Baltimore — (TFN): Maybe it is time we took a lesson from the French. Not the new-age work-fearing, café-going French, but the old-school, take-back-the-country kind of citizens alive during the French Revolution. Those folks knew how to stand up for themselves.

History buffs will be quick to point out the similarities of late-18th century France and modern America. There was a financial meltdown, runaway government spending and a constituency fed up with aristocratic fiscal shenanigans.

Minus the heads on pikes (give it a year), the situation is eerily similar to today.

Whether it is on the federal, state or local level, government ineptitude is  at all-time highs throughout the country. The powers that be want our guns, our freedom and most importantly, our money.

Whether they know it or not, the nation’s most populous states are on a fast-track to bankruptcy. California gets the most press time, but big-hitters like New York, Pennsylvania and Maryland deserve just as much space on the front page.

There is big trouble brewing.

At home in Pennsylvania, our governor took time last week, not to wish the state a Merry Christmas (that would be hell on poll numbers), but to warn us the state’s financial future looks very, very bleak.

Governor Rendell tells us once Obama’s stimulus money runs dry in the next year or so, funding for the programs that keep the state moving forward will dry up. Unless new revenue sources are created, upcoming budgets will have more holes in them than O. J. Simpson’s murder defense.

What’s his answer? Gambling and blackmail. What else would you expect from the raspy talker from Philadelphia?

Pennsylvania’s governor is using the state’s workers as pawns in a high-stake chess match with the legislators in Harrisburg. Last week, he set out a January 8 deadline to get a tax-heavy gambling bill passed.

If the state’s congress does not legalize table games by that date, another 1,000 workers get the axe.

How’s that for the aristocracy sticking it to the citizen?

*** If you have been watching the headlines, you know just about every cash-strapped state has plans of opening its borders to slot machines and gambling. It’s a great way to shake out the pockets of citizens without imposing a new tax.

It’s still stealing. But it is a much more sinister way of doing it.

Beyond gambling, legislators have their eye on an even bigger tax source… the Internet.

Right now, the World Wide Web is a veritable tax haven for shoppers. Sure, a few shoppers here and there are forced to pay state sales tax, but if you want to save the extra 5% to 10% you’d pay at a brick-and-mortar joint, just a few clicks will get the job done.

Of course, state governments do not like the idea. Billions of dollars in taxable sales are crossing state borders, yet very little of it is getting taxed. Even when the law states web-purchased goods are supposed to be taxed, the vast majority are not.

As of now, Internet tax laws are virtually impossible to enforce and large retailers are getting better and better at taking advantage of the many loopholes.

But that will change. You can count on it.

As state governments run out of easy revenue sources, they will turn to the Internet. Over the next twelve months, we will see an increasing amount of legislation aimed at getting more of your money out of your wallet and into their hands.

Even scarier, on November 1, 2014, the Internet Tax Freedom Act is set to expire. If not renewed, Web-vitals like email access and bandwidth could be opened up to federal and state taxes. Taxing these entities souned preposterous when the law was created in 1998, but now that Uncle Sam is in debt like never before, you can count on Washington getting its greedy hands on this one.

Soon, the Internet will no longer be a tax-free zone.  It is not good news for investors. It’s not good news for shoppers. And it certainly is not good news for the American economy.

*** Let’s talk gold. After early-morning gains, the precious metal just hit negative territory once again. With gold now trading for $1,100 an ounce, its speculative value is dwindling, but its attractiveness as a long-term store of security is rising.

As noted above, there is no doubt taxes will be on the rise in coming years. Estate taxes, short- and long-term capital gains and just about anything related to real wealth will be eyed by a greedy, desperate government.

While they will do their best to shave a few pieces off your bullion, gold is a great way to protect yourself from a government gone mad. Now that prices have come down out of sky-high territory, now is a good time to grab some gold, stash it in the basement and walk away.

But don’t go too far. You may need the shiny metal sooner than you think.

Before 1971, in the Bretton Woods monetary era, major economies used the dollar as a reference of value. The greenback was a North Star – helping businessmen and investors find their way. The U.S. dollar was reliable because it was tied to gold, which the U.S. Treasury promised to deliver to any country at a rate fixed at $42 an ounce. Then, on August 15, 1971, the U.S. Treasury reneged. Egged on by modern economists, the last link with gold was cut. Governments, investors and businessmen could still look to the dollar as a point of reference, but good luck to them. This disgraceful mischief caused even the stars to wobble.

…To make a long story short, a bubbly supply of cash and credit led to bubbly markets. The U.S. and major foreign stocks market bubbled up to all-time highs in January 2000; then they headed down. In inflation adjusted terms, most never recovered. Then, in 2003, it was housing’s turn… followed by emerging markets… and lately, oil and commodities.

Sure, the capitalists are greedy. And sure, many of them make mistakes. But with feds rearranging the heavens, it’s a wonder they didn’t wash up more often.

But it’s not just the US, inflation rates are up worldwide, in both emerging and mature markets, says Money Morning’s Jason Simpkins:

Consumer prices in Mexico jumped nearly 5% in May from a year earlier, the biggest jump since 2004, according to Bloomberg News. The government has issued a price freeze on tortillas, cooking oils, beans and roughly 150 other items this year to ensure its population is adequately fed.

The decision surprised many analysts as it flouted the country’s president, Felipe Calderon, who has hinted that borrowing costs are already too high. Still, inflation demanded Mexico’s attention as soaring food and energy costs have resulted in what has fast become a worldwide inflation epidemic.

Soaring fuel prices pushed India’s inflation rate to a 13-year high in early June, adding to speculation the central bank may accelerate its own monetary tightenting initiative, Financial Times reported. Inflation reached 11.05% in the 12 months ended June 7, up from 8.75% the previous week, and well above the 9.82% median forecast in a Reuters poll of analysts, the paper reported on its Web site.

Earlier this month, the Reserve Bank of India announced a surprise rate increase of its own, pushing its key lending rate up 25 basis points to a full 8%. The bank also raised its cash reserve ratio – the amount of cash banks must keep on hand – by 25 basis points to 8.25% as recently as April 29.

In China, consumer prices rose 7.7% in May after inflation reached a 12-year high of 8.7% in February. China’s producer price index rose 8.2% in May, the highest in more than three years.

The problem isn’t any better in mature markets either. Eurozone inflation hit a 16-year high in May, as costs pushed inflation up 0.6% to an annualized rate of 3.7%. High commodity costs fueled the increase, as food costs jumped 6.4% in May up from 6% in April. Energy prices soared 13.7% year-over-year on the back of record high oil, up from a 10.8% increase the month prior.