Tag: Money Management Mishaps

Regulation Nation

For being the freest nation on Earth (no, seriously, that’s why my patriotic friends tell me) the United States sure has a lot of red tape. I think the the term “regulation nation” accurately describes the United States. After all, if the costs of complying with its regulations were a nation it would be the 10th largest economy on Earth:

After years of rapid growth during the Obama administration, the cost of federal regulations is now bigger than the entire economies of all but nine countries in the world.

That’s according to the latest annual report on the regulatory state issued by the free-market Competitive Enterprise Institute, titled “Ten Thousand Commandments.”

Suddenly the fact that the average bank regulator makes more money than the average banker makes a lot of sense. There’s a lot of money sunk into regulatory compliance and all of that money is entirely wasted (unless you believe investing in an institution that bombs the shit out of foreign nations is productive).

There are a lot of people looking for work at the moment. Once in a while one of these poor souls will ask me what I think a good career move would be. My first question is always “Do you have any moral issue working for criminals?” Surprisingly nobody who has asked me for advice has answered in the negative to that question. But if they had I would then tell them to get a government job. That’s where the real money is made. You usually have to start out as a peon but you can quickly work your way up the ladder. When you get high enough on the ladder you gain authority and connections. The authority is there for personal amusement and allows you to get revenge on all of those kids who laughed at you in elementary school. Connections, on the other hand, are a valuable currency because when you rub enough elbows with enough government bureaucrats you can whore yourself out to a regulatory commission, lobbyist group, or non-profit organization. After that you really rake in the cash!

America is still a land of opportunity, so long as you have questionable or entirely absent morales. As the linked story shows government is a growth industry!

Pentagon to Destroy $1 Billion in Ammunition; Paul Krugman Applauds Its Efforts to Stimulate the Economy

Only an organization so vast, inefficient, and dumb could put itself into a position where it willingly destroys $1 billion worth of ammunition:

WASHINGTON — The Pentagon plans to destroy more than $1 billion worth of ammunition although some of those bullets and missiles could still be used by troops, according to the Pentagon and congressional sources.

It’s impossible to know what portion of the arsenal slated for destruction — valued at $1.2 billion by the Pentagon — remains viable because the Defense Department’s inventory systems can’t share data effectively, according to a Government Accountability Office report obtained by USA TODAY.

Most of this story focuses on the Pentagon’s shitty inventory system. I will save you some reading by providing you a TL;DR. The Pentagon has a shitty inventory system, it wants a fancy new inventory system, and it needs to make up claims about the potential to save billions of dollars so Congress will fund it.

I believe the more important question is why the Pentagon is destroying all of that ammunition. Obviously Stripes couldn’t be bothered to scrounge up an answer. My guess is that the ammunition is being destroyed as part of the effort to demonstrate how badly a new tax victim funded inventory system is needed.

Setting aside my cynicism I must ask if destroying all of that ammunition is necessary. If the ammunition slated for destruction is handgun and rifle cartridges then I feel the need to propose an alternative. Handgun and rifle ammunition, so long as it’s stored properly, keeps almost indefinitely. That being the case there is no reason that handgun and rifle ammunition needs to be destroyed in most cases. If the Pentagon is simply tired of having the ammunition around it could release it for sale to use mere civilians who can put the ammunition to good work at the firing range.

Using the State’s Rulings Against It

Ross Ulbricht, the man accused of being the operator of the original Silk Road, just demonstrated how effective he is at trolling. Facing charges of money laundering Mr. Ulbricht is now using the Internal Revenue Service’s (IRS) ruling that Bitcoin is property and not currency against them:

The IRS recently ruled that Bitcoin is property, not a “monetary instrument.” And now the attorney for alleged Silk Road founder Ross Ulbricht is arguing that his client must be innocent of money laundering because Bitcoin officially isn’t money, reports Wired.

I think that’s a very good defense. How can one launder money using Bitcoin, which has been ruled by the IRS as not being money? That question was hypothetical because we all know that the state doesn’t actually have to follow its own laws when prosecuting people. I’m sure the state will perform the mental gymnastics necessary to continue this case.

When You Suck at Doing What You Do

The big news circulating around the Bitcoin community is the apparent demise of Mt. Gox:

As of late Monday evening, the embattled Bitcoin site MtGox appears to have pulled the plug entirely in the wake of sustained DDOS attacks and the “transaction malleability” problem that has plagued other websites. The site is gone and the company’s Twitter account appears to have been erased entirely.

Several news outlets seems to be reporting this event as the death of Bitcoin. Anybody who understand the Bitcoin protocol knows this isn’t true since Mt. Gox didn’t have any control over the block chain, which is what determines who has which Bitcoin. Mt. Gox was merely one of several exchanges although it was the largest.

