THIS IS MY 138TH BLOG ON UNDERSTANDING MONEY
TOOLS
August, 2018
Understandingmoneytools.blogspot.com
In this blog we will continue with “America”. As has been typical of the last blogs
on America, let’s recap a bit from the past ones.
- America
loves war. War creates debt, debt
kills. It makes a few wealthy even wealthier at the expense of the middle class
tax payers.
- A
true socialistic society will not work here while we are controlled by the
elitists and wealthy. Same
goes for immigration of the unskilled, untrained and poor who need welfare.
- Especially
since the year 2000 America and its people have taken on debts that have never
before been seen. This debt does
not have the same collateralized value substantiating rational lending
policies. Likewise the World Bank and International Monetary Fund have lent
billions of dollars to third world countries at an unprecedented rate.
Let’s move forward.
Debt! How did we permit
fairly normal people to get themselves into these situations? America is one great propaganda
machine. We do it so well, and in
so many ways. We built cases
against Communism and Socialism which are held supposedly true today. Eugene McCarthy from Minnesota and J.
Edgar Hoover destroyed many people in the USA, like in Hollywood, if they were
thought to be Socialists or Communists.
Two great propagandists that come to mind are Adolph Hitler and Karl
Rove in the George W. Bush era.
George Bush hired Rove to get him elected Governor of Texas and then he
assisted on Bush’s run for Presidency in 2000. Karl used a tactic that I will always remember: “You leak a
lie to the press, then you substantiate the lie and people will then believe it
as the truth”. Doesn’t say much
for the average American mind!
Rah, rah, America is healthy and great. Borrow money you don’t have and spend it to get the economy
moving. We are doing the same
today under President Trump. The
“Trump Bump”! Big gamble.
We are twisted around by news, some perhaps true, some false
more than ever. Depends who owns the
newspaper or TV/radio station.
Here is another example. In
2003 we invaded Iraq. I was
masticating a wonderful bagel at my local deli when VP Dick Cheney came on the
morning news and stated that “debt does not matter”. I almost puked.
Debt kills! Here we are
bombing Iraq at a cost to the American tax-payers of $3 billion a week, and
debt does not matter? Cheney still
had connections with Halliburton, a fine oil/gas well service company, so he
and George Bush let non-compete contracts for tons of work in Iraq for oil well
servicing down to food commissaries. (By the way, how is Iraq today? It is a mess where the Sunnis, Shiites,
Iranians, Kurds and ISIS are picking it apart.)
Let’s hit upon Afghanistan, the predecessor war to
Iraq. We have been there now 17
years. What has been
accomplished? Now, 90% of the
world’s heroin trade comes from there.
Through our satellite system we know exactly where all the poppy fields
are but do nothing. (Don’t know where they are? Give me a break.
I farm acreage and the US Dairy Association sends me a copy of how many
acres I have in corn or soy beans to the one hundredth of an acre!)
Moving back to the home front, let’s talk about under-funded
US pensions. First, what does this
mean? If you worked for a larger
company or a branch of government you most likely had some sort of retirement
pension offered to you perhaps through a Human Resource Department. Very simply it is a trust, and the
money is to be managed by an outside source for your benefit. I won’t get into
the various types of vesting in the trust as this has been covered thoroughly
in previous blogs. Here is where
we are today. Many, many pensions
are under-funded, so the likelihood of you seeing all that was promised to you
down the road is not real. There
are reasons for this: 1) money
managers have not been able to perform to expectations especially with bonds at
very low rates now for the past 9 years.
2) Corporations have not been funding their required portion of the
trust. 3) Corporations have been
taking the money from the trusts and in some cases replacing it with their own
stock at a certain price. What
happens when their stock value goes down? (This is more normal with small
companies.)
Where do Americans sit with these pensions? The US Government pension right now is
$6 trillion under-funded. State,
city and local pensions are trillions of dollars under-funded. There is considerable news on this
currently.
How about Social Security? In about 10-15 years we are totally out of money. For one, the government keeps taking
any cash out of the fund/trust.
Secondly, and very importantly, it is calculated that automation in the
next 15 years will remove 1/3 of all human workers. This means that with automation fewer and fewer people will
be funding the Social Security system.
Robots will not be paying 14.3% FICA (Social Security) as we have
today. That figure includes .1%
that goes into Medicare, so there goes Medicare! Our Socialistic thinking politicians want free Medicare and health
for all. The current release of
cost estimates is approximately $33 trillion. Where do we get the money?
As wars have literally sucked us financially dry what has
happened to us mentally, educationally and in terms of health/welfare? After WWII a few of the wealthy
Japanese still remaining decided as long as they could no longer think of a
military build-up, “let’s take over the world economically”. Makes sense and therefore we have seen
tremendous industry growth in Japan over the past 50 years. China also has attributed much of their
vast and quick growth to staying out of war. China has broadened their acquisitions from owning Volvo in
Sweden, to some of the largest companies and real estate developments in the
USA, to buying up world supplies of lithium for batteries. America has spent its money on
war and hegemony. America stands
17th in the world on education, Finland first. The World Health Organization ranks the
US at 37th in health care.
Priorities! It depends on
our politicians, lobbyists and the president as to where we want to appropriate
money.
This is redundant, but let’s recap. Gross Domestic Product is the money
spent on goods and services in the USA, LESS government debt including interest
on the debt and LESS the difference in the import/export trade balance. The projected trade deficit is expected
to be between $550 and $600 billion in 2018, mostly from China. President Trump has his back to the
wall. He needs to slow down
Americans buying cheap goods and increase taxes. This is where his Tariff stand comes in. America has had tariffs before, nothing
new. The economists working on this
are projecting more coming in from taxes as an offset, than our companies being
hurt from tariffs placed on goods by other countries. Will this turn Americans into “Buy USA and pay more?”
We get a bit sad with this paragraph. America’s backbone economy is held
together by the Military/Defense “machine” and the medical/hospital/drug/doctor
industry. We appropriate close to
$1 trillion to defense budgets. In
regard to the medical industry within the last 6 months a I heard a spokesman
for Goldman Sachs state that we can’t afford to let people die, nor can we
afford to find cures for disease.
Of course, this meant keeping people sick, but alive so that we can keep
them on drugs and needing hospital care. Sad!
In the next blog we will look at America 2008 on and
“Selective Breeding”.
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