Monday, November 24, 2008

HENRY

Oh- I forgot. I also spent Sunday morning- as I always do- watching the talk shows. I watch Fox News Sunday with Chris Wallace and switch between "Meet the Press" and George Stephanopolus. Tom Brokaw was a complete ass to Joe Lieberman, I sincerely don't know how he is considered a journalist. I miss Tim Russert.

I also watch the local shows "Capitol Report" and "At Issue". Yes- I'm a nerd.

The spin on all of the National shows was that Obama was not going to keep his promise of raising taxes on those making over $250,000. That he'll let the Bush tax cuts expire in 2011.

They're lying.

They want "the rich" to shop over the Holidays, they know things are bleak. He'll raise taxes- he'll have to- in order to pay for his new WPA that will "rebuild roads and schools"--which schools? Do you think the government will make sure that no illegals are hired for these plumb jobs?

Back to "the rich". A fellow HENRY (High Earner, Not Rich Yet) sent this great article from FORTUNE magazine from last month describing the people that Obama wants to nail.

Accompany Obama's plans with a $4 Billion projected budget deficit in Minnesota- with Democrats in Control of both the House and the Senate- and it spells major tax hikes. The Senate PASSED a 9.7% top income tax rate in Minnesota last year!

I've thought about going back to work. I have an opportunity to earn about $40,000 a year doing something I really enjoy- but why would I? I'm not giving the government half of my salary- I'd be pretty stupid wouldn't I? The irony is if I were a single mom- I'd be getting money back if I were to take that job.

BAH HUMBUG!

4 comments:

Goose said...

Obama will raise taxes, he has too. He pledged to tax the HENRYS (I read that article in Fortune as well last month, great fact-based, real people examples) to spread the wealth to the "middle class" or 95% of Americans. So, unless he wants to re-invent himself as a supply-sider and promote deficit spending, taxes will go up.

Jim said...

Obama's nuts and the "economists on both sides" he mentions who agree with the idea of a trillion dollar "stimulus" are also nuts.

Bail out banks (it has happened and will continue), bail out states that can't balance their budget (that's coming), bail out companies that can't make a profit (wait a couple weeks for the auto bailout), bail out people who can't pay a mortgage (that's in progress, too), and just print up the money willy-nilly. It's insane!

Yes, there's deflation now, but I suspect the Fed is going to severely over-shoot on their monetary inflation (as they usually do, which is the flaw of a central planner running a central bank and controlling things that should be left to free market principles). We need to encourage saving, not punish it. They say deflation is bad because it discourages spending as people think "I'll wait and it'll be cheaper." Well, that only is true for a while and for unnecessary spending. If you need a new washing machine because your old one breaks beyond repair, you'll buy. If you save money instead of buying a new appliance/car/whatever you don't really need, is that bad? Or is that frugal? Once you have saved enough, maybe you'd buy a new car you didn't need if you could afford it. Then we'd have a solid economy based on savings. Instead, the government has over $10T in debt (and almost $100T in unfunded future debt) and encourages everyone to spend well beyond their means. The government does everything in their power to make sure the dollar continues to weaken over time with targeted inflation of 2-3% and a mad panic if there's ever any price deflation.

If you want to see a crazy chart of what the Federal Reserve is doing to the money supply, look here (short term) and here (long term). Yes, that's 1414% annualized increase in the base money supply over the last couple months.

To have monster price inflation you have to have monster money creation (which we have as shown in the above charts) plus lots of people willing to borrow and banks willing to lend (which we don't have right now). If the second part ever changes, we're going to have the mother of all bubbles or some extreme stagflation. Either way, people who save their money will lose buying power if/when this monster inflation happens. Rich, poor, retired, you're all going to lose buying power of your savings, while the debtors laugh as their debts become easier to pay back with weaker dollars and they've spent the money when the dollars were stronger.

I suppose if your goal is to have ridiculous and unaffordable federal spending for decades in order to buy votes and increase your power, then you wouldn't want any other system. If you want a sound, sustainable economy that isn't in some kind of crisis every 20 years or so, you would opt of a sound-money system where new money couldn't be created out of nothing.

Anyway, all these bailouts are a bold looting of the American people and they just accept it. It's amazing. "It's for your own good" or "it would have been much worse" they say. The bankers are just having their bad bets covered by the rest of us. That's all that's happening. It really is an outrage.

Goose said...

Right on, Jim!

It is stunning to me that the economic stimulus that was passed in the summer was so that people could go out and "spend" it on things (like iPhones and ringtones and cars they don't need) rather than pursue a personal fiscal responsibility agenda of saving and spending on needs, not wants. "Hey maybe we should save a little money for health care or education rather than bitch about how expensive it is? Oh, screw that, that would be too hard, let's go eat out and talk about how the government should fix this." Shame on the conservatives for going along with it.

Guess what the Chinese have been doing for the last generation? Saving like mad. Guess who the next GDP superpower is going to be; China. In China, personal savings rates are 25% versus 0.5% is the USA. For the record, saving 0.5% is probably not worth it, you might was well just blow it on fun stuff now. You need to be at 5% or more just to keep up with average inflation.

http://research.stlouisfed.org/publications/iet/20080801/cover.pdf

Note that the Chinese government has shifted retirement responsibility to the people, which has increased savings rates. Also note that these federal reserve analysts in St. Louis proclaim that economic growth is driven by domestic investment that is financed by domestic saving.

Sheila said...

Very intersting- China's savings rates.

We must take on entitlement spending- it's now or never. But there are not enough good Republicans to do it.

The battle will be here in MN at the state level-- then I get my Catholic Charities newsletter which talks about how they're going to "organize" 16 legislative districts to lobby the legislature against cuts to welfare.