In a recent article, “How to Defeat Your Enemies,” SLL maintained that governments and their people were natural enemies, and that the most powerful adversarial tactic is “getting one’s enemies to fool themselves.” The article detailed the effective use of this tactic by Osama bin Laden and al Qaeda. The question arises: how can the American people use it against their natural adversary, the US government?
Lies are always misrepresentations of reality, and reality always wins. The US government rests on an inherently unstable foundation of whoppers—big lies so huge they would make big lie proponent Adolf Hitler blush—some of which were detailed in the earlier article. The first trick to defeating an enemy is to ascertain its biggest weaknesses and the lies, which it feeds itself, flowing from those weaknesses.
Every government craves as much of its country’s resources as it can borrow, swindle, and steal. Our government’s finances are a series of lies. The first is that most people who pay taxes do so voluntarily. That’s a testable proposition. Make tax payments truly optional and voluntary, with no penalty and no civil or criminal liability for nonpayment. How much taxes do you think the government would collect? The taxes collected as a percentage of the taxes formerly collected would be an exact measure of the “voluntariness” of the tax system.
Closely linked to voluntary tax compliance is people’s willingness to back the government’s and the central bank’s debt. Creditors loan the US government money because the government has first call on the income and wealth generated by the world’s most productive economy. Besides the provision of a legal framework (currently a tiny part of its budget) the government has little to do with actual production, and often impedes it. Producers produce, and the decision to produce more than what’s necessary for subsistence is voluntary. Conduct a test similar to the tax test: ask producers to voluntarily send in money to pay the government’s debt bill, and see how much it receives. It would be even less than what it received in voluntarily paid taxes.
The government’s revenues are coerced exactions. A portion of those revenues are then redistributed from highly productive, low-vote groups to less or non-productive, high-vote groups, and that process is riddled with prevarication. Social security and Medicare employ the fiction that the taxes they extract are like contributions to a pension or medical insurance plan that is invested and builds value over the years. In fact, those “contributions” are paid out as they come in; there are no trust funds building equity for their “contributors.” The trust fund nomenclature is the mark of a swindle. The lies associated with the government’s newest foray into medicine, Obamacare, are numerous and well-documented. Similar lies can be untangled from virtually all the government’s redistribution schemes and social spending, but only by the stout of heart and strong of stomach.
The US government’s—virtually all governments’—biggest weakness is that it produces nothing on its own and must either borrow, swindle, or steal what it spends from those who do produce. Government is thus dependent on the voluntary choice of producers to produce and creditors to lend. Economic collapse and bankruptcy have felled far more governments than revolutions or invasions, although revolutionaries or invaders often administer the coup de grâce.
Yet, those who consider themselves modern American revolutionaries often envision manning barricades and mass revolt as the undoing of the government.That attacks the government at its greatest strength—its capacity to use force and violence. The US government has at its disposal the most potent military and surveillance capabilities ever assembled. Most of its warriors (the military, and federal and local police forces) are brainwashed and would open fire on, imprison, or kill anyone they are told is a threat to the state. If it so chose, the government could destroy some or all of this country with nuclear weapons, and it cannot be ruled out that we may someday have psychopathic “leaders” who would do just that if they felt sufficiently threatened, or maybe just for fun.
The idea that some sort of mass movement will rise and by force of its inferior arms throw off the yoke of oppression is the stuff of weak novels, not a real life strategy that has a chance of success. Those who buy into it and attempt implementation commit the biggest strategic failure: they have fooled themselves. Consequently, their enemy—the government—profits. It uses their failure to justify further tyranny and repression.
There is surprisingly little written about attacking the government at its weakest point: its financial dependence (see, however, “Revolution in America,” SLL). An offensive would require a mass movement far less massive than that required for armed revolt, and its tactics would be legal. A few million simultaneous phone calls and requests via websites for the withdrawal of balances from banks, money market funds, and stock and bond mutual funds would precipitate a financial panic. None of those institutions keep enough cash on hand to meet a tsunami of redemption and withdrawal requests. They’d have to sell their assets to raise cash. The prices of those assets would drop, begetting further selling; negative crowd psychology and wealth effects would kick in as markets crash, and debt and economic activity would contract.
The biggest loser in all this would be the government. As prices for bonds drop, interest rates rise, increasing its debt service. As economic activity contracts, tax receipts drop, safety net spending rise, crony capitalists must be bailed out, and deficits expand. Except for interest on government debt rising (it was perceived as a safe haven) all of this happened during the last financial crises. A massive increase in government debt and central bank debt monetization forestalled complete disaster last time. Even some of their proponents admit that those palliatives are now exhausted. During the next crisis, interest rates will rise on government debt to reflect its increasing credit risk.
Which will leave the government confronting, and being defeated by, one of its biggest whoppers: that the pieces of paper and computer notations its Treasury and central bank generate ultimately have value after decades of determined efforts to depreciate them. They’re simply pieces of paper and computer entries, and eventually they’re not going to buy any groceries for all those warriors and police the government’s counting on, or for anyone else. Currencies collapse just before governments do; witness Venezuela, with its Bolivar and its government in extremis.
This outcome does not require a plan; it’s going to happen. Indeed, it’s already happening. Anyone who wants to hasten the process in their own small way can stop lending governments money in the Treasury and municipal bond markets. Politically, they should vote for the politician who will promote more foreign military intervention, domestic spending, taxation, redistribution from the productive to the nonproductive, and economically destructive regulation. A vote for any of the candidates still standing will serve that purpose. As the government crumbles and chaos stages an upside breakout, other tactics to opportunistically capitalize on system failure and reinstate liberty will be feasible. SLL’s astute readers will discover and implement those tactics when the time is right.
