Elaine Meinel Supkis
Recently I received an interesting book called 'Trading Away Our Future'. The Richman family wrote this book which has some sensible solutions as well as explanations about trade issues that is quite good. As usual, though, I feel that the discussion about our nation's woeful state has to include sharp discussion about treason and betrayal and how all empires end up infested with creeps who destroy the empires. We can see this election cycle, how the process works. Sensible legislation and important changes to present laws that can halt or reverse present trends are not only ignored or sandbagged. They are attacked openly as nostrums, fake cures and snake oil is peddled as the solution! To the despair of these fine authors who wrote this book. I say, arrest the people destroying our nation and then we can pass sensible laws. Impeach the parties responsible. Especially those who are allowing the Pentagon to be a hostile force looting our nation.
Ideal Taxes.com sent me an interesting book to read: Trading Away Our Future. Written by Ramond, Howard and Jesse Richman. This book is a family effort. Dr. Richman, the father of the other two authors who are also professors. Dr. Raymond Richamn is associated with the School of Public and International Affairs at the University of Pittsburgh. This book is a very good addition to books about international trade. The Richman trio indulge in one of my favorite things: charts and graphs, to explain the tax issues concerning the movement of funds across borders as well as trade. They zero in on things that non-professionals might overlook.
Educated in the Chicago School under Friedman's guidance, the chief author of this book is very good at his own field and applies himself to the task of explaining arcane regulations and rules that can warp trade, for example.
The one weakness of this book which is very good in its own way is what motives me to write every day: understanding the real underpinnings of this whole system. Understanding why treason has replaced patriotism. Why schemes to fix this mess don't fix it at all. And why bills that are perfectly sensible are not passed by Congress nor signed by Presidents. And why all the 'cures' for what ails us, kills us.
As I often say, if one doesn't understand the dynamics of imperialism, one can't understand current events. For the last 10,000 years of human history, the growth and collapse of one empire after another has built a huge historical record of how the dynamics of imperialism works. And of course, if one can understand this history, one can see how America can save itself from collapse. The cure isn't simple. Indeed, it requires first, admitting we are a global empire in its final stages of decay. And hanging onto this rotted empire is impossible.
Just as a swimmer can't swim to any shore if he is carrying a ton of lead weights, so it is with our empire. No rescue scheme can work at all unless we first dump the imperial lead weights.
This book is a very good chronicle of what we should do to stop much of the trade mess. But the authors despair that even the smallest tax code changes suggested will never see the light of day. Tax cuts, yes. But taxes designed to cut back on offshore goods produced by US corporations ending: no way in hell.
I must add here, the writing is excellent. For non-experts, the three authors are careful to not use any tricky 'insider' talk so beloved by economics professors. They are quite clear about the intentions of the authors and they try to offer more than one escape from the trap we are in. They are hopeful but pessimistic. They figure, if we fail to stop things from continuing, we will have a 'hard landing' but will recover from it.
Alas, one problem with world-girdling empires crashing is, this always leads to a global struggle for dominance by rising empires. And the home base is destroyed by invaders, revolutionaries and military insurrections. The history of the total collapse of security within an empire as it collapses is crystal clear: ALWAYS the dying empire is dismembered INTERNALLY. And thoroughly, I might add. The examples are obvious and dire. The Medieval Holy Roman Empire run by the Hohenstaufen dynasty as well as the huge, powerful duchy of Austria were both destroyed by 1265 AD. The chaos from this collapse meant Austria was overrun by many other rising imperials from north, south, east and west. The raging battles destroyed one of the wealthier economies in Europe. Germany was rent to shreds and went into steep decline that took 100 years to recover from.
When the mighty Spanish empire that even conquered Portugal and its empire, they ruled the Seven Seas and set out to conquer all of Europe. In less than 200 years, they were totally bankrupt, the empire collapsing and from then on, the other Powers spend their leisure hours invading Spain itself and destroying the home base even as the Empire of Spain limped onwards overseas! Finally, dying in the 19th century with the USA giving it the coup de grace at the dawn of the 20th century. During all this, the people of Spain went from great wealth to total poverty except for the ruling elites who barely noticed their own life-styles declining. Indeed, they lived quite grandly despite the collapse in public services and the beggaring of the middle class.
This story can be repeated endlessly. Pick any empire and it follows the same trajectory. So when anyone discusses the future of the US, recognizing this horrible past and using it to project into the future is very important. ALL empires end up infested with traitors who line their own pockets and steal the public treasury like mad and who use every trick in the book to offshore and outsource so they can REMOVE THE LOOT from the empire and thus, protect THEMSELVES.
