Money Management Mishaps – Page 5

More Security Theater at the TSA

The Transportation Security Administration (TSA) has a sordid record when it comes to airport security. Since airport security is the agency’s primary job and it hasn’t been doing an effective job at providing security you might expect it to, you know, try to improve its capabilities. Instead the agency has been doubling down on security theater. But the best part is that the agency realizes that its efforts are theater:

If you’ve ever suspected that the TSA’s airport behavior screening (where it looks for visual signs of lying or stress) was just another example of ineffective security theater, you now have some science to back up your hunches. Thanks to a lawsuit, the ACLU has obtained TSA files showing that the organization has pushed and even expanded its “behavior detection” program despite a lack of supporting evidence. While the TSA maintains that it can detect signs of shady activity through fidgeting, shifty eyes and other visual cues, studies in its files suggest just the opposite — you’d have just as much success by choosing at random. And those are in controlled conditions, not a busy airport where anxiety and stress are par for the course.

The TSA hasn’t thwarted a single terrorist attack since it was founded. It hasn’t even done anything noteworthy in the field of security. The only thing the agency has managed to do is bolster the profits of bottled water manufacturers by stealing air travelers’ water and forcing them to buy more inside of “secure” areas. Yet this agency continues to exist. It continues to exist because the government that established it believes stealing your money and giving it to one of its entirely ineffective agency is fiscally responsible.

The next time some statist dipshit tells you that taxes aren’t high enough remind them that a ton of tax money is being irresponsibly dumped into agencies like the TSA.

The Truth Hurts

Donald Trump has promised to bring in a new wave of protectionism for American businesses. This news has been met with cheers from the small government advocates in the Republican Party. The democrats haven’t been cheering but only because Donald Trump is promising it. If Hillary Clinton had promised it they would be cheering but at least the cheering wouldn’t come immediately after claiming they’re for a small government.

Protectionism is almost always promised by people who blame foreign countries from a bad domestic economy and this case is no different. Trump and the republicans are claiming that China has been stealing American jobs. But Jack Ma, Chinese billionaire, sees things slightly differently:

Ma says blaming China for any economic issues in the U.S. is misguided. If America is looking to blame anyone, Ma said, it should blame itself.

“It’s not that other countries steal jobs from you guys,” Ma said. “It’s your strategy. Distribute the money and things in a proper way.”

He said the U.S. has wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home.

While I disagree with his claim that the money was merely misappropriated, he’s entirely correct in saying that the $14 trillion spent in fighting wars was wasted.

Any economist who isn’t a complete moron, of which there are very few, knows that wars don’t produce wealth. Sure, it often looks like wars are good for the economy because jobs are created to feed the war machine but none of those jobs are productive. They exist to destroy wealth. Every piece of military machinery is build to be destroyed. Ammunition is expended. Tanks are either destroyed in combat or destroyed after they’ve been made obsolete by a new tank. Aircraft carriers that aren’t sunk by the enemy are sunk by the owners when they’re decommissioned to make way for the new fleet. Every building, road, and telephone pole destroyed in a war must be rebuilt afterwards. No actual wealth is created by war. Wealth is merely dumped into building expendable equipment or redoing work that was previously done. This is also why fourth generation warfare is so effective. One side spends pennies while the other spends trillions.

Instead of waging an endless war, the people of the United States could have been doing productive things. But the government chose warfare, the people rolled over and accepted warfare, and a huge amount of wealth has been diverted to unproductive endeavors, which has done nothing good for the economy. China isn’t taking American jobs, the United States government is destroying those jobs.

Just a Slight Shortfall

What happens when a business makes more monetary promises than it can fulfill? Its assets are liquidated so that the proceeds can go towards paying off some of those promises. What happens when a government makes more monetary promises than it can fulfill? That seems like an important question to ask right now:

You can look at the financial health of Social Security in many ways.

