Author Archive for Steven Waechter

Mr. Waechter is an attorney and a recent graduate of Drake University.

Student Loans, Debt Crisis and Bondage

In the medieval era there was a rather odd ceremony; when a member of the lower social castes found themselves in dire straights, they turned to the landowning nobility. In exchange for land to work, the noble demanded a portion of the produce, availability for certain laborious tasks, and service in the event of war. The agreement was sealed when the peasant laid his head into the hands of the noble lord.

This ceremony was called a Bondage, as it sealed the bond of the peasant to the noble, as his serf (in contrast with an Homage, where one noble became a vassal of another noble). In our advanced and progressive times, we are – of course – much more evolved and civilized. Far from …


The Stupidity of Banking Fees

About ten years ago, my savings account basically stopped paying interest. The rate of about two percent fell to something like one-tenth of one percent in 2002. Over the last ten years, people just seemed to forget the way things used to work – banks are supposed to pay you for placing your money into a bank account.

Well, as you may have known, Bank of America has raised an uproar by announcing their intent to charge a $5.00 per month fee for their customers who use debit cards to make purchases. Other banks are expected to follow suit. This uproar has taken the tone of anti-corporate class warfare: the “Bigs” vs. the Common Man; Banks vs. The People – whatever. The furor is missing …


America is Bankrupt and Being Repossessed

So far in this presidential election cycle I have seen both Gary Johnson and Ron Paul bluntly declare that the most serious problem we faced as a nation was that we are bankrupt. After hearing this comments I started reflecting on the nature and effects of bankruptcy, and if we are actually bankrupt as a nation.

For corporations, bankruptcy is declared when the company cannot pay its debts as they fall due. It doesn’t mean that the company is worthless; in fact, bankrupt companies can have assets valued in the billions of dollars, and these assets don’t simply disappear because a company files for bankruptcy protection. What actually happens is that ownership rights to these assets are shifted from the company to the creditors. In …


Obama’s Jobs Plan: Economic Destruction Becomes Policy

Once again, a professional politician who believes that wealth comes from spending borrowed money has abused the patience of our nation and proposed another mechanism for wasting an enormous amount of money on a vaguely defined program which will accomplish nothing of benefit and inflict further damage on our economy – at least what’s left of it.

As it turns out, the President of the United States is rather clueless as to why the economy is in the doldrums, but under the political doctrine of “something must be done, even if that something will make the problem worse,” he now urges the nation to stagger into another stimulus program.

An economy can be roughly divided into three main sectors: The primary economy is one of …


The Great Sino-American Currency War

The economic relationship between the United States and China is often described as being “co-dependent.” The Chinese lend America money, and the Americans buy Chinese goods. If the Americans stopped buying Chinese goods, then people in China would lose their jobs, and if the Chinese stopped lending to America, then Americans couldn’t consume Chinese goods, and around and around as the story goes.

It is a complete mirage. Right now, the Chinese are dedicating a large portion of their economy (land, labor and capital) to produce cheap, depreciating consumer goods to sell to the United States. We pay for these goods with American dollars, and China’s domestic exporters have so far been happy to accept these dollars in exchange for their products.

These dollars flow …


College Is A Bad Investment

To the baby boom generation, a college degree was almost a mystical amulet, and just possessing it meant that your life would be improved in mystical ways. Thus, a college degree was something to be quested for, like a hero from Greek or Norse mythology.

Unfortunately, college is a horrible investment. Actually, I need to amend that; nothing is a horrible investment in-and-of itself. This is true for stocks and bonds, houses, and even college. Overpaying for these things – defined as paying more than is reasonable compared to the returns – makes them bad investments, and if you are attending a four-year college, you are almost certainly overpaying.

The United States has more unemployed college graduates right now than we have ever had before. …


There Was No Recovery

“Double Dip.” By now you have probably seen this term somewhere. It appears that the economic recovery is stalling in what is supposedly its second year, and now the economy is poised for the dreaded “Double Dip.”

It is a lie. There was no recovery in the first place. The alleged “recovery” existed only on paper, and only with a great deal of mathematical trickery.

A recession is defined as two consecutive quarters of economic contraction, measured by the change in the gross domestic product, and the GDP is an illusion.

We calculate our GDP like this: Investment + Consumer Spending + Government Spending + Net Exports. If the federal government spends $1 billion on an airport in Pennsylvania that nobody uses, that is calculated …


Default is Inevitable, Part II

Talking points are truly amazing things. They capture the essence of the obsessions of political operatives. The political news has recently been dominated by the talking points surrounding the debt ceiling debate, with the main terms of choice being the assorted variants of “apocalypse.”

First of all, failing to raise the debt ceiling would not automatically lead to a default on the national debt. The federal government would continue to collect revenue, and could use that revenue to pay debt obligations as they fall due, or in other words, pay the coupon interest on time. This would involve deep cuts to everything else, and if you are a professional politician that is synonymous with impossible, so there is an assumption that default would be the …


Environmentalism: A Cult with a Ponzi Scheme

A long time ago, somebody figured out that people were afraid of nature. With this realization, our subject set out to carve a statue of a woman with a horned head dress, and declared the idol to be Ninhursag, the goddess of the earth. Our carver then set about convincing people that if they brought their best wheat, their best grapes, and their best lambs and calves to sacrifice to the goddess then they will be blessed with plenty and the grace of the divine goddess will rain down upon them, but if they refused they would be cursed with pestilence.

And thus the people, rending their garments and lamenting of their fear of the weather and their invented devil gods, brought their best produce …


On National Debt, Default is Inevitable

Much attention has been focused on the size of the national debt as a whole; roughly $14.4 trillion. That number is astonishing, but the sheer size of the debt actually hides the true horror which is in store for the economy and future generations.

The debt has many component categories, the largest of which is called Marketable Debt. That means the portion of the debt that was issued in treasury securities that can be sold in the secondary bond market, and it is around $9.2 trillion. The rest is Non-marketable, and held mainly by the Social Security Administration through bonds that cannot be sold.

The Marketable Debt also has its own sub-components, based on the type of security that was sold to incur the debt …


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