The wonderful, and I would suggest, very patriotic writers of the book here are sincere about saving the US. They even go out of their way to help Congress design and promote obviously good bills that can save us a lot of grief. Using their web page as the linking source, I explored some of these bills. Here is the first example:
To amend the Internal Revenue Service Code in order to eliminate the tax-loophole for private foreign savings.
SECTION 1. SHORT TITLE
This Act may be cited as the “Private Foreign Savings Tax-Loophole Elimination Act”
SECTION 2: FINDINGS
The Congress finds as follows:
(1) Since the time that Congress enacted the private foreign savings tax-loophole in 1984, the trade deficit of the United States has risen and become chronic.
(2) The balance of trade is determined by flows of financial savings. Countries that experience a net inflow of savings have trade deficits and those that experience a net outflow of savings have trade surpluses. This is because such flows are necessary to be able to import. Market forces tend normally to correct trade imbalances by changing the relative prices of imported and exported goods, but there is no correction if the flow of savings persists. The private foreign savings tax-loophole attracts private foreign savings and, along with the continuing foreign-government reserves tax-loophole, has contributed to the chronic trade deficit that the United States has experienced since 1984. In his 1994 book about the repeal of the private foreign savings tax-loophole (From Creditor to Debtor: the U.S. Pursuit of Foreign capital – The Case for the Repeal of the Withholding Tax) Giuseppe Ammendola argued that the enactment of the private foreign savings tax-loophole in 1984 contributed in the movement of the United States from being a creditor nation to becoming the world’s largest debtor nation.
(3) At the April 11, 1984 hearing on the “Tax Treatment of Interest Paid to Foreign Persons” before the Committee on Ways and Means of the House of Representatives, Robert S. McIntyre, director of federal tax policy for Citizens for Tax Justice, a group representing unions and public interest groups, pointed out that foreign investment in the U.S. was already $50 billion more than American investors were sending abroad and warned that by 1985 or so the U.S. would become a net debtor and that the resulting higher price of the dollar, relative to other currencies, would make American industry less competitive and would cause the loss of U.S. manufacturing jobs.
(4) At the April 11, 1984 hearing on the “Tax Treatment of Interest Paid to Foreign Persons” before the Committee on Ways and Means of the House of Representatives, First Boston Corporation and Morgan Guaranty Trust Co argued for a much more narrow tax-loophole, correctly predicting that the broad version of the loophole that was eventually enacted would raise the price of the dollar, relative to other currencies, increasing United States trade deficits and causing the loss of U.S. manufacturing jobs.
(5) The higher price of the dollar, partly caused by the private foreign savings tax-loophole, has given United States manufacturers an artificial disadvantage when competing in world markets.
(6) The higher price of the dollar, partly caused by the private foreign savings tax-loophole, has given United States manufacturers an artificial disadvantage when competing with foreign manufacturers in United States markets.
(7) The higher trade deficit, partly caused by the private foreign savings tax-loophole, has contributed to the fall of gross private fixed investment in the manufacturing sector of the United States from 2.2% of GDP in 1984 to 1.3% of GDP in 2005. (Source: Bureau of Economic Analysis)
(8) The higher trade deficit, partly caused by the private foreign savings tax-loophole, has contributed to the loss of jobs in the manufacturing sector of the United States economy. Some of the loss since 1984 can be attributed to greater efficiencies of production. A comparison of the United States with Canada, two countries whose manufacturing processes involve similar levels of technology, shows that from 1984 to 2005 the percentage of civilian employment in the manufacturing sector fell from 20.0% to 11.5% in the United States and from 17.0% to 13.6% in Canada. (Source: Bureau of Labor Statistics)
(9) Elimination of the private foreign savings tax-loophole will increase United States income tax collections from foreigners by about $60 billion assuming that $4 trillion of private savings is earning 5% interest. The $4 trillion estimate is obtained from two sources:
(a) According to the US Treasury, at the end of the year 2005, foreign official institutions were estimated to have approximately $1.8 trillion of the $6.7 trillion of US long-term securities held by foreign investors. Thus foreign private investors had approximately $4.9 trillion. According to the COFER database, foreign governments actually had $2.7 trillion in reserves at the end of 2005. Thus approximately .9 trillion of the 4.9 were actually foreign government reserves placed into accounts with foreign banks and then placed by those foreign banks into tax-free US accounts.
