When I Grow Up

Today, I will decide what I will be when I grow up, and tomorrow and each day thereafter, I will also decide what I will be when I grow up.  It's a process...

Beality

Stock Exchange for Governments? What an Idea!

"I propose the creation of a new stock market in the United States. It would include 50 individual securities, each representing one of the 50 states. People would be able to "bet" or "invest" in states on an exchange.

Such a visual, quantified representation would surely put some pressure on our elected officials to act more fiscally responsible.

If they didn't, they'd risk being ousted, just like a CEO of any major company. Or just like any one of the now "ex" European heads of state.

Doing so would allow us to invest in the performance of a state's internal and external representatives. These stocks would not represent the underlying value of a state, but rather, they would be "Sentiment Tracking Stocks," tied to the financial performance of each state."

Better Add An “F” to Europe’s Debt Contagion, published Tue, Nov 29th, 2011 by Karim Rahemtulla

What the Government Will Never Tell You About the Debt Crisis

"I have no illusions about the turmoil of a real government shut down. It's ugly. For some period of time, it would be hell for millions of people. I don't want that. I'm sure you don't, either. No one wants mass economic hardship. I'm fully aware we're talking about people's lives here…

But if the government shrinks 45% starting August 3 and remains permanently smaller, the hardship would be temporary. We'd come out the other side of it a better, stronger, wealthier, and maybe even less arrogant nation.

Simply reducing the deficit wouldn't mean you'd pay less in taxes – so it's not that we'd all have more money in our pockets starting August 3. It's that there'd be less government, which means less government meddling in the economy. There'd be fewer parasites and more potential producers. We'd be freer to create new wealth and grow new businesses. A little more freedom would go a long way.

It would be good to have more productive minds looking for ways to create new wealth with fewer government impediments to doing so. It's much better than having those same productive minds rotting behind government desks, meddling in other people's lives, and destroying wealth instead of creating it.

But I do think the debt ceiling will be raised by August 2. Among other reasons for this belief, there's something you'd learn in the ensuing crisis if the ceiling was not raised, something nobody wants you to learn…

You'd find out government is the problem not the solution, and that we'd all be better off with a lot less of it.

That's why Treasury Secretary Geithner says it would be a "catastrophe" not to raise the debt ceiling. It's why Fed Chairman Ben Bernanke says it would be "calamitous." It's why Komrade Obama says it would be "financial Armageddon." They're all trying to scare you.

Everybody thinks people would starve without the big, strong government to feed them. It's not true. We'd be a more productive, dynamic, and wealthy society. You'd see this happen right before your eyes if a large portion of the government shut down permanently.

But nobody in government wants you to see that.

Our economy doesn't suffer from a lack of govern-
ment intervention. It suffers from too much government intervention. The solution to too
much government intervention in the economy isn't more government intervention. It's less government. That's what you'd get on August 3, without a higher debt ceiling.

Laying all my cards on the table, I freely admit that I relish the potential shutdown of huge swaths of our bloated, oppressive federal bureaucracy. And I relish the prospect of hundreds of thousands of government employees, people with perfectly productive minds, some of them quite brilliant, making the change from parasites to producers… though I realize it's unlikely to happen.

Imagine for a minute the unleashing of entrepreneurial energy in the wake of a shutdown of 45% of the federal government. The U.S. government is filled with intelligent, highly educated, highly trained people. Many are experienced leaders. Many are more than capable of positively heroic feats of entrepreneurship, feats we'll never witness if they don't leave their government jobs and get to work.

Frightened children like Obama, Bernanke, and Geithner see scary monsters everywhere. Adults with vision and experience see opportunities. I promise you those opportunities are real. They exist. If the government wakes up August 3 and can't pay 45% of its bills, it won't be long until many of those opportunities are seized and exploited, to the benefit of us all."

What the Government Will Never Tell You About the Debt Crisis, by Dan Ferris, editor, The 12% Letter,Saturday, July 23, 2011

Inflation Doesn’t Just Happen

In 2003 the renowned Swiss professor Peter Bernholz published a very practical book: Monetary Regimes and Inflation. Bernholz’s most important findings:

1. “The political system tends to favor an inflationary bias of currencies. All major inflations have been caused by princes or governments.”
Let me make this important finding even clearer: Politicians are printing money if they are allowed to do so. No wonder — the government is the main profiteer from inflationary episodes! Inflation is nothing less than tax hikes in disguise.

