Reinke Faces Life

http://www.breitbart.com/article.php?id=D8REP5LG3&show_article=1

Fed Urges Loan Holders to Avoid Defaults
Sep 4 01:14 PM US/Eastern
By MARTIN CRUTSINGER
AP Economics Writer

***Begin Quote***

WASHINGTON (AP) – The Federal Reserve and other banking regulators issued special guidance Tuesday urging loan service companies to work with borrowers in danger of defaulting on their home mortgages.

The new guidelines are not mandatory, but the regulators expressed the hope that companies that collect payments on mortgages would heed the advice.

***End Quote***

And what happens if they don’t want to take advice from these unelected minions of the rich and powerful?

Taxpayer pays?

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FROM LINKEDIN ANSWERS:

***Begin Quote***

RE: Tax deductions against home loans (mortgage)
From:Lubna Kably
Senior Manager at Ernst & Young
International tax consultant and newspaper columnist
India
RE: Tax deductions against home loans (mortgage)

In India there is a tax deduction available against home loans up to a certain limit. Interest payments above this do not get the tax relief.

In US, there is move to introduce a legislation to remove the mortgage interest deduction on huge houses (more than 3,000 sq feet). This of course stems from the fact that large houses lead to higher energy consumption and gas emissions and this tax policy is seen as a “green policy”.

What is your view on tax sops against housing loans.

1) Should there be a ceiling limit against the interest payable
2) Should there be a ceiling limit in terms of square meters of property
3) Should the entire interest payment be allowed tax free?

I also have an additional question for LI members from the US. Am I right in assuming that at present the entire interest payment is tax deductible?

Thanks in advance. Your comments will help me in writing my next newspaper column.

*** end quote ***

On 9/1/07 11:41 AM, John Reinke wrote:
——————–
Taxes are nothing more than theft! How the gang calculates it and asking opinions about the that theft are akin to a mugger asking you if you want to be hit with a pipe or a bat. That being said, unless one is willing to resist, you have to go along with the gag!

You should NOT assume that mortgage interest is ALWAYS deductible in the US. Two things jump to mind: Alternative Minimum Tax where deductions phase out AND refinancing situation where deductibility is limited. Also, in 2008, we’re going to the polls to elect a President. Only one of the candidates Ron Paul can be seen as pro-freedom.

In doing any financial planning, I’d suggest an team approach is needed — lawyer, accountant, and financial investment adviser. They should be three separate people because you need diversity of viewpoints. (I’ve seen some conflicts of interest when you accountant sells investments or the lawyer does accounting.)

Count your change and use your fingers. Where money is concerned, strange things happen.

# # #

RESPONSE:

Hi John

Thanks so much for your reply and interesting insights.

Have a great weekend.

Best
Lubna

# # #

Reinke replied:

Well, I’ll assume “interesting” is a polite way of saying “what a nut job”. :-) Thanks OK. I’ve been called much worse to my face. But as a firm believer in the non-aggression principle of the libertarian movement (i.e., I foreswear the first use of force to attain my goals. To be free, I grant to all the liberties I wish to have myself.), I think you should be free to think whatever you like. When you do write that article, please send me a like. I’ll put it on my blog. I can only guaranty you one extra reader, but you might be surprised how many people read my blog. (I average about 150 per day.) I guess there are a lot of visitor who wants to see a raving loon. :-) Best wishes.

# # #

Lubna Kably wrote:

Hi John

Will def send you the link. This will be published end Sept. What is your email id?

And no, it was not a “nutty answer”. The bit about AMT is interesting. In India, fortunately, Minimum Alternative Tax, which works on the same basis is applicable only to corporate entities and not individuals – fortunately.

Thanks
Lubna

# # #

Reinke replied:

Here’s that email address: XXXXXXXXXXXXXXXXXXXX

Hey, you all are lucky not to have an individual AMT. One of the tax resister’s popular arguments here is that in order for the Income Tax to be Constitutional that it only applies to “corporate entities”, not “sovereign individuals”. It’s hard to say which sets off people more: the income tax or the property taxes. The politicians do a fine job of “sticking it” to us. The really funny thing is that the biggest most-damaging tax is the largely unrecognized “inflation tax”. People are stupid. The politicians, abetted by the big media and the gooferment skoolz, “tax” every dollar by the unrestricted creation of more dollars. And, people just don’t understand it. That’s the sad part. And, it’s a “global tax”. That is the yearly monetary inflation impacts everyone who holds a dollar; not just the people in the US. Amazing how people don’t get it.

L8R,
fjohn

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http://www.masternewmedia.org/news/2007/09/01/the_federal_reserve_is_monetary.htm

September 1, 2007
Robin Good
The Federal Reserve: Is Monetary Power Being Replaced By Private Economic Global Interests?