People who have kept an eye on Bitcoin related news know that the people behind Mt. Gox has consistently demonstrated incompetency. It always baffled me how it was able to maintain the status of the largest exchange when other exchanges did a better job and almost always had better prices. But Mt. Gox’s incompetency eventually caught up with it and it now appears to have gone under. This is an example of a free market at work. A company that sucked at fulfilling the desires of the market went away.

While it does suck for any individual who had Bitcoin or fiat currency in a Mt. Gox account it should also teach a valuable less: you cannot trust a person you’ve never met with your money. Bitcoin allows anybody to create a wallet. So long as you keep your private key private any Bitcoin sent to your public key are secure. I keep a little Bitcoin in online wallets for quick transactions but never more than I’m willing to lose. All of my other Bitcoin are sent to an account that I possess the private key for. This is something I encourage everybody to do since it’s the only way you can guarantee your Bitcoin won’t disappear if the online wallet provider disappears.

The Solutions to Inflation isn’t Wage Increases

Inflation is a hidden tax. By having monopoly control of the money supply the state is able to devalue a currency by simply releasing more of it into the market. The Federal Reserve, which controls the United States money supply, has been releasing an imperial (because we don’t do metric here) shit ton of currency into the market. This has caused the value of the dollar to continue dwindling.

According to mainstream economists constant inflation is necessary for a functioning economy but the rate of inflation must be kept low. Economists that actually know what they’re talking about, that is to say those of the Austrian tradition, point out that inflation is bad because it constantly decreases the wealth of individuals. Regardless of what school you subscribe to the current rate of inflation should be worrisome. While official inflation numbers are periodically jiggered to make them look better the cold hard fact is that the stuff people actually need to buy in order to survive is increases at an alarming rate:

It’s is not her imagination. While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it’s on sale.

“Oh my god!” Singer said as she spied bacon for $3.

“The things that are going up in price are the things I absolutely need to buy,” she said. “It’s the meat, it’s the milk, it’s the eggs and it’s getting out of hand.”

The report goes on to argue that the real issue is wages not increasing. While people certainly like hearing arguments for why their wages should increase the real issue is that wages and inflation are inseparable. Increasing wages to match inflation necessitates increasing wages to match inflation. It’s an Ouroboros. The real issue is that the state is manipulating the market to favor itself and its partners at the expense of everybody else.

Legal tender laws make holding dollars desirable. If you don’t hold dollars you can’t legally pay taxes and other made up debts to the state. Failing to pay the state what it demands ends with you either being in a cage or a grave. First receivers of newly issued money are able to enjoy the full purchasing power of that money. Inflation doesn’t actually begin until newly issued money being to circulate. Therefore the state is able to give newly issued money to its partners and they get to enjoy the full purchasing power. Once they’ve used that money it enters the system and inflation begins to kick in, which makes the dollars currently being held worth less.

So long as the state is able to manipulate the money supply that we’re required to use things are going to get worse for everybody not politically connected. The issue isn’t wages it’s state monopolization of the money market. Until that problem is solved (and it will eventually be solved by an economic crash if nothing else) consumers are going to feel an increasing amount of financial pain.

Politicians Should Give Stock Options to Volunteers

Have you ever been approached to work on a political campaign? I’m guessing a notable percentage of those of you reading this post have. What form of compensation was offered? Probably nothing.

Political campaigns are always looking for volunteer labor. They want people to work on phone banks, do door knocking, march in parades, work booths at local fairs, stuff envelopes, and other menial tasks. If a volunteer asks to be compensated for his or her time they usually receive one of several excuses. The most popular excuse is that the campaign needs every penny in order to get its politician elected. That may be true but in many cases a surplus of campaign funds exist after the election. Furthermore, most politicians receive a salary if they’re elected.

This raises a question. Why don’t campaigns offer volunteers a form of stock option? Politicians could offer to use part of their salary to compensate their volunteers if they are elected? Why don’t campaigns offer to divide any surplus funds amongst volunteers after an election concludes?

I’ll tell you why. Politicians are interested in expropriating wealth. In other words they’re thieves. And any good thief knows you don’t pay for something that you can steal.

Consider this the next time you’re approached to work on a campaign. The politician, if elected, will likely receive an excellent salary and benefits package. Meanwhile you will receive nothing. In fact you will receive less than nothing when you consider the amount of time and money (because politicians, being thieves, also ask you to donate money to their campaign in addition to your time) you sunk into the campaign. Don’t be a sucker. Demand the campaign grant you stock options paid out of surplus campaign funds and the politician’s salary if he or she is elected.

Lots of Money, Little Effect

The Government Accountability Office (there’s an oxymoron of a name if one ever existed) has finally announced what most of us have known since 2001. All of the money being spent to fund the Transportation Security Administration’s (TSA) Screening of Passengers by Observation Techniques (SPOT) program has been wasted:

The federal government may have wasted $1 billion on a TSA program called “SPOT” that profiles people who may be “bad guys” at airports by talking to them, the Government Accountability Office reported Wednesday. There is no evidence that it works, it said.

