Any government activity should be heavily monitored and authorized only after all other options have been fully exhausted. Any government activity that relate to economy (and most of them do) end up hurting the economy in direct and indirect way.
Gov't 'building' infrastructure in reality creates subsidized infrastructure that cannot survive on its own, all while destroying whatever infrastructure the market prefers.
Gov't printing money destroys the currency and eventually destroys the economy
Gov't taxing income reduces the amount that is invested, provides part of this amount to somebody for free to spend, which has multiplier effect:
1. The original investment is either reduced or not made at all, so overall wealth in the economy is diminished.
2. The consumer who is given this "free" money doesn't have to produce anything for it, so the wealth of the overall economy is diminished.
3. The producer, who sold his goods/services to the consumer, who didn't produce for the money he is buying with, is being paid with money of diminished value, as he is exchanging his goods for nothing. (In reality he is providing goods to somebody in exchange for money of diminished value, because the person who is consuming the goods directly doesn't himself produce to offset this consumption for a fair trade to occur.) Again, overall wealth of economy is diminished.
This is why taxing income is wrong on all the levels that I described in the second link in this comment: economically and morally it is wrong.
Sure, but in the market place there is more opportunity to make large amounts of money and a stable income if you are productive in a way that market approves of than otherwise.
Of-course fraud can make you a quick dollar, but it also can lend you in serious trouble. Ever been shot at for stealing something? There are places where you can get shot for that, and it doesn't mean it's just a store and you are a poor schmuck. This happens to people who are playing with real money too.
My logic is undeniable, the problem is not logic, it is the reality in what we live.
We live in a world that is controlled by the government interests. Again, the links I provided in my to comment are to my journal, where I explain how the money that is created out of thin air by the government creates this gigantic separation between the top richest people and the rest by destroying the actual free market.
It is the ABSENCE of free market that creates monopolies and creates huge disparity between top and bottom earners.
What you are describing is the result of the monetary and economic policy, which allows government to choose winners and losers in the market, thus destroying competition, mis-allocating resources and also making people poorer.
Obama's Jobs Act is another example of how government will actually destroy more jobs and will worsen the economy.
Federal reserve printing more money will again, cause more destruction. Do you realize that what they are doing (forcing the short AND the long ends of the interest rate curve yields to go down will destroy the very banks that government bailed out? The banks will now be all insolvent again, and combined with the renewed gov't policy to push for more refinancing of properties without any equity, no business will be able to get a loan).
All of the government measures, from minimum wage, to various acts, like disability act, to money printing, to forcing interest rates down, all of this CREATES the disparity, especially coupled with the fact, that government is certain that it must prop up the banks, while destroying the rest of the economy.
Well, if you destroy most of the economy, but prop up the banks, you are going to see exactly this - 2 classes of people. The super super super rich and the rest.
The way to fix it is to get the government out of this business of economics and fiscal policy. The ability of government to set lending prices (interest rates are just money prices), is destructive to the economy in a way, that is hard to imagine even. It destroys all opportunity to start or continue a business.
Of-course you are going to have huge disparity. But if you think that the answer is in MORE government........ 4 letters: USSR.
As far as 'Paris Hilton' vs whatever, you can't pick and choose. There is no authority for you to pick and choose what is 'good' vs what is 'bad'. That's for the market to decide and shouldn't be in the hands of anybody, especially the political elite to decide. The only real votes are dollar votes.
Fraud was never legal, however all of the products you are using every day are there because somebody was trying to make something better for themselves.
Greed make a person start a business. If a person is not interested in making money, why would he bother starting a business, trying to build something and to make himself rich in the process?
Wealth is products that businesses make. Money is nothing, if it's not backed by production, otherwise Zimbabwe would have been the wealthiest economy on planet earth.
which is the basic tenant of capitalism.
- I don't know about the basic 'tenant' of capitalism, and how much he pays for rent, but the basic tenet of capitalism is saving capital in order to invest it to make more money.
Without government intervention, the only way to do this is to provide the market with products/services that market is willing to exchange for at a premium.
Why pay your employees twice as much in the US when you can get someone in China to do it and make more money for yourself?
- very good question. Think about that.
Now, why was it possible to have an economy in USA that made cheapest, highest quality goods, turning USA into the largest creditor nation on earth in 19 century? It was possible because government didn't destroy ability of people to do business and to invest money via inflation, regulations, income taxation and subsidies to preferred businesses, which become monopolies.
The worst thing any business can do today is hire in USA (or in most of the other Western nations), that's because of the regulatory burden that this hiring brings upon the employer. Why must employer lose his rights and employee gain all of the new types of privileges, that employer must supply? Why should the power be so lopsided? Well, it's because the employees are a large voting block and employers aren't. So employers found a way to move production elsewhere. The lower wages are just a cherry on top of that cake, but the real difference is all of the regulations and of-course lower taxes.
A Chinese worker's salary is going up, but as long as regulations and taxes will stay where they are currently, the jobs will stay in China.
USA needs to repeal all labor laws, all business regulations and it needs to abolish income and corporate taxes to attract productive jobs back, but without substantial cuts to government spending this cannot be done, and this is not what the government is interested in, thus all of the links that I gave in my previous comments apply.
We hemorrhage our money out all over the world so there is no surprise the Fed's have to print more of it for domestic use.
