economic failure

The Hydra Monster

The Hydra Monster (4/13/2011)

On Friday Americans will repeat the annual ritual of paying taxes. Local television stations will provide live coverage from postal offices near closing time; editorializing what we “must” do to pay our taxes. Obediently most all of her citizens will have complied and the monster of government will continue living, and regardless of attack she cannot be killed through starvation or even radical cuts. Valiantly some men are trying like Congressmen Ron Paul and Paul Ryan, but attempts to shut down the government and truly kill the monster to save future generations are met with mockery from the press and she continues to live.

Sadly, the Hydra Monster lives at all levels of our lives. We start with our paychecks by enslaving ourselves for the first three to four months of the year to pay Federal income tax (20%) and FICA (7.65%). Sadly, most people ignore the 7.65% raise they would receive if employers did not have to pay taxes “on their behalf.” In Georgia I have a state tax of approximately 3% and there are the other taxes my employer pays instead of paying me: SUTA and FUTA. Adding it all together nearly 40% of our paycheck is gone. In November most local municipalities seek property taxes on those who own real estate, amounts of $5-$15k are averages in Volusia County (let’s assume 10% of income). With every purchase comes sales tax: 6.5%. Adding everything together comes to 55% of earnings. Of course, there are countless fees and taxes on phones, internet, licenses, and registrations further driving up costs.

Taxes anger me because the Hydra Monster called government relentlessly feeds itself on the backs of all men and abusively spends the collected monies. At the national level the monster is so large the President readily acknowledged during his promotion of healthcare fraud and waste in Medicare comes to $1 billion, but the monster lives on. Locally governments build multi-million dollar firehouses on prime commercial property and create pension plans to allow productive citizens to withdraw from the workforce at early ages. In Nassau County, NY policeman earn $100k after five years and are entitled to hundreds of thousands in annual retirement benefits!

Our country is dying, consumed by the Hydra Monster. No matter how hard our heroes try to cut a head she will live on, breathing fire against her people, growing meaninglessly, and adding more heads to become ever more pervasive and invasive in our lives. Radical change is required to defeat the Hydra Monster, only banded together can she be killed. Paying taxes this week is a sad offering to the misery befalls man but will make the Monster stronger.

Death and Taxes

Death and Taxes Redux (4/13/2011)

Attending funerals I reflect on death, and although inevitable we deny our mortality one statement that intrigues me is the saying, “Only two things are known; death and taxes.” I know with certainty I will die and everyone around me will die, someday. Of course cause of death cannot be predicted but risks associated with death can be minimized and each of us tries to live with a goal of prolonging life and we fight death with all of our might but cannot stop its inevitability. Taxes, however, are not an absolute, but we evolved to accept taxes part of our being, just like death. Instead of continually working toward ending this other ‘absolute’ in our lives our society seems willing to perpetuate this self-destructive mechanism upon ourselves.

Taking a step back, maybe a better word for tax would be “privilege payment”. We pay for the privilege of living in a civilized society, and this argument could be made throughout human history. Most of us are willing to contribute a nominal amount of our individual efforts to support the purported common good of the society in which we live. I accept there is a cost to civilization as I expect infrastructure for safe water, sewage disposal, defense, and transportation.

Regardless of the specifics of the individual line items that we agree to tax ourselves for, we should constantly examine the necessity. I choose to minimize the risks I take in my daily life, exercise, eat well and therefore am hopefully prolonging my life and cheating death. I argue that we no longer do the same regarding taxes and instead readily acquiesce to taxing our individual efforts and allowing the state to control and disburse them. I assert we have voluntarily enslaved ourselves to an entity that we may not be able to escape.

Death is inevitable; the process of self-destruction through taxation is not. Taxes are acceptable when presented with a true cost and benefit analysis, a clear exit strategy from the tax, and a method to provide for checks and balances against a tax. If you were taking an inventory of your personal health in an effort to ensure you were prolonging your life you would question every risk, every activity, and eliminate those that are harming you. This same analysis must be performed frequently and regularly regarding taxes. We must question every dollar that is spent and be willing to take tough measures to eliminate waste, just as you would do personally.

