The Bureau of Economic Analysis released their numbers yesterday for the fourth quarter of 2005. As expected, the GDP was up 1.7% for the quarter. Not bad eh? Multiply that by four and you get a number in the neighborhood of 6.8% for the year. Now if you read that article and came to that conclusion you would have no problem believing that the economy is doing wonderfully well, which is what the new Fed chairman Bernanke reported in his last speech before congress.
I know it sure doesn't feel that good does it? Everything costs more, the old paycheck doesn't go as far as it used to, and the pay raises just are not happening any more. Maybe you have a nagging feeling in the back of your mind that is telling you that something just doesn't make sense. If so, then good for you. It doesn't make sense because it just isn't true.
Let's take a closer look at the numbers. First, here is the equation for estimating real GDP. Real not being "real" but being calculated after inflation.
Current dollar GDP- Inflation = Real GDP
Ok, so according to the economists at the Bureau of Economic Analysis, the inflation rate is running at about 3.5%. Current dollar GDP for fourth quarter 2005 comes in a 5.2% annualized, so 5.2 - 3.5 = 1.7. Amazing.
Here's the rub. We all know that the inflation numbers are massaged so that they come in lower than the actual rate. Why? Because the inflation numbers are used to index entitlement payments and the higher the inflation rate, the higher the payments and the faster the government has to print money.
Let me give you an example. Here in my small semi-rural county the calculated inflation rate last year was 4.7%. I believe that to be low and I've heard various folks claim that the actual rate may be closer to 6 or 7%, but I digress. If you plug 4.7% into the equation above, you get a much weaker number. Something around .5%. Not nearly as strong sounding as the published number. If you plug an actual inflation rate, free of all of the manipulations that are currently done, into the equation, you get a negative GDP. Negative GDP means recession.
Why not tell it the way it is? Because the Fed could not continue to print money and bump interest rates up if the economy was in a recession.
Now the real question is this. How can a group of highly paid economists come to a conclusion such as the one above, even in light of the fact that it is obviously in error? It all has to do with who writes your paycheck. The government wants it done a certain way. They have a vested interest in keeping the general population's anxiety level below a certain threshold. You sure do not want the people to figure out that something is up and stop spending money that they don't have now do you?
With that in mind, I read a very interesting article written by an economist who is not paid by the government. His name is William J. Williams. He writes that we are already in a recession...no surprise there, and that we need to prepare for a "hyperinflationary depression." Mr. Williams makes his living studying the numbers that the government publishes and then publishing the true numbers.
For example, he states that if we calculated unemployment the way we used to, the actual number would be between 10 and 12%, not 4.9%. The U.S deficit would be closer to $11 trillion if the government were not hiding liabilities much the same way Enron did before they crashed and burned.
Williams poured over the government's 2005 fiscal statements and found that the total obligations at the end of September were $51 trillion. That is over four times the level of GDP. He further believes that there will be hell to pay because of all of the "adjustments" that the government makes to the actual numbers to make things look better on paper.
Sounds amazingly familiar to what I have been saying here for the past year doesn't it?
Thursday, March 30, 2006
Tuesday, March 28, 2006
To Save or Not To Save
Any good financial planner worth his salt will tell you that you should have between three and six months of living expenses saved for unexpected emergencies. My guess is that most of us are not anywhere near that number. Why is it that we need so much set aside in a very liquid, convenient place? Let's take a look.
If you have watched the news over the past five years or so, you will have noticed an alarming trend in the number of layoffs around the country. Millions of people have lost their jobs since 2001. Just today GM announced several hundred more layoffs. The recent Delphi situation is causing concern for those employees. Maybe you have been a part of a recent downsizing.
A safety fund allows you to continue to live your life while looking for another job. Whether you need three months or six months of savings depends on the type of work you do. If you are a professional secretary, you will have a much easier time finding suitable work so a smaller emergency fund would be ok. If your work is more technical in nature, then a larger fund is needed, as it is more difficult to find comparable work.
This weekend, I read an article in our small local paper written by a local financial planner that discussed this very issue. In addition to the three to six months of living expenses he recommends a couple of weeks worth of funds in cash kept in a safe place at home. When I mentioned this to my wife, she wondered what that was about. I told her that in the event of a bank holiday or mandatory closing of the banks, you would need some cash to get you by until the banks reopened.
If we look back at the Great Depression of the 1930's, we find that people lost all of their savings when the banks ran out of cash and closed. Those that had some funds set aside at home were able to continue on for a while. I'm sure you have heard of several stories of older folks who passed away and left thousands of dollars hidden away in their houses. This was a direct result of the depression. Many people never trusted banks again. My own grandfather never went into debt after living through the depression. He paid cash for verything. He was not rich, just frugal.
