Category: Money Matters

Bad Economic Reasoning about the National Debt

Written in December, 2012.

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When I study the writings of professional economists I often have to shake my shaggy philosopher's head.  Try this passage on for size:

$16 trillion is the amount of Treasury debt outstanding at the moment. [It is around 36 trillion now.] The more relevant figure is the amount of debt the federal government owes to people and institutions other than itself. If, for some reason, I lent money to my wife and she promised to pay it back to me, we wouldn’t count that as part of the debt owed by our household. The debt owed to the public is about $10 trillion these days.

What a brainless analogy!  Suppose I loan wifey 100 semolians.  She issues me a 'debt instrument,' an IOU.  Has the family debt increased by $100?  Of course not.  It is no different in principle than if I took $100 out of my left pocket, deposited an IOU there, and placed the cash in my right pocket.  If I started with exactly $100 cash on my person I would end the game with exactly the same amount. 

But I do not stand to the government in the same relation that I stand to myself or to my family.  Suppose I buy $100 K worth of Treasury notes, thereby loaning the government that sum.  Has the Federal debt increased by $100 K?  Of course it has.  I am not part of the government.  Whether the government owes money to U. S. citizens or to the Chi-Coms makes no difference at all with respect to the amount of the debt.  The citizens plus the government do not form a "household" in the way my wife and I form a household.  Citizens and government are not all one big happy family.

The analogy is pathetic. Didn't Barack Hussein Obama say that the government is us? That is bullshit pure and simple out of the mouth of a master bullshitter.  

The author would have you think that "the more relevant figure" is $16 trillion minus $10 trillion = $6 trillion.  False, because based on a false analogy. 

This shows how ideologically infected the 'science' of economics is.  Only a leftist ideologue could make the collectivist assumption that I have just exposed.  The Marxian "From each according to his ability, to each according to his need" is a viable principle at the level of the family, but it is pernicious nonsense on stilts when applied to the state in its relation to the citizenry. 

But then I am no economist. Show me I'm wrong, and lunch is on me when next our paths cross.

April 15th: “Render unto Caesar . . . .”

Did you settle accounts with the Infernal Revenue 'Service'?  If yes, then celebrate with The Beatles, Harrison and Clapton, and Tom Petty.

No, I am not opposed to paying taxes.  I am not anti-tax any more than I am anti-government. We need government, and we need to fund it somehow.  It does not follow, however, that there must be an income tax.  There are alternatives.

We paid 14% of our 2024 income in federal and state income taxes. What did you pay?

Did we get value for our money? We got Biden-Harris. That suffices for an answer. No need to get scatological about it.  We are very lucky, however, that our geopolitical adversaries did not take the opportunity to pounce on us in our Biden-induced weakness. They wouldn't dare do that now.

Say what you want about tariffs, but one thing is blindingly evident: it is utter folly to be dependent on one's enemies for such essentials as pharmaceuticals and semiconductors, to mention just two classes of goods we cannot do without. And say what you want about Trump, but he alone has the cojones to end this insane dependency. The Dems are for it, and the Republicans would only talk about it. Too bad the moniker 'Big Balls' is already taken . . . . 

Nancy Pelosi in 1996: A Pre-Trumper on Tariffs

You have probably seen this by now, but in case you haven't, here is Nancy Pelosi in 1996 talking sense! I didn't think she had it in her, given the inanities she has been spouting for the last quarter century. I don't see much if any difference between what she said then about  tariffs, trade imbalances, and trade reciprocity and what Trump is saying now.

Part of what enrages contemporary Dems about Trump is that he has (a) stolen their thunder, and (b) is actually doing things they only talked about doing, e. g,  curtailing waste, fraud, and abuse at the federal level, controlling the borders, and shrinking the size of the federal government.

Blinded by their mindless rage, they cannot assess policy proposals on their own merits, but only on whether or not they are supported by Trump. If Trump is for it, they are against it, no matter what it is, and vice versa.

Anti-Trump Dems cannot stand the man because he has transformed the fat-cat GOP into a people's party.  The Never-Trump Republicans cannot stand him because he gate-crashed their rich guy club and exposed the bow-tied Beltway/Bulwark boys and girls for the effete and epicene bunch they are.  Interestingly, Trump has won the sympathy, though not the full support, of the socialist outlet, The Militant. See here for a recent article in support of my assertion.

But he wins because he is loaded too, and more importantly, loves his country, its people, and has the biggest cojones of the toughest hombre on the world stage at present.  

Move Over IRS: Make Way for the External Revenue Service

I kid you not. 

Donald J. Trump
@realDonaldTrump
 
For far too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS). Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the World, while taxing ourselves. It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service. MAKE AMERICA GREAT AGAIN!
 
 
Good riddance to Biden, his bromides, and his bullshit. Finally a leader with ideas and the cojones to execute them.
 