- again, if money was everything, then you wouldn't have a problem. Consumption is the trivial part of economy. The hard part is production.
When 2 parties trade, they do so due to comparative advantage. One is better situated to produce food and the other is better at making iPhones, or whatever.
Money is just a token of exchange, but it's also supposed to be a store of value as well as unit of account, so if gov't prints it, it destroys one of these properties - store of value. You can't store value, you can't save. You can't save, you can't invest. If you invest your actually earned capital, you'll lose it to inflation. There is no way to invest in an inflating economy that doesn't produce enough to out-pace that inflation.
Fed printing is the problem, it's not a solution. It can put a band aid, but the underlying problem is a heart attack and a stroke, so it won't help.
Money flowed mostly INTO the US.
- no, what flowed into USA was all the other nation's products that they could produce to exchange with USA for the American products. Oil, gas, steel, whatever USA was getting from the outside world, it was giving back high quality consumer goods - cars, vacuum cleaners, washing machines, TVs, whatever.
Again, trade is about comparative advantage - exchanging GOODS, it's not about just taking in worthless paper in exchange for good stuff, like food or bicycles.
Of-course tuition fees and medical insurance premiums and medical costs are all growing, but this has nothing to do with what people are making, this has everything to do with what people can get in loans.
It's exactly the same principle that applies to the housing bubble - could people actually afford to buy houses that are half a million or maybe a million dollars? Majority of people can't really afford these, but they were given that opportunity by the system that gave them the loans. It's all about government guaranteeing loans, government insuring loans, government pushing banks to give loans, it's all about credit that cannot actually exist.
Prices are going up not because of actual costs in case of medical insurance or health care or tuition or houses, prices are going up because of the amount of money that is available to chase them, and the amount of money that is available is not coming from individuals, it's coming from the government.
so what now? What kind of an encrypted link of - image to brain (or sound or text to brain), are music and movie studios going to require government mandates? Because clearly, this shit is an unauthorized copy right there.
Thanks for the patronizing epigraph, and it's obvious you believe no person can form his own set of convictions similar to mine based on reasoning, but let's look at the substance.
The Social Security system is not a Ponzi scheme. It is not an investment per se, as you've pointed out; it's simply a wealth redistribution system. However, because the payout is pre-determined based on your contribution, and because the government sticks to their payout promises, calling it an "investment" softens the blow of its being a mandatory contribution. It's a sales point.
- oh, I am very familiar with the way this was sold.
This was sold as an insurance program, thus they called payments 'premiums'. Of-course they called them premiums in public, while in court they were very specific about the payments being made under general taxation power of Congress, as it would be impossible to push the SS taxes through legally if they were just premiums. First reason being that government cannot force a person to buy a specific product (and it was understood to be Unconstitutional), secondly the direct property (income) transfer from an employer to an employee was also unconstitutional, and the 10th amendment wouldn't let that pass through, the government is basically not authorized to take money from person A to give it directly to person B.
The actual court case, that was decided in front of SCOTUS was:
Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way". That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers. - the gov't argued that SS payments are not earmarked, not actually going to be used for any purpose, but are only collected under general taxation powers of Congress.
Here is a bit more detail from it, that is very relevant:
We find it unnecessary to make a choice between the arguments, and so leave the question open.
They were four Justices: Pierce Butler, James Clark McReynolds, George Sutherland, and Willis Van Devanter who dissented on this case as well, declaring that the decision was giving Congress powers it was unauthorized to have.
So that's just to get the Constitutionality of this out of the way - it was never found to be Constitutional, instead the issue was sidestepped, as the government LIED to the court (and the court was complicit in buying this argument obviously, that the SS taxes were not earmarked for any particular purpose.)
Now you have to admit, that saying that taxes are not earmarked is not the same as saying that taxes go into any specific fund, and obviously the SS money was used in the Space Race and in Wars quite ways that were just cavalier. There was never any asset that was bought with the money, the most that the government did was put bonds or at some point T-bills into this so called fund, but that's just an accounting gimmick, because T-bills cost nothing to print.
--
Now to the question of SS being a ponzi scheme. Given that there was never a fund with money in it (as was argued by the government that there wouldn't be), let's look at the following evidence:
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid
By the way, the competition, where is it supposed to come from? As I mentioned in the other comment above, there is no way to make money in USA because investments are wiped out with government inflation, but what about lending?
The Fed came out with $400Billion USD stimulus again, but they are going to buy long term bonds, trying to push long term yields down. 10 year is at 1.77% and 30 year is at 2.684%. The lowest 30 year has been was in 2008, it was 2.5%. The 10 year hasn't been this low since 1940s.
But gov't also now has come out with a directive to Freddie and Fannie to start guaranteeing mortgages to people up to 125 or 135% of the home value, so even if you have no equity in the house, you can get a mortgage that is 125 or 135% of the value of the house - they are trying to make consumers consume again (as I said in the comment above, that's destructive to the market.)
So home mortgages will be refinanced, Freddie Fannie will guarantee them to people who don't have any equity. This refinancing will be under 4%, maybe 3% for many. HOW ARE BANKS GOING TO SURVIVE THIS?
Banks are going to go broke! This is crazy, the banks cannot lend any money because of how low the interest payments are at this point, their books is filled with debt that is long terms, low yielding, this is going to be even longer term even less yielding. All these banks are going to go bankrupt unless there is another QE (3). If Fed doesn't come out with that, then there will be another TARP (2).
