Let's assume you are an everyday guy who has saved 10,000 and buys a savings bond paying 7% interest compounded annually. Your bond would be worth $19,671.51 after 10 years. Your taxes on capital gains of $9,671.51, if you live in Nebraska with 7% capital gains plus 15% federal, would be $2,127.73 leaving you a net gain of $7,543.78 in currency.
Now lets assume inflation (amount of money the federal reserve was creating for the bankers) was at 5% over those 10 years. The amount of money needed to buy the same goods as 10 years ago when you made your investment would be $16,288.95 in currency.
That reduces your actual gain in buying power to $3,382.57 in today's currency. If we subtract the capital gains taxes paid from the actual gain in buying power, your gain was only $1,254.83 and your actual capital gains tax rate was more like 63% on actual gains.
Meanwhile, the banks are receiving federal reserve notes BEFORE the inflation rolls down hill to the pool of existing currency. Is it any wonder the divide between mega-rich and the average person is growing?
Added 12/5/10
The Fed creates all bubbles and inevitable bursting of all of the bubbles, by manipulating money supply & interest rate <<< pass it on.
Although we are all debt slaves to the Federal Reserve's ability to inflate, ballooning student loans-not forgiven by bankruptcy-may violate the Constitution. Many young adults after college are working in virtual 'involuntary servitude' to pay off loans--a clear violation of the 13th amendment. Why are college loans not challenged?
If the Supreme court ruled college loans violated the 13th, at first, fewer would go to college but very quickly colleges would recognize that market forces could put them on the street unless they tighten their belts so tuition could drop. Profs would take fewer paid trips, double up in offices again, and teach more hours. Also, many skills previously learned in technical high schools, might return meaning fewer community colleges classes needed. Think of the productivity from two years of work rather than two years of classes.
Added 1/11/11 A video explanation of paper money.
Tuesday, November 30, 2010
Sunday, November 21, 2010
What causes bubbles?
Matt Taibbi, an author I do admire, has read Cato's take on the housing bubble and written about it here in Rolling Stone. Now I doubt Rolling Stone will pick up on my humble response, but I do have a point or two to make.
- 1) Community Redevelopment Act[CRA] as originally written had nothing to do with the bubble but was a factor in Credit Default Swaps [CDS] as a hedge against loss. Banks were judged on their CRA rating and that 'forced' them to make loans in areas where a trend was showing crime, vacancies and business pulling out made them a bad risk. The buyer wasn't a risk, the house was well constructed, but if the homeowner were injured or lost their job, the home might be worthless on the market. Banks don't print money (Fed reserve aside,) so they cannot make loans of their depositors money except on sound risk.
- 2) After CDS became the norm and pushed off from the mother ship (the banks,) loans became a commodity. If a broker sold a house and wrote the loan for maximum amount, their % of commission was higher and they could actually 'sell' the loan to a CDS broker. This caused brokers to run around making second mortgages in the 10's of thousands on kitchen remodels with no concern that the loans exceeded the value of the home. Again they sold them for % profit.
- 3) On C-SPAN I have had very informed sources answer this question: If Americans were negative savers (because both Greenspan and Bernanke kept interest at 1% which discouraged savings and encouraged spending,) where did the US$s that financed all these risky home loans come from? The normal process is a saver puts money in bank at a certain interest rate and the bank loans that money at a higher interest rate on good solid 'risks' to make bucks.. But, we had no savings. The answer was the federal reserve created the money used to fuel the bubble. Its like a forest fire with lots of downed trees, branches and brush.. it burns very hot and destroys the trees.
- 4) So the circle was complete; the bubble grew. Greenspan or Bernanke could have (should have) raised interest rates like Volcher did to let the bubble deflate and give us several good years of growth again. The only way to deflate a bubble is to deflate it--in our case by not printing so much money and raising interest rates. The pain is hard, but its over fast. No Politician wants that. The federal reserve is very much in tune with politics and the administration in power.
- 5) Yes there was greed with flipping homes and some got caught with the hot potato when the bubble burst. There was greed in Goldman and other banks selling a faulty investment. There was greed in the loan makers who would shop the neighborhood to find a home that sold for a huge amount so they could make the loan (and their commission) higher.
Thursday, October 21, 2010
Providing equal rights for all
In Public Pulse on Friday
Omaha City Councilman Ben Gray said, "We want to make sure people are protected no matter who they are, where they come from or what they consider their gender to be."
When our Constitution was created, it was earth-shattering. Sovereigns were no longer kings, queens or elite bodies of leaders, but individuals. Each individual had sovereign rights, which we were born with.
Groups now vie for favor of the government to gain their rights - rights we gave away in our fervor to be fair to all.
Omaha City Councilman Ben Gray said, "We want to make sure people are protected no matter who they are, where they come from or what they consider their gender to be."
