We are living in an era when the leaders we elect do not uphold the rights and interest of the citizens at large. Instead, they pursue a path of self-enrichment and corruption at taxpayer expense. Nowhere is this deficiency more evident than the Congress. Here we see elected officials consistently miss votes that are inconvenient for them to participate in.
When we elect a politician, we expect that person to vote against legislation that will harm us and vote for legislation that will benefit us. However, that very politician received money from their party, private donors, corporate donors, lobbies, etc. It is those monetary contributors to their campaign (and back pocket) that they owe their Congressional votes to first, before any of us.
There is a very useful, but severely underused, tool that the government provides us with, which allows an average citizen to track the Congressional votes (or lack thereof) of their Senators and Representatives. Here is the website: https://www.govtrack.us/congress/votes
Based on a 2015 study, our Congress was rife with Senators and Representatives that missed a significant portion of their votes. To be fair, those dutiful elected officials that cast every single vote they are called upon drive the average absenteeism down to a palatable 4%. However, there are some that reach as high as 30% absenteeism and over 20 officials consistently miss more than 10% of their expected votes. Imagine if you don't show up for work 10% of the time? That's right - the Senators and Representatives play by a different set of rules.
But absenteeism is only a part of the problem. A lot of the time, the Senators and Representatives are present for the vote, but abstain from voting on an issue that may be problematic for them.
Let's suppose you're a Senator in North Dakota and you are asked to vote on the Dakota Access Pipeline regulation. Your voting population does not want the pipeline approved for environmental reasons. But your big money donors have a financial stake in the project and want your vote for approval. You are not going to deny your sponsor, but you will also not want to upset your voters. So you chose neither - you abstain from voting, citing the legislating is lacking, incomplete or some other irrelevant excuse. That way, you remain safe with the donors and most of the voting public.
In order for us to clean up the Washington landscape, we have to turn our votes into weapons. We must fight Congressional Absenteeism and legislative vote abstinence. Your elected officials have an important job - to vote for or against legislation on your behalf.
Take a look at your elected officials' voting record here https://www.govtrack.us/congress/votes
And if they're not doing their job, we must fire them. Don't sit on the sidelines - weaponize your votes!
Showing posts with label government. Show all posts
Showing posts with label government. Show all posts
Wednesday, February 22, 2017
Tuesday, February 21, 2017
Refreshing Congress
Get this, Donald Trump was actually right about one thing - in order to make Washington DC work for the people, those elected by the people cannot spend their careers in Washington.
The elected officials were never supposed to become career politicians according to the founding fathers of our nations. They were supposed to serve for a certain amount of time and return to their prior career afterwards. This way the government would stay connected with the people it served, because the decisions they made while in office would also affect them after they have completed their terms.
In addition, the added benefit of changing elected officials more often is that the special interest lobbies will be unable to depend on career politicians remaining in their pockets for the long term. They will need to court each and every newcomer, which won't be as easy since being bought for the short term will have potential dire consequences for their long term careers.
It is a very simple thing to say that term limits should become law, but it is incredibly difficult to make this a reality. The elected officials who enjoy unlimited benefits at taxpayer expense will not turn off their cash flow willingly. But besides Trump being right about it and promoting the idea, Senator Ted Cruz and Representative Ron DeSantis have introduced legislation this past January 3rd.
Unfortunately, politicians like Mitch McConnell and Chuck Schumer want the American people to forget about this proposal. Even politicians I used to have respect for, will not return phone calls or emails about the matter. Yes, the cash flow that being a career politician is quite a powerful force over serving the people that have elected you - it is a drug addiction. Well, I say it is time for an intervention.
We need to call, email, and show up at our elected officials offices. We need to let them know that if they do not support the term limits legislation proposal that should become law, this will be the last term they will ever serve.
The elected officials were never supposed to become career politicians according to the founding fathers of our nations. They were supposed to serve for a certain amount of time and return to their prior career afterwards. This way the government would stay connected with the people it served, because the decisions they made while in office would also affect them after they have completed their terms.
In addition, the added benefit of changing elected officials more often is that the special interest lobbies will be unable to depend on career politicians remaining in their pockets for the long term. They will need to court each and every newcomer, which won't be as easy since being bought for the short term will have potential dire consequences for their long term careers.
It is a very simple thing to say that term limits should become law, but it is incredibly difficult to make this a reality. The elected officials who enjoy unlimited benefits at taxpayer expense will not turn off their cash flow willingly. But besides Trump being right about it and promoting the idea, Senator Ted Cruz and Representative Ron DeSantis have introduced legislation this past January 3rd.
Unfortunately, politicians like Mitch McConnell and Chuck Schumer want the American people to forget about this proposal. Even politicians I used to have respect for, will not return phone calls or emails about the matter. Yes, the cash flow that being a career politician is quite a powerful force over serving the people that have elected you - it is a drug addiction. Well, I say it is time for an intervention.
We need to call, email, and show up at our elected officials offices. We need to let them know that if they do not support the term limits legislation proposal that should become law, this will be the last term they will ever serve.
Sunday, February 19, 2017
Breaking Up Parties
Now is the time and a chance to become a more civilized functioning country with a government that more closely represents each and every one of you - American citizens.
As long we have the two-party stranglehold over the USA government, the average American citizen will never be truly represented by the politicians we elect. Let me explain this in several simple points.
1) When only two parties control the political landscape, you have polarizing black and white views on each side. This makes it nearly impossible to make a nuanced choice of whom to support and for whom to cast a vote, as neither side will ever represent the vast majority of the American population. As a result, most American citizens do not participate in the election process. The majority that do wind up voting are left with a terribly choice - which candidate do I dislike less? When the candidates for any office are not even close to representing your views and values, there is no meaningful choice even when you have the right to choose.
2) When either party has the majority of Senate and House of Representatives, while also having the Presidential seat, the opposing sides don't have to negotiate. The controlling party can simply pass legislation and push through its policy without any regard for the other side. In the majority of other democracies in the civilized world, there are multiple parties that more closely represent the differing views of their population. In these cases, a party may win an election with a 25% percent of the vote, sometimes as high as 35%. But it almost never results in a flat out majority. This means that the winning party needs to negotiate with other parties, form a coalition, discuss and amend their proposals to fit the desires of the majority of their population. It is a much more true to form representative democracy than what we currently have to endure.