Of-course there is no way to start a business unless you have your own money saved, but as I said earlier, you can't save money in US, inflation by the Fed doesn't let you do it.
The country is in this box - can't save money, can't borrow money from banks without forcing bank bankruptcy or another QE or another TARP, which WILL make economy even weaker!
So what competition can we talk about here? How can any company survive this, AT&T, T-Mobile, they have to consolidate at this point.
Verizon may not get it, but they will have to consolidate with others just to survive at this point or they'll have to leave US market.
That's what I am talking about, it's not a spike in actual price of oil. The price of fuel at a gas pump is lowest ever in real money.
The Fed is going to print 400Billion USD more, will do all sorts of tricks, will bail out banks again by buying out more mortgage backed securities, will now try to suppress long term interest rates, all of this is inflation. Money printing. Setting extremely low cost of borrowing, all of this is inflation.
So in a depression, that USA and other countries are finding themselves in, the prices in real money are going down, because there is less production, so there is less consumption in real terms - that's deflation.
The Fed and governments of the world are filled with Keynesian charlatans, who only know have one remedy for everything: print more money. Of-course it forces prices to go up in nominal terms (in federal reserve notes.) But actual prices are going down.
Now, the real problem in USA and the West for cell phone companies and for all other companies is the same - there is no way to make money in such insane inflationary environment and in an economy that has no production capacity.
So how do these cell phone businesses can even STAY AFLOAT in this environment?
Never mind that they are making billions of dollars - that's nominally, and that's not money coming from the Federal reserve discount window to them. Sure, the Fed subsidizes consumption of US residents by pushing interest rates down.
Imagine that the government is now passing (or passed) a measure that will force Freddie and Fannie to provide or insure loans that will be given to people not based on any equity they have in their property, but they will have to give you loans that are up to 135% of whatever the nominal price of your house is.
So you can get a mortgage for your house, that is larger than your house is worth.
I say take it and RUN. Take it and leave, skip. Go buy some silver or gold or whatever you want with that cash and don't come back. Rent instead.
But for a phone company to try and make actual working business, or for any company for that matter..... it's a losing proposition.
I used to work for a company called Symcor in Toronto a decade ago, they were a check processing and check/statement printing company for three Canadian banks. Eventually they came into US market as well, buying out the smaller competitors.
Do you know WHY the were able to do this in a shrinking industry? (yes, the industry of check processing is/was shrinking). Because they are an economy of scale.
They have the capacity to add processing for smaller banks cheaper than any small processor, and can keep check processing going, while a small company would have just gone under.
I believe this is the same problem right now for other companies in USA - the phone business is no exception. What is USA producing?
As I said earlier - trading is about comparative advantage. You want to exchange the goods you produce for other people's goods. It's not about pieces of paper. So if you produce something, you take the money from people who ALSO PRODUCE something.
If they produce nothing, then their money is no good. That's why taking money from 'rich', who invest it into production and giving it to be spent for consumption on consumer goods to 'poor' is detrimental to the economy, it's not good money, it's a net negative effect. Those people who got the money for free didn't add anything to the productive capacity, so their money only subtracts from economy, it doesn't add to it.
So for a phone company to take your money, that is printed by the Fed and given to you at low or now interest, while you are producing nothing of value that the phone company could use in return for their products/services is a net loss for the phone company.
Sure, some companies always try to do that, it only makes sense for them to do so. However government involvement ensures that there will be a monopoly, not the other way around.
The market figures out its ways around cartels, for example OPEC can't do anything about its members selling more than their quotas, simply because it's so lucrative. What are you going to do? The only thing to do is start a war. Well, only government can do that - so there we have a few of those wars happening, Iraq, Libya.
However without government wars do not start and the markets for cellphones are not the kind that wars start over. AFAIC the market figures out a way around it, for example VOIP.
Oh, by the way, it's true about DeBeers - they are an actual successful cartel.
However that's because nobody cares about their products enough, and there is real competition, it's a different technology, it's called cubic zirconia, you may want to check it out before you waste your money on whatever 'forever diamonds'. Except for cubic zirconia there are also artificial diamonds.
Price fixing is a stupid idea, it doesn't work for cartels because it makes them more money to bring in more customers, so they come up with plans that undercut whatever prices they might have otherwise 'fixed' upon.
Except for that, if there is unfilled demand there will be competition, unless of-course government prevents competition, and it likes to do that.
OPEC doesn't work as a cartel. They are selling above their quotas, it makes no sense for them not to sell. The higher the prices the more capacity they try to bring on line, but there is no more capacity to open up.
Today's gas prices are lowest in history of USA. You can buy a gallon of gas for 10 cents.
Of-course you need a dime that was minted prior to 1965 and had silver in it.
What does it mean in this case - less competition?
You think AT&T and T-Mobile is not going to try and undercut Sprint? Why?
If they try to undercut Sprint, then it's good - it's going to force Sprint into MORE competition.
If instead they try to organize a cartel, it won't work. Oil cartels don't work, nobody wants to stick to their quotas, there is more money to be made by selling beyond quotas.
If they do set prices that are too high, this is just invitation for more competition from other new directions. Google may enter this market too, it's not unlikely at all, now that they own Motorola.
That doesn't call BS to my statement AT ALL. Did I put a TIME LINE on my statement?