When our Constitution was created, it was earth-shattering. Sovereigns were no longer kings, queens or elite bodies of leaders, but individuals. Each individual had sovereign rights, which we were born with.
In Europe, Marxism worked, as class structure existed. Marxism was not so easy here. We had to be convinced there was no American dream of success with hard work, planning and setting goals. We had to be divided.
Today, we have almost every special-interest group imaginable, from age, color, race, sex, sexual identity, disability, veteran and on and on - divided mostly by groups we cannot choose to leave - I can't be young, male or Hispanic.Groups now vie for favor of the government to gain their rights - rights we gave away in our fervor to be fair to all.
Separation of School and State
Ezra,
Hotly debated issues on education are created BECAUSE we do not have separation of school and state. Forget separation of church and state==its the schools as political footballs that are causing the quality of education of our kids to be relegated to the bottom of the adults' priority list. I'm listening to the Florida governors debate on C-SPAN and much of their discussion is how to 'RULE' education in their state. Top down cannot work as one size NEVER fits all. Their mortgages are teetering on the edge, says a reporter, but often that mortgage includes hundreds a month for education taxes.
If all schools were immediately unfunded by all level or agency of government, and only funded privately by tuition (or education stamps explained later,) property taxes would plummet, overhead costs at all levels and lobbyist groups would crumble, principals at existing public school buildings would need to negotiate tuition with parents and learn, as private schools do, that all resources must be used in classroom for teaching the kids including the head master. Most children would stay in their current school. The only difference would be the parents being empowered and education of children becoming the primary goal of schools again. I would abolish dept of education and In a five year phase out, have election of parents advisory board done at each school to work with the principal during transition.
What about the poor? Well, I think food stamps pro-rated by income is a good model as a tuition supplement for poor. I would base the amount on an average tuition for the county of residence. After all, we don't care whether grocery stores are owned by Jews, Catholics, Muslims or atheists for food stamps.
Justice Sotomayor's widowed mother worked two jobs to send her daughter to private Catholic school in NYC. In fact, Kagan attended Hunter College exclusive K-12 and Roberts attended Notre Dame K-12. Clinton, GW and Obama all benefitted from private K-12 school along the way. If the Justices who benefitted from private K-12 excused themselves from cases about public schools, how many would be able sit?
Bill & Melinda Gates and Warren Buffett's foundation as well as others interested in education could dive in to assist large city school districts (explaining business practices) during transition. Everything would begin to focus on one issue... only one.. the education of the child.
Certifications would be of no consequence. Either a teacher is teaching or they are not. If a neighbor has decided to stay home to teach their children, taking a hit in their double salary income, that teacher can now accept (for tuition) other children from the neighborhood. In my neighborhood we have an autistic child who could easily succeed with his siblings and neighborhood friends in a small class setting around the kitchen table.
States may decide it is in their interests to test children at set points to identify neglect, and absolutely test to certify 8th grade and high school diploma requirements have been met. Colleges and universities would no longer have to bear costs of the growing number of remedial classes. The ability to sit for annual testing can identify a need for coaching if a child is falling behind. As with college entrance exams, coaching programs will arise from free market.
Trades can once again be removed from community colleges and rolled into a high school focused on the borderline academic, who may be kept in school given the ability to work with their hands part of the day. In Omaha, our former Technical High, where interwoven with their classes, (given the sexism of the times) boys worked on their cars, and girls learned to type and take shorthand, has over 300 non-teaching staff and is being used as the district's headquarters.
The Prussians designed public education to create a class of citizens who respond to orders without question and are trained to endure long periods of boredom. Even the USSR did not fall for that standard. Public Schools are teaching our children that government is their friend and only has their best interests at heart. How many times has that worked out in the past? Was Uncle Joe Stalin a good guy? or Mao, or the politburo?
I say, separation of school and state is our best solution for education in the USA today.
My opinions are my own.. but It might be interesting to hear comments/questions.
Sent to wonkbook@gmail.com Washington Post
Hotly debated issues on education are created BECAUSE we do not have separation of school and state. Forget separation of church and state==its the schools as political footballs that are causing the quality of education of our kids to be relegated to the bottom of the adults' priority list. I'm listening to the Florida governors debate on C-SPAN and much of their discussion is how to 'RULE' education in their state. Top down cannot work as one size NEVER fits all. Their mortgages are teetering on the edge, says a reporter, but often that mortgage includes hundreds a month for education taxes.
If all schools were immediately unfunded by all level or agency of government, and only funded privately by tuition (or education stamps explained later,) property taxes would plummet, overhead costs at all levels and lobbyist groups would crumble, principals at existing public school buildings would need to negotiate tuition with parents and learn, as private schools do, that all resources must be used in classroom for teaching the kids including the head master. Most children would stay in their current school. The only difference would be the parents being empowered and education of children becoming the primary goal of schools again. I would abolish dept of education and In a five year phase out, have election of parents advisory board done at each school to work with the principal during transition.
