THIS IS MY 191ST BLOG ON UNDERSTANDING MONEY
TOOLS
July, 2020
In this chapter/blog we are going to continue on from blog
190. In blog 190 we covered some
history in socioeconomics and talked specifically about Nationalism, Fascism
and Socialism. Three individuals
stuck out, those being Adolf Hitler and his National Socialist German Worker’s
Party- Nationalism, Benito Mussolini the creator of Fascism although the roots
began in 1914, and political theorist Saul Alynsky’s writings about Socialism.
(A side note here.
As three of my grandparents came from Germany around 1900, I have always
enjoyed the study of German history.
It is amazing that Germany being slightly smaller than the state of
Montana almost took over the world in the 1940s. Today, Germany has a population of 83 million people and
Montana has 1 million.)
What initiated the writing of this blog was a morning coffee
with a good friend who is a retired professor of agriculture. He started our morning conversation by
stating one of his grandson’s, who has three college degrees and lives in
California, told him he was “left wing” slanting to socialism. My friend asked me for a definition of
socialism, and if that tended to be communism. I thought to myself “if my intelligent friend can’t
well-define the difference between capitalism, socialism and communism I wonder
how many people are “out there” who also can’t produce a definition.” This then breaks down into society,
politics, laws, money flow and much more.
With that said, let’s start.
Warning: This
blog wanders in content. Entering
you run the risk of gaining knowledge!
CAPITALISM: An
economic and political system in which a country’s trade and industry are
controlled by private owners for profit, rather than by a government body.
SOCIALISM: A
political and economic theory of social organization which advocates that
production and distribution should be owned or regulated by a community or
governmental body.
COMMUNISM: A
political system derived form Karl Marx advocating a society in which all
property is publicly owned and each person works and is paid according to their
abilities and needs.
Okay, those are text-book definitions. Let’s bring this into today’s world and
reality. None of these systems
work because of corruption and greed at top levels. Sad. Also, similar to people’s Race and
Color being more blended worldwide, the three forms of governing are less
distinct and separable today than 75 years ago.
Let’s take Communism first. Very few true Communist
countries remain in the world after Russia and it’s satellite countries self
destructed in 1989 when Mr. Gorbachev created a new system of governing. I looked up today’s Communist countries
and only found a handful, those being China, Cuba, Laos, and Vietnam. Frankly, I see these countries trending
toward socialism with an autocratic hand.
Much of this has been forced with globalism and trade. Communism lacked the individual
incentives to succeed. The top controlling parties and individuals in Communist
countries became wealthy leaving little for anyone else; there was not fair
distribution of capital and net income, as intended. The assumption was that individuals would take it upon
themselves to want to reach out and perform their best for the “state”; didn’t
happen, and governments became cruel “big brothers” monitoring each person’s
movements for control.
Then, we get to “socialism”. It is a grand thought that a governmental body could be
honest with good intentions for all, but unfortunately a political theory
doesn’t know the human being.
Today, we think of socialism and we think immediately of Venezuela; a
country that seems to have so much…oil, beautiful beaches, agriculture, and
more. Yet, the ruling party has
destroyed the country. (I suppose
I shouldn’t suggest our government and CIA was in there to help the destruction!) Socialism has great benefits when
operated properly, perhaps the best of all socioeconomic forms.
Many people place great countries like Norway, Sweden,
Finland, Denmark, The Netherlands, Switzerland, Austria, Canada in the realm of
socialist countries but they are defined as “capitalist” countries with many
socialistic underpinnings. For the
most part these countries offer a large middle-class, with few rich and very
few poor people. For many,
education and health care/medicine are free and the well-being of the people is
foremost. A commonality is they
all have a relatively small population, easy to manage, with a strong national
binding. Taxes tend to be high,
but quality of life including stability, good wages, happiness and low stress
comes first.
With “capitalism” it only works long-term with a truly
honest form of government rendering certain socialistic tendencies resulting in
a very large middle-class. Let’s
talk about the United States here, calling a “spade, a spade”. We are supposed to be the epitome of
world capitalism, a constantly upward trending economy year after year. In my viewpoint we have taken the
“goose that lays the golden eggs” and shot it. The goose is our government body, and the golden eggs are
our wonderful middle-class people.
With capitalism you can’t have a good country without a financially well-healed
middle-class of people. The
average person needs to have enough money coming in to afford basics and then
have a surplus of money (discretionary dollars) to spend on goods. We have
permitted big business and government to destroy the middle-class. Henry Ford was one “smart cookie”. He alienated his big business friends
by paying his people three times what the norm was so they could buy his cars. In the United States today we have the
big companies in control, destroying the small businesses that once made
America great. Anti-trust has been
destroyed protecting corporate domination, the last residue being seen around
2000 when George W. Bush became president.