REINSTATE LIBERTY!
STRAIGHT LINE LOGIC 
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Not going to offer any insights on profiting from the coming crash? I know I’m interested.
#OREGON HOBO#
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You raise an interesting point. I have stressed preparation rather than speculation. I speculated on the last crash and did well. However, I was a professional trader and it was still absolutely nerve wracking. The out of nowhere short squeezes, mostly enginnered by central banks and governments, were difficult to navigate, both emotionally and financially. Believe or not, large profits can really knock you off your equilibrium; I slept very poorly during that time. Back then, I sat in front of a Bloomberg machine and had virtually instantaneous access to information and trading capability. Now I do not, and I think it would be difficult, if not impossible, to trade from home, especially when markets are really moving and liquidity dries up. The trades themselves have been easy to conceptualize: short equity, short commodities, long credit spreads. There are any number of instruments–ETFs, individual equities, options on individual equities and equity indexes–with which to put on those trades. However, my trading desk made most of its money from credit default swaps, a market that most individuals cannot access.
The mother of all trades, still to come, will be when the markets start questioning the credit quality of governments, and government debt prices fall. The “when” of that trade is unknown, but I think it wil happen. One other danger that we got a taste of last time: governments outlawing certain trading strategies (last time it was bans on short selling). They may even retroactively go after profits from certain trades that can be characterized as negative bets. One final danger: even if you get it right, it is very difficult to step away psychologically from your bearishness when the market turns and rallies. I had trouble doing so in 2009, and ended up giving back a significant portion of the profits I had made in 2008. Trading is not easy, and it can really mess with your head, which is why the only trades I recommend on SLL are long-term strategies that can be executed by everyone.
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I have always wondered, what would happen if a small fraction of the US population just stopped using the USD altogether?
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Dog,those folks who stopped using the dollar would be some of the first to use new economies though bartering/trading ect. has always been around.Those folks will do the best in new economy and are showing the other folks the way.You may or may not trust them but local green backs for lack of better word/bitcoin ect. already in play,tis just the necc. beginning of new economies.
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Robert, would you have access to enough information to trade with the thinkorswim app? I realize some instruments would not be available.
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I’m not familiar with that app, but I doubt it. Even professional traders face poor execution and vanishing liquidity in crashing markets. Retail traders are once removed, not matter how good the app. Also, trading is a full time job, you have to stay on top of it. With my writing and another interesting project with which I’m involved, I do not have the time or energy to devote to it, even if I had the best information and execution resources. I’m sticking with the same strategies I’ve recommended to SLL readers over the last year: stay away from equities (I own small positions in a few stocks I forgot to sell, but other than Newmont Mining, which I bought last August, I have not bought any equities for months) and bonds, have some cash and physical precious metals, as well as emergency provisions and firearms, and build supportive friendships and alliances.
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Based on the above, maybe a little strategic voting is in order: “feeling the Bern” may be the best choice after all.
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During the first quarter of the Super Bowl I saw an ad by Paypal claiming to be “the new money”. Looked like an attempt to mentally prepare Americans for a cashless economy, with Paypal hoping to profit thereby.
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I saw that add and thought the same thing.
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Great article Mr. Gore as usual. A story the needs to be told, heard and heeded by the masses.
Not to minimize the excellent points you make, I do wonder however about the idea that Americans believe that paying taxes is voluntary. Perhaps I just run in the wrong circles, but I’m not aware of that being the general belief of anyone I know.
Thanks for all you do!
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Thank you.
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Reblogged this on The way I see things … and commented:
“The idea that some sort of mass movement will rise and by force of its inferior arms throw off the yoke of oppression is the stuff of weak novels, not a real life strategy that has a chance of success. Those who buy into it and attempt implementation commit the biggest strategic failure: they have fooled themselves. Consequently, their enemy—the government—profits. It uses their failure to justify further tyranny and repression.”
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The tyrant’s greatest weakness is his belief he has no weakness.
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Just found your site. Love it.
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Thanks.
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To Mr. Robert Gore – I posted this question on http://www.TheBurningPlatform.com – but, in case you are not still checking in there currently:
I have been thinking about this today – is it possible to organize 1 million people in an “Ann Barnhardt-type” tax protest? I think it might be possible. Who organizes? And, if it’s not done all at once, then what is to stop the feds from seizing assets, payroll, bank accounts & otherwise, making an example of the few? Any thoughts on this?
Your concept is very interesting, but I would like to know your input on the above. Thank you.
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I’m partial to the withdrawal of funds idea because it’s legal, it administers a crippling blow not just to the financial institutions, but to the government that will be under great pressure to bail them out, and it’s going to happen anyway as the SHTF and people liquidate investments to raise cash. Tax protests certainly have their place, but I think it is more appropriate after the government is severly weakened from fiscal stress and greatly diminished receipts. People will “protest” their taxes because of their own intolerable financial burdens and because their taxes are going to a collapsing government unable to deliver any meaningful services. At that time, a large scale tax protest will be much more feasible, and the chances of incarceration of those who protest, and their leaders, if any, should be greatly reduced amidst the general chaos.
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Thank you for your reply. I enjoy your writing & perspectives. Keep on keepin on. Amazing stuff. Thank you….
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So what your intimating Mr. Gore is withdrawal of funds, withdrawal from this system of debt and production slavery of the state is akin to withdrawal of consent? Effective means of defiance, with aggregating corrosive effects. They are accumulative, and maybe as a certain stage is reach take on logarithmic increase in effects?
Lot of potential creative methods with this if so.
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The logarithmic function has been growth in debt. Virtually all logarithmic growth functions in nature end in cataclysmic crash, and this one will, too. Then you’ll get all the “aggregating corrosive effects” you could ever hope for!
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