3) It is incredibly easy for big money interest groups to control the political landscape. There are big money lobbyists that play a heavy hand in influencing our government's policies via monetary contributions to the two major political parties and their candidates. Pharmacy, Insurance, Banking, Tobacco, Gun and various other lobbies have our American government in their back pockets. It is really easy to do - just donate money to both parties. Whoever wins the controlling seats in our government, the big money contributors are guaranteed that their interests are protected no matter what. If there are multiple parties that have to negotiate with each other and be held accountable to the actual views of the people who elect them, the lobbyists will not have as much sway over the legislation.
I believe that we are living in an extraordinary time of unprecedented opportunity, on which we owe it to ourselves and future generations to capitalize. The 2016 election has exposed and opened up the fault lines in both the Democrat and Republican parties. The Democrats screwed up big league by internal collusion in favoring one candidate in the primaries over another, while the Republicans were fighting among themselves and rolling down the hill into disarray, until they miraculously emerged on top of the orange mountain.
As a result, the Democrats have internal battles that are pulling the party into Progressives, Traditional Democrats, and those who now identify as Independents. The Republicans have an even more fierce battle among them between Traditional Republicans, Tea Party, Evangelicals, Reformers and Hardcore Conservatives.
We, as American citizens, must force these political fault-lines to crack these parties apart into smaller more specific ones. How do we do this? Through putting pressure on our elected officials with our votes. We need to make each and every politician recognize that we will, from this point on, hold them accountable for their action (or inaction) as our representatives. After enough politicians realize that the status quo no longer suits their office, the polarizing methodologies of the two-party stranglehold will be left in the rear-view mirror of history. Make your vote count in every single election, no matter how small, from this point on.
As long we have the two-party stranglehold over the USA government, the average American citizen will never be truly represented by the politicians we elect. Let me explain this in several simple points.
1) When only two parties control the political landscape, you have polarizing black and white views on each side. This makes it nearly impossible to make a nuanced choice of whom to support and for whom to cast a vote, as neither side will ever represent the vast majority of the American population. As a result, most American citizens do not participate in the election process. The majority that do wind up voting are left with a terribly choice - which candidate do I dislike less? When the candidates for any office are not even close to representing your views and values, there is no meaningful choice even when you have the right to choose.
2) When either party has the majority of Senate and House of Representatives, while also having the Presidential seat, the opposing sides don't have to negotiate. The controlling party can simply pass legislation and push through its policy without any regard for the other side. In the majority of other democracies in the civilized world, there are multiple parties that more closely represent the differing views of their population. In these cases, a party may win an election with a 25% percent of the vote, sometimes as high as 35%. But it almost never results in a flat out majority. This means that the winning party needs to negotiate with other parties, form a coalition, discuss and amend their proposals to fit the desires of the majority of their population. It is a much more true to form representative democracy than what we currently have to endure.
3) It is incredibly easy for big money interest groups to control the political landscape. There are big money lobbyists that play a heavy hand in influencing our government's policies via monetary contributions to the two major political parties and their candidates. Pharmacy, Insurance, Banking, Tobacco, Gun and various other lobbies have our American government in their back pockets. It is really easy to do - just donate money to both parties. Whoever wins the controlling seats in our government, the big money contributors are guaranteed that their interests are protected no matter what. If there are multiple parties that have to negotiate with each other and be held accountable to the actual views of the people who elect them, the lobbyists will not have as much sway over the legislation.
I believe that we are living in an extraordinary time of unprecedented opportunity, on which we owe it to ourselves and future generations to capitalize. The 2016 election has exposed and opened up the fault lines in both the Democrat and Republican parties. The Democrats screwed up big league by internal collusion in favoring one candidate in the primaries over another, while the Republicans were fighting among themselves and rolling down the hill into disarray, until they miraculously emerged on top of the orange mountain.
As a result, the Democrats have internal battles that are pulling the party into Progressives, Traditional Democrats, and those who now identify as Independents. The Republicans have an even more fierce battle among them between Traditional Republicans, Tea Party, Evangelicals, Reformers and Hardcore Conservatives.
We, as American citizens, must force these political fault-lines to crack these parties apart into smaller more specific ones. How do we do this? Through putting pressure on our elected officials with our votes. We need to make each and every politician recognize that we will, from this point on, hold them accountable for their action (or inaction) as our representatives. After enough politicians realize that the status quo no longer suits their office, the polarizing methodologies of the two-party stranglehold will be left in the rear-view mirror of history. Make your vote count in every single election, no matter how small, from this point on.
Saturday, February 18, 2017
Opportunity Blueprint
In modern times, we find ourselves a highly divided country with an alarming (and continuously growing) disparity in terms of income between the classes of our society. Incomes diverge, as expenses grow. It hasn't always been that way, but this is where we are and we have to resolve these issues before our nation collapses along the fault-lines of growing division.
First of all, let me say this clearly - it is all about money. There literally is nothing else that divides us at the core except for money. Racism, anti-antisemitism, xenophobia, islamophobia, etc. are all just the byproducts of the basic problem where people fear for their financial well being due to a perceived threat or a poverty-stricken reality makes people desperate enough to believe.
While these threats are just untrue and ridiculous at the core, the division we see across our nation are real. Furthermore, the proposed solutions to the economic divergence/disparity among the classes couldn't be more different and polarizing from both Democrats and Republicans. But without a meaningful admission of the core problem, neither of these one-sided proposals have any viable way of solving the root of the problem.
The government earns money from taxing the citizens' incomes, purchases, sales, gifts, etc. The majority of the revenue comes from income tax. The economy strives when the citizens are capable and motivated to spend their disposable incomes. As a result, it drives corporate profits and government revenues up. Finally, businesses see a reason to keep people employed and hire more staff to expand in order to meet the demand.
It has long been a predominant Republican belief that applying a flat tax across all tax brackets will raise enough revenue to balance the budget. However, taxing the lower classes and those below the poverty line would not only drive people into a further financial despair, it would also require additional Federal spending to accommodate those suffering from such a tax program. The general population will have less disposable income, the businesses will lay off staff due to waning demand and the government will be left with an ever-declining revenue. It is a losing scenario.
It has long been a predominant Democrat belief that spending government funds to hire people and create government sponsored projects are ways to increase employment and, subsequently, increase the government's revenue stream. While this appears to be a good plan in theory, it is a totally different result in practice. When you are spending tax revenue on hiring public and creating projects that do not have a corresponding demand, you are in fact cannibalizing the government funds. Yes, the unemployment decreases and the government revenues increase. However, your spending outpaces the revenue received. It is a net negative effect and a losing scenario as well.
What I propose is a return to near-parity in terms of net income. What does that mean? Net income is the total amount of money a person takes home from their wages after all taxes (including income tax) are paid. How would someone increase the incomes of the poverty line and lower classes? Simple, it would involve a two-fold plan of income re-balancing in an employer-employee environment.
