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Honest
Money
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January 16th, 2019
"Socialism simply means a happy world where people are taken care of." What nonsense! Who would believe such stuff as this? Senator Bernie Sanders, for one. NYC Mayor Bill de Blasio for another. Millions of American young people consider socialism a viable and even noble approach to organizing society. They appear totallyi unaware of the piles of bodies various socialist governments produced in the 20th century. And then there's the newly elected Alexandria Ocasio-Cortez who has already been interviewed by CBS's "Sixty Minutes", although the interviewer (Anderson Cooper) failed to offer much in common-sense challenge to her socialist schemes. Jeff Deist sees the growing enthusiasm for socialism in the U.S. as a serious threat. "Liberal Baby Boomers still think it’s 1968 and conservative Baby Boomers still think it’s 1985. Generation X and Millennials will exhibit the same blinders. It may be disheartening to keep fighting what should be a long-settled battle against socialism, but today we have no other choice." STILL FIGHTING SOCIALISM Deist points out that people like Ocasio-Cortez and de Blasio believe there's "Plenty of money out there," but it's in the wrong hands. He also thinks conservatives are doing a lousy job of promoting capitalism. He's right. Recession?
What
recession?
Everyone knows we're in the midst of an economic boomlet. In fact, the Federal Reserve has been raising the basic Fed Funds rate ever so slightly to put the brakes on the possibility of overheating the general economy. However, Fed chairman Jerome Powell has lately worried aloud about the possibility of a slowdown and has hinted that future increases in interest rates may be delayed. And an increasing number of U.S. economists are suggesting we may need to buckle up for another of those pesky recessions. (The word "depression" was removed from the economists' lexicon after the awful performance of the economy in the 1930s. ) But right now local and state governments are counting on a non-stop flow of tax revenues and are planning to pour big money (from future tax flows and borrowing) with no thought to the impact of the next recession. Spend and borrow, borrow and spend has become the mantra for government at all levels, and individuals as well. The evening news fills us in on the dire straits many government workers are in because of the federal government shutdown. Whatever happened to private savings? Why are so many people living from paycheck to paycheck? Something is seriously out of whack. At any rate - if history be a guide (and it is) recessions come along on a quite regular basis and even more than a century of management by the Federal Reserve System has not stopped the recurrence of recessions every five years or so. Now comes Charles Hugh Smith to warn of another reckoning. "The public sector is also ripe for uneven distribution of recessionary impacts. Local government and its agencies in boomtowns such as the SF Bay Area, Seattle, Los Angeles, NYC, etc. have feasted on soaring tax revenues and multi-billion dollar municipal bonds. "The Powers That Be in these boomtowns are confident that the good times will never end, and so the modest rainy-day funds they've set aside are widely viewed as immense bulwarks against recession when in reality they are mere sand castles that will melt away in the first wave." THE RECESSON WILL BE. . Years ago someone told us it was wise to have enough cash put by to pay all of one's expenses for at least three months in case of unexpected unemployment. The lesson apparently never took hold or has been lost, according to current reports on the plight of suspended government workers. Too bad. The old fashioned idea of "saving for a rainy day" needs to be resurrected.
"Fences Make Good
Neighbors."
Surrounding your property with a fence and posting 'No Tresspassing' signs will not keep intruders out, although they may deter most of them. But erecting some 1,000 miles of fencing along the southern border of the United States is a pricey undertaking. Mexico won't pay for it. The U.S. Congress is already running budget deficits of about a trillion dollars a year. Shifting more than $5 billion out of existing agency budgets will raise a fierce howl so the option will probably be to BORROW. But, as we'll learn in the weeks ahead the public debt is already nearly $22 trillion and there will be a contentious debate about whether or not to do away with a public debt ceiling altogether. (The suspended debt ceiling is scheduled to return March 2nd.) How about a one time TAX to pay for the fence? Silly idea. It would anger a voting majority and won't fly. Speaking of flying - if a tall fence were built surely some helicopter entrepreneur would set up shop lifting paying illegal immigrants over the obstruction in the dead of night. Possibly the more agile of the intruders will build tall ladders and slide down long ropes on the U.S. side. Drugs find their way into the U.S. from Latin America by the ton. Droves of immigrants have set their sights on entering the U.S. by fair means or foul, and if they can't enter overland there's always the sea or small aircraft, although expensive for the average immigrant. No easy answers to the constant immigration problem. We can't imagine borrowing more then 5 thousand million dollars to put up a fence on the southern border will change things very much. Maybe cutting out incentives for immigrants is the answer? A
Matter of Life and Debt
The contrarian aims to be as free of debt as possible. Why? We're pretty sure government and private debt has piled too high . The words of the ancient philosopher Publilius Cyrus echo in our head - "All debt is paid, either by the borrower or the lender" - suggesting that one of those nasty economic corrections may arrive on the doorstep to undo the imbalance multi-trillion dollar debt is causing. Now comes Mac Slavo with suggestions of how to whittle one;s debt down in the face of an economic slowdown: "Global public (government) debts and private debts are at all time (and terrifying) highs. This historic debt is really at the core of most people’s economic decline. Granted, not all debts are incurred through overspending or buying a car out of your price range, but if you want to be prepared for any downturn in the very volatile economy we all are living in, the best bet you’ve got is to go debt free." GO DEBT FREE IN 2019 Easier said than done, right? If skating on the thin ice of heavy debt makes you happy, ignore this advice. But if you're uneasy about the future check Mr. Slavo's advice. |