Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Monday, August 15, 2011

Today is the 40th birthday of the fiat currency known as the U.S. Dollar



ON August 15th in 1971 President Richard Nixon announced that the U.S. would no longer officially trade dollars for gold. Gold was worth $35 per ounce when they made this announcement. The currency had already been going thru a period of debasement for about 6 years due to the high costs of Gold and silver and the ever increasing costs of running the United States of America. Today that policy turns 40 years old and marks the first prolonged period in the last two thousand years that man has not used currency based on precious metals. Brian Domitrovic of Forbes says, this is a "new era of human history". Is he right?

Well This certainly is true. We know have gold north of $1600 and silver sitting right where Gold sat back in 1971. Is that bizarre, it should be.

Cheers,

Mike


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Friday, August 5, 2011

July Jobs Report not as good as it seems

So the July Jobs Report shows a slight increase in net job creation and a decrease in unemployment. If you google "July Jobs report" you'll see headlines like "Recession Fears Ease After Jobs Report" and "July Jobs Grow Slightly". What those articles don't tell you are the facts shown within the report itself. There were 139,296,000 people working in July, compared to 139,334,000 the month before, or a drop of 38,000.

How does that work? The government calls these folks “discouraged workers”, unemployed people who are not looking for work.

These folks are generally not included in the government’s various job measures. This shows how the unemployment figures are largely part of the plan to sugar coat the situation we're in so people will believe a recovery is still in the works. If you were to stick all those people back in the workforce you would wipe out the job creation and the drop in unemployment.

Our current administration, Our President, wouldn't how to create a job to save his life. In his mind creating new government work is creating jobs. The private sector is just another annoyance he must deal with. Those pesky capitalistic entrepreneurs that think they can create jobs if allowed to keep their own money instead of funding the machine known as the Federal Government are only gnats that need to be swiped away.

Cheers,

Mike

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Thursday, August 4, 2011

Another 513 Point Drop of the DOW

We needed to pass a Debt Deal quick, quick, in a hurry, to prevent the markets from falling.

I guess they were wrong.

After today, the market has lost all of the 2011 gains.

Are you surprised? I'm not.

Cheers,

Mike

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Wednesday, August 3, 2011

Let the spending begin!!!

Now that we have a brand new debt deal the economy should rebound right? Well the very next day the DOW Jones average fell 265 points and gold shot up $40 an ounce. Not exactly the type of reaction one would expect from a debt deal that supposedly was saving us from a catastrophic default.

Just as Washington was announcing the new Debt Deal the Bank of Korea announced the purchase of 25 tons of gold over the last two months. This marks the country's first gold purchase in 13 years. Central banks tend to buy gold when they need to diversify their holdings and are not necessarily market timed. Not only has Korea increased their holding recently but so has Kazakhstan, Russia and Thailand.

Why are they increasing their gold holding? Well I think the answer is simple. The U.S. Dollar is heading into very treacherous territory. The debt deal doesn't solve anything. NOTHING!!! The debt ceiling is going up and spending will continue to rise right along with it. To fully understand what the Congress just did, look at this graph provided by the Cato Institute.


Every single Congressman and Senator who says this deal is a step in the right direction is flat out lying to you.

If they start talking about another round of Quantitative Easing (QE3) remember you were warned. This government will continue to borrow, spend and create money until there is no value left in the U.S. Dollar.

Cheers,

Mike

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Tuesday, August 2, 2011

The Day After, how did the markets react?

So one day after the Debt Deal was reached how did the markets react to the plan that's supposed to save the sky from falling? Gold is up $40 Dollars an ounce and the DOW Jones is down 265 points. How's that for market confidence? Gold is now $1660 per oz. that's another historic high.

Timothy Geithner said, "I'm not sure whether the bitterly fought debt agreement will be enough to avoid a downgrade of the U.S. top-tier credit rating. "

Our Government, our leaders and our President seem hell bent on destroying the U.S. Dollar if it's the last thing they do. Count your lucky stars for the 24 Brave Members of Congress who voted against this plan and prepare for a fight like you've never seen before. If we don't turn this around in 2012 there is no telling how bad things might get.