***Begin Quote***

In the present world financial system turmoil generated by the collapse for “sub-prime” mortgage bonds, the US Federal Reserve System functions, as it always does, with private meetings and telephone conferences with the great financial houses, deciding in apparent secrecy whether to increase the money supply and government lending to financial houses or whether to raise or reduce interest rates.

***AND***

I am certainly not an expert at these matters but if I have to look and report at what mainstream media does not report about, while inviting each one of us to question and research in greater depth all such issues, this looks definitely like something on which we should all ask some more and better questions.

***AND***

Should the US, reconsider the makeup and makeup of the Federal Reserve System so that it can serve the people of the United States in a meaningful and fully transparent fashion?

***End Quote***

I love it when someone “discovers” that they (we) have been getting screwed since 1913 by a monopoly.

The monied elite and the politicians have conspired to “monopolize” “money”. The monied elite gets the license to print money and do fractional reserve banking. The politicians get all the money they want to spend with having to raise taxes. (The inflation tax is a silent killer to savings.)

We could consult the Constitution for what it says about the Federal Reserve.

At the very least, we could follow the example of Andrew Jackson and end the “federal reserve cartel”. Ron Paul is just the fellow to do it.

When you are in a hole, stop digging!

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From a radio show by <what was that dude’s name>
about college versus retirement

***Begin Quote***

The host made an excellent case that parents should worry about their retirement more than their children college.

Retirement is paid for upfront. Assuming your retire at age 65, you must have all your “savings for retirement” completed at that point.

College for children can be paid over the child’s lifetime. Potentially 45 years to spread it out over. Student loans at low rates of interest allow this to happen.

Your estate can be used to pay off student loans. Student loans can not be used for your retirement.

College’s ROI is over valued. There are cheaper ways to get a college education. Specifically, community colleges. Specifically, get a job where the employer pays. Specifically, the GI bill. (Note, imho, that could cost you a child. Too expensive.) Specifically, testing to get required courses waived.

***End Quote***

Convinced me!

Especially the ROI. Get a degree in basket weaving for $160k? To earn no more than a high school grad? And some jobs don’t require a degree — sales for instance.

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http://www.lewrockwell.com/peterson/peterson16.html

Peterson’s Law of Inflation
by William H. Peterson

***Begin Quote***

But still, would governments consciously inflate against their own citizens? The thought was too dismal, the theory too disconcerting. We never got to check out the connection, if any, between inflation and public debts, for we left the Museum of Moneys of the World – that monetary graveyard – for the purer air and traffic of New York’s Sixth Avenue and fished in our pockets for a fifteen cent subway token to take a ride that had cost a nickel not so long ago.*

*Current 2007 price of New York City subway ride is $2.

This article was originally published in National Review, December 19, 1959.

***End Quote***

I’d suggest that inflation is a mandatory element of any financial plan.

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http://www.reuters.com/article/inDepthNews/idUSN2040778220070827?feedType=RSS&feedName=inDepthNews&rpc=22&sp=true

Flips, scams blamed in California housing decline
Mon Aug 27, 2007 3:08AM EDT
By Christelyn Karazin

***Begin Quote***

The Inland Empire, 50 miles east of Los Angeles, was a latecomer to the housing boom in California as buyers squeezed out of high-price coastal Los Angeles and Orange counties found large homes going up on the region’s vast supply of vacant land.

And it has been one of the most hard hit by foreclosures.

The Inland Empire’s combined Riverside and San Bernardino counties reported the fourth highest number of foreclosure filings of any of the nation’s 229 largest metro areas in July, behind Atlanta, Los Angeles and Detroit, according to market tracker RealtyTrac.

OWNERS GO ‘UPSIDE DOWN’

Survivors of Towne Square find themselves not only with unsightly, empty properties next door, but also with home values plummeting amid the fire sales on foreclosed homes.

So selling and moving to a better neighborhood is not much of an option because many owe more on their mortgage than they would get for the sale — what the industry calls “upside down.”

And real estate agents note that California’s market is likely to rebound as it has in the past, underpinned by high population growth.

***End Quote***

OK, the gooferment created the real estate problem with fiat currency that allowed artificially low interest rates to start with and followed it up by being up to its collective nose with “regulation” and interference the market.

Solution. The gooferment should exit stage left.

Tough, yes. But giving them a role in fixing it will bring even more “unanticipated consequences”. Some time it’s tough to take the right medicine but it’s better for us in the long run.

We know that the “tough love” solution isn’t going to work so what should we do?

* If you have an ARM, refi before you get ARM-twisted (i.e., have to refi when rates are “bad”).

* If you have property, consider refi in terms of your long term financial strategy. Rick Edelman makes a good case for having your estate pay of your mortgage so you have flexibility. Dave Ramsey makes a good case for being debt free. I won’t quibble with either one.

* If you are renting, look for “fire sale” bargains.

* If you are investor, look for absolute value bargains.

* Anticipate low rates for a while with tightening credit standards.

