OBAMA'S 'TAX THE RICH' GUARANTEES ECONOMIC DISASTER IN ITS PRESENT FORM!

Math Wins

WalMart was out with earnings this morning, missing on the top line (revenue) but managing to do the usual “beat it by a penny” game with Wall Street. The forward look, however, was downbeat — for the holiday quarter. The company said: “Current macroeconomic conditions continue to pressure our customers,” Chief Financial Officer Charles Holley said in the statement. “The holiday season is predicted to be very competitive, but we are well prepared to deliver on the value and low prices our customers expect.” The “Money Fairy”, that is, deficit spending and/or monetary games such as QE are exactly identical to a tax on the economy. Again (and I’m going to keep pounding this into people’s heads until I start hearing it on CNBS!) if you have 10,000 units of output (e.g. oranges, gallons of gasoline, cars, etc) and there are 10,000 units of currency and credit in total available in the economy to be used, the exchange rate is 1:1. That is, one unit of currency or credit buys one unit of production. Now press a computer button (as The Fed and Federal Government do) and increase the number of units of credit and currency (by “borrowing and QEing”) in the system by 100% to 20,000. If you happen to have 100 of those units of currency in your home you can now only buy half as many units of output as you could have before.  In the best case, where the government evenly distributes that “created” money through the economy, you’re in the same place you were before.  But you never see the “best case”; someone always get privilege, they get more of it than you do, and thus you see a real, tangible loss of ability to buy things. This is an act of pure redistribution, exactly as if you were taxed. Were the IRS to instead show up at your door with a gun, shove it up your nose, and demand 50% of every dollar you have in the house, the effect on your ability to buy gallons of gasoline would be very close to identical. But nobody talks about this, because were they to do so the public would understand “en-masse” what had been done to them — and that it was all a scam.  They would understand this chart, in short: The only line that matters is the red one from a “GDP” perspective. By quoting GDP ”dollars” instead of some invariant unit the government and the bubble heads on TV are intentionally lying to you — they are presenting a ratio as a level.  A ratio is never a level unless the denominator, in this case the currency and credit in the system, does not change – any representation to the contrary is a lie. From a personal income perspective, this is the chart that matters: This is simply the ratio of personal income (from all sources) ex credit system dilution not including intra-financial system credit. Whether you raise taxes or spend in deficit doesn’t matter in this case, because both do the same thing.  The fact of the matter is that since 2000 we have been running a monstrous game on the American consumer and investor — the government “discovered” that it can produce what appears to be a healthy economy without actually doing so!  Much of this came from the fact that through the 1980s and 1990s, even during the Internet’s “coming of age”, the economy really wasn’t all that good and real personal income in purchasing-power adjusted terms wasn’t particularly healthy. Note the very right side of that chart and the deterioration over the last few quarters.  It’s getting worse folks, not better, despite what Barack Obama and the crooners on the Tee Vee are telling you. Look, I’m not making these numbers up.  I’m not blowing smoke up your tail.  All this data is published by our own government; it’s right there in your face.  I’m not doing what some people are, and “re-basing” it (e.g. Shadowstats) or claiming to have some proprietary model that nobody else has and therefore I’m “smarter than everyone else.” I’m simply opening my eyes and using the very information that our government’s official sources present, and which they claim shows that things are getting better. They’re lying and their own data proves it. We have become addicted to a “false God” siren song — that government redistribution and degradation of the economy through intentional destruction of purchasing power is somehow “positive” for the economy.  The Republican “Siren Song” is that we had a “recovery” in the 2000s that was “good” for the economy on-balance, when in fact it was no such thing — it was nothing more complicated than taking your credit card, getting in the plane and jetting off to Las Vegaspretending the credit card statement would never arrive in the mail. John Boehner, Paul Ryan, Mitt Romney and the others on the Republican side have run this crap serially for the last decade.  They’re liars and what’s worse is that they know they’re lying, as their own government agencies produce the very data that is charted up above! Obama, Reid, Pelosi and the others on the Democrat side also refuse to perform addition; they believe that one can “tax the rich” and somehow close the budget, when they know damn well that removing the tax cuts for only $250,000+ earners will put only about $50 billion into the coffers, and the deficit is $1,200 billion — literally pissing onto a house fire and believing you can put it out by doing so! The truth is that we have created false demand signals in the economy that do not exist, and therefore we have too much capacity in the economy.  Like a school room full of children who have gorged on chocolate that nobody had the money to pay for we’ve become addicted to the sugar high and we demand more and more of it, although we can’t pay for it, and throw temper tantrums when there is any hint that the answer might be “No.” We cannot have a healthy economy until the damage we have done over the last decade is allocated and the losses recognized.  The excess capacity must be purged.  The monopoly protections that have allowed certain sectors, especially health care and education, to ramp costs and suck up more and more of our economic output on an exponential basis must have their shield from competition and the market removed.  They will both crash in size in terms of dollars when that occurs.  The first, health care, must be done right now as it is an actual existential threat to the nation that is more serious than any terrorist threat has ever been.  The latter, education, is essential so that our youth can afford to purchase education with their personal economic output in the present tense, not with promises to work in the future. The market will insure both outcomes, provided we stop prohibiting it from working! But there is nobody, today, that is focused on these goals in the political sphere.  We instead talk about false Gods such as the “fiscal cliff” where the entire focus of our attention is the search for a means to continue to lie about demand in the economy and the amount of government spending we can do in excess of the taxes we are willing to pay to fund that government. There is no solution to the Fiscal Cliff until the conversation shifts to the above two charts and the blue line in that top chart is required to be negative in an amount that exceeds the interest payments due such that the debt we have accumulated at the Federal Level is paid down. Until that happens we are simply trying to cheat math and all attempts to do so will further destroy purchasing power and thus hurt the economy and personal economic outcomes in aggregate for Americans.  The simple fact is that arithmetic is not a political process and always produces the same answer no matter how fervently you wish it would not or how often you choose to lie to yourself.