What a Neocon you ask?

by | Jan 31, 2010 | Uncategorized

We’ve Been Neo-Conned

by Ron Paul

The modern-day, limited-government movement has been co-opted. The conservatives have failed in their effort to shrink the size of government. There has not been, nor will there soon be, a conservative revolution in Washington. Political party control of the federal government has changed, but the inexorable growth in the size and scope of government has continued unabated. The liberal arguments for limited government in personal affairs and foreign military adventurism were never seriously considered as part of this revolution.

Since the change of the political party in charge has not made a difference, who’s really in charge? If the particular party in power makes little difference, whose policy is it that permits expanded government programs, increased spending, huge deficits, nation building and the pervasive invasion of our privacy, with fewer Fourth Amendment protections than ever before?

Someone is responsible, and it’s important that those of us who love liberty, and resent big-brother government, identify the philosophic supporters who have the most to say about the direction our country is going. If they’re wrong – and I believe they are – we need to show it, alert the American people, and offer a more positive approach to government. However, this depends on whether the American people desire to live in a free society and reject the dangerous notion that we need a strong central government to take care of us from the cradle to the grave. Do the American people really believe it’s the government’s responsibility to make us morally better and economically equal? Do we have a responsibility to police the world, while imposing our vision of good government on everyone else in the world with some form of utopian nation building? If not, and the enemies of liberty are exposed and rejected, then it behooves us to present an alternative philosophy that is morally superior and economically sound and provides a guide to world affairs to enhance peace and commerce.

One thing is certain: conservatives who worked and voted for less government in the Reagan years and welcomed the takeover of the U.S. Congress and the presidency in the 1990s and early 2000s were deceived. Soon they will realize that the goal of limited government has been dashed and that their views no longer matter.

The so-called conservative revolution of the past two decades has given us massive growth in government size, spending and regulations. Deficits are exploding and the national debt is now rising at greater than a half-trillion dollars per year. Taxes do not go down – even if we vote to lower them. They can’t, as long as spending is increased, since all spending must be paid for one way or another. Both Presidents Reagan and the elder George Bush raised taxes directly. With this administration, so far, direct taxes have been reduced – and they certainly should have been – but it means little if spending increases and deficits rise.

When taxes are not raised to accommodate higher spending, the bills must be paid by either borrowing or “printing” new money. This is one reason why we conveniently have a generous Federal Reserve chairman who is willing to accommodate the Congress. With borrowing and inflating, the “tax” is delayed and distributed in a way that makes it difficult for those paying the tax to identify it. For instance, future generations, or those on fixed incomes who suffer from rising prices, and those who lose jobs – they certainly feel the consequences of economic dislocations that this process causes. Government spending is always a “tax” burden on the American people and is never equally or fairly distributed. The poor and low-middle income workers always suffer the most from the deceitful tax of inflation and borrowing.

Many present-day conservatives, who generally argue for less government and supported the Reagan/Gingrich/Bush takeover of the federal government, are now justifiably disillusioned. Although not a monolithic group, they wanted to shrink the size of government.

Early in our history, the advocates of limited, constitutional government recognized two important principles: the rule of law was crucial, and a constitutional government must derive “just powers from the consent of the governed.” It was understood that an explicit transfer of power to government could only occur with power rightfully and naturally endowed to each individual as a God-given right. Therefore, the powers that could be transferred would be limited to the purpose of protecting liberty. Unfortunately, in the last 100 years, the defense of liberty has been fragmented and shared by various groups, with some protecting civil liberties, others economic freedom, and a small diverse group arguing for a foreign policy of nonintervention.

The philosophy of freedom has had a tough go of it, and it was hoped that the renewed interest in limited government of the past two decades would revive an interest in reconstituting the freedom philosophy into something more consistent. Those who worked for the goal of limited government power believed the rhetoric of politicians who promised smaller government. Sometimes it was just plain sloppy thinking on their part, but at other times, they fell victim to a deliberate distortion of a concise limited-government philosophy by politicians who misled many into believing that we would see a rollback on government intrusiveness.

Yes, there was always a remnant who longed for truly limited government and maintained a belief in the rule of law, combined with a deep conviction that free people and a government bound by a Constitution were the most advantageous form of government. They recognized it as the only practical way for prosperity to be spread to the maximum number of people while promoting peace and security.

That remnant – imperfect as it may have been – was heard from in the elections of 1980 and 1994 and then achieved major victories in 2000 and 2002 when professed limited-government proponents took over the administration, the Senate and the House. However, the true believers in limited government are now shunned and laughed at. At the very least, they are ignored – except when they are used by the new leaders of the right, the new conservatives now in charge of the U.S. government.

The remnant’s instincts were correct, and the politicians placated them with talk of free markets, limited government, and a humble, non-nation-building foreign policy. However, little concern for civil liberties was expressed in this recent quest for less government. Yet, for an ultimate victory of achieving freedom, this must change. Interest in personal privacy and choices has generally remained outside the concern of many conservatives – especially with the great harm done by their support of the drug war. Even though some confusion has emerged over our foreign policy since the breakdown of the Soviet empire, it’s been a net benefit in getting some conservatives back on track with a less militaristic, interventionist foreign policy. Unfortunately, after 9-11, the cause of liberty suffered a setback. As a result, millions of Americans voted for the less-than-perfect conservative revolution because they believed in the promises of the politicians.

Now there’s mounting evidence to indicate exactly what happened to the revolution. Government is bigger than ever, and future commitments are overwhelming. Millions will soon become disenchanted with the new status quo delivered to the American people by the advocates of limited government and will find it to be just more of the old status quo. Victories for limited government have turned out to be hollow indeed.

Since the national debt is increasing at a rate greater than a half-trillion dollars per year, the debt limit was recently increased by an astounding $984 billion dollars. Total U.S. government obligations are $43 trillion, while total net worth of U.S. households is just over $40 trillion. The country is broke, but no one in Washington seems to notice or care. The philosophic and political commitment for both guns and butter – and especially for expanding the American empire – must be challenged. This is crucial for our survival.

In spite of the floundering economy, the Congress and the administration continue to take on new commitments in foreign aid, education, farming, medicine, multiple efforts at nation building, and preemptive wars around the world. Already we’re entrenched in Iraq and Afghanistan, with plans to soon add new trophies to our conquest. War talk abounds as to when Syria, Iran and North Korea will be attacked.

How did all this transpire? Why did the government do it? Why haven’t the people objected? How long will it go on before something is done? Does anyone care?

Will the euphoria of grand military victories – against non-enemies – ever be mellowed? Someday, we as a legislative body must face the reality of the dire situation in which we have allowed ourselves to become enmeshed. Hopefully, it will be soon!

We got here because ideas do have consequences. Bad ideas have bad consequences, and even the best of intentions have unintended consequences. We need to know exactly what the philosophic ideas were that drove us to this point; then, hopefully, reject them and decide on another set of intellectual parameters.

There is abundant evidence exposing those who drive our foreign policy justifying preemptive war. Those who scheme are proud of the achievements in usurping control over foreign policy. These are the neoconservatives of recent fame. Granted, they are talented and achieved a political victory that all policymakers must admire. But can freedom and the Republic survive this takeover? That question should concern us.

Neoconservatives are obviously in positions of influence and are well-placed throughout our government and the media. An apathetic Congress put up little resistance and abdicated its responsibilities over foreign affairs. The electorate was easily influenced to join in the patriotic fervor supporting the military adventurism advocated by the neoconservatives.

The numbers of those who still hope for truly limited government diminished and had their concerns ignored these past 22 months, during the aftermath of 9-11. Members of Congress were easily influenced to publicly support any domestic policy or foreign military adventure that was supposed to help reduce the threat of a terrorist attack. Believers in limited government were harder to find. Political money, as usual, played a role in pressing Congress into supporting almost any proposal suggested by the neocons. This process – where campaign dollars and lobbying efforts affect policy – is hardly the domain of any single political party, and unfortunately, is the way of life in Washington.

There are many reasons why government continues to grow. It would be naïve for anyone to expect otherwise. Since 9-11, protection of privacy, whether medical, personal or financial, has vanished. Free speech and the Fourth Amendment have been under constant attack. Higher welfare expenditures are endorsed by the leadership of both parties. Policing the world and nation-building issues are popular campaign targets, yet they are now standard operating procedures. There’s no sign that these programs will be slowed or reversed until either we are stopped by force overseas (which won’t be soon) or we go broke and can no longer afford these grandiose plans for a world empire (which will probably come sooner than later).

None of this happened by accident or coincidence. Precise philosophic ideas prompted certain individuals to gain influence to implement these plans. The neoconservatives – a name they gave themselves – diligently worked their way into positions of power and influence. They documented their goals, strategy and moral justification for all they hoped to accomplish. Above all else, they were not and are not conservatives dedicated to limited, constitutional government.

Neo-conservatism has been around for decades and, strangely, has connections to past generations as far back as Machiavelli. Modern-day neo-conservatism was introduced to us in the 1960s. It entails both a detailed strategy as well as a philosophy of government. The ideas of Teddy Roosevelt, and certainly Woodrow Wilson, were quite similar to many of the views of present-day neocons. Neocon spokesman Max Boot brags that what he advocates is “hard Wilsonianism.” In many ways, there’s nothing “neo” about their views, and certainly nothing conservative. Yet they have been able to co-op the conservative movement by advertising themselves as a new or modern form of conservatism.

More recently, the modern-day neocons have come from the far left, a group historically identified as former Trotskyists. Liberal Christopher Hitchins has recently officially joined the neocons, and it has been reported that he has already been to the White House as an ad hoc consultant. Many neocons now in positions of influence in Washington can trace their status back to Professor Leo Strauss of the University of Chicago. One of Strauss’ books was Thoughts on Machiavelli. This book was not a condemnation of Machiavelli’s philosophy. Paul Wolfowitz actually got his PhD under Strauss. Others closely associated with these views are Richard Perle, Eliot Abrams, Robert Kagan and William Kristol. All are key players in designing our new strategy of preemptive war. Others include: Michael Ledeen of the American Enterprise Institute; former CIA Director James Woolsy; Bill Bennett of Book of Virtuesfame; Frank Gaffney; Dick Cheney; and Donald Rumsfeld. There are just too many to mention who are philosophically or politically connected to the neocon philosophy in some varying degree.

The godfather of modern-day neo-conservatism is considered to be Irving Kristol, father of Bill Kristol, who set the stage in 1983 with his publication Reflections of a Neoconservative. In this book, Kristol also defends the traditional liberal position on welfare.

More important than the names of people affiliated with neo-conservatism are the views they adhere to. Here is a brief summary of the general understanding of what neocons believe:

  1. They agree with Trotsky on permanent revolution, violent as well as intellectual.
  2. They are for redrawing the map of the Middle East and are willing to use force to do so.
  3. They believe in preemptive war to achieve desired ends.
  4. They accept the notion that the ends justify the means – that hard-ball politics is a moral necessity.
  5. They express no opposition to the welfare state.
  6. They are not bashful about an American empire; instead they strongly endorse it.
  7. They believe lying is necessary for the state to survive.
  8. They believe a powerful federal government is a benefit.
  9. They believe pertinent facts about how a society should be run should be held by the elite and withheld from those who do not have the courage to deal with it.
  10. They believe neutrality in foreign affairs is ill-advised.
  11. They hold Leo Strauss in high esteem.
  12. They believe imperialism, if progressive in nature, is appropriate.
  13. Using American might to force American ideals on others is acceptable. Force should not be limited to the defense of our country.
  14. 9-11 resulted from the lack of foreign entanglements, not from too many.
  15. They dislike and despise libertarians (therefore, the same applies to all strict constitutionalists).
  16. They endorse attacks on civil liberties, such as those found in the Patriot Act, as being necessary.
  17. They unconditionally support Israel and have a close alliance with the Likud Party.

Various organizations and publications over the last 30 years have played a significant role in the rise to power of the neoconservatives. It took plenty of money and commitment to produce the intellectual arguments needed to convince the many participants in the movement of its respectability.

It is no secret – especially after the rash of research and articles written about the neocons since our invasion of Iraq – how they gained influence and what organizations were used to promote their cause. Although for decades, they agitated for their beliefs through publications like The National Review, The Weekly Standard, The Public Interest, The Wall Street Journal,Commentary, and the New York Post, their views only gained momentum in the 1990s following the first Persian Gulf War – which still has not ended even with removal of Saddam Hussein. They became convinced that a much more militant approach to resolving all the conflicts in the Middle East was an absolute necessity, and they were determined to implement that policy.

In addition to publications, multiple think tanks and projects were created to promote their agenda. A product of the Bradley Foundation, American Enterprise Institute (AEI) led the neocon charge, but the real push for war came from the Project for a New American Century (PNAC), another organization helped by the Bradley Foundation. This occurred in 1998 and was chaired by Weekly Standardeditor Bill Kristol. Early on, they urged war against Iraq, but were disappointed with the Clinton administration, which never followed through with its periodic bombings. Obviously, these bombings were motivated more by Clinton’s personal and political problems than a belief in the neocon agenda.

The election of 2000 changed all that. The Defense Policy Board, chaired by Richard Perle played no small role in coordinating the various projects and think tanks, all determined to take us into war against Iraq. It wasn’t too long before the dream of empire was brought closer to reality by the election of 2000 with Paul Wolfowitz, Richard Cheney and Donald Rumsfeld playing key roles in this accomplishment. The plan to promote an “American greatness” imperialistic foreign policy was now a distinct possibility. Iraq offered a great opportunity to prove their long-held theories. This opportunity was a consequence of the 9-11 disaster.

The money and views of Rupert Murdock also played a key role in promoting the neocon views, as well as rallying support by the general population, through his News Corporation, which owns Fox News Network, the New York Postand Weekly Standard. This powerful and influential media empire did more to galvanize public support for the Iraqi invasion than one might imagine. This facilitated the Rumsfeld/Cheney policy as their plans to attack Iraq came to fruition. It would have been difficult for the neocons to usurp foreign policy from the restraints of Colin Powell’s State Department without the successful agitation of the Rupert Murdock empire. Max Boot was satisfied, as he explained: “Neoconservatives believe in using American might to promote American ideals abroad.” This attitude is a far cry from the advice of the Founders, who advocated no entangling alliances and neutrality as the proper goal of American foreign policy.

