Trampled

"But Shawn, this has nothing to do with Blue Table Painting or with Wargaming!"

I beg to differ. This has everything to do with both of those things. I openly invite thoughtful and polite discussion of this topic.


"First, consider the effects of inflation by which we mean the Fed’s increase in the supply of money, on the value of the dollar. By increasing the supply of money, the Federal Reserve lowers the value of every dollar that already exists. If the supply of Mickey Mantle baseball cards were suddenly to increase a million fold, each individual card would become almost valueless. The same principle applies to money: the more the Fed creates the less value each individual monetary unit possesses. When the money supply is increased, prices rise—with each new dollar now worth less than before…

“All right, some may say, prices may indeed rise, but so do wages and salaries, and therefore inflation causes no real problems on net. This misconception overlooks one of the most insidious and immoral effects of inflation: its redistribution of wealth from the poor and middle class to the politically well connected. The price increases that take place as a result of inflation do not occur all at once and to the same degree. Those who receive the new money first receive it before the prices have yet risen. They enjoy a windfall. Meanwhile, as they spend the new money, and the next wave of recipients spend it, and so on, prices begin to rise throughout the economy—well before the new money has trickled down to most people. The average person is now paying higher prices while still earning his old income, which has not yet been adjusted to account for the higher money supply. By the time the new money has made its way throughout the economy, average people have all this time been paying higher prices, and only now can begin to break even. The enrichment of the politically well connected—In other words those who get the newly created money first: government contractors, big banks and the like—comes at the direct expense of everyone else. These are known as the distribution effects, or Cantillon effects, of inflation, after economist Richard Cantillon. The average person is silently robbed through this invisible means and usually doesn’t’ understand what exactly is happening to him. And almost no one in the political establishment has an incentive to tell him.

“When the value of Americans’ savings is deliberately eroded through inflation, which is a tax, albeit a hidden one. I call it the inflation tax, a tax that is all the more insidious for being so underhanded: most Americans have no idea what causes it or why their standard of living is going down. Meanwhile, government and its favored constituencies receive their ill-gotten loot. The racket is safe as long as no one figures out what is going on.

-- Ron Paul, “The Revolution” pages 143-144

Here is an article that suggests something different.

It's my opinion that my party (the Republicans) have betrayed me. They didn't stay in budget. They weren't honest. They told me the taxes would be low, but they didn't reign in spending. They just printed money to make up the difference. Well, at least my congressman (Chris Cannon) went along with this. And I say good riddance to him! (Chris Cannon was ousted in the recent Republican primary in Utah).

Did your congressman and senator go along with this? Did they betray your trust?

Did they sign off on the printing of $4,000,000,000,000 of new money over the last four years? As follows:




So, do you really care about this?

7 Comments:

Eric Danley said...

Hey Shawn,

Inflation is clearly one of the greatest problems the Bush/McCain republican party have left us with. The federal reserve bank lacks the authority and the ability to really deal with any economic issue that comes up.

Of course, ending the war in Iraq will free up our economy and give it time to recover.

Check out the following link for a look at Obama's plan for Small Businesses:

http://www.barackobama.com/pdf/SmallBusinessFINAL.pdf

Eric Danley
www.EricDanley.com

bluetablepainting said...

Thank you so much Eric! I love it that you make comments.

I read over Obama's small business PDF.

"The Obama plan would
reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they use the savings to reduce the cost of workers’ premiums. It is estimated that Obama’s health plan will save
businesses $140 billion annually in insurance premiums."

Where is the government going to get the money to do this?

"Provide Tax Relief for Small Businesses and Start Ups: Barack Obama believes that we need to reduce
burdens on small business owners, many of whom are struggling to succeed as health care and energy costs
continue to skyrocket. Barack Obama will support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the
employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation. Barack Obama will also eliminate all capital gains taxes on start-up businesses to encourage innovation and job creation."

This sounds like a step in the right directions. I really don't understand what a tax credit is, exactly. My understanding is that if you ended up owing $1000 in taxes, but had a $500 tax credit, you would only have to pay $500. Is that right?

I noticed that "small business" is not defined. Any idea on that?

