Archives for category: Finance

I wrote this originally as a comment to this blog post, and decided it would make a better standalone.

One thing that has always seemed to puzzle progressives is how the middle class individual gravitates towards the more not-interventionist end of the political spectrum. Wouldn’t he benefit from stronger unions and wealth distribution?

This is not how members of the “middle class”, and temporary members of the “lower class” view themselves. The American experience has taught them that each rung of the class ladder is a temporary state, to be passed over as you improve the lot of your family.

In the US, we level up!

Conservative members of the middle and lower class see economic interventionism and graduated taxation for what they are. Rather than taking money from the wealthy to give to the poor, progressive schemes leave the wealth of the rich intact. Where the money actually comes from are those individuals who are actively climbing the ladder from one class rung to another.

Individuals who are already wealthy, such as Woodrow Wilson in his day, and Barak Obama in ours, will stay at the same rung in any case. Their policies make it harder for members of the lower classes, professionals and small business men to join or surpass them. It is an attempt, purposeful or not, to create a new nobility from the wealthy political caste.

The blue-collar workers in America has sensed this trend. They have experienced and internalized the sharp contrast between the years under Jimmy Carter and those with Ronald Regan. They have felt the betrayal under the two Bushes as they were cynically offered bribes of the peoples money, and their freedoms were rapidly eroded. They have felt as though the country is tumbling over a precipice, as the current administration not only keeps the policies of Bush that angered them, but comes up with breathtakingly huge new ways of coddling them and hindering them, making sure neither they nor their children have the same opportunity to climb to the highest rungs of success.

We are the ones that view ourselves not as a European style class, but as a projectile of success. We want everyone to have the same chance for success with as few hindrances as possible. We are voting for our economic best interest.

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I am usually loath to embed video, but this is worth it.

It explains the absurdity surrounding the ever-increasing debt limit in an easy to relate to way.

My wife and I are getting ready to take our 2.5 children on a road trip. This caused my thoughts to wander, as they often do, to the price of gas. If the prices of gas continue to rise, will my children be able to take their children on road trips. The answer I came to was “Of course they will.” The recent surge in gas prices is due to inflation from Quantitative Easing and zero interest rates enacted by Congress and the Federal Reserve over the past few years. I suppose in the long-run the only people who will be hurt are those who have invested in US currency, like retirees and The Peoples Republic of China. Inflationary policy is effectively stealing from them. (This is also why there is no love lost between China and our current government.)

What is perhaps more interesting to the average person is how manipulating the supply of currency can be used to bypass congress in raising our taxes. With the graduated income tax system we have in the US, people are divided into a number of tax brackets based on income. The higher the income, the higher the percentage of it taken by the government. During inflationary times, employers generally increase their employees’ salaries to maintain their standard of living. This results in a number of them being placed in a higher tax bracket. Although people’s standard of living drops as they pay more in the higher bracket, inflation results in good publicity for the government. The numbers on the stock market go up, the dollar-value of homes increases. Congress may, occasionally, adjust the brackets a little bit higher for “middle-class tax relief” and still come out ahead. All the president and congress have to do is wait as more money is dumped into the system by the Federal Reserve.

So how did the federal government end up with this obfuscated power structure, with no accountability to the voters? Happy coincidence? No, it was thanks to the foresight of the loathsome Wilson Administration, which enacted both the Federal Reserve and the income tax.

So as you prepare for your next vacation, or the next time the news starts talking about the Fed keeping interest rates at 0%, or congress passing another round of quantitative easing, let us remember that it means sneaking through a tax hike and stealing from the elderly. If more people realized this without their eyes glazing over at financial talk, perhaps we could vote for a few more party faithful to take a road-trip back home…

While perusing blogs after my last post, I came across this interesting piece. It was a fairly good commentary on the positive aspects of the Anonymous movement, but buried in it was a link to an article on a left-wing website about an egregious anti-protest bill that had just passed congress which makes it a felony to enter any area the Secret Service declares “restricted”. I was surprised I had not seen it elsewhere on the web, but it soon turned up here on a right-wing website as a warning from a former Secret Service agent. How could a bill such as this one – odious to both sides of the recognized political spectrum – sail through both the house and senate with only three dissenting votes?

