It's All About the Money

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What is the economy?  Has anyone ever defined this mysterious entity that holds so much power over life and thought?  Is it a government construct, a creation of the Federal Reserve or of Wall Street?


Whatever it is, “the economy” seems pervasive but invisible, like god, or some peoples’ god.  It is powerful yet abstract, composed of numbers, heavily dependent on “jobs.”  The “global economy” is even more elusive.  How many people are directly affected by fluctuations in the economy?  It seems as though it is like the weather, constantly changing yet generally remaining within some livable limits.


Careful reading of the US Constitution reveals that it is an economic document that presumes all citizens are federal government property.  It provides a structure for supervising them through laws, executive, legislative, and judicial branches, and for collecting taxes.  It takes control of “economic narrows,” such as rivers and roads, and grants the federal government a monopoly on money management.  When people tell you, “It’s all about the money,” they are right.  It is.


It’s hard to imagine what the 18th century world was like.  The Western Hemisphere was an economic bonanza for resource-hungry Europeans.  North America offered abundant land and natural resources, limited only by those Native Americans who refused to be enslaved.  The British compensated by importing Negroes from Africa.  Its colonies in the West Indies became enormously profitable by the use of slave labor on sugar, timber, and other plantations.  In North America, most slaves came through the Northern ports of New York and Boston but were sold in the South, which had the land and climate for large-scale agricultural production.  Through the use of slave labor, the South became the main source of agricultural products for use in the North and for export to Britain, which prohibited its colonies from trading with anyone else.  Britain profited from slavery in direct and indirect ways, from taxes and from re-sale of commodities like tobacco and cotton.


The Declaration of Independence, dated July 4, 1776, lists the abuses colonists felt they suffered under the king and parliament.  It cites multiple perceived tyrannical acts by the King of Great Britain, including disrespect for or denial of colonial laws, dissolving representative houses, impeding elections, controlling judicial appointments, increasing bureaucracy, housing standing armies in people’s homes, impeding trial by jury, and other acts deemed despotic.


The Revolutionary War had already begun, on April 19, 1775, and several of the Declaration’s signers remained ambivalent about the drastic step of breaking away from the “mother country.”  Loyalists (Tories) remained entrenched in places like New York and the Northeast.  In fact, New York City fell on September 15, 1776, just three months after the Declaration was signed, and remained in British hands for the next five years. 


Between 1776 and 1787 the thirteen states functioned under the Articles of Confederation, which had no taxing authority.  The “Continental dollar” and war bonds became virtually worthless, and many of Washington’s soldiers had given up on ever being paid.  The war had been financed by debt, much of it from foreign investors.  After the Treaty of Paris was signed on September 3, 1783, American notables like John Adams and Thomas Jefferson were sent to Britain and France to negotiate credit and loans for the emerging country. 


By 1787, a group of bankers, lawyers, financiers, and landowners had decided the Articles of Confederation were too weak to support a centralized government.  What became the Constitutional Convention was billed as a meeting to amend the Articles of Confederation.  It occurred while John Adams and Thomas Jefferson were in Europe.  Convention delegates were sworn to secrecy, virtually locked in Independence Hall for three months, and not allowed to adjourn until they had drafted a constitution to replace the Articles.  The new Constitution was ratified by special assemblies convened for that purpose, and thus by-passed state legislatures.


Concurrently with the Declaration, in 1776, Adam Smith in the UK had published his Wealth of Nations, which instantly became a huge success.  In it, the “Father of Modern Capitalism” referred frequently to the “late war,” meaning the Seven-Years’ War (in North America called the “French-and-Indian War”) which had ended in 1763, and the UK debt resulting from it.  Wealth explores different taxing mechanisms used by various rulers to generate revenue.  Smith refers repeatedly to “stocks” and describes various banking systems.  Both the banking system and the stock market were growing in importance and influence at the time, spurred by the growing British shipping empire and the industrial revolution.  The British government had become increasingly dependent on the London Stock Exchange to finance its perpetual wars.


History substantiates the notion that the Constitution’s “Framers” wanted to create a centralized taxing authority and strong military to subsidize the financiers, industrialists, and elite. Both George Washington and the first Treasury Secretary, Alexander Hamilton, believed in a strong central government.  Hamilton, especially, personified the Federalists’ ambitions for Northern dominance, industrialization, and government “over the people.”  As Treasury Secretary, he also laid the groundwork for a military empire.


Hamilton was an admitted Anglophile and a tool of the elitists, if not an actual British agent, as some claimed at the time.  He had already established the private Bank of New York in June, 1784, for his brother-in-law, John B. Church, and for Jeremiah Wadsworth; and Hamilton was a board member.  The day after being confirmed as Treasury Secretary, Hamilton arranged a $50,000 loan from the Bank of New York to the federal government to pay Washington’s and Congress’ salaries.  He then arranged a loan from the First Bank of North America for another $50,000.  The First Bank of North America had been started by Robert Morris, signer of both Declaration of Independence and Constitution, and a Hamilton financial mentor. 


On December 13, 1790 Hamilton presented legislation for a tax on whiskey.  The next day, December 14, 1790, he offered a plan for a central bank.  The bank proposal generated substantial controversy, largely along North-South lines, with Thomas Jefferson and James Madison arguing that it was unconstitutional.  Hamilton, who made liberal use of the constitutional clause about promoting “the general welfare,” argued that a central bank would do that.  He interpreted the Constitution to mean that the federal government could do anything that was not specifically prohibited, under the “implied powers” clause.


Under his proposal, the central bank would be capitalized at $10 million, with the government contributing $2 million and the rest held in the form of stocks by private investors.  The government would appoint five of twenty-five directors, with investors choosing the remaining twenty.  He dismissed Jefferson’s argument that this would lead to wild speculation, but he later had to bail the bank out when the initial offering of bank scrip did just that.  He did this by asking the cashier of the Bank of New York to buy $150,000 of government securities, in order to stabilize the market. 


William Duer, who had been Hamilton’s first deputy treasury secretary, was blamed for single-handedly causing the nation’s first financial panic, the Panic of 1792, by stock speculation, borrowing heavily and driving up prices, then not paying on his loans.  It is believed he caused losses of $3 million and impoverished people of all classes.


This financial panic led to the beginning of the New York Stock Exchange on May 17, 1792, with the so-called “Buttonwood Agreement,” signed under a buttonwood tree on Wall Street.  Here, twenty-four stock brokers agreed to trade only with each other, and to charge a commission of one-fourth percent on trades.  The first trades were of bank (First Bank of North America, First Bank of the United States, and the Bank of New York) and insurance stocks, and of “Hamilton bonds,” meaning Revolutionary War debt.


The First Bank of the United States soon became the largest corporation in the United States.  Its role was to accept deposits, issue bank notes, make loans and purchase securities.  Hamilton had argued that it should be largely private, to insure it would not be politicized by government finagling.  Critics complained the bank favored foreign investors and Northern states.  In fact, its initial stock was only offered in New York, Boston, and Philadelphia.  Thirty shareholders were US Congressmen, well over one third of the 80-91 members of the First United States Congress.