Now, to be fair, there were some differences between then and now. For instance I can hear some of you saying that there was no FDIC to protect your deposits back then. That is true, however, banks in the 1920's kept a larger percent of their deposits on hand then we do now. The current reserve requirement for banks is less than 2%. The FDIC may tell you that your deposits are protected up to $100,000 but the truth is if a bank run occurred in this country, and because of the speed of the news it will happen much faster than it did back in the 1930's, the FDIC does not have the funds to pay everyone back. It would pay some, but it would be pennies on the dollar.
Think about the recent bankruptcy of United Airlines and the transfer of their pension plan to the Pension Benefit Guaranty Corporation (PBGC). This is an organization similar to the FDIC. Once the transfer took place, United retirees saw a 50 to 60% decline in their monthly benefit payments. Why because there is no way that the PBGC could cover that large of a pension plan. The same thing will happen when GM declares bankruptcy and petitions the court to turn over their pension plan to PBGC.
Neither organization has enough resources to cover all of the accounts that exist. Whether we are talking pensions or deposits.
Another major difference between the 1930's and today is the national savings rate. Back in the 1920's, before the depression hit, things were very different. There were no credit cards. There were no bank loans for average folks like you and I. As a result, most people saved for a rainy day.
Today, our national savings rate is negative. That means we are spending more than we make every year. Most of us rely on credit cards or home equity lines of credit for emergencies. Let me tell you, if a bank holiday occurs and that is the government's first line of defense against bank runs, most retailers will accept only cash. Cash will be king.
In the 1930's 80 per cent of the population lived on farms. Today, less than 20% live on farms, so we are more reliant on our food distribution system to put food on the table. For people with no savings and no job, that will create a huge problem.
Austrian economists tell us that whenever a government attempts to manipulate the currency in an effort to smooth out the natural ups and downs of the economy, malinvestments are made in areas of the economy where a false demand is created. All of those malinvestments must be cleaned up before the economy can return to normal. The purging of those malinvestments is usually a painful experience. This time will be no different.
To save or not to save, I think the answer is clear.
If you have watched the news over the past five years or so, you will have noticed an alarming trend in the number of layoffs around the country. Millions of people have lost their jobs since 2001. Just today GM announced several hundred more layoffs. The recent Delphi situation is causing concern for those employees. Maybe you have been a part of a recent downsizing.
A safety fund allows you to continue to live your life while looking for another job. Whether you need three months or six months of savings depends on the type of work you do. If you are a professional secretary, you will have a much easier time finding suitable work so a smaller emergency fund would be ok. If your work is more technical in nature, then a larger fund is needed, as it is more difficult to find comparable work.
This weekend, I read an article in our small local paper written by a local financial planner that discussed this very issue. In addition to the three to six months of living expenses he recommends a couple of weeks worth of funds in cash kept in a safe place at home. When I mentioned this to my wife, she wondered what that was about. I told her that in the event of a bank holiday or mandatory closing of the banks, you would need some cash to get you by until the banks reopened.
If we look back at the Great Depression of the 1930's, we find that people lost all of their savings when the banks ran out of cash and closed. Those that had some funds set aside at home were able to continue on for a while. I'm sure you have heard of several stories of older folks who passed away and left thousands of dollars hidden away in their houses. This was a direct result of the depression. Many people never trusted banks again. My own grandfather never went into debt after living through the depression. He paid cash for verything. He was not rich, just frugal.
Now, to be fair, there were some differences between then and now. For instance I can hear some of you saying that there was no FDIC to protect your deposits back then. That is true, however, banks in the 1920's kept a larger percent of their deposits on hand then we do now. The current reserve requirement for banks is less than 2%. The FDIC may tell you that your deposits are protected up to $100,000 but the truth is if a bank run occurred in this country, and because of the speed of the news it will happen much faster than it did back in the 1930's, the FDIC does not have the funds to pay everyone back. It would pay some, but it would be pennies on the dollar.
Think about the recent bankruptcy of United Airlines and the transfer of their pension plan to the Pension Benefit Guaranty Corporation (PBGC). This is an organization similar to the FDIC. Once the transfer took place, United retirees saw a 50 to 60% decline in their monthly benefit payments. Why because there is no way that the PBGC could cover that large of a pension plan. The same thing will happen when GM declares bankruptcy and petitions the court to turn over their pension plan to PBGC.
Neither organization has enough resources to cover all of the accounts that exist. Whether we are talking pensions or deposits.
Another major difference between the 1930's and today is the national savings rate. Back in the 1920's, before the depression hit, things were very different. There were no credit cards. There were no bank loans for average folks like you and I. As a result, most people saved for a rainy day.
