Wednesday, August 24, 2016

Obama-care Obfuscates Health Care Coverage With Insurance

You want insurance, you don’t buy it when your house is burning down. If you’re sick with health care issues, this would not be the time to shop for health insurance, there is none that you can afford. A majority of the people are in tune with how health insurance works, you buy coverage before you need it. If you are sick and can’t pay your bills, whatever the government gives you is not health insurance, is government medical coverage. Insurance is for people who are not sick. Get sick and you can wish you had insurance; the trouble is you’re a day late and a dollar short.

Obamacare is called “insurance,” but it is really government subsidized health care. The insurance aspect is not there. You want the coverage after the fact. Fire Insurance is not sold the day after the fire. So in essence, the people responsible enough to want coverage before they have a problem, now have to pay for those that were too cheap to pay for what they may have needed later in life.

How long can this work? My grown son has to have insurance, and he doesn’t need it, most kids will pay a doctor $300 total in a time span of 30 years, not $2,000 a year. Trump can kill this albatross. Obamacare is not health insurance; it is health care program destine to destroy private plans by destroying them with unfair government practices that make it unprofitable for the private sector to operate. You cannot sell insurance if someone else says that you have to cover those that didn’t buy before they needed it. The governments plan of redefining insurance does not make the concept better, it destroys it.

Of course we will never figure this out until the last health care insurer goes out of business. The neat thing about it is that it is a way for government to double each taxpayers tax assessment without raising taxes. And you can bet that the extra money collected isn't going for health care.

Monday, August 15, 2016

Lunatic Congressional Financing

The average citizen thinks that Congressmen have an intimate knowledge of government financing. That’s a totally wrong assumption. Picture a black box with an opening on the left and one on the right. Insert one tax dollar into the left slot and low and behold two dollars drop out of the right hand side. Nobody in Congress knows what the internal machinery of the box includes, but it works. The amount they can spend on the budget is twice what they get in tax collections.

There is a not so small black box called the national debt. It doubles in size every 10 years, but it’s no big deal, there has never been a problem with it. Since it’s just a bunch of numbers, it’s size lies in the virtual world of mathematics. You couldn’t trip over it even if you wanted to.

Then remember the archaic banking practice of saving money for retirement? You’d give the bank a dollar and 12 years later get back your dollar and another one as interest. There was no black box, you doubled your money in 12 years. It was called “Compound Interest,” the Eighth Wonder of the World.

In today’s world, you put a dollar in the bank and in some countries, you’ll get back 95 cents a year later. So if you examine the basics of banks loaning depositor’s dollars, that is fading into oblivion. All the bank does anymore is regulate transactions between different parties.

The thing to remember during the Congressional emergency of 2008 that lead to all of the quantitative easing, if the banks had failed, the US Government would have had no financial infrastructure to borrow from.

The problem today is this, there is absolutely no reason to save money, there is every reason to spend it. With that reasoning, there is no new money left in the banks for the government to borrow. Plus those retiring, are withdrawing the money deposited into the banks over the last 50 years. What the government is losing on the national debt on the back end from redemptions, is not being made up for on the front end.

Of course the financial markets seem to think everything is just great. You can draw all sorts of graphs on the bond market, but when interest rates approach zero you enter an undefined world that changes the perspective of how people view money.

What we do know is this. The government borrowed about 24 trillion dollars and has spent every penny of it. Congress knows they can’t pay the interest on the amount borrowed (the national debt) if rates were to rise to 8%. The banks have no more real money for the government to borrow. The Treasury and the Federal Reserve are printing dollars. T-bills are being presented for redemption and the Federal Reserve is purchasing every bill presented. This is what keeps the interest rates low. If there is no buyer, rates go up until there is a buyer.

What we have here is a situation that is artificial. As rates approach zero, the definition of a bond deteriorates. At zero it has no meaning. You can borrow for free. Low rates imply low risk, when in actuality, most of these new government homeowner borrowers couldn’t come up with 5 percent down, to close the deal. Loan qualification tests are now meaningless. Negative interest rate bonds are laughable. The trouble is, there are many people out there that think we are in a viable market. At some point people will realize that the emperor has no clothes, and then the game will then be over.

