Dollars and Sense – Inflationary Spending and Fiscal Insanity

Bobblehead DollThese articles have discussed money, monetary policy, fiscal sanity, and government spending several times this year.  Some have called me alarmist for raising fiscal sanity during a “Global Health Crisis.”  While COVID-19 (Sars-COV-2) is undoubtedly a viral disease with a 98%+ survival rate, I cannot in good conscience call this a “Global Health Crisis.”  The pandemic declaration was a political move, the mask mandating, business closures, and every other hysterical move have been carefully formulated to present a problem where none exists.  Has Sars-COV-2 mutated; absolutely, but the emotional hysteria has mutated far faster.

Dollars and SenseApathy

When you pass paper to a store clerk, are you spending money; no, you are spending confidence.  Your confidence in the dollar’s strength, as represented by a check, cash, money order, credit card, etc., is what is being spent.  Why was the Great Depression so lasting and detrimental; a lack of confidence in the US Dollar.  People who saved their money formed sane fiscal policies personally and acted logically lost their confidence in the US Dollar, and the dollar went into a great depression.

Since President Clinton, the US Government has been on a drunken spending spree and does not appear to be stopping unless the citizens demand they cease and desist!  What does this mean for you and me; everything costs more for two reasons inflation and interest.  When the government prints money, too much money increases prices, and too few goods chase too much money, resulting in people suffering.  When the government borrows money, the interest must be serviced; the interest will increase prices and usually absorb some of the extra capital on the market to bring down inflation.Lemmings 2

Except, Quantitative Easing (QE) is hindering the absorption of money on the market.  Hence America is witnessing something truly remarkable for the first time in financial history, the debt (principal), the interest, and the extra capital, all of these storms are combining into a major conflagration economically speaking.  Usually, at this point, a country begins to look for a place to go to war, which explains China and its expansionist policies in Southeast Asia and the Pacific Ocean.  Too much debt, too much interest, a military needing worked, and assets need to be stolen from other countries.  Typical historical thinking, war truly is grand larceny on a massive scale!

Where are America and China headed; let’s ask Czarist Russia, USSR, Nazi Germany, East Germany, China, North Korea, Italy, Venezuela, Greece, France, and who knows how many other economically unstable countries historically and presently.  Going to war will not solve this economic crisis, though some may try that solution.  The only solution worth advancing at this critical juncture economically is reducing the size of government, placing a firm halt on all government spending, and refusing the politicians to get into debt for at least two decades!  Yes, this means changing Social Security, Welfare, Medicaid and Medicare, and every other government benefit program to fit a reduced budget and smaller government model.  Failure to tighten belts for the next two decades will bankrupt America, and most of the world, making the Great Depression look like a summer picnic.Lemmings 4

Gold and Oil, real estate, Gross Domestic Products (the goods manufactured in America for sale), trade, all of these wealth tools and more cannot support the debt incurred, the money printed, nor the size of the government from the city and county to the White House.  As this trend continues, Wall Street will continue to be tumultuous, at best, and the confidence in the US Dollar will continue to slide.  But, as the dollar slides, which global currency will begin to take up the slack?

The Euro has discredited itself and is not worth the paper it is printed on.  China thinks they will step into the void and take up the slack with the Yuan, except their financial situation is almost as bad as Venezuela’s and Cuba’s, but their size and government type keep this hidden from the public.  Even though the Yuan is in junk status, the Communist government hides these facts; the truth is leaking out in higher trade tariffs and other global trade and finance costs.  Russia’s economic situation still has not stabilized with the fall of the USSR and will probably need another two to three decades until it can compete on the global economy again.Gravy Train 2

I heard a postulation that the Arabian Oil Rich nations of the Middle East would produce an OPEC-backed currency if the US Dollar fails.  I highly doubt this as a solution, but the potential is there.  Another person claimed the lack of confidence in the US Dollar would lead to the World Bank/International Monetary Fund (IMF) issuing currency for the world; boy, would that be a significant problem!  Yet, the American Dollar is being purposefully destroyed by the current crop of politicians, and nobody is standing up and declaring ENOUGH!

