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.

Weep America! – The VA Leadership is Becoming Worse! – Part 3

I-CareIn the less than 10-days since I last wrote on the Department of Veterans Affairs (VA), the Department of Veterans Affairs – Office of Inspector General (VA-OIG) has dumped more than ten inspection results over the last three days into my inbox.  Not a record, but the recorded actions are certainly hitting record lows.  Worse, the culture of the VA remains unchanged, even through all the recorded crimes and indignities the veterans suffer under.  Recording and summating the crimes of the VA is so depressing, mainly because of the failure to reform.  But, a little depression will not slow or halt the reporting of these detestable actions of the VA!

The first VA-OIG investigation is more of a report on criminal proceedings concluding with sentencing.  A total of five people, including one VA Employee, have been stung in this investigation.  How thrilling to see accountability and justice served cold!

Francis Engles of Bowie, Maryland, was sentenced to 30 months in prison and ordered to pay $150,000 in restitution for defrauding a VA program dedicated to rehabilitating military veterans with disabilities. As the owner of Engles Security Training School, Engles falsely represented to the VA that his company was providing veterans with months-long courses when, in fact, the school offered veterans far less.”

February 2019, four other individuals were sentenced in related cases following their guilty pleas. First, James King, a former VA employee, was sentenced to 11 years in prison for committing bribery, defrauding the VA, and obstructing justice. Second, Albert Poawui, the owner of Atius Technology Institute, was sentenced to 70 months in prison for committing bribery. Third, Sombo Kanneh, Poawui’s employee, was sentenced to 20 months in prison for conspiracy to commit bribery. Finally, Michelle Stevens, the owner of Eelon Training School, was sentenced to 30 months in prison for committing bribery.”VA 3

Apparently, bilking the GI Bill is a regular fraud opportunity, and the VA employees need to be held more accountable for the loss of these funds!  The GI Bill is a precious commodity and sometimes the only lifeline for a soldier for retraining while awaiting the VBA’s decisions. Therefore, stealing these funds should come with more substantial sentences, more accountability for the employees in the know of fraud, and scrutiny from elected officials!

For the next story, we have several crimes co-occurring; the most egregious is reporting to have been a veteran, fraudulently obtaining benefits, and then trying to use veteran status for preferential contract awarding.  The VA-OIG reports:

Robert S. Stewart, the former owner of Federal Government Experts LLC in Arlington, Virginia, was sentenced to 21 months in prison with three years of supervised release for making false statements to multiple federal agencies in order to fraudulently obtain multimillion-dollar government contracts, COVID-19 emergency relief loans, and undeserved military service benefits.”VA 3

I know the Supreme Court of the United States (SCOTUS) has declared that lying about military service is a freedom of speech issue and not a crime.  However, stolen valor continues to make me sick, and the liars should lose all US Constitutional Rights, as well as be sentenced to punishment most vile!  Having served twice (US Army and US Navy), having been deployed to S. Korea (US Army) and the Persian Gulf (US Navy Multiple Times), stealing valor infuriates me into a raging juggernaut!  I hate liars and thieves, but to steal valor from those deserving goes above and beyond being just a liar and thief, and the conduct deserves punishment most vile!  No, I am not apologetic in taking this stance either!  Burn the American Flag; I disagree with SCOTUS again and becoming a raging juggernaut!  There are lines you do not cross with impunity, and if you cannot scream fire in a crowded theater as “Free Speech,” then acts of stealing valor or burning the American Flag are reasonable restrictions!

I do agree with Justice Oliver Wendell Holmes’ statement:

The ultimate good desired is better reached by free trade in ideas — that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out.”Angry Grizzly Bear

But stealing valor and burning the American Flag is not “free trade in ideas,” and I support social shaming as part of the punishment most vile for these lepers of society!  Before you burn the Flag or steal valor, serve in uniform, watch a military funeral as a dependent, and then let’s talk about reasonable and valid restrictions upon “free speech!”