Carry the logic a step further. Scenario one, when people realize they are worthless, they will try to sell them for half price. On a one-year bond, that implies an interest rate of 50 percent. Of course that will never happen, the Fed will buy all bonds. Scenario two, the government will print 17 trillion dollars (electronically) and pay off the debt. That would be the effect, but in reality, they would print dollars to pay for all government payments to the citizens (Social Security, Welfare, etc). This would allow them to continue to “borrow” (Print) and kick the can down the road. The sad thing is, we are already there.

My only question, can we ever get back to a reasonable interest rate for savings? I am afraid the answer is no. Hyperinflation solves all of these problems by making new ones you wish you’d never met.

The great thing about credit cards, if a Starbucks Latte is $4,000 you don't have to plunk down or count out 40 100 dollar bills just for a cup of coffee. Kind of makes you smile for all the wrong reasons, go figure.

Tuesday, August 09, 2016

The Great Depression 2006 vs Doom and Gloom

I've been writing this blog for quite a while. People in the remarks section tend to think that I am hunkered down in a basement investing in nothing, while waiting for the Great Depression to pass and then make a killing.

If that is what you think, you are sadly mistaken. This blog is about pointing out the misinformation out there. Especially from government. There was no great recession of 2007 until just recently, Obama verified it, 9 years after the fact.

If you can comprehend that we are in a Great Depression, we have the financial information to make a killing. We have some stocks paying over 4 percent dividends. We have rental real estate in some parts of the country that will return 20% with a lot of hard work. Precious metals are a good place to park spare cash. The investor can make just as much money in a rising stock market as in a falling one. The trouble is, it is against human nature to short a stock.

There are stock and bond options out there that are thinly traded. A $100 option contract in the last crash on October 20 1987 returned $86,000. I was greedy and had to settle for $43,000 two days later. You have to purchase options when nobody thinks it has a snowballs chance in hell, that is when the price is right. If I was to tell another person my option strategy, it would double my cost of options. Most options expire worthless, so I don’t need to throw away twice as much money for being your friend. The real key is to establish a position in good times waiting for the inevitable.

The only real place my wife and I have stopped investing in, is the Treasury Bill market. We use to make $10,000 a year on rolling over 3-month T-Bills. Why would you give our government $140k and savor your chops over $700 in interest income? I don’t know anyone who is dumb enough to invest in Treasuries, but whoever they are, they deserve to lose every penny invested. The thing that bothers me on this point, is that I don’t think I have ever met anyone that stupid. The government is covering something up here. Of course we could call it the greatest robbery of the elderly's interest savings to have every been conceived.

So what do we have here? A Great Depression. Am I in a hole waiting for it to blow over? Hell no. If you know where you are, financially, you have options; if you don’t know where you are at, you have none.

Is this blog about doom and gloom? My answer, no. It’s about knowing what is happening and making money off of it. Money is a tool, used wisely, you can carpenter many things. The real question that time will tell, are you a good carpenter? May you have the time to become a good one, remember that experience is not a one day class,.

Sunday, July 24, 2016

The Coming Election and Reality

Obama says that the economy is hunky dory. And Donald Trump thinks that we are going to hell in a hand basket.

Let’s address the issue. We are in a World Depression that is beyond anything experienced by man in world history. You can get 6 percent back on a credit card purchase, but you get zip back for money in the bank. 60 million people have stopped looking for work and 43 million people are on food stamps. The government message is this, "Don’t acknowledge the depression, if you do so, it becomes self-fulfilling." We do not have to worry about it becoming self-fulfilling we are there.

The options we have from here are several, we need to rebuild our infrastructure. We can afford to spend trillions on roads, water and electrical. We cannot afford to spend any more on Government Quantitative Easing programs. The odd thing is that the money borrowed from savers got us to where we are now. The government cannot pay back what it has borrowed or even pay the interest on what was borrowed at a fair market rate. Government is ripping off retired people of their interest income, that they expected to be generated from their savings.

