Beyond the Cusp

September 30, 2016

Restore Honesty to the Mainstream Media and Internet

 

There are constant howls from all sides of the political spectrum about the slanted media. Conservatives rail against the New York Times and MSNBC while the Progressives rant over FOX and the Wall Street Journal. Both sides protest their not getting fair coverage with both sides demanding something be done. Well, we have a plan for making the media into the investigative in depth coverage that both extremes will love. They will look into why the Congress refuses to pass legislation when the nation is demanding that they address the demanding problems of the day. There will be enough meat and gristle for both ends of the spectrum and for a change they will pretty much agree about the problems but still differ about the correct directions the nation should turn. They will stand in agreement throwing shots at Congress at different sides there but will blame the voters and, of course, the White House. There is only one thing which needs to be done to bring about this miracle; elect Donald Trump.

 

That’s correct. Electing Donald Trump will bring the political classes together like never before, well, since Ronald Reagan until Reagan started going to the real power in America, the people. For those of us who were old enough to understand what was happening, Ronald Reagan was not particularly loved by the establishment money of the Republican aristocracy and was hated by the liberal Democrats. Congress was not exactly enamored with his election and probably would have remained gridlocked, which is not necessarily a bad thing. But Reagan had a secret weapon, the American people, even those in flyover country. Reagan made his first address to the nation and a weapon for getting America’s work done was launched. Reagan went to the public whenever it counted and the chips were down as well as when things were going well as he kept the nation involved like few before him. The media was not his greatest fan but slowly he won respect and slowly got some media respect.

 

Is Donald Trump comparable to Ronald Reagan? In a word, no. Well, at least not thus far. Likely Trump will never be Ronald Reagan and there likely will never be another, he was a one off, single model after which they broke the mold. Donald Trump is from a different mold. A really different mold and he is a one off as well. There are other niceties about a Trump White House; it definitely will not be boring. Just watch all the conniption fits the media will have and the near heart failure of the political elites. Of course in a Trump Presidency the Congress will have to be dragged kicking and screaming to do the nation’s business. But as we pointed out a little earlier, a do nothing Congress might be the best manner for doing the nation’s business in the best interest of the people possible. Of course the people would probably like to see tax cuts and a repeal of Obamacare, not an adjustment, a full repeal and pray the healthcare industry can make a speedy recovery. Beyond that, the American public may have to make their feelings known through the media or through social media which may prove to be the greatest pressure cooker for political change ever invented. Eventually, providing the Internet remains the greatest open forum for free and open discussion, for as long as it lasts, the power brokers will clamp strict rules and controls, very possibly almost invisible to the average users.

 

That could be an angle for a smart politician who could make proposing a Constitutional amendment making the Internet forever the property of private enterprise free of national or international controls for all parts under United States control. That will never happen as long as the two main parties have their lock on power. The two main parties are only likely to leave the Internet alone for as long as it does not challenge their power. As soon as the Internet and social media realized that it can actually cause the media, the political class and any other powers that be up to and especially the United Nations to sit up and pay attention, that will be the instant that the Internet becomes the property of the governments and the power elites and freedom of expressions will be gone in an instant. Blogs will be sanitized or removed and there will be second by second monitoring of all things entered onto social media with anything which crosses their path being nixed. The Internet scares the elites and the power brokers for the same reason Donald Trump scares them. They can be unpredictable and stray from the beaten path into strange fields where otherwise only dreams and nightmares reside. Of course that is the problem with the great unwashed, the public; they are unpredictable and uncontrollable which scares those who believe they control everything the most. They hate unpredictability because they have everything planned out for decades in advance and they just hate surprises, unless they marketed them. Thus far the Internet and social media have not challenged the Man so nobody who is anybody has had their feathers ruffled. If anything, those powers that be have more controlled and used social media as their personal echo chamber serving their purposes and probably plan on doing more of the same far into the future, possibly for perpetuity. But what if that should ever change?

 

The first thing that need be understood by Donald Trump and the people, the people who believe they actually control the world really believe they control the world. They also have their fingers deep into the Internet and social media and have programs to predict what will be the next big thing and what they can expect to be right around the corner. Their programs and geniuses they hire to make things work to their best interests have thus far done a wonderful job. But what happens when they fail and the people finally awaken to the power they have at their keyboards? The one beautiful thing is that when the people decide they have had all they will take; no amount of money or innate political power can win against the will of people with a desire to be free. There is one prerequisite which need be addressed first, people who have never known freedom and do not understand what freedom is or can be must first be educated and shown what it means to have freedom and with any luck, given the feeling of what freedom tastes like. That may be the first and foremost challenge that social media must overcome. When the human race understands and demands freedom to live their lives unfettered by government rules and burdensome taxation then maybe things can change. That will not be something we will see tomorrow, but perhaps in the future.

