small percentage of the 53% made up mostly of most of the 546 member( congress, supreme court, prez, vp) ruling class in DC and a few thousand with the best connections to the ruling class in DC.

    • g13man

      yes ,

    • Joe Marquis

      YES, dummy……Get a clue already. You probably work for the Federal Government which means you don’t work at all….

    • terry1956

      not only would we survive without a central bank a IRS and a internal federal income tax on citizens we would thrive.
      Also even the period in the US
      War Between the States, afterwards before the federal reserve, before with the first and second national bank the federal government had to much power over money and banking.
      Even in the ” Free Banking Era” to many state governments had to much power over money and banking.
      Hayek was right in supporting competitive private issued currency but for tax and payment purposes the federal government should set a gold or US Dollar ( silver) standard to judge the market value of private currency, bank and credit union deposits and shares.
      The currency, bank deposits and credit union shares should be backed 100% by what ever the bank or credit union in full transparent disclosure says they are backed by.
      Since federal, state, county and local government has a stake in preventing bank, credit union and currency issuing fraud, all of them should be able to investigate the above if either is in their jurisdiction and or the currency is used in their jurisdiction.
      Each government even the smallest town should be allowed to also present evidence to a fully informed grand jury of fraud enabling of other governments including state, federal and foreign governments.

  • K

    Without a central bank yes. But if you want to keep the American empire, you have to keep the tax and the IRS. Empires are expensive. All those foreign military bases, a Navy that is large even by war time standards. Have you seen the new Navy commercial? The Navy, a force for good in the world. Yeah right. The time frame you speak of. If we needed something in this Country, we made it in this Country. Yeah not so much now. And during that time frame, we did not give untold billions of dollars to foreign Countries. Like I said empires are expensive.

    • MeMadMax

      Yea…
      What empire do you speak of?
      Would be nice… All we are is a tool for the UN/NATO…

      • davidmpark

        If tools could think for themselves, then man would be ratcheting around the bolts. And in the case of the UN; if all you have is a hammer, everything is a nail…

        • davidmpark

          I need more sleep…

      • K

        It was once said the sun never set on the British empire. Then they lost their colonies. Now it is true of the U.S., with all the foreign bases we control. From Germany, to Korea, to so many points in between. All these bases cost plenty to maintain. How do they serve U.S. interests? They do not, unless you count the global cop role. A role we can no longer afford.

  • PoliticalMindPrisoner

    The free market system thrived
    ^ This.

    How many of you could build your house or grow a garden w/o the government intervening? but those close to the government and unions get exempt from those restrictions and laws.

  • markthetruth

    having too much private debt is also very bad for an economy. Sure is, but the government not only encourages it but forces Americans to take on the Debt.

    Only if i could own my property outright would be a blessing . And pay for any services i use.

    If you get rid of the income Tax there’s no need for the IRS Unless they Audit the Central Bank.

    the end…

    • MarleyMan

      A land patent enables you to own your land outright. It’s possible, just not broadcasted. Teamlaw as all sorts of information that can help you with that.

    • lois752

      as Alice said I am alarmed that a mom able to get paid $6993 in 1 month on the computer. did you see this web link w­w­w.K­E­P­2.c­o­m

  • saintmatty

    Just about anything the government touches, it destroys. I would like to go back to when it was our duty as(legal) U.S. citizens was to serve in Congress and the Senate. We need to get rid of the dinosaurs and cronies. Turn the government back to the people with fresh ideas and the only agenda to uphold the constitution.

  • davidmpark

    I’m building one of those horseless carriages! Doesn’t look THAT good as the old timer’s did it, but kinda similar… okay, ugly as all get out!

    The best part is the power system I’m using. I’m only using most of the horseless carriage body, chassis, and layout. The motor is a very small 4-stroke that runs on wood gas and powers the alternators. The vehicle is propelled on a 116 hp electric motor. It’s not a Prius-style hybrid, but more along the lines of diesel locomotives. I need to do more tests on the system, but theoretically we’re looking at 80 -90 miles per gallon.

