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Three Ways to Get America Back on TrackBy
Wednesday, October 23, 2013
The United States is still – by a wide margin – the wealthiest and most powerful nation in the world...
We have a greater productive capacity than any other nation. It's probably larger than all of Europe combined.
And despite what many people believe, I don't think our country's best days are behind us...
That may sound funny coming from the person who predicted the "End of America." But my thesis is about the end of the dollar's status as the world's reserve currency and the devastating economic crisis that would follow. But America has recovered from crises before (and usually emerges stronger)... I've always said I thought our political union would survive...
I'm still an optimist. I think that sooner or later – and I can't say when – the madness of our current economic policies will be so evident that this country will make wholesale changes. I just don't believe we'll vote ourselves down the abyss.
Eventually, the middle class will realize that this idea that we can tax, borrow, and spend our way to prosperity is failing. By then, real wages will have fallen so far... the wealth gap will become so pronounced... the collusion between the government and the banks will become so evident that people will vote in a candidate willing to take some radical steps to get us on the right track. Somebody like a Ron Paul, for example.
And you would be amazed how quickly even the huge hurdles we're setting for ourselves could be overcome just with some sensible policies. For instance...
Sensible Policy No. 1: Imagine what would happen if we just had a flat income tax rate for everybody. We'd abolish every other tax – corporate taxes, social security taxes, payroll taxes, and every other federal tax, levy, fine, and fee.
Instead, you'd just pay 20% of your income, whatever the source. We'd get rid of the different tax structures for different corporate entities and the different shelters and rebates. Wherever your source of income – dividends, capital gains, wages, etc. – we all pay the same, flat rate.
So the first thing we need to do to get our country back on track is to have a fair, sensible income-tax policy, period.
Sensible Policy No. 2: We need to pass a balanced budget amendment that keeps us from financing foreign wars and an endless welfare state...
We need true welfare reform, not the kind you saw in 1996, where everyone just jumped from welfare to disability.
If you have some kind of an emergency situation, you can apply to the federal government for help for a limit of $5,000 over six weeks (to pick arbitrary terms). And that's it... You won't get any money from the government again...
Sensible Policy No. 3: We need to get out of the business of trying to regulate every single banking transaction in the world...
In the financial crisis, who got in trouble? Was it the hedge funds that are unregulated and backed with private capital? No. It was the banks that are heavily regulated and backed with public capital.
To ensure everyone's money is safe, we'd back the currency by gold. We'd put up 20% of every dollar in existence in gold.
We need to stop trying to regulate the banks and guaranteeing the deposits. Leave that up to the market. But guess what? You won't even have to put your money in a bank if it's backed by gold. All you'd have to do is put it under the mattress and you'll be fine.
With those three steps, we'd have a fair and transparent tax policy, we'd have a sensible federal budget with no budget deficit, and we'd be out of the business of trying to control every dollar that's spent and the way it's banked around the world.
If we just did those three things, the size of our economy could double in five years.
It would be an unbelievable boom because America is still the largest market in the world. We still control the global language of business. We still have the best computing and software companies, the best technology. We have unlimited amounts of energy (thanks to the shale oil and gas boom), despite what the idiots in the government tell you.
But as long as we continue with the idiotic socialist policies we're currently pursuing, we are going to bankrupt ourselves just like every other socialist nation... no matter how wealthy and powerful we are.
Good investing,
Porter Stansberry
Further Reading:
In 2009, in the depths of the credit crisis and stock-market crash, Porter began warning readers about the "End of America."
In an update this past March, he revealed that energy and food costs, wages, and debt all show we're closer to the End of America than ever before. Find the proof here. And learn how you can protect yourself in Porter's two-part series here and here.
Market NotesWE WROTE IT – DID YOU HOLD YOUR NOSE AND BUY IT? As we predicted in late 2011, airlines are enjoying one heck of a "bad to less bad" rally...
Back in September 2011, we noted the trouble with airline stocks. Airlines sport razor-thin profit margins, they're subjected to wild swings in fuel costs, and they require lots of capital expenditures to keep the business running. This makes them horrible long-term investments. But from a trading viewpoint, it's worth noting that airlines go through big "boom and bust" cycles. These cycles can be traded for big profits.
In our write-up, we noted how airlines had just experienced a big bust. Many airline names, like giant Delta Air Lines, had lost over 40% of their value in just a few months. Sentiment toward the sector was awful. This, we speculated, offered a chance to trade a "bad to less bad" rally.
As you can see from the chart below, the call was well-timed. It displays the past three years of trading in Delta Air Lines. Around the time we wrote our bullish note, Delta shares traded for around $8. They have rallied more than 200% to reach a new high of $25 per share. "Bad to less bad" works!
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