Let there be no doubt, those in the neocon camp had been anxious to go to war against Iraq for a decade. They justified the use of force to accomplish their goals, even if it required preemptive war. If anyone doubts this assertion, they need only to read of their strategy in “A Clean Break: a New Strategy for Securing the Realm.” Although they felt morally justified in changing the government in Iraq, they knew that public support was important, and justification had to be given to pursue the war. Of course, a threat to us had to exist before the people and the Congress would go along with war. The majority of Americans became convinced of this threat, which, in actuality, never really existed. Now we have the ongoing debate over the location of weapons of mass destruction. Where was the danger? Was all this killing and spending necessary? How long will this nation-building and dying go on? When will we become more concerned about the needs of our own citizens than the problems we sought in Iraq and Afghanistan? Who knows where we’ll go next – Iran, Syria or North Korea?

At the end of the Cold War, the neoconservatives realized a rearrangement of the world was occurring and that our superior economic and military power offered them a perfect opportunity to control the process of remaking the Middle East.

It was recognized that a new era was upon us, and the neocons welcomed Frances Fukuyama’s “end of history” declaration. To them, the debate was over. The West won; the Soviets lost. Old-fashioned communism was dead. Long live the new era of neoconservatism. The struggle may not be over, but the West won the intellectual fight, they reasoned. The only problem is that the neocons decided to define the philosophy of the victors. They have been amazingly successful in their efforts to control the debate over what Western values are and by what methods they will be spread throughout the world.

Communism surely lost a lot with the breakup of the Soviet Empire, but this can hardly be declared a victory for American liberty, as the Founders understood it. Neoconservatism is not the philosophy of free markets and a wise foreign policy. Instead, it represents big-government welfare at home and a program of using our military might to spread their version of American values throughout the world. Since neoconservatives dominate the way the U.S. government now operates, it behooves us all to understand their beliefs and goals. The breakup of the Soviet system may well have been an epic event but to say that the views of the neocons are the unchallenged victors and that all we need do is wait for their implementation is a capitulation to controlling the forces of history that many Americans are not yet ready to concede. There is surely no need to do so.

There is now a recognized philosophic connection between modern-day neoconservatives and Irving Kristol, Leo Strauss and Machiavelli. This is important in understanding that today’s policies and the subsequent problems will be with us for years to come if these policies are not reversed.

Not only did Leo Strauss write favorably of Machiavelli, Michael Ledeen, a current leader of the neoconservative movement, did the same. In 1999, Ledeen titled his book, Machiavelli on Modern Leadership,andsubtitled: “Why Machiavelli’s iron rules are as timely and important today as five centuries ago.” Ledeen is indeed an influential neocon theorist whose views get lots of attention today in Washington. His book on Machiavelli, interestingly enough, was passed out to Members of Congress attending a political strategy meeting shortly after its publication and at just about the time A Clean Break was issued.

In Ledeen’s most recent publication, The War Against the Terror Masters, he reiterates his beliefs outlined in this 1999 Machiavelli book. He specifically praises: “Creative destruction…both within our own society and abroad…(foreigners) seeing America undo traditional societies may fear us, for they do not wish to be undone.” Amazingly, Ledeen concludes: “They must attack us in order to survive, just as we must destroy them to advance our historic mission.”

If those words don’t scare you, nothing will. If they are not a clear warning, I don’t know what could be. It sounds like both sides of each disagreement in the world will be following the principle of preemptive war. The world is certainly a less safe place for it.

In Machiavelli on Modern Leadership, Ledeen praises a business leader for correctly understanding Machiavelli: “There are no absolute solutions. It all depends. What is right and what is wrong depends on what needs to be done and how.” This is a clear endorsement of situation ethics and is not coming from the traditional left. It reminds me of: “It depends on what the definition of the word ‘is’ is.”

Ledeen quotes Machiavelli approvingly on what makes a great leader. “A prince must have no other objectives or other thoughts or take anything for his craft, except war.” To Ledeen, this meant: “…the virtue of the warrior are those of great leaders of any successful organization.” Yet it’s obvious that war is not coincidental to neocon philosophy, but an integral part. The intellectuals justify it, and the politicians carry it out. There’s a precise reason to argue for war over peace according to Ledeen, for “…peace increases our peril by making discipline less urgent, encouraging some of our worst instincts, in depriving us of some of our best leaders.” Peace, he claims, is a dream and not even a pleasant one, for it would cause indolence and would undermine the power of the state. Although I concede the history of the world is a history of frequent war, to capitulate and give up even striving for peace – believing peace is not a benefit to mankind – is a frightening thought that condemns the world to perpetual war and justifies it as a benefit and necessity. These are dangerous ideas, from which no good can come.

The conflict of the ages has been between the state and the individual: central power versus liberty. The more restrained the state and the more emphasis on individual liberty, the greater has been the advancement of civilization and general prosperity. Just as man’s condition was not locked in place by the times and wars of old and improved with liberty and free markets, there’s no reason to believe a new stage for man might not be achieved by believing and working for conditions of peace. The inevitability and so-called need for preemptive war should never be intellectually justified as being a benefit. Such an attitude guarantees the backsliding of civilization. Neocons, unfortunately, claim that war is in man’s nature and that we can’t do much about it, so let’s use it to our advantage by promoting our goodness around the world through force of arms. That view is anathema to the cause of liberty and the preservation of the Constitution. If it is not loudly refuted, our future will be dire indeed.

Ledeen believes man is basically evil and cannot be left to his own desires. Therefore, he must have proper and strong leadership, just as Machiavelli argued. Only then can man achieve good, as Ledeen explains: “In order to achieve the most noble accomplishments, the leader may have to ‘enter into evil.’ This is the chilling insight that has made Machiavelli so feared, admired and challenging…we are rotten,” argues Ledeen. “It’s true that we can achieve greatness if, and only if, we are properly led.” In other words, man is so depraved that individuals are incapable of moral, ethical and spiritual greatness, and achieving excellence and virtue can only come from a powerful authoritarian leader. What depraved ideas are these to now be influencing our leaders in Washington? The question Ledeen doesn’t answer is: “Why do the political leaders not suffer from the same shortcomings and where do they obtain their monopoly on wisdom?”

Once this trust is placed in the hands of a powerful leader, this neocon argues that certain tools are permissible to use. For instance: “lying is central to the survival of nations and to the success of great enterprises, because if our enemies can count on the reliability of everything you say, your vulnerability is enormously increased.” What about the effects of lying on one’s own people? Who cares if a leader can fool the enemy? Does calling it “strategic deception” make lying morally justifiable? Ledeen and Machiavelli argue that it does, as long as the survivability of the state is at stake. Preserving the state is their goal, even if the personal liberty of all individuals has to be suspended or canceled.

Ledeen makes it clear that war is necessary to establish national boundaries – because that’s the way it’s always been done. Who needs progress of the human race! He explains: “Look at the map of the world: national boundaries have not been drawn by peaceful men leading lives of spiritual contemplation. National boundaries have been established by war, and national character has been shaped by struggle, most often bloody struggle.”

Yes, but who is to lead the charge and decide which borders we are to fight for? What about borders 6,000 miles away unrelated to our own contiguous borders and our own national security? Stating a relative truism regarding the frequency of war throughout history should hardly be the moral justification for expanding the concept of war to settle man’s disputes. How can one call this progress?

Machiavelli, Ledeen and the neocons recognized a need to generate a religious zeal for promoting the state. This, he claims, is especially necessary when force is used to promote an agenda. It’s been true throughout history and remains true today, each side of major conflicts invokes God’s approval. Our side refers to a “crusade”; theirs to a “holy Jihad.” Too often wars boil down to their god against our God. It seems this principle is more a cynical effort to gain approval from the masses, especially those most likely to be killed for the sake of the war promoters on both sides who have power, prestige and wealth at stake.

Ledeen explains why God must always be on the side of advocates of war: “Without fear of God, no state can last long, for the dread of eternal damnation keeps men in line, causes them to honor their promises, and inspires them to risk their lives for the common good.” It seems dying for the common good has gained a higher moral status than eternal salvation of one’s soul. Ledeen adds: “Without fear of punishment, men will not obey laws that force them to act contrary to their passions. Without fear of arms, the state cannot enforce the laws…to this end, Machiavelli wants leaders to make the state spectacular.”

It’s of interest to note that some large Christian denominations have joined the neoconservatives in promoting preemptive war, while completely ignoring the Christian doctrine of a Just War. The neocons sought and openly welcomed their support.

I’d like someone to glean anything from what the Founders said or placed in the Constitution that agrees with this now-professed doctrine of a “spectacular” state promoted by those who now have so much influence on our policies here at home and abroad. Ledeen argues that this religious element, this fear of God, is needed for discipline of those who may be hesitant to sacrifice their lives for the good of the “spectacular state.”

He explains in eerie terms: “Dying for one’s country doesn’t come naturally. Modern armies, raised from the populace, must be inspired, motivated, indoctrinated. Religion is central to the military enterprise, for men are more likely to risk their lives if they believe they will be rewarded forever after for serving their country.” This is an admonition that might just as well have been given by Osama bin Laden, in rallying his troops to sacrifice their lives to kill the invading infidels, as by our intellectuals at AEI, who greatly influence our foreign policy.

Neocons – anxious for the U.S. to use force to realign the boundaries and change regimes in the Middle East – clearly understand the benefit of a galvanizing and emotional event to rally the people to their cause. Without a special event, they realized the difficulty in selling their policy of preemptive war where our own military personnel would be killed. Whether it was the Lusitania, Pearl Harbor, the Gulf of Tonkin or the Maine, all served their purpose in promoting a war that was sought by our leaders.

Ledeen writes of a fortuitous event (1999): “…of course, we can always get lucky. Stunning events from outside can providentially awaken the enterprise from its growing torpor, and demonstrate the need for reversal, as the devastating Japanese attack on Pearl Harbor in 1941 so effectively aroused the U.S. from its soothing dreams of permanent neutrality.”

Amazingly, Ledeen calls Pearl Harbor a “lucky” event. The Project for a New American Century, as recently as September 2000, likewise, foresaw the need for “a Pearl Harbor event” that would galvanize the American people to support their ambitious plans to ensure political and economic domination of the world, while strangling any potential “rival.”

Recognizing a “need” for a Pearl Harbor event, and referring to Pearl Harbor as being “lucky” are not identical to support and knowledge of such an event, but that this sympathy for a galvanizing event, as 9-11 turned out to be, was used to promote an agenda that strict constitutionalists and devotees of the Founders of this nation find appalling, is indeed disturbing. After 9-11, Rumsfeld and others argued for an immediate attack on Iraq, even though it was not implicated in the attacks.

The fact that neo-conservatives ridicule those who firmly believe that U.S. interests and world peace would best be served by a policy of neutrality and avoiding foreign entanglements should not go unchallenged. Not to do so is to condone their grandiose plans for an American world hegemony.

The current attention given neocons usually comes in the context of foreign policy. But there’s more to what’s going on today than just the tremendous influence the neocons have on our new policy of preemptive war with a goal of empire. Our government is now being moved by several ideas that come together in what I call “neoconism.” The foreign policy is being openly debated, even if its implications are not fully understood by many who support it. Washington is now driven by old views brought together in a new package.

We know those who lead us – both in the administration and in Congress – show no appetite to challenge the tax or monetary systems that do so much damage to our economy. The IRS and the Federal Reserve are off limits for criticism or reform. There’s no resistance to spending, either domestic or foreign. Debt is not seen as a problem. The supply-siders won on this issue, and now many conservatives readily endorse deficit spending.

There’s no serious opposition to the expanding welfare state, with rapid growth of the education, agriculture and medical-care bureaucracy. Support for labor unions and protectionism are not uncommon. Civil liberties are easily sacrificed in the post 9-11 atmosphere prevailing in Washington. Privacy issues are of little concern, except for a few members of Congress. Foreign aid and internationalism – in spite of some healthy criticism of the UN and growing concerns for our national sovereignty – are championed on both sides of the aisle. Lip service is given to the free market and free trade, yet the entire economy is run by special-interest legislation favoring big business, big labor and, especially, big money.

Instead of the “end of history,” we are now experiencing the end of a vocal limited-government movement in our nation’s capital. While most conservatives no longer defend balanced budgets and reduced spending, most liberals have grown lazy in defending civil liberties and now are approving wars that we initiate. The so-called “third way” has arrived and, sadly, it has taken the worst of what the conservatives and liberals have to offer. The people are less well off for it, while liberty languishes as a result.

Neocons enthusiastically embrace the Department of Education and national testing. Both parties overwhelmingly support the huge commitment to a new prescription drug program. Their devotion to the new approach called “compassionate conservatism” has lured many conservatives into supporting programs for expanding the federal role in welfare and in church charities. The faith-based initiative is a neocon project, yet it only repackages and expands the liberal notion of welfare. The intellectuals who promoted these initiatives were neocons, but there’s nothing conservative about expanding the federal government’s role in welfare.

The supply-siders’ policy of low marginal tax rates has been incorporated into neoconism, as well as their support for easy money and generous monetary inflation. Neoconservatives are disinterested in the gold standard and even ignore the supply-siders’ argument for a phony gold standard.

Is it any wonder that federal government spending is growing at a rate faster than in any time in the past 35 years?

Power, politics and privilege prevail over the rule of law, liberty, justice and peace. But it does not need to be that way. Neoconism has brought together many old ideas about how government should rule the people. It may have modernized its appeal and packaging, but authoritarian rule is authoritarian rule, regardless of the humanitarian overtones. A solution can only come after the current ideology driving our government policies is replaced with a more positive one. In a historical context, liberty is a modern idea and must once again regain the high moral ground for civilization to advance. Restating the old justifications for war, people control and a benevolent state will not suffice. It cannot eliminate the shortcomings that always occur when the state assumes authority over others and when the will of one nation is forced on another – whether or not it is done with good intentions.

I realize that all conservatives are not neoconservatives, and all neocons don’t necessarily agree on all points – which means that in spite of their tremendous influence, most members of Congress and those in the administration do not necessarily take their marching orders from AEI or Richard Perle. But to use this as a reason to ignore what neoconservative leaders believe, write about and agitate for – with amazing success I might point out – would be at our own peril. This country still allows open discourse – though less everyday – and we who disagree should push the discussion and expose those who drive our policies. It is getting more difficult to get fair and balanced discussion on the issues, because it has become routine for the hegemons to label those who object to preemptive war and domestic surveillance as traitors, unpatriotic and un-American. The uniformity of support for our current foreign policy by major and cable-news networks should concern every American. We should all be thankful for C-SPAN and the Internet.