    The wife bet me that I’d be able to alter it to run as an amphibious vehicle, and I think that is really the way we should go – runs on anything (wood, grass, manure etc.), drives anywhere (land and water), and gets very high fuel economy.

    Oh yes, and the federal reserve is nuts and taxes are way too high.

    • Bill

      Great work.

    • Mondobeyondo

      Whoa Nelly! (sound of horse neighing)
      Seriously, maybe you should try to get a patent on that thing.

  • Dee Walker

    I thnk we would do GREAT without the fed. I do think we need some taxes to pay for roads, police, etc. So I don’t know how you could get rid of taxes completely.

    • rhcrest

      Simple. Have indirect taxes only like sales tax. No direct taxation of income

      • Gay Veteran

        that’s great for the rich but bad for everyone else who needs to spend almost 100% of what they make just to survive

        • rhcrest

          There are NO income taxes including SS and medicare so you get to KEEP 100% of what you earn and then decide how much you will pay in taxes by how much you spend. Wouldn’t that be better than having that money stolen out of your paycheck every week?

          • Gay Veteran

            If you are forces to spend 100% of your income just to survive then your tax rate will be extremely high compared to those who can only spend 1% to survive. AGAIN, this massively favors the top 1% in the country, the bankster scum

          • rhcrest

            Why would you be forced to spend 100% of your income just to survive if there is no income tax? Your comment makes absolutely no sense. The rich will naturally spend more and thus their sales tax bill will naturally be higher than lower income people. What you spend is up to you. If repeal of the income tax is coupled with cutting gov’t down to its constitutionally limited size, with lots regulations along with the reduced taxes, then the prices of things will come down. When businesses price products, all the costs associated with gov’t regulations and taxes are hidden in the price and passed along to the consumer. Businesses don’ pay these things out of their own pocket.

          • Gay Veteran

            You do realize that the working poor and the lower middle class have to spend 100% of their income just to survive?
            If the saxes tax is 10% and you spend $10,000 of your income then your effective tax rate is 10%.
            If you “earn” $10,000,000 and spend $500,000 then your tax rate is 5%.
            Great deal for the bankster scum. For the rest of us, not so much

          • rhcrest

            100% of their AFTER TAX income. This way they get lots more money in their paychecks and they get to choose how to spend it vs having it confiscated. How does taking home 100% of your paycheck translate into having to spend 100% of your income? Your argument makes no sense.

          • Gay Veteran

            read my post again, genius. You said: “Have indirect taxes only like sales tax. No direct taxation of income”

          • rhcrest

            Hey genius, if a person gets 30-40% more a week in their paycheck then how are they still spending 100% of their income? Not everything would be taxed under such a system – you would only pay tax on NEW items., You wouldn’t pay tax on a used item that you buy. Tax would be paid once on a product and that is it. So if i get to take home 100% of my income and i get to spend that income how i see fit and spend less on taxes if i want to, that benefits rich people? Your argument fails the logic test miserably. I don’t know about you but if i got a to take home 40% more a week in my paycheck i’d be thrilled and it would make a HUGE difference in my life. State income taxes would also be gone.

          • Gay Veteran

            Well junior, I see you are incapable of addressing the examples I gave.

          • rhcrest

            And you are incapable of seeing how your argument lacks any logic. And by the way, FICA and MC tax are very regressive. No income tax would eliminate those as well. 7.65% in total just for those 2. So a poor person is better off paying those instead of getting the money? Please.

          • Gay Veteran

            too bad you can face facts. go back to your Ayn Rand fantasies

          • rhcrest

            Wow. Great comeback. I am impressed

  • Richard

    “If you can believe it, the ratio of private debt to GDP was 273.3% for the twelve months ending in the first quarter of 2013.”
    And if, perchance, I cannot believe it, could you tell me what the ratio is, please?

    • Handog

      Let me guess. Your nickname is Dic*

  • Ralfine

    What will happen with the Navy and the Army if you cut down their income? Will there be a coup? And America be ruled by a group of Generals?

