Perry Glasser

Archive for the ‘Finance’ Category

Why CEOs Are Worth Every Dime

In Business, Economy, Finance, Political Economy on May 10, 2018 at 11:29 am

 

 

 

 

 

 

 

 

 

 

 

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WALL STREET PERVERSITY

In Business, Economy, EDUCATION, Finance, FINANCE FOR THE CLUELESS, Politics, Wall Street on February 9, 2018 at 5:26 pm

Dollar$ notes again that the financial community seems to be insane. Buccaneers and Wizards confound the simple Citizen who needs a money harbor other than a pillowcase. Until someone invents bedding that pays interest or dividends, that is likely to be a bad idea.

screwed1

Citizen

You may have read that the markets are down because of too much good news.

It’s true.

January 2018 saw a market run-up of breathtaking scope. The Weasel-in-Chief was smugly taking credit and taking Olympic Gold for World’s Worst Comb-over (Orange Division). Kids on the street were selling their bicycles and holding bake sales to pick up some bitcoin, wait a day or two, and then cash in expecting in a day or two to have enough money to buy a private Caribbean island that would be closed to those short-sighted ever-selfish Baby Boomers who ruined the Earth by inventing cell phones, expanding civil rights, and creating cheap birth control that begat Hook-Up culture, all while stupidly neglecting to shape a world where no one would have to work.

Mean or what?

WHEN GOOD NEWS IS BAD NEWS

The good news that rattled the markets is that more people are working and that the people working are earning more money. Wall Street, naturally, near soiled its underwear.

The bad news was that many people persist in believing that economies are a zero-sum game. If the notion of I win, you lose! rules the markets, what could be more awful than Citizens getting a bigger piece of the pie?

More people, more jobs, more money, that’s bad.

R-i-i-i-i-i-ight.

 

CITIZENS & TUMBLING STOCKS

In Business, Economics, Economy, EDUCATION, Finance, FINANCE FOR THE CLUELESS, Personal Finance, Politics, ROBERT REICH, SOCIAL MEDIA, Wall Street on February 5, 2018 at 7:27 pm
jimmy-stewart

investor

Dollar$ readers have asked for a comment on the recent path of stocks falling off a cliff. Though Dollar$ seldom references perturbations in the market, in this case he will make an exception because any number of people with brains of tapioca or in possession of advanced degrees will point to this event to declare it political, a referendum of sorts on Donald Trump for whom they hold unsustainable rage.

 

THE AXE OF RAGE 

Rage as a political stance is unsustainable because it consumes its object as well as those who revel in it. We grind that axe at our own peril.

That won’t bother pundits such as Robert Reich at Berserkely. Expect his gloating to surface in a day or two while his cadre of unsalaried graduate student do his work for him.

After all, Reich persuaded thousands of Facebook followers that Spring rain, the demotion of Pluto from planet to rock and back again, and your most recent dose of athlete’s foot, were all ploys by the rich to separate you from your money because there is no bottom to the depth of their greed. (Except for St. George Soros, who sends wheelbarrows of Canadian cash to political causes in the United States out of simple generosity, something that most of us would find curious if the cash came from Outer Slobbovia or Russia.) The Professor has yet to mention the President’s promise to go after Big Pharma or his championing “the right to try” to give the sick access to medications stalled in the FDA’s long system for approval. How could Reich do so? His followers might dial back their rage, and then who’d buy the Professor’s books, subscribe to his videos on Netflix, or line up to enroll in his one class per year in a lecture hall packed with the beneficiaries of privilege, those students at Berserkeley who on cue wildly applaud before marching to deny free speech to someone else?

To be sure, Professor Reich will neglect to mention that the trillions lost on world markets in the past few business days have mostly been lost by the rich. Who did you think owned the shares of companies? Your barber?

Also, make certain you know, that Dollar$ believes our President to be at base a lout, a racist, sexist, and probably a compulsive adulterer who happened to revolutionize American politics by seizing on social media as a means to create a bridge between himself and voters when his own party and the American press gave him all the chances of a balloon in a pin factory.

Benjamin-Franklin-U.S.-$100-bill

Chastity?