(b) The most recent IRS data release of interest earned by foreign individuals is from 2000 (available on the Internet at http://www.irs.gov/pub/irs-soi/00frusi.pdf). That year, when the average interest rate on 10-year US Treasury T-Notes was 6.11%, private foreigners earned $128 billion tax exempt, indicating approximately $2.1 trillion of savings. Since 2000, increases in foreign government savings and increases in private foreign savings have each accounted for half of the current account deficit. Since foreign government savings went up by 2.4 times from 2000 to 2006, according to estimates based upon the International Monetary Fund COFER database, private foreigners savings in the United States have also gone up 2.4 times, up to $5.0 trillion. However, if an estimated $1 trillion of that amount is foreign government savings placed into private banks abroad and then placed by those banks into US accounts under the bank’s name, that would leave $4 trillion that would remain in private accounts, should those private accounts be taxed.
(10) Ending the private foreign savings tax-loophole would likely increase the level of manufacturing investment and thus enhance the economic security of the United States. In the long-run, the strength of the dollar is determined by supply and demand – the supply of American goods and services to the world and American demand for goods and services from the world. Without increased investment in the manufacturing sector of our economy, the sector that produces the preponderance of our exports and that competes with the preponderance of our imports, there will eventually be a substantial weakening in the dollar that would produce high levels of inflation and a greatly reduced American standard of living.
(11) Ending the private foreign savings tax-loophole would enhance the national security of the United States because it would strongly encourage foreign central banks to place their dollar reserves in United States banks where their funds could be frozen when their government comes in conflict with the United States, as when President Carter froze Iranian assets in 1979. Prior to 1984 foreign governments kept almost all of their dollar reserves in U.S. accounts because of the continuing foreign-government reserves tax-loophole. But with the enactment of the private foreign savings tax-loophole in 1984, foreign governments have kept large amounts of their dollar reserves in the dollar-denominated accounts of foreign banks, which in turn place those amounts, under the bank’s name, in U.S. accounts that are tax free because of the private foreign savings tax-loophole.
The book examines this excellent possible law. All Congress has to do is pass it and the President, sign it! HAHAHA. Right! First, to pass this bill, we have to arrest everyone accepting campaign donations from people who benefit from the present system: all the hell hedge fund three headed dogs, the pirate community operating out of Queen Elizabeth II's many islands, the military/industrial complex rip off artists using the Middle East as their home base for raiding the Treasury and beggaring the US tax payers. And then there are the industrialists who are madly offshoring all our manufacturing to take advantage of cheaper labor abroad as well as lax pollution laws. There is a veritable ARMY of people who will stop this by using every trick in the book which is mostly using lobbyists to grease palms.
Defeating these corruptors is the entire battle here. And the media is on who's side? Well! We can see easily who they support! They will cover news about outrageous violations of US laws and sovereignty but not a general cleaning of the stables of all the shit piled there. Instead, we are supposed to be unaware of exactly who is doing this to us!
We just saw the spectacle of the Federal Reserve LLP saving non-banking entities who are huge fans of offshore banking, moving money between countries, exploiting the trade deficit and budget deficit for their own enrichment and of course, the destruction of laws that stop the rapine. Here is yet another bill, one that was not passed, either, of course:
SEC. 3. REPORT ON INTERNATIONAL MONETARY POLICY AND CURRENCY EXCHANGE RATES.
(a) Reports Required-
(1) IN GENERAL- Not later than March 15 and September 15 of each calendar year, the Secretary, after consulting with the Chairman of the Board of Governors of the Federal Reserve System and the Advisory Committee on International Exchange Rate Policy, shall submit to Congress, a written report on international monetary policy and currency exchange rates.
(2) CONSULTATIONS- On or before March 30 and September 30 of each calendar year, the Secretary shall appear, if requested, before the Committee on Banking, Housing, and Urban Affairs and the Committee on Finance of the Senate and the Committee on Financial Services and the Committee on Ways and Means of the House of Representatives to provide testimony on the reports submitted pursuant to paragraph (1).
(b) Content of Reports- Each report submitted under subsection (a) shall contain--
(1) an analysis of currency market developments and the relationship between the United States dollar and the currencies of major economies and trading partners of the United States;
(2) a review of the economic and monetary policies of major economies and trading partners of the United States, and an evaluation of how such policies impact currency exchange rates;
(3) a description of any currency intervention by the United States or other major economies or trading partners of the United States, or other actions undertaken to adjust the actual exchange rate relative to the United States dollar;
(4) an evaluation of the domestic and global factors that underlie the conditions in the currency markets, including--
(A) monetary and financial conditions;
(B) accumulation of foreign assets;
(C) macroeconomic trends;
(D) trends in current and financial account balances;
(E) the size, composition, and growth of international capital flows;
(F) the impact of the external sector on economic growth;
(G) the size and growth of external indebtedness;
(H) trends in the net level of international investment; and
(I) capital controls, trade, and exchange restrictions;
(5) a list of currencies designated as fundamentally misaligned currencies pursuant to section 4(a)(2), and a description of any economic models or methodologies used to establish the list;
(6) a list of currencies designated for priority action pursuant to section 4(a)(3);
(7) an identification of the nominal value associated with the medium-term equilibrium exchange rate, relative to the United States dollar, for each currency listed under paragraph (6);
(8) a description of any consultations conducted or other steps taken pursuant to section 5, 6, or 7, including any actions taken to eliminate the fundamental misalignment; and
(9) a description of any determination made pursuant to section 9(a).