From a realistic point of view, 20 to 30 cents on the dollar is about all the government is going to pay on its debts. Just what does that mean? It means if you have savings in the bank, you are about to lose 70 percent of your purchasing power through inflation, government taxation or a new currency. The neat thing, if you are broke, it is totally painless, you have nothing to lose.

What you have to realize is, the Federal Reserve, the Treasury and Congress have turned our financial markets upside down. The expected outcome is unknown. The people in charge of this financial economic experiment, have no historical guidelines to gauge what is happening. The only thing that can be deduced is that this is not going to end well, when it ends.

We didn’t build this country spending money to get 6 percent back, we built it saving money for a rainy day. We haven’t saved anything and now we have a rainy day. It’s a little like going camping and using the toilet paper to start the fire. You’ll enjoy the meal and then discover that there is no toilet paper. It was not a problem until it became a problem.

Friday, July 22, 2016

Congress and Laws

Some Congressman by the name of Elijah Cummings is screaming that we need to pass more laws to control guns and violence. He doesn’t even impress me as an adult, he’s one of those that could panic theater viewers if the rest room lines were too long

Think about it for a minute, have the laws against handguns eliminated murder? People have killed others since the beginning of time. Everyone in this country is entitled to buy a gun before they commit their first felony. What we need to realize is that laws are there to prosecute people that violate the written law. They do not prevent people from trying to kill you. I remember back 30 years ago, a man in Cheyenne Wyoming, kicked in the restroom door on a women’s restroom and took pictures of the girl in there. The police arrested him, but he had violated no laws that could send him to jail. So they released him. Later, Wyoming fixed that by passing a law making it a crime. Of course, a week later, they found the gentleman tied to a fence post with his testicals removed.

Laws do not curb behavior; they only threaten to you with jail or prison if you get caught. If the driver next to you cuts you off and you get mad and kill him with a hand gun, you’ll get 5 years if you are caught, and with good behavior you’ll be out in 2 ½. Your odds of getting caught, about 1 in 5.

Hand guns, when mixed with alcohol and drugs, become a lethal combination. Many will go to jail for doing something very stupid they would have never done sober, like rob a store.

Believe it or not, forbidding the sale of fully automatic weapons, enabled the terrorist to kill more people. Pull the trigger on a fully automatic weapon, the clip is gone in one second and you have probably missed everyone or cut one person in half, but I digress.

The urge for Congress to act every time there is a problem is probably what has put us in this mess. We cannot regulate behavior with laws, we regulate behavior with financial rewards. You don’t shoot a Congressman; you bribe him or her. So in most cases, passing a law restricting the flow or sale of something only raises the price to the consumer. The wholesaler can charge more for illegal items. The laws created by the legislatures only change the mode of delivery and cost.

Let’s back off of the idiots in Congress. Most voters when confronted with a problem, demand an immediate government solution. Common sense suggests that if a government solution was available, it would have been applied a long time ago.

Maybe that is why most new business' start out of a garage, there are no government restrictions.

Thursday, June 30, 2016

Everyone Has a Different Right Answer

Just listening to the news about Brexit. One side says were doomed if we go down this path and the other side says this will correct all of the wrongs.

Then in the US, a vote for Hillary will continue the government in place, while the other side is fed up with all the socialism.

If you notice, we have a 50/50 split. At one time everyone was in agreement. Over time, things have changed. Once you disillusionize enough people, they begin to march to a different drummer. Not to mention the fact that people everywhere are beginning to realize that the world is in a global Depression.

The real trouble with these political arguments, both sides have an opposing solution to the problem, that will solve everything. My only concern is that both sides are adamant over what the final outcome will be if the other solution is applied instead. Common sense suggests that neither side has any idea of what real results lie ahead for either path. But both sides imply that an improper vote will set the country on a path to doom.