1. “All hyperinflations in history have occurred during the 20th century, that is in the presence of discretionary paper money regimes, with the exception of the hyperinflation during the French Revolution, when the French monetary regime, too, was based in a paper money system.” 
Given the abundance of hyperinflationary episodes — Bernholz discusses 29 of them — the still widespread belief in the advantage or even necessity of paper money being guarded by central bank bureaucrats is beyond insanity.

1. “Monetary regimes binding the hands of rulers, politicians and governments are a necessary condition for keeping inflation at bay.”
Okay, that’s how it should be. Unfortunately, in the U.S., in Europe and elsewhere there isn’t a strong enough public movement to stop the current reckless monetary and fiscal policy. Inflationists like Ben Bernanke are running amuck, without any opposition in sight! Therefore I have to conclude that “binding the hands” is next to impossible.

1. “Hyperinflations are always caused by public budget deficits which are largely financed by money creation.”
That’s an interesting finding, isn’t it? It makes it absolutely clear just how important fiscal policy is in the inflationary process. With budget deficits in the U.S., Japan, and most European countries totally out of control since the latest recession, this is a very strong argument for an inflationary endgame in the making. But this observation also brings up an important question: With budget deficits on the rise for many years, why hasn’t inflation become a major problem yet? There are two answers … First, we’ve already had severe inflation! During the late 1990s it came in the form of a global stock market bubble. And after that, as a real estate bubble. The second answer is taken from Bernholz’s book:

1. “A continuous flow of new money into the economy leads to inflation only after a more or less extended time, if the old money is also used abroad.”
Since the dollar and the euro are vastly used abroad, inflationary pressures have not yet come to fruition. But the course has clearly been set. Let me close this elaboration on inflation and government debt with one last quote: 

1. “A real budget deficit cannot be maintained permanently. The government must either reduce it or the inflating bad money will be substituted in time by the good money and the base of the inflation tax will be eroded.”

Claus Vogt, Money and Markets, Wednesday, June 8, 2011 at 7:30 am

True American Health

We have the most expensive--not the best--health care in the world.  The World Health Organization rated the U.S. 37th in health outcomes in the world--on par with Serbia!  In the 2000 rankings, the U.S. was near the very bottom of the top 40 nations, below Columbia, Chile, Costa Rica, and Dominica, and just above Slovenia, Cuba, and Croatia.  And it is worse today.

Andrew Weil, M.D., You Can't Afford To Get Sick, Plume Publishing, 2009

I can't help it...It's the truth!

"The U.S. government has never succeeded in collecting more than about 20% of GDP in taxes.... Our GDP is roughly $14 trillion today. So no matter how you organize the tax base, you end up with $2.8 trillion to spend. And you can't spend that much, because you've got interest payments and (gasp!) debt repayments to make.

Yes, that's right, America: You borrowed all this money, and our creditors actually expect to be repaid. Interest payments and principal reductions of our debt will have to come first and should total around $500 billion each year. If interest rates go up, we'll have to spend more than this. Sorry. That's the price we have to pay if we expect to maintain control of our economy and not allow our children to end up as house-boys and maids in Shanghai. That leaves us with roughly $2 trillion to spend.

Here are our current expenses: Medicare and Social Security are now spending $1.5 trillion and, if left alone, will quickly grow to far more than the entire tax base. The military spends over $700 billion (that we know of) each year. Domestic social programs (food stamps, Department of Education, etc.) cost $500 billion. Federal pensions cost more than $200 billion a year. So... we've got $2 trillion to spend... but our bills are running to $3 trillion per year, and they're scheduled to increase, substantially.

Thus, we will have to cut at least $1 trillion from the budget – immediately – and be prepared to continue cutting on discretionary spending and the military for at least the next decade. That will mean cutting about one out of every three dollars the government spends today. Unless we balance this budget, there's no longer any doubt our currency will be destroyed, our savings lost, and the assets of our country stripped by foreign creditors."

Porter Stansberry, The S&A Digest, April 22, 2011
  

Unsustainable!

"For the first time in modern history, the government is paying out more money, in cash, to citizens, than it is taking in taxes. We spent $2.3 trillion on direct benefits to taxpayers last year, while the government's total income was only $2.2 trillion. Roughly 60% of all Americans now receive some significant financial benefit from the government. Meanwhile, less than 50% of all people pay any federal income taxes. And roughly 10% of all taxpayers foot virtually all the significant income taxes levied."

Porter Stansberry, The S&A Digest, April 22, 2011