Today, our national savings rate is negative. That means we are spending more than we make every year. Most of us rely on credit cards or home equity lines of credit for emergencies. Let me tell you, if a bank holiday occurs and that is the government's first line of defense against bank runs, most retailers will accept only cash. Cash will be king.
In the 1930's 80 per cent of the population lived on farms. Today, less than 20% live on farms, so we are more reliant on our food distribution system to put food on the table. For people with no savings and no job, that will create a huge problem.
Austrian economists tell us that whenever a government attempts to manipulate the currency in an effort to smooth out the natural ups and downs of the economy, malinvestments are made in areas of the economy where a false demand is created. All of those malinvestments must be cleaned up before the economy can return to normal. The purging of those malinvestments is usually a painful experience. This time will be no different.
To save or not to save, I think the answer is clear.
Thursday, March 16, 2006
More Information Surfaces About the Avian Flu Threat
Because I believe that most people reading this blog have pretty much dismissed all of the discussion surrounding the Avian Flu threat, let me provide you with some more information. This website was created by the federal government. It went live in November. It is something that you need to read.
First, the latest odds on the flu mutating into something that is contagious between humans is now 50%. The longer the virus stays active, the greater the chance of a dangerous mutation.
If you read this site you will be amazed at what the government is suggesting. They have in place a "National Strategy." It involves plans for producing vaccines, transporting vaccines, quarantining entire areas of the country, and providing services for people who are homebound.
The site recommends that we prepare to stay in our homes for an extended period of time. This means that you must have substantial food stores as well as any other items that you need to survive such as medicines. The food stores should be non-perishable. When I read that I wondered why that would be the case, however, if travel restrictions are enforced, parts of the country will not be able to receive shipments of coal and the operation of power generation plants might be severely curtailed. They also recommend that you discuss with your employer the possibility of working from home, as you will not be allowed to have contact with others.
The government has plans to ban all types of public assemblies, such as school and church meetings. The site also suggests that you make plans for a period of time without income. If you have a skill or business that has the potential to be put online, now is the time to begin working in that direction.
I strongly recommend that you read through the site. There is a lot of information there that might come in handy.
In addition to the above site, the Federal Reserve issued an advisory about the Avian Flu threat. "This advisory is intended to raise awareness regarding the threat of a pandemic influenza outbreak and its potential impact on the delivery of critical financial services. Read the whole advisory here.
It is evident from the amount of information on these sites that there has been a lot of work going on behind the scenes with regards to this potential problem. In fact is has been suggested that because so many resources have been dedicated to this problem, it may have caused the delays in responding to the Hurricane Katrina disaster. Now we have no way to prove that and the government will never admit it, but it does sound logical in light of the poor response by government agencies.
If the government is this worried about this threat and the Federal Reserve is worried about a major disruption of the financial system, then maybe we had better take notice. Remember what I said in my last post, once the general population becomes aware of the situation, it will be too late to make any last minute preparations.
First, the latest odds on the flu mutating into something that is contagious between humans is now 50%. The longer the virus stays active, the greater the chance of a dangerous mutation.
If you read this site you will be amazed at what the government is suggesting. They have in place a "National Strategy." It involves plans for producing vaccines, transporting vaccines, quarantining entire areas of the country, and providing services for people who are homebound.
The site recommends that we prepare to stay in our homes for an extended period of time. This means that you must have substantial food stores as well as any other items that you need to survive such as medicines. The food stores should be non-perishable. When I read that I wondered why that would be the case, however, if travel restrictions are enforced, parts of the country will not be able to receive shipments of coal and the operation of power generation plants might be severely curtailed. They also recommend that you discuss with your employer the possibility of working from home, as you will not be allowed to have contact with others.
The government has plans to ban all types of public assemblies, such as school and church meetings. The site also suggests that you make plans for a period of time without income. If you have a skill or business that has the potential to be put online, now is the time to begin working in that direction.
I strongly recommend that you read through the site. There is a lot of information there that might come in handy.
In addition to the above site, the Federal Reserve issued an advisory about the Avian Flu threat. "This advisory is intended to raise awareness regarding the threat of a pandemic influenza outbreak and its potential impact on the delivery of critical financial services. Read the whole advisory here.
It is evident from the amount of information on these sites that there has been a lot of work going on behind the scenes with regards to this potential problem. In fact is has been suggested that because so many resources have been dedicated to this problem, it may have caused the delays in responding to the Hurricane Katrina disaster. Now we have no way to prove that and the government will never admit it, but it does sound logical in light of the poor response by government agencies.
If the government is this worried about this threat and the Federal Reserve is worried about a major disruption of the financial system, then maybe we had better take notice. Remember what I said in my last post, once the general population becomes aware of the situation, it will be too late to make any last minute preparations.