Introduced Jun 13, 2007
Scheduled for Debate Jul 31, 2007
Voted on in Senate -
Voted on in House -
Signed by President -
This bill was considered in committee which has recommended it be considered by the Senate as a whole. Although it has been placed on a calendar of business, the order in which bills are considered and voted on is determined by the majority party leadership. Keep in mind that sometimes the text of one bill is incorporated into another bill, and in those cases the original bill, as it would appear here, would seem to be abandoned. [Last Updated: Jan 27, 2008]
We can follow the trail of crumbs to the door of the lobbying community. The media assists in all this, of course. This is why the three candidates for President are tools of the lobbyist community. Of course, actual pirates ran for President. This failed due to the American people rejecting this for spurious reasons mostly having to do with religion than economics. The discussion about the tax evasions of Romney still angers me. The media didn't examine this at all! They did discuss his religious beliefs just like they are hammering Obama on this same topic. What are we seeing? The election of a Pope? Or a President? Now, another bill recommended by the Richman family:
September 14, 2006
Mr. DORGAN (for himself and Mr. FEINGOLD) introduced the following bill; which was read twice and referred to the Committee on Finance
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Since the 1990s, the United States has experienced record trade deficits that has made the United States the largest debtor country in the world.
(2) In 2005, the merchandise trade deficit of the United States was a record $767,000,000,000, and in 2006, the merchandise trade deficit of the United States is projected to surpass the record set in 2005.
(3) The surging trade deficits could soon create a balance of payments crisis for the United States, which could wreak havoc with the economy of the United States.
(4) Article XII of the General Agreement on Tariff and Trade (GATT 1994), annexed to the Agreement Establishing the World Trade Organization entered into on April 15, 1994, permits any member country to restrict the quantity or value of imports in order to safeguard the external financial position and the balance of payments of the member country.
(5) In accordance with Article XII of the GATT 1994, the United States should take steps to restore balance to its merchandise trade, and safeguard its external financial position and its balance of payments.
(6) The imposition of import restrictions should be phased in to allow the economy of the United States to absorb the impact of import restrictions with minimal disruption.
SEC. 3. DEFINITIONS.
In this Act:
(1) BALANCED TRADE CERTIFICATE; CERTIFICATE- The terms `Balanced Trade Certificate' and `Certificate' mean a certificate issued pursuant to section 4 that provides the holder of the certificate with a license to import into the United States a good with an appraised value that is equal to or less than the face value of the certificate.
(2) DEPARTMENT- The term `Department' means the Department of Commerce.
(3) OIL OR GAS- The term `oil or gas' means any good classifiable under--
(A) heading 2709 of the Harmonized Tariff Schedule of the United States (relating to petroleum oils and oils obtained from bituminous minerals, crude);
(B) heading 2710 of the Harmonized Tariff Schedule of the United States (relating to petroleum oils and oils obtained from bituminous minerals, other than crude); and
(C) heading 2711 of the Harmonized Tariff Schedule of the United States (relating to light oils and preparations).
(4) PROGRAM- The term `Program' means the Balanced Trade Certificate Program established under section 4.
(5) SECRETARY- The term `Secretary' means the Secretary of Commerce.
SEC. 4. ESTABLISHMENT OF BALANCED TRADE PROGRAM.
(a) In General- Not later than 180 days after the date of the enactment of this Act, the Secretary shall, in cooperation with the Secretary of Homeland Security, establish a Balanced Trade Certificate Program within the International Trade Administration of the Department. The purpose of the Program is to create gradually balance between the dollar value of goods imported into the United States and goods exported from the United States.
(b) Regulatory Authority- The Secretary, in cooperation with the Secretary of Homeland Security, shall promulgate regulations in accordance with section 5 that provide for--
(1) issuing Certificates to exporters;
(2) collecting Certificates from importers;
(3) valuing the Certificates issued and collected; and
(4) trading Certificates.
SEC. 5. OPERATION OF THE PROGRAM.