Did I say: at the very moment that one company gets an economy of scale, and if that company increases prices, right there, right then you will have an immediate market response?
First of all in this case it would be very subjective to say what the appropriate price for a piece of software is, it's a new type of software for personal use - an OS, Apple computer, MS, Amiga, Atari, Spectrum, etc., all sorts of computer systems came out and provided all sorts of choices. The market takes a little time to sort things out.
Secondly: MS (and other companies) enjoy government protection that comes from government protecting copyright and patents, and I believe that when government creates a monster by its own methods, then it's not a fair assessment of the market, to say that it is free, and it is failing, because it is prevented from existence by government regulations in the first place.
However in case of MS - yes, they were destroying competition. So what? Competition appeared anyway in form of Free Software movement.
Now the real problem is further government destruction of market by patent and copyright laws, which may help large companies, like MS, to destroy Free Software competitors.
So no, I am talking about a holistic approach - you have to get rid of government regulations that stifle competition and that's the only thing that creates monopolies.
Any time government sees a monopoly forming, it should really ask ITSELF - what are we doing here that is helping this monopoly to destroy the market? Let's get rid of THAT.
Because there is nothing like government force to create and help a monopoly. But when there are economies of scale, their competitors are NOT automatically what the market wants or needs. They want to get a piece of pie, and they are definitely ready to go to the government to help them subdue the larger player, but it's all to the detriment of the consumer.
- so you are saying they care about me? If they could care less, so that means they care quite a good amount right now? That makes me feel all warm and fuzzy.
Antitrust laws should not exist, but that's a larger discussion of why government shouldn't be allowed in business and money in the first place.
If a company has enough scale to undercut its competition, the government is then protecting the competition, it's not protecting the consumer with anti-trust laws, because the government then protects consumers from lower prices.
Government wants to protect business based on its relationship with a given business, but consumers would be better served by economies of scale if those economies produce lower prices.
IF a company does NOT provide low enough prices that there is no way to make money by producing a similar/same product and sell it cheaper or make it better quality, then there will be a competitor in that space.
Anti-trust laws are about protecting businesses, but not about protecting consumers. Consumers are better served with lower prices, not with large number of so called 'competitors', each of which provides the same freaking price/quality ratio.
But here are you go, one more reason to abolish patents.
As to tax loopholes - AFAIC the more, the merrier, but one place where loopholes really need to be eliminated is in the law that applies to government - Constitution. Government shouldn't be able to find loopholes in the law that applies to it, or then you find yourself at the wrong side of the gun, when president says: you are a possible terrorist, so we must kill you with a drone strike (or however else.)
But paying less taxes is everybody's duty and responsibility. It's because government that is given money destroys the economy (my argument here).
Any amount of money that becomes available to the government above the minimum amount that needs to be used for the bare minimum of functions that government is authorized to do ends up hurting the economy.
So patents on loopholes are obviously damaging to the economy, as they may be used to prevent people using the loopholes appropriately and it's just one more reason to abolish the patent system.
So you are for taking money away from those, who don't need the SS at all, and reducing their benefits, so that's direct mandatory subsidy from some people in the country to some other people, and you think that's a good policy?
You think that taking money away from people who invest it, because they are not spending it, and thus they are growing the wealth of economy by producing stuff via investments and giving this money to people who spend it on produced goods is a good thing for economy?
You don't see that it is a net loss for economy to take investment capital, that would have been used for production and giving it to people who didn't produce enough to fund their own consumption, so they would spend this money on consumption, and you don't see the net negative economic result?
You don't see that you just want to take a failing ponzi scheme and extend it by worsening the situation of people, who are paying into it, who shouldn't be in it, and you think this magically changes the ponzi scheme into a non-ponzi scheme?
Sure, you can do all those things. Reagan did. He increased taxes and did means testing. He increased taxes on everybody by 20% and on high earners by 140% and he reduced payments of benefits to high earners and he increased the cap. But all this does is it pushes the eventual crash of the scheme into the future, but it doesn't change the ponzi scheme into a non-ponzi scheme system.
It's a ponzi scheme based on the way it's funded - direct money transfer that relies on current beneficiaries to be subsidized by current payers. There are no funds. There are no assets. It's all garbage government debt, complete junk.
If you actually CARED about PEOPLE and not about the government SYSTEM, you'd see that people would be much better served if they didn't have to play into ponzi schemes, they didn't have to pay into anything like that, if their work wasn't taxed at all and only consumption was taxed and so they could invest into any business without being punished for any work that they do, for any under-consumption and resulting savings and production.
You are not really addressing the problem of people and their economy, you are just interested in extending the existing system into some indeterminate future. But the future is very determinate, it's coming and it's a dollar collapse.
Slashdot Mirror
That's why taxes kill infrastructure and instead of improving the economy they destroy it.
That's why basic income ends up hurting the economy rather than helping it.
Any government activity should be heavily monitored and authorized only after all other options have been fully exhausted. Any government activity that relate to economy (and most of them do) end up hurting the economy in direct and indirect way.
Gov't 'building' infrastructure in reality creates subsidized infrastructure that cannot survive on its own, all while destroying whatever infrastructure the market prefers.
Gov't printing money destroys the currency and eventually destroys the economy
Gov't taxing income reduces the amount that is invested, provides part of this amount to somebody for free to spend, which has multiplier effect:
1. The original investment is either reduced or not made at all, so overall wealth in the economy is diminished.
2. The consumer who is given this "free" money doesn't have to produce anything for it, so the wealth of the overall economy is diminished.