None of that, by the way, makes him unfit to join the ranks of John Kennedy, Franklin Roosevelt, Dwight Eisenhower, or Bill Clinton. There were many others; the folks who brag about zero tolerance for white male sin remain eager to rewrite history by expunging ordinary men from the presidential rolls. God help us if they figure out what the Founders did with their time when separated from spouses for months, and that rascal, Benjamin Franklin, was not know for his chastity.

Fortunately, The Donald did not run for Pope.

STOCKS

Dollar$ is happy to report the sky has not fallen, at least not in my neighborhood. If Jemima Puddleduck races past your front door, Dollar$ urges you to unwrap that shotgun you received as a gift from Grandpa. Go bag yourself an inexpensive cheap chicken dinner.

Responsible financial advisers will tell you to do nothing: Dollar$ agrees, unless you have a working crystal ball in which case Dollar$ would appreciate a call. All the elephants could not get through the door without the house collapsing. That’s what happened today.elephants

DECISIONS

What now? Better to ask: Where would your money be better off?

The world economy is peachy.

The American economy is also peachy, showing healthy signs of continued growth.

Do not confuse the economy with the stock markets. After a run-up of 21% in a year, market algorithms were bound to get nervous.  (Algorithms don’t properly get nervous, but the notion of market sentiment is a joke when upwards of 90 percent of all market transactions are conducted by computers.)

The American economy is in danger of suffering wage-inflation. Prices will rise because Joe Doakes, his cousin Joe Six-Pack, and their cousin, Jane Doe, are earning more.

O, the Horror! What will Reich say if people are earning more?  What fraud is being perpetrated that will need a decade to play out?

RELAX

The past week has seen a drop of 5 percent. More is coming.

Bear in mind that historically, a 7 percent gain in a year is good news. If after the carnage we saw today and can expect for a few more days your 401-k, your kids’ 509, and your savings ratchet back to a “mere” 12% annual gain, try not to swoon.

Stay  the course. There are bulls, there are bears, and there are pigs. People who try to time the market—that is, sell now with the hope and expectation of buying it all back when things have settled—are pigs , and like pigs will be slaughtered.

BITCOIN & SAD MILLENIALS

In Business, Economics, EDUCATION, Finance, FINANCE FOR THE CLUELESS, Personal Finance on February 3, 2018 at 1:18 pm

It’s hard to be sympathetic.

Several years ago, Dollar$ started plainmoneytalk to offer explanation and instruction about financial matters to the naïve and young. Someone had to.

Big honkin’ financial websites and advisory services run by Wizards have a vested interest in making what is basic seem complicated, the better to charge for magical advice no one should need.

buzzard

Credit Card Company

Personal Finance instruction at high schools is abandoned after explaining checkbooks, possibly because teachers themselves are uncertain of how banks, credit cards, car insurance and all the rest fit together. Young Citizens are left baking in the sun along the roadside, tasty meals strewn meal for carrion credit card companies who feast on the dead.

Dollar$ refrains from specific investment advice, the realm of Buccaneers and Wizards who cover their asses by couching advice in subjunctive mood: If XYZ Corp does not go up, it might go down!  Yes, well, other than standing still, there is no third alternative. There is, however, lots of deniability, and the advice applies not only to investments but to hydrogen airships navigating through lightning storms. If it does not go up like the Hindenburg, it will do just peachy.

hith-hindenburg-

Financial adviser: “But look how well they are doing at the front of the ship!”

The four personal financial functions – Saving, Investing, Spending, Insuring (SISI) — have been explained by Dollar$ in the past. Underlying the advice are a few principles, the hallmark of which is Get Rich Slowly.

BITCOIN TODAY

So it is with a heavy heart but some smug self-justification that Dollar$ observes that in the past two months, the eager sweaty Get Rich NOW! Millennials, nurtured on tales of college drop-outs making billions in weeks and because of weak toilet training remain puzzled by the concept of delayed gratification, have gotten kicks in the head and keister. (Why do we never read of the legions of Ivy League dropouts who lost Mom and Dad’s fortune by investing in systems to convert lead into gold?)

Bitcoin and other “digital currencies” took a beating, dropping a bruising 60 percent from a high of $19,783 in December 2017 to (gulp) as low as $7,700 last week. That’s 60 percent, and the fun is not yet over.bitcoin

Someone will offer a postmortem—increasing regulation around the world? invisible North Koreans getting out of the game until after the Winter Olympics?—but the fact is that at any time  they could have read Dollar$. With any luck, we have seen the last of this worldwide swindle put together for the greater glory of sex traffickers, arms dealers, dope runners, and terrorists.