Inflation

The US Government, and many others globally, have increased their drunken spending since Jan/Feb 2020 to incredibly extensive levels and used a “Global Health Crisis” as the excuse.  Except when Ebola was sweeping the world, we did not have this level of insane spending and government intrusion.  Ebola is far deadlier, easier to spread, and yet the Ebola disaster is barely remembered.  Bird Flu, Swine Flu, SARS, MERS, all these viruses have had their time in the media hysterical spotlight, every single one of them is deadlier than Sars-COV-2, easier to spread, and they were never a cause for a global pandemic.Gravy Train

Inflation is caused by poor economic policy, where the government grants itself the ability to print money.  Inflation is not just money and monetary policy; inflation is also confidence, faith, and trust.  Inflation is how the government acts, thinks, and behaves.  Inflation is as real as COVID-19 and just as deadly as Ebola while being more problematic for everyone.  From Dec 2020 to the end of July 2021, inflation has increased the price of goods and services by 3.8%, seasonally adjusted, or 5.4% non-seasonally adjusted, which means that prices go up as a seasonal adjustment in the summer.

Fiscal Insanity

Consider with me an analogy; you live in a community of houses and pay a Homeowners Association (HOA) Fee.  Your neighbor has decided they can write checks on your checking account, and the HOA has granted them legal protection to write checks on your bank accounts.  Because your neighbor has legal protection, you sell off assets to provide the funds for your neighbor.  You sell to other neighbors letters of credit that you promise to pay interest on, provided your other neighbors hold those letters of credit for specific amounts of time.  Except, your neighbors stop buying those letters of credit over time because they do not like how your neighbor keeps writing checks and spending your money.  How do you keep this house of cards from blowing over and losing everything?

Tax BurdenAmerica is in this position right now!  Trend lines show a steady downward trend in the value of the US Dollar.  Inflation will keep increasing prices as too much money is chasing too few products on the market.  Debt needs to be serviced and interest paid.  But, when the interest payment is the only thing being paid, and the principal will also need to be serviced, where and how does the principal get serviced when the interest is absorbing all the monthly payments?  Simple economics, money once created and put into the money market, cannot just be absorbed or disappeared.  Just like food doesn’t disappear once consumed, the offal must come out and be handled responsibly.  Well, the dollar is in an offal position and needs responsibly handled!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

NO MORE BS: Come, Let Us Reason Together – Chapter 5

Bait & SwitchIn Chapters 2 and 3 of this series, the discussion regarding money and the $350 Billion dollars COVID relief monies were discussed.  As this is a continuing discussion, I would encourage you to read those missives as well for a fuller understanding of the principles being discussed.  Regardless, several facts remain pertinent:

      1. The states accepting this money will be bound to spend it in a manner the Federal Government specifies.
      2. The money being given to the states as a “stimulus for COVID economic growth,” will not spur anything but inflation and poor fiscal policies.
      3. The strings attached to this money are a noose on individual state economic growth long after the deadline to spend the money (31 December 2026) comes and goes.

Doherty (2021) writing for the NCSL (National Conference of State Legislatures) provides some clarity on the Treasury Department’s rules and regulations regarding this $350 Billion albatross being forced down the state’s throats.  The funds being discussed originate in the $1.9 Trillion American Rescue Plan Act, and the Treasury Department has released operational guidance to the states and cities receiving the funds.  Never forget, while the Treasury Department claims there is an algorithm for sharing the money, politics and political connections will be the final determinant in who receives how much of the funds being doled out.

The Duty of AmericansPensions are the first point of discussion as to where these funds can go; never forget, pensions remain the largest single expense for states in the United States.  Those bloated governmental salaries, negotiated by unions, and put in place by legislative fiat, keep the taxpayer on the hook for poor financial planning long after the initial beneficiaries of the union retirement pyramid scheme and dead and buried.  Read carefully the pension data provided by USAToday for a full and detailed discussion on just how big the pension problem is for the states of the United States.