[…]

Despite the huge numbers, there’s even a less generous way of looking at the fiscal shortfall.

A projection, known as the “infinite horizon,” takes into account all the program’s future liabilities, even those beyond the 75-year period that Social Security actuaries typically use in their calculations.

Under the infinite horizon, Social Security will have $32.1 trillion in unfunded liabilities by 2090, $6.3 trillion more than last year’s projection. (See the chart below.)

Social Security was sold as a safety net that would guarantee that retirees would have money even after they were no longer working. But like all government schemes, Social Security was just another mechanism to expropriate wealth from the people for the benefit of the State. The scheme was originally quite simple. Today’s valued dollars would be taken by the State so it could use them as it pleased and then returned at a future date after inflation had devalued those dollars significantly. But the scheme quickly became more complicated.

Since 1982 Social Security has been paying out more than it has been bringing in. This deficit, often referred to by cute names such as unfunded obligations or unfunded liabilities, is slated to ballon to $32.1 trillion by 2090. To put that in perspective, the current national debt is hovering near $20 trillion.

If Social Security (or the United States government for that matter) was a business it would be forced to file bankruptcy as there is no realistic way that it will ever be able to repay its debts.

Dire Straits

In Finland the jobless can get their money for nothing and they don’t have to install microwave ovens:

Finland will soon hand out cash to 2,000 jobless people, free of bureaucracy or limits on side earnings. The idea, universal basic income, is gaining traction worldwide.

The computer graphics in that video are almost as bad as this idea!

Before any advocates of universal basic income start creaming their pants over this let me point out that this is a solution to a problem that was, not surprisingly, created by the government in the first place:

While entrepreneurs are eager to put these people to work, the rules of Finland’s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again.

The problem isn’t that there aren’t jobs available. The problem is that the Finnish government has created a system that discouraged unemployed individuals from seeking another job. Instead of fixing that problem the Finnish government has decided to exacerbate the problem by giving unemployed individuals money for being unemployed. How will that encourage them to seek a new job? It won’t.

I’m sure a bunch of advocates of universal basic income are ready to accuse me of hating workers because I’m not onboard with their little scheme. But I don’t hate workers. In fact, I am a worker. But universal basic income is an unsustainable idea because it relies on taxes and taxes only exist if there is wealth to steal. Ask yourself this, without employees motivated to work how can employers create the goods and services that create the wealth that supports universal basic income? Without employers wealth isn’t created. Without employees the employers can’t create wealth. This means that eventually the supposedly guaranteed income is no longer guaranteed because there is no money to pay it with.

TANSTAAFL, there ain’t no such thing as a free lunch, is the rule that the universe runs by. A few words written by some bureaucrats in a marble building can’t make that rule go away.

If Keynesian Economics isn’t Solving Your Problem Then You’re Not Using Enough of It

Although it’s unlikely he actually said it, it is often claimed that Albert Einstein said that the definition of insanity is doing something over and over again and expecting a different result. By that definition there are a lot of insane people out there discussing mainstream economics.

Take this article, for example. The article tries to argue that Keynesian economics could save the United States. The problem with the article, besides its advocacy of nonsense, is that it’s based on the false premise that the United States government ever stopped following Keynesian economics.

The United States is in the mess that it’s in, in part, because it followed Keynes’ advice instead of Mises’. Instead of relying on free markets, a commodity based currency, and debt avoidance the United States has been relying on cronyism, a fiat currency, and racking up more debt than a drunken teenager with their parents’ credit card. The natural correction mechanisms of markets have been suppressed for decades, which has lead to a massive misallocation of resources. Eventually the problem will become so bad that no force will be able to continue suppressing these market forces and people will get to enjoy the mother of all depressions. Debt, likewise, is unhealthy in the long run because creditors eventually refuse to loan any more money (or buy your debt in the case of the United States) and call in outstanding loans. When those loans are called in and you don’t have the money to pay you end up going bankrupt (or killing your creditors as the United States will likely try to do).

