Few people can explain sound economics as well as Peter Schiff. He explains why the stimulus is garbage and that the result of all this government spending is going to result in an inflationary depression.

Not that it should be a surprise to anyone who understands politics and economics–they always go hand in hand–but, the stimulus bill being pushed through into law contains many things that may not boost the economy. The only thing we hear about is how we need to act immediately to combat the worsening economy. No politicians talk about how the use of money in the stimulus is actually going to stimulate anything.

I’m under the impression that these politicians have no idea how or even if all this spending is going to “stimulate” the economy. If they were masters of economics, they wouldn’t have to rely on the rest of us to provide them a living. The one thing politicians are good at is taking other people’s money–by force of government–and then spending it recklessly on projects they deem important or necessary.

It is economic fact that central planning does not work and it only makes society poorer. The United States has been the shining light for prosperity because of the freedom of our markets. They have never been truly free but, still freer than most other places.

The idiocy of all the economic policies coming out of Washington is that they are all central planning tactics. We know what works and we know what doesn’t. Why are we constantly trying to use what doesn’t work?

It is more than possible that we need to rebuild some of the infrastructure in this country and that we need to find alternative forms of energy. The question is not if we need it but, does government know better than the rest of us if we need it.

And of course, do you take money from someone in California to build a bridge in Minnesota? The obvious is answer is, no. What all these stimulus bills and government works projects does is exactly that, take money from one person for the benefit of another.

There is nothing wrong with charity however, an attribute of charity is that it is voluntary. If one cannot opt out, it is stealing. It doesn’t matter if you use the barrel of a gun or the force of government. Thievery is thievery.

At best this stimulus package will shuffle money around and by pure luck the end result will be close to the optimal result the free market would have made. At worse, this bill will plunge the American economy into an even greater recession/depression.

No entity or person is capable of making better decisions faster than hundreds of millions of people making decisions with their money several times a day. To believe that you know better than the independent decisions of millions of people is incredibly arrogant to say the least.

The United States government’s attempts at fixing the current financial crisis has been a complete failure. Nothing has worked. We have spent or allocated trillions of dollars–$7.36 trillion–to “fix” the problem. The irony, of course, is not only will more spending not solve the problem but, it will make things worse.

It is important to remember that government has no money. The only way for government to pay for anything is to take it from citizens through taxes or inflation. Knowing that, the only way for the government to pay for the bailouts and stimulus packages is to take money from one group and give it to another. It is no more useful than taking blood from the left arm to give it to the right arm.

In the case of bailouts, money is taken from productive members of society and then given to nonproductive members of society.

This is called rewarding poor performance. If no one is buying GM’s cars, that means GM is making cars that nobody wants. To bail them out is to force taxpayers to “buy” GM. This only reinforces their current behavior and they will continue to make cars that nobody wants. The result is the same as throwing money into a black hole–nothing will come out of it.

We hear politicians telling us how hard they are working to solve this financial crisis. More bailouts and stimulus packages and tax cuts need to be passed, immediately! They have already stolen trillions of dollars from us and no positives have come from it. No one cares how hard you are trying. We want to see results.

If these politicians really want to solve the financial crisis and keep the pain to a minimum, they would try something else. I propose repealing the 16th Amendment and the abolition of the Internal Revenue Service–most lovably known as the IRS. This would eliminate the income tax. The amount of extra real money available to the people will be a stimulus that no amount of government spending can emulate.

The usual resistance to this idea is the question of how government will function without taxes? First, we aren’t eliminating every tax; just the income tax. Second, the income tax has been around for less than a century–we managed to run this country for over a century without it. Thirdly, individual income tax will only amount to $1.25 trillion in 2008. Compared to all the bailout spending, this is a drop in the bucket! And it will actually do some good.

Without income tax revenue, the government will have to cut spending by–at least–an equal amount. If the government is just going to make up the difference by printing money, it will be no better.

If we give the people $1.25 trillion dollars to do with as they please, the economy will turn around so fast that the history books will not have to rename the Great Depression. What we don’t want is a repeat of the Great Depression where Presidents Hoover and Roosevelt spent the nation into oblivion and turned a recession into a 16 year depression.

Increased government spending is a tax increase no matter how you cut it. Whether the government borrows it and we have to pay it through taxes later or it prints the money and we find ourselves buying a loaf of bread for $5 at the supermarket.

The average American almost spends half the year working to pay taxes. Imagine if we were able to use that money to pay our mortgages, student loans, credit cards, etc. We would be able to dig ourselves out of debt quickly and then have the extra income to spend. However, we cannot simultaneously spend and have a mountain of debt. At some point, the debt will catch up to us and the party will have to end–happening right before our eyes.

The real magic of the removal of the income tax is not just the extra money Americans will have, it is the means by which that money was obtained. If it was just about the absolute number of dollars every citizen had, the government could just print each of us $1 million dollars and everything will be roses and lollipops.

There is little difference between giving everyone $1 million dollars and what all these bailouts and stimulus packages are doing. The common theme is that none of the money was derived by production and therefore does not add to our wealth but, subtracts from it.

The removal of the income tax would provide Americans with “stimulus” money that was derived from production–we had to work for it. This will have the opposite effect of money created out of thin air and we will truly be wealthier.

Few members of Congress are talking about ending the income tax and most of the talk about abolishing the IRS relate to the Fair Tax Act. Although the Fair Tax is better than the current system, we are just moving the burden of taxation from one group to another. The best solution is to abolish the IRS and replace it with nothing.

There are movements across the web to repeal the 16th Amendment, abolish the IRS, and the Federal Reserve System that is most responsible for the financial mess we find ourselves. You can check out the End the Fed website to find the latest on the movement.

The only means of economic relief the politicians can come up with are ones where they spend more and more money while real relief is to stop spending. It is time to tell our representatives in Washington that they need to change course–not just talking about “change” but, actually do it. Tell them to abolish the IRS and the income tax if they are really on the side of the people.