April 17, 2011 by admin Big Government taxes

I am Angry

I am angry because it appears no one knows what is going on around them with deficits, rising fuel prices, Islamic radicalization, and Middle East uprising. The most twisted issue is an American society willing to tax food, clothing, and shelter, at the same time as supporting 44-million Americans on food stamps all while watching media celebrities like Charlie Sheen make fools of themselves. It cost an extra “Andrew Jackson” to fill my car today and the mainstream blames fuel prices on the Middle East, but that’s far from the truth. A middle-school look at the readily available data shows a more fundamental reason for the rise, one destroying our lifestyle and future.

Rising fuel prices are simply attributed to three factors: monetary supply, supply and demand, and speculation. Speculation is based on fear in the market which is driven by political unrest around the world. Supply and demand is a direct consequence of emerging economies, hurricanes in the Gulf, or destruction of Middle East oil assets. Although the Middle East uprisings are dominating news reports daily, the current rising prices are truly a function of monetary supply. Fed Chairman Ben Bernanke speculated on QE2 in August 2010 and it was officially announced November 4, 2010. Each week I graph crude oil prices and up until August prices were relatively stable, but immediately following QE2’s speculation fuel prices started to rise, increasing more after the official announcement. With the devaluation of our currency, OPEC announced a desire for higher fuel prices to effectively capture the same income. Today’s Middle Eastern uprising is a secondary issue exacerbating the underlying cause of rising fuel prices. Blame our government and central bank, not those fighting for civil liberties.

The solutions being thrown around by political pundits from both sides make no sense and demonstrate politics’ need-to-please, not realistic solutions. Opening strategic reserves is anecdotal to a giving a cancer patient a band-aid. “The Long Emergency,” as James Howard Kunstler writes, has begun and political unrest, failed monetary policies, and a third-world desirous of the same excesses we enjoy will continue to drive oil prices upward. I am angry pop-culture nonsense Tom Brady’s hair and Gaga’s breast milk ice cream exploits resonates more importantly than the collapse of our currency. On November 10, 2010 I wrote, “Gasoline should easily reach $3.40/gallon by April as OPEC is demanding a minimum $100/gallon.” I am angry no one listens.

March 25, 2011 by admin Big Government Muslim Obama sheep Stupid People

Destroying Futures

Imagine earning $30,000 (3 Trillion) per year but having bills and obligations of $42,000 (4.2 Trillion) per year. Additionally, let’s assume you have a spouse and two children with wants and desires. With your income falling short you would know radical changes in your lifestyle must be made and if you are a Dave Ramsey fan you know every expenditure would have to be considered and nearly one-fourth must be cut. However, the kids will complain if you cut their movies, food, school activities, clothes and even iTunes budget (government spending). Your spouse does not want to discuss the issue because she feels the problem will go away, as if by magic, and there is no reason to upset the kids (political debate).

However, there is an answer: debt. Of course, a loan to create a source of “income” can be created (deficit spending). For instance, a second mortgage on your home could fund the shortfall and maybe allow you to buy a new big-screen television or car, a hugely popular decision at home. But this only works for a while, quickly you discover the interest only payments add another $500 per month to your obligations, thus you are now using the debt taken on to pay for the original shortfall and the new debt (treasury auctions)! You have looked for ways to increase income, but the economy isn’t growing and no one is hiring (tax revenue). Your anxiety increases because you know this cannot keep going and bankruptcy may be the only way out.

One day however, your neighbor Fred (Federal Reserve) knocks on your door and explains his multi-level marketing business is doing well and as long as he keeps getting new people involved his success will grow and he would like to help you. Hesitantly you agree to his proposal: he will paper over your debt (purchase bonds), and you can repay him in 30-years. Thoughtfully you think his proposed near zero interest rate and 30-year offer has to work. At age 50 it is even unlikely you will be here in 30 years to deal with the repercussions. With a wink, Fred explains your children will assume the entire debt, with interest. After contemplation you feel it is better to risk your children’s future than to reign in your lifestyle today, and hurt their feelings, and since they do not get an opinion (can’t vote) they will never know. Like a deal with the devil, you know there is no way out.