Michael Ledeen and other neoconservatives are already lobbying for war against Iran. Ledeen is pretty nasty to those who call for a calmer, reasoned approach by calling those who are not ready for war “cowards and appeasers of tyrants.” Because some urge a less militaristic approach to dealing with Iran, he claims they are betraying America’s best “traditions.” I wonder where he learned early American history! It’s obvious that Ledeen doesn’t consider the Founders and the Constitution part of our best traditions. We were hardly encouraged by the American revolutionaries to pursue an American empire. We were, however, urged to keep the Republic they so painstakingly designed.

If the neoconservatives retain control of the conservative, limited-government movement in Washington, the ideas, once championed by conservatives, of limiting the size and scope of government will be a long-forgotten dream.

The believers in liberty ought not deceive themselves. Who should be satisfied? Certainly not conservatives, for there is no conservative movement left. How could liberals be satisfied? They are pleased with the centralization of education and medical programs in Washington and support many of the administration’s proposals. But none should be pleased with the steady attack on the civil liberties of all American citizens and the now-accepted consensus that preemptive war – for almost any reason – is an acceptable policy for dealing with all the conflicts and problems of the world.

In spite of the deteriorating conditions in Washington – with loss of personal liberty, a weak economy, exploding deficits, and perpetual war, followed by nation building – there are still quite a number of us who would relish the opportunity to improve things, in one way or another. Certainly, a growing number of frustrated Americans, from both the right and the left, are getting anxious to see this Congress do a better job. But first, Congress must stop doing a bad job.

We’re at the point where we need a call to arms, both here in Washington and across the country. I’m not talking about firearms. Those of us who care need to raise both arms and face our palms out and begin waving and shouting: Stop! Enough is enough! It should include liberals, conservatives and independents. We’re all getting a bum rap from politicians who are pushed by polls and controlled by special-interest money.

One thing is certain, no matter how morally justified the programs and policies seem, the ability to finance all the guns and butter being promised is limited, and those limits are becoming more apparent every day.

Spending, borrowing and printing money cannot be the road to prosperity. It hasn’t worked in Japan, and it isn’t working here either. As a matter of fact, it’s never worked anytime throughout history. A point is always reached where government planning, spending and inflation run out of steam. Instead of these old tools reviving an economy, as they do in the early stages of economic interventionism, they eventually become the problem. Both sides of the political spectrum must one day realize that limitless government intrusion in the economy, in our personal lives and in the affairs of other nations cannot serve the best interests of America. This is not a conservative problem, nor is it a liberal problem – it’s a government intrusion problem that comes from both groups, albeit for different reasons. The problems emanate from both camps who champion different programs for different reasons. The solution will come when both groups realize that it’s not merely a single-party problem, or just a liberal or just a conservative problem.

Once enough of us decide we’ve had enough of all these so-called good things that the government is always promising – or more likely, when the country is broke and the government is unable to fulfill its promises to the people – we can start a serious discussion on the proper role for government in a free society. Unfortunately, it will be some time before Congress gets the message that the people are demanding true reform. This requires that those responsible for today’s problems are exposed and their philosophy of pervasive government intrusion is rejected.

Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy. A few have, and others will continue to do so, but too many – both in and out of government – close their eyes to the issue of personal liberty and ignore the fact that endless borrowing to finance endless demands cannot be sustained. True prosperity can only come from a healthy economy and sound money. That can only be achieved in a free society.

See the Ron Paul File

Dr. Ron Paul is a Republican member of Congress from Texas.

Confiscation of Retirement Accounts is Coming

by | Jan 30, 2010 | Uncategorized

The Coming Obama Retirement Trap Has Started!

by Ron Holland

Mandatory IRAs just proposed by Obama Administration on 1/25/10 is the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market! Read the veiled report in Business Week.

A Personal Note from the Author

Dear Concerned American:

I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation. "He who has his thumb on the purse has the power." ~ Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck’s death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany’s military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is on a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar’s days as the world reserve currency are numbered, as is our ability to finance the national debt.

Although the historical government solution to unsustainable government debt loads has always been the destruction of the debts by currency depreciation and eventual hyperinflation, there is always an intermediate step used to buy more time for the politicians in power. This action, usually side-stepped and downplayed by the establishment historians paid to hide the real facts of history, is wealth confiscation. Napoleon had it right when he stated, "History is a state of lies agreed upon."

The largest source of liquid private wealth remaining in the United States is the $15 trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private retirement plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and, although they’d never use the word "confiscate," use your assets at their discretion.

The retirement trap I’m writing about is only a proposal at the present time and since it may well begin in the latter years of the Obama Administration, assuming the Democrats can somehow maintain their majorities in Congress, I’m calling it the "Obama Retirement Trap." But make no mistake, the government need for current revenue and their frenzied search for liquidity to monetize their debt obligations is an unspoken quest of both political parties. The establishments of both political parties will do whatever it takes to stay in power, including the raiding and pillaging of your retirement funds.

I am not a Johnny-come-lately to the area of retirement planning. Although I’ve been in the investment business since the early 1970’s, and often write about political and freedom-oriented issues, my background has always been in retirement planning. I’ve been following the government move to raid private retirement funds since the early 1980’s with my The Threat of the Private Retirement System book written in 1983. I warned again about this in my 1994 book Escape the Pension Trap. The threat receded somewhat with the Bush Administration, but it is now back with a vengeance and the revenue needs of Washington will eventually trump any government promises and guarantees.

I created the first self-directed hard asset IRA account for gold and collectibles back in the late 1970’s and I still remember the day when I was sitting in the office of James U. Blanchard III, a champion of liberty and sound money, in New Orleans. His National Committee to Legalize Gold spearheaded a nationwide grassroots campaign that restored the right of Americans to again own gold bullion following Roosevelt’s gold confiscation during the 1930’s Great Depression.

Congressman Ron Paul gave us a call to inform us that at the last minute, language had been inserted into the 1981 Economic Recovery Act, Section 314(b) ruling "collectibles" as not in the "public interest" of the United States and, therefore, prohibited from future retirement plan investments. This language promoted by Wall Street and the banks destroyed the opportunity to buy retirement investments performing best during those years of high inflation. More importantly, this section created a precedent for the Secretary of the Treasury to label any investment as not in the public interest in the future – and therefore prohibited from retirement plans.

You will be forced into another Social Security-like scheme with the proposed mandatory Guaranteed Retirement Annuity, with 5% of your salary confiscated into the program. You will also eventually find your existing retirement funds forced into the government program and you will lose your ability to invest and protect your retirement funds outside of the dollar, government bonds, and the US investment markets at some time in the future. The only questions are when and what the final details of this, the greatest potential wealth confiscation in the history of the world, will be.

My goal in writing this report is to make you aware of the threat with enough time to take some of my recommended actions to protect your retirement wealth, and thereby minimizing the Washington threat and their future confiscation efforts. Conventional retirement experts and most Wall Street investment advisors will say that I’m paranoid and crazy to advance such a theory because they want to retain the management, the fees and the commissions from your retirement investments.

The risks and threats of standing up to Washington’s wealth confiscation and aggression are great. But we have to take a stand. One of the greatest men in history I’ve studied was a relatively unknown, career army colonel coming from a respected family who lived right across the river from the nation’s capitol. Just before the start of a war, the head of the nation offered this officer the opportunity to take command of the entire national army if he would only lead an invasion and turn against his state and people. This officer declined the offer and all that went with it. The head of the nation was so outraged that he had the officer’s home and plantation occupied, confiscated and used as a burial ground for the war dead, never to be returned to his family or their descendents.

The president was Abraham Lincoln, the colonel was Robert E. Lee and his home, called Arlington, is now known as Arlington National Cemetery right across the Potomac River from Washington, DC.

"Sirs, my name is the heritage of my parents. It is all I have, and it is not for sale. Do your duty in all things. You cannot do more, you should never wish to do less." ~ Robert E. Lee

I believe the best retirement planning advice I can offer to successful individuals is to do exactly the opposite of what the government and most retirement or investment professionals suggest. Washington always recommends what is in their best interest, as do most bankers and investment firms, the so-called financial experts who just received trillions in bailouts and guarantees with your tax dollars.

Can you appreciate the irony and hypocrisy of financial institutions like Merrill Lynch or the Bank of America, just to mention a few, who have so little respect for the American public that they can still advertise to manage your investments or even handle your day-to-day banking needs when both went technically bankrupt? They pay themselves outlandish bonuses, yet they only survive in business at all because of the billions in bailouts and guarantees paid for by you, the American taxpayers, and forced on you through the lobbyists they used to buy the bailout votes in Congress.

I’m retired from the investment business. But I want to warn the American public about the growing threat to our retirement assets and benefits from a government gone wild, desperate for revenue, and looking for funds to buy their increasingly risky and ultimately worthless treasury obligations. You’ve been warned, I’ve done my duty as an American and an expert in the field. The rest is up to you.

Key Elements of the Obama Retirement Trap

Stealth Nationalization

Following their attempt at "so-called" health care reform in 2009 and 2010 – the first step in total nationalization of health care – Washington will next turn its attention to another broken program, the private retirement system. Although both health care and the private retirement system need real reform, the government, as usual, will use the problems to expand federal control and redirect the contributions currently going into quasi-private programs back towards the bankrupt coffers of the federal government.

Your Retirement Plan Will Soon Become Washington’s ATM Machine

Today over $15 trillion is sitting in tax-favored retirement plans, including $4 trillion in IRA accounts. Retirement savings make up 35% of all private assets. Washington is broke, the deficit is soaring and Congress simply can’t wait for Americans to retire so they can start taxing these funds. The politicians are tired of waiting; they need your money now.

The Trojan Horse

The nationalization will begin with a modest proposal to increase retirement security and basically create a new, third level of mandatory retirement benefits in addition to private plans and Social Security. This will be described as a Guaranteed Retirement Annuity or Account. Teresa Ghilarducci is the author of this leftist plan which first appeared in 2007 at the Economic Policy Institute: Agenda for Shared Prosperity. In 2008, she became the new Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. In her book When I’m 64: The Plot Against Pensions and the Plan To Save Them, she hypes her retirement solution for millions who do not have adequate retirement savings. Her ultimate solution is to confiscate most of the retirement assets of successful and wealthy Americans.

In the proposal, the government will even make an annual contribution to every citizen’s account of around $600 annually, covering the unemployed, under-employed and all working Americans. The initial problem for productive, successful Americans is that Washington will require, in exchange for their contribution, that all working Americans contribute 5% of their annual salaries or income into this new "guaranteed account" managed and run by the hard-working bureaucrats at the Social Security System. Successful Americans will of course complain about losing the deduction for this contribution, which is little more than a new 5% tax on income. But this is just the beginning of the problem for Americans with substantial retirement savings and outstanding benefits.

The Devil Is In the Details

Different proposals would delay retirement age until age 64, and some even later. The guaranteed retirement annuity would be structured to allow the government to hold and invest the money. Unlike your current private plan, it would be very difficult for members to withdraw their money before and even after retirement, except over the life expectancy of the participant.

I fear, following implementation of the contributory GRA program, a future legislative action by Congress would be to end the tax deductions and tax-deferred growth of all retirement plans, thus forcing these funds into the government controlled annuity. Your forced retirement contributions would be pooled and professionally managed by Social Security. Also, beneficiaries would be cheated out of half of any benefits remaining at the death of a participant because Ghilarducci’s plan has 50% of all balances at death reverting to the Feds, not the beneficiaries.

The Confiscation Event

At some time during the next decade, a global run on treasury debt and the dollar will also likely take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009. The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet.

At this time, Washington will "come to the rescue" and guarantee all private retirement plan market values back to pre-crisis levels. The gullible American public will overwhelmingly support this effort by switching their dwindling funds into the Guaranteed Retirement Annuity managed by the government. For the first few years, Washington will probably label those few of us who warn that Americans have lost their retirement benefits as extremists, Ron Paul paranoids and Tea Party advocates.

Then it will become crystal clear to all Americans that their retirement benefits have been given away for a promise by an evil group of plunderers who have never in their history kept a promise, a guarantee, or their word on anything. The greatest theft of wealth in the history of the world will have taken place and only those few who took heed of an early warning will still have their retirement benefits and security.

You Will Be Forced To Become The Final Buyer of Last Resort For Collapsing Washington Treasury Obligations

Although the faltering dollar could rebound in the short run, the longer-term prognosis is terminal unless Washington dramatically reduces spending and borrowing. When the global run on treasury debt and the dollar develops, the current relative minor fluctuations in values today will be replaced by a virulent death spiral of historic proportions rarely seen in world history.

Sometime in the next decade, the Washington dollar collapse will take its shameful place in history at the pinnacle of fiat currency robberies by politicians and central bankers. We will lead the world in wealth lost and future generations saddled by illegitimate government debts.

In the meantime, Americans should insulate themselves from the coming dollar and debt debacle by investing in gold bullion stored in the US, as well as outside, in secure facilities like the one offered by Global Gold Inc. in Switzerland, through mining shares, as well as through foreign currency diversification with the euro and Swiss franc. Don’t wait, take action now while you still have the opportunity to protect and preserve your wealth.

In the future, when the rest of the world’s investors, governments and central banks have lost enough purchasing power through their misguided investment in Washington treasury obligations, they will still have the luxury and financial freedom to diversify maturing treasury obligations and new funds into other non-dollar bonds, gold etc. But Americans will not have this choice. They will find that their retirement funds in the mandatory guaranteed retirement annuity will be used to purchase much of the rollover of treasury debt not repurchased by the Federal Reserve System.

The taxpayers will be forced to become the buyer of last resort in the final collapse of Washington treasury obligations. This is sort like being forced to purchase stock in AIG weeks before the final stock crash.

You Are A Narrow Target of Opportunity: Not A Grand Conspiracy

This is just another revenue generator for Washington and a payback for the unions, just like the planned nationalization of health care. The target is successful, productive Americans who make good annual incomes or who have been frugal and built up substantial retirement benefits in qualified plans.