First, the government would need to institute an enforceable guideline for compensation of companies' lowest paid employees to be no less than a certain reasonable percentage of the highest earning employee (usually the CEO). This way, each company is required to distribute its profits more fairly and each employee earns enough to where the taxes no longer cripple them below a living wage (that would otherwise require them to borrow in order to survive).
Second, the government would need to protect American companies and workers from outsourcing and in-sourcing scenarios. A lot of companies began to chase profits in the 1990s with cheap overseas labor that resulted in higher profit margins. However, this all came at taxpayer expense as hundreds of thousands of Americans lost their source of a living wage. The government loses revenue from taxes on those incomes and is now forced to spend their depleting revenue to support the newly unemployed. It is time to stop the bleeding. United States is still the leading consumer economy in the world. As such, it can dictate what US companies' foreign manufactured goods can pay in taxes - recognizing that one such product or service bought, is one American product or service left with declining demand. To solve this problematic economic minefield, the government needs to gradually phase in a tax of (5%, 10%, 15%... n%), where n% equals the difference in cost between a comparable American product (or service) + 2%. This will level the playing field for US produced goods and services, while providing American companies operating overseas with enough time to move back their operations, avoid losing government incentives and hire American workers.
The end result will be a greater level of net income for majority of Americans, a new degree of income parity between the highest and lowest earners, protection for American workers' incomes, increased disposable income spending, increased government revenue, reduced unemployment benefits spending and a more stable economy.
And maybe, just maybe, when we are in a new era of wholesale economic revival, our divisions will greatly diminish as our incomes and interests converge.
First of all, let me say this clearly - it is all about money. There literally is nothing else that divides us at the core except for money. Racism, anti-antisemitism, xenophobia, islamophobia, etc. are all just the byproducts of the basic problem where people fear for their financial well being due to a perceived threat or a poverty-stricken reality makes people desperate enough to believe.
While these threats are just untrue and ridiculous at the core, the division we see across our nation are real. Furthermore, the proposed solutions to the economic divergence/disparity among the classes couldn't be more different and polarizing from both Democrats and Republicans. But without a meaningful admission of the core problem, neither of these one-sided proposals have any viable way of solving the root of the problem.
The government earns money from taxing the citizens' incomes, purchases, sales, gifts, etc. The majority of the revenue comes from income tax. The economy strives when the citizens are capable and motivated to spend their disposable incomes. As a result, it drives corporate profits and government revenues up. Finally, businesses see a reason to keep people employed and hire more staff to expand in order to meet the demand.
It has long been a predominant Republican belief that applying a flat tax across all tax brackets will raise enough revenue to balance the budget. However, taxing the lower classes and those below the poverty line would not only drive people into a further financial despair, it would also require additional Federal spending to accommodate those suffering from such a tax program. The general population will have less disposable income, the businesses will lay off staff due to waning demand and the government will be left with an ever-declining revenue. It is a losing scenario.
It has long been a predominant Democrat belief that spending government funds to hire people and create government sponsored projects are ways to increase employment and, subsequently, increase the government's revenue stream. While this appears to be a good plan in theory, it is a totally different result in practice. When you are spending tax revenue on hiring public and creating projects that do not have a corresponding demand, you are in fact cannibalizing the government funds. Yes, the unemployment decreases and the government revenues increase. However, your spending outpaces the revenue received. It is a net negative effect and a losing scenario as well.
What I propose is a return to near-parity in terms of net income. What does that mean? Net income is the total amount of money a person takes home from their wages after all taxes (including income tax) are paid. How would someone increase the incomes of the poverty line and lower classes? Simple, it would involve a two-fold plan of income re-balancing in an employer-employee environment.
First, the government would need to institute an enforceable guideline for compensation of companies' lowest paid employees to be no less than a certain reasonable percentage of the highest earning employee (usually the CEO). This way, each company is required to distribute its profits more fairly and each employee earns enough to where the taxes no longer cripple them below a living wage (that would otherwise require them to borrow in order to survive).
Second, the government would need to protect American companies and workers from outsourcing and in-sourcing scenarios. A lot of companies began to chase profits in the 1990s with cheap overseas labor that resulted in higher profit margins. However, this all came at taxpayer expense as hundreds of thousands of Americans lost their source of a living wage. The government loses revenue from taxes on those incomes and is now forced to spend their depleting revenue to support the newly unemployed. It is time to stop the bleeding. United States is still the leading consumer economy in the world. As such, it can dictate what US companies' foreign manufactured goods can pay in taxes - recognizing that one such product or service bought, is one American product or service left with declining demand. To solve this problematic economic minefield, the government needs to gradually phase in a tax of (5%, 10%, 15%... n%), where n% equals the difference in cost between a comparable American product (or service) + 2%. This will level the playing field for US produced goods and services, while providing American companies operating overseas with enough time to move back their operations, avoid losing government incentives and hire American workers.
The end result will be a greater level of net income for majority of Americans, a new degree of income parity between the highest and lowest earners, protection for American workers' incomes, increased disposable income spending, increased government revenue, reduced unemployment benefits spending and a more stable economy.
And maybe, just maybe, when we are in a new era of wholesale economic revival, our divisions will greatly diminish as our incomes and interests converge.
Friday, April 17, 2015
At Taxpayer's Expense
Let me start off by saying - I know it is my obligation as a citizen to pay my fair share of taxes and I make sure my employer withholding every year is right on target to meet my tax obligations. I may not like the amount of money chopped off my paycheck, but neither does any other citizen. It is one of those things we know we must, but wish we didn't have to.
My problem revolves around the "wonderful" legislation that dictates the Highly Compensated Employees (HCE) rules. These rules are applied in a blanket manner across this country, whether you live in Wyoming, Texas, New York or California - you become an HCE if you either own 5% of the business or earn more than $115,000.
Once you become an HCE in the eyes of the IRS, you are no longer eligible for several education related tax deductions - and that is right, because those deductions were designed to protect the lower income population.
However, there is another side to the HCE rules. That side relates to the 401K and IRA tax deductible status. Ordinarily, employees are allowed to contribute money from their earnings towards these retirement plans. For 401K, the contributions are pre-tax and for IRA the contributions can be deducted from your taxable income when filing your return. Both plans allow investments to grow tax-deferred for the life of the plan.
When applying the HCE rules, which were advertised by our Washington legislators to the public as "making sure lower income individuals benefit from retirement plans as well as the HCEs", they were actually trying to apply the proverbial 'defibrillator' to the US Treasury investment (as most safe components of any retirement plan contain a healthy dose of Government Bonds and Treasury Bills).
