Today's comment is by John Pugsley, Chairman of The Sovereign Society. A long-time hard-money advocate, he authored several best-sellers in the 1970s and 1980s, including Common Sense Economics, The Alpha Strategy, and The Copper Play.

Dear A-Letter Reader:

If next week's elections put the democrats in control of Congress, republicans are predicting "across-the-board tax increases affecting millions of Americans." Would that be bad? Not in my view.

Any advocate of individual liberty-which rests on the proposition that individuals should control their own lives and property-must consider the most open and egregious attack on liberty to be robbery by force. In other words, taxation.

Lysander Spooner, 19th century attorney and total advocate of individual sovereignty, stated it bluntly: "What can be more absurd in nature and contrary to all common sense than to call him Thief and kill him that comes alone with a few to rob me; and to call him Lord Protector and obey him that robs me with regiments and troops?"

Like Spooner, I believe taxes are theft. Yet, I strongly support tax increases, and strongly oppose tax cuts. This is not a typo or contradiction.

Imagine for a moment that you are saving for your child's education. You just received a nice inheritance of US$10,000. You plan to save the entire inheritance in an investment account at the bank, and let it grow until your child is ready for college. You're on the way to the bank to deposit the US$10,000. And as luck would have it, you're mugged at gunpoint. Now to pay your child's college expenses, you'll need to be frugal, cut other expenses, and save up another US$10,000.

Or perhaps you're a little more "fortunate." You see the thief coming and take a different route. You make it safely to the bank and deposit the money in the account. Phew - close call right?

But the thief, finding armed robbery risky and uncertain, decides that embezzlement is his true higher calling. He gets a job at your bank, and over a period of time secretly embezzles the funds from your account, while carefully covering his withdrawals so you have no idea it's happening. When your child turns 18, you attempt to withdraw the money, and find the account empty.

Question: assuming the thief will get the money one way or the other, are you better off if he had taken it by force, or secretly taken it by embezzlement?

Answer: you're much better off if he had taken it at gunpoint. You would know immediately that the money is gone, and would have time to make other plans for your child's college tuition. If you don't realize the funds are gone until enrollment day, it's too late.

And that's the problem with tax cuts. You think you're saving money by paying less tax, but you're really just losing it in a completely different, secretive way.

You see, when any government spends money, it gets that spending money from its citizens. Like the thief, there are two ways government can cover its expenses: by force or fraud. It takes the money by force through taxes, and what it can't get by taxes, it takes through borrowing. Government borrowing is fraud.

Fraud? Of course. If you or I borrow money and have no ability or intention of repaying the loan, we've committed fraud. When the government borrows, there is no chance at all that it will ever repay. The history of government borrowing in all countries over the centuries is evidence, and a look at U.S. federal debt over the past century confirms it. From a debt of less than $2 billion a century ago, there are now more than $8 trillion in outstanding Treasury IOUs. Those IOUs cannot and will not be repaid.

How do we suffer the loss? Through price inflation. The money in our accounts loses purchasing power. The dollar saved in 1910 will now buy about a nickels worth of goods, or less. In a century, savings accounts have been looted of 95% of their contents.
But the loss of value through price inflation is not the biggest problem I have with tax cuts.

If deficit spending were stopped, citizens would suddenly realize that the free lunch the politicians promised will never be "free." If every dollar spent by government came immediately out of our wallets, you can be absolutely certain that politicians would find it impossible to fund their vast spending programs. We'd all be able to plan for our future, confident that the purchasing power of our savings would be there when we're ready to use it.

If you believe the world is better off when individuals have the freedom to keep what they earn, think twice about letting the politicians get away with looting our future through fraud. Expose the fraud by making them extract every dollar they want to spend at gunpoint - i.e. "taxes."

That's the view of this sovereign individual.

JOHN PUGSLEY, Chairman
on behalf of The Sovereign Society

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