Latest Article Roundup From Ajax The Great (Pete Jackson)

By Ajax the Great (Pete Jackson)

(Originally posted on the True Spirit of America Party blog)

LAST CHANCE TO AVOID RECESSION 

Inflation is now effectively beaten.  Not only has it cooled significantly, but now the specter of deflation has recently been raised, and has already been seen in the prices of durable goods falling a bit recently.  Oil is also down as well, which has of course led to a recent drop in gasoline prices.  And this is in spite of the ongoing conflict in the Middle East, which otherwise would have raised oil prices, ceteris paribus, due to the resulting geopolitical instability and uncertainty. 

Deflation may sound like a good thing, especially after such a high inflationary episode, but if it persists, it can turn into a downward economic spiral that is far worse than inflation (think the Great Depression, or Japan's three decades of rolling deflation from the early 1990s until very recently).  It also amplifies the sting of debt, and with debt of all kinds at such stratospheric levels today, America needs that like a hole in the head.  Once such a spiral begins and sets in, it is very, very difficult to extricate from.  Not even QE can seem to end it (though giving such "helicopter money" directly to We the People might work). And deflation is, at best, very difficult to control.

So the FERAL Reserve really needs to cut interest significantly, and pause QT, yesterday, before they create a problem that is practically impossible to dislodge. And if that doesn't work, prepare to not only restart QE, but also implement "QE for the people" as well. say you weren't warned.

In other words, this is the LAST CHANCE to avoid recession or worse.  And there is always a lag of at least two quarters, so if they wait until the recession begins before they begin cutting rates, it would be too late, and would be like "pushing on a string".

That said, looks like the Fed decided to stop hiking interest rates, and signaled at least three interest rate cuts in 2024.  So now is the best time to put your money in a CD account to lock in the current rates.  But who knows when they will cut rates?

HOW TO SOLVE THE BIG TECH PROBLEM WITHOUT VIOLATING ANYONE'S RIGHTS 

"Big Tech is the new Big Tobacco" is often bandied about these days.  And while that has a kernel of truth to it (a kernel the size of a cornfield, in fact), it is also used by authoritarian zealots with a very illiberal (and ageist) agenda.  Mandatory age verification, censorship, repealing Section 230, and other related illiberal restrictions would open up the door to many unintended consequences to privacy, cybersecurity, and civil rights and liberties in general.  Even those adults who don't support youth rights will eventually experience these consequences sooner or later.  Kafka, meet trap.  Pandora, meet box.  Albatross, meet neck.

And none of these things will actually solve the collective action problem of Big Tech and the "Social Dilemma".  But here are some things that will, in descending order of priority and effectiveness:

1. First and foremost, take a "Privacy First" approach as recommended by the Electronic Frontier Foundation (EFF).  Pass comprehensive data privacy legislation for all ages that, at a minimum, would ban surveillance advertising.
2. Audit the algorithms and internal research of the Big Tech giants, and make the results publicly available for all to see.  Sunlight is truly the best disinfectant. 
3. Require the strictest and safest privacy settings to be the default settings for all users of all ages, which can then be adjusted more liberally by the users themselves.  For example, "friends only" sharing and "no DMs enabled from people whom one does not follow" by default.  And allow the option to turn off all DMs completely as well.
4. Require or incentivize the use of various "architectural" safety features on all social media, such as various nudges, #OneClickSafer ("stop at two hops") to reduce the pitfalls of frictionless sharing, and increase the use of CAPTCHAs to root out the pervasive toxic bots.
5. If after doing that, We the People feel that we must still get stricter in terms of age, then don't make things any stricter than current California standards (i.e. CCPA and CAADCA).

The first two items on the list in particular would of course be vehemently opposed by Big Tech.  That's because their whole business model depends on creepy surveillance advertising and creepy algorithms, and thus incentivizing addiction for profit.  They would thus have to switch to the (gasp!) DuckDuckGo model if these items were done.  (Plays world's smallest violin)

For another, related collective action problem, what about the emerging idea of phone-free schools?  Fine, but to be fair, how about phone-free workplaces for all ages as well?  In both cases, it should ONLY apply while "on the clock", which for school would be best defined as being from the opening bell to the final bell of the day, as well as during any after-school detention time.  And of course, in both cases, there would have to be medical exemptions for students and employees who need such devices for real-time medical monitoring (glucose for diabetes, for example).  Surely productivity would increase so much as a result that we could easily shorten the standard workweek to 30-32 hours per week (8 hours for 4 days, or 6 hours for 5 days) with no loss in profits? 

We must remember that, at the end of the day, Big Tech is NOT our friend.  But neither are the illiberal control freak zealots.  These measures will actually make both sides quite angry indeed.  But truly that's a feature, not a bug.

Big Tech can go EFF off!  (Pun intended)

DO NOT ABOLISH CASH! 

There is an open conspiracy against cash these days, with the powers that be wanting to gradually, then suddenly, phase it out completely in favor of central bank digital currency (CBDC).  The push is particularly acute in the UK now, but if left unchecked it will come to a country near you, including the USA.

And here is why the powers that be really want to abolish cash, and also by definition why it must be opposed at all costs.  CBDC can be easily controlled directly by the oligarchs (the central banks, big banks, and their sycophantic lackeys in government), and thus are a totalitarian's dream come true.  Combine that with CCP-style social credit scoring and the ability to turn on and off one's account at will, and you have a recipe for full-blown dystopia.  

So DO NOT fall for it.  Seriously.  Keep using cash at least some of the time, as that is effectively KRYPTONITE to the oligarchy (and they know it is).