There Will Be No Public Outcry Like With Nationalized Health Care

Don’t expect a broad public reaction to the stealth nationalization to protect your hard-earned benefits. Most unemployed, underemployed, union workers in failing union plans, and eventually state and local government employees will benefit from this attack on the retirement assets of productive, successful Americans working in the private sector. You are a minority and the mob rule of democracy warned about by Thomas Jefferson is just doing what it has always done. But this time with you as the target.

"A democracy is nothing more than mob rule, where fifty-one percent of the people take away the rights of the other forty-nine." ~ Thomas Jefferson

Don’t Cry For Us Argentina

Bankrupt governments have a recent history of confiscating and nationalizing private retirement programs. Back on October 21, 2008, Fernandez de Kirchner, the president of Argentina, announced plans to take over $29 billion of private pension accounts, saying a state-run system would protect retirees from fluctuations in financial markets. Roque Fernandez, an economy minister and central bank president in the 1990’s, said the move is a "confiscation" of people’s savings.

How the Government Benefits From the Guaranteed Retirement Annuity

Initially, the government will receive a dramatic increase in revenue as Americans will be required to contribute (without a deduction) 5% of their annual income (without a cap like Social Security) into the GRA. These contributions will be accounted for in some type of statement, but the actual funds will disappear into the Washington coffers just like your annual Social Security taxes.

Secondly, the eventual loss of contribution deductions and tax-deferred growth in competing private plans will kill them and either a real or contrived financial crisis or tax rules will force most of these funds down the road into the government GRA accounts. Again, trillions of dollars will vanish into the black hole of Washington, Social Security and whatever vested private interests buy their way into management of the program. These trillions in vested retirement funds and benefits will be replaced with a Washington promise to pay you the benefits promised over your life expectancy so the actual costs to the government will be spread over many decades long after your funds have been hijacked for federal programs and government bond purchases.

The final and most important government benefit will be to use the trillions in nationalized private retirement funds first to pay the future annuity benefits. But secondarily, they will use the funds as a slush fund to invest in Washington treasury obligations as a final stop-gap measure as the rest of the world walks away from US government debt obligations and the dollar at some time in the future.

The Majority of Low Income & Union Members Will Benefit At Your Expense

For individuals, the proposal suggests if your annual income is under $12,000 per year, or if you are unemployed or never worked, then this program will benefit you because the proposal calls for a $600 per year contribution to be made to the GRA account of most Americans. Other lower income people will benefit from more of their income being forced into the GRA if they have enough disposable income to pay for their day-to-day expenses. Otherwise, this program, like most Washington efforts, will take away from Americans in the middle and upper income levels.

The main groups that will benefit from the retirement plan nationalization, in addition to Washington benefitting from increased revenues, are first the inefficient, overpaid automobile unions and their workers primarily in the northern Midwest rust belt areas. This proposal is first and foremost a government revenue generator, but second a bailout of underfunded, mismanaged and corrupt union retirement plans.

Later, as local and state governments continue to flirt with bankruptcy, the GRA funds will likely be utilized to bail out state and local government plans. These underfunded programs will be merged into the GRA program with the benefits paid again by the confiscated funds from participants, or with what the government will consider over-funded benefits.

There Is Always A Crisis Just When the Public Needs To Be Motivated

"Nothing just happens in politics. If something happens you can be sure it was planned that way." ~ President Franklin D. Roosevelt

Have you ever noticed how lucky democratic political leaders are when public opinion needs to change. From Fort Sumter at the beginning of the Civil War to the explosion of the battleship Maine starting the Spanish-American War. From the sinking of the Lusitania getting the US into World War One to the creation of the Federal Reserve in response to earlier financial panics. From the Gulf of Tonkin attack and the Vietnam War to the surprise of Pearl Harbor and the Second World War. Then, in today’s age, consider 9/11, Osama, and Afghanistan giving rise suddenly to the Patriot Act and an entirely new foreign policy.

Economic, political and foreign policy crises, actions and responses have the unique ability of molding public opinion almost always behind the government. We saw this in the demands for a bailout of Wall Street when the word "depression" was used in every government and political announcement until the bailout funds were secured, then the word "recovery" became the "word of the day." It will be the same when the global run on Washington treasury debt and the dollar happens. Asset values will tumble and suddenly Washington will have the perfect solution to solve your loss in portfolio values and the debt crisis.

What Would Spark this Nationalization?

A plan this radical cannot just slip through Congress. It can only ride into law on a first-class national crisis. As we’ve mentioned, somehow the politicians are always able to find one when they need one.

Loss of Triple-A Status for U.S. Treasury Bonds

The loss of triple-A status for Treasury bonds is the most likely trigger. And according to Steven Hess, Moody’s lead analyst for the U.S., it’s not that far-fetched. He states, "The AAA rating of the U.S. is not guaranteed. So if they don’t get the deficit down in the next 3 to 4 years to a sustainable level, then the rating will be in jeopardy."

Terrorist Attack or Military Disaster

A terrorist attack or a military disaster like the collapse of Pakistan or an Israel/Iran conflict and disruption of oil shipments could close American markets just as we saw in 2001. That would create a financial crisis overnight.

Another Economic Meltdown

After years of deficits, the greatest hazard to our economy is a run on the dollar and on treasury securities by foreign investors. Although America’s foreign creditors don’t want to start a run on national debt – they prefer a slow, orderly retreat – no one intends to be the last to head for the exit. Political or economic pressures in Asia could force Japan or China to take immediate action, dump our debt, and knock the prices down to fire-sale levels.

What happens if China decides to cut its losses on U.S. Treasuries and issues a $100 billion sell order? That’s only 10% of their holdings, but it could set off panic selling of dollar-denominated bonds and crush the U.S. stock market like an egg shell. Mortgage rates would spike, which would suck the housing market into another air pocket. The President would probably sign an Executive Order closing the markets until order could be restored.

Any of those events would take place in an atmosphere of deep public worry and fear. That’s when Washington would come to your rescue and guarantee to restore your retirement funds back to a "pre-crash" level. How nice, right? However, in exchange you would need to "voluntarily" move your retirement assets into your new Guaranteed Retirement Account.

Implications for Those Who Say "No"

For those who don’t sign up for a GRA because they’re not fooled by the dangled carrot, there would be sticks to consider:

  1. Additional withdrawal penalties and wealth taxes on their retirement plan.
  2. Limitations on permissible investments – nothing that isn’t "in the public interest."
  3. Mandatory minimum holdings for targeted investments, such as Treasury obligations.
  4. An end to offshore investments that could protect your wealth and actually benefit investors during a time of hyperinflation.

Remember, these retirement proposals are just in the discussion stage but progressives are promoting this confiscation agenda to the Obama Administration as a new source of revenue for a bankrupt federal government desperate for additional sources of revenue. When the next economic or stock market crisis hits, your retirement assets will be at risk from this type of confiscation effort regardless of whether the Democrats or Republicans are in control.

How To Protect Your Retirement Benefits & Security

"When plunder has become a way of life for a group of people living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it." ~ Frédéric Bastiat

First of all, the final forced takeover of existing retirement plans will be Washington’s response to a crisis; a crisis, I fear, welcomed by a majority of the American public. It will be legal, authorized and sold to the public by the media and experts. The reality of the action will slowly filter into the American consciousness over time but those of you who protected your assets and actually financially benefit from the collapse of the dollar will not win any popularity contests. Remember: misery loves company. And you would do well to live with frugality and a low profile as there will be millions of angry, destitute Americans. The Washington politicians will blame everyone but themselves, including foreign nations, freedom loving Americans, and those not stupid enough to believe all the BS out of Washington and Wall Street.

"It is very easy to awaken resentment against people who not only have money, but also the boldness to send that money abroad…in order to protect it against all manner of domestic insecurity." ~ Wilhelm Röpke

Strategies To Protect Your Retirement Benefits

Retirement plan assets and IRA accounts have a substantial amount of protection from lawsuits. But they are sitting ducks for confiscation and Washington controls. Uncertain times call for certain measures. Note, if you have less than $200,000 in qualified plans, do not follow these termination strategies as you should be OK. Most of the attacks will be targeted toward individuals with higher retirement plan balances.

Still, you should consider the offshore diversification and global investment strategies to protect your personal and retirement benefits from the coming dollar collapse. This way, you will benefit from what may be the investment profit opportunity of a lifetime by being in investments which should appreciate when the dollar falls.

Below Are Some Retirement Plan Protection Strategies For Your Review:

Simply Be Aware of the Risks

Remember, the vast majority of Americans will never wake up to the government threat on their retirement benefits. This will work to your advantage as the politicians will work to generate the maximum amount of retirement funds and revenue in the shortest time and with the minimum amount of effort using the current bureaucracy. These following strategies will allow you to legally avoid and side-step future regulations that they will try in order to freeze your retirement plans, control your liquidity options and force your investments into the mandatory GRA, government bond obligations and other preferred government investments.

The Swiss Annuity – An Excellent Foreign Investment Strategy For Liquidity & Security

Fixed and managed variable annuities are available. A Swiss annuity can be purchased and held by a self-directed IRA when you have the proper custodian. This is a simple and uncomplicated way to diversify your IRA into hard currencies like the euro, the Swiss franc, or even precious metals. Also, a Swiss annuity purchased through a retirement plan or IRA can usually be liquidated at any time by instructing the IRA custodian or trustee to mail the contract with liquidation instructions to the appropriate Swiss insurance company.

This type of investment liquidity outside US investment markets, investment management firms, banks and mutual funds should remain free of a stock market or bank closure during a future American financial crisis. We all remember how mutual funds, stocks, bonds and even American annuities were effectively frozen in the days following the 9/11 attacks near Wall Street. Therefore, a Swiss or other foreign annuity should retain its investment liquidity in a real or contrived American financial meltdown, terrorist attack or economic crisis.

Swiss annuities are an excellent investment alternative to diversify your IRA or corporate plan outside the dollar and US financial markets. If you have an IRA, you simply decide on the Swiss annuity contract provider and choose among several US self-directed IRA custodians which allow you to direct all or a portion of your IRA funds into a Swiss annuity contract. Then you transfer your existing IRA account and funds to the new custodian and direct them how to invest your funds. Note, do not request or accept the funds personally as this would be construed as a plan distribution, incurring the taxes and penalties associated with a distribution.

The self-directed IRA becomes both the owner (for your benefit) and beneficiary of the annuity contract while you are the person insured. If something should happen to you, the annuity contract will cash out and the funds will go directly to your IRA; the beneficiary payment will follow your instructions provided in the IRA beneficiary forms.

It is also important to remember that with a self-directed IRA, it is your responsibility to review and decide on your investment options, hence the name, "self-directed IRA." Therefore, you should review any proposed investment materials to make sure the IRA investment is appropriate for your personal, tax and family situation under current IRS regulations. You’ll also want to make sure that it meets the investment criteria for your world economic, dollar and political views of the future.

Swiss annuities and other legal IRA offshore investments are usually purchased by American investors concerned about the long-term downtrend in the dollar, future Federal Reserve and Washington actions that might further destroy their wealth, retirement security and future ability to diversify retirement funds internationally to escape a political or economic crisis.

Invest Your IRA & Retirement Plan Outside the Dollar At Home In the United States

Although I believe the seriousness of the threat to retirement plans makes it imperative to either move your retirement assets outside the dollar and the US markets, or consider taking a distribution, there is another alternative to consider in addition to plan termination and withdrawal for retirement investors with less than $200,000 in retirement plans.

Some American banks like EverBank offer foreign currency CD’s, and there are advisors and some mutual fund options available for investors who are far more worried about a future dollar collapse than outright confiscation and government control of your retirement assets.

Build Real Retirement Security Offshore With A Private, Non-Qualified Retirement Program

Every dollar you continue to keep inside the United States in qualified retirement plans and, to a lesser extent, IRA accounts, is at risk of being held hostage to the coming mandatory GRA plan. Washington will attempt to force you to transfer into the GRA by the loss of tax deductions, tax-deferred accumulation and likely additional distribution penalties and investment controls.

If you have over $200,000 in retirement funds, you can expect future controls, wealth taxes and probable excess distribution penalties in addition to current regulations. The best way to reduce the risks of the coming retirement threat is to take your funds out of these qualified plan programs which will soon be under revenue and political attack.

Another solution in addition to termination and taking a distribution is to transfer your distribution after paying taxes and penalties offshore, creating a personal non-qualified account offshore in the jurisdiction of your choice. Remember, after a plan distribution or simply adding a monthly investment to your offshore funds is perfectly legal as long as you meet the reporting and tax requirements.

More and more, Americans want a government jurisdiction where the regulatory environment and legal system protects productive, successful individuals, rather than a system which views them as targets to be plundered and attacked for their personal success. Since this is the environment in the U.S. today, many freedom-loving Americans are following the old adage that if you can’t change your government, then at least change the government jurisdiction where you keep most of your wealth.

Building your future retirement nest egg outside the U.S. certainly doesn’t guarantee you investment profits or success, but it does vastly reduce the likelihood of future government investment controls, exchange controls or the forced investment of your retirement funds into government sponsored or mandated investments. As long as the solicitation rules are followed along with reporting and tax requirements, you are free to invest in approved gold bullion (no collectibles), annuities, real estate and equity and fixed income investments in non-dollar-denominated currencies like the euro and Swiss franc.

Consider Ending Contributions to Your Self-Trusteed Retirement Plans and IRA’s

Don’t place more of your private or corporate wealth at risk by making additional corporate or personal contributions to an IRA or qualified profit-sharing, defined-benefit, money-purchase or 401(k) plan. After all, when the GRA becomes mandatory, the proposal is for 5% of your salary to be forced into the government Guaranteed Retirement Annuity or Account. So why continue your existing plan?

For Participants In Qualified Retirement Plans

If you are only a participant in a qualified plan and you aren’t a plan sponsor or in top management, reduce any required contributions to the minimum necessary to receive the maximum employer matching contributions. This advice is especially appropriate for employees covered under the popular 401(k) plans.

Stop All Voluntary Contributions To Existing Plans

For every type of qualified plan, immediately stop all voluntary contributions, both before and after tax. Here, voluntary contributions transfer private personal funds, into qualified plan funds, which are usually subject to increased restrictions on contributions, investments and distributions. Keep your personal wealth out of qualified plans with their soon-to-be increased limitations, taxes and penalties. The current tax benefits, such as tax-deferred growth and sometimes a deduction for the contribution, will soon be lost. There is no compensation for investors in exchange for the ultimate loss of ownership and investment control.

