Morality101.net

I received this in an email and found some food for thought. I think others may too.

BODY OF EMAIL TEXT

The numbers I checked out are okay except I can’t verify the $1 Billion to run the program. I suspect that is way off base. There was an article that said there were 3 agencies involved in the program but the government does not specify if these were existing employees or new hires or a combination of both but that 79 employees were brought in to assist in the program. If only 80 employees were involved I estimated their wages at $91,000 annually (with 30% fringe benefits) or $45,500 for six months for a total cost $3.6 million. If you throw congress and their staff into the equation you are talking, for three months, about $27 million.

Sorry about the lengthy follow up. I just wanted to be sure I was comfortable with the numbers.

What is clear is we are throwing money at a problem without reasonable numbers to determine the game plan results.

A good example of how our Federal Government uses your tax dollars to fund one of their money/earth saving programs and then announces how successful it was!!!!

· A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.

· A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.

· So, the average clunker transaction will reduce US gasoline consumption by 320 gallons a year.

· They claim 700,000 vehicles – so that’s 224 million gallons a year.

· That equates to a bit over 5 million barrels of oil.

· 5 million barrels of oil is about ¼ of one day’s US oil consumption.

· And, 5 million barrels of oil costs about $375 million dollars at $75/bbl.

· So, we all contributed to spending $3 billion to save $350 million.

. I billion of the package was for the Dept. of Transportation to administer the program.

. You don’t need to provide citizenship information, SS# etc. to qualify and Canadians and Mexicans can cross the border to cash in.

Edmonds (a highly thought of on line auto retailer, auto comparison web site.

Edmunds.com estimates that the average cost to the taxpayer will be about $20,000 per vehicle.

If all buyers have qualified for the higher $4,500 rebate, the “cash for clunkers” program will mean a marginal increase in car sales of 22,000 this quarter. $1 billion divided by 22,000 means a net cost to the government of $45,354 per car. (This is a cost estimate for the first $1 billion and does not consider the additional $2 billion.)

. Some clunker deals are being rejected by the government because they don’t meet all of the program’s specifications. For example, the trade-in must have been continuously insured for the 12 months prior to the clunkers transaction.

Car & Driver

. if you’re trading in a car that’s worth $3000, your net gain is only $500. Although if your car is worth $100, CFC couldn’t come at a better time.

people driving cheap old beaters are probably doing so because they can’t afford a new car. And $3500 doesn’t go far when the average transaction price of new cars hovers around $24K. The vouchers don’t apply toward the purchase of used cars, for which the majority of old beaters are traded in.

However, we hope these legislators don’t expect it to meaningfully help the domestic automakers. Many of the automobiles with fuel-economy ratings high enough to qualify for the vouchers come from Japan and Korea

Washington Post

Cash for clunkers’ effect on pollution? A blip (The article has been pulled from the post. This was the the title of the article.)

Wall Street Journal-Auto Repair Association comments.

The automotive after-market, a $250 billion industry that employs about 4.6 million people, could be among the biggest losers in the clunkers program, said Kathleen Schmatz, head of the Automotive After-market Industry Association: “It’s everybody from the Fortune 500 parts manufacturer all the way through the supply chain to the independent repair shop.

On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.

U.S. News and World Report

Cash for Clunkers may have cut our oil consumption by less than 0.2 percent per year. It didn’t even save us a day’s worth of gas. (The numbers in this report are a little different

than the numbers I received in red above but are very close).

What’s more, some analysts wonder if Cash for Clunkers really created any new sales at all. It’s possible that the program simply caused some people to buy cars earlier than they otherwise would have. What good comes from adding to August sales if we subtract from future sales to do it?

Even if it brought in new buyers, that scenario might create its own economic problems. The program led hundreds of thousands of Americans, for instance, to take on new debt in the midst of a recession and an uncertain job market.

Tuesday, September 1, 2009

There Will Be (Hyper)Inflation by Thorsten Polleit.

Increasing “Excess Reserves”

The demise of fiat-money regimes around the world has become unmistakable. They can only be kept alive by central banks creating ever-greater amounts of base money and governments underwriting commercial banks’ liabilities.

