The View From Under The Bus

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21

Arthur,

I wish that were true. Property taxes prove that isn't so. If they do away with cash and force us all to pay with smarty phones, they can easily tax whatever isn't spent as well as what is spent. If they could tax thoughts, they would.

Governments are in a world of hurt. Past politicians made promises that current politicians have to honor (public pensions, social security benefits, etc.) Too many promises were made and greedily accepted by the voting populace. Now, all those promises need to be funded or defaulted. As long as the politicians have hope that they can kick the can a little further, they will. Unless unending economic growth magically appears to save them, their only option is to tax more. Eventually, that will not be enough.

If it costs more to assess the tax than they collect from it, they won't tax it (for long.) If it is easy to quantify, expect it to be taxed. If you have nothing, they have nothing to tax.

Grover

22

Debasing the currency is just a stealth tax as well, and it's on your savings.

23

I have tried to get a number of my millennial offspring and relations to have a look at this wonderfully concise article and its implications. You've done an excellent job of capturing the main tenets of why people should be reading Prosper. Many of us, with a few decades under our belts, have witnessed these machinations first hand and have been able to avoid some of them. The forum's responses to it seem to back this up. As another voice in the wilderness, I must say, as I look around, it is unfortunate that many in this developing world cannot see the "forest for the trees".
Again, to all at PP  -  keep up the good work!

24
Adam said, "So before I make a large expenditure, I ask myself: Is this worth the time it will take me to earn this sum back? In my head, my financial calculations are denominated in time units rather than monetary ones -- because that's what I value more."
I also ask myself: Who am I spending this money/time with?  Do I buy my food from the bigbox store or from the local co-op or CSA?  Do I bank with the local credit union or the legacy corporate national bank? Do I support local arts or always sit in front of my TV?  Do I buy a piece of jewelry from the chain store at the mall or a local craftsperson?  If I cannot find an option that keeps more money in the local economy I tend to decide against that purchase (not always of course), but voting with the dollars you do spend can help the local economy if you choose wisely.  
25

Great article as always Adam,  I've been following many of the suggestions on PP for over a decade now…  Years ago we slowly worked towards frugal living by paying off our mortgage, saving for what we needed and for what we wanted (two district beasts to be sure).  With multiple pensions acquired over time and foreign countries I took the opportunity to take early retirement from my last employer.  Most of our 'investments' have been in our home as we work toward saving money through various efficiencies which include exterior rigid insulation and vinyl siding (who wants to paint there house every two years?), living in our rural retirement home now rather than waiting for a SHTF scenario (gee, I'm missing the snow flakes and BLM protests and riots), expanding our garden, raising chickens (I hate coyotes), moving to a tankless hot water system, new energy efficient doors and windows, security system (need versus want), etc… Taking money out of my pensions now and taking my money out of a bank and placing some of it in a Credit Union, investing in tangibles which include gold and silver, solar, energy savings etc.
I can't thank you, Chris, Robey, and the rest of the team for their insight and suggestions.  I've been asked to open my home to showcase how to live a resilient and frugal lifestyle.   Please keep up the good work!!!

26

GM_Man  –
Comments like yours are why Chris and I do what we do. Congratulations on creating what sounds like a nicely resilient life (which I'm guessing you're finding more fulfilling/enjoyable than the one you had while working 'in the system').

I'm heartened to hear that you're being recognized by your community as someone to emulate. Please keep up the good work, and please keep the PP.com updated on your continued progress!

cheers,

A

27

 

In 2006 I was preparing to sell my small business and retire. I estimated all of my anticipated retirement income and expenses by preparing a large, very detailed spreadsheet.

 

The expense page included all of my living expenses - food, clothing, travel, automobile, insurance, taxes, entertainment etc., etc. all with supporting data and assumptions. The income sheet was similarly detailed with income from the sale of the business, pensions and investments. It all balanced out nicely and I was confident that, after working hard and saving throughout my working life, my retirement would be reasonably comfortable and prosperous.