    • davidmpark

      The state militias (the real one’s, not the ones with girlie bikini calenders featuring howitzers – both real and fake), all able men and women, can be activiated by state governors and paid for by the people themselves, and back by the state’s national guardsmen.

      Just because the dollar dies doesn’t mean we can’t make creative solutions! We’re Americans! We usually figure something out (when the Leftists aren’t being whiny about it all the time!)

    • davidmpark

      Wait… why am I replying to that question? It’s not necessary. I’m going to bed.

    • Hey You!

      No; let’s hope that there will be operable states, some of which can operate more rationally than can the federals.

      • Ralfine

        What will happen to the navy, if you cut down on expenses?

        Most of the expenses (new debts, trillions of debts) are expended on the navy, army, wars, soldiers, weapons systems.

  • Ralfine

    Germany has a central bank and income tax and they are doing just fine. Same for China. And a whole lot of other countries.

  • Ralfine

    An American e-mail provider providing encrypted e-mail service just shut down after being ordered to provide customer data to law enforcement (he didn’t want to comply).

    Some American cloud companies have lost orders from overseas since the NSA fallout.

    And with the ongoing killing of unarmed teenagers in Florida by law enforcement, foreigners rethink their vacation plans.

    These are just a few cases where foreigners stop buying American products and services.

    It probably doesn’t have any impact.

  • Ralfine

    Lavabit email service abruptly shut down citing government interference

    Founder of service reportedly used by Edward Snowden said he would not be complicit in ‘crimes against the American people’

    See theguardian com for details.

    While American drones continue to attack Yemen, American businesses shut down or lose customers.

    Marx: Governments who work against economic needs will be swept away.

    • Graham

      An aspect of the Lavabit case can be found under the following.

      Shame, they had one of the best email encryption systems available.

      U.S. District Court
      District of Maryland (Baltimore)
      CRIMINAL DOCKET FOR CASE
      #: 1:13-mj-00607-SAG-1

      • Ralfine

        Reminds me of the Non-destructible defense meeting the all-penetrating sword.

  • chilller

    Not having term limits is like having the same jury for every trial that takes place in the United States. In either case, having so few permanent people in such high profile positions is ripe for and rife with corruption, temptation and lawlessness.

  • DJ 3000

    Looks like those clowns in congress did it again. What a bunch of clowns.

    • Mondobeyondo

      “Clowns to the left (of me), jokers to the right…”

  • Sam

    We have to move away from desiring economic growth. It is scientifically impossible to have infinite growth on a finite planet. We need sustainability, and the only way to have sustainability is to have universal equality.

    • alfred the monkey

      sorry but there is no known “limit or finitude” to anything in this universe…unles when you consider the entalpic biological forms which by coursed by having “individuality” are finits and limited by mortality..the rest of the universe is doing fine thank you based upon the Heraclitean concept that everything moves and so the motion itself guarantees that nothing is eternal but everything is..as for “our”earth remember that for the human beings lifespan even as a species in this world is far more limited(as we can logically assume that we are gone long before the earth is gone)…so to clarify this misconception on the limit thing of our resources you forgot that an unlimited energy is been continuously poured on us from the sun..so like little ants over the belly of a giant , we are nothing …it is this entrenched arrogance that it is so pervasive among the die hard socialists and communists and pseudo liberals infecting this earth that needs some sun to sterilize their foolish thoughts…like having the idea that what is past is bad and dead…there is no dead from the past the only dead are the living which are the ones who are dying in real time…and the real truth is like the old romans, USA achieved the PEAK IN THAT ERA AFTER THE CIVIL WAR and since then is decaying as only happens once in the history of each big civilization…once you have achieved the peak you by nature and force of your own internal contradictions in action( like the freedom embedded in your brilliant constitution that enabled by sort of legal mafia takeover by a cohesive allien people to highjack your economy and drive you into their agenda, the so known JUDEOchristian phallacy) going to fall down..both world wars were not won by USA merits but by the demerits of the GERMANS..who lost by their own mistakes..the rest is noise and self delusion…

      • Gay Veteran

        “…you forgot that an unlimited energy is been continuously poured on us from the sun….”
        and one day the sun will die, so yes there are indeed limits

      • Sam

        OK….. You don’t seem to understand that the oil, gas, metals and minerals take slightly longer to naturally form than they do for us to consume. And sorry but your statement on there being no known “limit or finitude” to anything in this universe is just plane wrong.