The US Federal Reserve, for instance, increased the stock of the monetary base – which includes banks’ demand deposits held with the Fed, plus coins and notes in circulation – from $870.9 billion in August 2008 to $1735.3 billion in January 2009.

Banks’ “excess reserves” – banks’ base-money holdings minus required reserves – rose from $1.9 billion to $798.2 billion. These excess reserves allow the banking sector, which operates under fractional reserves, to increase the credit and money supply manifold.

The monetary base expands when the central bank takes over the troubled assets of commercial banks in order to extend new credit to those banks. This process is gaining momentum: on March 18, 2009, the Federal Open Market Committee (FOMC) announced that it will increase base money by purchasing another $1,150 billion of securities. It is also considering increasing base money by extending credit to private households and small businesses.

	Print $17 Audio $25
	continue reading…

Dollar’s Days of Dominance Are Over

Seeking Alpha

by Jeff Neilson

While it may not constitute the final “nail in the coffin”, India commemorated the 4th of July by joining China and Russia in announcing they were seeking “alternatives” to the U.S. dollar (as “reserve currency”). With yet one more “prop” removed from the gangrenous greenback, this left only the submissive Japanese as the last major holder of U.S. dollars who strongly supports its continued status.

Bloomberg reported Saturday that the economic advisor to Indian Prime Minister Manmohan Singh has publicly and explicitly recommended that India reduce the U.S. dollar component of its currency reserves. “The major part of India reserves [totaling $264 billion] is in U.S. dollars – that is something that’s a problem for us,” said Suresh Tendulkar.

These remarks come only one day after China’s former Vice Premier, Zeng Peiyan stated, “There should be a system to maintain the stability of the major reserve currencies.” continue reading…

BEIJING (Reuters) – U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.

A major goal of Geithner’s maiden visit to China as Treasury chief is to allay concerns that Washington’s bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.

China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China’s total U.S. dollar-denominated investments could be twice as high.

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

More at Yahoo Finance

To All My Valued Employees,

There have been some rumblings around the office about the future of
this company and, more specifically, your job. As you know, the economy
has changed  for the worse and presents many challenges. However, the
good news is this: The economy doesn’t pose a threat to your job. What
does threaten your job however, is the changing political landscape in
this country.

However, let me tell you some little tidbits of fact which might help
you decide what is in your best interest.

First, while it is easy to spew rhetoric that casts employers against
employees, you have to understand that, for every business owner, there
is a Back Story. This back story is often neglected and overshadowed by
what you see and hear. Sure, you see me park my Mercedes outside. You’ve
seen my big home at last year’s Christmas party. I’m sure; all these
flashy icons of luxury conjure up some idealized thoughts about my life.
However, what you don’t see is the BACK STORY:

I started this company 28 years ago. At that time, I lived in a 300
square foot studio apartment for 3 years. My entire living apartment was
converted into an office so I could put forth 100% effort into building
a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I saved
went  back into this company. I drove a rusty Toyota Corolla with a
defective transmission. I didn’t have time to date. Often times, I
stayed home on weekends, while my friends went out drinking and
partying. In fact, I was married to my business — hard work,
discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a
modest $50K a year and spent every dime they earned. They drove flashy
cars and lived in expensive homes and wore fancy designer clothes.
Instead of hitting the Nordstrom’s for the latest hot fashion item, I
was trolling through the discount store extracting any clothing item
that didn’t look like it was birthed in the 70′s. My friends refinanced
their mortgages and lived a life of luxury.  I, however, did not. I put
my time, my money, and my life into a business with a vision that
eventually, some day, I too, will be able to afford these luxuries my
friends supposedly had.

So, while you physically arrive at the  office at 9am, mentally check in
at about noon, and then leave at 5pm, I don’t. There is no “off” button
for me. When you leave the office, you are done and you have a weekend
all to yourself. I  unfortunately do not have the freedom. I eat, and
breathe this  company every minute of the day. There is no rest. There
is no weekend. There is no happy hour. Every day this business is
attached to my hip like a 1 year old special-needs child. You, of
course, only see the fruits of that garden — the nice house, the
Mercedes, the vacations… you never realize the Back Story and the
sacrifices I’ve made.