Another case, another criminal act, only this time, I am left asking, “How long has this individual been doing business with the VA?”  Regardless, as this is an ongoing case, the following firstly applies: “The charges in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty.”  From the VA-OIG report:

Muhammad Z. Aabdin of Bronx, New York, was indicted for offering bribes to a VA contracting officer in exchange for the award of VA contracts for personal protective equipment.”VA 3

It will be interesting to watch this case and future (potential) investigations occur.  However, I have several questions needing to be answered, and the report does nothing to aid in answering the questions raised in the defendant’s arrest and the grand jury indictment.  More to come as the VA-OIG and the US Attorney produce information.  May the US Attorney NOT allow a plea deal!

The VA-OIG has often investigated improper fiscal practices at several VA sites for the VBA, the VHA, and the National Cemeteries.  I could almost quote the following investigation results, only differing on how much money is involved.

The VA Office of Inspector General (VA-OIG) conducted a review to examine whether VA’s Maryland Health Care System appropriately managed purchases and payments for medical equipment and supplies. Fiscal oversight of purchase cards and internal controls governing the use of overtime were also reviewed. The VA-OIG found ineffective processes, internal control weaknesses, and inadequate oversight in five areas: 1. The healthcare system and the Enterprise Equipment Request (EER) portal need improved controls for approving equipment purchases. 2. Healthcare system staff and the prime vendor should prepare timely and accurate planning information to ensure adequate supplies are on hand to fill orders. 3. Even though no inaccurate inventory payments were identified, VA’s inventory system needs controls to ensure correct recording of supply units and costs. 4. The healthcare system purchase card program requires closer monitoring to ensure purchases are authorized and supported by documentation. 5. The healthcare system should strengthen its overtime payment controls to ensure supervisors verify overtime hours were completed before approving timecards for payment.  The VA-OIG team also identified more than $5 million in questioned costs related to identified issues such as undocumented or unapproved purchases” [emphasis mine].VA 3

I have heard the term “Criminal Stupidity” and often wonder when “Criminally Designed Incompetence” will become adopted into common vernacular.  I am so fed up with the excuses, the missing money, and the abuse of taxpayer forbearance by bureaucrats; I could rip my hair out and scream until my voice gives out! But, unfortunately, both actions do absolutely nothing to correct the problem and would make me miserable.  The VA has problems with criminals without and stupidity masked as “designed incompetence” within, and the solution continues to be leadership!

Gravy Train 2What adds fire to my mental processes on criminally designed incompetence, the VA-OIG has two other investigations in my inbox on the need to strengthen fiscal controls, , and more correctly track accounting practices.  Under current legislation, if a private business accounted for their money like the VA, they would be shuttered, and criminal charges levied!  Yet, somehow, the elected representatives cannot apply the same accounting behavior standard to a government agency, as they mandate for private companies!  Anyone else thinks we need stronger demands for scrutiny of government agencies?

Plato 2Adding more fuel to the fire for the IT/IS Departments of the VA, the VA-OIG discovered that the VA still cannot regularly and appropriately log records into its own electronic health record systems!  Are you surprised; as a patient, I know I am not surprised at all.  Worse, the lack of medical records being properly handled influences (negatively, of course) how the VBA makes decisions on claims!

The Office of Inspector General (VA-OIG) evaluated whether VA’s community care staff accurately uploaded records for non-VA medical care to veterans’ electronic health records. Veterans receive non-VA care based on certain criteria, such as the distance from the veteran to the nearest VA facility or the wait time for a VA facility appointment. Records for non-VA care enable Veterans Health Administration (VHA) providers continuity of care and inform treatment decisions. The audit team found that staff at six of the seven VA medical facilities reviewed did not always index, or categorize, these records accurately. Inaccurate indexing of medical records poses a risk to veteran care. It increases the burden on the VHA staff who locate and correct the errors, reducing their time for other tasks. The team reviewed 209 veterans’ mental health medical records that VHA community care staff indexed between April 1, 2019, and September 30, 2019, and found 108 indexing errors for 92 veterans. (Some veterans’ records had more than one error.) Errors included using ambiguous or incorrect document titles, indexing records for non-VA care to the wrong referral or veteran, and entering duplicate records. These errors occurred, in part, due to inadequate procedures, training, quality checks, and quality assurance monitoring and a lack of local facility-level policies.”VA 3