Dollar$ does not like saying, “I told you so” because it is like kicking  corpse, but in this case will make an exception.

 

BITCOIN IN WONDERLAND

In Business, Economics, EDUCATION, Finance, Personal Finance, Political Economy, Wall Street, Wall Street Journal on December 22, 2017 at 2:52 pm

“Curiouser and curiouser!’ cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English); ‘now I’m opening out like the largest telescope that ever was!”

Bitcoin Speculator

Bitcoin Speculator

Whenever Dollar$ believes the Bitcoin mania is safely dead, someone nibbles a few crumbs of Bitcoin Cake and we hauled back to Looking Glass Land where mad creatures believe strongly that “Jam yesterday, and jam tomorrow, but never jam today,” is an economic promise and not an explanation the White Queen offers Alice.

The Queen said. ‘The rule is, jam to-morrow and jam yesterday – but never jam to-day.’
‘It MUST come sometimes to “jam to-day,”‘ Alice objected.
‘No, it can’t,’ said the Queen. ‘It’s jam every OTHER day: to-day isn’t any OTHER day, you know.’

Beware of strange substances that are labeled Eat Me.

A Silicon Valley startup called Xapo is the White Queen of BitcoinLand.

If you think gains like these are sustainable or represent some sort of value, you must have been eating Alice’s cakes. Maybe you’ve got some of that jam from yesterday. You might also wish to contact Dollar$ who just happens to have shares in the Brooklyn Bridge he can be persuaded to sell to you, a once in a lifetime opportunity.

BTC-2010-lin

 

Xapo is headquartered in Hong Kong, safely away from pesky US regulatory agencies. Sure, they’ve got offices in California, but so does every other financial firm in the world. The Board of Directors boasts former bankers from Argentina and Brazil, not exactly world beaters for stable currencies.

Magic Beans

The bitcoin business proposition is like the story Jack and the Beanstalk. (When it comes to bitcoins, metaphors from fantasy and fairytales are unavoidable.) Give us your real cow, and we will give you magic beans! Overnight they will grow to the sky! When you get up there, you’ll probably encounter a voracious giant ! To survive the giant, you’ll need to be a thief and run like Hell! All you need is the heart of a thief!

The Xapo Proposition

Xapo claims to have constructed physical vaults, “the company says are in mountainous regions.” There are no physical coins, of course. What will be down there will be computers Xapo promises will never be connected to the Internet–you know, like your laptop with no wifi.  If so, that means an army of people doing data entry on a army of disconnected laptops, in mountainous regions that cannot be approached easily. The mountain locations are, naturally, top secret.

If this does not strike you as the premise of a James Bond plot to bring down the world currency markets, what does?

goldeneye_oddjob007_reloade

Bitcoin Security

Liquidity

The bottomless credulity of the cyber-community originates with vitamin deficiencies caused by a steady diet of cold pizza and Red Bull for breakfast, watching Goldfinger too many times, the conviction being that one can get rich without ever getting out of a chair, if armed with an unshakeable libertarian belief that the arms merchants, sex traffickers, and drug dealers MUST have an untraceable non-government issued currency for money laundering.

Bitcoin Banker

Bitcoin Banker

 

TAXE$ AND COMMON CENT$

In Business, Economics, Economy, Finance, Personal Finance, Political Economy, Politics, TAXES on December 21, 2017 at 4:24 pm
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SCHOLAR OF THE SUBJUNCTIVE

Dollar$ resents and excoriates finance writers who write in the subjunctive mood. For readers who stopped paying attention to their English teachers in the 8th grade, that means a statement that is conditional. Correctly constructed, the sentiment expresses and a condition that is either not yet true, will never be true, or the speaker wishes were true followed by an outcome that is also not true.

 

If this be treason, make the most of it! – Patrick Henry

In our times, the greatest use of the subjunctive mood is for Romance, handy for lovers unwilling to commit but nevertheless compelled to express what resides in their hearts. Is there a better love song than If I Loved You?