For Qualified Plan Sponsors – Start Terminating Your Plan While You Still Can!

Washington does not want you to terminate your retirement plan now before the GRA is in place. They will need a real or contrived crisis combined with the extra distribution penalties and the loss of tax-deferred growth to make it necessary for most retirement plans and participants to transfer their funds into the proposed Guaranteed Retirement Annuity program. My advice is, depending on your business or personal circumstances, to terminate before the government makes this option prohibitive.

It is important to meet with your accountant or pension advisor and begin the process of requesting IRS approval for the termination of your plan and the distribution of the benefits to the plan participants. Many plan sponsors find it is very difficult to terminate primarily because the plan investment advisors and CPA’s or tax advisors make money from the ongoing continuation of the plan. They find going against the recommendation of these experts is far more difficult than dealing with the required government forms and regulations.

Check with the IRS on how long it takes in your IRS district to receive IRS approval for a plan termination. When more plan sponsors wake up to the pension threat, America will see an avalanche of plan terminations, causing long delays in the IRS processing of termination requests. This is when the politicians and regulators will move to "temporarily" freeze plan terminations. Then rest assured, the temporary freeze will become permanent; you and your retirement assets will be trapped.

If you wait until the rush of plan terminations is covered on the nightly news, CNBC or conventional establishment news websites, you will have waited too long. Your plan assets and benefits will become trapped and forced into the coming mandatory system. The only retirement benefits you’ll receive will be the standard annual benefits they allow you to withdraw monthly without penalty or excessive tax rates.

Begin Now To Reduce Your Wealth In Retirement Plans To the Minimum Possible Level

In future years, as a plan sponsor or participant with a fund in excess of $200,000, your goal should always be to have the minimum funds possible in any type of government-approved qualified retirement plan or IRA, since every dollar is at a future risk of forced transfer into a future GRA-type mandatory retirement program. Although there is no way you or your employer can escape the coming mandatory program entirely if you have qualified retirement funds, it’s prudent to at least keep your exposure and risk to a minimum.

This is why I suggest terminating your plan and reducing or ending your contributions as an early step in protecting your retirement wealth and benefits. There is no way of knowing in advance the political timetable of this retirement trap; therefore, predicting the plan termination panic and when the government will close the door on your retirement funds is also impossible. Remember, a financial crisis from the future treasury debt and dollar crisis could be sparked by actions from foreign holders of treasury obligations ranging from China, to Japan, to the oil-producing countries.

If Terminating Your Plan – Do You Take the Distributions Now and Pay the Existing Taxes and Penalties?

If you are over 59½ – remember, I believe one of the first moves in the attack will be to delay the early retirement age to maybe age 64 – and your tax bracket is low, then meet with your tax advisor. Ask about whether you should pay the taxes and get your funds out from under the current and future confiscatory qualified retirement plan regulations.

For participants in their 30’s to 50’s with more than the $200,000 threat level in qualified plan assets, I would also suggest that you "bite the bullet" – including the early distribution penalties – and take the funds out now, while you still have the opportunity. The costs of getting out from under the existing government plan system will only increase as time goes by. Penalties, controls and taxes will never be reduced, only increased, and Congress will make sure there is no way any productive, working American can escape the annual forced contribution as a percentage of your salary into the new GRA accounts. The GRA system will be just another black hole on your paycheck each month, just like Social Security. They get your money and you get a promise which they will consistently over time change to their advantage and your detriment.

If Terminating Your Plan – Do You Defer Taxes and Transfer the Funds To An Offshore Self-Directed IRA?

If you expect your income to drop or you require a number of years to withdraw the funds, placing your qualified plan funds into a self-directed IRA can be an excellent decision for a number of reasons. First, the mandatory plan will not be passed for at least a couple of years, and it will be some time later with a new crisis that Washington moves to force all plans into the GRA.

When the passage of the GRA (or whatever they call it) legislation is imminent, that will be the time to immediately close out your IRA account and take the distribution, regardless of taxes and penalties. This may well be the "last train out" for your accumulated retirement benefits. But remember, with an IRA investment like a Swiss annuity, your funds will still be liquid even if a crisis closes the US markets and the banks and you can reinvest the proceeds after paying any taxes and penalties personally or take a distribution in kind to take the distribution, thus remaining in a hard currency like the Swiss franc or euro.

For Existing Large IRA Rollovers

If you are age 59½ and already in an IRA rollover with a substantial balance, then I would begin to withdraw the funds now, with a goal of having at least 50% of the funds out and privately held within the next five years. Remember to discuss all of this with your CPA or tax advisor.

If You Must Keep Your Qualified Retirement Plan, Make Sure You Are the Trustee

If you have only a small number of employees and must continue your qualified plan, either for tax reasons or employee morale, a self-trusteed plan is far superior to one with an outside trustee and custodian. Most importantly, a properly drafted plan will give you, the trustee, the right to be custodian of the plan assets. While this is not an important benefit for mutual fund or investment security accounts, as here for convenience an independent custodian should maintain custody of any liquid or trading investments, there is a significant benefit for having personal custody of other plan investments.

In a crisis situation, having stock certificates in certificate form might provide some additional liquidity if some investment firms and outside custodians become insolvent. Also, both domestic and foreign annuity certificates should be held by you as the trustee and custodian for security purposes.

Remember, in the event of a closure or "government mandated emergency" in the securities markets, on the NASD, and NYSE, all American equity mutual funds and variable annuity portfolios can be frozen for the duration of the crisis. This just might be the time you require liquidity and cash most of all. With foreign annuities, a Swiss annuity or an offshore private annuity outside of American markets, these contracts can be mailed overnight to the respective insurance companies for liquidation or a distribution in kind. This is a taxable event but it can provide you a way to take a legal distribution out of retirement plans in a crisis situation when 99% of American investors are frozen inside a closed US investment market environment with assets waiting to be plucked by Washington.

Prevent Government Control of Your Retirement Investments or Forced Liquidation With A Swiss Annuity For Life Without Refund Option

Whether you have a self-directed IRA or a self-trusteed retirement plan, you can purchase a Swiss annuity policy for life, only with refund, or surrender value. In the event of a future financial crisis, Washington might attempt to force your existing retirement funds into the new GRA or to invest a portion of your non-GRA retirement fund in certain government-preferred investments like treasury obligations. This life annuity without refund option cannot be changed, nor can the contract be liquidated. This is a unique situation where restricted investment liquidity might work in your favor. You should discuss this option with a Swiss annuity expert.

Consider A "Distribution In Kind" With an Offshore Annuity Retirement Investment For Ultimate Liquidity

If there is a world-wide crisis and all investment markets close temporarily, you may or may not be able to liquidate your domestic or foreign annuity. In either case, your foreign annuity contract would be far safer from government confiscation attacks than one purchased in the USA.

In this "worst case scenario," foreign annuities could still be withdrawn from qualified retirement plans and IRA accounts by the participant taking a "distribution in kind" of the contract. This is where the contract is re-registered in the name of the plan participant instead of the plan by written instructions, sending the contract back to the insurance company for re-registration of the ownership. Take note that in this case, the beneficiary would also change from the retirement plan to your preferred beneficiary. This is also a taxable event and whatever distribution penalty and taxes due on the withdrawal would be due at that time.

A "distribution in kind" has been utilized for many years in American plans where the participant prefers the distribution of the actual investment, rather than a distribution by check. For example, American IRA investors might prefer to withdraw their Amazon.com stock in shares rather than liquidating the stock. This is a "distribution in kind."

Delay Could Be Fatal

The bottom line on all the strategies I’ve discussed above is they must be started and in place before the next major economic crisis and threat to your retirement assets occurs. If you, at the very minimum, do not have your offshore retirement program created and partially funded before the crisis and nationalization takes place, none of your remaining wealth in the United States may likely be expatriated outside the U.S.

In a crisis, the government will be forced to control the flow of funds offshore by private individuals and this prohibition will be total, except for politically-favored individuals and large multi-national businesses which will be exempted from the financial iron curtain descending around our borders. Exchange controls – a prohibition on wiring funds offshore, checks, the movement and ownership of cash and precious metals – will be curtailed. Presidential Executive Orders will destroy the last vestiges of civil liberties and the Constitution and Bill of Rights, formerly hanging by a thread, will be curtailed for the duration of the crisis. The door will slam shut!

"If you do not say a thing in an irritating way, you may as well not say it at all, because people will not trouble themselves about anything that does not trouble them." ~ George Bernard Shaw

January 28, 2010

Ron Holland [send him mail], a retirement consultant, works in Zurich and is a co-editor of the Swiss Mountain Vision Newsletter.

Copyright © 2010 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

The Best of Ron Holland

A Conservative Christian’s Descent into Anarchy

by | Jan 27, 2010 | Uncategorized

…

Other things have helped change my mind. R.J. Rummel of the University of Hawaii calculates that in the twentieth century alone, states murdered about 162,000,000 million of their own subjects. This figure doesn’t include the tens of millions of foreigners they killed in war. How, then, can we speak of states “protecting” their people? No amount of private crime could have claimed such a toll. As for warfare, Paul Fussell’s book Wartime portrays battle with such horrifying vividness that, although this wasn’t its intention, I came to doubt whether any war could be justified.

My fellow Christians have argued that the state’s authority is divinely given. They cite Christ’s injunction “Render unto Caesar the things that are Caesar’s” and St. Paul’s words “The powers that be are ordained of God.” But Christ didn’t say which things — if any — belong to Caesar; his ambiguous words are far from a command to give Caesar whatever he claims. And it’s notable that Christ never told his disciples either to establish a state or to engage in politics. They were to preach the Gospel and, if rejected, to move on. He seems never to have imagined the state as something they could or should enlist on their side.

At first sight, St. Paul seems to be more positive in affirming the authority of the state. But he himself, like the other martyrs, died for defying the state, and we honor him for it; to which we may add that he was on one occasion a jailbreaker as well. Evidently the passage in Romans has been misread. It was probably written during the reign of Nero, not the most edifying of rulers; but then Paul also counseled slaves to obey their masters, and nobody construes this as an endorsement of slavery. He may have meant that the state and slavery were here for the foreseeable future, and that Christians must abide them for the sake of peace. Never does he say that either is here forever.

St. Augustine took a dim view of the state, as a punishment for sin. He said that a state without justice is nothing but a gang of robbers writ large, while leaving doubt that any state could ever be otherwise. St. Thomas Aquinas took a more benign view, arguing that the state would be necessary even if man had never fallen from grace; but he agreed with Augustine that an unjust law is no law at all, a doctrine that would severely diminish any known state.

The essence of the state is its legal monopoly of force. But force is subhuman; in words I quote incessantly, Simone Weil defined it as “that which turns a person into a thing — either corpse or slave.” It may sometimes be a necessary evil, in self-defense or defense of the innocent, but nobody can have by right what the state claims: an exclusive privilege of using it.

It’s entirely possible that states — organized force — will always rule this world, and that we will have at best a choice among evils. And some states are worse than others in important ways: anyone in his right mind would prefer living in the United States to life under a Stalin. But to say a thing is inevitable, or less onerous than something else, is not to say it is good.

For most people, anarchy is a disturbing word, suggesting chaos, violence, antinomianism — things they hope the state can control or prevent. The term state, despite its bloody history, doesn’t disturb them. Yet it’s the state that is truly chaotic, because it means the rule of the strong and cunning. They imagine that anarchy would naturally terminate in the rule of thugs. But mere thugs can’t assert a plausible right to rule. Only the state, with its propaganda apparatus, can do that. This is what legitimacy means. Anarchists obviously need a more seductive label.

“But what would you replace the state with?” The question reveals an inability to imagine human society without the state. Yet it would seem that an institution that can take 200,000,000 lives within a century hardly needs to be “replaced.”

Christians, and especially Americans, have long been misled about all this by their good fortune. Since the conversion of Rome, most Western rulers have been more or less inhibited by Christian morality (though, often enough, not so’s you’d notice), and even warfare became somewhat civilized for centuries; and this has bred the assumption that the state isn’t necessarily an evil at all. But as that morality loses its cultural grip, as it is rapidly doing, this confusion will dissipate. More and more we can expect the state to show its nature nakedly.

For me this is anything but a happy conclusion. I miss the serenity of believing I lived under a good government, wisely designed and benevolent in its operation. But, as St. Paul says, there comes a time to put away childish things.

Inflammation and Infection

by | Jan 22, 2010 | Uncategorized

This module covers the cells and organs of the immune system, inflammatory processes, and their control mechanisms. It also covers infections and allergies (hypersensitivity reactions).

Christians Should Stop Supporting the U.S. Government

by | Jan 17, 2010 | Uncategorized

The Tax Trap: How a Florida Couple Declined Participation in a Government Ponzi Scheme and Ended Up in Prison

by Bill Sardi

Recently by Bill Sardi: Stocks, Bonds, Real Estate, Paper Money, Gold

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

~ Learned Hand, Judge, U.S. Court of Appeals 2nd Circuit (1872-1961) Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff’d, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

To write an article that casts the Internal Revenue Service in a bad light may have its obvious consequences – retaliation by the IRS. So this report is written anonymously.

Sadly, America is fast becoming a fascist country without recognition by its citizens. Public anger is misdirected and divides the nation, which insulates the government from public pressure. Division is how government keeps the pressure off of itself – rich vs. poor, black vs. white, immigrant vs. non-immigrant, union vs. non-union worker. In the following report, it’s tax-payer vs. tax evader.

Furthermore, government can even violate the Constitution with impunity because it picks off dissenters one by one, breaching the rights of one, not all. It was Martin Niemoller (1892-1984), born in Lippstadt, Germany, who wrote the following:

“In Germany, they came first for the Communists, And I didn’t speak up because I wasn’t a Communist;

And then they came for the trade unionists, And I didn’t speak up because I wasn’t a trade unionist;

And then they came for the Jews, And I didn’t speak up because I wasn’t a Jew;

And then . . . they came for me . . . And by that time there was no one left to speak up.”

The story of a tax evader versus the IRS is generally not sufficient to attract the attention of most Americans. Most Americans don’t side with tax evaders, feeling they are cheating others. Furthermore, most Americans cannot distinguish tax evasion from tax avoidance. Pay your fair share of taxes, just like all the rest of us! That is the common sentiment.

