THE COMING ECONOMIC BUST

            Ever since the last depression, the great, wise leaders of our country have been telling us that we cannot have another depression.  They tell us that they have learned how to make the government act as a balance to control the inevitable cycles of our type of economics.  They have let us believe that through fiscal and monetary controls they can protect us from a major economic collapse.

            Well, the facts don't show this is true.  Soon after the Vietnam War ended, The U.S. was blasted by a major crises in 1974 and the official unemployment rate popped out at 8.5 percent.  Then again in 1982 and 1983, we had an unemployment rate of 9.5 percent.

            Then Reagan came in to save us.  He constantly talked about how he would curb government spending but he did just the opposite.  He chocked up the biggest deficit in history trying to make the economy grow.  The years 1984 to 1990 were regarded a "record peacetime expansion." And once again the government leaders let us think they had the vaccine for the disease.

            Right now the official rate of unemployment is 6.8 percent but that doesn't take into account all the individuals who are discouraged, who work part time, who are marginally self-employed, or who are under employed.

            Our economic system is basically geared to overproduce its market.  But, the greatest part of the market is the workers who consume, if they are unemployed, there is a severe problem with consumption.  Also, the workers are only paid a small part of the value of the products they create for the rich owners of the corporations.

            During the Great Depression, the government renovated deficit spending in an attempt to combat the problem of insufficient purchasing power.  But it didn't work until we had the tremendous destruction of World War II to overcome the problem of overproduction.  Then we had the Korean War, the Cold War and the Vietnam War, and they keep fueling deficit spending to try to keep us from having another great depression.  However, as the warriors of the Freedom Movement know, deficit spending will not prevent an economic collapse forever.  The problem is that the stimulant of deficit spending has very, very dangerous side effects.  The most dangerous is inflation.  The 40 years of government deficit spending have inflated the national money supply and the dollar is now worth a fraction of its former value.  Also prices have risen, as the dollar fell which has caused a very severe problem with domestic purchasing power.

            So you see, our brand of economics is doomed if it feeds the inflation beast, and it is damned if it does not feed the inflation beast.  This writer believes that the great depression is just child's play for the real thing that is around the corner.  An enormously swollen public debt and a recklessly depreciated currency burden the economy. On top of that we have a vast industrial plant that is developed to meet a wartime and not a peacetime economy. These three problems are the only three nails we need to nail the lid on the coffin of the great American Dream.

            Our government leaders are worried but they are helpless.  They now cannot run still larger deficits without generating incredible inflation or borrowing so much from the banking system that the interest rates go sky high.  The government is out of options.  The government is too broke to come to the rescue.  What does the future hold, only time can tell; but it is evident that it might very well be a tough one.  The moral is, don't count on your government to watch out for your best interest!

Ask Dear Willie

Dear Willie:

I recently received a notice from the IRS requesting my tax return for last year.  I quit filing last year based on some stuff I read in

a book a fellow had at work.  I also filed an exempt W-4 last year so I eliminated withholding.  How should I respond to this letter?

Sincerely,

Philip Patriot

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Dear Philip:

Thanks for writing.  Unfortunately you have made one very bad mistake in your approach to date.  You have filed an exempt W-4 Form which is essentially an impossible situation to protect.  For one thing, you are not judgment proof if you have wages, the IRS can garnish your wages for back taxes and interest.  Furthermore, one of the IRS' favorite criminal ploys is to attack individuals who have filed exempt W-4 Forms with tax evasion charges.  I think that you might seriously consider changing your position regarding the exempt W-4 and then take a good look at the options available to you.  I specialize in helping people like you, so give me a call.

Sincerely, Willie

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Dear Willie:

I recently had my wages levied.  What can I do about it?

Sincerely,

Starved out

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Dear Starved Out:

Actually the answer to that question depends on several factors.  First of all, however if you wish to keep your job and you have not filed tax returns, it may be necessary for you to voluntarily file in order to get negotiation going.  The strategy you decide to use will depend to a large extent on why you owe the back taxes.  Give me a call and let's go over your situation in more detail.

Sincerely, Willie

            Those of you who have read my newsletter, or who have worked with me for any period of time, are aware that I don't pull any punches when I discuss many of the methods that are currently used by some of the freedom groups and leaders in the country.  Unfortunately, although the movement is growing by leaps and bounds, the majority of individuals are using methods that simply do not work.  For example, individuals all over the country are filing "zero" tax returns in an attempt to get refunds of back taxes.  These individuals are filing 1040 forms;

They are not using the informal method of writing a letter and requesting a refund with a full explanation of their reasons.

            When individuals file a "zero" return, there are several reasons why they may receive a refund that have nothing to do with the correctness of their argument.  For example, the IRS is not perfect and it makes mistakes; the person processing the return may simply take the return at face value without questioning the reasons for the refund.  The IRS is not responsible for the mistakes it makes, so later on, the IRS could proceed either criminally or civilly or both against the individual who originally received a refund.  Furthermore, the IRS deliberately gives refunds, at times,  for the purpose of creating a criminal case.  Yes, that is right.  The IRS might give you a refund and then prosecute you for filing a fraudulent return.  There is also the danger of prosecution for perjury if you sign a "zero" tax return.

            Another huge problem with the techniques used by many of the leaders and groups is that there is simply no way to protect many of the assets that the IRS can take.  If an employee files an "exempt" W-4, the IRS can make an assessment and proceed to collection. The Internal Revenue Code exempts very little from seizure.  So, many of the individuals that originally file exempt W-4 forms or zero tax returns will eventually lose their assets to the tax man.  If you are following a "guru" who advises the use of an exempt W-4 or a zero tax return, please don't do it.  You are not judgment proof if you have a job and the IRS can seize your wages.

            Another problem that is going to raise its ugly head one of these days is the UBO issue.  Many people have been advised by "gurus" in the Freedom Movement to set up businesses in the form of UBOs or Unincorporated Business Organizations.  They take the position that UBOs are exempt from the filing of tax returns and that a business organized in a UBO does not have to pay income taxes.  The problem with this argument is that there is no statute in the Internal Revenue Code that exempts UBOs from the payment of taxes and UBOs do not have a valid Fifth Amendment argument regarding the filing of tax returns, because the IRS treats them as corporations.  The point is that there is lots of bad advice out there, so please be very careful before you leap into the fray.