Millstone of Designed IncompetenceJust as important, look at the total number of government workers as a share of the total workforce, and you will discover just how big your state and local governments have become.  For example, two states selected at random from the 50-state list, New Jersey, and New Mexico are displayed below, and sourced from the article:

New Jersey

  • Funded ratio: 38.4%
  • Total pension shortfall: $130.7 billion shortfall (3rd largest)
  • Gov’t workers as share of total workforce: 13.3% (20th lowest)
  • Avg. annual payout per public retiree: $32,148 (9th highest)

New Mexico

  • Funded ratio: 61%
  • Total pension shortfall: $18.2 billion shortfall (18th largest)
  • Gov’t workers as share of total workforce: 18.6% (4th highest)
  • Avg. annual payout per public retiree: $20,907 (15th lowest)

ApathyConsider New Jersey for a moment, if you met 100 new people in one day, more than 1/10th of those met will work for the state or local government in some capacity, and those 11 people are earning $32,148 taxpayer paid dollars a year for being retired.  Worse, New Jersey is kiting checks on your children’s future to the tune of $130.7 Billion dollars every year.  Raising taxes cannot help closing the funding gap in the pension.  Want more news, the majority of those retired are not living in New Jersey, so all those taxpayer monies are not being recouped in sales taxes, property taxes, and other taxes.

Yet, the Federal Government just borrowed $1.9 Trillion to give the states $350 Billion, and the monies provided will not even pay a years’ worth of pension payments in most cases.  Let alone pay for all the other accounts that have been stripped to pay for the pension gap.  For example, infrastructure (Roads, Bridges, Highways, Broadband Internet, the Electrical Grid, etc.), Teachers, Community Colleges, Unemployment Insurance, Water and Wastewater Treatment facilities, and Health and Human Services, just to name a few cash strapped state programs.

Plato 2A few days ago, I was discussing broadband Internet grids, and there susceptibility to failure with people who work for a major Internet Service Provider.  In Umatilla County, as an example, the Internet either currently, or previously, went down nightly for 5-6 hours at a time.  Read the outage reports and you will find regular large geographic areas of the country suffering with Internet latency and connectivity issues.  Yet, your state legislators must focus not upon the potholes damaging your car, not upon shaky bridges and overpasses prone to failure, but upon pensions for retirees.  All due to labor unions and promises that should never have been made in the first place!

Pensions are the number one reason I, personally, think that government workers should not be able to unionize, and that the government pensions should be as rigidly controlled as the private sectors pensions.  Yet, the inverse is true, unions growing in the public sector, shrinking in the private sector, and the taxpayer is left with the bill.  Since the government can continue to kite checks, our children’s great grandchildren are already up to their necks in debt that is unsustainable.

Plato 3Come, let us reason together for solutions that actually work.  I offer below the following suggestions, feel free to agree, disagree, add more, and discuss openly in the comments.  We, the owners of government, must re-take control of the government, and to do so, we must communicate and act.

      1. Reduce the size of government immediately to the size posted on 31 December 1999. This is an immediate and interim step.  To be followed by a position by position, value discussion, where technological solutions to replace workers is decided.  Eventually culling government size back to a Pre-1930’s level.
      2. Automate as many functions as possible. The processes of how government function are necessarily complicated to justify a jobs program.  This culture of complication must cease forthwith, the processes cleared of unnecessary complications, and streamlined to allow for automation of the processes.
      3. Take the pensions and eradicate the unions. Privatize pensions should be the letter of the law for all, public and private sector employees.  Thus, creating a new market and investment industry.
      4. Privatize public maintenance of roads, the fuel taxes are sufficient to pay for this and improve road maintenance immediately.
      5. Privatize wastewater and water generation and distribution.
      6. Privatize and deregulate all utilities, allowing for maximum competition, and ending the private geographic monopolies the tech companies and Internet providers have established.
      7. Privatize K-12 and Community Colleges changing the pay structures for teachers and reducing the “staff” positions. Get focused on delivering a product, the product is an educated student who can read, write, and do math, thinking logically, and critically.  This means ending the surplus of standardized tests and putting the teacher in charge of the classroom.

PatriotismNever Give Up!Not every child should be forced into college.  Not every job requires a college degree.  Opening the community colleges produces certified, trained, and non-debt laden students that are workforce ready.  Workforce ready means able, willing, and skilled in working, be that in academia for a degree, or in the workforce as a tradesman the requirement is the same and the distinction needs removed from the leaders of K-12 educational leadership.