Now, the economy is falling apart and I, the guy that made all the right
decisions and saved his money, have to bail-out all the people who
didn’t. The people who overspent their paychecks suddenly feel entitled
to the same luxuries that I earned and sacrificed more than a decade of
my life for.

Yes, business ownership has is benefits but the price I’ve paid is steep
and not without wounds.

Unfortunately, the cost of running this business, and employing you, is
starting to eclipse the threshold of marginal benefit and let me tell
you why:

I am being taxed to death and the government thinks I don’t pay enough.
I have state taxes. Federal taxes. Property taxes. Sales and use taxes.
Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on
taxes. I have to hire a tax man to manage all these taxes and then guess
what? I have to pay taxes for employing him. Government mandates and
regulations and all the accounting that goes with it, now occupy most of
my time.  On Oct 15th, I wrote a check to the US  Treasury for $288,000
for quarterly taxes. You know what my “stimulus” check was? Zero.. Nada.
Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy
who has provided 14 people good paying jobs and serves over 2,200,000
people per year with a flourishing business? Or the single mother,
sitting at home pregnant with her fourth child waiting for her next
welfare check? Obviously, government feels the latter is the real
economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit
and you wouldn’t work here. I mean, why should you? That’s nuts. Who
wants to get rewarded only 50% of their hard work? Well, I agree, which
is why your job is in jeopardy.

Here is what many of you don’t understand … to stimulate the economy
you need to stimulate what runs the economy. Had suddenly, the
government mandated  to me that I didn’t need to pay taxes, guess what?
Instead of  depositing that $288,000 into the Washington black-hole, I
would have spent it, hired more employees, and generated substantial
economic growth. My employees would have enjoyed the wealth of that tax
cut in the form of promotions and better salaries. But – you can forget
it now.

When you have a comatose man on the verge of death, you don’t
defibrillate and shock his thumb, thinking that will bring him back to
life, do you? Or, do you defibrillate his heart? Business is at the
heart of America and always has  been. To restart it, you must stimulate
it, not kill it. Suddenly, the power brokers in Washington believe the
poor of America are the essential drivers of the American economic
engine. Nothing could be further from the truth; this is the type of
change YOU can keep.

So where am I going with all this?

It’s quite simple.

If any new taxes are levied on me, or my  company, my reaction will be
swift and simple.  I’ll fire you.  I’ll fire your co-workers. You can
then plead with the government to pay for your mortgage, your SUV, and
your child’s future. Frankly, it isn’t my problem any more.

Then, I  will close this company down, move to another country, and
retire. You see, I’m done. I’m done with a country that penalizes the
productive and gives to the unproductive.  My motivation to work, and to
provide jobs, will be destroyed and, with it, will be my citizenship.

So, if you lose your job, it won’t be at the hands of the economy; it
will be at the hands of a political hurricane that swept through this
country, steam-rolled the constitution, and will have changed its
landscape forever. If that happens, you can find me sitting on a beach,
retired, and with no employees to worry about….

Signed,  THE  BOSS

Recent events surrounding the failure of Indy-Mac banks have caused quite a stir in the financial markets. Of course our federal government has assured all of us that they will intervene and shore up the failing financial institution to the tune of approx. $10 billion dollars. The amount itself is staggering, and of course we the taxpayer will foot the bill.

The old adage, you cannot spend more than you make seems appropriate, but how about, you cannot keep printing paper money without dire consequences!!!!

This pay, even though there is no money idea will soon run out of steam, as the dollar falls to hyper-inflation, and ends up taking a wheelbarrow full of paper money to buy a loaf of bread. Actually the best course of action for the Feds, would be to file bankruptcy, far-fetched as that may seem, and to return to the gold standard for currency.

There are those out there who believe government can cure all the ills of society, and if you believe that, why let me sell you some prime real estate in the Florida Keys, and I’ll tell you what, it even comes with your very own pet alligator……… Good day…..