Of course, training and local policies were blamed for the failure to log records properly!  These are automatic designed incompetence excuses that appear every single time the VHA fails, the VBA fails, or they both make significant life-altering decisions for veterans, and the VA-OIG investigates!  The VBA claims it is my duty to ensure outside providers send records to the VA in a timely manner.  The VHA claims they have the documents the VBA wants, and they should read the file.  Who is inconvenienced, not the VHA and the VBA, the veteran?  The person who cannot even look at his digital file without a “Freedom of Information Act” (FOIA) request and 30-45 days of waiting, and even then, the document is heavily redacted for privacy!  Whose privacy, I wonder, the providers, the employees, or the veterans?  Because I guarantee the VA is conducting serious CYA on the records produced!  Let alone IT’s continued failure to protect the veteran from identity theft or IS to protect the files from being accessed without reason by employees.Apathy

May 2021 was a tumultuous month for the VA and the VA-OIG.  If you would like to review how tumultuous or think you might have missed an article or two reporting the VA’s designed incompetence, feel free to review using the following link.  Frankly, I want to see action taken based upon the investigations to clean house, more fully scrutinize the VA, and improve the veteran experience at the VA.  But, I do not tell you how to think or feel about an issue. Instead, I report and summate and leave the rest to you!VA 3

As always, I report and summate upon the good and bad.  If you are a citizen of Indiana or receive your care from either Fort Wayne, Marion, or through the Northern Indiana Health Care System, please count yourself lucky, and pass on the praise to the VAHCS employees.  The VA-OIG conducted a comprehensive Healthcare Inspection and found, “The VA-OIG’s review of the system’s accreditation findings, sentinel events, and disclosures did not identify any substantial organizational risk factors” [emphasis mine].  While improvements can still be made, this is HUGE news, and the Northern Indiana VAHCS leadership team needs to be back-slapping and congratulating their employees.

Knowledge Check!Thus, my sincerest congratulations go to the Northern Indiana VAHCS, and heaps of shame and scorn remain served cold to the ineffective leadership and useless employees of the VA in general!  America, we should weep, for the VA is not alone in the government agencies in providing world-class detestable service, abuse of the customer (taxpayer), and skirting accountability and responsibility through designed incompetence!  But, when we are done weeping, it is time for action!  Changing the elected representatives, demanding higher scrutinization with actual penalties for failure, and insisting upon fiscal restraint equivalent to the private sector!

© 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.

NO MORE BS: Understanding Money – Shifting the Paradigm on Money

LookDo you understand money?  Honestly, is how money is created, used, and tracked understandable or a complete mystery?  I have advocated for economics to be taught in high school to understand the actions of government since I was in high school.  I was forced to take a class to write checks, balance a checkbook, and other simple economic topics in US Army Basic Training.  I thought I knew how money worked after this class, but only later realized I knew enough to get into trouble with money, but not enough to fix the problems I had gotten myself into.  I was mid-way through my MBA when I finally took a class on money, economics, and how money works.

I have asked other adults and high school students what they think about money and remain aghast that basic economics is not taught in K-12 education.  There is no reason for fiscal illiteracy in America; yet, fiscal illiteracy is evident in the politicians elected, the lobbyists pushing agendas, and how American politicians of all levels understand money.  The following is a brief attempt to clear some of the confusion regarding money.

Green money is cash.

Dane-GeldGreen money is the dollars and cents in a bank account or your pocket and is quickly spent.  Green money is often called liquid money or liquid assets, liquid because the holder is presumed the owner, owns it, and can spend it freely any way he wishes.  Possession is nine-tenths of the law where liquid assets are concerned.  One of the first lessons most of us learned growing up was if you wanted to buy something and your pocket was empty, you went without.  Liquid assets are cash, green money and are available to be spent in any way the holder chooses.

Non-liquid assets are considered green money due to their sale; this is why a house, a car, a boat, and other such items are considered assets, investments, and opens the door to depreciation or money loss where an asset is concerned.  The sale of the asset provides the opportunity to turn a non-liquid asset into a liquid asset.  However, since the asset is often employed as collateral for a loan, the sale of that asset means the loan holder is paid first from the sale.  If the resale value is insufficient to cover the full loan owed, the loan, which is red money, can still be collected; this process is why red money is so important to understand.

Red money is debt.