The aim and the intent of all government programs is to get out of the way and let people act as they think best for themselves and their families.  Not pushing children to college for a degree and a life of debt payments.  Not forcing them into the military because you are too lazy to teach them how to read, write, think, and speak.  Not forcing them into poverty to support a government jobs program.  The government will not go “quietly into that dark night.”  But, with enough insistence the government we currently know can be cut, reduced, and forced to retreat.  We, the citizens, need to take back our government through the ballot box, through the judicial branch, and through demanding change in the legislative and executive branches at all levels of the government.

Knowledge Check!First step, believe it is possible; live like it has already occurred.  Second step, join others to raise the cry and demand the changes.  Third, support only candidates who already live fiscally proper, morally upright, and ethically dedicated.  Fourth, never give up!  Never lose focus, and never relinquish the moral high ground for a bowl of pottage or 30 pieces of silver.

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

NO MORE BS: Come, Let Us Reason Together – Chapter 2

Bird of PreyAs American state, city, and county governments, begin to become greedy little children over the $350 Billion the Federal Government is “handing out for COVID relief” to “spur a national recovery from the economic toll of COVID-19.”  I wanted to take a minute and speak some reality to the situation.  Let us logically review what has happened since November 2019 in the light of a non-partisan, apolitical review.  I urge you to take what is said, conduct your own research, and come to your own conclusions.  As Dumbledore said, “I could be as wrong as Humphrey Belcher, who believed  the time was ripe for a cheese cauldron.”

    1. COVID-19 started in Wuhan Province, China. It was delivered around the world by the Chinese Government’s intentional decision to allow travel while infectious.  The virus was further enhanced by the political nature of Government, the intrusion of Government, and the mass hysteria whipped up by the global media.  Power-hungry people looked upon a virus with a 99.02% survivability rate and saw a golden opportunity to seize power from those who elected them to office.Apathy

These are basic COVID-19 facts that have never been refuted, and the adults in the room have recognized the power-mad politicians and the media usurpers from the beginning of the “pandemic.”  While politics continues to play an over-sized role in COVID, while people are still suffering, and while some “normality” is breaking out, the money spent to date will eventually need to be repaid, and no one is discussing this problem.  Worse, more money is being printed and pumped into the economies of the world to “spur growth,” and this is never good fiscal policy!

    1. Printing money causes inflation. Too much money, not enough goods, raises prices beyond sustainable limits to rebalance the economy; hence inflationary prices will continue until excess money is absorbed.  This is a fundamental economic fact everyone should know.  Money is created through several processes, but printing it to throw at a problem, does not resolve the issue; it only prolongs the misery of the original problem.   The original problem was not COVID-19 but a runaway government from the Obama reign, where the economy stalled, the money pumped in did nothing, and a recession dragged on artificially due to the political hands in the economy.  The same problem from Obama’s reign will lead to the same economic issues under the fraudulent president.Plato 3
    2. Fiscal insanity is not fixed by Federal impropriety and investment. Too many states, California, Illinois, Michigan, New York, Maine, and so many others, are in dire financial straits.  However, their fiscal health was already failing before COVID-19.  Investment by the Federal Government will not change the underlying issues and make a fiscally insane state fiscally sane.  In fact, the opposite will occur; the funds being handed to the states under the auspices of “spurring growth” will exacerbate fiscal problems.  More to the point, the excess money in the markets will mean more financial problems for the rest of the United States, which will bleed into the global economy!Plato 2

You cannot buy your way out of fiscal problems!  The only answer to spur growth is to reduce Government!  Reduce regulations!  Reduce the intrusion of Government!  Eliminate taxes!  Instead, the same tired act is being performed, print money, give it to the states, complain about inflationary prices, blame the rich, and increase taxes!  The only thing the Trump Presidency proved, without a shadow of a doubt, if America can get the millstone of Government off her neck, her economy BOOMS!  Yet, what has Washington and too many state capitals done, doubled down on policies that do not work and try to call this “progress.”

