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: ZeroHedge.com)

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.

The Government Will Never End the Fed but the Fed is Destined to Die Anyway

Although the Republican controlled House of Representatives recently passed Audit the Fed, HR 459, Audit the Fed will never pass nor will the Fed ever be abolished legislatively. Republicans really do support the Federal Reserve because it funds their wars and empire. Furthermore, all the Republican YEA's to Audit the Fed were nothing more than an act of political expediency because Republicans in Congress absolutely do understand that Audit the Fed stands no chance of ever getting out of the Senate where it only has 30 co-sponsors and could never survive a presidential veto.

The Federal Reserve is the mother's milk of empire, tyranny and statism.  Big government and central banks exist for no purpose except to massive concentrate wealth and power.  Moreover, it's absolutely true that the phrase "99% vs the 1%" is indeed a valid premise even if it was hatched by socialists on the left.  What the progressive left fails to grasp is that it was liberal progressive Democrats who delivered unto us the Federal Reserve that was empowered to transfer wealth from the 99% to the 1%.

In many way, the progressive left considers itself intellectually superior to liberty because, control freaks that they are, they believe that there isn't anything they can't control or shouldn't control, given their totalitarian mindsets. . Hence, they have an enormous propensity to align themselves with big corporatist and big bankster money, the very same folks they claim to abhor as the blood suckers of humanity.  It's a situation of where progressive police state ideology butts heads with the real power - the power of big statist money.  In the end, it's always about power and never liberty or even the the prosperity of the people.   The first victims of most Marxists revolutions are typically the bourgeois, the middle class, and the backbone of any flourishing and prosperous society.  Marxist revolutions are never about revolts against capitalism but always about joining with the powerful to share totalitarian power.

Communist party officials always had the finest homes and the finest foods. They always exempted themselves from breadlines as the hoards of lowly humanity, the proletariat they claim to love, waited in line for hours to buy a loaf of moldy and stale bread.  The commie officials always had the best of everything from caviar to imported French wines.  From Stalinists and Marxists to the limousine liberals of the west, these folks thoroughly enjoy their rockstar status, power and money.

But alas, the progressives are in deep trouble as their beloved banksters and 1 percenters are now teetering on the brink of collapse as the human carnage piles up.  The debt fueled power of banksters and progressives is now imploding.  From Greece to Spain to Portugal to Italy, we are witnessing the final days of the marriage of banksters and progressives.  In fact, they've plunged into a black hole from which there is no escape.

With minor exceptions, nearly all western nations are indebted on a scale that is unsustainable.  Individual citizens are also massively indebted and will default on their debts.  The fiat banksters will suffer loan losses that will wipe out their capital.  It started in 2008 and while the Federal Reserve intervened and pumped some $16 trillion into the financial system, here, it was the equivalent of putting a band aid on a massive and oozing cancerous tumor for the sole purpose of hiding the tumor but not its deadly effects.

How will this mess shakeout?  It will shakeout the same way it's shaking our in Greece and Spain, namely, folks will devise new paradigms of survival that will include barter and underground economies. More importantly, they will just opt out of the system to the extent that they can to escape the government tax collectors.  Folks will seek financial safety in hard currency and they will withdraw their money from the banks.

As The Euro Tumbles, Spaniards Look To Gold

The euro exodus from Greece and Spain

Wary depositors are hauling billions of euros our of Greek and Spanish banks, reflecting the nervous mood of the people.

Wary depositors have been hauling billions of Euros out of Greek and Spanish banks over the past few weeks. Since 2009, Greek depositors have withdrawn $4 million a month from that nation’s banks, while Spanish bank customers pulled 31 billion euros from Spanish banks in April alone.

More than any election result, bank runs reflect the mood of the people.

Folks fear 2 things. They fear a currency collapse (devaluation and  hyper-inflation), something that is always triggered by the massive printing of currency. But they also fear the government seizure of what money they do have.