Tuesday, March 14, 2006
Tipping Points, Tripping Points
Maybe tripping points makes more sense. You see, back in January, I spent several days discussing possible tipping points that could affect the economy in 2006. Tipping points are events, which trigger changes in the status quo. Sometimes they seem like insignificant events when they occur, however, when looking at them later, they turn out to be the event, which set into motion major changes.
Economic tipping points are events that affect the economy. As I stated back in January, there are several possible events that could drastically affect the economy in 2006. That is why I believe 2006 is going to be a very interesting year for all of us.
One of the tipping events that I mentioned back in January and again last week involves the Avian Flu. After writing last week about making at least minor preparations, I was amazed at reading some of the reports that appeared this week.
You see I believe the flu will arrive here in the US. It is not a matter of if, but when. Now, as to whether it mutates into something that can be passed between humans is another issue all together, but as you will see, it does not require that to cause us economic heartburn.
Monday, two articles were published that should cause you to sit up and take notice. First, a report by ABC news over the weekend about a speech given by Michael Leavitt, the Secretary of Health and Human Services, recommending that Americans start storing some canned tuna and powdered milk under their beds. He stated that the bird flu will arrive here as it is being spread by migratory birds and there is no way to keep migratory birds out of the US.
US spy satellites are actually tracking infected flocks. A very real concern is with the nation's poultry producers, whose flocks could be wiped out by infection from these migratory birds. (Read the entire article here.)
Then in another article published here, the International Monetary Fund believes that the bird flu is likely to deal a harsh blow to the world economy.
Now there are a couple of things to consider here. If the flu mutates and becomes transmittable between humans, then all bets are off. They estimate that 50% of the population would catch the flu. The economic impact of quarantines and the like would be huge.
But, if the virus does not mutate, and I would guess that there is a pretty good chance that it will not, we still could see problems. Chicken happens to be a low cost source of quality protein, not only here in the US, but around the world. The resulting shortage of chicken could cause death by starvation to increase worldwide.
The travel restrictions that could be implemented to try to reduce the spread of the Avian Flu will affect the economy as well. We live in a "just-in-time" world. Supply chain management has increased profits for companies around the world for years. In fact, in some cases, the savings in supply chain costs are sometimes the only way a company manages a profit in today's highly competitive environment.
But in times of travel restriction, that efficiency becomes a liability as we run out of critical goods, food being a primary example, prescription drugs being another.
Why stock up on a few food items? Because I believe as this story develops we will see a growing awareness by the general public. As people start hearing more and more about the problem, they will begin to stock their pantries with extra food. Once it starts, you will see stores with empty shelves. Just like in Florida before a hurricane hits, only when travel restrictions are enforced, it will be more difficult for stores to restock.
This awakening by the public could occur as early as the end of March, most definitely when the first confirmed case of Avian Flu turns up in the US. So I figure we have about two weeks to make some preparations before things get difficult. It could play out a little longer, but I would not bet on it. One thing for sure, you do not want to be trying to buy groceries when the panic starts. It will be worse than a clearance sale at Macy's.
Economic tipping points are events that affect the economy. As I stated back in January, there are several possible events that could drastically affect the economy in 2006. That is why I believe 2006 is going to be a very interesting year for all of us.
One of the tipping events that I mentioned back in January and again last week involves the Avian Flu. After writing last week about making at least minor preparations, I was amazed at reading some of the reports that appeared this week.
You see I believe the flu will arrive here in the US. It is not a matter of if, but when. Now, as to whether it mutates into something that can be passed between humans is another issue all together, but as you will see, it does not require that to cause us economic heartburn.
Monday, two articles were published that should cause you to sit up and take notice. First, a report by ABC news over the weekend about a speech given by Michael Leavitt, the Secretary of Health and Human Services, recommending that Americans start storing some canned tuna and powdered milk under their beds. He stated that the bird flu will arrive here as it is being spread by migratory birds and there is no way to keep migratory birds out of the US.
US spy satellites are actually tracking infected flocks. A very real concern is with the nation's poultry producers, whose flocks could be wiped out by infection from these migratory birds. (Read the entire article here.)
Then in another article published here, the International Monetary Fund believes that the bird flu is likely to deal a harsh blow to the world economy.
Now there are a couple of things to consider here. If the flu mutates and becomes transmittable between humans, then all bets are off. They estimate that 50% of the population would catch the flu. The economic impact of quarantines and the like would be huge.
But, if the virus does not mutate, and I would guess that there is a pretty good chance that it will not, we still could see problems. Chicken happens to be a low cost source of quality protein, not only here in the US, but around the world. The resulting shortage of chicken could cause death by starvation to increase worldwide.