The Transportation Security Administration’s Screening of Passengers by Observation Techniques (SPOT) program relies on training personnel to recognize indicators like fear, stress or deceptive behavior that can be used to identify persons who may pose a risk to aviation security. Those who exhibit those indicators are subjected to additional security screening.

Polygraphs, better known as lie detectors, are an instrument that fail to perform the act they claim to excel at. This is because there are no known human responses to lying. SPOT was doomed to fail for the same reason. There’s no consistent way to detect through observation, that science is currently aware of, a person who is either being dishonest or planning something violent.

Economic Hitman Tactics on an Individual Level

The New York Federal Reserve released some interesting numbers recently. Of the numbers the one I found most interesting was the amount of outstanding student debt in this country:

Over the last eight years, aggregate educational debt outstanding has almost tripled, rising to nearly $1 trillion and becoming the largest consumer liability after mortgages. Was this dramatic increase attributable to more borrowers, or more debt per borrower? Both, as it turns out, in almost equal measure: The number of student loan borrowers and the amount each borrower owes have both risen 70 percent since 2004.

$1 trillion of student debt? Oi. This got me thinking about a book I read several years ago title Confessions of an Economic Hitman. The premise of the book is that the United States sends economic hitmen to developing nations. Loans are promises to the governments of those countries for major infrastructure projects. The catch is the loans are written to look reasonable but designed in such a way that the country is never able to pay it back. When a country accepts one of these loans they are forever indebted to the United States, which will come back later and demand raw materials or land in exchange for outstanding debt.

Students loans have some similarities to economic hitman loans. While student loans appear to be reasonable on the surface they are often so high that many college students can’t afford to pay them back. Instead they’re stuck paying the interest for the remainder of their lives. The state could effectively tax an entire population of students twice: once in the forms of income, sales, use, etc. taxes and once in the form of interest on outstanding debt. I’m beginning to wonder if the whole purpose behind student loans is to create an entire generation of debt slaves. There’s no way the United States government set up a system that hands out $1 trillion to students out of the goodness of its heart (since it has neither goodness or a heart).

Put the Pedal to the Metal

The government “shutdown” is over, the debt ceiling has been raise, and the Affordable Care Act can be funded. Obama received everything he wanted while the Republicans received nothing. Business as usual has returned to the land.

Here’s the thing we should all consider. The politicians in Washington DC wasted our time trumping up political anger just to do the same thing they have been doing since forever, raising the debt ceiling. I think it’s time that we admit that the debt ceiling is nothing more than a figment of our imagination. To that end I hereby support the elimination of the debt ceiling.

It’s time that we get rid of all these artificial barriers between the United States and complete economic collapse. Let’s put the pedal to the metal and give everybody what they want and give it to them good and hard. Remove the debt ceiling? Pass it. Completely socialized healthcare? Pass it. $20.00 per hour minimum wage? Pass it. Free welfare and education for all? Pass it. Pass everything and anything that can drive this country over the economic cliff.

I’m not a fan of half-assing things and this country has been half-assing economic collapse for over half of a century. The time to step up and do a proper job is now. The sooner we get to the collapse stage the sooner we can begin recovering.

The National Debt

During this entire “shutdown” drama one topic continues to be brought up again and again: the national debt. Fiscally conservative circles are giving the Republicans a lot of credit for refusing to pass a budget that funds the Affordable Care Act (ACA). Their reason for this is a belief that funding the ACA will increase the national debt even further, which is true (since the United States is maintaining a deficit any additional spending will increase the national debt). On principle I agree that further increasing the national debt is a bad idea. Practically speak, decreasing the national debt at this point is meaningless.

The national debt is hovering close to $17 trillion. At this point the United States is insolvent. Putting this into perspective, this national has already reach the point many fiscally irresponsible individuals reach when they received a credit card with a high spending limit. The amount of outstanding credit exceeds the debtor’s ability to repay. No matter what the federal government does it will never be able to repay $17 trillion.

One must now ask whether or not attempts to curtail the national debt are meaningful. Honestly, I don’t think they are. At this point the government might as well buy anything and everything it can. Anything of value (that is to say, anything that isn’t perishable) should be transferred to another entity to protect it from seizure when the time comes to declare bankruptcy. If you’ve already overextended your credit limit you might as well go for broke and get everything you can.

I’m of the mindset that there is nothing that can be done to prevent the sinking of the Titanic. Instead, I’m focusing my time on getting to the life boat, loading as many people as I can onto the life boat, and getting the life boat as far away from the sinking ship as possible. Going below deck and trying to weld patches onto the gigantic hole of national debt is futile.