Cheers,

Mike

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Friday, July 29, 2011

Debt Ceiling, Smoke and Mirrors

Most of the information being given by the MSM isn't worth spit. Do these people actually believe that we will have a financial catastrophe if the debt ceiling isn't raised? Do they really believe our military won't be paid or that Seniors won't get their checks from Social Security? The U.S. has been in default for some time. Default means you can't pay the expenses with your current income. Borrowing more so you can continue to pay doesn't change that, it only prolongs the inevitable. Loans to cover expenses makes sense when it's justified by your projected future revenues being great enough to make up for up for it, but how long can you get by with nothing but more loans?

Some think an increase in revenue (Raised Taxes on the rich) is the anwser. but this doesn't work either. Taxes can't be raised high enough to cover the shortfall without also hitting the middle and lower income bracket with huge tax increses. The MSM would have us believe it's only the Republicans who are being stuborn on this issue but the democrats are being just as stuborn by not actually participating. President Obama has still not actually provided an actual plan. His Press Secrestary admitted this saying to do so would be too politcally charged. Really? Does anyone have any idea where this strategy comes from? Some would so the Frankfurt School of political theory others would say it's simply a way to deflect blame. Regardless the strategy is working exactly the way it seems it was intended.

Just tonight, John Boehner got many of the republicans to cave on their principles by allowing for a rise in the debt ceiling, even though the Senate would likely table this legislation. This is a sign the GOP will now go along with whatever Harry Reids sends them. If so, Obama will get his comprimise and the ablitity to spend another Trillion Dollars now, so we can work on a Trillion Dollars in future cuts over a period of years. Does this make any sense? At least I can be proud that my Congressman
Timothy V. Johnson IL-15 voted No and stuck to his guns.

Thank you Congressman Johnson and thank you to the twenty one other brave republicans who continue to fight. The list below are the Republicans who voted NO along side two of the Presidential Candidates Ron Paul and Michelle Bachman.

Ron Paul (Texas)
Michele Bachmann (Minn.)
Justin Amash (Mich.)
Chip Cravaack (Minn.)
Jason Chaffetz (Utah)
Scott Desjarlais (Tenn.)
Tom Graves (Ga.)
Tim Huelskamp (Kans.)
Steve King (Iowa)
Tim Johnson (Ill.)
Tom McClintock (Calif.)
Mick Mulvaney (S.C.)
Connie Mack (Fla.)
Jim Jordan (Ohio)
Tim Scott (S.C.)
Paul Broun (Ga.)
Tom Latham (Iowa)
Jeff Duncan (S.C.)
Trey Gowdy (S.C.)
Steve Southerland (Fla.)
Joe Walsh (Ill.)
Joe Wilson (S.C.)

Half of these folks are freshman!!!

Just moments ago the Senate did in fact reject the measure 59-41. I guess we'll see where it goes from here.

Cheers,

Mike

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Tuesday, July 26, 2011

I wrote the check even though the money isn't in the bank!!!


I added $161,650.00 dollars to by budget so I could purchase a new Porsche 911 Turbo S. It's really a sweet ride, I've always wanted a 911 for as long as I can remember and now I'm finally going to get it. I put it in my budget and I wrote a check for it, dated August 20th. I know the money isn't in the bank and I know the money will not be in the bank on August 20th but I've committed to buy the car anyway so I guess it can't be stopped now unless I go into default.

These things can't be helped. The bank will need to increase my debt limit so I can make good on the debts I've incurred.

Wish me luck..

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Monday, July 25, 2011

Update to my point of view on a balanced budget amendment

It has come to my attention that the use of this letter (From my previous post on 7-20) might not be having the effect I planned.  I hoped that using material from a left leaning source would help show the commonality between our points of view.   As I wrote this I assumed that most readers would understand the natural aversion to changing the Constitution that any Constitutionalists would have.  I understood that many of the economists who wrote this letter lean to the left, I figured it would show both sides of the argument which agree, but what I failed to calculate was the mass support such an amendment would have.  If your reading my blog you probably lean to the right and should realize I do as well.  I'd like to believe you don't support a balanced budget amendment just because some leftist economists disagree with the idea.  I don't make a habit of supporting something just because the left is against it. There are many reasons why I hold the view I do, some of the reasons coincide with the views of these economists and some do not.