        • g13man

          the universe is still expanding , so new materials are still being created . so there is no limit yet . So if you do not see it , do not deny it of your children .

        • Hey You!

          Many things are just plain wrong, like equating universal equality with sustainability.

  • markthetruth

    Without the Government Great feats of determination created the Likes of

    Mount Rushmore (Truly Mind Boggling)

    The Bridge to Key West (A Engineering Marvel)

    The Brooklyn Bridge

    Many more.

    the end…

    • Dave Gustavson

      The Brooklyn Bridge and Bridge to Key West were built with monies stolen and to the detriment of taxpayers from Wisconsin, Alabama, Minnesota, California, etc. Pork projects where a “government” stole money via taxation from one group to reward another. Those projects ruined local economies outside of the building zones. Mount Rushmore- a truly awesome relic of a dead republic. Hopefully Prince obama doesn’t have it destroyed, it would be nice for archeologists to discover what the USA was capable of before it died in 2008.

  • pasttheend

    Michael,

    Finally, you’re starting to get hard hitting. For example, here is where you started to shine when you said:

    “We never needed a central bank, we never needed the IRS and we never needed an income tax. America would be doing just fine without
    any of them.”

    This is called impact embedding the thoughts into the minds of the audience.

    We need to see a lot more of this from you.

    Congratulations. You have stepped over the line.

    • Graham

      I believe you will see a lot more information being disseminated because there are so many critical pieces that can no longer be kept hidden from the masses.

      This story undoubtedly strikes a well justified blow right at the “core” and should bring people around to thinking about that “core’s” primary functions. Debt slavery is the key component. Everything else spreads out from it like the branches of a tree.

      You are also dealing with a massively complex structure that is part of a known agenda, which dates back over a hundred years, where the meeting on Jekyll island undoubtedly led to what occurred in 1913. Take a very close look at “The Protocols” and examine the story behind their discovery. The document is not a “hoax”!

      If you consider what took ten decades and more to put in place, how long will it take to deconstruct, modify or remove? That answer may well lie in exposing some of the biggest lies ever told in our recent history. Due to meticulous record keeping and subsequent preservation, it just takes time to absorb all of the written facts.

      The crucial facts are accessible online, but you also have specific movements that were established long ago to protect all the lies. You also have paid shills on blogs whose job it is to strike down anybody who attempts to expose the truths.

      There are also “many” working behind the scenes just now uncovering documented evidence and attempting to deconstruct what should never have been allowed to come into play. It is a laborious process.

      Those whistleblowers (etc) have tremendous respect for humanity and they are undoubtedly acting on its behalf in order to bring about a beneficial future, for “all”. Trillions have been traced through crafty transactions. Can you hoax a “Swift” or “PROMIS” based transaction that route traces to the Federal Reserve?

      Although a huge amount of corruption has already been uncovered and proven, especially in the world of finance, it still remains a daunting task to try and change the power systems that have deliberately been put in place by the power players. Those players essentially remain in the background and well out of sight.

      Once people become aware of what is now being made very obvious, a final step has to be considered and many people will find it “very difficult” to go there.

      Let’s just say there is a lot more to our history than what we have been told. The evidence exists in many places that confirms it.

      To sum it up, the main challenge now for humanity is to “remember itself” and realise the potential we have within. You cannot have the masses running around with “free” minds when a specific group demand full spectrum dominance through whatever means possible.

      Being “free” doesn’t entail doing what you wish, but by living in a manner that is fully connected and complicit with nature. When you disconnect the mind from certain principles, mayhem ensues. Just look at the madness and insanity going on around us. They then try and make us believe that this is “normality” through indoctrination.

