adjusting to bureaucratic imperialism- the massive increase of the US government in the last century

Note that video below is a companion to this blog, not a reading of the blog.

Things change- from sunrise and sunset  to the cycle of seasons. As life changes, everyone adapts eventually. Staying clear, we keep learning and notice what results we are experiencing, dropping methods that are no longer fitting and instead opening to methods that may already be producing the results we value. Even what we value can change. For instance, we may suddenly notice the value of clarity, peace, stability, security or privacy.

Now, here are two basic changes happening worldwide.

1) primary financial change: from gathering new debt to settling old debt/ gathering cash. (I address this in my previous video blog: “a simple truth.”)

2) corresponding political change: more aggressive revenue-generating activities by governments.


Tax (Photo credit: 401K)

(Governments are experiencing financial instability, and the predictable response is that they will increase revenues.)

I recently addressed the idea of how increasing government deficits correspond to a devaluation of currency, as in simply printing more units of currency to cover deficits. That piece was called “3 expensive financial myths.” I use the term myth because for the last 30 years or so, many major governments have had ballooning deficits yet there have been a slowing of inflation for the currencies used by those governments. As inflation has slowed, government deficits have ballooned. To the best of my knowledge, there is no evidence that governments are devaluing currencies to cover their deficits, and in fact quite the opposite is clearly evident: with inflation falling to historically low rates while government deficits have been multiplying for decades.

By the way, note that the currencies of central banks are exactly that- the currencies of central banks and not of the governments operating in the jurisdictions of those central banks. Governments not only have not used inflation to remedy their ballooning deficits of the last 3 decades, but it may not be in their authority to do so. Oddly enough, some of the people who are most emphatic about the fact that central bank currencies are not government currencies seem to be the most fanatical about their concern that governments will devalue private currencies of central banks which may not be theirs to devalue.

So here are some trends that would correspond to government reactions to increasing government deficits: higher taxes, higher fines, and more new criminalizing and penalizing of actions or absence of documentation of compliance with required actions.
Sometimes, though rather rarely, governments even decrease their services. For instance, here in the State of Arizona, many government operations of roadside rest areas have closed. A very attractive highway called 89A between the cities of Sedona and Flagstaff has apparently been closed indefinitely, with the costs of winter snow-plowing and year-round road maintenance falling in priority. What does that do for people and businesses located on that road? Even if their own access is not discontinued, a huge decline in passing traffic cannot be good for business.

This is similar to the down-sizing of towns set up along railroads when the interstate highway system was initiated. Of course, passenger trains previously demolished the market for steamboat transportation.

Historical government spending in the United S...

Call it creeping socialism or the rise of communism or whatever you like, but the US government (as well as state and local governments- not shown above) are primary components of the US economy. Image via Wikipedia

However, what we have emerging is a reduction in certain government services. Not only could government spending on new infrastructure plummet, but spending on maintenance of old infrastructure- like keeping highway 89A open for safe driving- may also plummet. A dwindling tax base will mean lower tax revenues which could lead to more and more aggressive revenue-generating activities by governments.

So, I have not said much about what governments may newly criminalize or which fines would be raised and how much. Such speculations are not the target of my research.

However, here are a few examples. One recent new program proposal in the United States creates penalties for certain individuals who fail to obtain government-approved health insurance. I’m sure there could be exceptions for religious minorities, but overall, there could be may new fines created and charged against people. Similarly, new regulations in a certain city in Texas require a home energy audit to be conducted prior to a sale of residential real estate. This produces new revenues for the city at the expense of anyone selling a home.

I spoke with an individual who had a buyer for his home, but then a new inspector, who was apparently quite hastily trained, did not approve the home for sale. The owner had to pay for an independent private inspector who was an expert in the relevant issues, who determined that the allegedly under-trained government inspector had been inaccurate all along about the home. The government eventually agreed and approved the house for sale, but by then, the prospective buyer had already bought a different home. That seller may face foreclosure soon rather than a sale for a small profit. So, new regulations can add to government revenues, either by creating new requirements or by creating new crimes, such as during the prohibition of alcoholic beverages.

Thus, in addition to other new revenue sources and well as simply raising tax rates, there have also been an increase in the amounts of fines for various actions or inactions, such as for filing taxes in ways that are deemed not to adhere to the increasingly complex tax regulations. More of those fines are being assessed and to a wider range of people and with the cost of many fines increasing and with more and more new categories of fines. It’s a predictable trend. The details are not so easy to predict, but the ballooning government deficits point to a demand to generate higher and higher revenues.

Medicare & Social Security Deficits Chart

How will governments handle such huge deficits? Will tax rates rocket or will currency hyperinflation wipe out the purchasing power of future government promises to retirees? Image via Wikipedia

Personally, I was assessed huge tax penalties- not because I was ever alleged to owe any taxes on income, which was never in controversy, but because I may have prepared tax returns inaccurately (not even late, just wrong). As more and more debts were pending against my social security account number, including lots of unpaid credit card balances, I grew more and more interested in financial privacy.

I studied the use of trusts and LLCs for limiting liability to taxes and courts, plus for the sheltering of assets and revenues. While tax-deferred shelters have been increasingly popular, tax-exempt shelters are also widely used. With many different types of shelters, bank accounts and brokerage accounts can be owned privately (and, in many legal jurisdictions, even secretly).

I know people who have lost their assets and revenues to tax collectors and to lenders, as well as invested thousands of dollars in paying lawyers to protect their assets in personal controversies (such as “romantic disasters”). I have also invested huge amounts of time into studying and applying obscure legal loopholes, generally to no benefit.

Here’s what I know: tax-exempt organizations are favored in a multitude of ways. Also, most businesses are legally protected in certain ways that individuals are not.

Some people think all of that favoritism is unethical. They can argue about ethics if they find it a rewarding investment of their attention. I’m just saying it’s simple and uncontroersial to recognize that the legal system (in the US and elsewhere) explcitly favors certain ways of operating. I’m not even talking about subsidies and tax credits- buy just deductions and exemptions. If some libertarians refuse to claim deductions for their dependents because of their libertarian principles, that’s their own ethical discretion. I’m just focusing on trends.

The trend is that most if not all governments are getting increasingly aggressive in collecting revenues of many sorts. Another trend is that many businesses and individuals are getting increasingly antagonistic and adversarial in their legal claims against each other.

From a perception of desperation, more and more legal controversies may be brought to court, regardless of the merit of the claims. After all, the extent of legal merit may depend on the applicable laws and laws can change, too. Things that were not required may be suddenly required. Simple things that were already required may be made quite intricate and expensive and time-consuming. After all, what would all the laywers do if there were not lots of legal controversies?

If laws were simple and everyone was honest, there would be a lot of lawyers and court officers with a lot of free time. If not for the old trend of gathering debt, governments would not have huge, ballooning deficits and you would not be as interested in legal shelters as you are already or as you may be about to be in the very near future as trends continue to shift.

As the volume of litigation and legal controversies rise, more and more people will invest in protecting their finances not only from predictable financial market shifts, but from the aggressive collection actions of governments and lenders and other claimants. If you are interested in a consultation, such as to invest in financial privacy, you are welcome to let me know.

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