I’m not sure how this line of thinking turns out. Almost everything is in an evolving state. In nature, the inability to evolve and adapt to new and different conditions, means you get eaten. It nice to know that all of these individuals running amuck have a solution to all of our problems, if only they could get us to listen. I've always held, that "the people with a solution to all of our problems, are a part of the problem."

Either way, it a news media feeding frenzy. Someone will print what you want to read. It's only a matter of selecting the right TV station or newspaper. The final truth?---there are no wrong answers--go figure!

Sunday, June 12, 2016

Faux Government Investment Reality and Retirement Income

Short term interest rates all over the world are about to go negative. Which means, you’ll have to pay more now for a T- bill that will mature with a value less than the original investment. Common sense suggests that lead poisoning is rampant in world financial markets.

Let’s suppose that there is a different reason for lowering Treasury rates that allows us to arrive to the same conclusion. What if the governments don’t have enough money to pay the interest on the debt and declared a moratorium on interest payments? Hmmmm. Notice doing it this way affects both government and private debt. By just lowering the interest rates to zero for government obligations leaves private debt untouched.

Either way, nobody is going to add any additional money to their savings, you mise well go for immediate gratification of your desires. Notice that those who have saved over 40 years are in a different boat. The money that they have saved for retirement is no longer generating investment income.

If we reasonalbly assume that the average retired couple can save 200K in their lifetime, at 8% interest, that would return about $16,000 a year in retirement income. Or about $1,333 per month for perputitiy. The average monthly social Security pension is about $1,335. So with a married couple, net benefits would be about $4,000 a month with everything added in. Change the interest rate to 1% and the story changes. Their savings are depleted in 13 years. And then when they really might need additional funds, they do not have them.

Unfortunately, the retiree’s kids will never even comprehend what the government did to their parents. The kids usually have no idea as to their parent’s money management skills. All they may be able to surmise is that they ran out of savings. The kids would never guess that the government ripped their parents off of about 300K in interest. This is money that they would have inherited. This is the Ultimate government coup de grace, of people that saved for retirement. The neat thing is that it is invisible. Old people are considered inept and incompetent by the young. So complaining about what the government is doing to them falls on deaf ears. Of course without schooling in economics, the elderly have a pretty good idea that they have been ripped off but don’t understand how it was accomplished.

The Federal Reserve has removed compound interest from the retirement community’s reach. This step eliminates the cost of government borrowing. With this spread between government borrowing and private sector borrowing, it is possible to generate a new income stream for Congress to spend. The vehicle of choice, student loans. Here is how it works; Congress borrows one trillion dollars of old folk’s money at 1 percent interest and loans it to students at 8%. The interest generated using the rule of 72, says that the government will double their money in 10 years. Then they return the money borrowed to the seniors while still having the 1 trillion of student loan debt still on the books. The neat thing about this income stream is that the government can gouge the young for a lifetime, not just their retirement years.

I’d never accuse the people in government of being intelligent enough to formulate the above plan, but it does illustrate the idea that “The road to hell is paved with good intensions.” The young are not saving because they can’t afford to and the old are dying off, broke and destitute. Kind of makes you wonder, is it time to avoid government retirement programs? I think so, gold and silver keep the politicians honest only because they can’t print either one of them.

An added bonus, the rest home cannot see the assets in your bank deposit box. The Gold and Silver can dance until you want the cows come home.

Saturday, June 04, 2016

Unemployment An Invisible Problem Of This Great Depression

The jobs report came out and it looks as if the country as a whole only created 38,000 jobs for the month of May and I believe they readjusted the figures for April down to 123,000 from 160.000.

The good news is that the unemployment rate went from 5% down to 4.7%. Of course the news that 500,000 people stopped looking for work kind of makes you wonder about the idiots cranking out the figures. It’s a little bit like an expert hunter talking about taking “sound shots” while hunting. That’s where you hear a noise in the bush and take a shot at it. You know what he’s doing, and your only question is why?