      Understanding the true nature of the mind is where many have found the answers. Science has also verified it. It is also ancient knowledge, which is why certain religious groups are often conditioned into not looking at material from elsewhere.

      The programming and conditioning must be “absolute” for it to have strength and meaning. The message should never be questioned either, just translated into meaningless rituals, dogma and doctrines. Whilst much of the data written contains core truth, it’s true meaning is grossly misunderstood by the unawakened mind.

      Note what steps are being taken to ensure the human mind is kept chemically induced. The plan is multi faceted and highly destructive as it alters our DNA. Note the types of disease this brings about. Suits big pharma of course as they make “trillions” out of treating the symptoms.

      [From the blogs resident “nutjob conspiracy theorist” and “free” thinker]

  • RarefiedSnotress

    I agree that bureaucracy/command is bloated, nonetheless, there were reasons that many programs such as Social Security and income taxes were instituted.
    It’s nice to look back with nostalgia, and think “those were the good ole days”, but in reality, history is typically perceived and written from a biased wiewpoint. Typically it’s the viewpoint of the winner.
    You can’t turn back the hands of time, and the world isn’t the same as it was before.
    Likely if you saw things from the standpoint of the postwar South and countryfolk.. those weren’t such great days. The cities had their industrial booms, and maybe or maybe not, the tycoons of the day were less greedy than they are now, but disparities back then were quite real and less “artificially” created by corporations. Many people really didn’t have the means of education, transportation, communications that are available now. It was easier to keep “the wrong” people “in their place”.. meaning women and minorities.. though back then women likely didn’t aspire to much more than being a housewife because in times when survival is tough, you don’t look beyond the basics.
    Also, back then, you didn’t have the sophisticated gangsters, technology, and weaponry that you do today… creating higher needs for security and taxation.
    We’d all like life to be “easier” on us, and today’s government does play its favorites games that are causing detriment to the future, but the right basic tools are there.. they’re just being implemented poorly.

    • Hey You!

      I was born in the 1920s. During the great depression, my father lost his business but continued on without unemployment, food stamps, etc., and we made it. We managed without government help. No, those weren’t great days but were much better that the “new dealers'” war and the continuing welfare-warfare state we have now.

  • Robert Govan

    And Thank God there will be No more Federal Reserve and no income tax in the very near future. These guys are going DOWN….Wellaware1.com

    • Hey You!

      You’re probably correct. Seems that there is no problem. A lot of the states are set-up much better than the federals are.

  • RocketScience

    Did the author forget anything?

    Why Yes!

    The Gilded Age was an age of tariffs and protectionism, which back then they called self-sufficiency.

    All world economic powers were built behind a wall of protectionism. There are no exceptions.

  • Concerned Boy

    I am very concerned

    • Sandbagger

      You mean, “Boy, I am very concerned!” ;)

      • Concerned Boy

        You’re right. But I am concerned nonetheless.

  • Sandman

    The “income” tax, an excise tax, when enacted, only affected about 4 percent of the population because it only taxed certain activities – mostly federally connected. During WWII a victory tax was enacted to help the war effort – people volunteered a portion of their earnings but were repaid. In the 50’s the IRS code was rewritten to obfuscate the language to make it APPEAR that all earnings were taxable. Now we have a whole industry surrounding this misapplication and are suffering the consequences.

  • Mondobeyondo

    1865 to 1913:
    – No federal income tax
    – Little to no government intervention in private business
    – Gold and silver were legal currency and often used in daily transactions
    – Federal debt kept in check

    1913 to 2013:
    – Federal, state, local, municipal, etc. taxes
    – Government regulations crushing small businesses
    – No gold or silver currency in circulation
    – Federal debt out of control

  • Sandbagger

    Russia is looking good these days.

    It was surprising to me to watch Putin give his State of the Nation address a few months back. I was watching him in the wee hours of the morning because there was either his address or else the Nu-Wave Oven show to choose from.

    He sounded like what I would have expected from a strong U.S. leader…but haven’t heard since Ronald. He’s a good leader, imo.