Many speakers flummox the niceties of this important use of mood, and while it is not Dollar$ purpose today to deliver a grammar lesson, he earnestly hopes readers will be afflicted with the dry heaves should they come across ersatz prophets who preserve deniability and protect their alleged expertise by abusing the subjunctive mood. Yes, the stock market may go up, a bold prediction that allows deniability. It may also go down. Dollar$ also notes in passing that Patrick Henry was not speaking archaic English when he addressed the Virginia House of Burgesses, but was properly employing the subjunctive mood of the verb to be. If you still don’t get it, consider that the Cowardly Lion of Oz fame sings “If I were King of the Forest.” Now you know why Bert Lahr never sang was.

THE 2017 TAX BILL

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SOCIAL MEDIA EXPERT

Dollar$ has until now said zero about the proposed tax bill because it was proposed. Details were open to negotiation. That, however, did not prevent the doyens of social media to claim the sky was falling and suggest that passage of the tax bill would end civilization as we know it.

FACTS IS FACTS

The corporate tax rate has dropped from 35% to 21%. Lest you read Robert Reich, the former Secretary of Labor so startled he is not advising Hillary Clinton in the White House that he has taken to Facebook to lead “The Resistance,” let’s note that despite Professor Reich this tax cut is does not pick the pockets of the poor to give money to the rich. After all, 35% of nothing remains nothing, not coincidentally the amount of taxes paid by Apple Computer and many other multinational American-based companies that have disincentives to bring their profits back to American shores.  The new tax law is a hope to repatriate funds, an overdue program first called for by John F. Kennedy. Short version: US corporate taxes now align with the rest of the industrialized world.

Apple and other corporations can bring billions back to our shores and suffer no financial penalty for doing so. The Tax Policy Center noted in 2014, “Despite its relatively high corporate tax rate, the United States raises slightly less revenue from corporate income taxes as a share of GDP than the average of other countries.”

TRICKLING.4.19.1-figure2_0
Facebook economists who took time from photographing their cats and their breakfast (or cats having breakfast) have been told repeatedly that Trickle-Down Economics does not trickle.  Dollar$, however, notes that several organizations have as of this morning announced raises for line workers and hikes in their minimum wage. Dollar$ is certain those responses are due to more than a rosy picture of future profits precipitated by a tax cut. Fact is, labor is getting scarce; like other valued assets, if you want to keep trained and skilled workers, you have to pay for them. That’s how markets work.

The Koch brothers may have a social agenda, but Facebook economists smugly predicting that the new tax codes will so reduce revenue that Social Security and Medicare will have to be sharply reduced may want to note that neither of those programs is funded out of general revenues but from separate trusts funds. That’s why your annual pay stub has separate boxes for Medicare and Social Security, Binky. They ain’t general revenues. Dollar$ bids good luck to any weasel who lays a hand on those monies, but since the first rule of weasel life is to remain a weasel, Dollar$ is losing no sleep over that possibility.

Similar dire predictions about how the poor will suffer because so many itemized deductions are now disallowed stagger Dollar$ for the hypocrisy or ignorance of how taxes work.

Itemized deductions are

  • also known as loopholes
  • seldom used by citizen taxpayers who do not own a home

LITTLE OLD LADY WHO LIVED IN A SHOE

woman-livedinashoe

TAX PLAN BENEFICIARY

The Little Old Lady who lived in a Shoe had so many children she did not know what to do will, if she itemizes, will get $2,000 per kid where she used to get $1,000. Unless her shoe is worth more than $750,000, her mortgage interest will remain a deduction. Chances are, however, since more than 60% of all taxpayers already use the Standard Deduction, the Little Old Lady will avail herself of that tax simplification because the SD has near doubled. That is, should she choose to itemize, she’d be a damned fool to do so unless he has more than $24,000 in deductions, something highly unlikely for any who works for wages.Look, that redoubtable working family never paid taxes anyway, and at year’s end looked forward to cashing a tax refund check, the sum of all that withholding tax. Under the new tax plan, her refund will indeed be less because week to week and month to month the Fed will be withholding less of her money. Maybe she can build an addition on the shoe, a playroom in the heel, perhaps.

If any of her kids are planning college, despite the dire warnings of Facebook economists, the deductibility of tuition remains untouched.

So do her medical costs above a certain level—the same as the way things are now.

FLIES IN THE OINTMENT

Okay, Dollar$, a few of you still awake might ask what happens by 2028? Don’t these individual tax breaks phase out? That’s when we’ll be screwed, right?