I would suggest the Occupy Wall Street movement. It is not that the Occupy movement was seen as a threat to the government, but that it was seen as an opportunity. They had no unified message, and their methods were such as to not garner them any sympathy. I remember listening to Dave Ramsey as he took their calls on his financial counselling show. He listened to each caller as they explained why they supported Occupy Wall Street. Each had a different reason, and none of the reasons matched up with the statement on the OWS website. They were a disorganized mob of protesters, thrown together and encouraged by the government to ease the passage of legislation to take away our freedom of speech and to assemble.

So now we are put into a bind. According to the loathsome Eric Holder, we have no reasonable expectation of privacy for our emails and cell phones, and the government can kill us without trial (or even consulting a court) as long as we are not in the country. The Defence Authorization Act allows the government to indefinitely detain citizens who are inside the country. SOPA and PIPA were the first, faltering steps toward control of the internet. It is starting to appear that the government – in an admirable bi-partisan effort – is cobbling together the low-level components of a police state, with OWS and Anonymous as the impetus.

So, what is to be done? In our current state, we have been carefully divided into opposing camps. Our goals and methods for achieving them have been purposefully scattered and debased to ensure that there is nothing to rally behind. We are scattered and harassed from all directions. From our enemy’s methods, we know what he fears. He fears that when people come together from the right and left, they will find common ground in defending the freedoms that are being taken from us. He fears that we will put aside the meaningless controversies that are designed to incite racial and religious bigotry, and come together peacefully and firmly in opposition to this power-grab. The government must take us on piecemeal. If they cannot, then we win. Go team!

Money flows to where society places its values. When a person supplies a need that society has, others will place value in that fulfilment, and money (or some other form of compensation) will flow to them.

Throughout our history as a nation, this mechanism has allowed even the most under-privileged to rise up to the highest levels of our society. Unlike the sclerotized socio-economic structures that have prevailed throughout history, our population has been productive and upwardly mobile. With no king or dictator to declare winners and losers, it has been up to the individual to determine how successful they would be. People like Steve Jobs and Bill Gates give us new products that we use each day, and are rewarded with success and wealth.

Our politicians become very wealthy while in office, accumulating wealth much more quickly than private-sector workers with a similar salary. What exactly are they supplying that is channelling all this wealth to themselves? I would suggest two things: they have the power to give away money that does not belong to them, and they have the power to impede anyone that does not cooperate with them. Classic carrot and stick.

In the name of stimulating the economy, the politicians can bind their friends and dependants with trillions of dollars that will never be paid back. In the name of environmental protection or the IRS they can punish those who fail to fall into line. In the name of national security our freedoms and privacy are stripped away.

Even in the absence of capitalism the invisible hand still functions. Money will still flow to where people place the most value and respect. The difference is that it will no longer go to those who produce and create. Rather than to the Henry Fords and Thomas Edisons, it will flow to those with the political pull. Rather than a basis in hard work, creativity and natural resources, the new economy will be based once more on fear of the authority of the few. What will be purchased is access to undeserved favour, or exemption from undeserved persecution.

What can be done if our politicians are marketing their power? Can the current lot. That would be an excellent first step. Then we need to strip the sources of the power away. Ratify a balanced budget amendment to take away the carrot. Strip the power from the ever-expanding regulatory agencies (Homeland Security, EPA, IRS) to take away the stick.

Have you ever had the impression that the government is a bit more complex than it needs to be to do the job originally asked of it? Take the graduated income tax, for example. If we had a flat tax, we could be doing our income taxes on the back of an envelope and be done with it. No deductions, no audits. The government wouldn’t loose any money, more people would be employed. The accountants could do something more fulfilling, perhaps helping all those employed people to not be dependent on Social Insecurity in retirement. The really good ones can become one of Dave Ramsey’s investment ELPs.

I have the unsettling feeling today that we are caught between two unsavoury forces.  On the one side are the parasitic moochers, who have finally ascertained that they can sell their votes to simplify their lives.  On the other side are those in government willing to buy the votes, and create a complex system to control the sellers.

In the end, people are searching for ultimate safety and stability, so they work to transform the government into the perfect host.  The government looks for the same stability, and attempts to control the masses. This leads to a bad place.

A people must impose parsimony on their government and allow a bit of complexity to creep into their lives, or complexity will creep into their government which then will impose the parsimony on the people’s lives.