March 4, 2011 by admin Capitalism Depression Great Recession preparedness taxes

Wisconsin

I debated whether to offer an opinion regarding Wisconsin, but knew I could not let go of this protest. I am impressed with the 65,000 plus protesters that believe in something strong enough to brave the cold. More important to see debate with such passion engaging on our own soil gives me hope toward future revolution against our government and the tyranny we face. It appears the press – from the left and right, have managed to blur the issue at hand as there only appears two possible opposing views when tapping MSNBC or Fox News. I hypothesize three parties are now at war in this country: Public Servants, the Ruling Elite (executive pay), and the Private Sector. Thus, a two pointed perspective does not work and furthermore the issue at hand is not about trimming union rights, but re-aligning public servant compensation.

Austerity measures will generate class warfare and in this Great Recession the compensation of the three parties has diverged greatly. Executive pay remained safe and increased greatly and Public Service payrolls have increased far greater than private payrolls. On the other hand, the Private Sector has suffered irreplaceable job losses, flat wages and lives in fear of a pink slip delivery tomorrow. At the same time the Private Sector is asked to pay more income tax, more sales tax, more property tax, and more fees to pay for the perpetuation of Public Service compensation programs and to bailout reckless executives who lost gambling bets against the masses during the debt fueled frenzy.

Ancient Rome succeeded through an ever expanding territorial economy fueling the wants and desires of Caesar. The masses found relief through entertainment at the Coliseum and a sense of safety, but yet traded liberty for trite compensation. Similarly, America is like Rome; rich Senators, a small ruling class, and wealth obtained for a few due to the destruction of others. Our masses are entertained by media and sports, not taking time to understand the reason behind the need for change. Like Rome our public servants are protected by a never ending spigot of tax dollars and turn against the working class and income earners for whom they supposedly serve.

It is forgotten that our children will ultimately pay the price. Something is happening in America right now, and it started with the bursting of the debt bubble three years ago. Denial has not worked and protests will become more common, maybe leading to revolution. I am concerned for my children’s future and cannot imagine the tax burden, inflation, and tyranny they will face if we do not stop opposing the protesters in Wisconsin.

March 4, 2011 by admin Big Government Depression Great Recession Health care taxes

Dad’s Money

Dad’s Money (2/23/2011)

Nightly we are bombarded by incomprehensible numbers regarding Federal government spending: $14 trillion debt, $4 trillion budget, $1.5 trillion deficit and $180 billion interest payments. There are too many zeros on each number to print in this column, twelve each for the debt and deficit. Sadly, like gamblers in Las Vegas using colored poker chips we have lost sight of reality because no one touches the monies. As taxpayers our view of the government has become like a child’s view of Dad’s spending. A five-year-old watching his father has no idea where he gets money, but feels there is an endless supply. Sometimes Dad reaches in his pocket and uses green currency or coins like nickels and pennies. Other times Dad uses colorful plastic cards and swipes them in machines, and Dad has a book with checks where he illegibly scribbles names and amounts and declares the bills are paid. Of course, he also logs on his computer and banks via the web. Similarly, the government engages in a playful deception of payments, using computers, checks, and cash cards to move monies around.

Dad always seems to have money and as five-year olds we know he leaves each day and goes to work to make more. A connection between work and money seems obvious because doing chores sometimes brings allowance to children. As young children we always seem to have food, clothes, and toys. We don’t know how the lights operate or anything about mortgages and rent, insurance, gasoline, or car payments. However, we know dad takes care of us and most citizens view the government the same way with no understanding of tax income or expenditures

Right now we are enjoying historically low interest rates, easing interest payments on our $14 trillion debt. If interest rates return to historic norms of 6% the payments will increase to approximately $840 billion, nearly 23% of our current budget. Like a five -year-old trusting Dad to make money and spend money to care for the family we believe our elected trustees will do the same. However, re-election drives decision making, not the tough longevity of parenting and sadly our federal government is recklessly spending money. Congress must be held accountable for the deficit spending because they are bankrupting our country. Every parent and grandparent should know what is happening and encourage Congress to stop today’s fiscal negligence. Congress is punishing our future generations with inflation, high interest rates and more taxes. Sadly a five-year-old cannot stop Dad’s recklessness, but as a voter you can stop Congress.