(1) ISSUANCE OF CERTIFICATES- The Program established under section 4 shall provide for the issuance of a Certificate to any person who exports a good from the United States with a face value equivalent to a multiple of the appraised value of the good determined pursuant to paragraph (2).
(2) VALUE OF BALANCED TRADE CERTIFICATES-
(A) DETERMINATION OF VALUE- The Secretary shall establish a system for the valuation of Certificates. To the extent practicable, the value of a Certificate shall be based upon the appraised value declared on the shipper's export declaration (SED), in accordance with subparagraph (B);
(B) SYSTEM OF VALUATION- The value of a Certificate shall be determined in accordance with the following table:
If a Certificate is issued: The face value of the Certificate is an amount equal to:
140% of the appraised value of the good exported. 130% of the appraised value of the good exported.
120% of the appraised value of the good exported. 110% of the appraised value of the good exported.
100% of the appraised value of the good exported
'Nyet problemy,' as my Russian friend liked to say many years ago. Yes, another possible solution to the trade deficit. Too bad, no one with real power wants anything to do with this. And this is why all empires die. The rulers get hooked on schemes that make money but are terrible for the empire. But it is so EASY to conspire with others to undermine the empire! The riches that pour in this way are unimaginable! The lucky duckies who yield to temptation can't help themselves. Below is a chart from the book. I amended it to show who is doing what, with tax policies:
I lived in Europe in the past. In 1968, Europe had huge VAT taxes. So things were 'expensive'. And gasoline was 'expensive' due to taxes, too. The US was the 'low tax' nation. We had cheap gasoline, cheap goods thanks to nearly no taxes! And we ended up, thanks to the low tax regime, deep in the hole in trade! Our nation rapidly being ruined. We are losing the 'value-added' game! I see a problem here and it can't be fixed by TAX CUTS!
On top of this, the low tax regime here has caused public debts to climb! On top of ALL this is our addiction to cheap lending. Cheap loans+low taxes=destruction of the industrial base, trade and banking. Simple, eh? And we don't want to believe this even as we see it in full, nasty operation!
The authors think the VAT tax doesn't work. Well, all of Europe has a trade SURPLUS with the US! And we don't have any advantages with them except if we totally kill the dollar and make it super-cheap, too! And we did this with Germany THREE TIMES in the past: Bretton Woods II, Plaza Accords and the Louver Accords. The DM used to be 4 to the dollar. Then 2 to the dollar and finally the dollar is what? Half a mark? And during all this, when did we ever run a trade SURPLUS with Germany?
HOW ABOUT NEVER! Ditto, Japan! Japan doesn't have a VAT tax to keep out foreigners. They have an awesome array of defenses which is why I call Japan a 'Fortress'. At any level, if foreigners get too close, too uppity, the Japanese will take stern measures INCLUDING CREATING A DEPRESSION DELIBERATELY to prevent anyone in Japan buying foreign goods. Whether it be picky inspectors at the ports, difficulties in sending in ships in the first place, finding retailers to carry goods, etc., Japan will find some means of crushing the interlopers. So they don't need a VAT. They will cheerfully kill the purchasing power of the consumer by never extending credit to them and using other tools, can have a low-interest rate regime while having no bubbles at home, all the money is exported along with their goods.
And this book, like so many others, is fooled by this. China is copying Japan except for one thing: they are not crushing the workers ruthlessly. They are open to trade. They do import stuff...even from Japan. They are not a 'one way nation' at all. And when they changed their policies this year in July to deal with inflation and excessive foreign funds flooding into China, this caused the entire planet to slide into a depression. This is because of unbalanced trade, world wide, not just in the USA. And this is due to the simple fact that the USA is going down the drain, fast. And as always, when a great empire finally rots to the core and the rulers become traitors, all the world is destabilized and goes down too. And then this is all sorted out via a machine we call 'wars'.
Note how Russia devolved. They lost half of the country's main base and all of their allies! And became so poor, they went bankrupt not once but several times! And the battle to regain ground is still going on. Successfully, I may add. This is due to the alliance with China and the need of Europe for Russian commodities. Now, if they can regain some industrial strength, then they may stride the world's stage again. But it is increasingly China's turn at this game. They ruled much of the planet in the past. And then was totally and completely dismembered by 1945. Looted and wrecked, they slowly rebuilt after some pretty nasty mistakes by the rulers such as Mao and his crazy Frau, Madame Mao.
Let's hope we don't fall that far! Ecch.
Click here for the Amazon link for buying this book. I do recommend this book as a jumping off point for pushing Congress. But of course, being nice about all this isn't working. Pushing Congress will require serious muscle. Maybe we can make them an offer they can't refuse, to paraphrase the Godfather.