Monetary inflation may seem impossibly complicated, but take heart.  While understanding inflation is essential to everyone, both in sensing the future and to understanding the basics of personal well-being, a degree in economics is unnecessary.

Money is basically a “medium of exchange”; an instrument of convenience, which makes it unnecessary to tote chickens or bushels of wheat or barrels of oil to market in exchange for something else of more value to each of us at any particular time or for any personal purpose.

Our concern here focuses on our Dollar — “fiat” money, backed by nothing more that our faith that money is a store of value which can be exchanged for whatever we desire.  In years now long past the Dollar was a certificate redeemable in gold, silver or “the full faith and credit of the United States”.  Today’s Dollar is labeled on it’s face as a “Federal Reserve Note”, redeemable only with another Federal Reserve Note.  Acceptance of such mere paper requires immense faith, but has none-the-less served the purpose for several decades, although quite imperfectly.

Equally important is our expectation that money be secure and reliable as a Store of Value.  This means that we should be able to expect that the price of a loaf of bread, a gallon of gasoline, or a new auto, tv, computer, dress, or visit to the doctor, will remain stable tomorrow, or next month, year, or decade. 

Okay, time to try an inflation calulator (click the link — you’ll not lose us, okay?).  Keep in mind that all of the inflation calculators I’ve found are based on the CPI (government’s Consumer Price Index) which is extremely flawed.

What you could buy for One Dollar in 1913 would cost you $21.23 in 2007!
What you could buy in 2007 for One Dollar would have cost you but one Nickel in 1913!

We use 1913 because that was the year beginning our Federal Reserve Bank, empowering “The Fed” to manipulate the money supply and monetary policy.

The 1971 Dollar (when Nixon removed the last of the gold backing) was worth only 19 Cents in 2007!

So that is Inflation = the continuing loss of purchasing power of our dollar.  Inflation causes your Dollar to be lousy Store of Value.  You actually LOSE money (=purchasing power) by stashing in in some bank which pays interest rates lower than the inflation rate.

How are “poor people”, whom the socialists like to call “lower class”, ever to realize gain and hope when there is negative incentive to save and accumulate money for investment?

Inflation is largely the result of expansion of our money supply by The Fed, done to “stimulate the economy”, but more-so because Congress has been spending far beyond anything that would seem like common sense, for socialism and for war.  The National Debt has climbed in record levels which cannot be paid.  You’ll find other discussion of that here on Morality101.  These things have caused the inflation rate to increase toward runaway levels – that’s hyperinflation.  More and more of us have come to realize that our dollar will soon collapse and become worthless; it has gone too far to stop.  There will be hell to pay, so prepare as best you can!

***

So today we have the presidential candidates of the two “major” parties.  Both candidates are members of Congress, which could have, and certainly should have, long ago reined in The Fed’s manipulation of the money supply.  Neither the candidates are greatly different in their goals; both want to increase spending of money that does not exist, for the immoral purposes of socialism and war.  Neither candidate is addressing the only issue of real importance — this collapse of our dollar and our economy.   The media is failing us all by avoiding the hard questions which must be asked.

More about the Federal Reserve bank here on Morality101.net.

A website with a number of awakening pages: http://www.hyperinflation.net/essays.html.

at Yahoo! Answers: Question in regards to the Federal Reserve?
The Federal Reserve was established in 1913 and is, therefore, a creature of Congress. The President of the United States nominates members of the Board of Governors of the Federal Reserve, subject to confirmation by the Senate. However, the Federal Reserve is basically free to pursue monetary policy independent of Congress or the President. Should the Federal Reserve remain independent of the President and Congress or should the President and Congress control monetary policy? Why?

I wrote this answer, but by the time I’d finished the Q had been withdrawn.  No problem, I’d rather have it here on morality101 anyway.

Our problems with the Federal Reserve stem from, perhaps from it’s very existence, but certainly from it’s freedom to manipulate the money supply at will.

Over the last couple of years prior, in an effort to slow down inflation, the Fed caused interest rates to rise.  Among other effects, those naive souls who had taken Adjustable Rate Mortgages found their payments rising beyond their means, which caused foreclosures to increase perhaps six-fold, which resulted in mortgage bankers losing liquidity (e.g. Bear-Sterns, there will be more), which resulted in too many homes on the market, which resulted in falling home prices and the virtual shutdown of the construction industry.  All these were factors in resulting in yet another recession.