 

First is the beacon of freedom, the United States needs something to reawaken their spirit and yearning as it has appeared to wane these past ten or so years. The people need to break beyond their self-imposed limitations and believe again. The old must educate the youth as their education system has failed them. The schools have become a jobs program for teachers and administrators primarily and indoctrination centers producing little drones secondarily and lastly they teach enough to produce obedient little workers. What has been forgotten is that parents are responsible for teaching their children but that used to be performed by the schools in generations past, but that has changed as the schools became unionized and began to care more for the employees and electing those who would increase their salaries than about the children. Are there still good teachers who truly care, yes, but nowhere near sufficient to change things from the pitiful state that will only grow worse. Freedom and its loss was actually predicted in a warning given be Ronald Reagan and as I seriously doubt we will hear such profound words and elevating language from Donald Trump unless somebody gets his undivided attention and trust and writes the words for him, please allow a quote from Ronald Reagan.

 

ronald-reagan

 

“Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free.”

 

Beyond the Cusp

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January 11, 2014

Minimum Wage, Livable Wage, and Income Inequality

President Obama will soon give his “State of the Union” speech before Congress and the American people. President Obama has promised that he intends to stress his feelings of urgency in taking on the challenges pertaining to income inequality as well as transforming the United States from the idea of a minimum wage to the ideals of a livable wage and even a guaranteed minimum salary which would be received from the government for those who are not employed. President Obama is continuing down the road to transform the United States Constitution from a guarantor of negative liberties which limit the ways that government is permitted to act and influence any individual’s life, into a guarantor of positive liberties where the government takes an active role in everybody’s’ lives guaranteeing things the government must provide and perform for every citizen. Never mind that President Obama aims to fashion the United States by implementing every failed concept ever attempted by any European country, exactly the opposite of what has separated the United States from European fantasies and experiments in socialist policies and central planning which combined to make the United States so successful where many European governments and nations have failed. This is the final push to complete President Obama’s promises from his initial campaign for the Presidency when he peddles the mantra of “Hope and Change”, “Fundamentally Changing the United States”, “Altering the Constitution from an Interpretation of Negative Liberties to an Interpretation of Positive Liberties”, and finally “Changing the Concepts to Ones Supporting Equality and Fairness” which stands for central planning for the economy thus guaranteeing to lessen wage disparities and providing employment, salaries and benefits for every American. But what do all these high sounding phrases mean going forward for the average American?

 

Taking them in some form or order, let’s start with minimum wages. The one truth which has been proven by virtually every study of minimum wages done outside of government subsidized studies has shown a marked decrease in the number of positions earning minimum wage in the job market. This is despite one of the consequences of raising the minimum wage which takes those who have worked their way up from the minimum wage and are showing some degree of promise find themselves back making the minimum wage as the increase either brought the minimum wage up to their salary level or took it beyond their salary level which gave them a backhanded raise in salary though less of one than those people who had been making merely the minimum wage before the increase. The loss of positions available after the government raises the minimum wage is obvious just as when the price of apples is raised people will buy less apples in order to remain within their allotted food budget. The total effect of raising the minimum wage is difficult to measure as it remains unknown if the number of positions available for employment ever reaches the identical level as it would have done if the minimum wage was never changed. Then there are the sarcastic arguments that if raising the minimum wage by a dollar or two is such a great idea, then why not simply raise the minimum wage to $20.00/hr or higher still to whatever price one believes is necessary to support the average family of four.