Their crazy way of thinking was explained - each company will have to undertake a 'stress test' to make sure that their lower earners benefit in no lesser proportion than their HCEs. Meaning if the lower earners don't contribute to the 401K plan or don't contribute enough, the HCEs become ineligible for the tax-deductible status of their 401K contributions and will have a refund of those contributions issued (which will then be considered taxable income).
The rationale was - the company HR and the HCEs should encourage the lower income employees to participate fully in the 401K program. Sounds like a collective social pressure applied to a work environment in order to pump up the Government's Treasury bottom line. Don't worry, comrade, the government has your best intentions in mind.
But this idea backfired - you cannot convince lower earners, some of whom live paycheck-to-paycheck, to contribute to 401K the money that they simply do not have to spare. As a result, the lower earners will not contribute because they cannot afford to and the HCEs will not contribute because they have been flagged as ineligible. In conclusion, unless this legislative mess is corrected, the 401K and IRA plans will suffer a contraction - one which will negatively impact the US Treasury investments (the exact opposite of what this legislation intended to do).
P.S. Consider the inconsiderate nature of this legislation - the HCE 'stress test' will surely pass an Investment Bank or a Law Firm, where every HCE will remain eligible for 401K's tax deductible status. Then consider a consulting company, where a lot of workers are per diem, don't earn enough to be considered an HCE and typically do not contribute to the company's retirement plans. The people who just barely meet the HCE criteria (through pulling in a lot of extra overtime) will now be unfairly punished simply because of the per capita income composition of their company. Also, geographically a non-HCE employee earning under $115,000 will probably be able to contribute to a greater degree in remote areas of Texas and Florida (where there is no state income tax to chop off your paycheck and the cost of living is relatively low), as opposed to New York and California (where state taxes are quite high and so is the cost of living).
My problem revolves around the "wonderful" legislation that dictates the Highly Compensated Employees (HCE) rules. These rules are applied in a blanket manner across this country, whether you live in Wyoming, Texas, New York or California - you become an HCE if you either own 5% of the business or earn more than $115,000.
Once you become an HCE in the eyes of the IRS, you are no longer eligible for several education related tax deductions - and that is right, because those deductions were designed to protect the lower income population.
However, there is another side to the HCE rules. That side relates to the 401K and IRA tax deductible status. Ordinarily, employees are allowed to contribute money from their earnings towards these retirement plans. For 401K, the contributions are pre-tax and for IRA the contributions can be deducted from your taxable income when filing your return. Both plans allow investments to grow tax-deferred for the life of the plan.
When applying the HCE rules, which were advertised by our Washington legislators to the public as "making sure lower income individuals benefit from retirement plans as well as the HCEs", they were actually trying to apply the proverbial 'defibrillator' to the US Treasury investment (as most safe components of any retirement plan contain a healthy dose of Government Bonds and Treasury Bills).
Their crazy way of thinking was explained - each company will have to undertake a 'stress test' to make sure that their lower earners benefit in no lesser proportion than their HCEs. Meaning if the lower earners don't contribute to the 401K plan or don't contribute enough, the HCEs become ineligible for the tax-deductible status of their 401K contributions and will have a refund of those contributions issued (which will then be considered taxable income).
The rationale was - the company HR and the HCEs should encourage the lower income employees to participate fully in the 401K program. Sounds like a collective social pressure applied to a work environment in order to pump up the Government's Treasury bottom line. Don't worry, comrade, the government has your best intentions in mind.
But this idea backfired - you cannot convince lower earners, some of whom live paycheck-to-paycheck, to contribute to 401K the money that they simply do not have to spare. As a result, the lower earners will not contribute because they cannot afford to and the HCEs will not contribute because they have been flagged as ineligible. In conclusion, unless this legislative mess is corrected, the 401K and IRA plans will suffer a contraction - one which will negatively impact the US Treasury investments (the exact opposite of what this legislation intended to do).
P.S. Consider the inconsiderate nature of this legislation - the HCE 'stress test' will surely pass an Investment Bank or a Law Firm, where every HCE will remain eligible for 401K's tax deductible status. Then consider a consulting company, where a lot of workers are per diem, don't earn enough to be considered an HCE and typically do not contribute to the company's retirement plans. The people who just barely meet the HCE criteria (through pulling in a lot of extra overtime) will now be unfairly punished simply because of the per capita income composition of their company. Also, geographically a non-HCE employee earning under $115,000 will probably be able to contribute to a greater degree in remote areas of Texas and Florida (where there is no state income tax to chop off your paycheck and the cost of living is relatively low), as opposed to New York and California (where state taxes are quite high and so is the cost of living).
Wednesday, September 17, 2014
How The Rich Campaigned for, Lobbied and Stole Economic Recovery
It is no secret that today on the Internet, Television and Radio you will hear news of the Great Economic Recovery! While it is certainly true that the traditional indicators of economic health have shown positive signs of life, it is also true that the American Elite (the American equivalent of Russian Oligarchs) have gamed the system to make the economy look healthy, while screwing the average American in the rectal cavity.
The average middle class American today (wage per capita less than $60,000) will find their adjusted-for-inflation annual wages down by 5%, as opposed to six years ago. Compare that with the upper class (wage per capita more than $150,000) and the upper crust (wage per capita more than $500,000), whose adjusted-for-inflation annual wages are up by 10% and 25%, respectively. You can see the unfair disparity in these figures.
You may ask yourself - how come the economy seems like it is healthy?
The answer is simple - it is a combination of the Federal Reserve pouring in money into the markets without any rational limits, the Unemployment Index not showing the full picture and the Corporate landscape using creative means to make a profit while preventing the benefits of those profits to reach common Americans.
It is clear as day that since the financial crash of 2008, the Federal Reserve has been printing money to mask the deflation that should have taken place in order to stabilize the unhealthy explosion in asset values which occurred due to Bank Deregulation and the Housing Asset Bubble. And, to a certain extent, the Federal Reserve has been successful in psychologically bypassing the panic and collapse associated with the deflation of the Great Depression of 1929.
However, just like Herbert Hoover's administration in the post-crash years, Barak Obama's administration has stepped into the same trap of trying to stimulate the economy from the top down. In Hoover's time it was called "Trickle-Down Economics", in Obama's time it is called "Bailout" and "Stimulus Package". History teaches us that it doesn't teach us anything. Just like in the 20th century, in the 21st century the Corporations kept the money made as a result of Government assistance, while the average American has seen their savings shrivel and their paycheck devalue with time.