Dollar$ asks the professional pessimists where it is written that a Congress controlled by Democrats in, say 2024, can’t tweak or change tax law? We change appropriations annually (it’s called a budget).

That is to say, Binky, if you think it is in your best interest, vote your convictions, but stop screaming like Chicken Little. Dollar$, you pestiferous fool, this tax law will raise the deficit!! We are going to hell in a handcart!” (Be careful though, you may start to sound like a Republican advocating fiscal responsibility.)

We have for a decade endured GDP growth in the 2% range, and we hunger for greater. Three percent is not unreasonable; up around 4% you can get a nosebleed and bet we are losing ground to inflation. But should the economy grow more quickly than it has, the deficit goes down. Bill Clinton demonstrated that by riding out Ronald Reagan’s tax cuts.

A country near 100% employment can afford a few risks, and if for a few years we put money in the hands of citizens, should we sweat it?

 

 

$$$

TREES DON’T GROW TO THE SKY or WHY RHETORIC WILL LEAVE YOU BANKRUPT

In Business, Economy, Finance, FINANCE FOR THE CLUELESS, Personal Finance, Wall Street on December 17, 2017 at 2:11 pm

Simple Truths

  • The stock market neither advances nor retreats–though prices indeed go up and down.
  • For every buyer, there is a seller.
  • When buyers and sellers agree to prices, they set asset values.
  • Buyers buy with the expectation of future profit; sellers sell when they believe continued ownership of an asset constitutes a risk no longer commensurate with possible reward.
  • No one in a free market is under compulsion.
  • Wall Street is neither a battleground for territory, nor  an adversarial contest.
  • It’s a market.

Wizards require small investors to believe that generals understand the battlefield and so deserve your trust and your fees because they otherwise have nothing to sell.  Internet access to mutual funds, closed-end funds (CEF) and  exchanged traded fund (ETF) has made giving professional advice a media game.

Sell newsletters, attract viewers, collect advertising dollars.  You need not be wise or even right. Scare the piss out of customers, and they come back anyway, thrilled that you were wrong. If God-forbid the doom-saying prognosticators prove to be right, customers will come back chastened and ready to listen.

Market Sentiment

Basically, after getting in the game buy buying 3 to 5 broadly diversified vehicles, you should do nothing. In 2017, if you followed that strategy, so far you are making a mere 20%. Since the vast majority of investing operations on Wall Street are performed by networked machines that monitor every price tick and move great mountains of capital for millions of worldwide financial vehicles, there is no human sentiment involved.

When you as a small investor get the news of sharp price movement, it is too late to act, unless you think and make decisions at light speed and are plugged directly into markets.

  • Machines do not agonize over decisions such as Buy, Sell or Hold.
  • Machines have no hearts. Machines do not succumb to sentiment. Machines do not read the newspapers.
  • Machines do not hold on to send their kids to college.
  • Machines do not save pennies to accrue the down payment on a house.

Nevertheless modern Wizards want us to believe market sentiment exists and that t hey are plugged into that sentiment.

Yeah. Sure. Right. Got it. Roger that.

How do TV Wizards get away with recommending buying or selling new assets every day?

kramer7

Sells perpetual panic and urgency

The fact is that while our money trickles into pension funds, 401ks, college funds, health insurance funds, and all the rest of the vehicles invented by Wizards to lure us with illusions of safety in an uncertain world, machines–owned assets are being sold.  There’s a buyer for every seller, Binky. Remember that.

Machines sell in torrents. We pray for 7 to 10 percent each year, are happy to get 3%, but when the algorithms indicate “Sell,” prices drop 20 to 50 percent in minutes.
Sentiment? Level playing field?

A Warning

Dollar$ is aware that sharp price moves can be precipitated by events and non-events such as national elections. If you think the US is going to hell in a handcart, do you also believe that after crap hits the fan that the money you buried in the backyard will buy a can of tuna?

This is why reasoned investors await blood on the floor before buying, and unless you are within 5 years of a financial goal–retirement, your kid’s first year of college, that down payment on your house–sit tight, never sell.

  • Buy and hold.
  • Ignore alleged “corrections.”
  • Sleep at night.