The travel restrictions that could be implemented to try to reduce the spread of the Avian Flu will affect the economy as well. We live in a "just-in-time" world. Supply chain management has increased profits for companies around the world for years. In fact, in some cases, the savings in supply chain costs are sometimes the only way a company manages a profit in today's highly competitive environment.
But in times of travel restriction, that efficiency becomes a liability as we run out of critical goods, food being a primary example, prescription drugs being another.
Why stock up on a few food items? Because I believe as this story develops we will see a growing awareness by the general public. As people start hearing more and more about the problem, they will begin to stock their pantries with extra food. Once it starts, you will see stores with empty shelves. Just like in Florida before a hurricane hits, only when travel restrictions are enforced, it will be more difficult for stores to restock.
This awakening by the public could occur as early as the end of March, most definitely when the first confirmed case of Avian Flu turns up in the US. So I figure we have about two weeks to make some preparations before things get difficult. It could play out a little longer, but I would not bet on it. One thing for sure, you do not want to be trying to buy groceries when the panic starts. It will be worse than a clearance sale at Macy's.
Thursday, March 09, 2006
I Love America. Do You?
by Harry Browne
March 3, 2006
Editor's note: Harry Browne, libertarian author and activist, died Wednesday, March 1, 2006. The following piece originally appeared on Antiwar.com Nov. 20, 2001. We reprint it in memory of this great friend of peace and liberty.
I love America.
I love every concept the Statue of Liberty stands for - that individual liberty is held above the objectives of government; that, as Washington and Jefferson said, America imparts good will toward all and threatens no one; that this country is so big-hearted and prosperous it can welcome people from all over the world fleeing oppression or poverty.
I love the Bill of Rights - the most noble document ever written to define the limits that government should obey.
I love the concepts of free speech, absolute privacy, and religious freedom embodied in our traditions and our Constitution.
I love the rule of law - the right of accused persons to confront their accusers, the right to an attorney, the right to remain silent, the right to refuse admission to government officials wanting to enter your home or office.
These are just some of the things that have made America unique in the history of the world. They are a direct cause of America's prosperity, of our security, of what makes America attractive to so many would-be immigrants.
The "Hate America" Crowd
Unfortunately, too many Americans seem to have little love for that America. They are quite willing to throw away the concepts I've described - in order to satisfy a lust for revenge against the September terrorists.
They're willing to abandon our cherished liberties - giving the government the power to do anything it wants. They assume - falsely - that such invasions of liberty and privacy won't affect them, even though the history of government demonstrates that what's applied against suspected terrorists today will be applied against innocent Americans tomorrow. They're willing to abandon free speech - wanting to shut up those who don't join in the rah-rah cheering as President Bush abandons the essence of what made America unique and great.
They're willing to abandon the rule of law and transform America into a police state - where any law-enforcement agency, military court, or intelligence agency can act as prosecutor, judge, and jury to decide your future.
They're willing to let innocent Americans die - by encouraging our government to bomb innocent foreigners at will, almost guaranteeing that there will be further terrorist attacks against us.
They're willing to continue transforming what was once a worldwide love of America into a hatred for America - caused by the correct perception that American presidents believe they can force any foreign nation to do their bidding.
They make no objection when congressmen pass bills - without reading them first or having any idea what's actually in them - bills that take away your liberties, pile more government debt on your family, and give the president the power to do whatever he wants, as though he were a Roman Emperor.
Words and Deeds
These people may not actually hate America. They may even profess to love America, but they show no understanding of what made America the precious nation it is. Here is what some of their sentiments amount to...
· Contrary to the American respect for peace-loving people, they think our hurt entitles us to hurt others - even people who didn't hurt us.
· Contrary to the American tradition of individual responsibility, they want to treat all Afghans as though they're bin Laden, and all Iraqis as though they're Saddam Hussein - making no distinction between the innocent and the guilty.
· Contrary to the American ideal of individual liberty, they think freedom may be a nice concept but state security is more important.
· Contrary to the American tradition of independent thought, they assert that questioning your government is unpatriotic, paranoid, and tantamount to treason.
· Contrary to the distrust of government that marked the Constitution and the Bill of Rights, they think that - despite all the mistakes our government has made - allegiance to the Fatherland is your highest duty.
· Contrary to the American way of good will toward all, they acknowledge that America is being transformed into an armed fortress, but say that's the price we must pay to be a superpower.
Those aren't the sentiments of people who recognize what made America the most attractive place on earth to live. But in the supreme irony, these people label those who protest against the destruction of American ideals "America-haters.
Where Do You Stand?
Do you love America?
If so, isn't it time you spoke out on behalf of America - before the president and Congress take away the rest of what made this the land of the free?
Or are you just as happy to see America transformed into one more bureaucratic warrior state, like so many of those in Europe and Asia?