With respect to the Unemployment Index, all it shows is how many Americans are getting a paycheck. While it is true that there are many more people employed today as opposed to four years ago, it is also true that the vast majority of recent employment opportunities are either part-time, contract, full-time positions with lower salaries, or full-time positions with multiple role responsibilities. As such, a large majority of American population that is a part of the "employed" figures according to the index is in fact "underemployed", if not completely overworked.
Corporate profits are up! The American stocks are soaring in value. But the vast majority of this growth is due to creative tactics, not an increase in productivity. The Corporations are using the free liquidity pouring in from the Federal Reserve to restructure their debt (refinance) and make their balance sheets look healthier. They are also cutting their biggest expense - the employees. Whether it is through laying off older more expensive employees in favor of fresh from college graduates, reducing employee benefits, or "consolidating" their workforce by having fewer employees do more - it leads to the appearance of profits. If that wasn't enough, the profits the companies are getting, they're not using to grow the business and hire more people - the corporations know there isn't a growth in the actual demand. Instead, they increase the value of their stock by putting all of those profits to buy back their own stock, which leaves the remaining shares more valuable - making it look like the company is growing, when in fact it is not.
So the Corporate Landscape, which was too big to fail, is thriving! However, the ordinary people who make these corporations work are losing. They are losing in wages, benefits, personal time, rising cost of goods, and oh by the way having their tax dollars sponsor the bailouts of the very companies that are now fleecing them.
The true problem is that we, as a people, have lost faith in our Democracy. Through our apathy, we have turned it into a De Facto Polyarchy! Get off your lazy ass and write a page, just a page, to your local representatives and senators. Make sure that your voice is heard! Make phone calls to those same representatives and senators. Get your community to know the facts and get them voting. This should be our Outbreak - an Outbreak of Consciousness.
So the Corporate Landscape, which was too big to fail, is thriving! However, the ordinary people who make these corporations work are losing. They are losing in wages, benefits, personal time, rising cost of goods, and oh by the way having their tax dollars sponsor the bailouts of the very companies that are now fleecing them.
The true problem is that we, as a people, have lost faith in our Democracy. Through our apathy, we have turned it into a De Facto Polyarchy! Get off your lazy ass and write a page, just a page, to your local representatives and senators. Make sure that your voice is heard! Make phone calls to those same representatives and senators. Get your community to know the facts and get them voting. This should be our Outbreak - an Outbreak of Consciousness.
Wednesday, January 22, 2014
From American Dream to Corporate Lie
Before we start, I want to make it clear to everyone - I no longer consider the American Government and the American Corporate landscape two separate entities. They have been melded together and when I refer in this article to "Corporate", I refer to both as one.
Ahhh, the American Dream. It began as a reflection of our forefathers' desire to give every citizen an equal opportunity to succeed, to get ahead in life. The desire to move up, achieve a greater social and economic status are all the trademarks of the New World, as no other modern society before the United States of America has provided such an opportunity. This premise of wealth and prosperity through hard work and dedication proves elusive to most. Yet through most of American history, it has yielded some of the most productive working and middle classes in the world. This concept has given the Corporate structures a great advantage in terms of innate motivation and productivity. Furthermore, people are unlikely to rise up and rebel against the Corporate structures, as this very premise makes the people believe that by rising up or rebelling they are risking a lot. While the average American citizen that followed this premise in the past was unlikely to achieve the American Dream, the very pursuit was good enough to earn a decent living - something we Americans often take for granted.
It is, of course, pure genius from a managerial perspective. You have a productive dedicated workforce and a mental safety net for the Corporate without a whole lot of effort needed from the top. However, since the time of our forefathers, there have been significant changes in economic and societal landscapes.
From a Corporate standpoint, a person can earn money, which means that he or she can be taxed on the money earned. Furthermore, that very same person can be a productive worker for any Corporate structure. Therefore, that person has the potential to provide the Corporate structures with profit twice. As far as the Corporate landscape is concerned, the more ways money can be generated from the same source, the better.
In present day, the American Dream no longer stands as just a premise of a better tomorrow through personal effort, but rather a well-crafted concept of acquisition of goods and status, regardless of means. You've all heard the standard consumerism version - a good education, a house, two kids, two cars. This is the Corporate Lie.
This is just Corporate Propaganda to make you feel like you're doing what you think is an accepted tried and true path to prosperity. In reality, for most people who blindly follow this version of the American Dream, it is a path to financial and personal ruin.
Let's break this down. For every part of the American Lie shown above, I will give you the following - the way the Corporate structures profit from the person and an alternative the person can pursue in order to benefit himself or herself instead of the Corporate structures.
I will start with Education, both emotional and academic. This is the foundation for all successful individuals that I have come across. The Corporate Lie dictates that pursuing a higher education (College or University) can provide you with a big salary, consequently financial stability and is crucial to your career. However, this lie is pushed by the for profit schools, which are in fact corporations themselves. These corporations make money from Student Loans and Government Grants. Grants are often paid for by the American Taxpayer, while Student Loans are an easy way to make money off the student who follows the Corporate Lie. As a result, The School Corporations profit from tuition, the Bank Corporations profit from loan interest, while the American Taxpayer and the Student are paying. What's worse, the same Corporate structures are outsourcing the very professions you are being trained to fulfill. So it is very likely that after leaving a higher education facility with an enormous debt, you may not have a reasonable opportunity to pay it off.
From a Corporate standpoint, a person can earn money, which means that he or she can be taxed on the money earned. Furthermore, that very same person can be a productive worker for any Corporate structure. Therefore, that person has the potential to provide the Corporate structures with profit twice. As far as the Corporate landscape is concerned, the more ways money can be generated from the same source, the better.
In present day, the American Dream no longer stands as just a premise of a better tomorrow through personal effort, but rather a well-crafted concept of acquisition of goods and status, regardless of means. You've all heard the standard consumerism version - a good education, a house, two kids, two cars. This is the Corporate Lie.
This is just Corporate Propaganda to make you feel like you're doing what you think is an accepted tried and true path to prosperity. In reality, for most people who blindly follow this version of the American Dream, it is a path to financial and personal ruin.
Let's break this down. For every part of the American Lie shown above, I will give you the following - the way the Corporate structures profit from the person and an alternative the person can pursue in order to benefit himself or herself instead of the Corporate structures.