Knowledge Check!Agree or disagree, your choice and your consequences.  I have made my case; the money being pumped into the states will lead to inflationary prices, above and beyond a sustainable level.  The states all have sticky fingers and wet lips looking for these funds.  Sure, there are many promises regarding how these funds will be spent. Still, I guarantee most of the promises are empty. The politicians will have their special interests fed first—leaving the citizens to pay exorbitant fees for food, clothing, housing, services, and products until the extra money is consumed, which might occur sometime in the next 5-years at a minimum.  Who benefits, nobody!  Who loses, everyone!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

Fiscal Insanity is not Fiscal Responsibility – Reports From the VA

I-CareConsider your home finances, you and your significant other are working hard for the paycheck.  Your significant other comes in and reports they have improperly paid the mortgage company, the electric company, the car loan, the gas company, and the credit cards over the last year to the tune of $100,000.  These funds are not recoverable, did not reduce your balances, did not pay ahead, did not apply to your account, and your significant other expects to be praised for improperly paying the bills.  What is your response?

The Department of Veterans Affairs – Office of Inspector General (VA-OIG) released a report on how the Department of Veterans Affairs (VA) remains out of compliance with the Improper Payments Elimination and Recovery Act (2010) for fiscal year (FY) 2019.  The report is replete with the obvious, the VA refuses to be fiscally responsible for American Taxpayer dollars.  Consider the following from the VA-OIG report:

In FY 2019, VA reported improper payment estimates totaling $11.99 billion for 14 programs and activities, $2.74 billion less than the total reported in FY 2018 for 12 programs and activities.

The quote is supposed to be good news, and a major gain, and deserving of applause.  Except, two programs were added between FY 2018 and 2019, thus reducing the overall performance.  The VA-OIG report states something that should be obvious to every household in America, “Improper payments are any payments that should not have been made or were made in an incorrect amount.”  Please keep in mind, the VA is not being tasked with eliminating improper payments, simply following the legislation, and reducing those payments.  The VA has legislatively mandated targets they are “strongly suggested” to meet.

VA did not meet annual reduction targets for a program considered at risk for improper payments and did not report a gross improper payment rate of less than 10 percent for six programs and activities as required. VA satisfied the other four IPERA requirements.”

The VA-OIG inspection for improper payments was not an audit, does not demand full and open books to be reviewed by third-party auditors for accountability of taxpayer dollars, reading the VA-OIG report is simply looks like the VA, including the Veterans Health Administration (VHA), Veterans Benefits Administration (VBA), and the National Cemeteries, self-report compliance estimates for meeting the targets.

Wrapped up in the VA-OIG report is the following gem of bureaucrat complicity.

“… Identified that four programs and activities have been noncompliant for five consecutive fiscal years, and two activities were noncompliant for three years.”

Thus, further reducing the overall adherence to Congressional oversight and fiscal sanity in properly handling the American Taxpayer money.  The VA-OIG reported that the VA is required to submit to Congress plans to come into compliance, and it was considered good news that the VA was able to do this for two high-priority programs with a monetary annual loss of $100 Million; but overall, I have to rate the VA’s ability to self-identify and self-correct fiscal problems at a very low F-.  The audacity of the VA Bureaucrats to not even follow all the VA-OIG recommendations, on such a softball legislative requirement mystifies.  From FY 2018 to FY 2019, the VA refused to comply with a VA-OIG recommendation, and this same recommendation has been carried over into FY 2020 in the hopes that the VA will come into compliance.

Blue Money BurningReturning the original analogy, if your significant other was reporting these failures to comply, how long would that person remain a significant other?  Yet, somehow, we, the American Taxpayer, accepts this type of poor performance from government bureaucrats.  The legislation is not working to improve performance after 10 consecutive fiscal years of trying.  Leading to the following recommendations for immediate Congressional action.

  1. Order a full, open, and transparent audit of the VA.  I don’t care what is found in FY 2019, just perform a complete audit and bring all the books and budgets of the VA into a single source.
  2. Set mandates for compliance with hard deadlines to meet. Without accountability built into a system for improvement, you cannot expect improvement.  Deadlines insist upon compliance.
  3. Start holding actual people accountable for not acting fiscally responsible. The charade has to end, the suggestions for improvement should never have started, and you, the elected Congressional Representatives, are responsible for correcting the fiscal ship of state!
  4. Insist upon adherence through personal liability. If a bureaucrat cannot handle the position they have been hired to hold, they need to be removed.  Not coddled, not protected, not another paycheck!

Congress demands every business in America be held accountable to basic accounting practices; why then does the VA get a pass?