What about the poor? Well, I think food stamps pro-rated by income is a good model as a tuition supplement for poor. I would base the amount on an average tuition for the county of residence. After all, we don't care whether grocery stores are owned by Jews, Catholics, Muslims or atheists for food stamps.
Justice Sotomayor's widowed mother worked two jobs to send her daughter to private Catholic school in NYC. In fact, Kagan attended Hunter College exclusive K-12 and Roberts attended Notre Dame K-12. Clinton, GW and Obama all benefitted from private K-12 school along the way. If the Justices who benefitted from private K-12 excused themselves from cases about public schools, how many would be able sit?
Bill & Melinda Gates and Warren Buffett's foundation as well as others interested in education could dive in to assist large city school districts (explaining business practices) during transition. Everything would begin to focus on one issue... only one.. the education of the child.
Certifications would be of no consequence. Either a teacher is teaching or they are not. If a neighbor has decided to stay home to teach their children, taking a hit in their double salary income, that teacher can now accept (for tuition) other children from the neighborhood. In my neighborhood we have an autistic child who could easily succeed with his siblings and neighborhood friends in a small class setting around the kitchen table.
States may decide it is in their interests to test children at set points to identify neglect, and absolutely test to certify 8th grade and high school diploma requirements have been met. Colleges and universities would no longer have to bear costs of the growing number of remedial classes. The ability to sit for annual testing can identify a need for coaching if a child is falling behind. As with college entrance exams, coaching programs will arise from free market.
Trades can once again be removed from community colleges and rolled into a high school focused on the borderline academic, who may be kept in school given the ability to work with their hands part of the day. In Omaha, our former Technical High, where interwoven with their classes, (given the sexism of the times) boys worked on their cars, and girls learned to type and take shorthand, has over 300 non-teaching staff and is being used as the district's headquarters.
The Prussians designed public education to create a class of citizens who respond to orders without question and are trained to endure long periods of boredom. Even the USSR did not fall for that standard. Public Schools are teaching our children that government is their friend and only has their best interests at heart. How many times has that worked out in the past? Was Uncle Joe Stalin a good guy? or Mao, or the politburo?
I say, separation of school and state is our best solution for education in the USA today.
My opinions are my own.. but It might be interesting to hear comments/questions.
Sent to wonkbook@gmail.com Washington Post
Wednesday, September 29, 2010
Schiff on Economics
Peter Schiff can spout more common sense economics in a minute then most do all year.
Schiff's podcastincludes an explanation about the current mess and why savings is always what created growth, not spending.
Midlands Voices/2005
Nebraskans understand issues have more than two sides. This is certainly true of the current attempt of the Unicameral, supported by the education establishment, to force Nebraska’s hundreds of Class I school districts to merge with larger school districts. Right now the choice is black and white. The Class I school districts will surely resist and the outcome is unknown. But why not allow the parents of children attending Class I schools a third choice?
Nebraska’s constitution requires we educate our children but has no barriers to a Charter school fulfilling that requirement. What is a Charter school?
A school stands alone as a Charter school by guaranteeing students meet certain educational outcomes. The operators of the school, generally the teacher(s), sign the contract. Charter schools receive tax moneys for the children in attendance. Traditionally, it is much less than the state average spent per child and if outcomes are not met, the contract is pulled and the school closes.
An administrator in Bellevue told me of a sandhills school near North Platte that was closed. The ranchers purchased a trailer and the teacher now teaches their children in the trailer. The other difference is that the ranchers pay her salary. This is the perfect example of the benefit of a Charter school option. The need was there, the desire was there and the teacher was there. It was the legislative option that was missing.
Parents have an option of sending their children to a traditional public school or setting up a Charter school system. In this respect, it is a win-win situation. Parents choosing the Charter school elect a parental advisory board, and often expect to volunteer, help with maintenance, provide transportation, etc. The rural Charter school is much like those of our past. My mother taught in rural schools and answered directly to the parents. Parental control gets defused as control moves up the bureaucracy.
And Charters are not only for rural school choices. Here are other options to increase choices and extend outcomes for kids:
• To attract quality professional staff, a large medical facility provides day care. Extending this facility to a K-6 Charter school might serve the same purpose.
• An international engineering firm recruits engineers by giving them summer jobs during college. A highly challenging math and science curriculum taught to 17 and 18 year olds on site in a Charter school could serve the same purpose.
• A teacher promises to cut the drop-out rate in half if given a Charter school in an inner city neighborhood. If she succeeds, she keeps her school and her Charter. And, she saves some kids from certain poverty and lives of lower fulfillment.