I will start with Education, both emotional and academic. This is the foundation for all successful individuals that I have come across. The Corporate Lie dictates that pursuing a higher education (College or University) can provide you with a big salary, consequently financial stability and is crucial to your career. However, this lie is pushed by the for profit schools, which are in fact corporations themselves. These corporations make money from Student Loans and Government Grants. Grants are often paid for by the American Taxpayer, while Student Loans are an easy way to make money off the student who follows the Corporate Lie. As a result, The School Corporations profit from tuition, the Bank Corporations profit from loan interest, while the American Taxpayer and the Student are paying. What's worse, the same Corporate structures are outsourcing the very professions you are being trained to fulfill. So it is very likely that after leaving a higher education facility with an enormous debt, you may not have a reasonable opportunity to pay it off.
Let's take a step back - a good academic education begins with the right mindset at a young age. That mindset can only be framed through good emotional education from parents. It is only once a person feels good about him or herself and knows how to handle emotions, as well as how to express them, that a kid is able to get the most out of academic education. Next, all the building blocks a person needs for a good academic foundation can be found from first grade through the end of high school. There are classes of both general and specialized nature that any student can take in high school, which are applicable in the workforce. By the time you leave High School, if you have dedicated yourself, you should be ready for the workforce in a general sense. Now a student needs to acquire what is considered "higher education", which I consider to be skills relevant to your profession. Now I am not saying that students should skip college, far from it. In fact certain professions - Doctors, Lawyers, Engineers, actually require college. And some fields do not require higher education at all. However for majority of academic fields, a combination of less costly book study with online courses can yield better results than attending a far costlier four year university. In a four year university a student will wind up taking courses that have nothing to do with their given profession, while an online curriculum can be crafted to include just the relevant courses - after all you're paying for it. Also, while you're going through online study and book study, make sure to get an internship in your field of choice - it will teach you to apply academic knowledge to practice. And that is all you need to get the higher education necessary to enter the work force. The rest of what you need in your given profession is on the job training, that's how the vast majority of graduates (including from ivy leagues) get started anyway.
Home ownership is the most advertised part of the Corporate Lie. We have heard all the monikers - it is the first step to raising a family, it is an investment. First of all, you can raise a family in an apartment, a condo or a log cabin, if you are so inclined. Last time I checked, human reproduction in America does not coincide with owning a home. Second, a home is not an investment, far from it. A house is a depreciating asset that in most cases loses value over time and is susceptible all kinds of risks beyond your control. The "investment" myth came about the inflating home prices during the latter end of the 20th century and the first few years of the 21st. However, if you track people's salaries with respect to home values, you will see that the home by itself serves as a preservation of capital at best and a total loss of equity at its worst. A home is a dwelling that the Corporate landscape loves for a multitude of reasons, here are some:
1) Banks Collect Interest - With a 3.75% rate on a 30 year mortgage, you will wind up paying an additional 50% of the value of your home in interest over the life of your loan.
Home ownership is the most advertised part of the Corporate Lie. We have heard all the monikers - it is the first step to raising a family, it is an investment. First of all, you can raise a family in an apartment, a condo or a log cabin, if you are so inclined. Last time I checked, human reproduction in America does not coincide with owning a home. Second, a home is not an investment, far from it. A house is a depreciating asset that in most cases loses value over time and is susceptible all kinds of risks beyond your control. The "investment" myth came about the inflating home prices during the latter end of the 20th century and the first few years of the 21st. However, if you track people's salaries with respect to home values, you will see that the home by itself serves as a preservation of capital at best and a total loss of equity at its worst. A home is a dwelling that the Corporate landscape loves for a multitude of reasons, here are some:
1) Banks Collect Interest - With a 3.75% rate on a 30 year mortgage, you will wind up paying an additional 50% of the value of your home in interest over the life of your loan.
2) Mortgage Backed Securities (MBS) - These bonds represent future earnings from home loans.
3) Insurance Premiums - You are required by the lending bank to pay for home insurance, which increases over time.
3) Insurance Premiums - You are required by the lending bank to pay for home insurance, which increases over time.
4) Property Taxes - Local townships love the taxes collected from home owners and constantly increase them.
5) Home Improvement Stores - Where you will spend money to make the home fit your style.
6) Furniture Stores - Where you will get a bed, couches, chairs, and tables.
And don't forget the implied repair costs associated with home ownership - a leaky roof, torn siding, burst pipe, termites, carpenter ants, mold, heating/ac problems, etc. These are all things you would likely not be responsible for, had you been living in an apartment or a condo. When you add up the difference in costs of living in a house versus apartment/condo, and add that difference to cost of the home, you can consider yourself lucky if you get half that money back when you are ready to sell your "investment".
The only way that a house becomes profitable for the consumer is if you are renting it out to tenants or its land becomes suddenly valuable due to a natural resource discovery or proximity to a desirable site.
My advice is to go for an apartment or a condo, and you will be pleasantly surprised by how much more money you can save. With the condo, make sure to only buy it when you have the money to pay for it outright - you don't want to pay the interest on the loan, trust me. You will have far fewer headaches and more money in your pocket.
Next up are the children. The Corporate structures do not see your kids as pride and joy, they see them as dollar signs and future consumers/taxpayers. With the kids, you have to pay for baby formula, diapers, clothes, medicine, daycare, etc. Yet some adults in this country are not prepared to be parents at all, neither emotionally nor financially. Life is not a lock-step approach where you hit a milestone and move on to the next one - it is a path specific to the person you are (as well as your partner) that is unique in every sense. And you should only have kids when you're absolutely ready to be responsible, in every sense of the word, for bringing another life into this world. Introducing a child into this world by parent(s) who are unable to provide the right environment for that child, is downright criminal in my opinion.
Cars, the Corporate Lie emphasizes status symbols above all else. And much like the house, a car is a status symbol. Even more so, it is also a depreciating asset that will need to be replaced at least a couple of times in your lifetime. In most cases it requires a loan, where the banks make money on interest. It provides business for the Auto Repair shops, Auto Body Shops, Oil Change facilities, Auto Parts stores, Insurance Companies, etc. Unlike the house, you do need a form a transportation. And for most people who live outside large cities where Mass Transit can be a viable substitute, a car is a necessity. However, heed my advice and don't treat it as a status symbol - get something that meets your needs for transportation while taking the least out of your wallet, nothing more. A Bentley is not going to get you to work any faster than a KIA during a traffic jam in the morning.
Don't live the Corporate Lie, live your own version of the American Dream that is based on personal fulfillment and true happiness that is not tied to anything you can buy.
The only way that a house becomes profitable for the consumer is if you are renting it out to tenants or its land becomes suddenly valuable due to a natural resource discovery or proximity to a desirable site.
My advice is to go for an apartment or a condo, and you will be pleasantly surprised by how much more money you can save. With the condo, make sure to only buy it when you have the money to pay for it outright - you don't want to pay the interest on the loan, trust me. You will have far fewer headaches and more money in your pocket.