 

That argument brings us into the livable wage argument which claims that the minimum wage be scrapped and the livable wage be substituted. There are some among those supporting a livable wage who actually agree that in such a system the livable wage be calculated for every individual area such that the livable wage for New York or Los Angeles would be different than the livable wage for Wasilla, Alaska and Rawlins, Wyoming. Calculating the livable wage such that a family of four can afford to live at an agreed defined level of comfort if one person working at a livable wage was their sole source of income would have a wide disparity depending upon where one sampled in order to make such a determination. As stated above, the differences between major metropolitan areas and small towns and rural areas would have little commonality. The one truth is that in almost every location a livable wage being implemented would spike the minimal salaries far higher than any proposed adjustment which has been proposed for the increased minimum wage. The damage and loss of positions available in the job market under a livable wage law would be far more drastic than should the minimum wage be raised rather than replaced by a livable wage. So, the arguments both for and against a livable wage system and a simple raising of the minimum wage are close to identical with the main difference being the predicted results effect on the job market. Either idea being implemented currently with the still sluggish rate of the recovery would be a shot through the heart on the economy and would still any recovery for the immediate future until equilibrium was reestablished. The new equilibrium is also another argument that raising the minimum wage either to a higher level or drastically raising it to meet livable wage standards has to be addressed. Eventually prices will catch up to the increased minimum wage and inflation will have erased any amount of additional salary earned at the lowest level of wages. If a family has their gross income increased by five percent because the minimum wage was increased five percent, they will initially feel the benefit but within a year or possible two the family will find that their new higher level of income no longer has any effect on their purchasing power. Prices will eventually track upwards and remain at the same or only bear a slight difference from the percentage of income the family paid at the previous level. There is little to any residual improvement when the minimum wage is raised except that government debt gets reevaluated lower but only because of inflation making each dollar worth less and eventually could render the dollar worthless.

 

That brings us to income inequality. The first thing one needs to understand is that government has very little effect on income inequality or income disparity. Anything the government could enact to lessen the amount of income disparity has to have one or the other effect, either it raised the bottom end of the salary scale or it lowers the upper end of the salary scale. Raising the lower end we discussed when looking at minimum wage and livable wage programs and realize that these tactics really have little if any permanent effect. When the government raises the minimum wages of worker that initially will decrease the disparity between the bottom and the top temporarily but over time such changes will only result in an even larger amount of disparity. This is due to a simply principle that the top salaries tend to reflect the level of the salaries of those at the bottom. The top salaries will usually stay at a certain multiple of the lowest end wages. If you increase the bottom end of the wage scale by two percent, this will work out to increase the top salaries by two percent in close order. That mean that the total amount of wages will increase by the same percentage but that also means that the top scale rises faster and farther than the bottom. A simple example is one person makes $20,000 per year and another makes $2,000,000 per year. Then let’s say that both people receive a five percent increase but that the person at the higher level has that increase take place over a two year span while the lower paid person gets their increase immediately. At the end of two years the higher paid person will be making an additional $100,000 while the person at the lower end will receive an additional $1,000. This makes an increase to the difference of their two salaries of $99,000 even though both people got a two percent increase. The real question is if we consider the person at the higher level has a steady, straight-line increase for the two years, how long will it take before the higher salaried person eclipses the totality of the increase of the other person. Remarkably enough, it would take one week for their respective salary increases to balance dollar-wise, give or take a day; and after that first week, every subsequent week would represent an increase in their wage inequality. Obviously raising the bottom salary range upward with no restraints of the top salaries would prove completely ineffective.

 

