Stop Pulling the Wagon

I am amused at all the “hand wringing” and finger pointing about our Governments “Debt Problem”.  Whose fault is it?  How are “they” going to “fix” it?  Who is going to “pay” the debt?

Being a student of the history of money and the governments who issue that money I can tell you I am absolutely positive how this will be “fixed”.  The only real question is timing.  It is said that in email and electronic messaging the way to shout is to use all capital letters so I will shout my answer to these questions.

OUR GOVERNMENT WILL DO WHAT EVERY OTHER GOVERNMENT SINCE AT LEAST THE TIME OF THE ROMAN EMPIRE HAS DONE WHEN THEY GET INTO FINANCIAL CRISIS.  THEY WILL USE INFLATION.

It works like this.  If you owe 14 Trillion Dollars but you inflate (spelled de-value) your currency by 50% you only have to repay the equivalent of 7 1/2 Trillion Dollars.  If you deflate it by a factor of ten, then you would only have to repay the equivalent of 1.4 Trillion Dollars.  In todays world that is “chump change”.   Play with this concept a little using your own inflation factor and do the math.

If you will look at the currency note pictured above,  it was issued by the German Government in December 1922 for the amount of 1000 Marks.  In September of 1923  that same German Government overprinted  and changed the value of the note to 1,000,000 marks.  So in nine months the government changed the value of (devalued) the currency by 1000%.  This is called hyper-inflation and it destroys the value of whatever money is in the hands of citizens (often their life savings) at the time of the “re-valuation”.  Another way of doing it is simply by inflation through run-a-way interest rates which has the same impact on the value of money in circulation.

At first glance this might look appealing because a person is tempted to think “okay, my dollar bill will suddenly be worth a hunred dollars” (or whatever) but it doesn’t work that way.  Remember, Government is the one with the power to print money.  So the money you have is now worth that much less.  Think of it this way: If our own Government were to revalue the dollar by 50% your local Dollar Store would become the Two Dollar Store only you would still have the same dollars in your bank account or wallet, but now they would buy you only half as much.

Do I think we will get into a hyper-inflation scenario like Germany did following the First World War?  Probably not, but, the government will have to do something with our ever growning National Debt.  All too soon we will reach the point that it becomes ever more difficult, or impossible,  just to pay the interest on that debt in todays dollars.  Inflation will be the only option left unless we are willing to make sacrifices I don’t see the American public expressing the discipline or desire for.  If interest rates were to rise sharply, as in the Carter years of the 1970’s, then “Katie Bar The Door”.

Just my thoughts.  You don’t have to agree.  But consider the very real history behind the currency note above.

Bob Bandy

I remember when my daughter was young and used to go to birthday skating parties with her friends.  They had an Arcade at the skating rink and I would often pass the time with the games there.  One of my favorites was Whack-A Mole where the object is to whack the moles on the head with the mallet as they pop their heads up through the holes.  I was remembering this recently and it got me to thinking…….

I keep hearing members of our government asking why businesses are not hiring more employees and why they are re-locating to sites outside the United States?

Have any of these people asking these questions ever tried to start a business?  Have they ever tried to keep a business going?

Being a business owner, or potential business owner is like being a Mole in a game of Whack-A-Mole. Only you are not trying to avoid just one “Whacker” but multiple “WHACKERS”.

You will need a permit or license.  WHACK!  Your city, county, state will require an application and fees.

Where is your Environmental Impact Report?   WHACK!   The EPA will need a completed report and a fees.

Need to hire employees?  WHACK!  More forms, more requirements, more regulations.

You will need insurance against everything that could possibly happen or create a potential liability.  WHACK!

Need to terminate an employee?  WHACK!  WHACK!  WHACK!  More forms, more regulations, more requirements and sometimes attorneys.

Government mandated Health Insurance.  WHACK!

Did I mention potential Union involvement?  WHACK!

You finally beat the odds and make a profit.  Its now tax time.  WHACK!

And the game goes on.  Can be a lot of fun…….   unless you’re the Mole.

Bob Bandy

I HAVE A QUESTION. WHY IS BERNIE MADOFF IN PRISON FOR 150 YEARS WHILE 537 BERNIE MADOFF WANABE’S ARE LIVING A LIFE OF LUXURY AND INDOLENCE AT THE TAXPAYERS EXPENSE IN OUR NATIONS CAPITOL?

Supposedly ole’ Bernie is guilty of running an 80 Billion Dollar Ponzi scheme which bilked thousands of investors.  In the meantime, 435 members of the House of Representatives, 100 memers of the Senate and 2 elected members of the Administration just scammed three hundred million Americans for another 2.4 Trillion Dollars to add to the 14.3 Trillion Dollar Ponzi scheme that is our nations National Debt.

After months of finger pointing, name calling and accusations they just pulled off another big one.  Lets see, they add 2.4 Trillion to the debt while they promise to reduce deficit spending 21 Billion Dollars.

Folks, 21 Billion Dollars is equal to the amount of debt they will be adding to the deficit in the next five days!