© Copyright 2020 – M. Dave Salisbury

The author holds no claims for the art used herein, the pictures were obtained in the public domain, and the intellectual property belongs to those who created the pictures.

All rights reserved.  For copies, reprints, or sharing, please contact through LinkedIn:

https://www.linkedin.com/in/davesalisbury/

Shifting the Employment Paradigm – Or an Open Letter to the Politician’s of America

Pournelle and Sterling wrote an amazing Military Sci-Fi series of books under the banner of ‘Falkenberg’s Legion’ (1990) collected into a single title called ‘The Prince’ (2002).  In this series an interesting quote appears.

Every soul in his earliest stages of untutored awareness feels that the center of the universe resides within himself [or herself].  To learn that we exist and move for the most part in orbits, rather than preside at the focal point of even a minor cosmic system is a painful and difficult process for most of us…

So far in this series of writing, the origins of the current employment system has been uncovered and commented upon.  During this period of writing, the United States of America, a previously free Republic, has moved inexorably onwards in the path of less freedom, more chains of debt, and further into the dark abyss of history’s failed experiments.  This does not mean that hope is lost; it simply states for the record that leadership is needed very soon.  Toward this end, this missive is given.

The citizenry of the United States is comparable to a herd of anxious cows.  Let me explain.  No offense is intended; please do not choose to take offense.

Fear makes cowherds anxious.  Loud sounds, changes in temperature, atmospheric pressure changes, and even the simple desire to run have spooked entire herds into running, mostly into dangerous territory and always to the disgruntlement of the cow herders, ranchers, and farmers.  Ranchers have learned to make fences stronger, read the lay of the land, and place the herd into as tight an enclosed position as possible when the herd is put to sleep at night to protect the cows from harm.  Just before a herd breaks into a run, the signs of anxiousness are observed; the emptying of bladders and the evacuation of bowels makes quite a mess.  Other signs are apparent; the shaking of heads, the shifting of feet, the eyes roll back in the head, and restlessness or the shuffling of feet in every direction begins.  Finally, the most important sign is a refusal to listen to external leadership, i.e., cowboys/girls tasked to watch the herd.  The final straw before the herd breaks is usually not a major action but a minor inconvenience, which if it had occurred earlier would have been brushed off as nothing; but in the agitated state, the herd sees the minor as major and the herd breaks loose.  Once the herd begins running, those tasked with the herd’s care are forced into running beside the herd to try to turn the leading cows away from danger.  However, herd mentality has taken over.

The citizens of America are as restless as a herd of thunder struck cows right now.  Recent events in Hurricane Sandy, tornadoes in Alabama, the massacre in Newtown, the regulatory nightmare from Washington D.C., Libya, Syria, Iran, Iraq, Israel, China, etc., all are culminating into a nameless fear.  The leaders of the herd, or the politicians at every level, have been entrusted to care for the herd, to take limited resources and spend wisely on that which provides the best for American interests.  The pathways the Federal Government have lead us down are filled with enough good intentions and self interests to pave a four-lane highway from Maine to London and Seattle to Tokyo.  Yet, these same leaders are causing the people to err.  Herein lies the problem.

America was founded upon, has lived upon, and rests upon a single principle, confidence.  The US Dollar is strong because those people, who possess it, trade in it, and bet futures upon it, have confidence in the dollar.  America’s military is strong because the US Soldier/Airman/Marine/Sailor are all possessing confidence individually, in their leaders, and in the political establishment.  The American voter goes to the polls from an overabundance of confidence that the person they have selected is the best choice, but even in a loss, that same voter and nonvoter instills the winner with their confidence.  This confidence forms a sacred trust, an unbreakable vow, an eternal contract, between the politician and the voters.  Breaking this sacred trust hurts every institution in America at the core of confidence.

Look at the abysmal numbers of people who trust the House of Representatives, the Senate, or the President to do the right, plot a correct course for America, or simply to tell the truth, and it becomes apparent that the core has been shook, people are restless, and the herd is about to run.  People need a paycheck, need to know how big the tax bill is going to be, and need to know that the collected taxes are going to reduce the debt, that the politicians elected will honor the contract America made by electing them to office.