This leaves placing limits of some kind on the salaries of those earners at the top end of the scale in order to limit income inequality. The easiest way to curtail higher incomes is to raise the taxes beyond a certain point; even to the point of making salaries beyond whatever is considered the maximum reasonable wage taxed at or over one-hundred percent. Relying on this application of limiting wages has been implemented in the past and all it proved was that the people at the top of the wage scales are not idiots. They, almost to an individual, took far lower salaries and replaced the rest of their earning into stock options, a company vehicle, company house, company jet, company membership to a gym, country club, exclusive restaurant privileges plus any additional privileges and other dispensations as replacements of dollar salary. No matter the restrictions or limitations placed to force the appearance of wage equality, there will be no lifestyle equality as the people at the top have direct control of the levers and accommodations which they will receive as compensation, otherwise known as salary except that the salaries at the top and even some mid-level positions will be given in a form which is not attacked by the income tax rate. That is why raising the tax level actually is counter-productive and will not actually change the most important inequality, the inequality of the quality of life at the various levels of the wage scale. The reality is actually even more depressing than income inequality; almost any method which is implemented to erase income inequality through government intervention actually results in increasing lifestyle inequality and makes it more difficult for those people aspiring to climb into the ranks of the top echelons in compensation in succeeding in their quest. The reason this is true is the disparity between the very rich and the average and poor is not a function of income or even compensation but is a result and measure of wealth which is not taxed. This is in no way a call for such taxation and even if it were, the very people in Congress would never pass such a law as it would have dire effects upon them and their well-heeled moneyed backers. A true wealth tax would not be simply a tax on savings, like the theft of savings from the banks as was committed by the Greek government, but would encompass all wealth including homes, cars, jewelry, gold, silver, precious metals, gemstones, stocks, bonds, real estate and an almost endless list of assets. Should such a tax ever be levied, even if it advertised as an emergency one-time tax, then it is time to worry and worry deeply as such a bald-faced theft committed by the government is a definitive sign of insolvency and possible imminent threat of default on debt payments. Such an act would be an act of desperateness and would shake the very foundations of the economic system under which such a desperate act was resorted to. A nation in such a desperate state as to literally legislate such a theft is a nation where income inequality is the least of their worries, keeping civil order in the aftermath would be the immediate problem as any government which resorts to stealing from the people cannot be expected to stand and would become a pariah among nations as their promises would no longer be trustworthy. Even a simple savings tax as proposed recently by some from the IMF (International Monetary Fund) would be an indicator that the government has gone economically beyond the cusp and into the valley below the cliffs, a valley from which climbing out takes generations if it is even possible without dissolution of that government and the implementation of new governance. Such is a very painful place to live and there are few examples other than Zimbabwe or, from history, the Weimar Republic. Under such conditions even tulips may become a basis for currency, but I have heard even that was tried and failed.

 

Beyond the Cusp

 

January 22, 2013

When Will the United States Budget Crash?

The dirty little secret in the halls of Congress and the spacious rooms of the White House is that the United States budget has already gone over the theoretical fiscal cliff and all are simply waiting for the crash that is coming when it hits the rocks at the bottom. All the fuss over whether or not a budget is made and how many billions of dollars they can save by raising funding of departments by less than they theoretically might have raised them had the economy and everything else been robust is all noise without substance. The honest truth is the United States spending problem went critical during the first term of President George W. Bush and was simply piling on more debt in his second term. The unbelievable spending which occurred during President Barack Obama’s first term in the White House only served to speed the train towards the end of the tracks and the great dive into the canyon beyond. Even if President Obama had simply continued with the increases as the government suffered under President George W. Bush we would be facing the same problem. All the unparalleled spending which President Barack Obama has done has simply increased the train’s speed so that we will crash a little further out into the canyons and hit the bottom simply going somewhat faster. So, the important questions that need to be asked are first, when will we hit the end of the tracks; second, what will be some of the early signs that all is lost; third, what will be the sign that the end is nigh; and fourth, what can we do to avoid total ruin; and lastly, what will happen to the world when the collapse comes?

Let us take each question in turn. The first is when will we hit the end of the tracks? Technically speaking, we have already hit the end of solid ground and the tracks we are running on are suspended over the canyon with only air between the train and the long drop. As for what is keeping us suspended in the air, mostly forward momentum, heavy rust on the tracks, and we are in that position the coyote gets when he goes off the cliff chasing the roadrunner and he waves as he pauses suspended in midair just before the perilous drop to a puff of desert sand or splash of water when he hits the bottom. What is keeping us up is a false situation where interest rates are being unnaturally held low and money is being invented electronically just in time to avoid defaults. There is nothing right now between the United States and most of the nations of the European Union and the final crash of their collective economies. The difference between the United State and Greece is one of degree and not one of inevitable ends.

Second, what will be some of the early signs that all is lost? The very first signs will be those countries that have a salvageable economy and comparatively sound fiscal policies will begin to place distance between themselves and the countries that are doomed to fail. Their initial move will be to remove any assets they have in the countries they are concerned and hold doubts of their fiscal futures and then they will attempt to call in any debts and get whatever payments they are able before the economy of the failing countries completely collapse and their currency worthless. If any of these nations are partnered in the European Union and are using the Euro as their currency, they will begin to print their original currency notes and coins and keep them in preparation for exchanging their currency for the Euros upon its failure for their citizens and only their citizens. Another step the healthier countries are likely to take somewhat further in front of the coming problems is to cash in any currencies of countries with suspect fiscal situations for Gold or in payment for commodities and solid assets such as lumber, gold, silver, other building materials and anything that will retain its value. There might even be a selling off of any realestate holding of the presumed stricken nations. You would see actions like that of Germany recently where they demanded their gold held in two foreign countries be returned with all possible haste. The two countries from which Germany demanded their gold be returned were France and the United States. This move would make one conclude that Germany has suspicions about the continued value of the Euro and the American dollar.