3. The producer, who sold his goods/services to the consumer, who didn't produce for the money he is buying with, is being paid with money of diminished value, as he is exchanging his goods for nothing. (In reality he is providing goods to somebody in exchange for money of diminished value, because the person who is consuming the goods directly doesn't himself produce to offset this consumption for a fair trade to occur.) Again, overall wealth of economy is diminished.
This is why taxing income is wrong on all the levels that I described in the second link in this comment: economically and morally it is wrong.
Take out JavaScript and take out the browser entirely, replace it with a Swing Applet.
At this point buy a gun and lots of ammo, because you'll need it to fight off the zombies.
Sure, but in the market place there is more opportunity to make large amounts of money and a stable income if you are productive in a way that market approves of than otherwise.
Of-course fraud can make you a quick dollar, but it also can lend you in serious trouble. Ever been shot at for stealing something? There are places where you can get shot for that, and it doesn't mean it's just a store and you are a poor schmuck. This happens to people who are playing with real money too.
My logic is undeniable, the problem is not logic, it is the reality in what we live.
We live in a world that is controlled by the government interests. Again, the links I provided in my to comment are to my journal, where I explain how the money that is created out of thin air by the government creates this gigantic separation between the top richest people and the rest by destroying the actual free market.
It is the ABSENCE of free market that creates monopolies and creates huge disparity between top and bottom earners.
Here is one link to explain some of it again.
What you are describing is the result of the monetary and economic policy, which allows government to choose winners and losers in the market, thus destroying competition, mis-allocating resources and also making people poorer.
Obama's Jobs Act is another example of how government will actually destroy more jobs and will worsen the economy.
Federal reserve printing more money will again, cause more destruction. Do you realize that what they are doing (forcing the short AND the long ends of the interest rate curve yields to go down will destroy the very banks that government bailed out? The banks will now be all insolvent again, and combined with the renewed gov't policy to push for more refinancing of properties without any equity, no business will be able to get a loan).
All of the government measures, from minimum wage, to various acts, like disability act, to money printing, to forcing interest rates down, all of this CREATES the disparity, especially coupled with the fact, that government is certain that it must prop up the banks, while destroying the rest of the economy.
Well, if you destroy most of the economy, but prop up the banks, you are going to see exactly this - 2 classes of people. The super super super rich and the rest.
The way to fix it is to get the government out of this business of economics and fiscal policy. The ability of government to set lending prices (interest rates are just money prices), is destructive to the economy in a way, that is hard to imagine even. It destroys all opportunity to start or continue a business.
Of-course you are going to have huge disparity. But if you think that the answer is in MORE government ........ 4 letters: USSR.
I answered to a similar question, so no point repeating.
As far as 'Paris Hilton' vs whatever, you can't pick and choose. There is no authority for you to pick and choose what is 'good' vs what is 'bad'. That's for the market to decide and shouldn't be in the hands of anybody, especially the political elite to decide. The only real votes are dollar votes.
Fraud was never legal, however all of the products you are using every day are there because somebody was trying to make something better for themselves.
Wealth destruction due to greed
- no, wealth is created due to greed.
Greed make a person start a business. If a person is not interested in making money, why would he bother starting a business, trying to build something and to make himself rich in the process?
Wealth is products that businesses make. Money is nothing, if it's not backed by production, otherwise Zimbabwe would have been the wealthiest economy on planet earth.
which is the basic tenant of capitalism.
- I don't know about the basic 'tenant' of capitalism, and how much he pays for rent, but the basic tenet of capitalism is saving capital in order to invest it to make more money.
Without government intervention, the only way to do this is to provide the market with products/services that market is willing to exchange for at a premium.
Why pay your employees twice as much in the US when you can get someone in China to do it and make more money for yourself?
- very good question. Think about that.
Now, why was it possible to have an economy in USA that made cheapest, highest quality goods, turning USA into the largest creditor nation on earth in 19 century? It was possible because government didn't destroy ability of people to do business and to invest money via inflation, regulations, income taxation and subsidies to preferred businesses, which become monopolies.
The worst thing any business can do today is hire in USA (or in most of the other Western nations), that's because of the regulatory burden that this hiring brings upon the employer. Why must employer lose his rights and employee gain all of the new types of privileges, that employer must supply? Why should the power be so lopsided? Well, it's because the employees are a large voting block and employers aren't. So employers found a way to move production elsewhere. The lower wages are just a cherry on top of that cake, but the real difference is all of the regulations and of-course lower taxes.
A Chinese worker's salary is going up, but as long as regulations and taxes will stay where they are currently, the jobs will stay in China.
USA needs to repeal all labor laws, all business regulations and it needs to abolish income and corporate taxes to attract productive jobs back, but without substantial cuts to government spending this cannot be done, and this is not what the government is interested in, thus all of the links that I gave in my previous comments apply.
We hemorrhage our money out all over the world so there is no surprise the Fed's have to print more of it for domestic use.
- again, if money was everything, then you wouldn't have a problem. Consumption is the trivial part of economy. The hard part is production.
When 2 parties trade, they do so due to comparative advantage. One is better situated to produce food and the other is better at making iPhones, or whatever.
