Thursday, December 20, 2012

Surviving Economic Calamity Thru Creative Resistance

Americans intuitively comprehend that something is radically wrong even if they don’t understand why it is happening or what caused the economic implosion and calamity. As the economic misery piles up and government becomes increasingly powerless to solve problems, folks are indeed justifiably scared and trembling as they comprehend that life as they know it is has never been more gravely threatened.

First, it’s important to understand precisely what brought America to her knees and created a situation that is literally wiping out the middle class. The evil and insidious root of the poisonous tree that resulted in the downfall of American prosperity is 1913 the Federal Reserve Act that spawned the warfare-welfare state. The sole purpose for the creation of the Federal Reserve was the massive concentration of wealth and power by taking economic power away from the people and free markets, and transferring that power to the ruling elites and the political class. For a concise and scholarly understanding of the Federal Reserve, I highly recommend reading The Creature from Jekyll Island by G. Edward Griffin.

Bad as the Federal Reserve is, the damage that it could inflict was restricted so long as the dollar was still tethered to gold. When Nixon de-tethered the dollar from gold in 1971, the dollar then became a 100% pure paper fiat currency and we got 2 economic and liberty destroying fatal diseases 1. Banksters Gone Wild and 2. Government Gone Wild.

The resulting harm created by the Federal Reserve can be pictorially presented to show its devastating impact on the middle class.

1.  Production Worker’s Hourly Wages in Gold (Source:

2.      Inflation has soared and the purchasing power of the dollar has shrunk.

3.      The tax burden has dramatically increased.

4.       To maintain their standard of living, Americans resorted to debt.

The above charts document a substantial decline in real wages, a decline in the purchasing power of the dollar, an increase in the tax burden and an exploding consumer debt. That is precisely what the Federal Reserve intentionally delivered, especially after 1971.

But not all folks were equally affected. The poor and middle class were hit the hardest while the rich got richer. Economist Robert Reich stated “The richest 1 percent of Americans last year took home 23 percent of total national income. Back in 1980, the richest 1 percent took home 8 percent of total income. The last time the top 1 percent took home more than 20 percent of total income was in 1928, just before the Great Crash.” I’m not in agreement with the Keynesian economic policies advocated by Reich but he’s correct in his disclosure that the rich are getting richer and the poor and middle classes are getting poorer. Little does Reich understand that the exact policies that he endorses created the great economic disparity.

As the economic carnage grows, there is virtually no hope that the economic mess will reverse itself in the immediate or near future. At best, all folks can do is prepare and plan for a survival strategy. However, just because our tyrannical rulers may be insanely committed to shock and awe economic destruction for no purpose other than to maintain their absolute power doe not in any way imply that the situation is hopeless for the people. In fact, the elites have sown the seeds of their own destruction because the system is so far gone and so out of whack that it’s impossible for the banksters and the elites to do anything to reverse the destructive course that they charted.

Hope lies in Starving the Beast know as Fedzilla (government) through the building of underground economies that will include voluntarism, agorism, trade among individuals, bartering, cyberspace currencies like Bitcoin, homesteading for food self-sufficiency and just about any productive and voluntary economic activity that can be accomplished that is beyond the ever watchful eye of the government.

Government only survives so long as folks perceive a value in supporting the government by conferring legitimacy upon the state and its institutions. It’s all a matter of trust and when trust flies out the window, folks will literally stripe the government of its legitimacy by opting out of the system. Nowhere is this premise more validated than in Greece.

Greece is bankrupt and the Greeks have become notorious for just opting out of the system and not paying taxes. In a PBS article, here, Paul Solman wrote an article titled In Greece, Underground Economy Fuels Financial Crisis. Solman is only partially correct because he blames the Greek aversion to paying taxes to the thieving and corrupt government to be the root cause of Greek financial problems. However, Solman accurately describes the magnitude of the Greek underground economy “If you think there's been a tax revolt in the U.S…consider Greece. The estimates we've heard, from the sources that seem the most reliable: 40-50 percent of the Greek economy is underground. i.e., untaxed..” The US has a very powerful and ruthlessly efficient system of civil asset forfeiture and the government will seize your property, clean out your bank accounts and leave you penniless and homeless if the government believes that you are non-compliant. The secret to Starving the Beast in America requires advanced planning, thinking and the ability to be clever and smart about it. Never advertise or brag on Facebook or social media or in any electronic communication venue that you are proudly ripping off the government.

Successfully Starving the Beast requires a far more subtle approach. Many folks have jobs and are linked to the system with automatic paycheck deposits and they must file tax returns. Folks should file tax returns on all traceable income because the non-filing of tax returns is a giant red flag that gets government attention.

Much is being written about the 1099 independent contractor economy, here and here. One of the biggest obstacles facing the government is its ability to collect taxes. So long as folks are employed as employees, the government easily got its share of plunder right off the top via the federal withholding tax and the Social Security tax, along with other taxes including state taxes. Enforcement of tax collections was never really much a problem for the government so long as most folks were employees. The government didn't need an army of tax collectors because employers functioned as the primary tax collectors for the government.

But with the economy tanking and necessity being the mother of invention, folks are now forced to discover new paradigms of survival and many of those survival techniques involved just opting out of the system to the extent that one can. Forms of passive resistance involve minimizing the ability of the government to track you through your financial transactions like bank accounts, credit/debit cards and any electronic financial transactions. Some folks have embraced the cash and money order economy because such transactions are untraceable.

Finally, folks need to seriously focus on what they can do to strengthen their survival skills while simultaneously being as invisible as possible to the government. The government has finally forced itself in one pickle of a mess because the welfare-warfare state has devastated the economy that feeds government revenues. Moreover, folks who feel angry and betrayed will do everything within their power to stiff the government because that’s basic human psychology in the best of times.

Moving forward, I absolutely do anticipate a massive growth in the underground economy because it constitutes the only reliable and viable mechanism for survival. Governments and fiat central banksters are destined to go down but we don’t have to go down with them. If anything, the human instinct to survive is our strongest instinct and if we are careful and cautious, it won’t fail us.

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