Third, what will be the sign that the end is nigh? This sign is actually rather strange as most will interpret this as the end of the difficulties, but it will be a temporary reprieve unless handled with great finesse and care. The end will actually be signaled by an improvement in the economy with rising employment and the appearance that things are finally going to improve. When this begins the leadership and those who monitor and adjust the controls of the economy and such things as the money supply and interest rates will immediately need to address the fourth question, namely what can we do to avoid total ruin? When the economy begins to pick up steam there is going to have to be mechanisms utilized to draw back much of the monies which were used to finance government spending during the lean periods. All the monies which were almost magically invented by raising the debt ceiling or printing and selling bonds to the Federal Reserve who bought them with electronically produced monies which in a more difficult time would have actually needed to be printed but in the electronic age we simply invent it on the ledgers and then spend it. It actually works in exactly the same manner as actually printing the bills and placing them into circulation. Currently, the vast amount of electronically injected monies put into circulation through the Federal Reserve buying new government equities with this new money is largely sitting in financial institutions not being lent or utilized on any real manner. Money lacking what is called velocity does not cause inflation or have much of an effect on the economy. Eventually, when the economy starts to pick up steam there will be more of a demand to take out loans to meet the rising demand for goods and services. Once the money begins to be lent and spent, then it has velocity and as there is a much greater amount of money available than existed when we entered the downturn in the economy, it has a deleterious effect on prices. As per the laws of supply and demand, having an oversupply of money drives up prices. That in turn will drive up the demand for higher wages which are possible due to the inflated money supply. This could potentially start a rapid spiral which is referred to as hyper-inflation which is what drove the Weimar Republic into insolvency which led to the rise of the Nazis who promised to repair the monetary insolvency caused by the hyper-inflation. In order to control the inflation and keep it from driving the economy into a ravenous feeding beast with prices raising almost hourly the people responsible for fiscal policies need to draw as much of the invented monies back out of the economy as quickly as they can without upsetting the recovery. The two most utilized methods are either to increase taxes or to increase interest rates. This is where the problem comes in for any country which has significant debt; they cannot survive rising interest rates. This is the position the United States has reached along with numerous European Union members. If your interest payments are $500,000,000.00 when the interest rate is a very low rate between 1% and 3%, you are fine and can manage your debt as long as the interest rates remain at that level. But when the economy picks up steam and the excess monies begin to have velocity, you likely will have to raise interest rates in order to prevent runaway inflation, especially the huge amount that has been produced by many Western countries. When that interest rate climbs to 5% to 8% your interest payment rapidly increases to upwards of over one-trillion dollars. Should the interest rate triple or worse, get many multiples higher, then the interest on the debt reaches the point where it becomes un-payable and your economy collapses. That is what is approaching if things are not handled very delicately and with great finesse. Does anybody have faith that the politicians in their state, county, city or country have the wherewithal to handle anything deftly and with finesse grounded in reason, logic, and self-control? Neither do I.

Lastly, what will happen to the world when the collapse comes? Well, for examples of what the end looks like, all we need do is look back at history for similar events. There was the depression of the 1930s which followed the free-running economic over-inflated 1920s which pushed at least Germany beyond solvency and into a case of hyper-inflation which was one of the main triggers for World War II. Shaving the currency led to the failure of the Roman coins which brought on an extended period of failed economy in much of Europe. There have been numerous civil wars triggered by the financial collapse of the currency and thus the economy of numerous countries and societies. The most usual result of financial collapses is either war or governmental collapse into chaos and anarchy resulting in violent lawlessness. Whatever comes after hyper-inflation, it will be very unpleasant and many will die from malnutrition or disease. The only consolation I can offer is that it is very possible if this next economic challenge can be managed and the other side is reached, it will be because of a transformation coming to much of the world’s societies which will relatively quickly even reach and liberate everybody on the planet. There is a distinct possibility that a new age is coming in the near future which will be a revolution that will make the industrial revolution look like a small tick upward in the development of mankind and our societies. All that will be required is sufficient bravery from sufficient numbers of communities and those who will initially control the mechanisms initially that will bring on this new age to allow it to attain its highest of possibilities and capabilities. There is great hope.

Beyond the Cusp

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