Even when Americans are asked if they know of any specific law which requires citizens to pay income taxes, most Americans look perplexed as to why a law would be needed in the first place. What is often heard is that every good American citizen should pay their taxes regardless of whether there is a law or not.

America has drastically changed from its earliest beginnings. America actually started out as a tax protest, the Boston Tea Party being the best specific example. Today, protest taxes and you are considered unpatriotic!

Onerous tax code

The IRS’ Taxpayer Ombudsman says the U.S. tax code has become so onerous, so complex, it costs Americans about $193 billion a year to fill out tax forms, and if improperly filed, the consequences could be forfeiture of property or garnishment of wages. As recently as the year 2000 almost half of U.S. wage earners filled out their own tax forms. Today 80% of tax filers must rely upon assistance in the form of software or a tax consultant. This means the tax code is beyond the comprehension of most citizens.

An estimated 7.6 billion hours a year are spent filling out tax forms for the IRS; and that figure does not even include millions of additional hours that taxpayers must spend when they are required to respond to an IRS notice or an audit (7.6 billion hours consume the equivalent of 3.8 million full-time workers).

The U.S. tax code is so complex that almost any tax filer could be found in violation of some rule and be subject to fines and penalties. Furthermore, the IRS can extend its reach beyond the Tax Code and employ laws intended to track down illicit drug dealers. In the case presented below, laws which require banks to report transactions of $10,000 or more.

Case in point

In the case presented below, laws require banks to report transactions of $10,000 or more to the IRS. The IRS claims the alleged offenders attempted to skirt around this law by writing checks just under $10,000 so as to avoid detection by authorities and to evade taxation on income. In legal terms, this violation is called "structuring." It was initially defined in the context of drug dealers who would use many small bank transactions to evade detection. The IRS has elected to use this structuring law to prosecute anyone whom they can make it appear has attempted to evade government detection and therefore, taxation.

Now it is used against a Christian ministry that had no intent to defraud, and individual checks for $9500 and $9600 were cherry-picked over a 2-year period from among weekly checks written to make payroll. The employees were paid in cash and the checks were sometimes written for amounts as low as $2000 or as high as $12,000. Checks written for $6200 and $7800 were not considered "egregious enough."

Any citizen who writes checks for amounts just under $10,000 could be sent to jail. In some instances, even when all taxes are paid, the IRS has deemed transactions under $10,000 to be structured.

How would those accused of structuring have prevented the problem? They would have had to demand that their bank report these less-than-$10,000 transactions to the government so as to avoid potential prosecution. There is no law that would force banks to report transactions below $10,000.

What about privacy? Must the government know everything its citizens do? But citizens serving on a jury panel are likely to ask, what have you got to hide?

Assume for a moment there is no argument that the "tax evader" was actually "evading" taxes. Does that give the Federal government the right to over-prosecute a citizen, tax him for every dime he ever made, use laws intended to deal with drug dealers, and invoke penalties and fines that even convicted drug dealers don’t face?

Who cares, he’s a tax evader, right? That’s just what must have been going through a jury’s mind two years ago in Pensacola, Florida.

The ordeal

Without warning, in the early morning on a day in 1996, Internal Revenue Service agents, sporting seizure papers and accompanied by police officers, towed away cars parked on Cummings Road in Pensacola, Florida. So began a long ordeal between a Christian ministry and the Internal Revenue Service (IRS) that continues today.

IRS agents seized the property in a claim for $10,000 of unpaid taxes. The alleged tax violators had mailed written responses to the IRS, but IRS agents chose to seize property without notice rather than write a reply to the accused. What would become years of intimidation had begun.

The vehicles were later returned. But the accused had to take advantage of Florida law and file for personal bankruptcy to regain their vehicles.

Today the accused, a man and his wife, convicted of tax fraud, are spending their time in separate federal prisons. He won’t get out of jail till 2015. His wife has just now entered federal prison and will spend a year in jail.

Just how this couple was found guilty of tax fraud extends beyond a family dispute with a local branch of the IRS to public privacy and punitive issues as well as the right to a fair trial that deserve attention in a country that is fast losing its Constitutional freedoms.

Setting the stage

This story is not just that of a crank tax protestor, but that of a retired public school teacher who started a ministry for children to learn about dinosaurs.

In 1989 Kent Hovind and his wife Jo had begun a ministry to educate Christians that they did not evolve from monkeys but rather were made in the image of God, in a six-day creation as spelled out in the Bible.

The Hovind’s called their ministry Creation Science Evangelism (CSE), and they produced videotapes that have been played worldwide. The tapes were not copyrighted and anyone was invited to duplicate them free of charge. Hundreds of thousands of these tapes were copied and distributed throughout the world.

Kent Hovind fondly became known as "Dr. Dinosaur" for his popular presentations to young children that the dinosaurs did not live millions and millions years ago but rather were created thousands of years ago as the Bible describes.

Kent became known for his public presentations where he demonstrated for children how to launch a paper airplane that would fly over a building, and how to shoot rubber bands to hit an object the size of a light bulb from 30 feet away. This wowed children.

Kent was frequently late for appointments because he stopped to help someone stranded on a roadside with a flat tire or a dead battery.

Hovind went so far as to challenge biology professors and teachers of evolution to open debates. Videotapes of these debates made for interesting viewing as time after time Hovind tore into the holes in evolutionary thinking. Hovind even offered a $250,000 reward for anyone who could provide empirical evidence for evolution.

Vow of poverty

Back in 1989, Kent Hovind officially took a vow of poverty, as Roman Catholic priests who belong to an "order" do today. Catholic priests who take a vow of poverty, which is recognized by the IRS, are exempt from paying Federal income tax. For those who have taken such a vow, earnings are considered the income of the religious order, or in Hovind’s case, part of his ministry. In essence, Hovind owned nothing, had no salary, and all of his needs, housing, food, transportation, were met by the ministry. He had no personal wealth, and he was not an owner of any real estate or other property, the ministry was. All of CSE’s real estate was put into a trust. Years later, newspaper reports nebulously reported Hovind failed to pay his taxes. It was a moot point. Hovind, like ordered Catholic priests, officially had no income.

The raid

The Hovind’s faced a squadron of IRS agents and police officers, who with guns drawn, raided Creation Science Evangelism in the morning hours on April 14, 2004. Some $40,000 was stolen from the ministry safe that day.

CSE was hardly a dangerous crowd of workers, but 20 armed government agents stormed onto the ministry property without warning in the early morning hours. One of Hovind’s son, who is physically handicapped, was thrown to the floor and handcuffed. Four armed agents entered Jo Hovind’s bedroom and handcuffed her. She was not even allowed to get dressed or go to the bathroom. She was taken to jail despite pleas for simple courtesies. She was indicted at the Federal Courthouse in her nightgown. Such is the experience today of those who, while innocent until proven guilty, are subjected to humiliation and public ridicule. The local Pensacola newspaper found the Hovind’s ordeal with the IRS increased their readership. Not a whimper of protest has ever been issued from the newspaper. It was as if Hovind was guilty from the start.

The Withholding Tax trap

Kent Hovind was arrested and charged with twelve counts of willfully failing to withhold, deposit, report, and pay federal income and FICA (social security) taxes for employees from March 31, 2001 until December 31, 2003. The only law he was informed that he violated was 26 U.S.C. § 7202. (26 U.S.C. § 7202 has a 5-year penalty and he is in jail for 10.)

When their day in court arrived, 5 of 6 former and current employees testified they had paid their own taxes, so the IRS’ argument that the Hovind’s (or the ministry) owed the government hundreds of thousands of dollars was specious.

It appears that the IRS could not easily invoke fines and penalties upon Kent Hovind because of his vow of poverty. In fact, a 2005 Grand Jury declined to investigate Hovind any further after submission of his affidavit which explained his dedication to ministry work and how he began his ministry with a vow of poverty, which he adhered to religiously.

To the IRS, this was not a ministry but rather Kent Hovind doing business as Creation Science Evangelism. So let’s pretend, for a moment, Hovind really was a business like the IRS tries to make it appear. But the IRS didn’t follow their own rules here. Churches and ministries do not have to apply to the government to be tax exempt.

According to IRS Publication 526:

Organizations That Qualify To Receive Deductible Contributions

You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, as described below, must apply to the IRS.

In the IRS’ own words a church "is automatically tax-deductible."

Unable to pursue Hovind on the ministry income or personal income taxes because of his vow of poverty, the IRS targeted the Withholding Tax for his employees.

The IRS tells employers and employees that according to Internal Revenue Code (IRC) section 3402(a)(1) of their code: “…every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary.” This language is widely cited in copies of the IRC.

However, this is what the law really says: "no (federal, state, city or county) municipal corporation shall levy or collect or cause to be levied or collected any tax upon the income, or any part thereof, of any person, resident or nonresident (also known as the “Full Paycheck Law”)."

How did the IRC regarding withholding tax get changed? According to a September 15, 2003 letter from GAO (General Accounting Office) to Congressman Elton Gallegly regarding W-4 forms and reporting, this was revealed:

“Under current law, IRS does not have statutory authority to impose a penalty to enforce employer compliance with the reporting requirement. The reporting requirement was promulgated in Treasury regulations.”

So the U.S. Treasury Department altered the Internal Revenue Code regarding Employee Withholding taxes. But even then, there is nothing that an employer can do to force employees to sign the W-4 form

The Code of Federal Regulations clearly advises the employers at 26 CFR §31.3402(p)-1(a) “An employee who desires to enter into an agreement for withholding…shall furnish his employer with Form W-4 (or its equivalent) for withholding. The furnishing of such Form W-4 shall constitute a request for withholding.”

Then, 31 CFR §215.2(n)(1) clearly tells the employers they cannot take amounts from the workers’ pay for any form of State tax UNLESS the employee VOLUNTARILY elects to have such sums withheld.

The IRS threatens employers with huge fines if they don’t withhold payroll taxes. Yet there is nothing an employer can do till employees consent to withholding by signing the W-4 form.

Devvy Kidd, Executive Director of We the People Congress, Inc., says: "The withholding issue was sold under the guise of patriotism because the American people did not want this new taxing scheme back in 1942."

Structuring and penalties

The IRS claimed the Hovinds "structured" 45 checks for $9500 or $9600, totaling $430,000, to skirt around government reporting laws.

First, it is difficult to imagine how one check can be deemed to be structured. The combination of two or more checks that represent $10,000 or more to the same payee, intended to avoid the IRS reporting requirement, has been interpreted as structuring in the past.

But transactions under $10,000 have been cited as a violation of reporting laws. The 11th Circuit Court of Appeals ruling states "by its plain language, the statute [Section 5324(a)(3)] prohibits transactions of less than $10,000 that are intended to evade reporting requirements." … "Knowledge of, and the intent to avoid, reporting of those transactions by bank" represents evidence of structuring. (31 CFR § 103.11(gg)

But the fact that one check for $9500, written by anyone who has knowledge of the $10,000 reporting law (which shows intent in the government’s mind), can be deemed to be evidence of structuring means anyone could be found guilty of this practice by happenstance.

Avoiding and evading are mixed here. Citizens apparently have no right to make efforts to maintain privacy in financial dealings. Were the Hovind’s negligent in informing their bank to report those checks under the $10,000 requirement? The IRS needs to make it clear, since the public has become generally knowledgeable of the $10,000 reporting requirement for banks (not businesses, citizens, or ministries), that transactions intentionally engineered so as to remain under this reporting requirement for the sole purpose of maintaining privacy may be deemed to be a violation of the law. Therefore, in self-protection, parties should instruct their bank to report all transactions to the IRS regardless of amount to the IRS. The current practice is a reporting trap.

Here is the IRS’ logic:

You should not drive through a red light or you will be sent to jail.

You can drive through a green light, and you will not go to jail.

However, if you drive through a green light in an effort to knowingly avoid driving through a red light, you go to jail.

Or….

It is illegal to drive 45 in a 45 zone because you’re avoiding breaking the law at 46.

Second, the IRS arbitrarily claims the Hovind’s owe the government $430,000, the total amount of the structured checks. But the 45 checks totaling $430,000 were written to pay the salaries of employees and were essentially a deductible expense of the business. How can the government demand payment for what amounts to the entire weekly payroll of CSR’s employees?

The total withholding tax for workers designated as independent contractors, who would pay both the workers and employer’s share of the tax, would be 15.3%. The Hovind’s would be obligated to pay, at most, 15.3% of $430,000, or $65,790 in Withholding tax. The employees, who were paid cash, were obligated to pay their own taxes on their income. The remaining total of the payroll checks, minus Withholding taxes, would represent a tax deduction to the dba (Kent Hovind) for cost of labor.

How did a jury buy into this false argument that the penalty should be based upon the total payroll, not the total of Withholding taxes? The IRS picked the highest amount, the total amount of the payroll checks, not the lower amount, Withholding taxes. Why did the local news reporters in Pensacola never question this figure? Why did the judge allow this higher figure to be the penalty the Hovind’s owed?

Withholding tax supports a Ponzi scheme

In their defense, the Hovind’s declared the Social Security payroll deduction a Ponzi scheme and branded it as illegal. After his conviction and sentencing, the judge in the case stated she found the Hovind’s defense as based upon "bizarre arguments." Few Americans paid attention.

The General Accounting Office says that Social Security is under-funded by $12 trillion, and there is no money in the Social Security trust fund under each citizen’s name, and it relies upon a larger population of younger tax payers to pay for retirees, and it cannot in any way deliver on its promise to deliver retirement checks to future retirees.

Despite this, most Americans would view the Hovind’s defense, while true, to be a cover to evade taxes and such failure to pay taxes would only make matters worse. It is very difficult to get through to the citizenry on these matters.

Christians appear to be paralyzed to oppose a wrong, their complicity with what appears to be a Biblical exhortation not to "cheat your neighbor, nor rob him. The wages of him who is hired shall not remain with you all night until morning." (Book of Leviticus 19:13) The current Social Security system is going to cheat future generations out of trillions of dollars.

The Securities and Exchange Commission describes a Ponzi scheme as a system where one continues to put money into a system on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.

The Withholding Tax may be the law by prevailing practice, but that doesn’t make it moral or right. In fact, it may be unconstitutional because it interferes with the life, liberty and pursuit of happiness guaranteed in the Declaration of Independence.

If somebody doesn’t begin to stand up to a government system that by all definitions is a Ponzi scheme, American society will crumble in economic insolvency, as we read in the daily newspapers now.