Those who believe the United States was founded on democratic principles need only remember that the Constitution, not the Declaration of Independence, is the law of the land.  While the two documents are often confused, and we celebrate “Independence Day” on July 4 every year, the Constitution, which was signed eleven years later, on September 17, 1787, negated that independence.  It claimed the nation’s inhabitants, resources, waterways, and products under a financial monopoly--backed by military might--that the federal government, banking industry, and New York Stock Exchange still enjoy today.


Pardero Added Apr 24, 2018 - 4:30pm
Katharine Otto,
Thank you for the valuable history lesson. Although the Constitution was a dubious improvement over the Articles of Confederation, it is all we have, and  I am not ready to give up on it.
Dino Manalis Added Apr 24, 2018 - 4:44pm
Money motivates us directly and indirectly!
George N Romey Added Apr 24, 2018 - 4:44pm
Katharine excellent article and a realistic view of history. In essence the elite have always wanted to privatize their profits but socialize their losses. The Fed is the perfect vehicle to do just that.
The elites allowed for a middle class for a few decades after WW2. But by 1980 they clearly wanted to return to the days of serfdom and so they have.
Neil Lock Added Apr 24, 2018 - 4:50pm
Katharine: Another fine and thought provoking article, as always from you. I'm struck particularly by the following parallel:
1688 - Glorious Revolution. 1689 - Bill of Rights. 1694 - foundation of Bank of England.
1776 - American Revolution. 1787 - Constitution (and Bill of Rights). 1790 - First Banks.
The marriage of politics and money is not something new.
Dave Volek Added Apr 24, 2018 - 5:32pm
Nice article. It's interesting to hear that vested interests were a big part of the development of this new nation. That sorts of takes some of the altruism from this emerging nation. 
Although the Constitution was a dubious improvement over the Articles of Confederation, it is all we have, and  I am not ready to give up on it.
It's time for a new system of governance. Americans will lead the way, I am sure.
The alternative is to remain stuck in 1787.
Doug Plumb Added Apr 24, 2018 - 7:54pm
Really, its all about the laws. The central banks was known as the exchequer, the court of the exchequer being the highest in the land. The banks print the money so that they can write the laws, its not about 500 million dollar yaughts.
Its the law that will be changing and has been changing from the common law based on reason to a statutory law based on empire and immediate needs. This in not an American or British ideal, it is Jewish in every sense.
It was the Jewish slave trade, not American slave trade.
Even A Broken Clock Added Apr 24, 2018 - 8:02pm
Fascinating read about how intrinsically debt was woven into the founding fabric of this nation. Thus it was, thus it shall ever be, apparently.
Katharine Otto Added Apr 24, 2018 - 9:19pm
Unfortunately, as flabby as the Constitution is, the US hasn't followed even that.  The argument that a central bank is unconstitutional is as valid as ever.  Congress hasn't actually declared war since World War II.  The military was empowered for two years.  
We don't have a democracy or even a republic.  The electoral college and the supreme court are not representative bodies, yet they make the most important and far reaching decisions in the nation.
Katharine Otto Added Apr 24, 2018 - 9:20pm
Yes, and the government is motivated to get it away from us and distribute it to selves and friends.
A. Jones Added Apr 24, 2018 - 9:24pm
Careful reading of the US Constitution reveals that it is an economic document that presumes all citizens are federal government property.
I have little confidence that you yourself have given the U.S. Constitution a "careful reading." If, indeed, the Constitution presumes what you claim it does, then you will kindly copy such passages from that document and paste them in this thread so that we might all read them for ourselves.
That said, I have little confidence that you've read Adam Smith's "Wealth of Nations" with any great care, either.
Katharine Otto Added Apr 24, 2018 - 9:28pm
You write a lot about the disappearing middle class, but the economic hierarchy itself is the problem.  I don't believe in forced re-distribution of wealth, but I do believe in eliminating unfair advantages granted by government.  For instance, I wonder how many Fortune 500 companies derive significant revenues from government contracts.  Even the Army Corps of Engineers no longer does its own engineering.  
Katharine Otto Added Apr 24, 2018 - 9:34pm
I was most struck by the stock market's role in all this.  Great Britain began relying heavily on the stock market to finance its wars after the Seven Years' War ended in 1763, but the stock market was a heavy player even before that.  The South Sea Bubble of 1720 was one of the biggest bubbles in history, and Wikipedia says Brits are still paying interest on the debt the Crown assumed to bail everyone out.
Thanks for the comment and the compliment.
Katharine Otto Added Apr 24, 2018 - 9:41pm
That period of history was full of intrigue, and I don't know if we'll ever know the full story.  In my research, I learned William Duer, Hamilton's first assistant treasury secretary, was born to British nobility, had timber plantations in Antigua, also land in the Hudson Valley.  He had contracts to supply lumber to the British Navy and to Washington's Continental Army.  I suspect there were many wealthy mercantilists who sold to both sides so not were particularly loyal to any government.  The "globalists" of yesteryear.
I'm skeptical of any centralized power and those who would rule from afar.  The idea of "government over the people" needs to go.
Katharine Otto Added Apr 24, 2018 - 9:49pm
Paper money signals the impending bankruptcy of a state or country, and it's usually issued to cover war debt.  Slave trade has existed from time immemorial, so I can't blame it specifically on the Jews.  Julius Caesar's greatest plunder was slaves.  
I have come to believe that governments exist to fund themselves, so they need armies to secure their dominance.  That people submit to the laws and taxes shows that we still don't know how to be free.
Katharine Otto Added Apr 24, 2018 - 9:55pm
Debt is the downfall of empires and individuals, and it may be what destroys the US.  A person or nation in debt is not free, and lenders know this.  That's why bankers like JP Morgan preferred lending to governments, so he could obligate them.  Creature from Jekyll Island claims the Federal Reserve Act was secretly planned in 1910 to maneuver the US into backing his loans to British investors as WWI was heating up.
Possibly the Constitution's greatest weakness is the allowance for government debt.
George N Romey Added Apr 25, 2018 - 7:11am
Katharine a middle class is not the typical reaction from capitalism. By nature capitalism concentrates wealth into the hands of the few but eventually becomes cannibalistic. My sense is there should be a big picture society that understands the immense benefits of a successful broad based economy. But we’re not there and may never be given human nature. That’s why “bigness” is so lethal.
