10 Radical Proposals to Save America

While most investors are rightfully focused on the economic ills in the U.S. they are missing the big picture: America faces a debt disaster of untold proportions, the fatal blows of which are now arriving. The [very] survival of the U.S. and our way of life, not to mention many of our liberties, are at stake, which is precisely what gold’s recent rally to new record highs is telling you. The dollar – and debt-based monetary system – is irretrievably broken, and its demise is the real reason behind the soaring price of gold. As such, it’s now time for the U.S. to rise to the occasion … to rise above the mistakes of the past — and usher in a new era of monetary stability and I have some radical proposals to do just that. Words: 2287

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited […] excerpts from Larry Edelson’s (http://www.uncommonwisdomdaily.com) original article* sub-titled “A 10-Step Proposal To Save America From The Fatal Blows Of A Debt Collapse … And Give Control Of The U.S. Economy Back To The American People” for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Edelson goes on to say:

The beginning of the end of the world’s dollar and a debt-based monetary system is upon us as suggested by the following facts:

Fact #1:
Throughout history there has never been a civilization that has managed to survive the levels of indebtedness now facing the U.S…. They have either collapsed, waged wars to try and survive by plundering others’ resources, defaulted on either domestic debts, foreign debts, or both, and largely disappeared as a major player on the world stage.

Fact #2:
The U.S. is now drowning in total Federal debts and liabilities of $136 TRILLION … pit against an estimated $74 trillion in total assets [which] means that even if we liquidated every penny of assets in this country we’d still be IN THE HOLE BY $62 TRILLION, or $199,845 for every man, woman and child in this country. More than $763,249 for each family.
Moreover, even at today’s historically low rates, the interest-bearing portion of our country’s official national debt is costing us more than $794 million per day, or $33 MILLION dollars per hour. More than $5 MILLION PER SECOND.

Does the above sound like something we can escape from or even kick the can down the road? Does it sound like something we can handle as a nation, without suffering a major loss of purchasing power in the dollars that we use as our medium of exchange? Hardly!

Ergo, I conclude that the dollar- and debt-based monetary system is irretrievably broken, and that its demise is the real reason behind the soaring price of gold. As such, it’s now time for the U.S. to rise to the occasion … to rise above the mistakes of the past — and usher in a new era of monetary stability, based on five basic principles including:
1. Debt-free economic growth.
2. Honest money, where the value of the medium of exchange (a new currency) cannot be manipulated at will, and is not born from, or backed by, a debt-based system.
3. A non-discriminatory, indirect tax system, scrapping the existing Internal Revenue Service and its 71,684-page Code.
4. The eliminatation of the banking system’s current cushy advantages and power over the economy, and …
5. A return of power over the economy back where it belongs — with the American people.

How could we usher in such a new era? My radical proposal is as follows: A debt-for-equity swap, whereby the domestic portion of the national debt and all current liabilities owed to U.S. citizens are fully monetized, then swapped for equity in a newly formed sovereign corporation that owns and controls the U.S. government. [This would] eliminate the debt and make each and every American citizen an equal shareholder in the U.S.A. A radical proposal? You bet it is!

No matter how radical my proposal may sound, [however,] a debt-for-equity swap embodies the full liberties the founding fathers of this great nation intended for us. I believe we can get there, with the following 10-step process:

Step 1
Freeze all domestic federal debt and payments on that debt. Make good on the IOUs now, in current dollars by freezing the domestic portion of the national debt and all current non-military federal spending. [Why?] Because even if Washington has what it takes to make deep spending cuts, what good would the cuts be when we’re racking up almost $5 million per second in interest expense? They would be effectively worthless. My argument: You cannot cut spending without cutting the existing mountain of crushing debts.

The [above] answer is extreme, no doubt, but only by limiting spending to military needs, while cutting all other Federal spending to ZERO and simultaneously freezing the domestic portion of the national debt will we be able to stop the train wreck dead in its tracks and be in a position to implement an entirely new system.

Step 2
Immediately put the government on a cash basis accounting system and a true, bullet proof PAYGO system that uses appropriately earmarked revenues to pay current Social Security, Medicare obligations, and the like, again, on a cash accounting basis. Future contingent liabilities would be handled entirely on a PAYGO system. Simultaneously …

Step 3
Set up a national coupon holding bank which would be commissioned to handle the next phase of the American overhaul …

Step 4
Monetize 100% of the domestic federal debt. That’s right, print $1 (current dollars) worth of coupons for every dollar of existing domestic Federal debt, effectively monetizing the entire domestic debt, turning it into redeemable coupons. The redeemable BEARER coupons would be held in a national coupon bank, and every American citizen would have — in their name — their coupons in a segregated account. Put simply, Bill Gates or Warren Buffet would receive the same number of coupons as Joe the Plumber.

The Federal Reserve would be re-commissioned to secure and manage the coupon bank, but only from an administrative perspective. The Federal Reserve’s current role, managing the nation’s base money and credit conditions, often hijacking the people’s money, would effectively cease to exist. Next …

Step 5
Make each American citizen’s coupons convertible into …
a) 40% of a new currency to be issued AND distributed. The new currency would not be the dollar, tied to nothing but the whims of the marketplace. If it were, monetizing the debt would naturally be very inflationary. The new currency would be tied to a basket of freely traded commodities. The inflationary impact of monetizing the debt would therefore be virtually zero. As the overall value of the basket of commodities rise or fall, the new currency’s purchasing power would likewise rise or fall, while virtually always maintaining equilibrium with what would amount to a benchmark cost of living index.