I love America - the one symbolized by the Statue of Liberty - the America that was the beacon of liberty, providing light and hope and inspiration to the entire world. I want that America back.
The warmongers may say they're patriotic Americans, but they're willing to discard everything unique about America in order to satisfy their lust to avenge the September tragedy.
The desire for revenge is understandable. But the rush to permanently abandon the wonders of America to satisfy a temporary rage is not.
March 3, 2006
Editor's note: Harry Browne, libertarian author and activist, died Wednesday, March 1, 2006. The following piece originally appeared on Antiwar.com Nov. 20, 2001. We reprint it in memory of this great friend of peace and liberty.
I love America.
I love every concept the Statue of Liberty stands for - that individual liberty is held above the objectives of government; that, as Washington and Jefferson said, America imparts good will toward all and threatens no one; that this country is so big-hearted and prosperous it can welcome people from all over the world fleeing oppression or poverty.
I love the Bill of Rights - the most noble document ever written to define the limits that government should obey.
I love the concepts of free speech, absolute privacy, and religious freedom embodied in our traditions and our Constitution.
I love the rule of law - the right of accused persons to confront their accusers, the right to an attorney, the right to remain silent, the right to refuse admission to government officials wanting to enter your home or office.
These are just some of the things that have made America unique in the history of the world. They are a direct cause of America's prosperity, of our security, of what makes America attractive to so many would-be immigrants.
The "Hate America" Crowd
Unfortunately, too many Americans seem to have little love for that America. They are quite willing to throw away the concepts I've described - in order to satisfy a lust for revenge against the September terrorists.
They're willing to abandon our cherished liberties - giving the government the power to do anything it wants. They assume - falsely - that such invasions of liberty and privacy won't affect them, even though the history of government demonstrates that what's applied against suspected terrorists today will be applied against innocent Americans tomorrow. They're willing to abandon free speech - wanting to shut up those who don't join in the rah-rah cheering as President Bush abandons the essence of what made America unique and great.
They're willing to abandon the rule of law and transform America into a police state - where any law-enforcement agency, military court, or intelligence agency can act as prosecutor, judge, and jury to decide your future.
They're willing to let innocent Americans die - by encouraging our government to bomb innocent foreigners at will, almost guaranteeing that there will be further terrorist attacks against us.
They're willing to continue transforming what was once a worldwide love of America into a hatred for America - caused by the correct perception that American presidents believe they can force any foreign nation to do their bidding.
They make no objection when congressmen pass bills - without reading them first or having any idea what's actually in them - bills that take away your liberties, pile more government debt on your family, and give the president the power to do whatever he wants, as though he were a Roman Emperor.
Words and Deeds
These people may not actually hate America. They may even profess to love America, but they show no understanding of what made America the precious nation it is. Here is what some of their sentiments amount to...
· Contrary to the American respect for peace-loving people, they think our hurt entitles us to hurt others - even people who didn't hurt us.
· Contrary to the American tradition of individual responsibility, they want to treat all Afghans as though they're bin Laden, and all Iraqis as though they're Saddam Hussein - making no distinction between the innocent and the guilty.
· Contrary to the American ideal of individual liberty, they think freedom may be a nice concept but state security is more important.
· Contrary to the American tradition of independent thought, they assert that questioning your government is unpatriotic, paranoid, and tantamount to treason.
· Contrary to the distrust of government that marked the Constitution and the Bill of Rights, they think that - despite all the mistakes our government has made - allegiance to the Fatherland is your highest duty.
· Contrary to the American way of good will toward all, they acknowledge that America is being transformed into an armed fortress, but say that's the price we must pay to be a superpower.
Those aren't the sentiments of people who recognize what made America the most attractive place on earth to live. But in the supreme irony, these people label those who protest against the destruction of American ideals "America-haters.
Where Do You Stand?
Do you love America?
If so, isn't it time you spoke out on behalf of America - before the president and Congress take away the rest of what made this the land of the free?
Or are you just as happy to see America transformed into one more bureaucratic warrior state, like so many of those in Europe and Asia?
I love America - the one symbolized by the Statue of Liberty - the America that was the beacon of liberty, providing light and hope and inspiration to the entire world. I want that America back.
The warmongers may say they're patriotic Americans, but they're willing to discard everything unique about America in order to satisfy their lust to avenge the September tragedy.
The desire for revenge is understandable. But the rush to permanently abandon the wonders of America to satisfy a temporary rage is not.
Tuesday, March 07, 2006
Batten Down the Hatches
A fellow that I read every day, George Ure, over at www.urbansurvival.com makes a very interesting comment today about changes coming in the near future and how he has prepared.