opher goodwin Added Apr 25, 2018 - 8:35am
Katharine - thank you for such an enlightening article. Very well put together and elucidating.
Riley Brown Added Apr 25, 2018 - 10:34am
Katharine, I look at it the other way, I see our Constitution as a document that attempts to create a government that serves the people, not one that owns them. 
All the rights are personal rights, protecting the people from oppression like was often possible and done before that by governments that did treat their citizens like property.
Back then your house really wasn't your's, the government could take it from you at a whim without giving you just compensation.  They could search it and your other property at will, with no reason given, and that to is no longer permitted.
Dave Volek Added Apr 25, 2018 - 12:58pm
It is my understanding that various property rights, search and seizure rights, arrest rights, etc. were in writing in much of Europe before the American independence. It's just that they were loosely enforced.
So the founding fathers already had a exposure to these humanistic concepts: they did not invent them out of thin air. What they did do well was to create a system that was better at enforcing them. This helped USA become a mighty nation. And even though other democracies never really adopted the American model of governance, they did learn from the American example in these regards.
Some things of governance need to be done at a local level, some at a municipal level, some at provincial level, some at a national level, and some at an international level.
I understand the suspicion of the putting power to the higher levels. But if we had a system of governance what we could trust and this system was capable of moving governance up or down the levels as appropriate (centralizing vs. decentralizing), then we really don't need an ideology that local is better in most things. 
Tubularsock Added Apr 25, 2018 - 10:34pm
Katherine, excellent post AND right on the “money” sort of speak.
The trick to remember is that this entire system is just made up!
There is no intrinsic value to any of it rather than the ones we ascribe to it.
It is in truth, a mirage.
And many spend their lives believing that VALUE can be found within the mirage.
Now Tubularsock likes to play in the game as do others BUT whatever you do don’t be fooled by it!
It ALL works from the inside out rather than outside in!
And because we have been taught the other way around is what has caused us to be living in an upside down world.
Fun to a point but for heavens sake, NOT REAL.
Katharine Otto Added Apr 25, 2018 - 11:20pm
I believe there is a big picture of what ought to be, but people are discovering it's not working out that way.  They don't really understand why, because what's claimed is so different from what is. 
One of the reasons I wrote the article is to show the roots of the problem in the US go back a long way.  People were sold a bill of goods and told it was in their best interests.  Most people don't even know the difference between the Declaration of Independence and the Constitution.  I'll bet most people can't tell you when the Constitution was signed.
That the so-called "ruling class" eventually becomes cannibalistic is the reason the New World Order or the Deep State won't succeed.  Those people can't even get along with each other, so how will they agree on leaders?
Katharine Otto Added Apr 25, 2018 - 11:21pm
Thanks for reading and the compliment.
Katharine Otto Added Apr 25, 2018 - 11:38pm
You see it the way most people do, but it's a sham.  First, your property is only yours if you pay property taxes.  And, they don't give you much leeway on the due date.  
Second, the Whiskey Tax in 1791 set the precedent for search and seizure, under the mere suspicion of illegal activity.  It was the first time the federal government flexed its muscles against the people who pay its way, complete with military force.  The Whiskey Rebellion was composed largely of ex-Revolutionary War soldiers and farmers who had left their farms to fight Washington's war for him, and they were going bankrupt because Washington had deferred their salaries.  They survived by bartering items like whiskey.  The whiskey tax was a slap in the face to those who had risked everything for independence.  It set the precedent for the federal government to intervene directly in individual homes and lives, which it has been doing ever since.
Finally, the government has been using eminent domain to seize property it wants for a couple of hundred years, most notably for the railroads, more recently for oil pipelines.  After the Supreme Court Kelo decision in 2005, the use of eminent domain went haywire, extending to "blighted neighborhoods."  Now, in Georgia, we are facing the state government's possibly giving a private pipeline company, Kinder Morgan, eminent domain rights for the pipeline it wants to build along the coast.  The head of Kinder Morgan was one of the principals at Enron.
Katharine Otto Added Apr 25, 2018 - 11:48pm
I don't think there's a person or group in the world I trust to make decisions for me.  Unfortunately, I don't get to decide whether we build a drone base in Niger or allow Monsanto to poison the food supply, with sterile, GM foods.  Nor do I get to opt out of ethanol-laced gasoline.  I don't get to stop the helicopters from hovering over my house, or the Walmart from being built in the newly zoned commercial development so close I can hear its street sweeper at night.
Who needs a government you have to watch every second to make sure it doesn't sell you out?  Even watching and protesting doesn't help, as all the wars show.  
I think we probably agree that local government, at least, has a role in public sanitation, but where I live it's not even competent at that.  
Katharine Otto Added Apr 25, 2018 - 11:55pm
Thanks for the enlightening response.  Since I don't have a genetic investment in this planet, I'm becoming increasingly detached from the illusory horrors that younger people will have to face.  
The trick is not to take it too seriously, and you are very helpful in that regard.  
Yes, it does work from the inside out.  I am creating all this maya, am I not?  I must be very creative.
Katharine Otto Added Apr 26, 2018 - 12:00am
A Jones,
You would be wrong about both your assertions.  Not only have I read both--the Constitution several times--I underlined heavily, wrote in the margins, and took extensive notes.  My notes on Wealth of Nations ran about 30 typewritten pages.
George N Romey Added Apr 26, 2018 - 9:28am
Katharine we’ve had about 125 years of the Industrial Revolution and we’re still fighting over the same ideas how to spread the wealth it creates. Government can be bought and sold. Notice how everyone in Congress becomes a multi millionaire on a $174K a year salary.
BTW ignore Jones. He’s not worth the effort to type. 
Yellow Sub Added Apr 26, 2018 - 9:30am
Only if the federal gov't upheld the US Constitution like how pension laws are upheld to the T and almost unbreakable, they gotta make sure they get paid until their deaths. 
Just look at all the teachers protest to get a glimpse of the revolt of gov't workers against the citizens.  You will be without public school indoctrination (which is a good thing), police and fire...