Until the laws and regulations regarding taxation are changed, the citizenry is obligated to pay taxes and employers are obligated to withdraw funds from employees’ payroll checks. But this makes citizens complicit in the crime.

News headlines

Within a week of the April 14, 2004 raid on CSE the Associated Press had taken the story national. Why the Associated Press elected to cover a local news story should be noted. It could prejudice a future jury.

Newspaper headlines made it sound like the Hovind’s were millionaires. CSE had taken in $5 million, but that was over a period of 5 years and pertained to the gross receipts of the ministry, not the net profits. The seeming largesse of the money was beyond what any jurist would ever make in their lifetime. They couldn’t imagine the Hovind’s did not personally profit from many donations and tape and book sales.

Playing to the jury

The jury of twelve was sworn in on October 18, 2006 in United States District Court for the Northern District of Florida.

Jurors could only be those who embrace Darwinism or even atheism, or Christians who espouse to the Biblical teaching to pay taxes, or maybe a mixture of both.

It is in just this sort of courtroom vise that the Hovind’s found themselves in a Southern courtroom where it would have been expected that Southern jurors in the heart of the Bible Belt should have exonerated them. But oddly, the godly and the apostate would align together to convict the Hovind’s of contrived charges

The Southern jury was anticipated to largely reflect a Bible Belt population. The prosecution knew this and they had to overcome it. The strategy was to confront the jury with Bible verses that would condemn the Hovind’s right from the beginning of the trial.

On the second day of the trial the prosecution brought Rebekah Horton, vice president of Pensacola Christian College, to the witness stand. Horton’s testimony was irrelevant to the case, but she was allowed to testify anyway.

Horton herself had a history of run-ins with the IRS. The non-profit Pensacola Christian College derived a great deal of its income from A Beka books (named after Rebekah Horton), which publishes Christian books and curriculums for grade school children. In the mid-1990s, A Beka paid nearly $50-million in back taxes after the Internal Revenue Service ruled that it should have been classified as a for-profit entity.

The reformed Horton took the stand. She had subsequently taken an "anti-tax rebel" stand and informed students that the school would report anyone who they feel is breaking the laws of the country. Pensacola Christian College has strict rules of conduct, and they informed students the school would prohibit any student from associating with others who took an anti-taxation stance.

Whether Horton’s penance was to take the witness stand on that day is unknown, but why the judge would allow the prosecution to question Rebekah Horton goes unexplained. Horton had no direct connection with the case. Horton was an avowed enemy of Hovind and had forbidden her school’s students to work for Creation Science Evangelism.

Horton testified: "We know the Scriptures do not promote (tax evasion). It’s against Scripture teaching." The scripture she was referring to is Matthew 22:21: "Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s."

Those words were uttered by Jesus when questioners tried to trap Jesus into taking a stand that they could report to the Roman authorities on whether Jews should or should not pay taxes to their Roman occupiers. The more accurate translation is: "Creatures of the State should pay taxes to the State, and Creatures of God should pay to God." This scripture is one of the most often misinterpreted.

Jesus Himself rebuked the Apostle Peter for paying taxes not due. (Matthew 17: 24-27) "Jesus asked: of whom do the kings of the earth take custom or tribute? Of their own children, or of strangers?" (Interpretation: governments raise money from foreigners {aliens} rather than from sons {residents}.)

The Bible offers no mandates for employers to pay their employees taxes, only for workers to pay their taxes. At issue in the Hovind case was Federal withholding for Social Security. Federal withholding taxes actually stake first claim on an employee’s paycheck, essentially replacing the "first fruits" that were to be given to God. (Deuteronomy 26:2) The Federal government now receives the "first fruits." The Hovind’s were objecting, as Christians, to participation in a fraudulent scheme called Social Security. Imagine, in this case, had the jury elected to exonerate the Hovind’s of all charges based upon a requirement to withhold money for a fraudulent public retirement scheme, history would have been made. The jury seized no such opportunity.

The Social Security scheme is not much different than the Bernard Madoff $50 billion Ponzi scheme that has outraged so many Americans. Yet no fury is expressed when the government robs the people.

The Hovind’s claimed no benefits for Social Security. Social Security is still a voluntary system for its participants. Recognize, according to the General Accounting Office, Social Security invests money in securities on Wall Street. Withholding Taxes produce handsome rewards for traders on Wall Street who pay lobbyists and make circuitous political contributions to Congressional representatives. Others line their pockets with the Withholding tax money the IRS collects, under force of law.

The judge

The judge assigned to the case, US District judge Casey Rodgers, a G.W. Bush appointee, was the youngest woman appointed to serve in the federal court system. She was appointed at age 39, a couple of years prior to the Hovind case. She had a career to make and now an important case to cut her teeth on.

Of considerable side interest, Judge Rodgers was later to rule, in a case involving the Santa Rosa County School District in Pensacola, against school prayer. Her ruling prohibits employees from promoting prayer at school-sponsored events. This is despite the 1st Amendment to the U.S. Constitution which states “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Essentially, Judge Rodgers ruling violates the 1st Amendment.

During closing arguments Kent Hovind’s attorney read the jury instructions to the jury about the amount structured must be more than $10,000. The U.S. Attorney objected to her own jury instruction! The judge held a side bar and called for a recess. Forty-five minutes later she came back in with new jury instructions that said if they found that the Hovind’s withdrew less than $10,000 they must find them guilty! The stunned Hovind attorneys each moved for a mistrial since jury instructions cannot be changed after closing arguments are presented. The judge denied their motions. The Hovind’s were never allowed to present a defense for structuring transactions under $10,000. The Hovind’s were found guilty of forty-five counts of structuring.

After the trial, Judge Rodgers was quoted by the Pensacola News Journal to say that "Kent Hovind had failed his fellow citizens and the men and women of the military – who fight to defend his freedoms – by refusing to pay taxes." This is a very strange statement for a judge who is supposed to be impartial. Juries find the accused guilty or innocent, not judges. The definition of a patriot has changed, from one who resisted an onerous tea tax by the British, to Americans today who view any tax protest as a lack of patriotism.

After Kent and Jo Hovind had been convicted and sentenced, an appeal was filed with the 11th Circuit Court. Judge Rodgers refused to produce transcripts of the Hovind case that were required for an appeal to be submitted. In fact, Judge Rodgers even incurred fines and delayed the appeal by many months. Why was Judge Rodgers dragging her feet in delivering transcripts of the case in preparation for an appeal?

After-court comments

In the Pensacola News Journal IRS spokesman Norman Meadows said Hovind’s case was not run of the mill and “tax protesters like this are a threat to the nation.”

The government alleged that Mr. Hovind threatened harm to those investigating him and those cooperating with the investigation, yet when pressed about these claims, the government said this claim was based upon Mr. Hovind’s prayer on the radio program he hosted when he discussed David praying that God would smite his enemies.

On January 20, 2007 the Pensacola News Journal said: "Jo Hovind will be sentenced March 1 on charges of evading bank-reporting requirements." But just exactly how would a citizen force a bank to report transactions to Federal authorities that were below the $10,000 notification point? That point went unexplained. The local newspaper bought the government’s story all the way.

Fearing more charges would be filed against her, after the trial was completed Mrs. Hovind, who had never taken a salary at Creation Science Evangelism and had never filed a tax return, filed a late tax return for the past 10 years showing she owed $25,000 in back taxes (including fines and penalties), which she couldn’t pay. Surprisingly, after belatedly filing her tax returns, Jo Hovind actually received tax refund checks from the IRS for a few hundred dollars!

The ordeal continues. The IRS has delivered tax bills to the Hovind’s for $528,000 and $700,000 and now $10 million dollars (Spring 2008). The IRS is over-prosecuting, declaring every dollar of income made by CRE to be ill-gotten. The IRS must be tabulating the huge cost of filing charges against the Hovind’s and figuring out how to justify what must be millions of dollars spent in their prosecution for more than a decade. This must be the reason for the attempt to confiscate property belonging to Creation Science Evangelism. A judge is now considering which if any properties on Cummings Road in Pensacola, properties worth close to $2 million. Just how the IRS is going to justify the taking of all the property in this ministry is going to be worth watching since churches and church groups, regardless of their filing for 501c3 status, are exempt from paying taxes. The IRS maintains, and the courts supports, the false notion that the IRS is a "victim of tax evasion." (11th Circuit Court of Appeals decision, Dec. 30, 2008, No. 07-10502) Even if true, to what extent? The penalty for not paying Withholding tax appears to be beyond reason since most of the employees paid their own taxes.

Many followers of Darwinian evolution followed the court case involving Kent Hovind every step of the way. Many ridicule Kent Hovind, arrogantly claiming scientific high ground for Darwinian evolution, and gloat that a proponent of Biblical creation has finally been "caged," that his science and his business practices were a fraud all along.

Another note to this saga: Assistant U.S. Attorney John D.R. Atchison, a prosecutor in the Hovind case, was arrested in September of 2008 for flying to Detroit in an attempt to molest a 5-year old boy. Atchison committed suicide in federal prison a month later.

Is there any privacy left in America?

Donald McAlvany, editor of the McAlvany Intelligence Advisor, lashes at the war on cash and privacy. Mr. McIlvany’s words speak loud:

Most Americans suppose “money laundering” refers primarily to the hidden, laundered, movement of cash profits from drug deals. Wrong! It refers today to almost any “financial crime,” broken financial regulation, use of cash, avoidance of government cash-reporting laws, unreported foreign bank accounts, unreported transfer of funds, or virtually anything the government bureaucrats want it to mean. The definition is vague and ever expanding.

IRS agents are greatly accelerating money-laundering cases in situations where there is obviously no criminal intent, and certainly no involvement whatsoever with drugs or drug money. Remember, the IRS considers money laundering to be any effort you make to disguise your assets or avoid completing a federal currency transaction or border-crossing form.

If a tax case can be called “money laundering,” it is no longer civil, but criminal, with large potential criminal sentences and fines….

The first thing the Nazis did in the 1930s to establish control over their population was to establish “money crimes” that were punishable by forfeiture and imprisonment. Half a century later, the same thing is happening here. The war on drugs is a classic government power grab.

McIlvany goes on to address "structuring:"

“Structuring” is defined by the IRS as any effort to avoid reporting cash or other monetary transactions over $10,000 by breaking them down into smaller “related” transactions over any 12-month period (defined by USC 31, Sec. 5322-5324-Money Laundering Control Act of 1986, as amended).

“Structuring” is now defined as money laundering, and is a criminal offense. You can now go to jail for dealing in cash to protect your financial privacy, if the IRS thinks you’re trying to hide or structure your transactions or monetary instruments. Furthermore, it’s against the law for a bank or merchant to tell you that you might be violating the law. This can get him prosecuted as part of your structuring “conspiracy.” If they think your behavior is suspicious, they may fill out a form on you without telling you and file it with the IRS, which will promptly audit you, or begin a criminal investigation. . . .

The average person might say, “Well, the government would never come after anyone who was totally innocent.” But that’s not true – he misses the point. The IRS admits that 85% of the people accused of “structuring” committed no other crime than seeking to protect their privacy.

Interpretation

Americans look to their TV sets for interpretation of current events. It is easy to see that the public sorts out a case like the Hovind’s as just another crank tax protestor who is depriving the public of its money. Yet some people ask why child molesters roam the streets on parole while a teacher like Kent Hovind gets 10-years in the slammer?

The American people largely appear to be oblivious to a government that has slid past socialism to fascism. Americans might admit to the socialist claim, but they wouldn’t recognize fascism if they saw it. It is not in their vocabulary.

In Nazi Germany, Christians were confronted with the Bible scripture to "render unto Caesar" to compel their cooperation. As the nation slides further into debt (another $12 trillion of public debt is planned by 2013) government will legislate more and more ways to raise taxes, pay fines, etc.

The Hovind case was not about law, it was about a country that cannot distinguish the over-reaching arm of government, beyond what the 10th Amendment to the Constitution allows, from an all-authoritarian, totalitarian government, that often, but not always, operates under a dictator. The State has replaced God.

The Hovind case was about a citizenry that cannot fathom that their country does any wrong.

The U.S. Constitution serves as a perfect cover for American fascism. Constitutional limited government is gone. The fear of imagined terrorists produces a need for the public to rely upon an all-authoritative protector.

America is a Constitutional republic in name only. Efforts to remove guns from potential criminals are a cover for negating the 2nd Amendment to the Constitution. The principle of "no taxation without representation" is negated by gerrymandering of Congressional districts. Government must strike down tax dissenters lest the populace rise up against unfair taxation.

The public is encouraged to save rather than go into debt, but the savings only capitalize the bankrupt bankers. The public, via inflation created by the Federal Reserve, is fleecing the citizenry of its money. The public remains in a coma.

The greatness of America, its pioneer spirit and its standard of living, is about to come to an end. The Federal government hides the fact it spends over a trillion dollars a year on war making, or more than half of the U.S. annual budget, essentially robbing money from its future. Medicare and Social Security are aggregately under-funded by $75 trillion. There is no way Americans today are going to be provided the healthcare and pension checks they were promised.

When the citizenry finally does wake up, the only way the State can maintain control is to quell all opposition, threaten imprisonment, keep the people financially impoverished and in bread lines, so they cannot mount up meaningful resistance. Searching for food on the table, they become more dependent upon a monster that the nation’s forefathers warned about.

Threatened with exposure, the government is not beyond a "false flag" operation where a "dirty bomb" or two will cause the people to give up their freedoms for greater security. Plans for such covert operations have been discovered in archives of the federal government.

Oppressive countries imprison dissenters. America has more people locked up in jail than any other country. Prisons have become a growth industry. Kent and Jo Hovind look out from behind bars, wondering when or if America will ever wake up. They now serve God in a prison ministry.

Americans will hear of the Hovind case. They will say, "Ya, that’s that creation guy, got himself into trouble with the IRS. He should have paid his taxes like everyone else."

Yes, we should all be good citizens and pay into the government Ponzi scheme, and relinquish our privacy rights and not hide anything from the government, and make no effort to avoid (not evade) taxes. Americans aren’t likely to pay attention till the IRS is prosecuting them.

At the current writing of this report, the Federal government is covertly auditing small business bank accounts for any appearance of tax evasion. The Federal government assumes it has the right to audit every bank account in America because it is now an insolvent government that must look for new sources of income. It is possible the IRS will estimate taxes owed and withdraw funds directly from small business bank accounts rather than audit every small business.