Obama asked at a town meeting if he would have done anything different in his Presidency, said that he wished that he had advised the people of the severity of the recession we were in at the time it was happening.

The economic consensus of our present mess, is that we walked by the graveyard whistling and got to the other side without a scratch. The trouble is, the demons know you have to come back the other way sooner or later.

Some other news source stated that half of the US population can’t come up with $400 cash for an emergency, they need to use a credit card. That scares me.

Blue Shield in Texas has announced that they will increase premium rates by 60% November 1st. If you are paying $400 now, it’s not rocket science to calculate the new monthly payment; but you’d have to be a rocket scientist to cover the increased premium for a family of 3. Obama Care will destroy the private insurance industry. No profit, they are gone. Government programs are like public restrooms, abused just as much as they are used and always underfunded.

46 million households are on food stamps. That’s out of 134 million households. It’s not like anybody is starving, they ought to pass a law against wearing stretch pants in Walmart if you weigh over 200 pounds.

But I digress. Where do we go from here with 14 to 20 percent unemployment? Does raising the minimum wage to $15 create jobs? I can see the logic in wanting to start out at $15 an hour as an employee. We need to ask the question, are the people protesting unemployed? If so, raising the minimum wage is not going to help them get a job. Millions of people were unemployed during the Great Depression. It took government work programs on infrastructure to open up the jobs market. Obama couldn't figure that out, maybe Trump can.

Of course the government claims that unemployment is about 4.7 percent and inflation is almost negative. Then we have the banks paying interest of about 1 percent. Toilet paper use to have 1000 sheets per roll. It’s a buck a roll now and smaller, it has about 200 sheets and the rolls are 2 inches less wide. So a toilet paper inflation calculator suggests that inflation is about 15 percent a year.

The irritating thing is you feel like throwing a roll of toilet paper at a politician, but when times are tough, you have to reconsider, use it where it is really needed.

Tuesday, May 31, 2016

Idiots in the News Media

Trump while campaigning, raised about 6 million dollars in pledges for our veterans. Some of the pledgers might have had a bit too much to drink or were absorbed in their own self-importance and over pledged what they were willing to deliver. So the totals don’t quite match up. But realistically that’s the way it goes in most pledge drives. The heart is willing but the wallet or wife isn’t.

ABC news announcer got labeled a sleaze by Trump for pressing the issue of who received checks and the Washington Post was demanding a list of recipients. Here is a guy that raises 6 million dollars while running for President in the Republican primary. He’s not fund raising for himself. Why would you accuse him of not distributing the funds considering what he accomplished for the same organization in 2015?

And then we have Hillary Clinton saying;
she was glad that Trump had given out the promised money.
"The problem here is the difference between what Donald Trump says and what Donald Trump does," Clinton said. "He's bragged for months about raising $6 million for vets and donating $1 million himself, but it took a reporter to shame him into actually making the contribution."

This woman leaves a bad taste in my mouth, and I’ll bet she has the same complaint with "Blowjob" Bill her husband.

What ever happened to giving credit to someone who does something great for others? What is the incentive to do it again if the media accuses you of false promises and skepticism for what you have accomplished?

Something is wrong with the news media, they expect us to be trained monkeys programed to their mindset. They are the fools, I'm tired of listening to their impression of what they think reality is.

Their perceptions don't fit into the real world. Of course I'm just one person, but someone that can raise 6 million while he's doing something else, is better than any politician.

Maybe the news sources are treating Trump like every other politician that they have covered. They are not worth a damn, maybe that's what makes Trump DIFFERENT.

Wednesday, May 25, 2016

The Venezuelan Solution to Bankruptcy

Just reading a bit of news about the dire predicament Venezuela is in. Their currency is in shambles and there are riots in the streets. Somebody suggested that the country adopt the US dollar as currency of the realm. The reason being, their government and the politicians can't print American dollars. It kind of works for all the wrong reasons.

Maybe there is a lesson for us in there somewhere. Socialism fails when you run out of “Other people’s money.”