February 23, 2011 by admin Big Government Great Recession taxes

1970s versus 201Xs

The kids wearing plaid pants and striped shirts with long hair watching the “Brady Bunch”, “Adam-12” and “Emergency” are the men and women running our government today. It seems these “kids” have no recollection of the politics or monetary policy of the 1970s, instead only remembering the Bicentennial, bell bottom jeans, and Nerf footballs. A careful examination will show a decade that suffered an energy crisis causing an immediate recession. The same happened in 2008 when oil prices rose rapidly to $147/bbl driving our economy over a cliff to financial Armageddon. Nixon removed the Gold standard in 1971, and the Federal Reserve enacted new monetary policies to bring recovery. No radical method helped Nixon or Ford, and a hopeless Democrat was elected; promising prosperity and unable to deliver as we added the word “stagflation” to our vocabulary. As America entered the 1980s, after seven years of lackluster growth interest rates rose rapidly crushing the housing recovery. I remember my own parents struggling with 18% rates, job loss, and our manufacturing shift overseas as Chrysler sought a bailout and American’s learned “Made in Japan” meant quality compared to our union produced assembly lines.

For ten years inflation was high, reaching 13.5% in 1980 and unemployment soared above 10%, but like today the same policies were held: Federal spending never slowed, and tax increases for the rich were proposed. Gold prices accelerated and fueled speculation the end was near and the economy would not survive. Talk of wind mills, solar panels, energy conservation, and self-sufficiency abounded. Reviewing newspapers from the early 1980’s it is easy to spot Tip O’Neill’s 100-plus Democrat majority was adding to federal spending faster than the revenues received, not unlike the recent Pelosi dynasty. I found one article stating for every 1% increase in unemployment Federal spending deficits increased by $25-40 billion during the 1982 recession because unemployment drives down revenue and causes government to spend more.

Many argue the cornucopianism of Ronald Reagan saved the economy through supply-side tax cuts. I would argue a direct correlation should be made between recovery and oil prices as the UK’s discoveries of North Sea oil increased supply and probably fueled the recovery of the 1980’s and 1990’s. The 1970’s are remembered for Disco and parties, instead we should truly understand the damage of failed economic policies. We are three years into the current economic decline and the kids I knew now run Congress; I would offer 1970’s history provides more answers than the academic speculation used today.

February 2, 2011 by admin Big Government Depression Great Recession Peak Oil taxes

My Buddy Neil (1/26/2011)

My buddy Neil is a great guy and well entrenched in his opinions as he is in his mid-70’s. One topic which always leads to vigorous, friendly disagreement is politics; as a senior citizen Neil enjoys and takes advantage of many of the programs offered him, like Medicare and Social Security. Overall, he feels entitled to benefits available to someone like him who worked hard all his life. I guess I can’t blame him, but I grew up being told social security would not exist when I needed it. In fact, it is now broke and taking in less money than payouts. Sadly, the government “borrowed” against the Social Security trust fund and there is nothing but journal entries reflecting what should be a solid program.

Meanwhile I, in my mid 40’s, feel like I carry the world on my back to produce and earn income, not only for my own family, but due to taxes for many other people too. Neil and I have conflict on what we see as the role of government. Last week we discussed politics: Obama, Fox News, Democrats and Republicans. In the course of conversation Neil commented he didn’t realize I write this column every week, thinking I was an occasional guest appearance. He challenged me, wondering about my position and I explained I try to hold a middle ground and this earned a respectable smile.

I quickly reminded him I don’t have cable television and therefore the opinions I write are original. He asked how I see the world, “left or right?” I replied I have realized during the last 70 columns I am a libertarian and my friend’s eyes opened wide whilst asking me to define myself further. Suddenly I found myself defending what I would call the anarchists view of libertarian politics. Instead, I explained my definition of libertarianism is quite easy, “we need nothing more than 7 of the 10 commandments and they serve as a guidebook for libertarianism.” In short, in the middle, I believe less government is good; I can make better decisions than anyone else can on my behalf, and we should not legislate against stupidity. As the “Man in the Middle” I try hard weekly to maintain a balance and offer original opinions and insights. By the way I sent Neil my last 70 columns and look forward to debating what he reads.