* Anticipate recession and declines in various markets.

imho

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http://www.lewrockwell.com/blog/lewrw/archives/014893.html

August 26, 2007
Top 8 Ways Hard Money Would Change Your Life
Posted by Chris Brunner at August 26, 2007 12:57 AM

***Begin Quote***

2. No more Inflation Tax for the poor

Inflation occurs when the Federal Reserve expands the money supply by creating more money. Each time this happens, and lately it’s been happening at a frighteningly rapid pace, the money that already exists – that is, the paper in our wallets and bank accounts – loses its value. This is why prices increase. Each time your money loses its value, it takes more and more of it to purchase the same goods. These guys literally make a living stealing our wealth and giving it to others. However, unlike Robin Hood, the recipients of this wealth tend to be people who are already wealthy, and the people who are hurt the most are arguably the poor. That is, the people who get screwed the most are the poor who can’t afford the rising prices – those on with minimum wage jobs or fixed-incomes. A hard money policy would put a stop to this by cutting off the Fed’s ability to inflate, or abolishing the Fed entirely.

***End Quote***

Never mind just the poor. What about me!

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http://thelibertarianforum.com/Videos/Ron-Paul-Federal-Reserve.html

Video: Ron Paul on the Federal Reserve – TheLibertarianForum
(Source: thelibertarianforum.com)
Ron Paul on the federal reserve bank.

Money is not a store as value as it is supposed to be. Ron give “Helicopter Ben” a rudimentary lesson in what is wrong with the current system.

* Congress unConstitutionally created a central bank and ceded all oversight of that bank to a private cartel to the detriment of the American people.

* The dollar is inflated year after year. This results in a 96% loss in purchasing power (Ron Paul’s number) since 1913. (Other statisticians say it’s 95% from 1970 to 2000). Regardless of whose numbers you believe the purchasing power of the dollar erodes dramatically impacting everyone , but especially the people least able to cope.

* Inflation is a tax. Hidden. Silent. This permits the Congress to spend without limit.

All financial planning must treat the USD as a depreciating asset. YMMV!

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http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/20/bcnswiss20.xml

Top Swiss banker attacks US lending standards as ‘unbelievable’
By Ambrose Evans-Pritchard and Yvette Essen
Last Updated: 12:15am BST 21/08/2007

***Begin Quote***

Switzerland’s top banker has warned of massive losses from the unfolding credit crisis, describing the collapse in US lending standards as “unbelievable”.

Jean-Pierre Roth, president of the Swiss National Bank, said market turmoil was far from over as tremors from the sub-prime debacle continued to rock the world.

“We’re certainly not at the end of the story. There are question marks surrounding the development of the American economy,” he said. “Something unbelievable happened. People who had neither income nor capital got credit with very attractive conditions. Now reality is striking back,” he said.

***End Quote***

No money down, low interest rate, no documentation.

Was it any wonder that the real estate market exploded. One way to avoid inflation, (i.e., the counterfeiting of money), is to buy real estate.

And I am sure the local komisars were not unhappy with the run up. In New Jersey, property taxes are based on “value”.

What a joke!

And, are we hurting America’s productivity by having people locked in a location by home they are tied to. That, as opposed to a rental apartment, where if they found a job in a different geography, moving was not out of the question.

Can anyone not in a city ever walk to work? Or, perhaps telecommuting is going to make a big comeback?

Having said that, perhaps now is the time to find bargains?

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http://www.lewrockwell.com/duffy/duffy11.html

Financial Markets on Crack
by Kevin Duffy

***Begin Quote***

How does today’s credit bubble compare to its 1998 and 2000 predecessors? Derivative exposure has more than tripled since 1998. And the balance sheets of the top 5 investment banks have nearly tripled since 2000. Structured finance was in its infancy 9 years ago and the collateralized debt obligation (CDO) market was just being invented. LTCM was a liquidity crisis; the current credit meltdown is a solvency crisis.

Cheap and plentiful credit is what caused the current mess. More of the same can only make it worse. It is only a matter of time before this shot of credit heroin wears off. Sometimes the best medicine is none at all.

***End Quote***

Yup, you don’t grab a falling knife. But it is tempting. Buying quality stuff at a discount is one way to make money in the market.

But, if the market is going over the cliff in an unprecedented fashion, does it matter if you are on the bus going over or just waltzing along.

Bottom line: You’re on your tush saying “what happened”.

Aigh! (Combo sigh and argh)

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http://www.jbs.org/node/1064

You, the Fed, and Inflation
By Llewellyn H. Rockwell Jr.
Published: 1998-11-23 06:00 Economics

***Begin Quote***

Wall Street remains constantly worried about two forces in American economic life: inflation and deflation. It seems Wall Street worries about inflation on Mondays, Wednesdays, and Fridays. On Tuesdays and Thursdays, it worries about deflation. Or perhaps it worries about both at the same time.