Don't look at it like a bad thing, the collapsing economy is exposing all the wrong doings where we can correct it and those in powers will soon lose their grip over us.  The end of the Mayan calendar only signified the end of an age.  We're not in the age of Enlightenment, it will have to happen during this window or humanity will continue to be enslaved...

In regards to war, there is barely any movement or protest to stop it.  Americans have been ingrained the perception that seems to hold.  It's quite comical to see Americans feel sympathy for a handful of deaths that happen domestically yet ignore hundreds of thousands of bombs being dropped  on civilian targets w/o a single care over the millions killed including women and children. 

Killing in the name of "freedom" and "democracy" aka "your" false sense of security seems to remove any guilt of the horrific deaths many suffer and gives them all the power to continue to commit these atrocities.  Like I have said, you see monsters throughout history wondered why their people didn't do anything about it.  Well, what they all have in common, is that their leaders were fighting for their people like how it is now.  
George N Romey Added Apr 26, 2018 - 9:38am
With few Americans serving in the military all these wars are out of sight, out of mind. Bring back the draft and see how quickly the protests soar.
John Wagner Added Apr 26, 2018 - 1:55pm
A few comments: 
I think federal govt regulation of currency makes sense. Back in the day the US had literally hundreds of types of money. It makes sense to limit that to one currency; it facilitates commerce. The problem comes when the central bank tries to do more than simple regulation of the currency and be the lender of last resort during crises. The Fed has certainly tried to do more than that... and has made things worse on more than one occasion. 
I think the US constitution was intended to limit the power of the federal govt for the purpose of protecting individual rights. However, the constitution is just words on paper. It still requires govt officials to adhere to the principles, and the voting public to hold govt officials accountable for doing so. We've strayed from that over the past century or so. 
Ian Thorpe Added Apr 26, 2018 - 4:00pm
Well written and informative article, giving some new (to me at least) perspectives on the formative years of the USA.
I notice you sidestepped the question of "what is the economy," wise move. Most politicians and media commentators equate the economy with GDP, which is not even a true measure of the health of an economy, but simply the amount of money exchanged in trade that churns through the financial system.
'The Economy' is a concept rather than a thing, and concepts are notoriously hard to get hold of.
George N Romey Added Apr 26, 2018 - 4:14pm
Increasingly GDP has been driven by the financial sector. The practice of trillion dollar casino banking has no positive impact on the overall economy and has the potential to wreck an economy. 
Dave Volek Added Apr 26, 2018 - 4:54pm
I should have put another layer in my local/municipal/provincial/national/international paradigm: that being the individual. That is also quite important.
I sense your frustration with decisions that don't make sense or barrel over your concern. If western democracy is working properly, the elected decision makers theorectically should be hearing different perspectives on an issue before coming to a decision. Citizens should have a chance to voice their concerns. And hopefully a decision is made that is somehow  based on a balance. Failing that, western democracy allows for activism, but that takes a lot of time and energy. And when a good part of the citizenry is more concerned about feeding their addictions, the force of activism is also limited.
And we have been trained to push forward on our agenda rather engage in consultation. The side that shouts the loudest and longest wins, right?
Even if western democracy is working as it is supposed to (and I believe in many ways, it is), if citizens don't believe it has their best interest at heart, democracy will eventually unravel to something else.
It's time for a new way of governance.
Neil Lock Added Apr 26, 2018 - 6:32pm
Dave: It's time for a new way of governance.
Absolutely agree, Dave. But we disagree on solutions. You want to see a new way of selecting leaders within the existing political system. I want to see a new framework, in which governance doesn't do politics, only justice.
And I'm glad to see that you recognize the importance of the individual:
Katharine Otto Added Apr 27, 2018 - 11:18am
I skip the computer for a day and come back to find several most interesting and thought-provoking comments.  Thank you all.
The industrial revolution has made a huge difference in how we think and live our lives.  For instance, the idea of hourly work and wages, and saving for retirement, is probably new.  While people may have saved, I suspect savings took the form of tangible assets, like homes and tools.  They probably depended a lot more on relatives and offspring to take care of them, but this is my largely un-educated generalization.
I do believe the industrial age has gone too far, and the machines that cost a lot in overhead (and debt) are producing more than markets can absorb.  That's the reason for such things as planned obsolescence, and for making inferior quality products.  It's a reason imports are stacking up at ports and filling warehouses, and imported cars are rusting on the docks in places like Los Angeles.  
Re-distribution isn't as important, to me, as getting priorities straight, meaning placing greater value on those who do "useful" work, such as skilled labor.  We have a whole society of people who derive income from skimming off other people's work, including (sorry) bankers, insurance companies, government workers, and stock brokers, to name a few.  In Wealth of Nations, Adam Smith tried to make a distinction between "useful" work and other work, but it was obvious he sided with the parasites and that's one reason his book was such a hit. 
Katharine Otto Added Apr 27, 2018 - 11:26am
Yellow Sub,
Nice to meet you.   I haven't seen your avatar before.  You make many good points, and I agree with most of them.  While I don't see much effort to stop the wars, I don't see much enthusiasm for them, either.  I keep coming back to TS Elliot's line to the effect that the world will end, "not with a bang, but a whimper."
I think pensions and Social Security are debilitating to "the economy," but they serve Wall Street and the Fed well.  They also feed the eco-rapists, like the international palm oil industry, a steady supply of income.  The pensioneers often don't know where their money is invested, only whether it pays good dividends.   Meanwhile, the fund managers are looking only to returns and have no social consciousness.  While I don't support cutting off those who have been promised pensions, I do believe it's a bad idea to keep offering them.  I'm on Social Security, but if payroll taxes had been optional when I was working, I would have opted out.
Katharine Otto Added Apr 27, 2018 - 11:31am
What if we had a different kind of draft, to wit:  Require 1-2 years of community training/service/apprenticeship from 18-year-olds.  They could have a wide range of options, including health care, public works, public transportation, or any number of services we pay government to do, and for which they are perpetually short-handed. 
You know I have issues with the military and with war, but the military does some things right, such as have clear chains of command and accountability.  After all, one of FDR's most popular programs was the CCC, run by the military.  Too bad it was allowed to die.
Katharine Otto Added Apr 27, 2018 - 11:44am
John Wagner,
Hello.  Thanks for reading and for your comment.  Maybe the currency issue comes down to the use of paper money and bank credit notes.  This was not a problem when governments used gold, silver, and copper currency.  However, international commerce has made that impractical.
Now that central bank credit is backed by nothing except the governments' good faith promises to pay, it traps everyone into this Ponzi scheme of needing to spend more and more on less and less, until we will eventually be spending everything on nothing.  Where will the World Bank, or the International Monetary Fund go for funding, after all, when as lender of last resort, it runs out of good faith credit in the world?  There are already indications that the system is imploding from within.
I believe it's interesting that both China and Russia are hinting about returning to the gold standard.  Also, central banks are buying up tons of real gold, suggesting they know where the true value lies.