TIME TO "86" THE FEDERAL TAX CODE

With tax season coming up, one thing is painfully clear:  the federal tax code has become increasingly Byzantine in its complexity, and the very rich easily get away with paying next to nothing due to the loopholes that they themselves write into the code.  The TSAP believes it is best to overhaul it entirely. 

That's why any serious tax reform idea needs to begin with, "The Internal Revenue Code of 1986 is hereby repealed".  And then replace it with something much, much simpler and more efficient:

The Universal Exchange Tax (UET) is one potential thing to replace it with.  A tax of typically 0.1% or less on (practically) all electronic transactions, and only on the destination or deposit side.

Another similar idea is the Automated Payment Transaction Tax (APT), from Dr. Edgar Feige.  This one taxes both sides of each transaction, and posit a higher rate than the UET due to less optimistic assumptions about the tax base, among other subtle differences.

Another similar idea is the Automated Deposit Tax (ADT, aka the "Tiny Tax"), from Dr. William J. Hermann, Jr.  Formerly one of the largest supporters of the APT above, he later came up with an even simpler idea, that only taxes the deposits into financial institutions.  Given a smaller base, as "within account" transactions would not be taxed, the revenue neutral rate is expected to be around 1% to replace all federal taxes and 1.2% to replace all federal, state and local taxes.  A more optimistic assumption would of course put the tax base much higher, and thus put the tax rate even lower still.

Keep in mind that, unlike the UET and APT, the ADT (Tiny Tax) would be unlikely to result in any significant shrinkage of the theoretical tax base in practice, since most if not all of the predicted shrinkage in the former, would result from fewer high-frequency stock, bond, and derivative trades within accounts (which are far more sensitive to that).  That is, what the latter lacks somewhat in the relative size of the tax base, it largely or entirely makes up for in relative lack of shrinkage. And switching to any of the three of course removes all of the compliance costs, distortions, finagling, and deadweight losses from the status quo, resulting in significant savings right there.

All of the above are the logical conclusion of the "lowest possible rate on the broadest possible base" with the latter idea adding "with the least complexity" as well.  All of these taxes are also surprisingly progressive, since the rich transact disproportionately more money than the non-rich, thus they pay disproportionately more in practice.  And yet it is not a particularly heavy burden on anyone, rich, poor, or anyone in between for that matter.  In fact, it's equivalent to everyone getting a raise, we can still afford to have a robust social safety net (if not the entire progressive wish list), AND America still becomes a global tax haven nonetheless.

It's a win-win-win situation for everyone but the oligarchs at the top that benefit from the status quo at the expense of the rest of us, in other words.

Some plans aim for revenue neutrality, while others aim for a balanced budget or even a surplus.  But what if there was a way to make the concerns about balanced budgets completely obsolete and irrelevant?

PAGING DR. FIRESTONE!

Enter Dr. Joseph M. Firestone, a proponent of one flavor of Modern Monetary Theory (MMT).  He argues that Congress can simply pay off the entire fictitious "National Debt" in one fell swoop and simply create the money ad hoc to pay all of its expenses, without needing to raise revenue at all.  He calls it "Overt Congressional Financing" (OCF), and can be done by a simple Act of Congress and/or the Treasury minting a high value platinum coin (i.e. valued in the trillions).  As does Rodger Malcolm Mitchell (of Monetary Sovereignty fame) and Ellen Brown as well.

That's not to say that taxes are completely useless.  There in fact are a number of reasons for them.  They 1) create demand for the currency, 2) help control inflation to some extent as an automatic stabilizer, and 3) control the economy to one degree or another to encourage and discourage various things (also known as social engineering).  And they can also be used for less than lofty motives as well to rig the game for the oligarchy, of course.  But for a government that can issue it's own currency, like our own federal government (but unlike our state and local governments), simply raising revenue is NOT of them.

So how do we retain the desirable features of taxes without the drawbacks?  Pigouvian taxes, such as vice taxes and eco taxes, for example, can then be added (back) in after repealing the old outmoded tax code.  Ditto for perhaps a limited "rich-only" or "very rich-only" individual income tax like the sort that prevailed prior to World War II, or alternatively an excise tax on executive compensation (like Bernie Sanders advocates) exceeding a maximum pay ratio between executives and their average or lowest-paid employees, in order to reduce the yawning chasm of inequality these days.  And perhaps a "too big to fail" tax on any bank or corporation that is so large and interconnected that it poses the externalities of systemic risk as well.

So what are we waiting for?

UPDATE:  One mild criticism right off the bat is that jettisoning the income tax entirely would also inherently jettison the proven poverty-fighting Earned Income Tax Credit and Child Tax Credit as well.  The answer?  Until we implement a Universal Basic Income (UBI), we can and should implement a "Reverse Payroll Tax" that tops up wages by matching wages in each paycheck dollar for dollar up to a point (say, the first $200 per week), which is actually much simpler than the EITC and CTC.  As for the criticism that tax-free municipal bonds will lose their luster in terms of investment incentives, and municipalities will suffer as a result, the Monetarily Sovereign federal government can simply provide more federal aid to municipalities so they don't have to borrow at high interest rates.  And regardless of what the feds do, municipalities and states can also set up their own public banks (like the famous Bank of North Dakota) as well and borrow money interest-free, of course.

UPDATE 2:  Even if the Tiny Tax is implemented, there is nothing to prohibit maintaining (and increasing and harmonizing) the SEC Fee on Wall Street transactions, if one wishes to implement a sort of "gaming tax" on speculation as well.