Compensatory spending is wrong now and was wrong back in 1946 when passed into law for the euphemistic purpose of ‘Full Employment.’  No government from Ancient Greece to Modern America can provide ‘Full Employment.’  Going into debt does not bring true prosperity.  The only reason compensatory spending was entered into law was to cover up the pain the Federal Government created through fiscal policy failures accrued during the Great Depression.  It took a globe spanning war, millions of deaths, thousands of mutilated bodies, the complete destruction of every civilization on the planet, along with millions of gallons of tears shed in pain and misery to lift the world from the Great Depression, and no society has recovered since.  Our current society is at best a farce, Kabuki Theater, to what it could be if the government left people alone, followed the law, and had not accrued so much debt.

Not once in all the discussion about spending has a single politician offered to apologize for the laws of 1946 allowing compensatory spending and offered to remove this horror from the legal code.  Not a single politician has said, “No more debt, we will live within our means.”  America is a rich country; we are not alone in this label.  The United Kingdom, France, Germany, Japan, China, Brazil, etc., are all rich countries.  Yet all these rich countries share the same problem with Africa, Australia, and New Zealand:  debt, cold, hard, and totally unsustainable.  The politicians tasked with the people’s trust have failed them by running up huge mountains of debt for little or no purpose.  The end result is simple.  More debt equals higher taxes, higher taxes means less freedom to the people and more power to the government.

Another truth, simply expressed; money is power.  Ever since people began forming societies, the need to trade goods and services has required something of value.  Possessing more of that valuable substance automatically equated to power, for the possessor could stop providing the resource valued and the entire economic structure would topple and fall.  A final truth:  actions have consequences.  The creator gave man the unalienable right to choose, whether he chooses right or wrong. While man can choose his thinking and actions, he cannot choose the consequences, and wrong choices cause pain.

Going back to the legislation of 1946, the politicians had chosen to meddle in financial controls.  The consequence was lost value, destroyed confidence, and the crash of the world’s economies.  This brought pain, suffering, despair, and a tremendous backlash.  The answer chosen was to increase the government.  Increasing the government meant more taxes to pay for bigger government.  Bigger government took that which was valuable from those producing valuable tools and gave to others in a vote-buying scheme unparalleled in any society known in history.  Now to retain power, those currently in power have a choice to make:  stop spending at unsustainable levels, reduce the government, and return power to the people where it rightly belongs; or, to try and continue on the unsustainable path and end 200 years of experiment in freedom.  America cannot and will not survive if the debt mountain continues.  The monies must be repaid, the debt satisfied, which will occur in either money or blood.  This is not doomsday scare mongering, but simple truth.

Look to history for this to be unfolded.  A single example:  when Ancient Rome experienced serious debt dilemmas, they conquered their creditors with their armies and navies.  Once Rome could no longer conquer their creditors, fighting began between Roman and Roman, civil war weakened the empire, and external enemies and creditors destroyed that civilization.  This pattern repeats itself time and time again throughout the history of the world.  When a government can no longer conquer their creditors or raise capital to service debt, the debt begins to be serviced by the blood of its citizenry.  The unfunded liabilities must be serviced, the debt must be serviced, and the service of the debt will be painful.  Reducing government to live totally within its means, even during natural disasters and war is the only solution.  This path is difficult, but the more difficult and bitterer pill to swallow is to see civil war break out again in every state of this republic.

By tying employment to economic indicators, the Federal Government placed people in harms way.  Lose your job and suddenly you place the entire country at risk of debt default.  Mass unemployment means fiscal uncertainty for the entire world.  This is not right.  If the government provides more freedom to the electorate, the reward is longer terms in office to keep providing more freedoms to the people.  Be courageous, shift the paradigm, service the debt, and release the power of individuals by untying employment to the economy by annulling the laws of 1946 and 1976 that would free employees to become independent contractors capable of choosing their destiny, choosing those they want to work for, and choosing what they want to do.  Employers should not have by government intervention the ‘Right to Control’ free and independent people.  Employment should be the trading of time for something of value, negotiated between two free and independent parties with the intention of improving both parties.  Act now to rectify a wrong made by previous congresses; free the employee!

© 2012 M. Dave Salisbury

All Rights Reserved

Employee Benefits – A History of Corruption and Coercion

From humble beginnings atrocities begin.  Every action must follow immutable and unalterable laws, consequences follow choices; this article follows the influence of choice pieces of legislation from impetus to current event entanglements.  Only through learning history can proper change produce preferred results.