Tulips and BitCoins

In Business, Economics, Economy, EDUCATION, Finance on December 7, 2017 at 9:00 pm

Tulips

In 1636, Holland discovered the tulip. They were imported. People went crazy for them. Everybody wanted them. No one could get enough of them, and the more rare they seemed, the more valuable they became. The cost of tulip futures for some bulbs rose to prices worth more than 20 acres of land. I am not making this up.

It’s easy to laugh, but open your closet and count your Beanie Bag Babies stash. How many collectibles have you bought recently? Holy bananas, have you been buying fake money and stamps with baseball players on them from small Caribbean states as family heirlooms?!?

But God forbid, have you considered BitCoins?

The Wizards on Wall Street are fainting. They notice that Bitcoin rose above $15,000 this week, and is up from $800 a year ago.  Remember, always that Wall Street Wizards invest in nothing, but they want a piece of every transaction. They earn profits when money changes hands, and if that is when your kid’s college education turns to dust, well, that’s a shame.

BitCoins are an imaginary currency backed by the full faith and credit of nothing, not nobody, not nohow.  The dollar, on the other hand, is a currency backed by the full faith and credit of the United States, which Dollars$ admits may not be all that much more, but has to be worth more than a few beeps and blips on some kid’s garage in a Tokyo sub-basement. Sorry, Binky, but the gold in Fort Knox has not been seen for decades. Every bill in your American wallet is a promise to pay–later.

The US dollar is also the standard for several other currencies, small countries, mostly, that cannot risk having speculators manipulate their money. In  the currency markets where money floats, the US dollar is relatively stable.  On the other hand, people who invest in Bitcoins either live too far from a decent casino or think Monopoly money is tricky stuff. They plan on being the last person through the exit when the inevitable collapse occurs, but do you know what happens when all the elephants try to get through the door at the same time?

BitCoin is the preferred currency among drug dealers and computer hijackers, those rascals who are the cousins to that Nigerian prince who offer you millions if you’ll send just a few thousand. The Prince makes that offer by email; the BitCoin pirates fly the Jolly Roger  while sailing through cyberspace.

You get your choice.

bitcoin

look that them digits!

jolly roger

WEALTH INEQUALITY

In Business, Economics, Economy, EDUCATION, Finance, Political Economy, Politics, TAXES on December 5, 2017 at 10:40 pm

bossy sisterWhenever my big sister played Monopoly, if the game was going against her she would toss the playing board in the air. My hotels and houses would scatter across the living room carpet as she shouted, “Salugi!” (a New York-ism pronounced “suh-LOO-gee”)and lunged across the table to confiscate most of my deeds, especially Boardwalk and Park Place.

When I was able to read the rules of the game, I learned there was no allowance for tossing the game in the air or confiscating my property. My sister was cheating! But since I was 8 and she was 14, she was able to meet my accusation by beating me up.

The History of Wealth Redistribution

My sister was a revolutionary.

To be sure, Dollar$ reminds readers that rebels object to rules, but revolutionaries rewrite them. Rebellions are common; revolutions are rare.

The folks who threw the board in the air in the past have cried, “Justice!” not “Salugi!” They had names like Washington, Lenin, Mao, and Castro.

Note that political persuasion—Left or Right—has nothing to do with revolutionary status. Mao and Washington might have discussed military tactics, but Dollar$ suggests they would have come to no agreement about economic systems or the function of government.

The Function of Governmentpreamble-20532-20120118-55

It’s less complicated than Monopoly.

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Washington (the dude on the $1) believed that the function of government was primarily to protect the rights of the individual, rights that most often needed protection from government itself. If no military personnel have been billeted in your living room, thank Washington.

Washington may have noted that to promote the general welfare required some redistribution of wealth to insure equal opportunity and to insure domestic tranquility, but that does not guarantee equality of status among citizens.

Washington’s pal was the first Secretary of the Treasury, Hamilton (the dude on the $10). Hamilton understood that wealth concentration in institution like banks were a social good, provided the bank used that concentration of wealth to fund the visions of a greater society, lending money to visionaries and giving stability to the economic infrastructure by protecting wealth from being squandered by a ruling class on personal indulgences. Hamilton, an orphan at 11 and the illegitimate son a British West Indies plantation owner, would likely not endorse a notion that the function of government was to protect the rights of the filthy rich to become obscenely rich.