Of course, inflation is one of the most destructive forces in all of human history. In order for an economy to function properly, money must be sound and its value must be honestly gained. For most of human history, soundness and honesty were guaranteed because money was just another name for the most valuable commodity: gold. Gold was ideal as money because it was portable, durable, divisible, fungible, and scarce.

Gold has been money throughout most of our nation’s history, and until well into the 20th century government had little control over its supply and value. But with the establishment of the Federal Reserve in 1913, the foundation of money in gold began to be eroded. Over the decades, the link became progressively less secure, until in 1971 President Nixon did away with the last remnants of the gold standard. If you hid a dollar in a mattress in 1970, today it would be worth less than a quarter of its former value.

***End Quote***

Stunning simple observation of why we as a country are so royally weenied!

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http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/19/ccom119.xml

Business comment: Financial services should be there to serve
By Dan Roberts, Business Editor, Sunday Telegraph
Last Updated: 2:14am BST 19/08/2007

***Begin Quote***

First, the bad news. Don’t be fooled by Friday’s bounce. We are not out of the woods yet. If anything, the Fed’s decision to rescue markets by throwing money at the problem supports our view that this summer’s financial crisis threatens the wider economy.

A slowdown will be painful for everyone, especially here. Despite our Chancellor’s belated words of confidence, the UK is excessively dependent on the City. Even companies far away from the Square Mile will find it harder to borrow their way out of trouble or invest in new factories, shops and offices. It may not tip us into a recession, but the fall in confidence will trigger a big chill that brings some racier parts of the economy to a near standstill.

***End Quote***

Best assessment of Friday’s Fed action is that we are heading into a period of inflation (i.e., the Fed’s “helicopter” Ben dumping more counterfeit notes into circulation) and recession (i.e., consumer and business confidence will “de-invest”).

How does one save and invest going into this climate?

Clearly one has to “surf” the wave of inflation. Don’t even think about sticking money in your mattress. To surf in a falling market is a good trick. Riding indexes south will not only NOT keep up with inflation but may actually be a big loser if you guess wrong. The best strategy might be targeted investments in things that retain value. Defensive stocks, high quality stuff, commodities, essential businesses.

Tie in a recession, and you need to focus on where people have to spend money regardless of their “confidence”: basic food, medicine, healthcare, drugs, commodities.

Look to the era in the USA during Carter’s stagflation and Japan’s Decade of Zero Interest Zero Growth.

Where is growth “guaranteed” — India (where you might get an honest count) and China (where you definitely are at risk of a haircut).

Sigh.

Certificates of Depreciation — on the theory that a small loss is better than a big loss?

Tough times!

# # # # #

No, not the kind you use to climb to the roof of your house, but the financial kind.

With the recent shakiness in the market, someone has asked me about my blog post about CD ladders. So, here’s a sanitized version of the advice I gave him.

You might be interested in a ladder to maximize the interest your receive on the savings part of your portfolio, you might want diversification to minimize risk, or you want a flow of readily available cash without forgoing a higher interest rate.

In building a ladder, you can use certificates of deposit, treasury bills and notes, or bonds. Regardless of what you use, the principles are the same.

For sake of discussion, let’s look at a simple ladder. Here’s a four quarter four year ladder:

Now assuming that you have 16K$ to invest, how do you: set it up, maintain it, and shut it down.

Let’s assume you are doing this at a credit union (I love credit unions.) where they have a full spectrum of terms available and a 1k$ minimum.

You walk in on January 2nd with your 16k$ and buy A one year, two year, three year, and a four year cd for 1k$ each. You also buy a Ninety day, One Hundred Eighty day, and a Two Hundred Seventy day cd for 4k$ each.

Now your ladder looks like this.

On the first business day of each quarter, you go in and redeem your maturing 4k$ cd. They will pay you some small amount of interest. So buy a one year, two year, three year, for 1k$. And a four year cd for 1k$ plus the interest.

Now your ladder looks like this:

And, you are in “maintenance” mode.

Each quarter, you go in, redeem your maturing cd, and buy a four year cd for the matured amount.

Now your ladder looks like this at the end of year 1:

Now, to just close the ladder out, you can just take every maturing CD as they come due.

OR if you are saving a big purchase like a car or college education, you may wish to “unwind” it.

Let say at the end of year 21, you are buying a house. in Year 17 you wish to begin to “unwind” it for year 20. It’s really simple. In Year 17, instead of buying the Four Year cd, you would buy a Three Year cd. In year 18, instead of buying a Four Year cd, you would buy a Two Year cd. In Year 19, instead of buying a Four Year cd, you would buy a Two Year CD. In Year 20, instead of buying a Four Year cd, you would buy a One Year CD.

In Year 21, with the First Quarter cd, you’d roll it over into a 270 day cd. Similarly, Second Quarter would roll into a 180 day cd. Third Quarter rolls into a 90 day cd. In the Fourth Quarter of Year 21, you redeem all the cds for the new house.

That’s how a ladder works.