Next up are the children. The Corporate structures do not see your kids as pride and joy, they see them as dollar signs and future consumers/taxpayers. With the kids, you have to pay for baby formula, diapers, clothes, medicine, daycare, etc. Yet some adults in this country are not prepared to be parents at all, neither emotionally nor financially. Life is not a lock-step approach where you hit a milestone and move on to the next one - it is a path specific to the person you are (as well as your partner) that is unique in every sense. And you should only have kids when you're absolutely ready to be responsible, in every sense of the word, for bringing another life into this world. Introducing a child into this world by parent(s) who are unable to provide the right environment for that child, is downright criminal in my opinion.
Cars, the Corporate Lie emphasizes status symbols above all else. And much like the house, a car is a status symbol. Even more so, it is also a depreciating asset that will need to be replaced at least a couple of times in your lifetime. In most cases it requires a loan, where the banks make money on interest. It provides business for the Auto Repair shops, Auto Body Shops, Oil Change facilities, Auto Parts stores, Insurance Companies, etc. Unlike the house, you do need a form a transportation. And for most people who live outside large cities where Mass Transit can be a viable substitute, a car is a necessity. However, heed my advice and don't treat it as a status symbol - get something that meets your needs for transportation while taking the least out of your wallet, nothing more. A Bentley is not going to get you to work any faster than a KIA during a traffic jam in the morning.
Don't live the Corporate Lie, live your own version of the American Dream that is based on personal fulfillment and true happiness that is not tied to anything you can buy.
Saturday, January 28, 2012
The Fall (Part II) - Military Race against whom???
In last week's post we began looking at the fall of the Socialist empire and the major factors that forced its demise. In Part I, we covered the Patriot Act, SOPA and NDAA, as well as how each parallels the government control principles of a Police state. While today's news were all about the Internet blackout and the SOPA/PIPA backlash from the public, today's post will focus on The Fall Part II that will cover our country's out of control military spending.
When the economy imploded in the Soviet Union, one of the major factors which led the demise was the consistent foolish desire by the Socialist world leader to "Keep Up with Uncle Sam" in terms of military might. The CIA saw an opportunity in this desire and consistently fed it, in order to drive their ideological opponent out of business. To compound the problem, Soviet Union's incursion into Afghanistan lasted for over nine years and bled the once formidable Socialist adversary completely dry. What the Politburo discovered, when it was way too late to stop the collapse, is that you cannot expect to cover the increasing costs of military spending without growing the country's gross domestic product. But the money to pay for all of this had to come from somewhere... and it did. It came at the cost of a declining living standards of Soviet citizens, as the government fleeced its population of their earnings in order to pay for the military indulgences.
Which all brings us to today, where the United States has no formidable military rival in the world and still outspends the closest military power eleven times over. Let me repeat that, the United States of America spends eleven times more than the second highest military spender in the world. Last year, our country spent over seven hundred billion ($700B) on military during one of the worst ongoing recessions in the country's history. Incidentally, we also had the largest increase in military spending than anyone else in the world. And while our national economy isn't growing, our military spending continues to increase.
To be fair, some of the spending increases are attributed to ongoing operations in the Middle East and Afghanistan. Nobody will contest that the incursion into Afghanistan after 9/11/2001 was justified as retribution against terrorist-sponsoring Taliban nation. Neither will there be issues justifying the incursion into Iraq in March of 2003 to destroy a terrorist-harboring regime. However, the length of stay in these regions has been extensive. Nevertheless, the public has yet to question our government's intentions when it came to military spending correlation to our economy.
The public may already know that active military operations cost money. The Army employs over 1,100,000 Americans in active and reserve military personnel directly within the branch. You need to pay for arming, clothing, feeding and transporting military personnel. Intelligence, logistics, armored vehicles and other related equipment costs a lot of money - and you can't get it on sale at Walmart. The taxpayers pay the full price and sometimes an inflated price due to the existence of only one supplier in many cases. What most people do not realize is how far-reaching the war machine is into our economy. Manufacture of small arms, tanks, fighter jets, reconnaissance planes, helicopters, drones, refueling vehicles, artillery, optics, satellites and more are all taken care of by private companies. The engineering and medical staff required in the field are a part of the military, but the equipment they require are also supplied and maintained by privately held companies.
Part of the arsenal in our military is the highly mobile Navy that can deliver a military presence anywhere in the world. All of its vessels are enormously expensive to build and maintain, as well as instruct personnel on how to operate them. In the disclosed vast arsenal of our Navy there are 12 Aircraft Carriers, 29 Amphibious Vessels, 109 Surface Vessels and 71 Submarines. To keep this fleet afloat year in and year out costs the American Taxpayer a fortune.
The United States also maintains an incredibly large military presence at home and overseas. We have Army, Navy and Air Force bases all over the world in every continent except for Antarctica. We have bases in Afghanistan, Australia, Brazil, Bulgaria, Cuba, Germany, Great Britain, Greece, Greenland, Guam, Iraq, Israel, Italy, Japan, Kuwait, Kosovo, Kyrgyzstan, Netherlands, Portugal, Qatar, Singapore, South Korea, Spain and Turkey. And these are the installations that the United States has made public - it doesn't account for others that are utilized by various intelligence services. While not as expensive as an active military operation, the same exact costs apply to personnel and equipment. Furthermore, the majority of installations in Europe serve no real purpose, as they are Cold War relics that survived our transition from the days of the arms race, where we successfully pushed the Soviet Union to expend its military to the breaking point.
In the end, the United States military machine is very costly to the American taxpayer. In addition, the war machines and bases the United States maintains around the world are a bleeding wound to the American taxpayer. Furthermore, taxpayer funds are also spent heavily on the wide array of private companies that supply the United States military. As a result, the indirect and direct military expenses are beyond reason. Furthermore, they provide a reduction in unemployment figures as more people are employed directly and indirectly through the military each year - this allows the government to mask true unemployment figures. Moreover, they provide related private sector economic growth which is fueled by government spending and represents false growth and false hope in our economy.
Lastly, and to my initial point, against whom are we conducting this arms race? We no longer have a Soviet Union to strangle with our spending. On the contrary, we are suffocating ourselves with every additional budget increase that is earmarked for the military. Our Cold War rival was pushed to the brink with the arms race we engineered. Let's not fall victim to our own strategy.
