Tony Robbins has made a video on the United States budget. The video serves to show how far out of whack the federal budget is, and more especially, how the plan of taxing the rich so that they pay their fair share, which is the rhetoric coming out of the Obama campaign, will not solve the problem. Taxing expats, US citizens living abroad, won’t solve the budget problems either. Basically, Robbins shows, using Iowahawk’s numbers, that confiscating all the profits and all the wealth of the rich and corporations would not balance the budget, unless the US were also to stop (1) foreign aid; (2) pull out of Afghanistan and Iraq, (3) etc., etc.
Meanwhile, Cullin Roche, the Pragmatic Capitalist, calls Tony Robbins’ video stupid; he claims to understand monetary policy and says that it is impossible for a money currency issuer to go insolvent (e.g., Zimbabwe, Weimar Germany, Argentina, Chile???); rather, he says that such an entity can cause inflation. He says that this is not merely a semantic distinction. Are you buying that? I have argued that the United States government is already insolvent, but that its money creation ability makes it able to extend and pretend, to kick the can down the road, until the dollar itself becomes a meaningless symbol of value, since measuring other assets in dollars is reification. The United States has already defaulted. So have many currency issuers in history. Monty Pelerin agrees. Here is Roche’s video:
But the United States government is much worse off so far this year than what Robbins projects; it is not borrowing 40 cents on every dollar it spends but 53 cents. The debt death spiral is at work. Expect a government that is so desperate to continue to put in place desperate measures. It becomes a predator, seeking food high and low, including expat food. It is currently cannibalizing its own expats, rather than facing the fact that it must both (1) cut its budget and (2) raise taxes on all Americans living in the United States. Raising taxes on the rich and those living on foreign countries will not solve the insolvency.
Hat tip: Business Insider.