Modern employment, as we know it, began with a small change from the republic principles of free enterprise morphing into the democratic philosophies of top-down government control.  Soldiers, sailors, marines, and airmen coming home from WWII had left jobs and wanted those jobs back; so, the Federal Government changed policies, wrote legislation, and veteran preference in hiring began.  Sounds good, right?  But by carving out exclusions for veterans, other people wanted to possess special treatment.

What occurred in Federal Legislation has caused some serious problems; the first of these problems began with the altruistic ideal of full employment.  Full employment refers to  “the continuing policy and responsibility of the Federal Government . . . to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining . . . conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maximum employment, production, and purchasing power.”  (Scitovszky, 1946)

The Federal Government in 1945, with enough good intentions to pave a super-highway from New York to Beijing, sought to avoid the natural swings which occur in finance and wrote a bill, eventually entitled the ‘Employment Act of 1946’ to avoid future problems experienced between the prosperous 1920’s and the depression of the 1930’s.   To try to improve financial situations for the Federal Government, employment was considered and tied to economic indicators, suggesting low unemployment equates to higher tax revenues and dollar strength.  This reasoning is valid; however, the consequences spinning off these legislative nightmares are self-defeating.

The next time these economic indicators were reviewed was in 1976 with the ‘Full Employment and Balanced Growth Bill.’  Both of these bills, 1946 and 1976, show tremendous influence from Keynes and his theories of being able to spin into prosperity by incurring unsustainable debt.  Sections 2b and 2c of the original bill from 1945 are crucial to understanding the nightmare problem.  In 1945 the legislators declared full employment is possible for all those who desire it, and proposed full employment through federal government spending.  See the problem, especially in the current fiscal cliff negotiations; the Federal Government has become a consumer of goods and exercises a little known principle “Those who pay, control.”  By becoming a consumer of goods and spending money as a customer, the Federal Government can now demand private enterprise obeisance.

Section 3 of the 1945 version of this legislation requires that the president forecasts and writes a budget to increase or decrease spending based upon unemployment numbers and percentages.  The president must forecast spending on a yearly basis to which Congress must then write the underlying legislation as part of the budgeting process.  The president was made directly responsible for the employment of every person in the US who wanted to work, desired to work, was healthy enough to work, and the legislative bodies would produce the needed bills to make it happen.

Flash forward from 1945 to 2012 and the problem is glaringly obvious.  With a disinterested president failing in his legal duties to propose legislation and forecast employment and spending to the House of Representatives and the Senate, a contentious House and Senate that is more interested in internal politics, divisive sound-bites, class warfare and race games, and world economy fluctuating between dead and dying, the problem with this legislation becomes clear.  There is no control mechanism that compensates for the above.  Dictating through top-down government what businesses need to produce and still call it free enterprise is not possible.  The principle of full employment limits choices by forcing people to become employees through inflation, limiting markets, and the over regulation of enterprise.  These laws do not treat people equally because of the definition of employee, which feeds into the description of full employment.  Ranchers, farmers, and other independents suffer because of these laws and the definitions and classifications of the term ‘employee’ and ‘employment’ including ‘self-employment.’  Making the Federal Government a consumer has failed to provide true economic freedom and prosperity.

The nightmare of compensatory finance, as established by Keynes, is the main problem facing America today.  These two little known bills continue to rob America of greatness, steal future generations of prosperity through debt, and keep the Federal Government wasting tax dollars on frivolous projects.  Full employment is a worthy goal, but it is not obtainable due to the following reasons:  Federal Government spending into debt just to buy goods not used; Federal Government spending simply to keep unemployment numbers low; or Federal Government spending to soften financial cycles, all of which are unerringly wrong.

© 2012 M. Dave Salisbury

All Rights Reserved

References

Barro, R. J. (2011, August 24). Keynesian economics vs. regular economics. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424053111903596904576516412073445854.html

Sanotini, G. J. (1986). The employment act of 1946: Some history notes. Federal Reserve Bank of St. Louis.

Scitovszky, A. (1946). The employment act of 1946. Social Security Bulletin,