For my part, I'd still just rather be left alone. My crew shares that sentiment. We groan at all the paperwork and records that we have to keep up on in case the STATE decides I have to prove my innocence.

Jason Gillard said...

Shawn,

I highly recommend you take a look at recent updates at www.richdad.com, and take the time to check out the audio mp3 file and the video manu on the home page. Financial whiz Robert Kiyosaki is basically confirming what you said in this blog, with a few additional extras worth your time.

This isn't a problem unique to the US - we in Australia are involved in a similar scuffle, with similar headaches.

The debate over tax is an interesting one - in Australia during the early 90's, our then richest man Kerry Packer was called before a Senate Committee on tax evasion accusations. Kerry was eventually aquited of any wrong-doing, but the hearings gave up an immortal line.

When quizzed over why he only earned $20,000 taxable income a year, Kerry said he had a good accountant who minimised his income along legal guidelines in the tax legislation. He went on to say "Anyone who doesn't minimise their tax is an idiot. Why should we give government more money than we absolutly have to, considering what a poor job you lot do of managing it".

The pictures of Senators looking like they had finished sucking a rather large lemon remain priceless.

Keep up the great work - inspirational stuff on all fronts.

Jason Gillard

bluetablepainting said...

[here's a kind comment from a blog-reader]

Hey Shawn,

Just wanted to say that I like your Ron Paul posts. My step-dad is a supporter as well, though I do not pay as much attention to politics as I should. Most people don't. It is very interesting to note that many people do not know how the money system actually works or where it comes from. If I had not done my own research regarding the inner workings of money and the Federal Reserve system I would have no clue, and I work at a bank.

Anyways, just wanted to say that I don't mind when you stray away from posts about little painted men to comment about the more important things in the world.


Joe

bluetablepainting said...

My key problem with over-taxation is the coercive nature of it. It didn't hit home until I was threatened personally. If the government programs are so great, why not make them voluntary? I mean, I don't need the government to provide my car insurance.

Of course, my perception is colored by my experience as a Mormon-- a very, very self-reliant people who "take care of their own". But I don't see any reason why the same thing couldn't happen for any group. Atheists could circle the wagons just as well.

Well, that's a thought. What do y'all think?

Counter me! Tell me why socialism is so great!

Eric Danley said...

Followup to my first comment:

Obama identifies the problem with the US economy as two parted:

The first is the tax cuts for people who make more than $1,000,000 a year. A significant portion of income will come from ending these tax cuts.

I thought you would appreciate the second part:

"Wages are Stagnant as Prices Rise: While wages remain flat, the costs of basic necessities are increasing. The cost of in-state college tuition has grown 35 percent over the past five years. Health care costs have risen four times faster than wages over the past six years. And the personal savings rate is now the lowest it's been since the Great Depression."

http://www.barackobama.com/issues/economy/

According to costofwar.com, ending the Iraq would save $341 Million a day.

In answer to your second question, Tax Cuts are a "recognition of a partial payment already paid." So a deduction reduces your amount of taxable income, a credit reduces the amount of taxes you owe. So if you owed $1000 to the feds, you would only owe $500 after a $500 tax credit. If you owed $0 tax, a $500 credit would mean that you would get $500 from the Feds.

What is a Small Business? I can only imagine he will use the definition of a small business from the small business act that created the Small Business association:

"The Small Business Act states that a small business concern is "one that is independently owned and operated and which is not dominant in its field of operation"

From SBA.gov

In regards to socialism:

Socialism does not work. Period. Look at France, unemployment at 10% and basically no GDP growth. Capitalism and Free Markets must exist, but I feel they must exist within a controlled environment. Business cannot along be trusted. Historically, look at US Steel, Standard Oil or the Chicago Meat Packing industry. These companies exploited the land, and the worker to the detriment of both. Before you say Business doesn't act that way anymore I ask you to look at Enron, ExxonMobil, WAL-MART (I was a manager there for 3 years and I can vouch to how poorly they treated everyone in their employ) and many others.

We need government regulation, and certain specific industries need to be regulated more stringently or socialized. Social Security is an example of this (See my comment in another post) and Health Care is another. Though I will agree that how we are going to pay for a socialized health care system is a pinnacle concern.

