Gingerbread Man on 27/2/2007 at 00:26

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I remember a lot of discussion about this a few weeks back and elsewhere. I can't find the discussion, though, because I SUCK AT THINGS.

Bottom line, however, appeared to be that Russo is either a) only partially informed about things and therefore operates under the Desmond Rule or b) is simply sticking his fingers in his ears and shouting LALALALALALA when anyone comes up with the proof he claims doesn't exist.

Either way, I have no idea what's true and what's not. I'm more concerned with the tinfoil hattery involved with this Daylight Savings Time conspiracy, to tell you the truth.

Rug Burn Junky on 27/2/2007 at 01:17

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This guy talking about income tax is roughly equivalent to agwpt or TGGP talking about the Constitution.

Trust me when I tell you that you DO have to follow mere "regulations," otherwise I've wasted a shitload of my time learning the Securities Regs.

Strangeblue on 27/2/2007 at 06:03

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Can o' worms, Subterfuge.

Many many years ago when one went to file one's federal taxes, there used to be a little letter in the front of the form instructions that thanked the tax payer for "voluntarily" filing their return. That letter disappeared around about 1990. I wish I'd kept the booklet I had which included it, because it always made me laugh--imagine being thanked for doing what you have very little choice about. When government stopped at least being polite about it, we should have known we'd come to the beginning of the end.

OK, a little background:

The Social Security System is what all Federal and State income taxes descend from and depend upon in the USA. It was originally proposed as a kind of "retirement/disability" insurance investment which put money into the goverment's hands to invest and use the income to pay for government programs until the taxpayer was eligible to retire and draw a pension from the system they had invested in. Kind of the same way banks make loans from funds on deposit but eventually give the money back to the customer who invested it. It didn't really work out that way, but that's what the original idea was.

On a technicality, participation in the Social Security System is "voluntary" but since you can't get a job in the US unless you have an SS Number or the equivalent, or a foreign tax exemption form/letter, it's not. Nothing stops a US citizen from opting out--except economic survival. If you go back to the late 1930s or early 1940s when the Federal Social Security Act was passed, it required only aliens, and Federal, State, or other government employees (including all members of the Armed Services) to participate, but anyone else could do so if they wanted and private employers were urged to encourage participation by their employees. Prior to that, there were no income taxes in the USA. Only property, sales, excise, and use taxes--basically you paid only for what you used or bought, but the money was all chopped up in little, dedicated bits--not big central funds. Under the Soc Sec System, the more people who participated, the larger the pool of money to "invest" would be and the more money the government would have to put into various programs and public works.

Bear in mind that this program came into existence just as the Depression was finally breaking and WWII was raising its curtain on the first act so the idea of putting a little money aside for your future retirement or in case of an economic "rainy day" certainly sounded like a good one. And with the history of bank and stock failures still pretty strong in most people's memory, handing the money to the government didn't seem like a bad idea--it could redistribute the wealth and use the income to benefit lots of people if the tax payers were just willing to give a little to the government out of every paycheck (and it was originally a very small amount something like 0.5% of gross). This was also long before anyone had health insurance or employee benefits packages. The idea sounds reasonable and it wasn't, at that point, mandatory if you were an ordinary Joe.

So, most people joined up and soon employers just asked for SSN from everyone. Eventually, increasing federal regulation required increasing employee information and tracking and since everyone was paying taxes, the SSN became universal. Most employers have no other way to handle employee records and tax information except through the SS system and their business licenses and tax status require them to have this information for everyone who works for them and be able to document it to the government when asked. I'm not even sure there's a way for a company of more than one person and his/her immediate family to operate legally without this status and paperwork, so... most companies can only employ people who have SSNs or equivalent TIN or foreign tax exemption paperwork. If you don't have an SSN, you can't be forced to pay taxes, but you also will find it extremely difficult to work and make money, to open a bank account, to buy anything you don't have cash for, or to get services from utilities. And you can't do what Russo and his ilk are trying--playing half the game and thinking they can get benefits of a system without really participating. You are either in or you are out. No middle ground on this.

There are people who don't have SSNs and they don't participate in the system in any way, but they are rare, their job choices and lifestyles are limited, and it's not easy. But since this is a representative democracy based on republican principals of individual liberty, they can't be forced to play. It has to be "voluntary." But not volunteering is so very hard to do that it's impractical to the point of impossibility. I know. I tried it. It doesn't work.

I'm going to skip the Federal Reserve Banking System thing: it's really weird and I still don't get it. I know they don't coin or print money, but they do set the value, effectively, and they do distribute money to regular banks and clear checks and perform other financial coordination. It might as well be a central bank, except that the way the collection of individual states that constitute the United States of America protect their own banking laws makes a European style central bank impossible without overturning States rights issues. And we don't want to try that again, now do we? Last time we got into a bloody Civil War and things are still a damned mess.

Rug Burn Junky on 7/3/2007 at 16:37

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Close but not quite. You're mixing up the discount window and treasury bills.

To grossly missimplify it: All of our money is created in a ledger at the Federal Reserve.

They lend it to banks at varying rates, which is how it enters general circulation in our economy. Ironically enough, the Federal Reserve Banks are owned by a small number of the banks that they end up lending money to (through mergers over the years, some of these are actually foreign banks).

As for the government debt, that's actually sold by the Treasury, (and to all investors, foreign and domestic, including the Federal Reserve, which buys and sells US Debt in order to change the amount of money in circulation and at the disposal of the government.)

Fannie Mae (as well as Sallie, Ginnie and Freddie Mac) are entirely different beasts. They're Government Sponsored Enterprises. (Actually, Sallie Mae went completely private in the past decade, and is no longer sponsored by the federal government.) The GSE's don't actually make money for the government, they were created for specific end goals, and are used in order to provide low cost loans in their given field. Essentially on the theory that because their government sponsorship gives them stability, they receive favorable rates from their own investors/lenders, and enable greater access to borrowing.

Asset Backed Securitization is how pretty much all debt in this country is financed: your credit card, your mortgage, your student loan, your car loan. It one of the main tools of corporate finance, and a giant industry.

Banks lend the money, then bundle them all up into a giant pool, and offload them into a shell company, which purchases the loans buy selling their own bonds, rated by the quality of the loans, and the structure of the bond transaction. This way the bank offloads the risk of the loans to investors and by creating a secondary market with supply and demand pressures, more or less lower the costs to borrowers. That's true for all banks, mortgage companies, etc., not just Fannie and their ilk. (For the record, my job is to build these financing vehicles).

Rug Burn Junky on 7/3/2007 at 18:59

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Welcome to the dreary banality of my existence.