The data is in. 2010 Government payments to citizens in the form social security, medicare, medicaid, unemployment benefits and stimulus programs that paid money directly to citizens totaled $2.3 Trillion.
Tax receipts for 2010 totaled $2.2 Trillion.
That means all the rest of the money the US Government needed to spend to keep things operating and pay the interst on all the previous years of borrowing needed to be borrowed.
The US Government is effectively borrowing money to pay the interest on its debt.
The US Government is borrowing money just to operate.
Now for your investment question of the day... Should buy 1 ounce of silver or 1 share of JPMorgan? They both cost the same in US Dollars.
A weakening dollar (because the only one really lending to the US is the US Central Bank) is causing oil prices to creep up because oil is traded in US Dollars so it takes more dollars to buy a barrel of oil.
This pushes commodity prices up so those companies with pricing power to pass along increase costs (preferably before their cost actually go up) will do well until the double dip.
Some say the US is exporting inflation by devaluing the US Dollar causing food, fuel and essential needs to increase in price around the world. This is not true. Inflation is ocurring around the world because these countries peg their currency to the dollar. So, as the dollar goes, so does their currency. If they let their currency float they wouldn't have this problem. But they won't change because if their currency becomes stronger then their exports would slow double dipping their economics.
So we are in a deadly embrace. Snakes emeshed in each other's death grip.
This has happened many times before and eventually things right themselves. But in the mean time, the investments that worked for you 10 years ago probably won't work now nor in the next few years.
Wednesday, April 20, 2011
Tuesday, April 05, 2011
OK, Break's Over; Everyone Get Back To Work!
With the recent news that the US Unemployment Rate dropped below 9% comes some collateral damage. The Employment Security Commission of the State of North Carolina (US) recently posted the following information telling its residents that the 99 weeks of unemployment benefits were no longer available to those still looking for jobs:
"Please be advised that due to the recent decline in the North Carolina Unemployment Rate, the state no longer meets the Federal and State requirements of the Extended Benefits Program. In accordance with Federal and State law, the Employment Security Commission cannot pay any Extended Benefit claims for weeks later than April 16, 2011. "
North Carolina, the home of NASCAR, Country and God, will take this all in stride. Pick themselves up and get jobs. I don't expect the same whimper of acceptance will occur when similar facts begin affecting the big cities. Stay tuned.
The interesting thing about playing golf is that sometimes you get paired up with someone you don't know. Last year, I played golf with a 99 weeker (a guy that was well on his way to collecting 2 years of unemployment checks from the government). He had no problem paying the $65 for the round of golf because his wife worked and her employer was providing all the medical benefits for both of them. It didn't seem to bother him that I was paying for his vacation through my tax dollars. I didn't make a big deal of it because I didn't want to be swinging 5 irons at each other on the back nine. After all-- this is a civilized country! However, I did remind him that if his wife worked at a job well enough to have generous benefits that he needed to get prepared to write a check to the Federal Government because unemployment is taxable income and his wife's job probably puts them in a tax paying bracket.
So as he and many Americans are now filling out their Federal Tax forms, I am smiling at the prospect of him having to pay taxes on his unemployment benefits because such payments do not have any Federal Tax withholding requirements. Therefore, he probably spent every dollar he got not realizing that some percentage of it was going to have to be returned to the Federal Government in the form of taxes.
"Please be advised that due to the recent decline in the North Carolina Unemployment Rate, the state no longer meets the Federal and State requirements of the Extended Benefits Program. In accordance with Federal and State law, the Employment Security Commission cannot pay any Extended Benefit claims for weeks later than April 16, 2011. "
North Carolina, the home of NASCAR, Country and God, will take this all in stride. Pick themselves up and get jobs. I don't expect the same whimper of acceptance will occur when similar facts begin affecting the big cities. Stay tuned.
The interesting thing about playing golf is that sometimes you get paired up with someone you don't know. Last year, I played golf with a 99 weeker (a guy that was well on his way to collecting 2 years of unemployment checks from the government). He had no problem paying the $65 for the round of golf because his wife worked and her employer was providing all the medical benefits for both of them. It didn't seem to bother him that I was paying for his vacation through my tax dollars. I didn't make a big deal of it because I didn't want to be swinging 5 irons at each other on the back nine. After all-- this is a civilized country! However, I did remind him that if his wife worked at a job well enough to have generous benefits that he needed to get prepared to write a check to the Federal Government because unemployment is taxable income and his wife's job probably puts them in a tax paying bracket.
So as he and many Americans are now filling out their Federal Tax forms, I am smiling at the prospect of him having to pay taxes on his unemployment benefits because such payments do not have any Federal Tax withholding requirements. Therefore, he probably spent every dollar he got not realizing that some percentage of it was going to have to be returned to the Federal Government in the form of taxes.
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