I couldn’t believe it when I heard this in the Republican debate yesterday. Behold:

CAIN: Let’s cut to the chase, this is what business people do and politicians don’t do. Here’s how I would fix this economy, first, eliminate the current tax code. It is a drain on entrepreneurs, it is the biggest barrier that’s holding this economy back, and what I would do is to propose a bold plan, which I have already released.

I call it my 9-9-9 economic growth plan. Throw out the current tax code, a 9 percent tax on corporate income, our 9 percent tax on personal income and a 9 percent national sales tax. If 10 percent is good enough for God, 9 percent ought to be good enough for the federal government. This will replace all federal income taxes. It’ll replace all federal income taxes.

It will also replace the payroll tax, so everybody gets some skin in the game. And it replaces the capital gains tax.

Using the tithe as a limit for federal taxes is certainly not a new idea. However, just one thing to note. If you stop and think about it, Cain does not actually mean what he is saying. If I make $10,000 and then it is taxed as income at 9%, I have $9,100 left. Then, when I spend it, it’ll be taxed again, so only $8.281 remain. But it gets worse. Once the company pays its 9% corporate income tax on that corporate income, it receives only $7,535. Effectively, the corporate income tax becomes a separate income tax, because the company can only give me $7,535 worth of product for my $8,281.

All in all, Hermain Cain’s plan effectively taxes my income at 24.65% to the Federal Government. This is where things get real weird. Right now, the Federal government’s annual revenues are approximately 2270 billion of taxes on a 14,914 billion dollar economy, an effective tax rate of 15.22%. So, once you run the math, Cain’s tax reforms wind up actually raising the tax burden of the United States by a whopping 62%, all the way up to more than two and a half times as large as the biblical tithe.

So here’s what I suggest. If you want to raise taxes, say so out loud and publicly. Don’t hide behind pious but meaningless phrases about what’s “good enough for God.” Cain can pretend all he wants that he is an outsider to politics, but his drive to massively raise taxes, and the way he quietly acquiesced as a party to the robbery of the American people as the Chairman of the Federal Reserve Bank of Kansas city. His complicity in the hole of moral darkness that is the Federal Reserve must come either from dishonesty, or ignorance, or both. Either way, I simply cannot bring myself to trust a man who attempted to hide the doings of the Fed by trying to discourage an audit of it.

Currency Manipulator?

Romney wants to get Congress to officially label China a “currency manipulator.” Anyone who knows the foggiest bit about the US dollar should know that we are in no position to call any country, anywhere in the world, “currency manipulators.” The currrency manipulation charge is an attempt to use American xenophobia to make China a scapegoat for the irresponsibility of the United States. It is worrisome that someone as ignorant as Romney would even be considered for US President. Huntsman spoke correctly, though understated the extent of our problem, when he said

He doesn’t get the part that what will fix the U.S- China relationship, realistically, is fixing our core right here at home, because our core is weak, and it is broken, and we have no leverage at the negotiating table.

The fact of the matter, as China is well aware, is that we are a spend-thrift nation trying to paper our way out of our debt problems. China, on the other hand, is a rapidly growing creditor nation. The borrower is, in some sense, slave to the lender, and we have no room to waggle our fingers at China. If Romney were really serious about g currency manipulation, the first person he should denounce is Herman Cain, who had an active hand in debauching our nation’s currency, not Hu Jintao, whose loans to the US have helped us to shore up the value of the US dollar.

The reason I bring this up is to point you to an article entitled The Bastard Child of the Mother of All Bubbles, by Jim Quinn.  Rather than retreading the whole ground of explaining the Austrian Theory of the Trade Cycle, it digs into the specifics of our latest run-in with the laws of economics, known as the “Late-2000′s Recession.”  In it, he includes this gem of a quote from Ben Bernanke:

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.” – 2/15/2006

Looking at the quote, you can see that Ben Bernanke said this at the exact peak of housing prices, right before a jaw-dropping plummet in prices.

Details aside, the point is clear.  Our current big-government economists, the guys we are told to completely and utterly trust with our financial futures, may know a huge number of words and be quite adept at manipulating models, but they really aren’t practicing the sort of hard science they claim to be.  They’re gambling.  Except it’s with our money, not theirs.

The article also claims something that sounds counter to what I thought Paul believed:

Paul stopped short of calling for the reinstitution of the gold standard and instead called for the government to allow the use of hard currency — gold and silver tender — alongside the use of the dollar.

That might be a politically smarter way to achieve what he actually wants:  the use of stable currency throughout the US.  The political difficulties surrounding the imposition of the gold standard — the only realistic means of saving the dollar from eventually blowing up — might just be so thick that allowing people options would be a more sure means of ensuring that even if the dollar does blow up, your savings don’t have to blow up with it.

The Federal Reserve system is bankrupting the entire banking system of our nation.  It’s all a matter of relatively simple math.  And the savings problem of the nation could be fixed in a simple manner, starting with higher interest rates at the Fed, and the ending of our inflationary deficit spending.  But we don’t have the stomach for such reforms, and until we do the finances of the U.S. (and the parallel problems of Europe) will continue to implode.

In this case, some of their questions concern the 2008 economic crisis.  When our banking institutions went into the dip that inevitably characterizes sustained inflationary policies, the government decided to use taxpayer money to finance lending to private institutions.

So now the federal reserve, our central banking institution, is being required to release its records of what private institutions it handed our people’s cash to in 2008.  Our nation’s government-backed bank cartel, which has benefited so much from easy and confidential access to our money from the Fed, is naturally opposed to the release of records.

The release of Fed records could be used to more clearly show Americans how their money is being used for the benefit of massive private institutions to their own detriment.  The bank cartel is afraid of what would happen if the American people understood what was going on with banking–the incredible insecurity forced upon the American people by it.  Henry Ford, long ago, knew how badly the financially-ignorant American people have been scammed by this corrupt bank system:

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford.

Similarly telling is what the joint spokesman for the bank cartel’s interests has said:

“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks . . .”

The fear of bank runs is a legitimate one because our government’s banking structure keeps our entire banking system essentially bankrupt at all times.  The answer to our troubles, however, isn’t to keep our eyes shut as our money is handed about secretly.

A better idea is to open up the information and then let the discussion about what to do next be carried out in the open.  That’s how that whole democracy thing was s’posta work, right?

The concept of the Fed as a destructive con-job has apparently hit even the mainstream media (in the form of MSNBC).  Very good.  This is a pretty good description of exactly where our financial problems came from.

Keep in mind, of course, that by ‘con job’ I am referring only the fact that the system rips off the American–not, of course, that there is some sort of eeevilll cabal snickering and holding the government at knife point.  This cogent explanation of the problem does a great job of showing how the American people lose and a banking cartel wins through the easy money created by the Fed.  It also does a pretty good job of showing how this causes collapse, although it does not address the Austrian Theory of the Trade Cycle, which explains how inflationary boom-bust cycles (we just saw a recent example in this latest financial crisis) inevitably form as a result of cheap-credit inflationary policies.

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