When the economy imploded in the Soviet Union, one of the major factors which led the demise was the consistent foolish desire by the Socialist world leader to "Keep Up with Uncle Sam" in terms of military might. The CIA saw an opportunity in this desire and consistently fed it, in order to drive their ideological opponent out of business. To compound the problem, Soviet Union's incursion into Afghanistan lasted for over nine years and bled the once formidable Socialist adversary completely dry. What the Politburo discovered, when it was way too late to stop the collapse, is that you cannot expect to cover the increasing costs of military spending without growing the country's gross domestic product. But the money to pay for all of this had to come from somewhere... and it did. It came at the cost of a declining living standards of Soviet citizens, as the government fleeced its population of their earnings in order to pay for the military indulgences.
Which all brings us to today, where the United States has no formidable military rival in the world and still outspends the closest military power eleven times over. Let me repeat that, the United States of America spends eleven times more than the second highest military spender in the world. Last year, our country spent over seven hundred billion ($700B) on military during one of the worst ongoing recessions in the country's history. Incidentally, we also had the largest increase in military spending than anyone else in the world. And while our national economy isn't growing, our military spending continues to increase.
To be fair, some of the spending increases are attributed to ongoing operations in the Middle East and Afghanistan. Nobody will contest that the incursion into Afghanistan after 9/11/2001 was justified as retribution against terrorist-sponsoring Taliban nation. Neither will there be issues justifying the incursion into Iraq in March of 2003 to destroy a terrorist-harboring regime. However, the length of stay in these regions has been extensive. Nevertheless, the public has yet to question our government's intentions when it came to military spending correlation to our economy.
The public may already know that active military operations cost money. The Army employs over 1,100,000 Americans in active and reserve military personnel directly within the branch. You need to pay for arming, clothing, feeding and transporting military personnel. Intelligence, logistics, armored vehicles and other related equipment costs a lot of money - and you can't get it on sale at Walmart. The taxpayers pay the full price and sometimes an inflated price due to the existence of only one supplier in many cases. What most people do not realize is how far-reaching the war machine is into our economy. Manufacture of small arms, tanks, fighter jets, reconnaissance planes, helicopters, drones, refueling vehicles, artillery, optics, satellites and more are all taken care of by private companies. The engineering and medical staff required in the field are a part of the military, but the equipment they require are also supplied and maintained by privately held companies.
Part of the arsenal in our military is the highly mobile Navy that can deliver a military presence anywhere in the world. All of its vessels are enormously expensive to build and maintain, as well as instruct personnel on how to operate them. In the disclosed vast arsenal of our Navy there are 12 Aircraft Carriers, 29 Amphibious Vessels, 109 Surface Vessels and 71 Submarines. To keep this fleet afloat year in and year out costs the American Taxpayer a fortune.
The United States Air Force provides incredible first strike capability in the American arsenal. In addition, it can prevent the need for ground operations and subsequently avoid American casualties. In its services are 5,573 aircraft, including 2,132 fighters. It employs more than 550,000 Americans directly, has 32 satellites and 450 Intercontinental Ballistic Missiles. However, the wealth of equipment we have is redundant with a significant part of existing projects for future aircraft unnecessary and wasteful. The Comanche helicopter and F-22 Raptor fighter were incredibly expensive and unnecessary projects that cost the taxpayers a lot of money, cancelled due to high cost of the programs and in the end were never needed on the field of battle.
The United States also maintains an incredibly large military presence at home and overseas. We have Army, Navy and Air Force bases all over the world in every continent except for Antarctica. We have bases in Afghanistan, Australia, Brazil, Bulgaria, Cuba, Germany, Great Britain, Greece, Greenland, Guam, Iraq, Israel, Italy, Japan, Kuwait, Kosovo, Kyrgyzstan, Netherlands, Portugal, Qatar, Singapore, South Korea, Spain and Turkey. And these are the installations that the United States has made public - it doesn't account for others that are utilized by various intelligence services. While not as expensive as an active military operation, the same exact costs apply to personnel and equipment. Furthermore, the majority of installations in Europe serve no real purpose, as they are Cold War relics that survived our transition from the days of the arms race, where we successfully pushed the Soviet Union to expend its military to the breaking point.
In the end, the United States military machine is very costly to the American taxpayer. In addition, the war machines and bases the United States maintains around the world are a bleeding wound to the American taxpayer. Furthermore, taxpayer funds are also spent heavily on the wide array of private companies that supply the United States military. As a result, the indirect and direct military expenses are beyond reason. Furthermore, they provide a reduction in unemployment figures as more people are employed directly and indirectly through the military each year - this allows the government to mask true unemployment figures. Moreover, they provide related private sector economic growth which is fueled by government spending and represents false growth and false hope in our economy.
Lastly, and to my initial point, against whom are we conducting this arms race? We no longer have a Soviet Union to strangle with our spending. On the contrary, we are suffocating ourselves with every additional budget increase that is earmarked for the military. Our Cold War rival was pushed to the brink with the arms race we engineered. Let's not fall victim to our own strategy.
Friday, December 9, 2011
Gold Unleashed!
I have received a lot of email regarding my November 27th post on Real Money. Specifically, the correspondence was divided into two camps. One was arguing that the price of gold is strongly inflated due to the falling value of the United States Dollar. The other was vehemently professing that the soaring demand from countries like China and India played a major factor.
Both factions are correct, to an extent. The nature of gold, as stated previously, is that it has intrinsic value that no treasury in the world can devalue. As such, it is highly desirable at the moment by countries and individuals who don't value paper currency on the same level.
With the treasury printing presses in the US and Europe set ready to greatly devalue the dollar and the euro, the one asset governments cannot devalue is thrust into limelight. Relative of these currencies, gold will retain its value.
However without buying or selling of the gold itself, its price would remain the same regardless of where the dollar goes. It is the actual volume of gold purchases that drives up the price (demand).
So to answer my readers - you are both right. The falling value of the dollar is providing the motivation for countries and individuals holding the dollar to convert it into another asset that is more stable - gold. These purchases drive the demand and, subsequently, the price up.
The recent Federal Reserve intention to provide more liquidity only means that our government is ready to do more of the same. They will continue printing tonnes of money, hoping to devalue their debt and your savings. This should provide sufficient and significant additiinal motivation for countries and individuals holding dollars to convert them to gold.
Caveat: The worsening situation in Europe may provide a temporary flight toward the US Dollar as a perceived safety asset. During this time you may see some institutions and individuals sell gold for dollars. As a result, the price of gold and precious metals may fall to an extent. However, in my mind the safety in the US Dollar is a false perception and this boom will not last long. Therefore, I will use this period of Dollar's strength (and precious metals' fall in price) to purchase gold and silver.
There are many ways in which you may own gold. Bullion, coins, stocks, ETFs - it is up to you. Just remember that there are no guarantees in life and weigh risk/reward carefully.
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