Re-Published Post From David Haggith
Year after year around tax time, a tired war horse of a story gets trotted out about how the heavily burdened rich already shoulder eighty percent of the tax load. Poor rich. They are oxen doing the heavy pulling to make things easier on the rest of us dumb cows. Thank God we have them!
Don’t believe a word of it!
… It is hard for people to believe that the huge majority of all the money made in the US is going to such a small percentage of the population. As a result, when they hear that this group is paying 80% of the taxes (oh my!), they think that group is clearly pulling more than its fair share of the load. (Let’s hope the rich never get mad at us for putting this load on them and decide to stop carrying it.) I mean, expecting the smallest number of people to carry 80% of the load is crazy!
Actually, the crazy (Read More....)
. . . → Read More: Don’t Be Fooled by Stories that the Rich Pay Eighty Percent of the Taxes
by MN Gordon
“There ain’t no such thing as a free lunch,” is one of the essential axioms of economics. No doubt about it, there’s no getting around this simple truth. Everything has a price.
For example, even if someone buys you lunch the lunch still isn’t free. The opportunity cost, your time to eat the lunch when you could’ve been doing something else, has a price. In addition, even if you don’t consider your time a cost, there’s no denying the fact that someone paid for the lunch. Hence, it wasn’t free.
Nonetheless, despite this simple fact, politicians promise free lunches for the many at the expense of the few. This offense is especially on display during a presidential primary election. Free college. Free drugs. Free housing. Free food.
You name it, there’s hardly a lunch out there this season’s crop of presidential candidates haven’t already laid claim to. This is what they must do to get elected. This is how presidential politics works in a democracy.
We (Read More....)
. . . → Read More: No Free Lunches Be Damned
by MN Gordon
Former Federal Reserve Chairman Alan Greenspan resurfaced this week. We couldn’t recall the last time we’d heard from him. But, alas, the old fellow’s in desolate despair.
On Tuesday, for instance, he told Bloomberg he hasn’t been optimistic for “quite a while.” Obviously, this is in contrast to the perennial Goldilocks attitude he had during the 1990s. So what is it that has the Maestro playing a low dirge?
China, the dollar, Dodd-Frank, and associated unknowns are all part of his negative outlook. But the long winter of his discontent is something else. Greenspan said he “won’t be [optimistic] until we can resolve entitlement programs.”
“Nobody wants to touch [entitlements]. But it is gradually crowding out capital investment and that is crowding out productivity and that is crowding out the standards of living,” said Greenspan.
Indeed, funding (Read More....)
. . . → Read More: Alan Greenspan’s Pickled Economy
by MN Gordon
It all seems so systematic, arranged, and orderly. Sixty seconds make a minute, 60 minutes make an hour, 24 hours make a day, and one day equals one complete rotation of the planet earth.
Roughly every 30 days the moon orbits the earth – which is one month. Then every 12 months the earth orbits the sun – which is one year.
So far so good…right?
But here’s where the nice and neat order of it all breaks down. For if you try to measure one of earth’s orbits of the sun in days it’s not so divinely tidy. For it takes 365 days plus an inconvenient 6 hours to fully complete the cycle.
Nonetheless, we don’t let these inconvenient 6 hours hamper our perfection. We’re humans, after all. We innovate, invent, and make the world in our image. So when the numbers don’t jive, we do what must be done. We fudge them.
We create an off balance account, we concoct a new theory, we contrive negative interest rate policy…and we invent leap year.
This (Read More....)
. . . → Read More: Day of Reckoning Imminent
by MN Gordon
The popular notion that the economy’s doing just fine is losing acceptance with each passing week. Politicians, central bankers, brokers, and even the nightly news broadcasters can no longer pretend everything’s going according to script. All at once, no one can remember their lines.
Surely even the most sarcastic playwright couldn’t have plotted the broad approval of Donald Trump and Bernie Sanders as presidential candidates. But here we are, in the midst of the primaries, and ‘Feel the Bern’ bumper stickers blight the landscape like roadside graffiti art.
The professional economists said 3 percent GDP growth, 2 percent inflation, and 5 percent unemployment would usher in a new era of economic enlightenment. Who knows where these criteria came from? What is known is that the knob twisters can’t seem to dial it in per their specifications.
Nonetheless, the larger populace has come to the realization that the supposed bliss this would bring is not what has been (Read More....)
. . . → Read More: Welcome to the New Dark Ages
by MN Gordon
Lucky to Be Alive
Just when we thought we’d seen it all the impossible happened. Earlier this week the 10-year Japanese government bond slipped into negative. Obviously, it took decades of heavy handed intervention into credit markets to pull off such a feat.
On Tuesday, when the Nikkei dropped over 5 percent, the yield on Japan’s 10-year government bond dropped to minus 0.005 percent. This marked the first time in the history of government debt that the yield on a G7 country’s 10-year bond has been less than zero. We are lucky to be alive to bear witness to the absurdity.
Just a few years ago these depressed credit prices would’ve been considered impossible. Why would anyone with advanced knowledge of a negative outcome loan their money at a loss? But sure enough, in the bright light of day, the impossible has become reality.
Make of it what you will. The ultimate impact of a 10-year government bond with a negative yield is unknown…though something seems amiss. (Read More....)
. . . → Read More: Less than Zero
by MN Gordon
“As long as you’re green, you’re growing. As soon as you’re ripe, you start to rot,” once remarked Ray Kroc, mastermind of the McDonald’s franchise empire.
At the moment, no truer words can be spoken for China’s ripe economy. The Middle Kingdom’s 30-year economic boom is being overcome with the unpleasant odor that befalls rotting vegetables. What’s more, there’s no way to reverse it.
The state of economic activity in China is stalling out. All of the sudden, the mistakes that were hidden by a growing economy are surfacing en masse. Excess capacity is turning up in all corners of the economy and no one knows what to do about it.
Each day, it seems, new rot comes to bear upon Beijing’s central planners. Somehow the miracle workers have lost their hot hand. A slowing economy, falling stock market, exodus of wealth, and weakening currency are not conforming to the graphs and statistics reported in the latest blueprint for the planned economy.
How could it (Read More....)
. . . → Read More: China’s $6.6 Trillion Toxic Loan Problem