[quote=Thomas F.]… it boils down to nothing more than another fundraising ponzi-scheme that will be misallocated in an attempt to cover the money they owe on the other 3. At the end of the day the U.S. government is no better with money than a ten year old is with 100 chocolate bars. I learned my lesson the hard way. It’s high time the government grew up and did the same.
[/quote]
That pretty much says all that needs to be said about these programs. The only difference is that 10 year olds haven’t developed their super-duper “trust me I’ve still got the money somewhere around here” accounting tricks yet.
SS
[quote=Thomas F.]When I was a child I used to sell Worlds Finest Chocolate bars to raise money for various activities and programs; e.g. baseball, football, after school programs etc. The bars sold for $1.00 and we got them for cost with a coupon on the back that essentially saved the buyer $1.00 on some other good; it was a win-win situation. The bars came 25 to a box and each kid could preorder up to 4 boxes at a time if memory serves correctly. The problem was, that me, my brothers and our friends ate the candy ourselves, and we were spending the money we made on the candy we did sell on other stuff. By the time the fundraiser was over we would have no candy left to sell and little if any money to account for the missing bars. Unfortunately, my parents told me it was high time I grew up and learned my lesson. I was on my own and I had to go shovel snow, cut grass, wash cars or whatever I had to do to earn the cash to cover that candy…and FAST. There was no bailout. The government has 3 fundraisers currently in operation…Social Security, Medicare and Medicaid, and they just established a fourth…Heath Care. All debate aside regarding the particulars of heath care, it boils down to nothing more than another fundraising ponzi-scheme that will be misallocated in an attempt to cover the money they owe on the other 3. At the end of the day the U.S. government is no better with money than a ten year old is with 100 chocolate bars. I learned my lesson the hard way. It’s high time the government grew up and did the same.
[/quote]
Awesome post!
Also, Chris, I’m happy that you have finally started naming Obama by name for some of the insane things he’s been attempting. I know it’s hard to stay non-political but the guy is a Socialist and represents a dangerous threat to the free markets. (If you can even call them free anymore?)
I have read that inflation is nothing more than a hidden tax. Is this true? And if so, how does it work? Are the corporations that make the things that we buy taxed and passing this down through higher prices? Is that it?
[quote=concernedcitizenx5]I have read that inflation is nothing more than a hidden tax. Is this true? And if so, how does it work? Are the corporations that make the things that we buy taxed and passing this down through higher prices? Is that it?
[/quote]
Simple enough. If the price of an object rises you have to earn more and spend more to acquire the same benefit. The gov. has increased it’s revenue because of the price rise. The government gets to tax the income at a higher level and states get more sales tax.
So in the end the government gets to increase its revenue by being irresponsible.
[quote=concernedcitizenx5]I have read that inflation is nothing more than a hidden tax. Is this true? And if so, how does it work? Are the corporations that make the things that we buy taxed and passing this down through higher prices? Is that it?
[/quote]
Here’s one way to think of inflation that I find especially easy and useful. Suppose you have $1,000 in the bank, earning nothing, and you pull a Rip Van Winkle and fall asleep for 10 years.
While you were asleep the government was busy simply printing money and distributing it for consumptive purposes (healthcare, SS, bombs and the like) which, wonder of wonders, simply caused there to be more money than goods in the world.
Naturally this cause inflation, which we will set at 6.7% per year so that the numbers come out even in the next part of this story.
When you awake after your long slumber you find that you still have $1000 in your bank account, but that it now can buy exactly half as much as it used to. That is, 50% of your money’s purchasing power has been eroded due to the free printing and spending ways of your government.
Here’s where the analogy to taxes comes in. Does it really matter if your government had reached into your bank account and taken half by taxation vs. having printed the money and taken half its purchasing power? Not really, the impact is the same.
The funny part of this story is that the government could have achieved roughly the same amount of distributive/consumptive behavior by directly taxing you as by creating inflation it’s just that taxes are really obvious and people hate them. Inflation? ‘Not one man in a million can diagnose its cause’ according to John Maynard Keynes and therefore it is the (vastly) preferred mechanism of sitting politicians.
This is how inflation is ‘the hidden tax.’
So basically, it is the banks that finance our government’s debt that make out in this form of “hidden tax”. Which explains the lack of banking reform and serious efforts at opening the Federal Reserve books. Thanks for confirming this question for me.
Thank you TommyHolly for your compliment.