The current United States economy is what you get when a government goes full Keynesian. If you’re really interested in trying to fix this mess you should pick up some books written by Ludwig von Mises and follow their advice.

Using Data Classification to Hide the Truth

Continuing on my theme of the State having many layers of protection that hinder any meaningful change, I came across a story about how the Department of Defense used data classification to protect itself from possible budget cuts:

In January of 2015, as the US Department of Defense was chafing under the sequestration of its budget, the Pentagon leadership got some great news. A study prepared by the Defense Business Board (DBB) and a team from the global management consulting giant McKinsey and Company found that even with “moderate” changes to business practices, the DOD could save $125 billion over five years.

[…]

That good news, however, did not fall upon welcoming ears. DOD officials had no real idea how much bureaucratic overhead was costing them, as the costs were never accurately measured. When they saw the numbers from the DBB, the Washington Post reports, some of the Pentagon’s leadership was afraid of a legislative backlash. After DOD officials had complained for years about not having enough money to Congress, the department feared findings would trigger further cuts to the DOD’s budget. So the data for the study was designated as sensitive, and an overview of the report that had already been published to the Defense Business Board website was pulled.

You will never find a department within the State that will willingly submit to a budget cut. In fact, departments will go to great lengths to justify expanding their budgets. Different departments have different strategies to argue against cuts but they all work together to ensure that the State always has a justification to keep cranking up taxes.

I would have liked to see the looks on the faces of those Department of Defense (DoD) bureaucrats when they saw that they could cut $125 billion for their budget. I’m sure they made more than a few implied threats to the people who created the report to discourage them from performing such an investigation in the future. And if the DoD didn’t have a policy to mark any reports arguing in favor of a budget cut as sensitive before, I’m sure it does now.

People talk about changing the system from the inside but that’s not possible when every component of the system has hundreds or thousands of roadblocks preventing changes. Concealing information is one such roadblock. How can somebody make an accurate budget when the information they need is inaccurate or missing? So long as every department only reveals information arguing for the need to increase their budget there is no way anybody within the system is going to be able to make a valid (to the State, not to the people) argument for decreasing taxes.

Secure Your Assets

Anybody with more than two braincells to rub together and has even a modest knowledge of economic history knows that you can’t trust the State for your retirement. The government issued funny money is in a constant state of devaluation, which means every slip of its paper you save will be worth much less when you retire. Because of that, smart people find alternative ways to preserve their wealth for retirement. Some people invest a portion of their wealth in the hopes they can grow it faster than the rate of inflation while others prefer to rely on time proven precious metals.

If you look at historical trends the latter is a pretty solid choice if your goal is to preserve your purchasing power. However, if you’re going to opt for precious metals you need a secure method of storage, to spread out your assets, and probably a decent insurance policy because physical assets can be stolen:

ST. PAUL, Minn. – St. Paul Police are looking into an reported burglary that stripped a female resident of her entire life savings.

Police spokesman Steve Linders confirms that the alleged victim, a 57-year-old who lives on the 1600 block of Abell Street, had her valuables stashed in her bedroom because she does not trust banks. The thieves got away with 100 gold bars valued at more than $1,200 apiece, $60,000 cash and a diamond ring valued at $36,000.

I’ve seen quite a few comments making fun of the fact that her lack of trust in banks caused her to lose her life savings. But if your money is in a bank account its purchasing power is constantly being stolen in the form of inflation so acting high and mighty because you keep your government funny money in a bank is just as stupid as keeping all of your gold in one location and not properly securing it.

By the description of her storage method (stashing it in her bedroom) I’m left to assume she didn’t have her gold in a quality safe. If you’re going to have a lot of gold on hand you should invest in a decent safe that can be bolted to the ground (i.e. a decent gun safe). Bonus points can be had if you can also conceal the safe. But a quality safe offer two advantages. First, it greatly increases the time it takes for a burglar to get to your valuable assets. Burglaries are often smash and grab affairs where the burglars want to minimize the amount of time that they’re in a house. The more secure your assets are the less attractive they will be to a petty thief looking to get in and out. The second advantage a quality safe offers is fire protection. You don’t want to lose your retirement if your house burns down.