I personally believe in a free market economic system which takes controls away the Federal Government.  This means in my personal view anything that puts more control on the economy is a bad idea.  Murry Rothbard once wrote, "balancing the budget by increasing taxes is like curing influenza by shooting the patient."  A balanced budget amendment would allow the Federal Government to use tax hikes to do just that.  He also agreed with one of my earlier points.  He believed a major flaw was treating "the budget" as a constitutional entity which would increase the tendency of the government to spend money on off book items that don't get included in official expenses.  There are all kinds of games that can be played depending on how such an amendment is written.  Do we really want to take the chance right now with the current climate?  My last aversion but certainly not least in my mind is the fact that spending is our problem. 

WE DON'T NEED A CONSTITUTIONAL AMENDMENT TO CUT SPENDING! 

Why people can't understand this is beyond me.   


Cheers,

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Wednesday, July 20, 2011

Balanced Budget Amendment is a really bad idea!!!

The idea of changing the Constitution to require a balanced budget seems like a good idea right? It appears to force lawmakers to live within their means. How could that be a bad thing? Well, how is it that most U.S. states now requires a balanced budget from the governor and/or the legislature, Yet still find themselves in various types of financial messes?

At the state and local level it creates an incentive to create all sort of off-budget enterprises like housing authorities and hospital authorities, to avoid the implications of the balanced-budget amendment. Also a balanced-budget amendment would mandate action to counter recessions and economic downturns not to mention tax revenue shortfalls and unemployment benefits. This would essentially hard wire Keynesian Economics into the United States Constitution.

Below is the contents of a letter written to our leaders in Washington in regards to the idea of balanced budget amendment. The letter is written by 6 past Nobel Prize Economists and Laura Tyson from the University of California, Berkeley.


We, the undersigned economists, urge the rejection of proposals to add a balanced-budget amendment to the U.S. Constitution. While the nation faces significant fiscal problems that need to be addressed through measures that start to take effect after the economy is strong enough to absorb them, writing a requirement into the Constitution that the budget be balanced each year would represent very unsound policy. Adding additional restrictions, as some balanced budget amendment proposals would do, such as an arbitrary cap on total federal expenditures, would make the balanced budget amendment even worse.

1. A balanced budget amendment would mandate perverse actions in the face of recessions. In economic downturns, tax revenues fall and some outlays, such as unemployment benefits, rise. These so-called built-in stabilizers increase the deficit but limit declines of after-tax income and purchasing power. To keep the budget balanced every year would aggravate recessions.

2. Unlike many state constitutions, which permit borrowing to finance capital expenditures, the federal budget makes no distinction between capital investments and current outlays. Private businesses and households borrow all the time to finance capital spending. A balanced budget amendment would prevent federal borrowing to finance expenditures for
infrastructure, education, research and development, environmental protection, and other investment vital to the nation's future well being.

3. A balanced budget amendment would invite Congress to enact unfunded mandates,
requiring states, localities, and private businesses to do what it cannot finance itself. It also invites dubious accounting maneuvers (such as selling more public lands and other assets and counting the proceeds as deficit-reducing revenues), and other budgetary gimmicks. Disputes on the meaning of budget balance would likely end up in the courts, resulting in judge-made economic policy. So would disputes about how to balance an unbalanced budget when Congress lacks the votes to inflict painful cuts.

4. Balanced budget amendment proposals typically contain escape hatches, but in peacetime they require super-majorities of each House to adopt an unbalanced budget or to raise the debt limit. These provisions are recipes for gridlock.

5. An overall spending cap, which is part of some proposed amendments, would further limit Congress’s ability to fight recessions through either the built-in automatic stabilizers or deliberate changes in fiscal policy. Even during expansions, a binding spending cap could harm economic growth because increases in high-return investments — even those fully paid for with additional revenue — would be deemed unconstitutional if not offset by other spending reductions. A binding spending cap also would mean that emergency spending (for example on natural disasters) would necessitate reductions elsewhere, leading to
increased volatility in the funding for non-emergency programs.

6. A Constitutional amendment is not needed to balance the budget. The budget not only attained balance, but actually recorded surpluses and reduced debt, for four consecutive years after Congress enacted budget plans in the 1990s that reduced spending growth and raised revenues. This was done under the existing Constitution, and it can be done again. No other major nation hobbles its economy with a balanced-budget mandate. There is no need to put the nation in an economic straitjacket. Let the President and Congress make fiscal policies in response to national needs and priorities as the authors of our Constitution wisely provided.