[quote=cmartenson]…The funny part of this story is that the government could have achieved roughly the same amount of distributive/consumptive behavior by directly taxing you as by creating inflation it’s just that taxes are really obvious and people hate them. Inflation? ‘Not one man in a million can diagnose its cause’ according to John Maynard Keynes and therefore it is the (vastly) preferred mechanism of sitting politicians.
This is how inflaiton is ‘the hidden tax.’
[/quote]
Bold mine.
Great explanation Chris, although it’s not only “that taxes are obvious and people hate them.” There is the other fact that when you tax people “open and honestly” you still need to collect from them and that gets to be a real problem as people wake up to the waste, fraud, abuse, and government largesse. As the problem grows (along with the taxes) fewer and fewer people will pay taxes willingly. Inflation, aka taxation by printing money, takes the “willingly” out of the equation. Anyone holding the currency that is being printed has just been stolen from. The beauty for our government, which is actually a tragedy for the world, is that the dollar is the world’s reserve currency. Therefore we not only are able to tax our own citizens, but also the citizens of all nations holding dollar denominated debt. Bernanke and his gang may look clean cut and may have brought doublespeak to a new all-time high to cover their tracks, but they are truly criminals in this increasingly Orwellian world we live in.
SS
[quote=SingleSpeak]Therefore we not only are able to tax our own citizens, but also the citizens of all nations holding dollar denominated debt.
SS
[/quote]
This is the genius of the current US system. Where past empires built themselves on securing the world’s resources and brought them to their shores by force, the US has built an Empire of Debt, a far more subtle means of achieving the same end.
That’s is the thesis of the book so titled by Bill Bonner which I consider to be a “must read.”
Like any empire, though, its continuation depends on something that is unsustainable continuing forever. We are in the middle to late stages of that breakdown, and this partially explains the anxiety and fear that surface when something as obviously broken as the US fiscal situation is brought up and talked about during a budget cycle.
Quick! Get this topic off the news ccycle, surely there must be some bread & circuses we can elevate to the top of the pile?
[quote=Thomas F.]Hello all, I am pretty new here, and have been devouring so much of the information on this site from both Chris and the community at large. Thank you Chris for all you have done and are doing to change the focus of our Nation, and I thank all of my fellow members for your contributions to this site. This information and this site have truly changed my life.
When I was a child I used to sell Worlds Finest Chocolate bars to raise money for various activities and programs; e.g. baseball, football, after school programs etc. The bars sold for $1.00 and we got them for cost with a coupon on the back that essentially saved the buyer $1.00 on some other good; it was a win-win situation. The bars came 25 to a box and each kid could preorder up to 4 boxes at a time if memory serves correctly. The problem was, that me, my brothers and our friends ate the candy ourselves, and we were spending the money we made on the candy we did sell on other stuff. By the time the fundraiser was over we would have no candy left to sell and little if any money to account for the missing bars. Unfortunately, my parents told me it was high time I grew up and learned my lesson. I was on my own and I had to go shovel snow, cut grass, wash cars or whatever I had to do to earn the cash to cover that candy…and FAST. There was no bailout. The government has 3 fundraisers currently in operation…Social Security, Medicare and Medicaid, and they just established a fourth…Heath Care. All debate aside regarding the particulars of heath care, it boils down to nothing more than another fundraising ponzi-scheme that will be misallocated in an attempt to cover the money they owe on the other 3. At the end of the day the U.S. government is no better with money than a ten year old is with 100 chocolate bars. I learned my lesson the hard way. It’s high time the government grew up and did the same.
[/quote]
Excellent comparison.
[quote=cmartenson]This is the genius of the current US system. Where past empires built themselves on securing the world’s resources and brought them to their shores by force, the US has built and Empire of Debt, a far more subtle means of achieving the same end.
That’s is the thesis of the book so titled by Bill Bonner which I consider to be a “must read.”
Like any empire, though, its continuation depends on something that is unsustainable continuing forever. We are in the middle to late stages of that breakdown, and this partially explains the anxiety and fear that surface when something as obviously broken as the US fiscal situation is brought up and talked about during a budget cycle.
Quick! Get this topic off the news cycle, surely there must be some bread & circuses we can elevate to the top of the pile?
[/quote]
I’ve read the book.
This discusion always reminds me of the statement by Keynes, “In the long run we are all dead”. Well, those past decision makers are (all dead).