In addition to a quality safe you also want to spread your assets around. Keeping all of your eggs in one basket is not a wise idea. I would personally recommend against a safety deposit box at a bank because the State can and has seized them. And since the United States government has confiscated gold in the past it’s not unreasonable to think another gold confiscation might occur. You’re better off having trustworthy family members or close friends or have a second piece of property where you can install a quality safe and store some of your assets.

The third thing, which can be tricky if you’re concerned about another possible government gold confiscation, is having an insurance policy. Precious metals are valuable and valuable assets should be insured against loss. However, insuring your precious metals also means records of the metals existence will exist. If the government decided to do another gold confiscation they very well may require insurance companies to surrender information on customers who have insured precious metals. Then again, an insurance policy is a nice thing to have if burglars break into your home and get into your safe. It’s one of those risk-reward formulas that you have to figure out for yourself.

Storing your retirement savings in government funny money in a bank is not a good idea but if you’re going to do something else you need to be smart about. Simply buying gold isn’t a solid plan if you don’t have a way of securing that gold longterm.

The State Giveth and the State Taketh Away

Do you trust the United States government? Believe it or not, there are fools out there that still do. Unfortunately, many of these fools get suckered into military enslavement (I call it enslavement as opposed to service or employment because an individual who enters the military voluntarily cannot later leave voluntarily and the contract they sign is entirely one sided). Why? For some it’s because they believe the military allows them to serve their country (and that serving a country is noble). For others it’s because they’re out of employment options and need the cash, which is why the State often offers enlistment bonuses. But there is no honor amongst thieves. As the ultimate thief in the territory the United States government is more than happy to demand those enlistment bonuses back:

Short of troops to fight in Iraq and Afghanistan a decade ago, the California National Guard enticed thousands of soldiers with bonuses of $15,000 or more to reenlist and go to war.

Now the Pentagon is demanding the money back.

Nearly 10,000 soldiers, many of whom served multiple combat tours, have been ordered to repay large enlistment bonuses — and slapped with interest charges, wage garnishments and tax liens if they refuse — after audits revealed widespread overpayments by the California Guard at the height of the wars last decade.

Investigations have determined that lack of oversight allowed for widespread fraud and mismanagement by California Guard officials under pressure to meet enlistment targets.

I guess this is what the United States government means when it speaks of treating soldiers with respect and dignity.

There are two important details worth noting here. First, the obvious. The California National Guard misrepresented the deal to the soldiers signing up yet it is not the entity being punished. Instead of the California National Guard being forced to repay the money it wasn’t authorized to distribute the soldiers who signed up with the understanding that they would receive the enlistment bonus are being required to give it back with interest. This solution seems to be acceptable to the United States government. As always, when the State screws up it’s the people who pay.

Second, and this is where my label of enslavement comes in, the contract the soldiers signed when they joined the California National Guard are apparently very one sided. There are very few ways for a member of the military to change the contract they sign, which includes submitting themselves to an alternative justice system, but the State seems to be able to change the contract for any reason whatsoever. If a member of the military wants more pay they’re shit out of luck. If the State later wants the enlistment bonus it paid a member when they joined it can do so without issue and even charge interest.

The State submits us to continuous propaganda about how solider are heroes and how us mere civilians should treat them as such. But the State prefers us to do as it says, not as it does because it has no issue treating soldiers like shit. Of course, in the long run, this will be detrimental to the State because it will have a more difficult time finding people for its meat grinder and those already getting ground up may turn out to view their employer less favorably. An unhappy military is a less efficient expropriator of foreign wealth than a happy military.