One of the benefits of modern technology and the computer age, at least from the perspective of the government, is that governments now have the ability to track your entire life - from auto-deposit payroll checks to what goes in your savings account and to what you buy with debit/cards. Government know where your money is all times because they have an electronic trail and road map. But the government's power to track, tax and plunder becomes a whole lot more limited in an underground economy that may utilize various methods to transact business, including cash, plain old bartering, local currency or even a cyber currency like Bitcoin.

Moreover, hard currency like gold and silver will also come into play as a newly emerging default currency. The modern system of government taxation and banking requires trust in the system but when trust and confidence evaporates on a significant scale, folks will always flee to safe havens that protect wealth from devaluation and confiscation. At this point, government revenue collection machines and fiat banks are in deep trouble. Government revenues shrink and folks withdraw their money from the banks, something that denies the government the ability to track their life and every financial transaction.

It's wise to use cash to purchase what you need and bills can be paid with money orders. Even folks with auto-deposit paychecks are withdrawing their money from their bank accounts. It's very important to conduct one's financial life, to the extent that one can, beyond the snooping electronic eyes of the government and its agent-in-chief, the banks. Even more importantly, it's imperative to keep a low profile and live below the governments radar - never attract attention or discuss your business with anybody.

In many ways, the government and its fiat banks have sown the seeds of their own destruction by spending way too much money, taxing folks to the point of outright expropriation and doing it all with fiat money.  In the process, government and banksters have literally destroyed the one thing that sustained them - the wealth producing capabilities of a thriving economy.

Most folks never wanted to opt out of the system. They were forced out by government policies that destroyed their jobs, livelihoods and their prosperity. In fact, most folks were quite content and very willing to tolerate the corrupt system so long as as the system was working for them. But whether one is in Greece (where an estimated 30-50% of all economic activity is now underground), Spain or the US, the system is no longer working for the growing millions who got shafted and are now suffering.

To be sure, these folks will seek vengeance on the government that caused them so much misery and their willingness to ever trust the government and its banksters again will be about zilch. A paradigm shift from 'government is great and government is god' to 'screw the corrupt government' will unfold slowly but it will ultimately be massive. Furthermore, the beast known as the government monster will be starved in the process as revenues dry up.

Starving the beast is a two-step dance that includes opting out of the banking system and figuring out how to make and trade your stuff and skills through voluntary associations. Granted, it's a challenge but many folks are embracing the challenge as they dive headfirst into survivalist mode. Going forward, there will be a proliferation of small rural voluntary communities with good soil and a reliable water source. Skills will become critical (carpenter, plumber, mechanic and other trades) but the services of doctors and geeks will also be in demand. Hot commodities will be basic food, fuel and medicine.

Many Americans have already embarked on a journey that they never anticipated but was forced upon them without their consent.

Benefits of the 1099 Economy, the Underground Economy and the Future of Freedom

According to Forbes, the 1099 economy is booming.

One of the biggest obstacles facing 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 government so long as most folks were employees. The government didn't need an army of tax collectors; 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. Many companies are resorting to contract labor to avoid the legacy costs of health insurance and retirement plans. They hire independent contractors and issue a 1099 instead of a W-2. Folks who earn 1099 income are required to file tax returns, they are required to pay quarterly taxes and they are considered self-employed. They are effectively small business owners who also avail themselves of legal tax deductions.

1099 income is a whole lot harder for governments to trace and enforcement becomes a huge problem for the government. Precisely because 1099 tax revenues don't consistently and reliably flow to the government in a timely manner, the government is at a disadvantage because it no longer has employers functioning as efficient and immediate tax collectors.

The economic calamity has also spawned a massive distrust of the government. Folks are simply fed with with paying taxes. When government is perceived a corrupt to the core and no longer offers value to taxpayers, taxpayers will seek ways to just opt out of the system. And thus, the underground economy is born.

There can be no question that America is in uncharted territory but whatever happens will also translate into an opportunity to shed the shackles of slavery, fiat money and corrupt government. The one thing that America needs most - peace, liberty and prosperity - will never flow from the government or government power, which is precisely why the beast must be starved.