Monday, December 10, 2012

Yikes! IRS seizes Lindsay Lohan's bank accounts

I was reading an update on which mentioned that in an effort to collect some $233k in back taxes, the IRS has apparently seized Lindsay Lohan's bank accounts. The problem that we have is that as the economy gets worse -and by this I mean as the currency debases more and inflation accelerates - history shows that government shakes people down more and more for cash. This comes in the form first of legislators demanding a tax hike on persons like Lindsay Lohan aka "the very wealthy" and later in the form of new fees, fines and mandates imposed on all citizens in general. The rule of law no longer becomes about protecting private property or persons against injury but rather revenue collection and continuity of government.

As I have said so many times before, the issue is not state revenues the issue is state spending and currency debasement. You cannot tax your way to prosperity. We are at the cusp of a hyperinflation crisis which means that current budgets will not be sufficient to cover expenditures as inflation raises the cost of goods and services. If government keeps using the same formula it's always done, it will simply say, "Oh, we need to raise taxes this year" (just like they did last year). But no matter how much they tax you, it won't be enough because the government - like you - can't keep pace with inflation. The best example of this is how in 2005/6 the Hawaii State Legislature had to keep pumping emergency appropriations into various agencies because the instability of energy markets had caused them to have cost overruns in overhead. Only now we're looking at this on a global scale.

Rose Wilder Lane famously said, "A 'planned economy' destroys Government because when men use force in an attempt to control productive energies, they have no means of knowing real costs, and these costs automatically increase at an increasing rate until the people can no longer pay them." Yes, to my critics out there, government can and has caused prices to reach near infinity throughout history (see Weimar, Zimbabwe et al). Gresham's Law tells us bad money drives out good under legal tender laws. This all comes down to a lack of a stable currency.

An interim solution would be to allow people to use competing currencies and to immediately shrink the size of government and to reduce taxes. Government's "toolbox" in a hyperinflation crisis only makes things worse.

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