Let me give you a quick update on his worldview. He believes that there are some major events on the near horizon, which are going to affect our lives in the coming months. Since about 1996 he has been predicting the approach of a second great depression. Something that will make the first great depression look like the good old days. He sees this depression unfolding in a kind of slow motion way. In light of his viewpoint, he has been making preparations for such an event.
He and his wife have moved to a farm in Texas. They have been investing in gold since it was around $250 an ounce. You have too, right? They have a producing well, a years worth of food, an energy efficient home, and a complete workshop. They are both refugees from the corporate world. They want nothing to do with the cities at this point in time. Some would say that they are crazies, but today he makes a very interesting point about his preparations.
Look at the preparations that China is currently involved in. First, they are opening the world's largest gold mine. They are planning to open several large strategic oil bases for the storage of oil in the near future. They have entered into a trade agreement with Iran for 300,000 barrels of oil per day. (Based on this fact alone, it does not make sense for the US to attack Iran.) China is working on coal development. They are buying wheat from France and Australia. And they are developing strategic relationships with non-US industrial giants.
All of these preparations when lookedat together seem to present a picture of a country that is preparing for the worst. They are getting their ducks in line, working to make themselves as self-sufficient as possible. Now China is no dummy. They have been around longer than any western country. The Chinese culture tends to operate from a long-term prospective. Something that we here in this country have lost. Our country is only concerned with the next quarterly report and look out if you don't hit the numbers.
So why should we even consider making a least some preparations? Well, for starters if an entire country is making preparations, then it would seem to be the prudent thing to do. Secondly, we have just witnessed first hand how well our own country responded to disaster with the recent Katrina debacle. Do you really believe that your government will take care of you in a crisis? I don't. We had all better be ready to fend for ourselves for an extended period of time in the event of a disaster of any kind.
What kind of disaster? It could be anything. The avian flu will finally arrive here sometime this year and that could result in travel restrictions. If the flu virus mutates and becomes transmittable between humans, entire sections of the country could become quarantined. Another possibility is a major disruption in oil supplies. This could happen if there is an attack on Iran. After all, it would be pretty easy for Iran to shut down the Strait of Hormuz. If either of these events comes to pass, how will food and othe rcritical items be delivered? You realize that our grocery stores only have a three-day supply of food on the shelves, right?
Now you may read this and call me alarmist, but what is wrong with a little preparation? Do you really want to be in a situation that you have no control over and have to depend on a government that is so strapped for cash that they announced yesterday that they dipped into a government pension plan for funds to keep from exceeding their $8.2 trillion dollar spending cap? I know,what's a trillion dollars? A trillion here, a trillion there, and pretty soon you have some real money.
Yes, you pay taxes and you are entitled to all of the services that the government provides in the event of a crisis of some sort, but listen to me, we need to get out of this mindset that says that our government owes us something. We need to take responsibility for our own lives. Not just our investments but other areas as well. You will never regret being prepared. In fact, when the storm clouds start swirling about, you can rest assured that you are ready for whatever comes your way. You also just might be able to help someone who did not have the foresight to prepare as you did.
Let me give you a quick update on his worldview. He believes that there are some major events on the near horizon, which are going to affect our lives in the coming months. Since about 1996 he has been predicting the approach of a second great depression. Something that will make the first great depression look like the good old days. He sees this depression unfolding in a kind of slow motion way. In light of his viewpoint, he has been making preparations for such an event.
He and his wife have moved to a farm in Texas. They have been investing in gold since it was around $250 an ounce. You have too, right? They have a producing well, a years worth of food, an energy efficient home, and a complete workshop. They are both refugees from the corporate world. They want nothing to do with the cities at this point in time. Some would say that they are crazies, but today he makes a very interesting point about his preparations.
Look at the preparations that China is currently involved in. First, they are opening the world's largest gold mine. They are planning to open several large strategic oil bases for the storage of oil in the near future. They have entered into a trade agreement with Iran for 300,000 barrels of oil per day. (Based on this fact alone, it does not make sense for the US to attack Iran.) China is working on coal development. They are buying wheat from France and Australia. And they are developing strategic relationships with non-US industrial giants.
All of these preparations when lookedat together seem to present a picture of a country that is preparing for the worst. They are getting their ducks in line, working to make themselves as self-sufficient as possible. Now China is no dummy. They have been around longer than any western country. The Chinese culture tends to operate from a long-term prospective. Something that we here in this country have lost. Our country is only concerned with the next quarterly report and look out if you don't hit the numbers.
So why should we even consider making a least some preparations? Well, for starters if an entire country is making preparations, then it would seem to be the prudent thing to do. Secondly, we have just witnessed first hand how well our own country responded to disaster with the recent Katrina debacle. Do you really believe that your government will take care of you in a crisis? I don't. We had all better be ready to fend for ourselves for an extended period of time in the event of a disaster of any kind.