Why do it?

* You are always getting the highest rate of interest.

* You always have cash becoming available for emergencies.

* You are minimizing your risk of interest rate fluctuations.

What is it useful for?

* You can have your own little annuity or steady pension plan (i.e., take the interest and reinvest the principle).

* You can have an emergency fund when you need it that earns a little more interest.

* Your savings can keep pace with inflation.

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http://money.cnn.com/2007/08/13/pf/expert/expert.moneymag/index.htm

Retirement: The 4 percent solution
Many retirees are confused about how much of their savings to take out each year. Money Magazine’s Walter Updegrave explains the 4 percent rule.
Money Magazine
By Walter Updegrave, Money Magazine senior editor
August 14 2007: 10:32 AM EDT

***Begin Quote***

NEW YORK (Money) — Question: I’ve read that if I withdraw roughly 4 percent of my retirement savings each year to live on, my money will last virtually forever. But does this 4 percent include the money my portfolio already kicks off in dividends and interest? Or is the 4 percent withdrawal on top of that? – Doug Martin, Syracuse, New York

Answer: First, let me say you’re not the only person mystified by the workings of the 4 percent withdrawal rule. I get questions about it all the time, so I’m happy to clear up the confusion.

Money Magazine’s Walter Updegrave gives his advice on the best way to maximize your retirement savings when you are just starting out.

And while I’m doing that, I’d also like to point out that, like any rule of thumb, this one is really only a general guideline. It’s not as if the Retirement Gods have decreed that everyone must use a 4 percent initial withdrawal rate, or that doing so guarantees the best retirement.

But before I get into some of the subtleties about this oft-quoted rule, let me explain how it works. Many people think that the 4 percent rule means that you simply withdraw 4 percent of retirement savings each year. But that’s not right. In fact, the 4 percent figure applies only to the percentage of your savings that you withdrawal the first year of retirement.

You then increase the dollar amount of that initial withdrawal for inflation each year.

***End Quote***

Rules of thumb are great. Even if they made the mistake and took 4% each year, they wouldn’t be far wrong. And, if else fails, one COULD — not recommended — buy a low cost annuity and take all the guess work out of it.

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http://www.lewrockwell.com/rockwell/reality-vs-state.html

Reality vs. the State
by Llewellyn H. Rockwell, Jr.

***Begin Quote***

So on it went for seventy years, until one day the entire hoax was exposed by the ultimate reality test: the market economy. Bad credit risks didn’t pan out. Those who lent without regard for underlying fundamentals are suddenly seeing red all over the place. Bankruptcy ensues. Those who purchased repackaged mortgages on the open market find themselves with a hot potato and no one to toss it to.

So what does the government do then? It runs to the basement and turns on the printing presses. It creates $37 billion on the spot and buys up the bad loans and calls them assets. The government says that this is to create confidence. But confidence can’t be created by making up reality. That path only leads to more illusion and error.

***End Quote***

Didn’t anyone think that “averting the crisis” was in and of itself a problem? Anyone still believe the gooferment’s core inflation rate numbers? Anyone not concerned where this runaway freight train is heading at full steam?

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http://www.humanevents.com/article.php?id=21827

Stealth Tax Increase
by Robert Novak
Posted: 08/06/2007

***Begin Quote***

WASHINGTON — The 42 senators and 196 House members who have signed a no-tax-increase pledge received a stern warning last Wednesday from Grover Norquist’s Americans for Tax Reform (ATR): If you vote for Amendment 2548 to the Democratic-sponsored expansion of SCHIP (State Children’s Health Insurance Program), you will violate your solemn promise. However, Amendment 2548 is not the product of tax-and-spend liberals but of conservative lawmakers and policy experts.

***End Quote***

There doesn’t seem to be anyway to stop the free spending in Congress.

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http://www.survivalblog.com/2007/08/letter_from_lawyer_describing.html

Letter From Lawyer Describing Real Estate During the Great Depression

***Begin Quote***

The following (courtesy of Tom at CometGold.com) is an excerpt from letter written from a lawyer from Mason City, Iowa in the Corn Belt, recounting the impact of the Great Depression of the 1930s on his town. Foreclosures galore. Tom’s Comment: “Anything sound familiar?” Just substitute residential real estate for farm land, when reading the following:

“The boom period of the last years of the World War and the extremely inflationary period of 1919 and 1920 were like the Mississippi Bubble and the Tulip Craze in Holland in their effect upon the general public. Farm prices shot sky high almost over night. The town barber and the small-town merchant bought and sold options until every town square was a real estate exchange. Bankers and lawyers, doctors and ministers left their offices and clients and drove pell mell over the country to procure options and contracts upon this farm and that, paying a few hundred dollars down and expecting to sell the rights before the following March brought settlement day.

{Extraneous Deleted}

***End Quote***

A sobering read. Neither a borrower nor a lender be? Especially when you’re old and gray.

