The ‘Deep State’ Is Fighting Back

The ‘Deep State’ Is Fighting Back, by Porter Stansberry. This is difficult to verify, but is an interesting insight.

For the last 30-plus years, my source has worked for and around the highest levels of our government. He is currently regarded as the president’s most likely choice to become our next Federal Reserve chairman. We call him the “Metropolitan Man.” …

How the current US elite derives its power:

For the last 40 or so years, the U.S. economy has been built around a model that created vast power in D.C. This model has a few important components…

First, we have a highly “progressive” income tax. Without extremely progressive income-tax rates — where about half the country pays nothing and the top 10% pay for roughly 80% — the electorate would never continue to vote for more and more government. But it does, mostly because it doesn’t have to pay for it.

Second, the government has a powerful regulatory regime in place. This allows D.C. to essentially control vast segments of our economy. Take Wall Street, for example. Who gets to sell a bond or a stock to the public? Nobody the Securities and Exchange Commission doesn’t like… This power results in tremendous amounts of “tribute” — legal fees, fines, and hidden lobbying that flows into D.C. and feeds its economic ecosystem.

And finally… there’s the North American Free Trade Agreement (NAFTA) and “free” trade. Our country has the ability to export all of the inflation generated by our central bank. This has led to decades of lower and lower interest rates and the government’s ability to borrow essentially endless amounts of money without any serious inflationary consequences.

Trump threatens all three components:

What Trump is doing right now via his border-adjustment tax, additional tax reform, and regulatory rollback is targeting all three of them at the same time. If he wins, all of the power that has been consolidated in D.C. over the past 40 years will evaporate. …

Look at what has happened to the middle class in America over the last 40 years…

Did NAFTA prevent price inflation by allowing America’s consumer economy the luxury of accessing the world’s cheapest labor? Yes, it did. But the flip side was devastating to the entire manufacturing industry in the U.S.

And where did the resulting wealth flow? To D.C., and to the top 1% of America’s wealthiest people who were able to access foreign markets (and shield the resulting income from America’s tax system).

Meanwhile, America remains the only industrial country in the world with global income taxation (you have to pay federal income tax, no matter where you live) and without a value-added tax. In short, we’ve chosen a system that punishes wage earners, while rewarding individuals and corporations who use overseas labor. The result has been a decline in real, after-tax wages over the last 40 years. That’s a recipe to destroy the middle class – and that’s what has happened.

Trump’s plan to effectively lower income taxes to 25% (maximum) and implement a value-added tax to discourage foreign production of U.S. goods will turn this entire economic structure on its ear and disenfranchise the Deep State that controls it. The winners will be the middle class, small-business owners, wage earners, and America’s manufacturing base. The losers? Those who have invested heavily in the current Deep State regime. …

What’s next?

Unlike the health-reform issue, the Metropolitan Man assured me that Trump’s tax-reform agenda would certainly pass. “It’s a done deal,” he said. … That means the Deep State has been pushed into a corner. What it might do next, no one knows. …

The next several months could see our government erupt into open civil war. The FBI accusing the president of treason… The president accusing a director of the CIA of breaking the law and having him arrested. Who knows where this will lead?

On the other hand, assuming the government doesn’t collapse into a civil war, Trump’s new economic model will become a reality before the end of the year. A new economic regime is coming in America. For some industries (and for most Americans) these changes will bring massive prosperity. And for others – especially for companies and individuals who have been living at the government trough, tough times are looming.