While I believe the Federalists' Constitution was intended to supersede state power, I suspect the Framers had no idea how far their descendants would take it.  It seems all the early founders were happy to use public money to expand federal power, even Thomas Jefferson, who funded the Lewis and Clark expedition and negotiated the Louisiana Purchase.  
George N Romey Added Apr 27, 2018 - 11:49am
Katharine what you refer to is a rent seeking economy, which the US is increasingly becoming. Economic activity that provides little value to society, enriches the already fabulously wealthy and places a danger on society. Think of payday lenders, which by the way give very generously to politicians.
Katharine Otto Added Apr 27, 2018 - 11:49am
Actually, I didn't sidestep the question.  I merely posed the question, because I'm not sure of the answer, either.  I suspect it is a government/Fed/Wall Street construct that conflates individuals with institutions.  What's good for the institutions is often bad for individuals.  For instance, the "farming industry" does not speak for individual farmers.  The "health care industry" certainly doesn't speak for me, and in fact, opposes everything I believe in.
John Wagner Added Apr 27, 2018 - 12:00pm
The industrial revolution made saving for retirement a new thing because it made saving possible. That is, it raised incomes and allowed most people to save more money. 
I cannot agree that "machines are producing more than markets can absorb." Sure, maybe on a short-term basis here and there, too much stuff gets produced, because life is not 100% perfect. But on an overall basis, over-production is not gonna happen. I know it's hard to believe, but businesses actually don't like losing money. 
Bankers, insurance companies, and stock brokers may not directly do 'useful' work, but they DO help others do 'useful' work. Not claiming perfection here, either, but I guarantee we'd be worse off if we eliminated all bankers, insurance companies, and stock brokers. They help finance the enterprisers who do 'useful' work, and spread their risk. 
Katharine Otto Added Apr 27, 2018 - 12:01pm
Like Tubularsock, above, I believe it all starts with the individual, and this is where I defy convention.  Consider this:  if taxes were voluntary, how many people would pay them?  Would they choose to pay taxes for some things, and not others?  
I'm currently reading a biography of Ben Franklin.  He started a private circulating library and a private fire department.  Members of the fire department were required to pay a fee, buy specific equipment, practice regularly, and maintain the equipment.  They agreed to respond to fires only in members' buildings.  This may have seemed extreme, but soon several similar clubs were established, so that eventually most of Philadelphia had fire protection and trained, invested people to fight the fires.
What does the government do to earn its money?  If taxes were voluntary, I bet we'd see a lot more community cooperation.
John Wagner Added Apr 27, 2018 - 12:04pm
I'm with you on the benefits of a gold standard, that it keeps politicians and central banks honest, rather than allowing the endless printing of fiat currency. I just don't know if a gold standard is really possible anymore. I'd probably be in favor of more rule-based Fed decision-making that aims to control the growth of the money supply. Seems less arbitrary than what they do now. 
Katharine Otto Added Apr 27, 2018 - 12:10pm
Maybe my comment to Dave, above, will find favor with you.  It addresses the idea of governance from the bottom up rather than the top down.  It's only a start, because I don't presume to have final answers.  I suspect there will never be final answers, just continually evolving questions.
Doug Plumb Added Apr 27, 2018 - 12:11pm
re "Like Tubularsock, above, I believe it all starts with the individual, and this is where I defy convention.  Consider this:  if taxes were voluntary, how many people would pay them?  Would they choose to pay taxes for some things, and not others? "
You have to pay tax Its the law and it is also morally correct.
The income tax is not a tax. Its an interest payment on loans made to the MIC. The loans were not real, the money has no value other than the work ethic of the American people. They take our money, lend it to MIC then get us to pay it back.
This is why the income tax is voluntary. The Fed (who has MIC working for it) has no obligation to the American people. The American people thus have no obligation to it.
If you look up "income tax voluntary" on you tube, you will see officals explaining that you report your own taxes which is what voluntary means. Voluntary does not mean "manditory self reporting, manditory signature under penalty of perjury". Your signature is forced on your income tax forms. Don't think that you didn't make a mistake, no one understands the incom,e tax code. It is there to confuse. You sign that doc with a mistake on it and they have grounds for a future arrest - or a re- assessment which you cannot pay.
The income tax is the most vile, immoral thing that has ever been perpetrated on American people aside from the faking of the holocaust.
Doug Plumb Added Apr 27, 2018 - 12:15pm
re "its time for a new system of governance"
Nothing is better than the common law. Its better to learn it and restore what is ours. Many people sold out because they think the NWO is inevitable because we are stupid. Stupid people will still be taken advantage of under a new system. A new system will permit the Jewish banks to continue operating.
Dave Volek Added Apr 27, 2018 - 12:50pm
If taxes were voluntary, I bet we'd see a lot more community cooperation.
The USA is going through a great experiment right now. The recent tax cuts will put more money in the hands of rich people. If the wealthy class is indeed as generous as some WB contributors claim, the country's charitable donations in the IRS tax forms should rise substantially, a statistic which should be easy to attain. This increase will come by either directly from a donation of the wealthy or indirectly as the wealthy buy more luxury items and those business owners or workers eventually donate.
I'm willing to bet that the increase in donations will be less than 10% of the foregone taxes. In other words, the wealthy are really not that generous. That is my experience.
Katharine Otto Added Apr 27, 2018 - 1:21pm
Thank you for that clarification.  I have also heard the income tax is voluntary, that there is no obligation to file, but if you file, you'd better pay.  I've even done some research into the beginnings of the income tax.  It is shrouded in mystery and deception.  
One of the tricks used by government is withholding.  If money is withheld from salaries, many people, especially those who want refunds, will file to get their money back.  It's a great "gotcha" scam to make sure people file.
Katharine Otto Added Apr 27, 2018 - 1:25pm
If the wealthy (or anyone) approved of what the government is doing, they might be more charitable.  I don't approve so feel it's my patriotic duty to starve the government as much as possible.  That includes not earning, spending, or investing.  In fact, I'm cultivating non-productive laziness and using what I already have.  It's my latest calling.
Stone-Eater Added Apr 27, 2018 - 1:49pm
Excellent, sorry I've read it so late. But you see, those constant remarks about the constitution and n amendments made me tired as a European ;-)
I mean:
DO WE NEED A PAPER TO REMIND US HOW TO BEHAVE, it a constitution or a bible or quran or whatever ? Are we really still that dumb ?
I agree that we need a set of rules in a community because there's always some who don't (want ?) to understand. 
BUT: The ones who are representing the rules, be it a pope, a president, a CEO or whatever, MUST be authentic.
They aren't. And a bad example attracts many followers.....;)
Ian Thorpe Added Apr 27, 2018 - 2:04pm
Katherine, you're not sure what the economy is? Welcome to the club - and I have a qualification in economics.
But if you'd care to brink the snacks and wine (might need two bottles) I'll explain what I know.
Cynthia Rouse Added Apr 27, 2018 - 2:08pm
The FED is a consortium of private wealth holders that conned the World into giving them printing rights to paper money in 1913. See 'The Creature From Jekyll Island' See the 'Gold Standard' see 'British Sterling' 
You thought that was a cologne, didn't you? No. It's a form of Fractional Reserve Genocide and economic slavery. Research social security numbers, bought and sold, like slaves. It's all in the public domain.
Stone-Eater Added Apr 27, 2018 - 2:16pm
Bill Kamps Added Apr 27, 2018 - 2:43pm
The conversation is somewhat amusing in that it presumes there ever was a time or place where things werent run by the rich for the rich. There never as such a time or a place, so why do we think this is some new revelation?