 

That was 2006. Now, only ten years later, my retirement plan has been blown to smithereens. Despite my best efforts to maintain the purchasing power of my savings, the income I anticipated has been literally decimated. Instead of living largely on the income from secure investments, such as CDs, I am consuming my capital at a relentless rate.

 

According to the Chapwood Index, (Ed Butowsky: Calculating The True Cost of Living Increase, by Adam Taggart Sunday, March 20, 2016 ) the true cost of living in my area went up by 10.7% last year, so you can imagine my reaction to the letter I received in November from the Social Security Administration which began “Your social Security benefits will increase by 0.3 percent in 2017 because of an increase in the cost of living.”!

 

Those of us who worked hard and made prudent preparation for retirement, have been betrayed by our own government and the TBTF banks which run it. I would leave the US if I saw greener pastures in another country, but the predicament is global in scope. In many countries it is even worse than here.

 

I fervently hope that the traitorous politicians and obscenely greedy bankers who brought about this mess all burn in hell. But, seething with impotent rage will only shorten and sour whatever time I have left, so I have decided to simply make the best of a bad situation and enjoy myself. I'm tired of waiting for the SHTF event and my emergency food flush is reaching the end of its shelf life. If I outlive my savings, I will at least have had a good ride while they lasted.

28

This is why I am actively engaged in using elements of the Crash Course, Shadowstats.com, and other non-MSM sites in my high-school-level survey economics class (tomorrow they learn about "fuzzy numbers"). I'm determined to inculcate in that part of the next generation I come into contact with the notion that official data is not to be trusted, that they must think and reason for themselves (I had fun with the marketing lessons on that score), and that the only way to explain why things are the way they are right now is to dig deeper than the official memes would have you dig. I find that when I explain things to kids this way, it builds a trust they rarely seem to have with adults these days (I'm acknowledging things they can sense are wrong), and it gives them more tools to peel back the onion and start peering behind the curtain, so to speak (apologies for the mixed metaphors). It's great to watch the light bulbs go on and see them finally understand why they hear "everything's awesome," but they see that "everything is not awesome."
 

One class at a time.

29

Everything is (not) Awesome!
One of my themes, is that any understanding of the Trump phenomenon has to have “economic factors” right at the top of the list, or the explanation is wanting.

There’s the obvious loss of rural power and opportunity which showed up on the county election maps, but there’s also the loss of faith among the young.

And by “young” I mean people 30 years old or younger.

The American Dream is over, and has been for a long time, and that shows up in statistics like this:

Barely Half of 30-Year-Olds Earn More Than Their Parents

Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents. Even rapid economic growth won’t do much to reverse the trend.

Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age.

In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age, they found. In 2014, that number fell to 51%.

The percentage steadied for around a decade and plunged again starting in 2002, according to the economists.

The paper doesn’t provide specific reasons for the declining fortunes of younger Americans, but it generally blames the slowdown in economic growth and, especially, the widening income gap between the wealthy and the rest of society.

“Wages have stagnated in the middle class,” said Mr. Chetty in an interview. “When you’re in that situation, it becomes very hard for children to do better than their parents.”

So not only are the rural hurting, but the young.  If these young folks could not bring themselves to vote for Trump, perhaps they were equally uninspired to show up for Hillary whose slogan “Stronger Together” seems to fall flat if “together” does not mean everyone.

The policies of the two main parties have left out the vast majority of the population, especially an cruelly the young who take out student loans and then discover that their elders decided, in their infinite wisdom, to make student debt the only non-dischargeable debt in the land.

Great optics there, older folks!

Further, when the Fed decides to ram up house prices because that would be good for existing homeowners (it’s really not, but that’s the story they are running with) they are specifically, again, punishing the young.

What sort of society treats their young this way?

Not a healthy one, that’s my opinion.