The Fix - Capitalism Version 2.0 & The New Economy

People ask me what I am talking about when I talk about "Capitalism Version 2.0" and this whole "New Economy" thing. What are you talking about? Is this capitalism? Is it socialism? What do you mean we don't need taxation to pay for government? What do you mean by "unlimited fiscal spending"? What is an "omnibus economic system"?

It seems like the more I talk about the real-world solutions we can apply to salvage the economic future of our country for the benefit our own immediate circumstances, the more people ask questions and tend to be confused.

Most of the confusion starts when I talk about taxation because we have been taught that our economy and government cannot function if we don't pay taxes to sustain our government. In reality, this is completely false, because; taxation is a limited activity and spending isn't a limited activity. You can't tax 100% of output - in fact you can only really tax about 19% of output without creating an economic recession, so that's a real limitation. Congress has proven that it can just keep writing checks and we will have to be responsible for their spending. There are no immediate consequences (save Bart Stupak) for their decisions that they can see; they believe they are immune to your lamentations, so it is unrealistic to believe that spending can be controlled.

The political reality is that spending cannot be reasonably controlled, because; humans acting in their own self-interest have no reason to reduce spending and never will. Your realization of this fact (you don't have to like it, you just have to agree that you know I am right) allows us to take the next step - fixing this problem.

When you fix a problem, you have to either fix the conditions that create it or the process that generations the actual outcome itself. In the case of spending, we can't fix the process as democracy demands Congress has the right to determine spending and unless we are going to have a constitutional convention, this will not change. This means you have to change the conditions that make unlimited spending a problem.

So what do we now know? We know that taxation is a limited activity and unlimited spending is not a limited activity and that we can't fix an unlimited activity by using a limited resource pool to make the activity happen. Think of it in terms of oil; you run out and the lights go off. The same is now true of taxation; we no longer have enough revenue to pay our bills and pay the national debt, so the debt continues piling up. When it reaches the point where nobody believes they will be able to be paid back, nobody will let us borrow money and our economy and government will crash and everything you thought America now is, will become a thing of the past. America will be no better than Argentina.

We have to look at the other side of the problem to fix it. This means we have to realize we have to either augment taxation with another source of revenue that is sufficient to pay our bills (and pay off the national debt) or replace taxation altogether with a source of revenue that will give us the practical ability to undertake unlimited spending and pay off the national debt.

Mathematically, there is only one activity that generates revenues on a consistent basis that can be structured to be, more or less, unlimited in nature. That activity is investment-income investing. The investment-income method of revenue generation gives us the opportunity to completely replace taxation because the investment-income method is not inherently dangerous to our economy. In point of fact, it can easily be structured so that all government spending becomes a true stimulus to the private-sector economy and can be structured to be non-inflationary in nature.

Now think about that for a few moments; a way of paying for government that would actually help our economy, wouldn't cause inflation and could be structured to pay off our national debt and pay for all those entitlement programs you think you just can't go without. All of this could happen without us suffering want or having to make the stupid economic choices that socialism, communism or progressivism would dictate. In point of fact, we could structure the use of the investment-income method in such a way to kill the specter of socialism and communism for all time.

Now that's a true omnibus solution, don't you think?