January 8, 2010

Bill Sardi [send him mail] is a frequent writer on health and political topics. His health writings can be found at www.naturalhealthlibrarian.com. He is the author of You Don’t Have To Be Afraid Of Cancer Anymore.

Copyright © 2010 Bill Sardi Word of Knowledge Agency, San Dimas, California. This article has been written exclusively for www.LewRockwell.com and other parties who wish to refer to it should link rather than post at other URLs.

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Should You Pay Your Mortgage

by | Jan 17, 2010 | Uncategorized

It May Be Financially Irresponsible to Pay Your Mortgage

by Karen De Coster
Recently by Karen De Coster: Revisiting the Swine Flu Lies and Hysteria

Roger Lowenstein has written one of the best articles I have read on the topic: walking away from your house. The prominent author and journalist published a January 7, 2010 article in the New York Times with the headline, “Walk Away From Your Mortgage!” Lowenstein acknowledges that it may be financially careless for homeowners who are upside down on their mortgage to keep paying it in order to hang onto a fantasy of ownership and avoid the shame of default. In this article, Lowenstein’s subject is the borrower who can afford to pay the mortgage but considers opting out for reasons of financial benefit and survival. This is referred to as a strategic default.

Lowenstein’s thesis is exactly what I have been preaching to family, friends, and acquaintances for some time now. Many Americans are, by nature, very meticulous about paying off their debts and honoring contracts. Nevertheless, when they are stuck with a home that is worth far less than what they owe, the home becomes a noose around their neck, a pecuniary black hole, and a drag on household cash flow. It becomes what I call exorbitant rent. If the difference between the mortgage balance and the current market value is substantial, the homeowner is throwing away money on a home when it may take him years of mortgage payments to recover enough value to revert to a state where equity crops up. Thus the homeowner is essentially throwing money into an unpredictable black hole. If the mortgage payment is higher than a rent payment would be on a similar home, that adds the burden of overpayment for the “privilege” of being a quasi-homeowner paying high rent on a house you may never own, unless you plan to stay put in the house for a long time. If the mortgage is lower than an equivalent rental, there may be some advantage to hanging on for the short term, but that would depend on the condition of the house and various maintenance factors, as well as the additional costs of ownership.

After all, ownership requires payment for taxes, higher insurance (higher than renter’s insurance), and maintenance/replacement costs. I have gone over household budget/cash flow analyses with a few friends and family, and I have shown them the astounding cost differential between ownership of their “underwater” mortgage and renting a similar home. Yet people still aren’t willing to give up the cash-eating arrangement. Though I can spot the financial detriment, as a Certified Public Accountant I am very wary about giving direct professional advice, except to family – they know, perhaps too well, that I am never short of “pointers” for their financial situations. I refrain from telling people they “should” do this or do that because I don’t want to be blamed for someone’s unhappiness or other quality of life issues that may be the result of complex decisions. But I do try to make clear the alternatives to standing on the deck of a sinking financial ship. As Lowenstein remarks:

And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value.

I agree on the second point – almost all people are delusional and think the post-bubble housing crash is the aberration, and that the housing market will return to normal one day in the (near) future. They do not understand that the bubble was the aberration, and those days are over and dead. They thought the bubble prices were the new norm. And the strange thing is that they liked it. They delighted in receiving a high price for their home, and never seemed to be able to factor in the reality that they would also pay a higher price for another home. Not understanding the bubble is a principal part of the problem in getting those people to understand the whole of their financial problem. Also, people do indeed desire to avoid default and they fear the effect that a poor credit rating will have on their future. I agree with Lowenstein that most credit rating fears are a bit overblown, and besides, it is far less problematic to absorb the short-term trauma from a shoddy credit rating and radically improve your long-term financial prospects while shedding the iron monkey on your back.

The other snag is that most individuals, no matter how "educated" they may be in the college sense, are financially ignorant and cannot conduct basic analyses of their own financial matters, let alone weigh the costs and benefits of a complicated scenario. There are plenty of talented and smart people who don’t have the skills to sort out budgets, expenses, debt, and investments. That is not a criticism – it is just a fact. Furthermore, add to that the fact that the boom years produced rabid consumerism, and keeping up with the Joneses become a core family value for so many debt-worshipping Americans. The gotta-have mentality destroyed what common sense that would have otherwise emerged.

Enter the typical, boom-period mortgage representative, a guy who also knows nothing about business, finances, or accounting. He was most likely hired as a short-termer, with no experience in the business – he was hired for his sales ability and arm-twisting skills. Or he may have a college degree in finance, accounting, or economics, but washed out trying to make it those competitive fields. He was hired to help the mortgage company keep up with the demand generated by the housing bubble, and he knows nothing more than what he was taught in his introductory training that focused mostly on seduction skills and reaching sales goals. Those people sense the gotta-have desperation and they pounce on the vulnerable would-be borrower. ARMs and interest-only loans became a new middle-class norm, which amounted to certain disaster for the person who became a homeowner during the bubble. The natural human instinct for handling undesirable affliction is to get rid of the offending parasite and make things right as quickly as possible. This is your moral duty to yourself, your family, and your future. Moreover, Lowenstein makes this point:

Former Treasury Secretary Henry M. Paulson Jr. declared that "any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation." (Paulson presumably was not so censorious of speculation during his 32-year career at Goldman Sachs.)

Federal officials like Paulson, along with others who have in interest in keeping you hogtied to the sinking housing market, are trying to depict struggling Americans as irresponsible scoundrels who are rashly walking away from their commitments. Various political special interest promoters and academics that pontificate from outside of the real world that the rest of us live in are reflecting that view. George Brenkert, a business ethics Professor at Georgetown on the Potomac, was quoted in the Wall Street Journal as saying "borrowers who can pay – and weren’t deceived by the lender about the nature of the loan – have a moral responsibility to keep paying." A follow-up quote from the article states this:

A standard mortgage-loan document reads, “I promise to pay” the amount borrowed plus interest, and some people say that promise should remain good even if it is no longer convenient.

But, like Lowenstein says, the borrower signs a promissory note and "the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them." Lowenstein also places some blame, as he should, on those folks in the mortgage industry who took full advantage when government-created bubbles made their businesses bloom, and now they are on the defensive when debtors are looking to escape the wrath of the bloody aftermath.

But to put the onus for restraint on ordinary homeowners seems rather strange. If the Mortgage Bankers Association is against defaults, its members, presumably the experts in such matters, might take better care not to lend people more than their homes are worth.

In the same Wall Street Journal article noted above, John Courson, Chief Executive of the Mortgage Banker’s Association, lowers the boom on the bogged-down buyer and asserts the guilt game:

But it isn’t just a matter of the borrower’s personal interest, says John Courson, chief executive of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: “What about the message they will send to their family and their kids and their friends?”

This is the same corporate state-special interest slimebag who lobbies feverishly for favors from the feds so his mortgage industry clientele can profit handsomely and the taxpayers can foot the bill by bailing out companies that fund his industry, such as Fannie Mae and Freddie Mac.

Then there’s Megan McArdle over at The Atlantic – someone who has the financial wherewithal of a lobotomized cadaver. Megan rants about deadbeats who don’t pay their debts and instead choose bankruptcy as an easy way out of an accumulation of bad decisions. Indeed, my article and blog archives are loaded with invectives on this very same topic – few people have written as much criticism as I have about how hare-brained, high time preference Americans have gone wild on consumer spending and debt, thanks to the Federal Reserve’s funding of the credit bubble and other economic factors that all trace back to Big Government and its corporate state compadres. I have never absolved these impetuous debtors from their role in perpetuating their own problems because they could have chosen to abstain from the spending frenzy mentality.

However, Megan cites the same Wall Street Journal article, and she is confused because she doesn’t draw the distinction between those who go on a reckless debt-o-rama spree and walk away from the financial carnage, and mortgage debtors who are underwater due to the breakdown of a completely unsustainable economic system. If McArdle had any business sense, she would understand that strategic defaults are a conventional business practice. Throwing good money after bad just isn’t an option, either for a corporation trying to maintain a brisk bottom line or an individual who needs to keep his financial house in order. Daniel Gross recently wrote an article in Newsweek titled "Default Nation," where he discusses this very fact, including the mention of recent strategic defaults by Stanley Morgan, KKR, and Six Flags, a company where Bill Gates has 11% ownership. Mr. Gross writes that it is surprising that, given market conditions, there aren’t more consumer defaults.

Let’s return to Roger Lowenstein, where he reveals, "We are all economic pinballs, insensibly colliding for better or worse." What Lowenstein doesn’t say is that individual mortgagers are not responsible for the credit bubble, the housing bubble, or the unsustainable and corrupt federal policies that encouraged and fueled the speculative boom and bubbles. The economic meltdown and ensuing fallout in housing values has been a recipe for financial disaster for many households, and each individual or family must commence a course of action that is sensible, sustainable, and provides for long-term financial security and growth. It is not unethical or immoral to relinquish a strangling and injurious debt load on a house that ties you down in favor of mobility and a healthier household financial plan. In fact, it is state worship and economic ignorance that fuels the notion that you, as a victim of the state and its corporate state special interests, have some obligation to ruin your life and bend over to "take one for the team."

If all factors point to your best option being a default, then walk away guilt-free and boost your cash flow and future prospects, because ultimately, you are responsible for you, and none of these babbling naysayers are going to bail you out or come by to help clean up the mess. Walk away, free yourself from unnecessary bondage, and let the giant banks sort out the mess that they helped to perpetuate and swell.

January 11, 2010

Karen DeCoster, CPA [send her mail] is a libertarian accounting/finance professional and writer. She was writing about rabid consumerism and debt, the housing bubble, corporate bankruptcies, boom-period business malinvestments, and the economic crack-up long before it was fashionable. She likes to occasionally look through the piles of hate mails from those times while sipping on an Oregon Pinot Noir. This is her LewRockwell.com archive, her Taki’s Magazine archive, and her Mises.org archive. Check out her website and blog.

Copyright © 2010 Karen DeCoster

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The Government Can’t Protect You

by | Jan 17, 2010 | Uncategorized

Can the Government Keep Us Safe?

by Andrew P. Napolitano
Recently by Andrew P. Napolitano: What Is a Right?

What a week we have all just endured! While the Democrats were re-writing the federal takeover of healthcare behind closed doors, the public face of the federal government was fixated on denying and then explaining all the gaps in its intelligence gathering. The Obama administration has been finger-pointing over who in the government let a murderous thug on a plane in Amsterdam that he tried to explode over Detroit. First, the government said that the system worked. Then the President said it didn’t. Then he announced that the intelligence communities and security people would start to talk to each other so the bad guys could be kept out. Weren’t they supposed to be doing this all along?

At Newark Liberty Airport last Sunday, a TSA agent left his post, and a young man walked past it to kiss his girlfriend good-bye. Then the young man turned and left the secured area and left the airport. So far no harm, no foul. But because the government’s surveillance cameras in the airport didn’t work, the feds panicked and ordered over 10,000 passengers to leave the terminal, go out into the 15-degree Newark, NJ cold at night, and then re-enter the airport. Flights were delayed and missed, kids did not get to school on Monday morning, and soldiers were listed as AWOL. All because the government overreacted to a kiss. This humiliated the feds: New Jersey’s 86-year-old senior Senator Frank Lautenberg demanded that the guy who kissed his gal be hunted down and prosecuted because of the chaos he caused. He caused? Let’s see; the government has cameras that watch us every time we scratch our noses, and when those cameras don’t work, the government blames the person whose picture it was supposed to be taking? Come on.

All this, of course, brings out the false argument of liberty versus security. And we hear it from the Progressives that the government must take our freedoms in order to keep us safe. That’s hogwash. Freedom is our birthright. It doesn’t come from the government; it is part of our humanity. America is the only country in the history of the world dedicated to the truism that we are endowed by our Creator, as Jefferson wrote, with certain inalienable rights, and among these are life, liberty, and the pursuit of happiness. The government has forgotten basic civics: “Endowed by our Creator” means that our rights come from God and not from the feds. “Inalienable” means that we and our freedoms cannot be separated, unless and until we are convicted by a jury of violating someone else’s rights. What is the value of being safe if we are not free? Did our forefathers flee the kings and despots of Europe and come here to be safe? Did Patrick Henry say "Give me safety or give me death?" Here is the mistake that the Big Government crowd wants to thrust upon us: They want to balance liberty and safety. There is no such thing as balance when it comes to freedom. We will not trade freedom for anything, or balance it against anything, and we certainly won’t give it up to the TSA.

Can the government keep us safe? I don’t think so. Airline travel is safer today because pilots have guns, cockpit doors are like bank vaults, and the passengers have become courageous. All this was done by individuals in the private sector, not by the government. I’ve said it before and I’ll say it again, if the feds had not stripped us of our natural rights to keep ourselves safe – by keeping and bearing arms – 9/11 would never have happened. How about letting the airlines decide who gets on the planes, rather than a TSA worker who leaves his post? When industry competes for your business, you fly where you want to go, you get there in comfort and safety, and you do all this at a competitive cost. When the government runs the show, you stand in the cold night air for six hours because of a kiss. The government can’t deliver the mail, it can’t operate surveillance cameras at an airport; it can’t pay back its debts; it can’t tell the truth. That would be the same government that wants to manage your healthcare.

America, do you see what happens when we rely on the government too much? It gets authoritarian and we get weak. Our children grow to expect from the government what we once did for ourselves. Government is a fearful master. It is not faithful to us; it is not truthful to us; it can’t produce for us. It doesn’t obey its own laws; it doesn’t keep us safe; and it won’t leave us alone. It is mortgaging our futures, raising our taxes, and treating us all like children.

What to do? Challenge it at every turn. Expose it to friend and foe. Educate all you know about what you see and hear every day on this show. And return no one to the government who has stolen your freedom.

And one other thing: The God who gave us life also gave us liberty. He loves us. Praise Him from the roof tops, and ask Him to save us from a government that is out of control.

January 11, 2010

Andrew P. Napolitano [send him mail], a former judge of the Superior Court of New Jersey, is the senior judicial analyst at the Fox News Channel. His next book is Lies the Government Told You: Myth, Power, and Deception in American History, (Nelson, 2010).

Copyright © 2010 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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