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http://www.masternewmedia.org/economy/debt-and-interests/money-creation-by-private-banks-Money-Castaways-story-20070804.htm

August 4, 2007

How Money Is Created As A Debt By Private Banks – The Money Castaways

Robin Good
Be Smart, Be Independent, Be Good
Edited by: Luigi Canali De Rossi

***Begin Quote***

The story I present to you here today has nothing with to do with web 2.0, new media or how to make money with your site. Today’s story is all about waking up. Realizing that something you have given for good and granted since you were born, may actually deserve some heavy rethinking ASAP.

This is the story of how private banks force most of us into the vicious, enslaving circle, in which you have long been feeling trapped. Working your ass off for six days a week only to be able to pay the rent, the gas, the bills and very little more. If getting a mortgage to buy a house means signing a slavery contract for the rest of your life, maybe THERE IS something deeply wrong with the economics of our system and the way create debt out of money THEY DO NOT OWN.

But you know what fucks us bad?

Our ignorance.

***End Quote***

Now I’ll need a little help here. I’ve sent out the “bat signal” to real Austrian economists. This cartoon doesn’t seem right to me. But, I’m an injineer, not an ekkynonnnymist.

I suspect that it is in the quick way it whizzes by the transformation from bartering goods to creating a fiat currency. But, I think it makes some big leaps to an unsustainable conclusion (i.e., money for social justice).

One must always read extra careful when you see stuff by the “social justice” crowd. They are usually Socialists at best and Communists at worst.

While they will criticize the “banker” in their little morality play, they ignore conveniently that the division of labor made possible by free markets and capitalism. We can support more of us with everyone doing “their thing” in liberty. The free market allows us to peacefully decide who “needs” what and to satisfy those needs in an incredibly complex calculus. Thousands of needs all integrated and aligned to come up with the “best” solution. Markets with prices allow everyone to decide what is best for them. It came about organically from the barter economy. And, is singularly responsible for human progress in that it allows needs to be peacefully satisfied.

Money, whether it be those big wheels of the Yap Islands, the tikis of some other island, or gold coins, makes the world go around. Money allows prices. Prices induce people to change their behavior — forgo, substitute, or conserve. Some need is expensive; maybe it’s a want as opposed to a need. Steak is “too expensive”; eat “cheaper” chicken. Maybe for an expansive good, I can use less. The marketplace automagically aligns all these calculations. Prices allow people to adjust.

I agree with the conclusion about “ignorance”. We’ve become too “smart” for our own good.

When gooferment was given the monopoly over “money” that’s where the dead old white guys made their mistake. And, we have been paying for it since 1913 when the Federal Reserve was created. They should have stood silent on what constituted money and allowed the marketplace to decide.

imho

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http://www.web-purchases.com/ECC/EECCH604/landing.html?o=1313749&u=6531875&l=826579

From the Early To Rise newsletter

***Begin Quote***

Untangle yourself from all of life’s most perplexing situations, in business, your personal life, or on the road, every time. Just pick up your free copy of ETR’s Unscrew Yourself e-book and get 223 pages of our most practical insider information.

***End Quote***

I like “free”. I have no idea if it’s good. But the ETR and its writers always seem to have good advice. And, it’s free.

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http://www.vanguard.com/VGApp/hnw/VanguardViewsArticle?
ArticleJSP=/freshness/News_and_Views/
news_ALL_socialsecurity_07232007_ALL.jsp&
email=returnarticle&oeaut=CtTBZmlVcb

Social Security: Does it pay to delay?
July 23, 2007

I thought you might be interested in this information I found on Vanguard.com®.

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The first members of the baby boom generation are about to reach another milestone. People born in 1946—the beginning of the boom—will turn 62 next year, making them eligible for early retirement benefits from Social Security.
For more information

Having paid into the federal program for decades, many baby boomers will find the prospect of tapping their benefits appealing. But this may be a situation that calls for delayed gratification.

Taking Social Security at age 62 involves a significant trade-off: In exchange for getting your payments before “full retirement age,” you’ll see your benefits permanently reduced.

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Social Security Insurance — it’s none of those things — is such a scam.

The article correctly cites to delay if you can and your guesstimate of your life expectancy.

The article ignores that: the congresscritters can change the game at any time (like the did when they made it taxable); the dollar is not a store of value (hence the number that they cite are devalued by inflation); and the catastrophic effect of your death on your wealth (guessing wrong about you life expectancy deprives your heirs for the fruit of your labor).

The article begs the question of why anyone would be in a scam that provides such a significant negative return. It’s estimated to be a negative 2% per year.

It also fails to factor the TEOTWAWKI arguments that might end the scam. Social Security Insurance is a Ponzi scam that is racist, intergenerational war, unconstitutional, and unsustainable. It transfers money from poor minority men to rich white women. It pits the old against the young by saddling them with the bills later. No where in the Constitution is the gooferement empowered to do all these things. And, like most Ponzi schemes, it collapses when it runs out of suckers.