They Want Your Fuckin’ Retirement Money

George Carlin once said, “And now they’re coming for your Social Security money. They want your fuckin’ retirement money. They want it back so they can give it to their criminal friends on Wall Street. And you know something? They’ll get it. They’ll get it all from you sooner or later ’cause they own this fuckin’ place. It’s a big club and you ain’t in it.”

Social Security is often referred to as a Ponzi scheme and that is a fairly accurate assessment. Ponzi schemes tend to enrich the early participants of the scheme at the expense of the newer participants and the State, which passed the legislation mandating we all participate in this scheme, was certainly enriched while newer participants continue to get screwed harder than the last set of participants. What makes matters worse is that we all realize it. How many people in their 20s and 30s have you heard say “I don’t expect to get anything from Social Security?” Hell, I say it quite frequently. But you know who is benefitting from Social Security? The State.

Since its inception the Social Security Trust Fund has been “invested” in Treasury securities. In other words, the State pulls money from peoples’ supposed retirement accounts and lends it to itself. But its cronies have been wanting to get a piece of the action and, as George Carlin predicted, they’re going to get it.

The State has been unwilling to directly cut its cronies in on the Social Security scheme but it did throw them a bone. The bone was a tax rule that allowed money invested into a sanctioned scheme to be withdrawn from employee paychecks before taxes. This scheme, referred to as 401(k), has two major flaws from the point of view of the State’s cronies. First, it’s decentralized. There is no single mandatory 401(k) account that all employees have to invest in. Second, it is voluntary so many employees didn’t hand their money over to the State’s cronies. A lot of that is likely to change in the near future under President Clinton:

While Hillary Clinton has spent the presidential campaign saying as little as possible about her ties to Wall Street, the executive who some observers say could be her Treasury Secretary has been openly promoting a plan to give financial firms control of hundreds of billions of dollars in retirement savings. The executive is Tony James, president of the Blackstone Group.

[…]

It is a plan that proponents say could help millions of Americans — but could also enrich another constituency: the hedge fund and private equity industries that Blackstone dominates and that have donated millions to support Clinton’s presidential bid.

The proposal would require workers and employers to put a percentage of payroll into individual retirement accounts “to be invested well in pooled plans run by professional investment managers,” as James put it. In other words, individual voluntary 401(k)s would be replaced by a single national system, and much of the mandated savings would flow to Wall Street, where companies like Blackstone could earn big fees off the assets. And because of a gap in federal anti-corruption rules, there would be little to prevent the biggest investment contracts from being awarded to the biggest presidential campaign donors.

The “millions of Americans” that proponents are claiming will be helped by this change are the State’s cronies on Wall Street. Me and you? We’ll get fucked on the deal just as we’ve been getting fucked on Social Security. Instead of voluntarily opting to enter into 401(k) we’ll be forced to give money to yet another national retirement scheme. It’ll basically be Social Security II but the money will go to the State’s cronies instead of itself.

Every decree by the State exists to expropriate wealth from the populace. It’s a nice system if you’re either the king or are connected enough to the king to hold a royal title. But it really sucks for us lowly serfs.

Reminder: Private Quantitative Easing is Illegal

A man in Idaho was recently sentences to a year in jail and three months of home imprisonment. His crime? Following the Federal Reserve’s plan to stimulate the economy through quantitative easing:

COEUR D’ALENE, Idaho — A northern Idaho man who created counterfeit $50 bills using a computer printer has been sentenced to a year in jail and three months home confinement.

The U.S. Attorney’s Office says 51-year-old Daniel Keith Snyder of Hope also on Monday in federal court was ordered to pay $1,150 in restitution and have three years of supervised release.

Quantitative easing, more common referred to as counterfeiting, is, like kidnapping and assault, perfectly legal if performed by the State but illegal if performed by a private individual. So remember, just because the State does it doesn’t mean you, a lowly peasant, can do it.