January 26, 2011 by admin General Rant

Bob Cratchit

My Christmas week column

Without much thought most of us can recite the plot of Dicken’s “A Christmas Carol” and the various scenes of ghostly Jacob Marley torturing the soul of Ebenezer Scrooge. Dicken’s indictment of 19th century capitalism is just as accurate 167 years after publication. Although in denial, most Americans have more in common with the hurting Bob Cratchit and family than the wealthy, out of touch Ebenezer Scrooge this Christmas.

I challenge you to consider how your Christmas four years ago compares to this year and what concerns are facing you, your family, friends, and our country. Christmas 2006 we had never heard of candidate Barak Obama, the national debt was 8.5 trillion versus 14 trillion today, 258 U.S. soldiers had died in Afghanistan versus 1437 total through today, and unemployment was 4.6% compared to the current 9.8% with over 8 million jobs lost in just the last two years. Personally, Christmas 2006 was incredible as my house was “worth” far more than I had paid, and I was a believer in the infinitely upward movement of American economic growth. Two years of unemployment wiped out my entire career’s worth of wealth building. Regardless of your opinion of the financial crisis, our political parties, or presidential administrations this Christmas is different.

Last week at Wal-Mart my wife spoke to a cashier who had her heat fail and was using space heaters to warm her home. With their 3-year old sharing a bed to stay warm she said the house dropped to the same temperature as outdoors, 15oF. I assert most of us are like Bob Cratchit, just surviving to stay warm and struggling to feed our families. The debt crazed, home equity financed Christmas is now the Ghost of Christmas Past. This year the Ghost of Christ Present has brought prudence, fear, and common sense upon America. State employees, teachers, and educated engineers and managers wonder if tomorrow will bring a pink slip or another week of toiling hours just to keep a job, unappreciated by the likes of Scrooge. Bankers however will bask with overgrown golden turkeys, excesses of food and thermostats set at 74 oF unlike 60 oF for the common folk. And what about the third specter? The Ghost of Christmas Yet to Come will more than likely deliver further pain and woe to already hurting families. “When people lose everything and they have nothing to lose, they lose it.” – Gerald Celente

December 27, 2010 by admin Depression Great Recession preparedness

The Twilight Zone

The Twilight Zone

My buddy Noel and I were talking this week about the rising cost of fuel, unemployment, President Obama’s actions in Asia, rising gold prices, crashing housing prices, and “Dancing with the Stars”. I said it felt like we were in the “The Twilight Zone”. You see, Noel and I are the same age as each other, born in 1967. I commented that we grew up with Gene Cernan hitting golf balls on the moon and promises of us living there someday. We were influenced by TV re-runs like “The Brady Bunch”, “Leave it to Beaver”, and “Andy Griffith”. The 1970’s had the gas crunch, Nixon going to China, the Bicentennial, Jimmy Carter, and the Iranian Hostage crisis. As we entered high school Reagan protected us from the Soviets, and the Big 3 auto companies saved themselves from the Japanese. In college Bush 1 continued the legacy of Reagan and we graduated to a healthy job market. Clinton first scared us with Hillarycare and reinvented himself to ultimately steer a healthy economy where everyone talked dotcoms, and knew Peter Lynch’s name; investment returns less than 15% were despised. Even as we partied like it was 1999, life remained good, our careers flourished, and although terrorism was new to our shores, we all jumped on the real estate rocket ship.

Today I feel like a character in the Twilight Zone: I lost my job, like Donald Trump sold real estate at a loss, shed assets like “The Biggest Loser”, have watched two elections with dismay wondering how some get reelected and others lost, and been puzzled by the bank mess and healthcare. On television gay characters perpetuate, obesity delights, and sitcom dialogue offends. I used to love air travel, but George Bush created a Gestapo security force requiring me to show papers, remove my shoes, and in the latest round choose radiation or molestation to board a plane. My president claims Islam was the light of the world, but yet the followers of this political radicalism have killed over 3,100 Americans in the last decade, many on our own soil. America manufactures nothing, we regurgitate services, and our economy is fueled by debt and consumption; there are no jobs and it will take 20 years to recover the 8 million lost over the last three years. Last week the central bank announced it will print money until our economy is fixed, another crazy scheme parallel to the Fed’s efforts of the Great Depression. My only explanation is we are waiting for Rod Serling to step from behind a tree saying, “That’s the signpost up ahead – your next stop, The Twilight Zone!”

November 20, 2010 by admin Big Government General Rant Obama