So, my take is that you should cash out as soon as you can. Too many unavoidable risks. A dollar now invested in gold might be worth far more than an empty promise later.

imho

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update: There’s a Part 2 here: http://tinyurl.com/ypamjp- that’s where the surprise is.

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http://www.economist.com/business/displaystory.cfm?story_id=9587542

The credit squeeze
Abandon ship
Aug 2nd 2007
From The Economist print edition
Investors sail into a credit storm amid worries about the debt markets

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Bank executives will be haunted by memories of Ninja loans (to people with No Income, No Job or Assets) and Pik toggles (agreements that gave firms the right to pay interest in the form of further IOUs rather than cold, hard cash).

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Now there’s a term I never heard before — ninja loans!

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http://www.lewrockwell.com/orig3/guillory10.htm

Thrift and Liberty
by Gil Guillory

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Taxes. Not only is taxation perhaps the most evil institution left on earth, now that chattel slavery is virtually extinct, taxation distorts the individual’s finances. We are all familiar with the social engineering in the US Federal Income Tax, with credits and deductions for all manner of activities the state officially encourages or discourages. But much worse is the attack on capital which the tax system represents. Consider: your wages are taxed, with what’s left, you invest in stocks of companies, the profits on the companies you invest in are taxed, with what’s left of that, the company pays you dividends or increases retained earnings, and then those dividends or capital gains are then taxed.

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We can’t even calculate the ax load we carrying. Taxes are buried inside everything.

Argh!

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OK, it’s Frau’s subscription, but it was a “honey do”! It was interesting that there was a 28% discount for a multi year subscription. There were no human beings handling the call. (Activating Frau’s replacement credit card was an automated experience as well. Another honey do! She lose her card and I get work to do. Sigh!) Of interest in this exchange was that there was no confirmation number. And, a lot of dumb repetition. Sigh. SO, if the transaction gets “lost”, how do I prove I did it. Better yet, how do I get credit for completing a honey do?

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OK, it’s Frau’s subscription, but it was a “honey do”! It was interesting that there was a 28% discount for a multi year subscription. There were no human beings handling the call. (Activating Frau’s replacement credit card was an automated experience as well. Another honey do! She lose her card and I get work to do. Sigh!) Of interest in this exchange was that there was no confirmation number. And, a lot of dumb repetition. Sigh. SO, if the transaction gets “lost”, how do I prove I did it. Better yet, how do I get credit for completing a honey do?

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http://www.lewrockwell.com/north/north550.html

The Five Stages of Counterfeiting
by Gary North

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The FED does whatever it can to figure out what the public will expect next. Most important, it keeps its activities and plans secret. But, step by step, word is getting out. The dollar is falling. The government’s debt is rising.

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While North is focusing on how the fiat currency “burrows” into the civilization’s thinking (i.e.paradigm shift), I was focusing on the meme of money. There’s no doubt that the debasement of the currency has caused the downfall of several empires, civilizations, and nations. The French Kings, the Byzantine, and Zimbabwe to cite just three quick examples.

The 64k$ question is “when?“.

When does the SHTF?

When is the Gadswell “tipping point”?

When does the money fail to support the division of labor?

I’m an ingineer, not an ekkynonymist. I’m not even sure that those three whens are in the correct order. In the history of the USA, and before that in the United States of America, we have never seen such an event. There have been several close calls. The Carter 21% inflation, the Nixon Wage Price Controls, and the Long Term Capital Finance derivative mess.

The tipping point on when the American dollar can no longer be inflated imho is when the Chinese accept something else as a reserve currency. The recent “news” that they were diversifying out of dollars was telling. It’s a toe in the water. When OPEC wants payment in other than dollars, when the Chinese make WalMArt pay in other than dollars, when the Mexican “illegals” start sending home something other than dollars, htt will be the tipping point. Look out below.

The SHTF when the legal marketplace begins to fail and the black market begins to boom in other than drugs. Ebay starts auctioning food. Amazon sells move books on Victory Gardens. And, the politicians start “jawboning”.

Money is a unique meme. The store of value function is what is being messed with by gooferment. Money allows capitalism and the division of labor. On Crusoe’s island, Robinson has to save five days of fish to make a the fishing net to allow him to catch twice as much. Tool building is the hostage of savings. If there were ten castaways on the island, they could each “invest” a ½ fish in making a net. (Dumb analogy. But you get the idea.) So to substitute money in for those saved fish, money saved allows small sacrifices to be “collected” more easily into one big “investment”. Note that money isn’t the saved fish. But printing more money doesn’t make more fish. When money devalues so quickly that there is a paradigm shift by the population, that’s when the division of labor breaks down. When people are growing “victory gardens” instead of working for money, the division of labor is a “toasty critter”. Stick a fork in it we are done. We only support the number of living souls based on the division of labor. If we begin to regress to subsistence farming, then there will be a lot of dead people around.

