Category: Federal Budget

The Social Security Trust Fund Is Already Empty

The annual report of the Social Security Trustees has been out for a few days now, and the news was bad on its face; the Social Security Trust Fund is now expected to be depleted by 2033, three or four years earlier than had been previously thought. This means that after 2033 the Social Security system will depend entirely upon the payroll taxes it will then be collecting, and the huge surpluses built up from payroll taxes of the past decades will have gone.

That is the nightmare in the headline news; the reality is much worse.

The Social Security Trust Fund does not exist in any meaningful way. What happened was this: Over the past years, the Social Security Administration collected more in payroll …


The Shakedown

I don’t know what else to call it.  Last week’s “settlement” with the five biggest banks in the country, where the Obama Administration squeezed $25 billion to settle “claims” of “inappropriate” lending practices that resulted in 2008’s Financial Crisis, was nothing more than a shakedown.  The settlement suggests that there were no other parties involved in the creation of our most recent recession (assuming we are in economic recovery).  It did not go after the other responsible parties, namely, the people who took out mortgages they couldn’t afford, the people who packaged these loans into securities and sold them for huge fees, the people who bought the securities and ended up holding the bag, and the government that forced the banks to make substandard loans …


Dr. Bernanke’s Fed Funds Patent Tonic with Opium

If you look at the weekly price chart for either gold or silver for the week ending January 27, 2012, you can make out a distinct “J” shape in prices of both metals. Tuesday the prices were suppressed, and then on Wednesday they spiked upward. You can actually pinpoint on the charts the moment the Federal Reserve announced its intent to keep the Federal Funds Rate at nearly zero percent until late 2014.

Low interest rates are supposed to spur economic growth, or at least that is what the textbook for my International Political Economy course said, so what could possibly be wrong with low interest rates?

Of course, low interest rates provide an incentive to borrow money. However, they also form a powerful incentive …


Warren Buffett’s Taxes

For some strange reason, probably because this is an election year, I decided to watch President Obama’s State of the Union address tonight.  I usually avoid watching because I don’t need to elevate my blood pressure beyond what’s safe, given my advancing age.  But I also don’t watch because I find the President boring.  His version of the State of America is not the same as mine.  And since he uses rhetoric instead of facts to support his arguments, and delivers them in a manner that is both condescending and arrogant, I generally choose to avoid his incendiary speeches.

But this is an election year, and much is being made about how the uber-wealthy are being taxed, whether it’s Warren Buffett, or Mr. Buffett’s secretary, …


Willie Nelson and Walking Toward Gingrich

“After carefully considering the whole situation, I stand with my back to the wall. And walking is better, than running away…and crawling ain’t no good at all”

Willie Nelson—Lyrics to “Walking” (1974)

While not known for his astute political analysis, with these lyrics Willie Nelson has managed to perfectly describe the conundrum myself and millions of other voters face in selecting a candidate to support for president amongst the Republican field.

For months now GOPers have been carefully considering the whole situation, and have yet to settle on anyone. With the voting only two weeks away a majority of those undecided now officially are standing with their backs against the wall.

In this regard I am no different—laid here are the reasons I am currently …


Why I am Caucusing for Ron Paul

“I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom…..And if I should later be attacked for neglecting my constituents’ “interests,” I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.”
– Barry Goldwater, Conscience of a Conservative

Perhaps more than any other politician of the twentieth century, Barry Goldwater captured the essence of the American spirit – ferocious independence. This spirit depends upon the Constitution for its life and energy. Without our Constitution, our nation is nothing more than another geographic location; nothing but more …


Connecting the Dots

Yesterday the Labor Department released the employment statistics for October.  I prefer to refer to is as “employment” rather than “unemployment”.  While it may seem to be nothing more than semantics, it is more positive.

The good news is that the economy created jobs–104,000.  The bad news is that the economy needs to create 120,000 new jobs a month to break even.  But there are now 104,000 new taxpayers, and for that fact alone the rest of us are thankful.  Buried in the article in the Wall Street Journal was this sobering statistic:  there are 13.9 million people looking for work.

President Obama had this to say:  “I’m worried about putting people back to work right now, because those folks are hurting and the U.S. …


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 …


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