Money is just a token of exchange, but it's also supposed to be a store of value as well as unit of account, so if gov't prints it, it destroys one of these properties - store of value. You can't store value, you can't save. You can't save, you can't invest. If you invest your actually earned capital, you'll lose it to inflation. There is no way to invest in an inflating economy that doesn't produce enough to out-pace that inflation.
Fed printing is the problem, it's not a solution. It can put a band aid, but the underlying problem is a heart attack and a stroke, so it won't help.
Money flowed mostly INTO the US.
- no, what flowed into USA was all the other nation's products that they could produce to exchange with USA for the American products. Oil, gas, steel, whatever USA was getting from the outside world, it was giving back high quality consumer goods - cars, vacuum cleaners, washing machines, TVs, whatever.
Again, trade is about comparative advantage - exchanging GOODS, it's not about just taking in worthless paper in exchange for good stuff, like food or bicycles.
Of-course tuition fees and medical insurance premiums and medical costs are all growing, but this has nothing to do with what people are making, this has everything to do with what people can get in loans.
It's exactly the same principle that applies to the housing bubble - could people actually afford to buy houses that are half a million or maybe a million dollars? Majority of people can't really afford these, but they were given that opportunity by the system that gave them the loans. It's all about government guaranteeing loans, government insuring loans, government pushing banks to give loans, it's all about credit that cannot actually exist.
Prices are going up not because of actual costs in case of medical insurance or health care or tuition or houses, prices are going up because of the amount of money that is available to chase them, and the amount of money that is available is not coming from individuals, it's coming from the government.
Here is an explanation of the next round of this phenomena.
Actually that's not capitalism, that's money destruction, and it's an attitude that is permeating throughout government, academia, market turned to a casino by this idea, POTUS and banks and public as well.
so what now? What kind of an encrypted link of - image to brain (or sound or text to brain), are music and movie studios going to require government mandates? Because clearly, this shit is an unauthorized copy right there.
Thanks for the patronizing epigraph, and it's obvious you believe no person can form his own set of convictions similar to mine based on reasoning, but let's look at the substance.
The Social Security system is not a Ponzi scheme. It is not an investment per se, as you've pointed out; it's simply a wealth redistribution system. However, because the payout is pre-determined based on your contribution, and because the government sticks to their payout promises, calling it an "investment" softens the blow of its being a mandatory contribution. It's a sales point.
- oh, I am very familiar with the way this was sold.
This was sold as an insurance program, thus they called payments 'premiums'. Of-course they called them premiums in public, while in court they were very specific about the payments being made under general taxation power of Congress, as it would be impossible to push the SS taxes through legally if they were just premiums. First reason being that government cannot force a person to buy a specific product (and it was understood to be Unconstitutional), secondly the direct property (income) transfer from an employer to an employee was also unconstitutional, and the 10th amendment wouldn't let that pass through, the government is basically not authorized to take money from person A to give it directly to person B.
The actual court case, that was decided in front of SCOTUS was:
Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way". That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers. - the gov't argued that SS payments are not earmarked, not actually going to be used for any purpose, but are only collected under general taxation powers of Congress.
Here is a bit more detail from it, that is very relevant:
The argument for the respondent is that the provisions of the two titles dovetail in such a way as to Justify the conclusion that Congress would have been unwilling to pass one without the other. The argument for petitioners is that the tax moneys are not earmarked, and that Congress is at liberty to spend them as it will. The usual separability clause is embodied in the act. ' 1103.
We find it unnecessary to make a choice between the arguments, and so leave the question open.
They were four Justices: Pierce Butler, James Clark McReynolds, George Sutherland, and Willis Van Devanter who dissented on this case as well, declaring that the decision was giving Congress powers it was unauthorized to have.
So that's just to get the Constitutionality of this out of the way - it was never found to be Constitutional, instead the issue was sidestepped, as the government LIED to the court (and the court was complicit in buying this argument obviously, that the SS taxes were not earmarked for any particular purpose.)
Now you have to admit, that saying that taxes are not earmarked is not the same as saying that taxes go into any specific fund, and obviously the SS money was used in the Space Race and in Wars quite ways that were just cavalier. There was never any asset that was bought with the money, the most that the government did was put bonds or at some point T-bills into this so called fund, but that's just an accounting gimmick, because T-bills cost nothing to print.
--
Now to the question of SS being a ponzi scheme. Given that there was never a fund with money in it (as was argued by the government that there wouldn't be), let's look at the following evidence:
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid
By the way, the competition, where is it supposed to come from? As I mentioned in the other comment above, there is no way to make money in USA because investments are wiped out with government inflation, but what about lending?
The Fed came out with $400Billion USD stimulus again, but they are going to buy long term bonds, trying to push long term yields down. 10 year is at 1.77% and 30 year is at 2.684%. The lowest 30 year has been was in 2008, it was 2.5%. The 10 year hasn't been this low since 1940s.
But gov't also now has come out with a directive to Freddie and Fannie to start guaranteeing mortgages to people up to 125 or 135% of the home value, so even if you have no equity in the house, you can get a mortgage that is 125 or 135% of the value of the house - they are trying to make consumers consume again (as I said in the comment above, that's destructive to the market.)
So home mortgages will be refinanced, Freddie Fannie will guarantee them to people who don't have any equity. This refinancing will be under 4%, maybe 3% for many. HOW ARE BANKS GOING TO SURVIVE THIS?