When the big question is not if, but when?

So what does one do?

* Become Amish? Or a Mormon. No debt, frugal life style, seek valuable skills.

* Orient savings and investments away from fiat currencies. Stick to defensive investing regardless of what your politicians and bureaucrats tell you.

* Minimize your exposure to taxes. Call the shots as you see them. Save and plan for what does one do when the transition occurs.

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http://www.homelandstupidity.us/2007/07/04/independence-day-3/

From a discussion with a befuddled fool who’s had the wool pulled over his eyes.title

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Author: Ace Duggery
Comment:
You’re a moron. First of all, I had to debate whether or not to even respond to a posting with dozens of grammatical errors. Obviously you’re a very smart person, your command of the written English language shows that. NO matter what you use as a currency, whether it’s a commodity or a piece of paper, somebody will have to control the issuance of such currency. Unless you want a barter economy, do you know what that is reinkefj?, you will never get true value from an exchange and there will constantly be a change in value of whatever you use for currency. If we used gold or silver, or even a note that is backed by such commodities, like the United States used to do, we would have to constantly revalue how much our currency is worth per oz. of these commodities. Do your research, this has happened several times over the course of history. And the reason we stopped using volatile commodities as a peg for our currency is that the prices of gold and silver fluctuated so much that we had to frequently change

Oh…and the dollar has not depreciated 95% since 1970. That is a blatant lie, did you make that number up?

I understand your points, and I even agree with you to the effect that the government, “gooferment”, whatever you want to call it, is, at times, corrupt. This is no perfect society, get over it. No such place exists, has ever existed, or will ever exist. There will always be shortcomings. I am not advocating that we completely ignore these problems, but let’s at least come up with a better idea than commodity backed currency. And seriously what the hell was Ron Paul talking about in the last debate? 9/11 happened because we were bombing Iraq and the middle east? Are you trying to say we “deserved” 9/11 because we were over there fighting against countries in the Middle East?

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Here’s my response:

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>somebody will have to control the issuance of such currency.

No, why can’t we have a free market in currencies as we did before the legal tender laws were passed mandating that everyone had to accept these phony unconstitutional federal reserve notes.

>And the reason we stopped using volatile commodities as a peg for our currency is that the prices of gold and >silver fluctuated so much that we had to frequently change how much the paper backing was worth to the metals.

No, the reason FDR took us off the gold standard was so that he could spend as much as he wanted on welfare and warfare. And the people were to dumb to see the con.

>The dollar has not depreciated 95% since 1970. That is a blatant lie, did you make that number up?

No even the Federal Reserve will admit that the dollar has depreciated.

http://www.frbsf.org/econrsrch/econrev/98-3/3-16.pdf
between 61 & 97 2.39% per year average by the Fed’s own numbers. The math is a little tortured to minimize the impact.

However, other credible sources

http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt
1970-01-01 37.900
2001-01-01 175.600
CPI 175 from 37 looks a lot more than 95%

http://inflationdata.com/inflation/Inflation_Rate/Inflation_Rate_Calculator.asp#results
435.49%

And no one seems to dispute the impact.

http://www.econedlink.org/lessons/index.cfm?lesson=EM168
Costs of Inflation
4. Inflation does reduce the purchasing power of money.
5. Inflation does redistribute income. On average, individuals’ incomes do increase as inflation increases. However, some peoples’ wages go up faster than inflation. Other wages are slower to adjust. People on fixed incomes such as pensions or whose salaries are slow to adjust are negatively affected by unexpected inflation.

>You’re a moron.

You’re right “Putting lipstick on a pig doesn’t make it beautiful and annoys the pig.”

One can’t reason with a “true believer”. If you wish to believe that everything in money is just peach keen, then do so in peace. But, let’s not kid around with the what is the single biggest crime of the gooferment messing with the money. It’s what brings down civilizations (i.e., Romans; Germans; English) and our turn is coming. Quickly.

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Which made me think of an interesting comparison.

If the CPI was 38 in 1970 and 176 in 2001, that’s a 463% increase.

If the S&P500 was 85 and 1394, that’s 1643% increase.

If the DJ was 619 and 11501, that’s 1857%.

So the markets have out performed inflation.

Using my real estate as a proxy, 55 to 350 47 to 335 40 to 350. That’s about 142 to 1035. Or, 728%.

Those are the good things.

Purchasing power has declined. SO a “depreciation factor” would make all these “paper gains” what?

$4559.73 in the year 2001 has the same “purchase power” as $1000 in the year 1970. www.measuringworth.com/ppowerus/result.php

So that’s about 79%!

But, it I think it understates it. For example, I’m paying property taxes on an inflated value. I’m paying capital gains taxes on an inflated value. And, the various taxes are all based on a percentage of inflated value.

Exponential Arghs!

One thing is for sure. You don’t want to be holding cash. Ever!

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