The Constitution only gives voting rights to white men who own property.  What more does one need to know?
The fact that a middle class exists, is merely an accidental means to an end for the rich.  The Egyptian tombs were built by tradesmen who  were well paid, not  because the Pharaohs liked to pay people well, but because that was how their tombs best were built.  It has worked this way ever since. 
The prosperity of the 1960s was not because suddenly the rich were being generous.  The prosperity was because the rich needed labor in order to maximize their wealth.  Labor was in short supply compared to the opportunities, and so people were paid relatively well.  Now that the rich have found other means to accomplish their goals, labor is less necessary.  This is Economics 101. 
Bill Kamps Added Apr 27, 2018 - 3:05pm
The owners and managers of companies do not hire people to distribute the wealth of the Industrial Revolution.  They hire people, to maximize their income.  If hiring a person makes more money for the owners they do it, if not they dont.  Now they dont always get the calculation correct, the  rich  make mistakes just like all of us.  So sometimes they hire too many, and sometimes too few.  However, they are not hiring people so they can spread the wealth.
When the owners of companies pay people well, it is because in their calculation this will make them even more money.  Maybe it will lower turnover, maybe they will attract better talent, whatever the reason it is not generosity. 
The people that wrote our Constitution were the richest men in the Colonies, so OF COURSE they tilted the playing field towards themselves.  What else would we expect?  They can say whatever they want to justify it, just like Trump says the tax cut helps the blue collar workers, that doesnt make it so now, and didnt in 1776.
John Wagner Added Apr 27, 2018 - 4:14pm
I agree with much of what you say, but want to point out one inconsistency. The tax rate cut for businesses WILL help blue-collar workers, for the reasons you state elsewhere. Businesses do indeed compete to attract and retain employees. Wages are based on supply and demand, like everything else. If businesses have more after-tax profit, that allows a bigger pot of money to get competed into employee pay. Not because businesses are altruistic. Businesses pay higher wages than a century ago because they are more productive and therefore profitable. 
Lower business tax rates also encourage investment, which promotes productivity, which eventually boosts blue-collar pay. 
Dave Volek Added Apr 27, 2018 - 4:30pm
Just because a citizen does not get exactly what he or she wants out of government does not give the citizen the moral authority to claim that taxes are unfair or unwisely spent.
And because we all have different opinions, no one really gets their way. For example, the rich could ideologically justify that their superior talents and work ethic should exempt them from paying any taxes for the rich are ones keeping the economy going.
Taxing and government spending is a big societal compromise. If the politicians do a reasonable job of formulating that compromise, they get elected again.
And what parts of government are so wasteful? I did a little civics calculation when I was in High River. I could save each house $500 a year by firing all the police officers and shutting down the police station. Would you rather have the police protection or the $500?
True it is there is some obvious misspending. But this just happens! I have seen big petroleum companies, who have business analysts doing many calculations, make some silly decisions. When I was in small business, I made a few mistakes. As individuals we make mistakes, misspending money here and there. Why is that when government misspends money, it is such a grievous mistake that justifies a contemptuous attitude for all taxation?
Most money taken in by government is reasonably well spent. Even when an activity is wrong in our eyes, it is right in another's eye? For example, consider the $200m of missiles dropped on Syria recently: some Americans need to that to feel good that USA is battling terrorism--and it is a very visible sign.
I will contend that we could attain a better balance between taxing and government spending. But we shouldn't depend on the western democratic model to create that balance.
Dave Volek Added Apr 27, 2018 - 4:32pm
Bill Kamps
Nice explanation of Economics 101.
I don't see the rich donating much of their tax breaks back to charities of any kind. They just might argue that they need a bigger tax break to justify being generous.
John Wagner Added Apr 27, 2018 - 4:46pm
You say, "because we all have different opinions, no one really gets their way [with government policies]." This is actually a core reason why I think it makes sense to minimize government. At least, in many countries. 
Smaller countries with homogeneous populations tend to have more widespread agreement on what ‘the group’ should do. Therefore, collective action through government is more likely to be aligned with the desires of most citizens.
It's different in a larger and more diverse country, like the US. A large and diverse group will naturally find it more difficult to reach widespread agreement on what ‘the group’ should do. Therefore, collective action through government will likely please a much smaller subset of citizens.
In this setting, it makes sense to leave more decisions and money in the hands of individuals rather than collectivizing through government. 
Doug Plumb Added Apr 27, 2018 - 5:01pm
@Katherine re "One of the tricks used by government is withholding.  If money is withheld from salaries, many people, especially those who want refunds, will file to get their money back.  It's a great "gotcha" scam to make sure people file.  "
I had an employer, summer employment for three years. At my request, he did not take income tax from my cheque. In Canada you sign a form giving permission to take taxes. Income is not wage earnings and people believe income and earnings mean the same thing. You sign the form a little differently. (My employer still takes taxes from me even though I haven't aquiesced) Under common law, they cannot take your money without a mutual obligation on their part, they do it by way of fraud and deception. It is not the Christian way to operate by fraud and deception.
Bill Kamps Added Apr 27, 2018 - 5:05pm
The tax rate cut for businesses WILL help blue-collar workers, for the reasons you state elsewhere.
John I agree.  There is a kernel of truth in what Trump said, most people will benefit at least a little.  However, the majority of the benefits go to the rich, that is unavoidable as they pay more taxes in dollar terms.  
There also was a kernel of truth in what our Founding Fathers said.  There was more personal liberty given to US citizens, than many other places.  These liberties were given to more than just white male landowners.   However, they were not given as broadly as the Declaration of Independence announced.  All men, were not treated equal. 
So while politicians trumpet the benefits going to the lower and middle classes, we all know who gets most of the benefit.  Its like one of Newton's laws of gravity, the greatest benefits go to those that have the most. 
Dave Volek Added Apr 27, 2018 - 5:10pm
As I have stated earlier in this thread, we need to establish a balance between individual/local/municipal/provincial/national/international jurisdictions.
Take my $500 tax rebate or local police protection choice. We could give citizens the choice to pay directly for the police protection. But there will be people who won't or can't pay for that protection. If they phone in a complaint, no police cruiser comes to their door. They would need to fight off the burglar, rapist, kidnapper, wife beater, etc. in their own way. They made a choice; they live with the consequences. 
In other words, there are many things we need to think of in a collective way--if we want any societal efficiency.
If we take that example to a higher level, our local police budget is based on the population of our town. Our provincial government gives the town so much money just for police protection. Not only that, the province has more to with the direction of this local police force than the elected town council. This might be a case where the province should cede much of its control of local policing to the local council. But being in federation where the various jurisdictions are tightly defined, it takes a lot a lobbying to effect these kinds of changes--even if they are the right changes to make or are worthy of some experimentation. 
Rather I would prefer that the province just decides the local town councils need more autonomy in policing.
Bill Kamps Added Apr 27, 2018 - 5:11pm
John, Smaller countries with homogeneous populations tend to have more widespread agreement on what ‘the group’ should do.
