(The Economic Collapse Blog)—Most Americans don’t know that for much of U.S. history there was no federal income tax and there was no central bank. But now everyone assumes that we must have a federal income tax and a central bank in order to have a functioning society. Today, there are just a handful of nations that do not have an income tax, and more than 99 percent of the entire population of the globe lives in a country that has a central bank. Of course the two work hand in hand. A central bank creates a spiral of borrowing that is meant to be unbreakable, and an income tax is necessary to service payments on that debt spiral. It is not a coincidence that a federal income tax and the Federal Reserve were both established in 1913. Since that time, we have piled up the biggest mountain of debt in the history of the world, and that is precisely the outcome that the system was designed to produce.
So what is the solution to this colossal mess?
The answer to 1913 is 2025.
This year, we are seeing things get proposed in Washington D.C. that once would have been unthinkable.
For example, Commerce Secretary Howard Lutnick just told Fox News that President Trump wants to “abolish the Internal Revenue Service”…
More details have emerged from the Trump administration about alleged plans to get rid of the Internal Revenue Service (IRS) and utilize tariffs so the “whole economy explodes.”
“His goal is to abolish the Internal Revenue Service and let all the outsiders pay,” Commerce Secretary Howard Lutnick said Wednesday on “Jesse Watters Primetime.”
“As the president said, reciprocal tariffs, either you bring yours down or we’re going to bring ours up. If we go to their level, it will earn us $700 billion a year to be equal to everybody else,” he expanded Thursday on “America’s Newsroom.”
And it appears that the Trump administration is already taking concrete steps toward that goal.
In fact, it is being reported that “approximately 7,000 probationary workers” at the IRS are about to be hitting the bricks…
The Internal Revenue Service (IRS) is planning to slash approximately 7,000 probationary workers in Washington, D.C., and across the U.S. starting Thursday, according to reports.
The layoffs will affect probationary workers who have been employed for one year or less and have not been able to secure full civil service protection, The Associated Press reported, citing a person familiar with the plans.
Wow. Meanwhile, the Federal Reserve is also being targeted by the new administration.
In fact, Elon Musk has suggested that the Federal Reserve could soon get visited by the Department of Government Efficiency…
Musk wrote on X in response to a user’s post about the billionaire’s support for an audit of the Fed that the central bank isn’t above scrutiny from DOGE.
“All aspects of the government must be fully transparent and accountable to the people. No exceptions, including, if not especially, the Federal Reserve,” Musk wrote.
Musk is a longtime critic of the central bank and has called out its decisions on monetary policy as well as claiming the Fed’s workforce is bloated.
This is wonderful news. Because what we have been doing for decades is clearly not working.
The Federal Reserve system is designed to create debt, and the income tax is designed to service that debt.
We find ourselves on an endless hamster wheel that becomes more painful with each passing year.
The charts that I am about to share with you tell a very clear story.
The primary reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountain of debt in the history of the world. Once upon a time the United States was the wealthiest country on the entire planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
When President Woodrow Wilson entered the White House in 1913, the U.S. was less than 3 billion dollars in debt.
Now we are 36 trillion dollars in debt…
This is what a central bank is designed to do. Most people simply do not understand this.
We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore.
It is time for a change.
Sadly, Americans have also accumulated the largest mountain of household debt in the history of the world. The following chart which comes directly from the Federal Reserve shows the growth of household and non-profit organization debt over the years…
Of that amount, more than 18 trillion dollars of it is household debt…
Americans’ household debt levels, including credit card debt, rose to new all-time highs in the fourth quarter of 2024, according to a report by the Federal Reserve Bank of New York.
The report showed that overall household debt increased by $93 billion to $18.04 trillion at the end of 2024, an all-time high. Credit card balances rose by $45 billion from the prior quarter to reach $1.21 trillion at the end of December, which is also a record high.
We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to purchase our vehicles, and we even pile up debt to buy holiday gifts and to purchase groceries.
The American people want to hear that better times are ahead. But under the current system the only way to give the American people “better times” is to crank up the debt spiral to an even higher level.
That is the approach that our leaders have been taking for a long time, and it is madness.
When you add up all forms of debt in our society, it comes to a grand total of more than 100 trillion dollars…
We are literally committing national suicide. I wish that I could get more people to understand this.
30 years ago, the total amount of debt in the system was less than 20 trillion dollars. Now we have surpassed the 100 trillion dollar mark.
We are talking about a financial bubble that is unlike anything that the world has ever seen before. If we continue down this road, our children and our grandchildren would have no future.
When people hear words like “billion” or “trillion” they tend to tune out. But that is a mistake.
There is an enormous difference between a billion dollars and a trillion dollars.
Just how big is one trillion dollars?
To answer that question, I would like to use an illustration that I have used in my books. If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
Yet somehow we have piled up more than 100 trillion dollars of debt, and our financial status just keeps getting worse month after month after month.
If we want to get free from all this debt, we have to abandon the system that created all of this debt in the first place.
We need to abolish the Federal Reserve, the IRS and the income tax. We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.
But it is time to turn out the lights because the party is over. The good news is that change is in the air.
The answer to 1913 is 2025, and those that are attempting to dismantle the current system should be applauded.
Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
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