    It breaks my heart to think I may suggest to my son to learn Russian and possibly immigrate there when he’s older. I want a good future for him and that doesn’t appear to be what the U.S. has in store.

    Hunt saying this lasts an average of 23 years is going to be just about our son’s education time-frame. Perhaps Russia will accept early-entrance to their University since DS is gifted?

    Maybe DS could be a foreign exchange student? Will they even want him since he’s American?

    Russia: Land of Opportunity and soon to be Land of the Free, Home of the Brave?

    Just some thoughts running around in my mind after reading your previous article on Russia, Michael.

    • GSOB

      You should make a stand now for what is right and good about the USA, at least her history…

      That will have a better effect.

  • Dave Webb

    The original system was built in the 30s by FDR and his brilliant financial engineers(not). The guy that put it together bankrupted his entire family with failed business efforts before he found his way to the government.

    The idea was to put a society together of middle class people with Unions, These Unions intimidated businesses to pay more money in wages. Then the companies had to raise the rates by which they sold the products back to the Union members. (Better known as inflation.) Since the price of goods went up constantly there was a need to negotiate better wages every 3 to 4 years. The increases being in the neighborhood of 4% per year.
    To do this wage engineering required that the wage increases would disappear as time went on in the form of a currency that was constantly devalued. The illusion being that there was a way to save money and get ahead of the game.
    The reality is that the income tax was built to curb that gain as the numbers increased, more and more people fell into a category where they could be taxed to death.
    In real money, none of this group of wage earners was actually making any more money than they were before.

    I have heard that in the present world that unions now represent less than 11% of the working population. Those numbers are inaccurate because now it is less than that.
    But we still have an Income Tax that now can go after millions of people with tactics favored at one time by the protection racket of the mob.
    The problem is one of efficiency. The numbers of people out there on unemployment and welfare are staggering. The system has actually broken down. We no longer have a force increasing wages on a regular basis in the economy. But we still have all the inflation factors we had before only now people do not have the inflated wages to pay them.

    How many illegal immigrants payed income tax last year? Well, that is an embarrassing question isn’t it? How about illegal occupations like prostitution? When is the last time the IRS went after any of these people? Well, that might be a little bit of a challenge.

    The only efficient tax at this point is not based on income. It is based on what you buy with what you have. That system of income tax is obsolete because wages is not where people are subsisting in today’s economic world.
    To change over to such a system is going to be a fairly big task and the IRS is not set up to do it.
    Rather they are set up to support an enormous group of tax accountants and lawyers.
    Until the IRS and the Congress join the 21st century, the system will continue to fall apart.
    My suggestion on tariffs is to forget it. The horse left the barn a long time ago.
    But if you want to set up tariffs by all means do so. Only use a mirror. Mirror the taxes that each nation tariffs our goods. Like China taxes our goods coming into their country. Like artificially keeping their currency devalued against other currencies so no one can compete with their prices on goods.
    I suggest that every job that is overseas be taxed to the company or corporation that has done it to the tune of how much they save by going overseas to slave labor type countries. Now that would solve the national debt right there.
    Our entire system of taxation is based on labor related wages of our people. When that went out the window, so did our tax structure.

  • Patriot Alice

    Excellent article…

  • robert burns

    With respect, too many seem to call for an all or nothing role of government. “Get out of the way”. That sounds great in theory but we might not like the practice. Give private enterprise total freedom, and you get Love Canal. You get pollution everywhere (worse than it is now). You get tainted drugs or drugs that do nothing. You get a meth lab next door to you. You get tires for your car that you have no idea when they were made. You get water containing mercury, e-coli etc. You get school buses with no construction standards. You get doctors with no certifications that they actually are real physicians. You get banks that can take your money and there is no FDIC to cover you.

    And back in the “good old days”, if you were poor, and most were, you just died from that wound which you might have gotten at your place of work because the owners did not care about any safety measures. If you were black, or female, you did not count much at all, if at all. A black person could not even get a sandwich in a restaurant. So lets not get too carried away with “the good old days”. Times are different. Things change.