Agreed.  It is also why some cities are doing better than many states. Not only is being homogeneous helpful, but smaller usually means physically smaller, and government then is living close to the people they govern.  Cities also are an example of this as mayors live in the city and interact with the people every day.  Congress people are thousands of miles away, and those rare cases where  they talk to voters it is usually a pretty controlled circumstance.
Bill Kamps Added Apr 27, 2018 - 5:15pm
Take my $500 tax rebate or local police protection choice. We could give citizens the choice to pay directly for the police protection.
We have some degree of that now.  Our neighborhood can optionally fund a constable for our area, yet another layer of police here.  If  enough people are willing to pay, we get extra patrols.  Even the people that dont pay get the benefit within the small area, however the people that dont pay dont get to the tell the constable when they are going on vacation, and have their house specifically looked at for problems.  We can register our vehicles with the constable also, so they know if other vehicles are around that dont belong there.   In our location it is not a lot of money for the annual  fee. 
John Wagner Added Apr 27, 2018 - 5:16pm
Bill and Dave, 
You both seem to make arguments for local govts having more power and the federal (national) govt having less. I heartily agree, for many reasons. Better chance of being efficient, effective, and aligned with what citizens actually want.
Unfortunately, that's the exact opposite of what has happened in the US over the past century. 
Dave Volek Added Apr 27, 2018 - 5:30pm
And that the problems with federations that have well defined jurisdictions of authority. These jurisdictions just don't like giving up control.
Any transfer of authority must be fairly easy to enact.
And of course the transfer of authority should go both ways. There may be instances where local control has proven not be a good idea. The authority needs to be taken away from the local council and reverted back to a higher level (and with some degree of ease).
The Alberta government tried to decentralize health care about 15 years ago. So it set up about eight different boards for the various regions of the province. It seemed to me the the various boards, each with its own CEO, were incapable of finding ways to cut costs--and saw their function as only to lobby the government for more money. There may be other reasons I could not glean from the media. Eventually, the eight boards were dissolved and replaced with one provincial board. It seemed that experiment to decentralize did not work out!
Doug Plumb Added Apr 27, 2018 - 6:47pm
re "Take my $500 tax rebate or local police protection choice. We could give citizens the choice to pay directly for the police protection. But there will be people who won't or can't pay for that protection. If they phone in a complaint, no police cruiser comes to their door. They would need to fight off the burglar, rapist, kidnapper, wife beater, etc. in their own way. They made a choice; they live with the consequences."
Then the police make money from fear. Its not unlike police/military to do false flags to create a need for their service. Firemen would set houses on fire if their jobs depended on it.
Doug Plumb Added Apr 27, 2018 - 6:56pm
You guys always talk in terms of economics. The thing that characterizes the West is its laws and from the laws came the greatness of the West. From the laws, greatness can return. Economics is always about short term remedies - the empirical and doesn't focus on the rational.
You cannot say that you need to create new policy to turn things around. Your new ideas and new policies just smash into everything else.
Our government agencies regularly break the common law Reason is debt to banks). A perfect example of this is the income tax. Without that all the bogeymen starve.
There have been many highly accomplished ex members of the working establishment, from the FBI, the CIA, Revenue Collections Agencies, etc that tell us our governments are breaking laws.
Katharine Otto Added Apr 28, 2018 - 11:13am
I'm trying to get at fundamentals, but it's hard to do in a 1500 word essay.  Because we've been brainwashed for centuries to accept without question certain dogma about the role of government, I think it's important to highlight key points in history.  US history is the one I know best, and it stems from European history, primarily British.  
We adopted from the British the notion of constitutional law, the idea of property rights, rich-vs-poor, the importance of "the economy," commerce, and industry.  We learned from the British there's something demeaning about honest work, with the profit-takers reaping benefits from other peoples' labor.  We got this work ethic from the Puritans, but I wonder if the "work ethic" is over-rated, a way of guiltifying labor into working enough for itself and its overlords.
I'm thinking about a post on the benefits of laziness.  If you aren't acquisitive, you shouldn't feel obligated to work very hard.
Katharine Otto Added Apr 28, 2018 - 11:15am
Snacks and wine are tangible assets, unlike money.  I believe a discussion with you would be most entertaining.  When do you plan to jump the pond? 
Katharine Otto Added Apr 28, 2018 - 11:25am
I've read The Creature from Jekyll Island twice, and parts of it more than that.  It was profoundly revealing, but it doesn't cover the extent of interconnected intrigues that have riddled Western history.  Griffin doesn't go into the stock market's role, for instance, or the fact that the Fed with central bank tied to new tax scheme (income tax) is based on Alexander Hamilton's central bank tied to the whiskey tax.
And this was based on Britain's example, with the British crown increasingly dependent on the London Stock Exchange, protectionist tariffs and exclusive contracts and  to fund its wars.  
Katharine Otto Added Apr 28, 2018 - 11:39am
Bill Kamps,
It's based on Western historical precedent, and mostly on European history.  When you look at the tribal cultures in the Americas, social arrangements were quite different, but they were wiped out or overrun before anyone learned anything useful from them.  First, nomadic groups were not acquisitive, so they only took what they needed from the land.  I wish I knew more about the native cultures, but I suggest that they were caught off guard by the European guns and attitudes, the greed, the idea of property rights and permanent dwellings.  Money becomes less relevant when your wants and needs are within your grasp.  
The idea of profiting from other people's labor is well described in Wealth of Nations, in which Smith repeatedly describes ways of squeezing labor to maximize stock returns.  If you can deal with Smith's sing-song style, it's well worth reading--a cold-blooded tax collector's social history and justification for exploitation.
Katharine Otto Added Apr 28, 2018 - 11:46am
You and I agree government needs to be re-conceptualized.  Much of what you write supports my point of view.  I still contend the government extorts money it doesn't deserve to fund itself, like the Mafia.  The example of police protection doesn't cut it with me, because I'm more afraid of police than criminals.  In many cases the police are the most criminal, and I wouldn't want them to know if I'm going out of town.
It is said that Chinese tradition pays the doctor to stay away.  I feel that way about police, government, and the Mafia.  Unfortunately, like the deer I feed, the more I feed them, the more they return, bringing more of themselves to be fed.
Katharine Otto Added Apr 28, 2018 - 11:58am
Bill and John,
If you believe income tax itself is fraud, then the argument about whether to lower business tax becomes irrelevant.  Theoretically, the less you tax people, the more disposable income they have to churn the "economy."  Also, they wouldn't need much in wages, if they didn't have government parasites to support.  The early federal government favored industry and groups and created the imbalance we have now.  It's not so much a rich-poor issue as one of groups vs. the individual.
The idea of local autonomy is less one of "control" than of "responsibility."  Who suffers most if sewage runs in the streets?  Shouldn't those who stand to benefit or suffer most have the autonomy and responsibility for solving the problem?  When localities abdicate their responsibilities to outside forces, they deserve to get short-changed.  
Katharine Otto Added Apr 28, 2018 - 12:02pm
I beg to differ about laws.  The greatness of the West (the Americas) is based on land and the natural resources the Europeans stumbled on and exploited for export and money.  Laws facilitated this exploitation, because they only apply to the other guy, and they were backed by guns.