How would a journo (my term of disapprobation for a leftist pseudo-journalistic shill for the despicable Dems) respond to this?  By willfully ignoring the main point and drawing attention to Trump's odd capitalizations and less-than-elegant use of the English language. That tactic comports well with their inability to look past style to substance.  You will by now have noticed their fascination with empty celebrities and such narcissistic pretty boys as Gavin Newsom and  Justin Trudeau not to mention such airheads as the overgrown teenage girl, AOC, and that hilarious birdbrain Kamala. 
 
If Trump accomplishes 10% of what he has planned, that will be 100% more than Kamala could do. (Riff adapted from Michael Savage, the wittiest pundit on our side.)

The Mighty Tetrad

Money, power, sex, and recognition form the Mighty Tetrad of human motivators, the chief goads to action here below. But none of the four is evil or the root of all evil. People thoughtlessly and falsely repeat, time and again, that money is the root of all evil. Why not say that about power, sex, and recognition? The sober truth is that no member of the Mighty Tetrad is evil or the root of all evil. Each is ambiguous: a good liable to perversion.

Read the rest at Substack.

Success is the Best Revenge

Bill Ackman on Elon-liberated X:

The business community is giddy with excitement about the @realDonaldTrump administration. I am hearing this from everyone, including from people who didn’t vote for Trump. Business confidence is a self-fulfilling prophecy. Business leaders are becoming more confident about the country and the economy. This means they will be making more investments in our future which will drive the economy and the stock market, reducing the cost of capital and bolstering confidence further, catalyzing more investment and more growth in a self-reinforcing, virtuous cycle.

Read it all.

Gold

Spot at the moment sits at 2709 USD/oz.  It will go up no matter who wins on the 5th, more with Kamala.   Wait for a dip to buy?  Buy now. You should have been buying steadily all along. But think for yourself and keep your own counsel. That's part of what I am trying to teach you people. You know enough to take my financial advice and predictions cum grano salis.

Interesting that gold should surge right after Kamala's embarrassing performance in the Bret Baier interview.  How embarrassing? See here.

Central Bank Digital Currency

It is already upon us. Fifty Shades of Central Bank Tyranny.

In this article, I will define what a Central Bank Digital Currency is by exploring its major categories. I’ll demonstrate that the US already operates with a form of CBDC, albeit without the flashy labels. I will also show that the Federal Reserve (the Fed) can introduce more dystopian elements into this system—such as programming restrictions on when, how, and where you can spend your money without requiring Congressional approval.

However, the fear of central bank control over your transactions is, in fact, a red herring. The real threat lies with our government, which has already perfected the art of surveillance. Adding programmability is just the next logical step. Ultimately, both Republicans and Democrats are steering us toward the same destination: total digital control. They may use different words and different propaganda, but their goals converge. While we can’t simply vote out of this predicament, we can opt out entirely.

Gold Will Surge Should Kamala Win

So buy more now to cushion the shock later, should disaster strike.

Gold to $10K/oz under Harris admin.

Update (9/22). Spot is now $2621/oz as of 12:10 NY time. Kamala or no Kamala it will most likely trend upwards.

"When we have gold we are in fear; when we have none we are in danger." An English proverb the pertinence of which is proven by recent developments.

U. S. Treasuries Still a Safe Haven?

Argument contra. Excerpt:

Even though the U.S. government’s debt-fueled spending response began as a national emergency under former President Trump, excessive spending continued under the Biden-Harris administration. It continued long after the emergency faded and continues today.

By continuing it, the Biden-Harris administration squandered the opportunity to refill the U.S. government’s credit reservoir to restore its risk-free status. They could have reduced spending to sustainable levels after the pandemic ended, but instead, they failed this basic test of fiscal responsibility.

The national debt in relation to the U.S. economy has now reached levels not seen since the end of World War 2. It may be helpful to consider how politicians of that time tackled this challenge. After the war, they adjusted their spending habits and stopped investing money in a war that had already ended. This decision ensured that the U.S. government’s credit reservoir would be replenished for future generations.

It’s a history lesson that today’s politicians either never learned or have chosen to ignore. Because they haven’t heeded the lesson, debt issued by the U.S. government has become riskier to the nation’s creditors. Because it has become riskier for those who lend money to the U.S. government, that same debt has become much more costly to U.S. taxpayers.

“If something cannot go on forever, it will stop.” It’s only a question of when and how painful it will be when it does.

Here we have yet another reason why anyone who supports Harris-Walz is a contemptible fool.  Is it not one of the marks of the fool to be unaware of, or unconcerned with, one's long-term best self-interest, where such self-interest correlates closely with the long-term best self-interest of one's country? 

Meanwhile the spot price of gold hovers around 2500 USD/oz.  That says something, doesn't it?

When we have gold we are in fear . . .

. . . when we have none we are in danger.  (English proverb)

A proverb whose pertinence is proven  by  recent  developments. Gold hit 2400 USD/oz. a day or two ago, but has backed off some.   Joe Biden and his shills lie their heads off about everything including the health of the economy, but, with respect to the latter,  the surging price of gold suggests otherwise.