Banks are going to go broke! This is crazy, the banks cannot lend any money because of how low the interest payments are at this point, their books is filled with debt that is long terms, low yielding, this is going to be even longer term even less yielding. All these banks are going to go bankrupt unless there is another QE (3). If Fed doesn't come out with that, then there will be another TARP (2).
Of-course there is no way to start a business unless you have your own money saved, but as I said earlier, you can't save money in US, inflation by the Fed doesn't let you do it.
The country is in this box - can't save money, can't borrow money from banks without forcing bank bankruptcy or another QE or another TARP, which WILL make economy even weaker!
So what competition can we talk about here? How can any company survive this, AT&T, T-Mobile, they have to consolidate at this point.
Verizon may not get it, but they will have to consolidate with others just to survive at this point or they'll have to leave US market.
That's what I am talking about, it's not a spike in actual price of oil. The price of fuel at a gas pump is lowest ever in real money.
The Fed is going to print 400Billion USD more, will do all sorts of tricks, will bail out banks again by buying out more mortgage backed securities, will now try to suppress long term interest rates, all of this is inflation. Money printing. Setting extremely low cost of borrowing, all of this is inflation.
So in a depression, that USA and other countries are finding themselves in, the prices in real money are going down, because there is less production, so there is less consumption in real terms - that's deflation.
The Fed and governments of the world are filled with Keynesian charlatans, who only know have one remedy for everything: print more money. Of-course it forces prices to go up in nominal terms (in federal reserve notes.) But actual prices are going down.
Now, the real problem in USA and the West for cell phone companies and for all other companies is the same - there is no way to make money in such insane inflationary environment and in an economy that has no production capacity.
So how do these cell phone businesses can even STAY AFLOAT in this environment?
Never mind that they are making billions of dollars - that's nominally, and that's not money coming from the Federal reserve discount window to them. Sure, the Fed subsidizes consumption of US residents by pushing interest rates down.
Imagine that the government is now passing (or passed) a measure that will force Freddie and Fannie to provide or insure loans that will be given to people not based on any equity they have in their property, but they will have to give you loans that are up to 135% of whatever the nominal price of your house is.
So you can get a mortgage for your house, that is larger than your house is worth.
I say take it and RUN. Take it and leave, skip. Go buy some silver or gold or whatever you want with that cash and don't come back. Rent instead.
But for a phone company to try and make actual working business, or for any company for that matter..... it's a losing proposition.
I used to work for a company called Symcor in Toronto a decade ago, they were a check processing and check/statement printing company for three Canadian banks. Eventually they came into US market as well, buying out the smaller competitors.
Do you know WHY the were able to do this in a shrinking industry? (yes, the industry of check processing is/was shrinking). Because they are an economy of scale.
They have the capacity to add processing for smaller banks cheaper than any small processor, and can keep check processing going, while a small company would have just gone under.
I believe this is the same problem right now for other companies in USA - the phone business is no exception. What is USA producing?
As I said earlier - trading is about comparative advantage. You want to exchange the goods you produce for other people's goods. It's not about pieces of paper. So if you produce something, you take the money from people who ALSO PRODUCE something.
If they produce nothing, then their money is no good. That's why taking money from 'rich', who invest it into production and giving it to be spent for consumption on consumer goods to 'poor' is detrimental to the economy, it's not good money, it's a net negative effect. Those people who got the money for free didn't add anything to the productive capacity, so their money only subtracts from economy, it doesn't add to it.
So for a phone company to take your money, that is printed by the Fed and given to you at low or now interest, while you are producing nothing of value that the phone company could use in return for their products/services is a net loss for the phone company.
For them it makes no sense to continue,
Sure, some companies always try to do that, it only makes sense for them to do so. However government involvement ensures that there will be a monopoly, not the other way around.
The market figures out its ways around cartels, for example OPEC can't do anything about its members selling more than their quotas, simply because it's so lucrative. What are you going to do? The only thing to do is start a war. Well, only government can do that - so there we have a few of those wars happening, Iraq, Libya.
However without government wars do not start and the markets for cellphones are not the kind that wars start over. AFAIC the market figures out a way around it, for example VOIP.
Oh, by the way, it's true about DeBeers - they are an actual successful cartel.
However that's because nobody cares about their products enough, and there is real competition, it's a different technology, it's called cubic zirconia, you may want to check it out before you waste your money on whatever 'forever diamonds'. Except for cubic zirconia there are also artificial diamonds.
Price fixing is a stupid idea, it doesn't work for cartels because it makes them more money to bring in more customers, so they come up with plans that undercut whatever prices they might have otherwise 'fixed' upon.
Except for that, if there is unfilled demand there will be competition, unless of-course government prevents competition, and it likes to do that.
OPEC doesn't work as a cartel. They are selling above their quotas, it makes no sense for them not to sell. The higher the prices the more capacity they try to bring on line, but there is no more capacity to open up.
Today's gas prices are lowest in history of USA. You can buy a gallon of gas for 10 cents.
Of-course you need a dime that was minted prior to 1965 and had silver in it.
What does it mean in this case - less competition?
You think AT&T and T-Mobile is not going to try and undercut Sprint? Why?
If they try to undercut Sprint, then it's good - it's going to force Sprint into MORE competition.