George N Romey Added Apr 28, 2018 - 12:36pm
My biggest issue with the Fed is that with a guaranteed backstop the large criminal banks will always prevail. The Fed will either come in with free or near free money or even better yet buy off problems at book value, or both as what happened in 2008-2013.
Doug Plumb Added Apr 28, 2018 - 2:52pm
re "Doug,
I beg to differ about laws.  The greatness of the West (the Americas) is based on land and the natural resources the Europeans stumbled on and exploited for export and money.  Laws facilitated this exploitation, because they only apply to the other guy, and they were backed by guns. "
There you go thinking like Karl Marx, everything boils down to economics. Laws of the West had been under development long before America was discovered and as for wealth, all that really matters in the economy for most is how much they have relative to the next guy.
I don't believe that the Natives were as oppressed by Whitey as mainstream would have us believe. Mainstream goes out of its way to try and tell us we are responsible for black slavery as well. Christians were about the only group not involved, with only a tiny number of Christians in the trade.
We viewed natives as savages in these sense that they didn't have the agency to live in a common law society. Same thing applies to blacks. They didn't when we first encountered them, but no white Christian is going to say a black man has fewer rights because of his skin color. The hard alt right just wants to restore his society and put the black man back in Africa to restore his own society. No one wants to harm or hurt him.
The West is a true gem in modern human civilization, people who come here should be thankful that they can live in a peaceful society that was not of their making, and they should look around and see that we have it better, and also that its faults, pornography, drugs, booze, etc were all introduced by a small number of people who are themselves supremists and not in any way connected with the common law.
Katharine Otto Added Apr 30, 2018 - 12:28pm
You misunderstand my point.  It's not a question of Natives being oppressed by Whitey as much as a clash of values, in which Whitey believed in things like property rights, laws, commerce, and permanent dwellings.  Whitey's way prevailed, but we know not what was lost in the process.  The pristine land, for instance, was changed forever, and we are dealing with the consequences now.
I'm not asserting the Natives' way was better, because I simply don't know.  I can say that during Benjamin Franklin's time (I'm reading a biography now), Native children raised by white families took the first opportunity to return to their own.  White children raised by Natives chose to stay with their adoptive families.  
Katharine Otto Added Apr 30, 2018 - 12:32pm
We both have lots of issues with the Fed, starting with the dishonesty, but the more I learn, the more I see that dishonesty is built into the system and probably always has been.  Even our so-called "heroes" rationalized their behavior with such notions that "ends justify the means."  They convinced themselves and others that they were acting on others' behalf.
Bill Kamps Added May 1, 2018 - 11:07am
John, yes the Federal government has grabbed more power, and people have largely allowed this to happen because it seems easy.
It is always easier to allow someone else to handle the problem.  However, when that someone else does a poor job, or ignores the problem, like the Feds are doing with infrastructure, then the people suffer the poor results.
The  Feds grab the power because the risk is low that they will be held accountable for poor performance.  The people cede the power to the Feds because dealing with everything at a local level is challenging.  Mayors face a higher risk of being held accountable, so they are willing to give the responsibility to the Feds. 
Will dissatisfied voters push the power back to the local level? maybe at some point when they see that sending dollars to Washington is a bad bargain.
John Wagner Added May 1, 2018 - 12:14pm
Bill, infrastructure is a good example of what should be a local, not federal, govt responsibility. We're generally better off if the same individual or organization that receives the benefit of something also incurs the cost. 
Two reasons why govt is ineffective are that (a) govt doesn't have the detailed knowledge needed to make good decisions, and (b) govt doesn't have the self-interest and accountability of spending its own money on things it will use itself.
Local govt helps to minimize these problems. Minimize, not erase. Even local govt will still make worse decisions and be less accountable as compared to private sector buyers and sellers. 
John Wagner Added May 1, 2018 - 12:19pm
Katharine, I don't consider income taxes as fraud. I do believe that society is best-served by limited government, not Big Government, so I'd prefer less taxes overall.
I also believe that we are better-served by local rather than federal govt. However, in all cases we need some govt, and so we need to pay some taxes. 
Maybe I'd rather tax consumption than income, but that's because it would likely lead to more long run economic efficiency and prosperity. 
Katharine Otto Added May 1, 2018 - 1:53pm
It's important to remember that we have four levels of government, if you live in a city--city, county, state and federal--that are competing for tax dollars and control, while shifting responsibility to the others.  Also, there is overlapping responsibility, such as the federal and state Departments of Transportation.
A good example is that the Army Corps of Engineers is busy deepening the Savannah River Harbor.  The dredge from the bottom of the river has created the largest mosquito nest in two states.  "It's not our job" to control the mosquitoes, they say.  The Corps leases the land from the state of Georgia for the dumping site, but it pays Chatham County for mosquito control.  The county can't afford to provide good drainage to prevent mosquitoes, so it has helicopters spraying malathion throughout the coastal area.  "It's good for the birds," says the Corps.
Then you have the problem of the federal government's wanting infrastructure that communities don't want.  Think of all the cities that have been divided by the interstate highway system.  Do we need all those interstates?  Do we need new highways or bridges?  Who should decide?
Katharine Otto Added May 1, 2018 - 2:08pm
The income tax has a long history that I'm researching, and it's a matter of opinion whether it is fraud.  I consider intentional deception fraud, but others may disagree with me.  It's a mechanism by which the federal government can justify profligate spending, because it provides steady, dependable revenues for paying interest.
If, at this point, I don't support anything the federal government does, should I be forced to pay for it?
Local government, theoretically, should have a clearer picture of what local communities want or need, but they must kowtow to other levels of government.  Education provides a good example.  Most of local property taxes go to education.  In addition, over 50% of Georgia's budget is dedicated to education, and the state lottery also contributes.  Then we have the federal government and the Department of Education involved.  Yes, I believe in literacy, but these government entities really need to learn their math.  It shouldn't cost that much, for what we get.
Bill Kamps Added May 1, 2018 - 2:13pm
Katherine,  I did not say that dividing responsibility is an easy job.
I just said, that when things are done locally, they tend to be done better because local government is more responsive.  That doesnt mean everything could or should be done locally. 
There is this notion that when the Feds do something, it is "free".  Which of course isnt true.  However, it is kind of like going to an expensive restaurant where everyone agrees ahead of time to split the check equally.  What are the odds that people will order the lower priced entrees, or the cheap wine?
Katharine Otto Added May 2, 2018 - 2:15pm
I probably didn't state it exactly, but I, too, prefer local solutions and payment for local problems.  At least locally, my voice counts for something, if I choose to exercise that power.  Also, I fantasize that locals would voluntarily participate in local improvement efforts if it saved money on taxes.  Neighborhood litter campaigns, for instance.
Maybe some people perceive government services as free, but I don't.  In fact, I take the opposite view, that government services cost way more than they're worth.
Also, I never agree to split the check equally, because I don't drink.  If I had the choice on taxes, I would take the same approach.

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