Remember, our children and grandchildren will “inherit” the 16.7 Trillion Dollar Debt forever!  That and whatever “our Representatives” continue to add to it !

And, there is no doubt this bunch will continue to add to the total.  All so they can perpetuate themselves as power brokers in public office.

Lets see, they spend an additional 2.4 Trillion dollars over and above the amount they will take in and for that they promise to reduce deficit spending by 21 Billion.  What are they planning on doing?  Taking five spending days off in the next year?  What a sacrifice!  Heck of a deal!     

Click on the following link for a “Casey At The Bat” spoof which I include just because its funny….  We have to remember to laugh at ourselves…. No offense intended….     

Bob Bandy

Right now there is a lot of discussion about the United States involvement and commitment in Afghanistan.  Legitimate questions are being asked as to why we are there, what is the U.S.  goal and exit strategy and just how much blood and treasure are we willing to invest in what kind of hoped for outcome.

While I was appalled at the treatment of Afghan women and children under the rule of the Taliban there is also questions in my mind as to whether we may have gotten ourselves “bogged down” in a country that seems to be contentedly lost in the 8th century.

I heard Ann Coulter comment on a television news and commentary program the other day that Afghanistan is a country with more goats than flush toilets.  While her comment was no doubt made somewhat tongue in cheek, it also highlighted the fact that this is a mostly Tribal Culture without rights for women or children and where the accepted norm is brutal enforcement of the harshest form of Islam.

A country with very little infrastructure such as electric power, roads, sanitation systems or public education system beyond the Muslim Madrassa’s where boys and young men are taught to hate everything about the “Evil West”.

A country whose only significant export and source of revenue is opium/heroin.  Whose government is enormously corrupt and does not have the trust of the people it pretends to govern.

So………   While I do not like to envision what would happen to the people, especially the women (including young girls) of Afghanistan if the United States were to leave, I also cannot think of a viable long range goal for our being there.  I find myself with questions that I do not have satisfactory answers for.

Maybe the National Organization for Women could open a headquarters in Kabul with branch offices in every village and town throughout the country?

Something to think about……..    

Bob Bandy

I knew a man who cured his son of the desire to smoke by having him smoke a pack of cigarettes at the kitchen table while he helped by lighting them for him.

Here in California we did something similar. For many years, under both Republican and Democratic Administrations, we have given public sector employees and unions (mostly all good people like you and me) pretty much everything they asked for including early retirements with lifetime incomes and medical care. Now the State of Calfiornia, as well as many Counties and Cities within the State, are finding themselves in a situation where they do not have the money to pay both their current and “retired” employees. In too many cases they are now having to layoff current Police, Firefighters, Teachers and others because the “retired” employees have Contractual and Legal “first dibs” on whatever money is available in Government budgets.

One solution offered by some is to increase the amount of tax revenue available by simply raising taxes on “The Rich” and “Corporations” . Unfortunately, California, as well as New York, Illinois and some other states, is finding out that those same “Rich” and “Corporations” who have the money to pay more in taxes also have the money to move. And, many are moving themselves, their tax money and the jobs they have provided, to other states (and sometimes countries) with lower tax rates.

What is left behind is a higher percentage of those who are too poor, too sick or too lazy to move to greener pastures. They continue to consume whatever tax revenues are left from a smaller and smaller public “bank account”.

How do we fix this?

As a former Girls Softball Coach I learned early on that the way to victory was not by “punishing” those who showed up on time, worked hard, played as a team and won games while at the same time “rewarding” those who did not show up for practice, refused to play as a team, broke the rules and caused us to lose games. The point being that if I punish the hard working players who are winners they will simply move to another team where they can play up to their potential while those who are not hardworking will continue to drag what remains of the team down to the point it can no longer compete and the team will “fade away”.

Something to think about. …………..

Bob Bandy

INSTEAD OF BEING CRITICAL OF CONGRESS,  CAN WE LEARN FROM THEM?

Maybe we could apply “Congressional Problem Solving Solutions”  in our own daily lives?

For every dollar our government now spends,  forty two cents is borrowed.  I like to think of it as the 42% solution.

Don’t have all the money you would like?   No problem!  Just do what Congress does.  Want to spend $1000 this week but only have $580 available?  Borrow the other $420! 

Can you do this indefinitely?  Sort of like paying your Visa bill with your Mastercard.   Congress seems to believe its possible.

Just think what would happen if every one of us applied this “simple” 42%  solution to our own lives.  Get a calculator and do the math.  We could run up some really big numbers fast!  How long would it be before we were bankrupt?   Just like Congress!  

Congress is showing us that, for them, there is no “Day of Reckoning” (when the bills come due).  They are content to let a future Congresss  send the bills to our children and grandchildren.        

Are we willing to leave a pile of debt to our family and future generations?  If not, why to we keep voting for those who will leave our children  a mountain of debt? 

This is not a Republican vs Democrat issue.  This is a very real question we must answer.  If we want to get out of this hole, we must decide to stop digging.   The debt clock is running and the debt is  piling up as the hole gets deeper.      

Something to think about……  Bob