What about retirement money currently sitting in tax deferred 401K/IRA plans? With baby boomers retiring, wouldn’t this provide juice up US revenues over the next few years? Or did they already account for this temporary revenue surplus?
[quote=TommyHolly] I know it’s hard to stay non-political but the guy is a Socialist and represents a dangerous threat to the free markets.
[/quote]
Just to disabuse some people of certain notions in case they hold them (not saying you do, TommyHolly).
Yes, he’s one. Yes, the Democrats are. So also are the Republicans. So was Bush, Jr. (Medicare Part D, anyone?) They dare not speak out against Social Security, Medicare/Medicaid, or many of the wealth redistribution programs.
As someone once said, by 1970, every single plank in the Socialist Party platform of 1932 had been adopted by the Democrats and the Republicans. And the American people now rely on them.
It’s part of why I think we really should stay away from partisan politics here. Too often I see one-sided partisanship bashing rather than truth. The truth is, both socialism/communism and crony capitalism (or even pure capitalism) have evil consequences for ordinary people.
Poet
P.S. - As an aside on how socialism and crony capitalism can join forces for evil, per Wikipedia on Medicare Part D, “Projected net expenditures from 2009 through 2018 are estimated to be $727.3 billion.” Even more interesting, “By the design of the program, the federal government is not permitted to negotiate prices of drugs with the drug companies, as federal agencies do in other programs. The Department of Veterans Affairs, which is allowed to negotiate drug prices and establish a formulary, pays 58% less for drugs, on average, than Medicare Part D.” And definitely dastardly, “Former Congressman Billy Tauzin, R-La., who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was working through Congress. A total of 14 congressional aides quit their jobs to work for the drug and medical lobbies immediately after the bill’s passage.”
[quote=Poet][quote=TommyHolly]
I know it’s hard to stay non-political but the guy is a Socialist and represents a dangerous threat to the free markets.
[/quote]
It’s part of why I think we really should stay away from partisan politics here. Too often I see one-sided partisanship bashing rather than truth. The truth is, both socialism/communism and crony capitalism (or even pure capitalism) have evil consequences for ordinary people.
Poet
[/quote]
Nicely said, thanks Poet.
[quote=Poet][quote=TommyHolly]
I know it’s hard to stay non-political but the guy is a Socialist and represents a dangerous threat to the free markets.
[/quote]
As someone once said, by 1970, every single plank in the Socialist Party platform of 1932 had been adopted by the Democrats and the Republicans. And the American people now rely on them.
It’s part of why I think we really should stay away from partisan politics here. Too often I see one-sided partisanship bashing rather than truth. The truth is, both socialism/communism and crony capitalism (or even pure capitalism) have evil consequences for ordinary people. [/quote]
Thank you, Poet. Very well put.
Well said. I think this kind of goes with that cartoon that r posted. Substitute “socialism” for waste. As you point out, the word has become such a mis-used epithet it has lost any real meaning, but instead seems to mean “is in favor of government programs that [the speaker] does not like”.
It’s like in the sixties and seventies when the epithet “Fascist Pig” was in vogue. That quickly lost all meaning as well, and really started to mean “is in favor of government policies that [the speaker] doesn’t like”
In your list of the Big 4; you really need to expand it to The Big 7, adding Fannie Mae, Freddie Mac, and the FHA.These agencies are treated as off-budget, and the government pretends they are self supporting. They just needed some bailouts in the last few years due to the housing “emergency”. These programs have trillions in off books liability waiting to explode further, and they are being expanded rather than cutback.
The one thing both parties can always agree on is more subsidies for housing. Until we as a nation can say no to real estate subsidies; there is no hope for any fiscal sanity. Why is it the governments responnsibility to backstop 600,000$ home loans?
[quote=dhusch]In your list of the Big 4; you really need to expand it to The Big 7, adding Fannie Mae, Freddie Mac, and the FHA.
These agencies are treated as off-budget, and the government pretends they are self supporting. They just needed some bailouts in the last few years due to the housing “emergency”. These programs have trillions in off books liability waiting to explode further, and they are being expanded rather than cutback.
The one thing both parties can always agree on is more subsidies for housing. Until we as a nation can say no to real estate subsidies; there is no hope for any fiscal sanity. Why is it the governments responnsibility to backstop 600,000$ home loans?
[/quote]
I agree with you; more ways to funnel cash through the government under the guise of the common good. The government has proven itself to be a rather poor steward of our Nations treasure.
the only way those revenue numbers will be met is through massive inflation.