As we know, or should know, big business with their money
buys politicians with direct donations or with lobbyists. Wall Street has “made” certain people
incredibly wealthy as with Bill Gates, Jeff Bezos and others. Without the power worldwide of Wall
Street these individuals could not have created their wealth of today. So, I say we are destroying ourselves
because of individual and political greed similar to poorly run Socialized and
Communist countries.
Bottom line here is that the world does not have a pure
Capitalistic form of government nor a pure Communist system. The form of government is important as
it has an impact on taxes and where the money flows, thus the impact on its
people. Since 2007 we have seen
both Socialism and Fascism enter the US.
The US government has created “controlled selective breeding in the
corporate world.” We let certain
banks and companies fail, and bailed out others with taxpayer money. We also participated with ownership as
we did with General Motors Corp.
This has been a prevalent habit with the Department of the Treasury and
Federal Reserve buying trillions of dollars in US stocks and bonds creating a
false economy.
Let’s delve into other things which I think you may find
interesting. Start with our two
party political system and its development. The Democratic Party was started on January 8, 1828 by
Andrew Jackson and Martin Van Buren.
The Republican Party was formed on March 20, 1854 in Ripon,
Wisconsin. (I remember that coming
from Wisconsin!) Prior to the
Republican Party it was the Whig Party from 1833-1854, started by Henry Clayton. Typically, over time the Democratic
Party has been the “left-wing” more socialistic trending party, and the
Republican Party has been more conservative, “right-wing” wanting less national
government intervention with decision-making and conservative on spending. The “right-wing” gives the states more
control. A quick look at the past
50 years and you might re-adjust your thinking on conservative national
spending. Our incredible debt
because of the Viet Nam War under Kennedy, then Johnson, then President Nixon
forced us to go off the gold standard that supported our US dollar on August
15, 1971. President Reagan,
another Republican, almost bankrupted our government trying to out-do Russia on
“military build-up.” Republican
President George H.W. Bush built up more debt with Desert Storm War in
1990-1991. Continuing with massive
debt under Republicans would be George W. Bush entering Afghanistan and Iraq,
with us now being in Afghanistan for 19 years. Currently, President Trump has added $8 trillion to the
countries deficit balance sheet in just 3 1/2 years. Who knows how many more trillions of dollars spent “off
balance sheet?” This has more to
do with hegemony than being fiscally conservative.
Let’s back up further and wander more with a couple of
things that formed this country.
The Declaration of Independence declared this country to have its own
rights and separation from England. (We just celebrated the 4th of
July!). The next important
document was the Constitution.
This formed our government and set forth a basis for laws.
Here is another diversion of interest for you that had great
impact on the business world and the world’s people…diseases. We are now experiencing a terrible
disease, the Coronavirus. If we
trace disease back to the “Black Death” or “Plague” starting in 1346, killing
somewhere between 75 and 200 million people, then to the Spanish Flu in
1918-1920, then to the H1N1 Flu in 2009 we have something much in common with
business. After each pandemic the
result was the transference of wealth to the top wealthiest. The wealthy have the best health care,
and governments have taken care of the larger companies permitting the smaller
less capitalized to die off. Take
a look at The Great Recession of 2007-2009 and the approximate $4 trillion in
government money going to select companies. Look at the current recession/depression we are in, however
the government refuses to accept that.
Since September, 2019 we have spent about $10 trillion on helping
people, saving primarily large corporations like Apple, Microsoft, Carnival
Cruise Lines, the airlines, “and” permitting our US government and Federal
Reserve to buy Exchange Traded stock Funds and Bond Funds. We have never in modern history had
such a disparity between corporate earnings and stock market values.
Before I end this blog I would like to take another venture
into our history of importance, The Emancipation Proclamation of January,
1863. This declared “all persons
held as slaves are, and henceforward shall be freed.” There is great civil
unrest today, the outcome uncertain.
One deficiency of our government at that time, including white slave
owners, was that they didn’t look forward to see what would happen if they
didn’t educate these black slaves and teach them how to become independent on
their own. This was like releasing
5 year olds, who mostly could not read or write, and say “make it on your
own.” Everything is cause and effect!
What to do with money?
Wealthy are exiting the US dollar going into commodities like gold,
silver and art. I think inflation
adjusted bonds may be wise. Once
the government no longer supports the money being poured into the stock
markets, watch out. At that point,
if you are still in the markets you better buy a large bag of “Depends”!
That’s it for now. I hope you found this chapter interesting
and learned something.
(If you want a re-cap of our history based upon cause and
effect from a financial standpoint you might enjoy reading my blogs
133-145. It is long, perhaps 51
pages, but of course I think worthwhile.)
