From: Forrest Bishop (forrestb@ix.netcom.com)
Date: Mon Jul 08 2002 - 19:07:23 MDT
----- Original Message -----
From: <Dehede011@aol.com>
To: <extropians@extropy.org>
Sent: Sunday, July 07, 2002 8:30 PM
Subject: Those number have been disconnected
> Someone said:
> "Well, my biggest gripe with taxes is that those "teeny slices" add up to
> over 60% of my income!"
>
> Let me offer an example from the other end of the spectrum. I am
> studying accounting and this semester I am doing a course in payroll
> accounting. The problems we work on are fictious in that the names are made
> up. But they are "live ammunition" in that the conditions are entirely
> typical of what we will see in practice.
> Last week we did a paycheck for a woman with two children that made
> about $15,000 per year. She is making so little that the law says she gets
> an income credit against her taxes.
> My point is this: after paying state taxes, local taxes, FICA, health
> tax, etc. she was still paying more than such a person could afford. But
> what was worse was realizing that the small break she got on her income taxes
> was strictly window dressing for political purposes. Work it out for
> yourself and take a look....
I did, and the analysis above is quite correct. The case above is compounded by several additional Statist scams that may not be
included in an accounting course:
1) Inflation Tax
In a fiat-currency regime the number of currency units can be arbitrarily and capricously increased or decreased at the whim of
the central planners. The increase in the money-supply is called "inflation", the decrease is called "deflation". In both cases, the
prices (denominated in the currency) of goods and services rise, *in a highly non-uniform manner*. Currently, Argentina exemplifies
the deflationary case- the peso supply is being restricted by closing/destroying the banking system and converting peso deposits to
long-term peso-denominated bonds. The restrictions on supply forces people to turn to alternative media of exchange, which therefore
reduces the demand for pesos. Less demand lowers the price of the peso. A similar process is occuring in Japan. These phenomena
manifest as *price-inflation*, which is often just called called *inflation* by mis-informed, state-educated macroeconomists.
Price-inflation is a tax imposed by the central bank and its associated State. "Inflation tax" (Europeans use this term) hits
poor and middle-class people the hardest. A wealthier individual can hedge against it with a variety of instruments-
inflation-adjusted bonds, currency swap derivatives, precious metals and other forms of portfolio diversification not accessible to
the working stiff. Since different goods rise in price differentially, the amount of the inflation tax depends on what the person is
purchasing with their wages. Recognize that money is always held for some length of time by someone. The inflation tax does its work
during the time the money is held. Wage increases generally lag the price-inflation rates, compounding this effect.
The CPI (a rather fraudulent creation of BLS employees) attempts to quantify price-inflation using a generalized basket of goods
and services. A 3% CPI would then mean approximately a 3+% tax upon the money earned and held over the course of a year. Factor this
figure in to the accounting example above.
2) Debt Servitude
(a) In a fiat-currency or credit-currency monetary system (the US system combines both types), "money" is created out of thin air,
as noted above. One method is by the state simply running the printing presses. In the US this process is accomplished by selling US
bonds, created out of thin air, to the Federal Reserve in exchange for Federal Reserve Notes* created out of thin air. Nice work if
you can get it. These bonds and the currency thus materialized are alleged claims against the assets of US citizens (now roughly
$20,000- $70,000 for every man, woman, and child in the US, depending on which figures one uses). The national debt cannot ever be
paid off, as this would collapse the monetary system. Instead, it must be continously expanded at the base, as these instruments
form the base reserves of the entire banking system. The rest of the money supply is created by pyramiding on top of these reserves-
a classic Ponzi scheme. This is called fractional-reserve lending. Incidently, the US bonds are in turn pyramided on top of the US
gold reserves, which appear to be encumbered many times over. The Federal Reserve (gold certificates), Exchange Stabilization Fund
(direct claims) and IMF (SDR and SDR certs) all hold various claims to the same asset. In addition, it appears the commercial banks
and foreign central banks (Bundesbank) have been allowed claims against these reserves as well, which show on their books as
derivatives (futures, forwards and swaps).
(b) A US bank (which may or may not be a member of the FRS) creates money out of thin air when it makes a loan. The currency thus
created is carried as a *liability* on the bank's books. The offsetting *asset* is the signed loan agreement from the bank's
customer, similar to the US bond system described above. The same process occurs when you swipe a VISA card through a reader: the
currency that goes to the merchant's account is created on-the-spot as your debt. In this fashion, every dollar in existence was
created as somebody's interest-accruing debt. The idea that banks only loan previously deposited funds is a myth carried over from
pre-fractional-reserve lending. Recognize that "credit" and "debt" refer to the same thing.
(c) Because a certain class of persons (mortgagers, credit-worthy folks) have the ability to conjure up fiat-currency, they have
an advantage in bidding for goods and services in the marketplace. That advantage drives up the prices of certain classes of assets-
the ones that are purchased on credit, such as cars, real estate, large appliances, etc. (this is related to the central mechanism
of the boom-bust cycle). The advantage come at a cost to the borrower as well as to the savers that are shut out of the bid.
Debt-servitude is encouraged, while thrift and saving is penalized. The result is a structural imbalance in the economy, which is
later rectified through liquidation and economic depression (note: you are here).
*A Federal Reserve Note (FRN) is not a note- the claim is fraudulent. A note is a legally binding document that has four items:
Maker, Payee, Due Date, and Amount. Previous issues of FRN were legal notes, as they were inscribed, *and honored* up until 1933,
with various versions of the following:
"Will Pay $10.00 [the Amount in lawful money, for example] to the Bearer [the Payee] on Demand [the Due Date of the Note was
current, hence the term "currency"] at a Federal Reserve Bank [the Maker of the Note].
3) Licensing and Regulations
Perhaps the woman would consider starting a little business on the side to supplement her income, say, a hair-braiding business.
If she has the audacity to simply start providing a service that other people are willing to pay for, she risks being kidnapped at
gunpoint, losing her other source of income, having her property stolen, losing her childern, and so forth. So, under duress, she
goes down to the local, state, regional, federal, international and interdimensional Bureaus of This, That and the Other
4) Psyops
The woman in the above example may have grown up in the good ol' USA. If so she may have been subjected to a barrage of
disinformation and prevented from finding out a few facts critical to her well-being. The above information for example is not
taught in US schools nor aired in the mainstream media. She may be partially or entirely unaware of the existence of the Federal
Reserve. Although she has been paid in FRNs all her working life, she may not even be aware of of the existence of this instrument,
even though it is right in front of her face. My research, as well as the research of others, indicates that something well over 95%
of Americans fit this bracket. You can verify this by turning now to the person sitting next to you and asking him or her this
question:
"Have you ever seen a Federal Reserve Note?"
Welcome to the Matrix,
Forrest
-- Forrest Bishop Chairman, Institute of Atomic-Scale Engineering www.iase.cc
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