The Situation Today

Some of Dollar$’s best friends sink into fuzzy thinking when talk comes around to how wealth is created and distributed in the United States. They lose sleep fearful that someone, somehow, somewhere, is leveraging assets to optimize profit.  They simple-mindedly believe that economics is a zero-sum game and cannot imagine economic growth. If an organization makes a dollar, someone must be a dollar poorer.

No. That simply is untrue. If it were so, you and I would enjoy the same standard of living as Washington and Hamilton. But the fact is that economies grow.  At issue is how they grow, not whether they should grow at all, though there are indeed some who think that a good idea, too.

The deluded friends of Dollar$ from time to time propose bold programs to redistribute wealth, programs they understand as pursuing Justice.

There two reasons those cannot and should not work.

1. Nowhere in the US Constitution will one find the word corporation. True, we reserve the right to free assembly, but that does not elevate any assembly of citizens devoted to profit a guaranteed right to speak lies in its advertising or compensate its directors and executive officers so rapaciously that shareholders who hope to partake of the boons of the system see their profit participation reduced by rapacious Buccaneers.

Oliver-Wendell-Jr-Holmes-9342405-1-402
Not Sherlock; not Mycroft, just Oliver

2. Oliver Wendell Holmes, Jr. noted Taxes are the price we pay for a civilized society. The idea is carved in stone on the IRS building in DC., but let’s note that corporations do not pay taxes, they collect them.  If you think they do not, you are submitting to a distraction. Dollar$ hastens to explain that citizens are consumers. Tax us, and we bleed money. Bleeding, we consume or save less, neither of which are good things, though it does not follow consumers should not be taxed. Civilization is messy, but must be purchased. But to a corporation, taxes are a cost of doing business, like labor, supplies, and logistics.

Raise corporate tax rates, and corporations will only raise their prices.

Guess who pays the difference?

Today’s  Lesson

Remember, friends, we cannot pursue social justice by confiscating wealth. We can, however:

  • Limit executive compensation by law to some multiple of the lowest worker in an organization;
  • Create progressive income tax brackets that limit the shift of American wealth to the rich from the poor;
  • Lower repatriation taxes so that companies that keep their money off-shore are encouraged to bring it home where they can invest in more factories and create jobs here–better to collect 15 percent of something than 30 percent of nothing;
  • Demand that higher education is a matter of national security, and so to insure the blessings of liberty are  free to all;
  • To insure the blessings of liberty on ourselves and our posterity, give tax breaks to organizations that train employees instead of demanding that future employees borrow so much money to gain perceived needed skills that students have no choice except a life of indentured servitude;
  • Regulate publicly traded corporations by disallowing aggregation of profits as cash without paying shareholder dividends, a means to share in that profit. Can we stop the nonsense that hoarding cash is good corporate financial strategy when all it does is spike share prices that are subsequently used to calculate executive performance compensation? (Are you listening Apple Computer?)
  • Return to personal income tax rates that  reflect the needs of our society. Under Eisenhower, we built the interstate highway system and taxed marginal income as much as 92 percent.

We don’t have to throw the game board in the air to start over again: all we need to do is play by the rules.

DEMONIZE THE OTHER GUY

In Business, Finance, Political Economy, Politics, TAXES on December 4, 2017 at 5:50 pm
screwed1

Citizen

Dollar$ sadly notes that social media has reduced American political discourse into rabidly demonizing the other guy. I wish we could say Dollar$ is surprised.

If you dislike the proposed tax bill, it cannot be that in 500+ pages there is not a line or page you admire. If you admire the new tax bill, it cannot be the in 500+ pages there is not a page that is wrong-headed.

Here’s a challenge: call your representative and ask him or her what he or she likes (or dislikes) about the bill. Make them reverse field. Watch them cry.

Real-world logic allows for conversation and (gulp) compromise. Instead, we see Republicans who simply walked away from their responsibilities for the final year of President Obama’s tenure and refused to act on anything at all; we now have Democrats who think what citizens want is for them to do the same, to get even.

You know, like a kid in a school yard with a grudge.

Wake up, ladies and gentlemen who  represent us—none of us voted for you to do that.

Is it any wonder that Congressional approval ratings linger under 15%? Think of it, 6 of 7 Americans think their representatives are a bunch of horses’ asses.

Guess who is getting screwed?

Congress at work.

Congress at work