Is the U.S. in store for Greek-style collapse and chaos?
*Texas Straight Talk, by Congressman Ron Paul, February 27, 2012:
''Senator Jeff Sessions, ranking member of the Senate Budget Committee
has pointed out that our per capita government debt is already larger
than Greece's. Per person, our government owes over $49,000
compared to $38,937 per Greek citizen. Our debt has just reached
101% of our Gross Domestic Product. Our creditors see this and
have quietly slowed down or stopped their lending to us. As a
result, the Federal Reserve has been outright monetizing debt as a way
to patch things together and keep the economy on life support a little
longer. There is rapidly shrinking demand for our debt, and
confidence in the dollar is falling. This phenomenon is hidden
only by the fact that confidence in all other fiat currencies is
falling faster.
None of this seems to really alarm the administration, obviously, as
they have just released a budget that accelerates spending and
borrowing. The reason the debt and deficits plague the economy,
according to this administration, is that the American economy is not
taxed enough. Therefore, hidden in the fine print of the budget
is a provision that ramps up the corporate dividends tax rate from its
current 15% to 39.6%. In addition, certain deductions and
exemptions will be phased out; an additional 3.8% Obamacare investment
tax surcharge will be tacked on, bringing the effective dividend tax
rate to 44.8% in 2013. Keep in mind, this is not just a tax on
big business, this is a tax on anyone who depends on dividend income to
live - retirees will be hit hard by these changes and dividend yielding
stock prices will adjust downward rapidly to reflect their decreased
value.
Not only this, but the Obama administration is worsening the uniquely
American policy of taxing income of US based companies earned
overseas. No other country presumes to tax globally in this
manner, so it amounts to a huge penalty for basing a company in the
US. Companies have been able to manage this penalty by deferring
taxation until it is repatriated or by paying dividends. What
will happen to US based businesses with strong international ties if
these allowances are abolished as the Obama administration
proposes? A massive wave of permanent capital flight will
undoubtedly cause the already high levels of unemployment to rise.
Businesses are struggling and failing in this economy. The
government ultimately depends on a healthy business climate to provide
jobs and a tax base. It is penny wise and pound foolish to add to
business tax burden in a misguided attempt to close the colossal gap
between our government's revenue and spending. Rather than crippling
and absorbing more of our shrinking economy, government needs to be
drastically cut - not in 10 years, but immediately.
Those who understand the underpinnings of the dollar and how the
Federal Reserve works have known for some time that we are on an
unsustainable course, that major chaos is in store if nothing is done
quickly to reform things. Politicians pay lip-service to reforms
that never materialize or turn out to be at best small and meaningless,
or at worst actively harmful. It seems more and more inevitable
that because the necessary changes would be too inconvenient for the
elites to enact now, we will get them later Greek-style, through
collapse and chaos.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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