If instead they try to organize a cartel, it won't work. Oil cartels don't work, nobody wants to stick to their quotas, there is more money to be made by selling beyond quotas.
If they do set prices that are too high, this is just invitation for more competition from other new directions. Google may enter this market too, it's not unlikely at all, now that they own Motorola.
That doesn't call BS to my statement AT ALL. Did I put a TIME LINE on my statement?
Did I say: at the very moment that one company gets an economy of scale, and if that company increases prices, right there, right then you will have an immediate market response?
First of all in this case it would be very subjective to say what the appropriate price for a piece of software is, it's a new type of software for personal use - an OS, Apple computer, MS, Amiga, Atari, Spectrum, etc., all sorts of computer systems came out and provided all sorts of choices. The market takes a little time to sort things out.
Secondly: MS (and other companies) enjoy government protection that comes from government protecting copyright and patents, and I believe that when government creates a monster by its own methods, then it's not a fair assessment of the market, to say that it is free, and it is failing, because it is prevented from existence by government regulations in the first place.
However in case of MS - yes, they were destroying competition. So what? Competition appeared anyway in form of Free Software movement.
Now the real problem is further government destruction of market by patent and copyright laws, which may help large companies, like MS, to destroy Free Software competitors.
So no, I am talking about a holistic approach - you have to get rid of government regulations that stifle competition and that's the only thing that creates monopolies.
Any time government sees a monopoly forming, it should really ask ITSELF - what are we doing here that is helping this monopoly to destroy the market? Let's get rid of THAT.
Because there is nothing like government force to create and help a monopoly. But when there are economies of scale, their competitors are NOT automatically what the market wants or needs. They want to get a piece of pie, and they are definitely ready to go to the government to help them subdue the larger player, but it's all to the detriment of the consumer.
What is Netcraft saying on this issue?
Otherwise, they could care less about you.
- so you are saying they care about me? If they could care less, so that means they care quite a good amount right now? That makes me feel all warm and fuzzy.
Antitrust laws should not exist, but that's a larger discussion of why government shouldn't be allowed in business and money in the first place.
If a company has enough scale to undercut its competition, the government is then protecting the competition, it's not protecting the consumer with anti-trust laws, because the government then protects consumers from lower prices.
Government wants to protect business based on its relationship with a given business, but consumers would be better served by economies of scale if those economies produce lower prices.
IF a company does NOT provide low enough prices that there is no way to make money by producing a similar/same product and sell it cheaper or make it better quality, then there will be a competitor in that space.
Anti-trust laws are about protecting businesses, but not about protecting consumers. Consumers are better served with lower prices, not with large number of so called 'competitors', each of which provides the same freaking price/quality ratio.
As I always say: patents must be abolished (and I get nasty replies for that)
But here are you go, one more reason to abolish patents.
As to tax loopholes - AFAIC the more, the merrier, but one place where loopholes really need to be eliminated is in the law that applies to government - Constitution. Government shouldn't be able to find loopholes in the law that applies to it, or then you find yourself at the wrong side of the gun, when president says: you are a possible terrorist, so we must kill you with a drone strike (or however else.)
But paying less taxes is everybody's duty and responsibility. It's because government that is given money destroys the economy (my argument here).
Any amount of money that becomes available to the government above the minimum amount that needs to be used for the bare minimum of functions that government is authorized to do ends up hurting the economy.
Of-course the problem is government redefines what money is and then it just prints the hell out of it.
So patents on loopholes are obviously damaging to the economy, as they may be used to prevent people using the loopholes appropriately and it's just one more reason to abolish the patent system.
So what if somebody doesn't die on it? Is there a suicide booth at the end and do you have to drop a quarter into it?
So you are for taking money away from those, who don't need the SS at all, and reducing their benefits, so that's direct mandatory subsidy from some people in the country to some other people, and you think that's a good policy?
You think that taking money away from people who invest it, because they are not spending it, and thus they are growing the wealth of economy by producing stuff via investments and giving this money to people who spend it on produced goods is a good thing for economy?
You don't see that it is a net loss for economy to take investment capital, that would have been used for production and giving it to people who didn't produce enough to fund their own consumption, so they would spend this money on consumption, and you don't see the net negative economic result?
You don't see that you just want to take a failing ponzi scheme and extend it by worsening the situation of people, who are paying into it, who shouldn't be in it, and you think this magically changes the ponzi scheme into a non-ponzi scheme?
Sure, you can do all those things. Reagan did. He increased taxes and did means testing. He increased taxes on everybody by 20% and on high earners by 140% and he reduced payments of benefits to high earners and he increased the cap. But all this does is it pushes the eventual crash of the scheme into the future, but it doesn't change the ponzi scheme into a non-ponzi scheme system.
It's a ponzi scheme based on the way it's funded - direct money transfer that relies on current beneficiaries to be subsidized by current payers. There are no funds. There are no assets. It's all garbage government debt, complete junk.
If you actually CARED about PEOPLE and not about the government SYSTEM, you'd see that people would be much better served if they didn't have to play into ponzi schemes, they didn't have to pay into anything like that, if their work wasn't taxed at all and only consumption was taxed and so they could invest into any business without being punished for any work that they do, for any under-consumption and resulting savings and production.
You are not really addressing the problem of people and their economy, you are just interested in extending the existing system into some indeterminate future. But the future is very determinate, it's coming and it's a dollar collapse.