7. It is dangerous to try to balance the budget too quickly in today’s economy. The large spending cuts and/or tax increases that would be needed to do so would greatly damage an already-weak recovery.

You can see the complete letter here. 

Update 7-25-2011

It has come to my attention that the use of this letter (From my previous post on 7-20) might not be having the effect I planned.  I hoped that using material from a left leaning source would help show the commonality between our points of view.   As I wrote this I assumed that most readers would understand the natural aversion to changing the Constitution that any Constitutionalists would have.  I understood that many of the economists who wrote this letter lean to the left, I figured it would show both sides of the argument which agree, but what I failed to calculate was the mass support such an amendment would have.  If your reading my blog you probably lean to the right and should realize I do as well.  I'd like to believe you don't support a balanced budget amendment just because some leftist economists disagree with the idea.  I don't make a habit of supporting something just because the left is against it. There are many reasons why I hold the view I do, some of the reasons coincide with the views of these economists and some do not.

I personally believe in a free market economic system which takes controls away the Federal Government.  This means in my personal view anything that puts more control on the economy is a bad idea.  Murry Rothbard once wrote, "balancing the budget by increasing taxes is like curing influenza by shooting the patient."  A balanced budget amendment would allow the Federal Government to use tax hikes to do just that.  He also agreed with one of my earlier points.  He believed a major flaw was treating "the budget" as a constitutional entity which would increase the tendency of the government to spend money on off book items that don't get included in official expenses.  There are all kinds of games that can be played depending on how such an amendment is written.  Do we really want to take the chance right now with the current climate?  My last aversion but certainly not least in my mind is the fact that spending is our problem. 

WE DON'T NEED A CONSTITUTIONAL AMENDMENT TO CUT SPENDING! 

Why people can't understand this is beyond me.   

Cheers,

Mike

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Tuesday, July 19, 2011

We already have the most progressive tax system in the developed world




That's according to the OECD-24 report back in 2008. Remember back then, when Candidate Obama was going around talking about spreading the wealth around? I guess he didn't realize that our wealth was already being spread around quite well. It looks like the leftist rhetoric about the rich not paying their fair share is a bunch of hooey after all?

I've already painted this picture several different ways, I'm not sure how many more are available. The top 1% in America pays more than the bottom 95% combined. Think about that. The top 50% combined pays 97% of all Federal revenues. If you take out the top 1%, the remaining 49% pays 59% of all Federal revenue. Now that 49% of people are the folks who earn between $30,000 and $400,000 per year. So who is going to pay more if taxes are increased? Do you make between 30K and 400k? If you do, it's highly likely you will help fund the situation.

Our current financial mess can not be solved by taxing, spending must be cut if there is any chance of avoiding a complete economic failure. We've simply ran out of other peoples money.

Cheers,

Mike


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Thursday, July 7, 2011

Do not raise the debt ceiling, "Cut and Lower"

The debt ceiling in 1981 was 1 Trillion Dollars. ($1,000,000,000,000.00) It's Currently over 14 Trillion Dollars. (14,000,000,000,000.00)

Every President since has raised it. It has been raised 20 times in the last 30 years. Why are we arguing over whether we need to increase the debt limit again when the obvious answer is that we need to lower it. I propose we start pushing our legislators to form a new plan which I'll call, "Cut and Lower".

Cut the spending, cut the size of the Federal Monster and Lower the Debt Ceiling. Then we need a Cap that ties the future debt ceiling to some sort of percentage of GDP so it can't get out of control again. This is the only plan that makes any real sense given the severity of our situation.

Please vote on the Soda Head Poll below.

http://www.sodahead.com/united-states/why-are-we-arguing-over-whether-or-not-we-should-raise-the-debt-ceiling-cut-spending-then-lower-the/question-1952655/

Cheers,

Mike




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Wednesday, March 30, 2011

What is Keynesian Economics?

What Does Keynesian Economics Mean?

Investopedia explains Keynesian Economics
A supporter of Keynesian economics believes it is the government's job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation.

Library of Economics and Liberty



Spotlight on Keynesian Economics

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