What kind of disaster? It could be anything. The avian flu will finally arrive here sometime this year and that could result in travel restrictions. If the flu virus mutates and becomes transmittable between humans, entire sections of the country could become quarantined. Another possibility is a major disruption in oil supplies. This could happen if there is an attack on Iran. After all, it would be pretty easy for Iran to shut down the Strait of Hormuz. If either of these events comes to pass, how will food and othe rcritical items be delivered? You realize that our grocery stores only have a three-day supply of food on the shelves, right?
Now you may read this and call me alarmist, but what is wrong with a little preparation? Do you really want to be in a situation that you have no control over and have to depend on a government that is so strapped for cash that they announced yesterday that they dipped into a government pension plan for funds to keep from exceeding their $8.2 trillion dollar spending cap? I know,what's a trillion dollars? A trillion here, a trillion there, and pretty soon you have some real money.
Yes, you pay taxes and you are entitled to all of the services that the government provides in the event of a crisis of some sort, but listen to me, we need to get out of this mindset that says that our government owes us something. We need to take responsibility for our own lives. Not just our investments but other areas as well. You will never regret being prepared. In fact, when the storm clouds start swirling about, you can rest assured that you are ready for whatever comes your way. You also just might be able to help someone who did not have the foresight to prepare as you did.
Wednesday, March 01, 2006
Good News Bad News
Consumer spending up .9% for the month. Yippee, the news reports that sure enough things are rosy. The economy is growing. Happy times are here again. Right?
Wrong. Incomes were only up .7%. That means that we are spending more than we are making. How do you do that? Well, you spend savings. Last year the savings rate for the country was negative .4%. The worst since the great depression. Another way to spend more than you make is by using credit. Either by refinancing yourhome or by using plastic. The problem with both of those options is that at some point, you will run out of credit. Unlike our federal government that just keeps printing more and more money.
And speaking of printing money, how about that inflation rate? Do not go by the numbers published every month. Go here and look at the handy inflation calculator provided by the Minneapolis Fed. Enter an amount for something that you purchased in 1971 and then enter 2006 in the current year and hit the calculatebutton. I think you will be surprised.
I remember in 1974 my father made $15,000 per year as an accountant. I thought that was pretty good at the time. Not now. At that salary you would be living below the current poverty level. So if we enter $15,000 into the inflation calculator how much would that be worth in todays dollars? Surprise, $61,612 a year. Wow! No wonder it takes two wage earners to make ends meet.
The Federal Reserves continual diluting of our money supply is actually a stealth tax. In addition to paying somewhere north of 40% of our earnings in various taxes, our earnings are being further eroded by inflation. That is why it seems that every month we get a little further behind.
Our trading partners are seeing the same thing. They keep accepting our dollars for the things that they manufacture, but every month those dollars are worth a little less. The only way to keep their currency from strengthening against the dollar is to hold on to those dollars or buy US debt. The US,through our inflationary policies has created a global house of cards. When the house collapses it will effect the entire world. That is one reason why our trading partners allow the game to continue.
But allowing the game to continue will only make the correction, when it comes, that much worse. For all of us.
Wrong. Incomes were only up .7%. That means that we are spending more than we are making. How do you do that? Well, you spend savings. Last year the savings rate for the country was negative .4%. The worst since the great depression. Another way to spend more than you make is by using credit. Either by refinancing yourhome or by using plastic. The problem with both of those options is that at some point, you will run out of credit. Unlike our federal government that just keeps printing more and more money.
And speaking of printing money, how about that inflation rate? Do not go by the numbers published every month. Go here and look at the handy inflation calculator provided by the Minneapolis Fed. Enter an amount for something that you purchased in 1971 and then enter 2006 in the current year and hit the calculatebutton. I think you will be surprised.
I remember in 1974 my father made $15,000 per year as an accountant. I thought that was pretty good at the time. Not now. At that salary you would be living below the current poverty level. So if we enter $15,000 into the inflation calculator how much would that be worth in todays dollars? Surprise, $61,612 a year. Wow! No wonder it takes two wage earners to make ends meet.
The Federal Reserves continual diluting of our money supply is actually a stealth tax. In addition to paying somewhere north of 40% of our earnings in various taxes, our earnings are being further eroded by inflation. That is why it seems that every month we get a little further behind.
Our trading partners are seeing the same thing. They keep accepting our dollars for the things that they manufacture, but every month those dollars are worth a little less. The only way to keep their currency from strengthening against the dollar is to hold on to those dollars or buy US debt. The US,through our inflationary policies has created a global house of cards. When the house collapses it will effect the entire world. That is one reason why our trading partners allow the game to continue.
But allowing the game to continue will only make the correction, when it comes, that much worse. For all of us.
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