Another excellent read by Porter Stansbury. While primarily focused on precious metals and currencies, and the possibility of returning to some commodity-based currency, Stansbury touches on many interesting topics. We are entering the period where government failure becomes apparent. Ultimately, it will result in a redefinition of government unlike anything we have experienced in our lifetimes. The history books written a hundred years from now will refer to our time and the preceding century as “The Myth of Government.”
As we approach sovereign bankruptcies and the utter uselessness of government as currently constructed becomes apparent, sacred laws and traditions will come under attack. Governments, especially the most powerful ones, will do everything to resist loss of power and revenue. The analogy of a wounded and cornered animal willing to do literally anything to survive is probably a reasonable one.
Governments will not go quietly or quickly. The next twenty years are apt to produce actions and reactions that were previously unthinkable. Stansbury speculates about the need to raise revenues:
“You wouldn’t want to underestimate the perfidy of the government. I have no doubt that the government will need to increase revenues substantially to avoid default on either debt or social welfare promises. How they will increase those revenues, I can’t predict. It seems unlikely that they’ll be able to effectively increase revenues by raising taxes because it just doesn’t work. People will find ways to reduce their income to avoid the taxes or simply leave the country. So I wouldn’t be surprised at all to see some kind of a land grab or an asset grab. I don’t believe it will focus on gold because there just isn’t enough privately held gold in the country to make a real big difference in revenues. I think they’ll go after something else, perhaps a tax on net worth, which I’ve seen discussed in Congress already.”
For a very interesting, non-traditional analysis of what is happening, read the entire Stansbury article.