Government Largess 3Historically, if a debt could not be paid, the debtor’s blood was allowed to be spilled; hence debt is red money.  Red money always comes with a penalty called interest.  Interest is green money turned red to return the profit to those who lent the initial funds or principle.  That debt, be it a loan, a credit card, or another debt model, remains a burden to the borrower, continues to accumulate interest, and can be called due at any moment in time.  While some laws protect the borrower from excessive interest rates, it remains essential to know about and be cognizant of the interest rate trap.  The legalese on a contract to launch a debt is important to understand, especially where prepayment penalties, late payments, and the ability to call the note due are concerned.

The interest rate trap comes in several forms.  While in the US Navy, stationed in Norfolk, Virginia, a sailor buddy bought a beautiful car for $4000 with a 45% interest rate.  He put $1500 in green money down, so the full loan amount, principal, and interest, for 60-months were $7805.49, including the sales tax.  Later that month, when the car was stolen, the insurance company valued the vehicle at only $1000, leaving the sailor to pay $6805.49 immediately.  This is one type of interest rate trap; another comes from Payday Loans.  Borrow your next paycheck today, get the money today, and pay your paycheck back during the next 36-months at an interest rate between 30-60%.  By the time the payday loan is paid off, more than four separate paychecks will have been paid to cover a single paycheck loan, provided all the payments have been made on time and as quickly as possible.

Welfare State BeginsWhile paying off this loan, you lose your job.  You can lose your car because your car is sometimes used as collateral for your payday loan.  If the resale value is insufficient, you lose your car, you lost your job, and now you still owe a considerable sum that gains interest.  Red money is dangerous; like Damocles’ sword, the danger hangs by a tiny thread above the borrower; one wrong move and the sword falls.  Debt, red money can be helpful; but, careful planning and budgeting are required before entering into debt obligations.  Always it is better to save and budget green money or obtain investors before contemplating debt.

Black money is dead money.

Consider the person who takes green money and places those dollars and cents under a mattress or coffee can in their home.  The cash is out of circulation, is not valuable enough to collect, and no one is benefiting from the money through interest.  Black money can be created in other ways that will be explored later in this article.

Potential Money – Blue Money

blue-moneyThe next type of money is blue money, also referred to as potential money.  Consider a hammer. The hammer might cost $20.00 in green money to buy and bring home.  In the hands of a trained construction worker, a $20.00 hammer, over the course of the hammer’s useful working life, has the potential to earn thousands of dollars in green money for the construction worker.  In the hands of an inexperienced worker, the hammer has the potential to cost thousands of dollars in green money through waste, destruction, and learning.  Training a person to improve their performance might cost $300 in green money; but, if that employee can improve his performance on the job, potentially millions of dollars can come into the company because of the training provided.

Money is created when it is borrowed, and interest is paid on the loan.  For example, Jack has an extra $500 (green money).  He gives this money to his friend Joe in the form of a loan (red money).  Joe takes the loan, adds to his business potential (blue money), and through increased profits, can pay Jack his $500 loan plus the interest of $300.  Hence, $300 (green money) is created as profits for Jack.  While a simple analogy, do the types of money become more apparent?

Welfare State EndsJoe’s loan to Jack showed on Joe’s books as red money until the loan and interest were paid.  During this time, Joe was also making green money, or profits sufficient to pay his workforce, his other obligations, and still retain adequate to pay himself.  Small business owners are not paid until everyone else is paid.  It is not uncommon for small business owners to be scraping by on the smallest margins because all their non-liquid assets are locked up in loans to keep the business afloat.  When poor business practices begin risking inventory and equipment and shareholder investments are added into the equation, is it any wonder why small businesses struggle.

quote-mans-inhumanityMoney is also created when saved in the various saving tools offered by banks.  The diligent saver can save $40 a week until he or she is 65 years of age and potentially have millions in the bank for retirement.  Why, because the bank will pay interest to the saver from the interest collected on the loans the bank makes with the green money invested from the savings account.  Many different savings tools can be considered non-liquid assets because of the agreements made between the saver and the bank.  Generally, the longer the bank’s contract to hold the savings money, the higher the interest rate paid as the bank can schedule payments and loan the same dollars more efficiently when the saver’s funds are expected to be in the bank for a more extended period.

