Copyright 2012 by John T. Reed

The 4/26/12 Wall Street Journal has an op-ed by Daniel Mitchell titled “How the Swiss ‘Debt Brake’ Tamed Government.

Referendums in Switerland prevent misbehavior by politicians

Swiss government spending only increases at 2.6% annually since they passed their “debt brake” by referendum in 2003.

Other referendums set the Swiss tax rates as 11.5% individual, 8% value-added, and 8.5% corporate. (Corporate taxes are stupid. They are just hidden sales taxes on the products and services of the company in question. Taxing humans taxes corporations because corporations are owned by humans.)

The rates can only be changed if a majority of voters in a majority of states vote to change them in a future referendum—roughly the equivalent of requiring a policy change to win 26 states in the U.S. in a national election. The only national elections we have now are for president and vice president. I have advocated binding national referendums for important policies like tax rates, total government spending, and declaring war. It would transform America by getting politicians out of decisions where they have proven themselves to be disastrously mismotivated.

Get out of the U.S. dollar and into Swiss francs

The Swiss have already done this. For months, I have been advocating getting out of the dollar and into Swiss fancs. I am working on that myself. This Wall Street Journal article only shows how wise buying Swiss francs is.

Swiss government spending is going down as a precentage of GDP. I hope all readers are aware that ours has long been going up like a rocket with no change in sight.

Between 2005 and 2010, when Euro Zone spending rose from 70% of GDP to 85% on average, Swiss government spending fell from 53% of GDP to 40%. Very simply, that’s because the Swiss people make those decisions, not Swiss politicians. God bless referendums.

No time soon here in the U.S.

I have been urging people to convert their U.S. dollars to Australian, Canadian, Danish, New Zealand, and Swiss currencies. Debt-to-GDP ratio is the main indicator of propensity to inflate. Switzerland’s debt-to-GDP ratio acrcording to the Journal article is 36.5%. That is about what ours was when Reagan was elected in 1980. We were the world’s biggest creditor (lender) nation then. Now we are the world’s biggest debtor (borrower) nation.

U.S. Congressman Kevin Brady (R-TX) has intorduced a bill to have the U.S. use a similar “debt brake.” Yeah, right. It has to be a Constitutional Amendment and that is politically impossible at present. I want a new third party dedicated to passing a series of Constitutional amendments—binding national referendums on total spending, tax rates, wars, replacing elected Congress with a grand jury sort of Congress, and others. Nothing less that a political party that wins a majority of seats in 3/4 of the state legislatures would get it done. There is no political will for that now, but when Washington hyperinflates the currency—which I figure will happen in about 3 to 5 years—the American people will be ready for huge change.

Can you become a Swiss citizen?

Can you move to Switzerland and become a citizen? I checked. It’s hard. You have to become a citizen of the Canton or community first and they are free to set their own standards within constitutional limits. Unusual approach but probably quite good at keeping out the riff raff.

Can get the benefit of their stable currency without becoming a Swiss citizen or even going there

You can, however, own Swiss francs, and thereby get out of the headed-for-self-destruction U.S. dollar and into a currency whose citizens prevent their politicians from doing what we let our politicians do. Your Swiss francs need to be outside the U.S, although not necessarily in Switzerland. The reason they have to be outside the U.S. is when we get hyperinflation (the only aternative to cutting spending which politicians are incapable of doing) the U.S. government will almost certainly enact capital controls and one of the tenets of capital controls is a ban on possessing or using foreign currency in the U.S.

John T. Reed