May 15th, 2013 by Dissolving Dollars
Today gold and silver underwent another round of technical damage, thus reducing the probability of reversing the down move anytime soon. In the meantime, U.S. stocks continue to march higher, with nearly no pullbacks. The dollar keeps trying to go higher too. This is all part of setting up the next U.S. recession, which is still a few years down the road.
The danger going forward is hypertaxation not hyperinflation. Yes, hypertaxation will make things expensive, but that won’t be hyperinflation. With hypertaxation, the bond holders will get paid and the government will be able to maintain its obese figure for a little while longer without having to start its diet. I’ve heard chatter that a backup plan for dealing with the government debt when the day of high interest rates comes to the U.S. is to take over retirement funds. They will do it under the guise that the safest place for retirement funds is government bonds and thus they will force the $20 trillion or so in retirement funds into government debt at low or even no interest.
A recent example of the trend to hypertaxation is the internet sales tax. It hasn’t passed yet, but even if it doesn’t they’ll keep trying. The cry is that the lack of online sales tax isn’t fair for local brick and mortar stores…as if most truly local brick and mortar stores couldn’t engage in online sales themselves. But regardless, if it is unfair for brick and mortar stores, then get rid of sales tax altogether. That would be super fair. But of course that’s never even proposed as part of the dialogue. Ignoring the fact that taxation is the socialization of theft, taxes suck for doing business. Taxes are a layer of regulation that gives unfair advantage to those with the economies of scale to comply. Here’s a novel concept, instead of stealing money and spending it on stuff that is supposedly important, how about charge people money for stuff they actually want and use.
But no, taxation is a brutal political weapon that no government ever wants to give up. The recent IRS scandal involving discrimination of anti-tax political movements goes to show the power of the tax weapon. And I just love how these scandals are always blamed on some low level peons. But when there is something to brag about, it is the people at the top of the pyramids that take the credit (namely presidents). Tax is a weapon of control to force support of the government, and it has been and always will be used as such for as long as people accept the concept of government. That is why Bitcoin is another thing the government is starting to crack down on in preparation for hypertaxation.
Hypertaxation doesn’t mean gold and silver won’t still rise in price, it just means they won’t rise hyperinflation style. Nonetheless, in the hypertaxation environment, I could see something like junk silver being highly valued. People will sell things for junk silver and pay tax on the face value of the coins rather than the metal value. Just something to think about for anyone wanting to buy metals before they bottom out and in due time eventually start marching higher.