Moreover, each American citizen would also have a …
b) 60% equity stake in a newly formed corporation that owns the U.S. government, with dividend potential while the other 40% equity would be held in the sovereign corporation as Treasury stock. All revenues of the Federal government would be collected by the sovereign corporation on behalf of the American people … and all expenses would be paid by the corporation on a PAYGO basis. In effect, the U.S. government would become an extension of a business owned by American citizens.

Who would run the sovereign corporation? Who would be its CEO? Who would run the various branches of government within the corporation? [I believe it should be] volunteers, elected by the American citizen shareholders, all of whom have equal voting power. Campaigns would be financed out of the general Treasury of the corporation with equal funding for each candidate, but only authorized via a U.S. shareholder meeting.

Importantly, the sovereign corporation’s value would rise and fall with the GDP of the nation, which would be redenominated in terms of the new commodity-based currency. In good times, profits would be set aside in the Treasury for a rainy day, with a portion distributed equally to all shareholders as a dividend. Likewise, everyone would feel the pain equally in times of contraction.

Step 6
Abolish the current tax system and enact a national sales tax. As part and parcel of the overhaul I propose, the current IRS tax code — and the social tinkering it’s been used for — be scrapped and revenue collection be made a department of the sovereign corporation … via a national sales tax.

All income and estate taxes would be eliminated. There have been several studies showing that a national sales tax of approximately 17% or less would adequately fund our entire government, including the military.

Step 7
Pay off foreign holders of our debt at full value. We simply cannot welch on our foreign creditors but by monetizing 100% of the domestic portion of our debt, we eliminate the domestic interest expense, allowing for full repayment of our foreign creditors on schedule, but in a new currency and in an amount equivalent to their full face value in dollar terms. Once all foreign debt is paid off, and given the other changes I propose to the system, there should be no future need for foreign borrowings.

In addition, the sovereign corporation would, by new law, be forbidden from borrowing in foreign markets, even on a short-term basis, unless approved by a national shareholder referendum.

Step 8
Under my proposals, and via its charter, the new sovereign corporation of the U.S. would be allowed to increase the base money of the nation each year by an amount equal to the expected inherent GDP growth of the country, mainly attributable to population growth, but also to immigration, productivity increases, and [some other factors] – but not a penny more. Simultaneously …

Step 9
Limit spending to an appropriate percentage of GDP, by law. Running a budget deficit would be forbidden. Extraordinary spending items, in instances of a natural disaster such as Hurricane Katrina, would be funded by the nation’s revenues, the nation’s rainy day account, or, if necessary, new borrowings or equity raises, but only if approved by U.S. citizens.

Step 10
Work with the G20, IMF, and the United Nations to introduce a new international trade currency… The global monetary system needs to be redrawn largely because it is based on a flawed dollar/debt model. Therefore, as part and parcel of the revolution to “restructure” America’s finances, I believe it is also necessary to work toward a new international foreign exchange regime – a monetary system that would effectively introduce a global firewall — a currency that would act as a filter and buffer, preventing fiscally irresponsible nations from impacting others, and preventing crises from becoming contagions and the best way, in my opinion, [to do that would be a new] international trade currency, used for all international transactions. For sovereignty and domestic purposes, countries would keep their existing currencies.

One such proposal already exists, although it’s being designed for corporate barter use, and it is called the Trade Reference Currency, or Terra. The Terra would introduce a reference currency that is fully backed by a dozen or so of the most important commodities and services in the global market, thereby providing an international standard of value that is inflation-resistant.

I propose we adapt the Terra initiative to make it a supra-national complementary currency, intended to work in parallel with the current international monetary system to provide an effective mechanism to buffer global imbalances and help prevent the breakout of financial contagions.

What about the private credit markets if debt is to be eliminated and prohibited at the Federal level? Simple: They would continue to exist [because] no economy can survive without them. Corporations would still be allowed to issue debt and borrow money from the public as would municipalities and individual investors would likewise be able to obtain credit for mortgages, school loans, small business investments, etc. [BUT] the banking system and other financial intermediaries, while still part of the private sector, they would simply be forced to make more prudent loans, run their businesses as businesses, and not look to the Federal Government as the lender of last resort, or for bailouts. [That being said,] securitization of loans, which have been a huge part of the problem to begin with, would — and should — cease to exist.

As I said at the outset — and as we all know … America faces a debt disaster of untold proportions, the fatal blows of which are now arriving. The [very] survival of the U.S. and our way of life, not to mention many of our liberties, are at stake, which is precisely what gold’s recent rally to new record highs is telling you.

Until radical steps like the ones I’ve outline above are taken, be sure to keep a good portion of your investments in gold and other tangible asset markets.

*http://www.uncommonwisdomdaily.com/urgent-10-steps-to-save-america-%e2%80%a6-10108?FIELD9=2 )Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit their site.)

– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
– Permission to reprint, in whole or in part, is granted provided full credit is given as per paragraph two above.
– Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.
– Submit a comment. Share your views on the subject with all our readers.