The 1980's are a watershed in the history of the United States and the entire free world. The apparent acceptance of the ideas of Rothbard and Hayek on the part of American economists (the notion that proper economics flows from the inheritance of land "ownership" and the inevitable aristocracy created thereby) was a triumph of greed over common sense that is probably unparalleled in the annals of history. The foundation of this claim of "unparalled" lies not in the fact that greed won the day. That has happened many times before. What was different in this particular aristocratic coup was that greed was able to overpower a supposedly free and enlightened populous without firing a shot.

Perhaps there is some merit in the observation that the the coup was not successful until the depression generation was, for all intents and purposes, removed as a major influence in political discourse. It was the burgeoning size of electoral constituencies through population growth and limited education that finally produced enough control on the side of the aristocrats to totally defeat representative democracy (see notes below). As much as the "Trickle Down" supply siders would like to be able to blame all the price increases of the 70's on the Johnson "War on Poverty", and as much as they wanted and still want so desperately to blame "stagflation" on the "New Deal" running all the way back to Roosevelt, the facts of the Kennedy tax cuts, monetization in support of the "Vietnam War" and the abandonment of the gold standard won't just magically disappear for them. Only through control of information and through purposeful deception was it possible to "sell" an aristocratic bucket of lies. The American people, dumbed down by the lack of even the most rudimentary education in fundamental economics and pummeled by the actions of Paul Volcker, were ripe for the plucking.

One of the most ludicrous claims in history was Nixon's rhetoric on the "Wage Price Spiral" (the claim that wage demands were forcing up the general price level) at a time when the monetized and borrowed deficits of the Vietnam War were coming home to roost. The fact, of course, was that goods became more expensive because of the war, just as any person with a lick of common sense would conclude from any familiarity whatsoever with the laws of supply and demand. And as labor demanded its rights to a decent wage, the prices rose still higher just as one would expect. The holders of money and bonds will do what they will to protect their purse from the encroachment of "communism", but you can bet that they will not tolerate a dent in their pile of interest bearing (actually rent collecting) money. And this was most especially the case as the USA was throwing off the last vestiges of the gold standard to move to the creation of fiat_money backed by nothing other than what would become aristocratic power. And when the war ended in 1973 and the soldiers came home we had an escalation in unemployment and yet another of Nixon's rhetorical improvisations: "stagflation". And through it all we never heard a whisper of a quite obvious adjustment that would have alleviated the problem and put the nation back on a much more solid footing. Not one word was mentioned about putting the tax code back to the way it was prior to 1964 so as to assure a more appropriate redistribution of Economic Rent .

One of the most obvious realities a man can witness is the correlation between very large incomes and the taking of rent. People simply do not "produce" a thousand times more than their fellows by virtue of their own sweat and talent. And the notion that people who have already accumulated a large sum of money should be rewarded simply for having this money is, of course, only a religious tenet of aristocracy, i.e. the belief that a hierarchical caste system will attract an enlightened and benevolent rulers to lead the people to the promised land. But with this general idiocy concerning the righteousness of money, the failure of the many to understand what money actually is, and the refusal of those who held it to justly accept a lions share in the cost of the "Vietnam War", indeed in their lust to employ the war in the advance of aristocracy, we saw the coming of Paul Volcker; the man that would slay the "inflation" dragon to the cost of every productive small enterprise in America. The rise in the cost of labor had severely impacted the power of the wealth holders in the United States. And they were bound and determined to get it back. By controlling the amount of money in the private sector of the economy, not by taxation, but through the banking system, the Federal Reserve engineered one of the greatest rip offs of the middle class the world has ever seen. Interest rates on government secured bonds rose to over 20% as the rich people were encouraged to pull money out of the private sector where it was needed to support the real economy and to place it, instead, into a "mattress" in trade for a very sterile IOU referred to as government bonds. The result, quite easily predictable, was the liquidation of real estate, of small farmers, and the destruction of small businesses that were totally dependent on reasonable credit. The resulting want and unemployment of the people was manna to the holder of money. The value of money, the labor it could command, rose, and continued to rise.

This is the point at which Ronald Reagan and the Republicans strolled onto the stage with more political ammunition than any administration since those of the Great Depression. The scapegoat was Carter, a Democrat who had appointed Volcker. The economic landscape had been blasted to rubble by the "inflation" fighting policies of Volcker, and all the Republicans needed to do was to allow any economic growth whatsoever so as to be seen as miracle workers. But instead of restoring the economy to a state in which the productive members of the society were to be rewarded, the puppets of the aristocracy increased the rewards to the aristocratic rentiers at the expense of the rest of of the people of the nation. This was accomplished by removing the taxes on rent and increasing the taxes on wage earners. This aristocratic tax shift which we have chosen to refer to as The Great Ray Gun Rip Off due to its companion military spending on a system of particle beam weapons, simultaneously routed the output of the economy into the war furnace and created a mountain of indebtedness for the tax paying wage earners of the nation. The aristocracy simply acquired bonds, enjoying interest/yields of more than 20% in some cases, and watched the government build a defense system to protect their asset ownership. It would seem to be quite obvious that poor people and the middle class and the small farmers who had their incomes destroyed by Volcker and their taxes increased by the Ray Gun Rip Off would not then have sufficient lose change with which to "invest" in bonds. Therefore, one would rapidly conclude that, in the absence of the Good Fairy or Santa Claus, that the aristocrats who received the tax breaks were the purchasers of these very high interest rate bonds. More to the point: As the tax code was revised to tax wages instead of taxing income from rent, and as the only place from which these bonds can be repaid is from taxes, then it is seen that the working people of the nation were sold into indentured servitude to those who received the tax cuts. The American wealthy during the 1980's and through the 90's became the American aristocracy. The United States government currently sends forth the Tax collector to collect wage taxes so as to deliver interest on the national debt to the people that got all the tax breaks from Ronnie and his pals. Welcome to Republican heaven.

The Tax system in the United States has not undergone any significant change since this major destruction at the hands of Reagan and the Republicans in the 1980's and the national debt and the trade deficits have continued for the last 20 years. The USA is "tapped out". We have no more factories in which to produce anything and all the farms are owned by the big boys that get paid for not farming. We import fancy cars, and lots of oil, and our primary export is air pollution and fear. The Republicans have sacked the nation and used the loot to construct the most powerful military machine in the history of the world. That military is now being turned inward in the form of "Homeland Security" and the new SS in the post office and the meter readers. 20 years of fake prosperity floated on a mountain of debt resulting in a "A fascist banana republic with no bananas".

Madison on constituency size.

Aristocratic_Imperative -- Showing the USSR how its done.