As govt’s go further in debt, they get increasingly oppressive in their tactics to fund themselves. The evidence of this economically corrosive process, which Armstrong’s model said started Oct 1, 2015, is all around us. Since this turning point was identified, the mainstream media has driven off the cliff trying to protect the establishment, and traditional political parties and policies are being ousted by anti-establishment movements.
Since states and local municipalities cannot print money to mask their mismanagement of budgets, they must rely on tax increases, red light camera’s, civil asset forfeitures, and other abusive fees and penalties. Instead of reforming, govt’s are getting increasingly creative in how they steal your money to maintain their Ponzi pension programs and deficit spending that are mathematically IMPOSSIBLE to maintain. For example, several countries in Europe and even some US states, like Oregon, are getting ready to tax the miles you drive by using GPS to track your movement. Don’t count on them to replace the current gas tax and tolls with this new tax. It will be additive.
Fortunately, reality has caught up to several states that have been relentlessly raising taxes on their citizens, as they have found out there are limits to their pilfering, as individuals and businesses can simply leave when their limit is reached. Unlike IL, CT, NJ, and other socialist basket cases that are seeing a net decline in their populations, Maine at least has a fiscal conservative that realizes when the limit is reached an economic death spiral ensues when the tax base leaves. The same thing happens with countries, as the capital needed for growth simply leaves and parks in unproductive assets when govt gets aggressive in their money tracking and confiscation methods.
Companies that forget who the customer is often fail. Some claim (usually those in govt) that you can’t run govt like a business. I beg to differ. It may take longer, but if govt forgets its citizens and businesses are the customer, they will also lose both.
Denninger addresses the IL budget battle as only he can in his article, “Heh Illinois: Blow It Out Your Ass“. Unfortunately, what’s happening in IL and ME is coming to a muni near you, as most are growing promises faster than revenues. Like IL, other broke govt’s will force their productive citizens (tax payers) to leave, believing their citizen’s tolerance and depth of pockets are endless. As interest rates rise from credit rating downgrades, the proverbial “can” will get kicked over the cliff.
All that govt would need to do to contain the misery is simply reform. But they can’t do it. Rather than risk their perks and power, govt always throws their citizens under the bus.Some claim that at the federal level all we need to do is cut defense spending and the socialist panacea can be realized. These utopian collectivist were never taught there is no such thing as a free lunch. Even if interest rates only revert to the mean, which they will swing far beyond, interest expense alone will be larger than defense spending. Accumulated interest is already over 50% of total debt.
The sad reality is the socialist govt debt bubble is leaking all over the world, and will officially pop when the US dollar rises above 103 (most debt around world is in US Dollars). The influx of safe-haven capital into dollar-based assets, the primary reason for rising stock prices, will explode when the euro implodes, which will likely start after the German elections in September.
The self-preservation reaction to the “Big Bang” by career politicians means govt’s will dig in their heels instead of reforming. If citizens don’t want increased govt oppression, civil unrest, and war, they must vote out EVERY incumbent EVERY election to make the career politician extinct.