Charter schools offer a choice for parents. They offer competition to the existing monopoly of public schools. Charter schools are public schools, too, but they are run by parents, not administrators or bureaucrats. If no parents send their children to a Charter school, it closes.
--> not included in newspaper: Running for the Unicameral taught me the power of the Education establishment. The teachers union can and does deliver votes. Their questionnaire for candidates is much more about finance and control and much less about improved student outcomes and choices. I’m pro-education for our kids and I want more choices, not less. Hopefully, LB 126 can be amended to include Charter schools as an option. School Charters can be co-signed by a mayor, a county board or a school district board.
Reagan said it best: "Our system freed the individual genius of man. We allocate resources not by government decision but by the millions of decisions customers make when they go into the market place. If something seems too high-priced, we buy something else. So resources are steered toward those things people want most at the price they are willing to pay." Today, too many of our education decisions are made by government not by the customers of education --the parents.
Nebraska’s constitution requires we educate our children but has no barriers to a Charter school fulfilling that requirement. What is a Charter school?
A school stands alone as a Charter school by guaranteeing students meet certain educational outcomes. The operators of the school, generally the teacher(s), sign the contract. Charter schools receive tax moneys for the children in attendance. Traditionally, it is much less than the state average spent per child and if outcomes are not met, the contract is pulled and the school closes.
An administrator in Bellevue told me of a sandhills school near North Platte that was closed. The ranchers purchased a trailer and the teacher now teaches their children in the trailer. The other difference is that the ranchers pay her salary. This is the perfect example of the benefit of a Charter school option. The need was there, the desire was there and the teacher was there. It was the legislative option that was missing.
Parents have an option of sending their children to a traditional public school or setting up a Charter school system. In this respect, it is a win-win situation. Parents choosing the Charter school elect a parental advisory board, and often expect to volunteer, help with maintenance, provide transportation, etc. The rural Charter school is much like those of our past. My mother taught in rural schools and answered directly to the parents. Parental control gets defused as control moves up the bureaucracy.
And Charters are not only for rural school choices. Here are other options to increase choices and extend outcomes for kids:
• To attract quality professional staff, a large medical facility provides day care. Extending this facility to a K-6 Charter school might serve the same purpose.
• An international engineering firm recruits engineers by giving them summer jobs during college. A highly challenging math and science curriculum taught to 17 and 18 year olds on site in a Charter school could serve the same purpose.
• A teacher promises to cut the drop-out rate in half if given a Charter school in an inner city neighborhood. If she succeeds, she keeps her school and her Charter. And, she saves some kids from certain poverty and lives of lower fulfillment.
Charter schools offer a choice for parents. They offer competition to the existing monopoly of public schools. Charter schools are public schools, too, but they are run by parents, not administrators or bureaucrats. If no parents send their children to a Charter school, it closes.
--> not included in newspaper: Running for the Unicameral taught me the power of the Education establishment. The teachers union can and does deliver votes. Their questionnaire for candidates is much more about finance and control and much less about improved student outcomes and choices. I’m pro-education for our kids and I want more choices, not less. Hopefully, LB 126 can be amended to include Charter schools as an option. School Charters can be co-signed by a mayor, a county board or a school district board.
Reagan said it best: "Our system freed the individual genius of man. We allocate resources not by government decision but by the millions of decisions customers make when they go into the market place. If something seems too high-priced, we buy something else. So resources are steered toward those things people want most at the price they are willing to pay." Today, too many of our education decisions are made by government not by the customers of education --the parents.
Tuesday, September 28, 2010
Define Progress
Progressive policymakers moved single mothers to projects like Cabrini Green's high rises [see below] and lumped them together by the thousands -- miles from the father and extended family-- left to foment for 20/30/40 years. Men called 'dad,' attempting to stay with their families, became 'cheaters.' When the drugs, crime and gang problem resulted, they bulldozed the site and scampered off to hatch a new plan to help the poor.
All the neighbors in the projects had failed at personal responsibility in one way or another. The children in this situation seldom if ever saw their father, their grandparents, or any individuals that might be classified as 'responsible,' and had only lonesome, dejected, and often depressed moms to raise them.
Why would anyone vote for progressives or for a way forward after observing social planners abject failures over the years.
Is all this history of failure down the memory hole? Didn't we learn anything? I hear day after day, young voters asking for a 'way forward' and 'progress' from their elected representatives.a Chicago Housing Authority (CHA) public housing development on Chicago's Near North Side, ..At its peak, Cabrini–Green was home to 15,000 people,[1] living in mid- and high-rise apartment buildings. Over the years, gang violence and neglect created terrible conditions for the residents, and the name "Cabrini–Green" became synonymous with the problems associated with public housing in the United States.
Unless they look back at what prior social engineers created with their good intentions, before listening to current plans from politicians, they will risk more unintended consequences.
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