Actually, I skew a little towards the right when it comes to economic issues believe it or not. Its the social issues where I am solid left. I just think its important to recognize that their are no absolutes in life, even with regards to government.

The Government is NOT always good, nor always bad.

The Free Market is NOT always good, nor always bad.

Taxes are NOT always good, nor always bad.

A hybrid system is what we need, not ruling our country with insistance on strict adherence to any one idea, but choosing the best solution to each problem.

Finally, the idea of voluntary taxes is great in theory. But we all know that there are many, many people who would choose to benefit from government programs without paying. Its called the "Free Rider" problem and you can read about it here:

http://plato.stanford.edu/entries/free-rider/

or here:

http://en.wikipedia.org/wiki/Free_rider_problem

If you listen to NPR or Public TV you are very familiar with this problem. Only 10% of the people who listen to NPR on a daily basis choose to donate any amount of money, hence the twice yearly pledge drives.

As always, I enjoy these discussions greatly and anxiously await your response.

Jason, I've got good friends in Australia and have been there a number of times. Its really a beautiful country with truly remarkable people. Its a country with more than its share of problems however. A slow moving economy, a government that seems to follow the US with anything it says, and a environment on the verge of collapse (not to mention mandatory voting.) I hope sincerely that things are fixed, and damnit I want the US to sign Kyoto... Anyway, Enjoy a good VB for me!

Eric Danley
http://www.EricDanley.com/

bluetablepainting said...

Eric- As usual, I almost find it a waste to post your AWESOME comments on my humble little blog. I have to say that I really enjoyed reading that last one.

Scattershot thoughts:

I agree that there are problems with any system. In a market that's completely free from any government interference there's the danger of Corparatism and from the "cornering of the market". So, we may be in a fine-tuning sort of argument here; where should the thermostat be set. We agree that it should be neither 40 degrees nor 100 degrees.

One of my poli-sci professors told me that "government isn't the road to heaven, it's the wall that keeps us from sliding into hell."

I have a lot more faith in business than you do. It's easier to overthrow a company than a government. I think that if people are in a suck-tastic job for more than a few years it's their own fault. Take responsibility for pity's sake. Heck, even a handy man can easily get $30 per hour, even in Utah Valley.

But I digress. I grant there are problems with un-checked corporatism. However, the solution isn't

"Tax the Rich" sentiment is used as political ammunition. But let's turn it around. Imagine a world-system in which a billion Chinese of Indians vote that your $20,000 a year classifies you as "Rich" and should be taxed at 50%. What would you say to that? "Oh, yes, of course, it's my *moral imperative* and good thing The Gov came along to ram my head into it."

What gives government the right to do that? Where are the limits?

My position is clear: the Feds should do ONLY what they are supposed to do and NOTHING else. Health care is waaaaaay outside the government's purview. And if left un-checked they won't ever stop until every aspect of my life is taken over.

It's bad enough already. It seems like every day something new is in the mail:
Fill this out.
Where's your money?
Who do you bank with?
Prove to us how much you sold in Utah last year.
How many people do you employ?
Help us track down so-and-so
How many tables do you have?
ETCETERA

Gah! Get the hell off my farm! And stop carting off the crops!

It ends up hurting my workers. When the government takes time and money away from me, it makes the pie smaller. The assumption is that hurts my profits, but it also hurts the payroll budget.

Case in point: I have to pay $5 per check in order to process payroll (ie Medicare, Social Security etc.). That money comes out of the payroll budget. Each worker gets $5 less per check. Oh it's not directly deducted by any means; the adjustment is made higher up in the budget process. This is the same in ANY business-- only the adjustment is already smoothed out early in the business design process.

I have a ton more to say about that.

Bringing it back around: when I hear Barack Obama or John McCain saying they're going to "do" anything I have to choke back a derisive snort because government can't give out a single dollar without first taking two dollars from someone else and losing a dollar in the "department of dollar-management".

I think people can take care of themselves (and so much better if they didn't have to carry a government worker on their backs), even Wal Mart employees.

 

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