quote-mans-inhumanity-2Often Federal treasury departments of governments create money by printing more or larger bills.  The problem with printing more money is one of surplus, which begins to increase interest rates and decrease the value of the green money held by citizens participating in the economy.  Consider that if the only way to create money is to work money through lending, improving business, etc., and then printing only makes it harder to put money to work.  Too much money on the market creates negatives; negatives include lower dollar value, which makes items cost more and increases interest rates, making borrowing costs rise, and inflation begins to increase prices for goods in the economy.  More importantly, except for necessities, producers’ willingness to spend money stops; these are typical cause-and-effect actions.  A long enough period of decreased desire to spend money and an economic downturn is initiated.

Blue Money BurningState, City, County, Town, municipal governments are even more pernicious with their plots and plans.  On the local government level, money cannot be printed.  Hence, debt is entered into, and municipal bonds are sold to create money in the private sector, which is then paid to the government in increased taxes, but the money lent to the local government was already spent.  One truth discovered about government, when taxes are increased, money is asked of the voters to borrow.  The truth is, the government body asking for more has already spent the increase, spent the budget, and usually spent twice as much as they are asking the voters to allocate.  Consider special elections for increasing taxes; the money being asked for has been spent, the budget was spent, and now the voters are asked to pay for the special election cost to decide if the local government can spend some more money.  The increase being asked very often has been spent three to four times before the election is considered to ask for permission to enter larger amounts of debt in the public’s name.

Poor fiscal planning increases debt by decreasing the value of the original municipal bonds.  The government has to borrow more to get relatively close to the value of the first municipal bond sold.  Note, municipal bonds are considered a debt to the local government and as green money non-liquid assets to the purchaser; municipal bonds can be bought and sold on the private market.  Government focuses upon the holder of the most bonds; because elected leaders are focused upon the holders of the most bonds, citizens bear no weight in being heard.  Money talks!

Detective 4In several different locales, municipal bonds can be held as unseen debt or black money, also referred to as unfunded liabilities, kept on other books, not currently open to the public.  The monies owed are not considered red money because there is no plan by those in power to pay these debts; thus, the city’s debt could be significantly higher than reported.  Unfunded liabilities never have a plan for repayment by those in power.  Unfunded liabilities can be a mixture of many different debts (employee retirement, some municipal bond types, unpaid bills to local service providers, etc.).  The common denominator remains, there is no plan or money to repay this debt.  Thus, black money is created because there are no plans or money to meet these obligations.  The taxpayer remains on the hook for the principal and the interest of those unfunded liabilities.  Unfunded liabilities are hopes of current politicians on future prosperity, and sometimes, depending upon laws, unfunded liabilities are part of the government’s credit rating. Low credit ratings by the government increase taxes, the risk increases, making borrowing money more expensive, and the taxpayer generally has no idea how poor their municipal government’s credit rating.  Never forget, municipal government, many times includes the local school board.

ToolsWhile this explanation is elementary, the lessons contained are sufficient to protect the bottom-line, improve knowledge, and provide an opportunity for improving circumstances.  When bottom lines fail, before anything else, look to lost blue money as the cause.  When blue money is disregarded long enough, red money increases exponentially, and green money evaporates; this formula is set in stone.  Potential blue money is not elusive, but it takes keen observation to protect and grow.  Grow enough blue money, and green money multiplies exponentially.

Americans must start demanding fiscal literacy in the politicians running for office.  Americans must begin understanding the captivity they are in where the government spending is concerned.  Ask yourself, would your bank honor a post-dated check?  Why should the government be allowed to write a check the bank won’t allow you to write?  Can you spend 8-15 times your salary between paychecks and maintain your house, car, and other assets?  Of course not, so why should the government be allowed to do this on your tax dollars?

DutyFiscal literacy improves freedom and liberty.  Fiscal literacy is required to maintain the US Constitution and US Bill of Rights.  Budgets are not bad things for government to live on; in fact, the government should be the first exemplar of budgetary soundness and fiscally literate action.  A Liberty FIRST Culture will require fiscal sanity and fiscal restraints, a reduction in debt, and a payment plan for all unfunded liabilities.

© 2021 M. Dave Salisbury
All Rights Reserved
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