THIS IS MY 131ST BLOG ON UNDERSTANDING MONEY
TOOLS
April, 2018
Sometimes I reach a point on issues where I just need to
write a blog and vent. We will
call this blog “Things”. I could
have called it irritations, but didn’t.
Let’s start with wages here in the US. Concerning the new tax bill I hope you
are one of the people who thought this was a scam favoring, as always, the
wealthy and big companies. First
quarter results reflect exactly that.
Yes, a few corporations gave one-time bonuses up to $1,000 to employees
while the drop in corporate income taxes went from 35% to 21%. Looks good, but some of these
corporations saved many millions on lower tax rates. The government and Mr. Trump espoused that the corporate
trickle down and new tax laws would increase wages and incomes $4,000-$10,000
per year. In light of first
quarter wage increases across the board it now looks like families may receive
an actual annual increase of a few hundred dollars, a far cry from projections
as usual. There has never been
such a thing as “trickle down” from corporate America!
Let’s move on.
A year ago the government excluded certain items when credit scores were
calculated to increase scores and permit Americans to be able to purchase more
on credit. A reminder, “significant
credit causing more debt and buying deflationary items is a death spiral you
can’t get out of”. It makes short
term government economic figures look good, however the consumer suffers with
high interest rates and debt they can’t pay back to banks. No wonder first quarter bank earnings
look good ! Currently, to spur the
economy more the government will not permit “tax liens” against individuals
when calculating their credit scores.
Apparently, this action will benefit these individuals about 30 points
upward on credit scores so they can buy more.
The oil industry.
I love it, used to be in it.
A very cyclical business.
As I wrote in my last blog it is one of the industries not calculated
into our inflation rate, however as you well know it is meaningful. The price of a barrel of oil has gone
from about $45/ barrel to $70/barrel.
A few analysts now think $100/barrel is in the making. This is very inflationary and against
growth. Unfortunately, much of the
pricing is associated with manipulators in the market trading oil
“futures”. Wall Street does it
again! The recent bombing in Syria
does not help, nor does the general turmoil in the Middle East. Many variables.
I think Mr. Trump is making several mistakes that past
presidents have made plus many more.
One is that he is firing his people by the numbers. Many of these people are outstanding
individuals and should be given more time to acquaint themselves in particular
roles. Mr. Trump is getting us
deeper into Middle East tensions when a year ago he stated we were getting
out. In this regard, we can’t
afford more financial outlay in that area or any other area of the world. We want to mitigate tensions with
nuclear countries like North Korea and Russia, not make things worse. Russia has had naval bases in Syria and
supports President Assad. We do
not want to start WWIII, with everyone losing. I believe we want control of Syria and it’s oil, however we
have no business there. Mr. Trump
should have stuck to his original platform.
As much as we are told that the US can come back from our
current debt and financial obligations with a balanced budget, we can’t. Much of the debt has been caused by
intervention and war. The defense
industry makes up to about $800 billion of our annual budget, and the defense
contractors add greatly to GDP. A
bad way to grow a country!
Interest rates have risen and the Feds will continue to
raise rates to some degree. The
government gives the impression that the rise in rates is because of a very
strong economy; it is only strong in a few sectors. Higher interest rates and growth work inversely to one
another. The leading reason for a
higher Gross Domestic Product (GDP) comes from easier lending practices by
banks to corporations and individuals.
Spend the borrowed money. This helps in the short term, not the long
term. At most government levels we
continue to hire more people. The worst thing an individual can do is borrow
money to purchase depreciating items like autos, furniture, appliances and electronics. The International Monetary Fund has
lent money freely to third world countries. The seams of structure are tearing apart, as I have
predicted, and these countries are not able to pay on loans.
The Feds have kept interest rates too low for far too
long. This has hurt older people who should be in
conservative investments like bonds and savings accounts. All in all, this has forced people in
all age brackets into riskier investments such as stocks and junk bonds (not A
rated, but the low B and C ratings)