So during 2008, the Fed switched gears and lowered the discount rate several times, which bailed out illiquid mortgage bankers, which increased available mortgage money, which is enabling home buyers to purchase homes (foreclosed or otherwise) at better prices with lower loan rates again.

The whole game is predictable.  One needs understand only the very basics of economics (supply and demand applies) in order to predict the future maneuvers of the Fed.  I

In due course, the Fed will cycle us back to even greater inflation.  Inflation WILL be greater because of the rapidly increasing national debt, caused by the politicians voting for war, socialist schemes, subsidies, “stimulus” etc etc ad nauseum.  All are  passed by our politicians despite not having the money to pay for them.  Thus the congress routinely raises the national debt limit so they can borrow the funds, the Fed makes the bookkeeping entries creating more “money” (federal reserve NOTES), and like magic, it’s all a done deal.  Reason enough not to give politicians control of monetary policy, right?

Nothing in all this should be construed as my justifying the continuing existence of the Fed.  If, for the time being at least,  the Fed continues, then congress must cause the Fed to cease  manipulation of the money supply and forbid expansion of the money supply in beyond indexes of population, income, GDP and/or such other indexes as may are appropriate.  Perhaps we will rediscover that applied economics actually has some value in our world for this indexing chore.  Natural market forces will provide the monetary stability which has been absent from the beginning of the Fed.

There are many proponents for going back to the gold standard, but I’m not convinced that is necessary.  You may want to check out as a free-market alternative to the dollar – the Valun.

Up thru most of 1972 I built custom homes for $15 per SqFt, decent homes with redwood exteriors, turnkey with appliances and carpeting for a small family cost about $17,500.  30 years later, you know it, that same house cost $120,000 or more.  You bought your house from a tract builder, and paid $200,000 with a lot,

Okay, you took an adjustable rate mortgage because you couldn’t afford fixed-rate.  Then a couple of things went sour, your ARM shot up and now the bank owns your house.  C’mon, you were in over your head when you signed that mortgage!.  So now you’re crying to the government to help your sorry ass because you screwed up?  Get a grip, people, it’s not my fault and I won’t pay taxes to support you!

But maybe the government will pass a welfare bill for you anyway, because I really have nothing to say about it, do I?  It’s called taxation without representation – today that’s supposedly okay, but I will disagree with that immoral bullfeathers to the day I die.

Well let’s look at what may have REALLY happened here.

The Fed opined that the economy had heated up a too much, so they tightened money.  Things slowed down, so maybe you lost your job?  For sure, when your lender saw interest rates rising, he caught you by the ARM and raised interest/payments over your head.  Happened to many folks, so don’t feel like the Lone Ranger. So there were a bunch of foreclosures on homes bought at inflated prices.

So the bankers start whining about their Owned-Real-Estate portfolios growing out of control, and the banks had lost their liquidity.  They couldn’t resell the foreclosed homes and they didn’t have $$ to make new loans, awwwwwwwww.  Bear-Stearns then became the first of many on the brink of disaster, so the Fed quickly gave them a huge loan guarantee which saved B-S’s butt while it was sold to someone else.  But then, realizing the foreclosures were continuing, the Fed acted to make more money available by dropping the discount rate, not once, but several times, down to record low rates!  This enabled the bankers to come to the Fed window and borrow needed liquidity.  By this the bankers were temporarily saved, but you?  You aren’t allowed in the line to the Fed window, that’s a banker’s-only club.

So all this manipulation by the Fed, plus the mushrooming national debt, have weakened our dollar to the brink of collapse.  So what should we expect the Fed to do next?  They’ll soon enough be tightening money again, in a misguided attempt to strengthen the dollar.  When that happens, I suppose we’ll see some more foreclosures, but we will also start seeing the bankers tumble, and that could be domino-time.  There’s really nothing much else to be done, it’s about over, folks.  It won’t matter one whit who wins the next election.