    I am not saying government is all good. Clearly it isn’t. In some ways it is abhorrent. But lets not fool ourselves that human ethics are so good that we can believe if we only return to former values things would be great. Not so.

    • davidmpark

      Well, what about the states doing those functions? Many of them already have the same departments in their bureaucracies. That way the feds would be limited, and more local control.

      • robert burns

        You might well be correct on that. I don’t know. But, when several states cannot agree, for example, on water use from a common river such as the Colorado, or any other stream, then another authority has to rule. If an upstream state has loose, or no rules, then the state downstream gets harmed.

        Again, I am not suggesting that the government is benign, it isn’t. I am saying that some government is essential if the rule of law is to prevail.

        I never underestimate the ability of people to inflict suffering on others for their own profit. Even with government, it is happening a lot. I just don’t have perfect alternatives but neither do pure Libertarians and/or Anarchists.

  • jakartaman

    Anyone who still pays taxes to this corrupt government through there IRS corrupt agents is in my opinion immoral.

  • SMASH THE CONTROL MACHINE

    we don’t need no water let the

  • Rufus T Firefly

    Were we better off having J. P Morgan run the country instead of Ben Bernake? We may also have high growth rates because it was the beginning of the industrial revolution. Seems like there were alot of strikes such as the Pullman and Cox’s Army in the 19th century.

  • Gay Veteran

    “…The Gilded Age saw the greatest period of economic growth in American history….”
    and the greatest income inequality as the Robber Barons lived like kings while their workers lived in abject proverty

  • Gay Veteran

    you do know that Hitler came to power in a conservative coalition and that German Labor totally opposed him

  • sharonsj

    There was also child labor, complete exploitation of workers, no health care, no pensions, degradation of the environment, animal cruelty, and no consumer protection laws. There is a reason why we pay taxes and expect a civilized society.

  • John Pryce

    One objection: the Federal Reserve was NOT created to serve the interests of “big banks”.
    Like all central banks, it had one purpose: to fund profligate government. This is the primary purpose of central banks: to create the means for profligate government spending without the bills coming due in the form of tax hikes that cost politicos their jobs.
    The Federal Reserve has been no different. Deliberate inflationary policy, as pursued by the Fed, is not and never has been pursued for strictly economic benefit; it is – and always has been – pursued to make it easier for the government to issue new bonds and take on additional debt.

  • Hank Kingsley

    Economies cannot grow forever. Perpetual growth is impossible. And yet, perpetual growth is what our entire system is based on.

    There is no way out, there is no way back.

  • therooster

    There was also no real-time floating gold to use as currency back then in the 1800’s. Gold under any fixed/pegged constraint cannot function well when the trade value is by fiat. Real-time gold weight (floating market value) is our answer to the purging of fiat based debt. Gold is now true money. Support bullion … purge systemic debt.

  • Mudpie

    First off, this is a beautiful description of pre Fed capitalism and I live the mention that indeed, with a free society we all have a hope to prosper in a way that suits us as individuals.

    Millions, or hundreds of thousands, found this notion worth dying for. Worth walking into bullets at Gettysburg, Normandy, Iwo Jima, etc.

    Secondly, I do not think people are going to let this govt. off the hook when it all goes bad. But there will be some who actually blame capitalism for the ills. Hope to God we can avoid an internecine civil war of sorts.

    • g13man

      of course we will not let the gov off the hook , they already hooked us for the cost , LOL

  • art simpson

    Maybe if all of the Bilderburgers and Illuminatti were to vanish, things would get better. Ya think?

  • Esther

    ;Never knew this ever happened!. Thanks for the post!

  • Bo

    During the free banking era, the banks were short-lived compared to today’s commercial banks, with anaverage lifespan of five years.

    What a glorious time indeed!

  • trailer_music

    I think what this article helps underscore is the need to get out of credit card ASAP on the individual level. The sooner, the better!!

  • Spook Moor

    What I cannot understand is, where did people borrow money from at this period and from whom?

  • Sigfredo Mendez

    Yeah check the black budged programs and how much money they suck out and been given away also to other countries

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