U.S Debt Problems

  

                                                         

Most Americans may not yet be too concerned about heavy government financing by enormous borrowing, the equivalent of printing money, and enormous outstanding debt that has to be constantly financed.

                       

Funds for financing business and government are in a Zero Sum game. Funds needed by government to finance huge debt have to displace funds needed by industry. Economists of every stripe concede that. This problem will get worse when government has to raise its cost of borrowing from currently very low to more realistic, higher levels.

                       

Governments can only overcome the accommodation for extraordinary spending and the potential problems they will entail, by expanding the economy. But if the government is heavily taxing while borrowing and literally printing money, it will be curtailing that necessary economic expansion.

                       

To sum up: You cannot borrow forever without hurting expansion because you crowd out funds required for private business to operate normally. There will be business stagnation and inflation. Proof has been shown over and over for centuries. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Insider Financial Information

                       

No matter how many investors see as government attempts to even the playing field by convicting those who attempt to use inside securities information, too many investors are still missing the facts.

                       

What is illegal is the sale or divulging of information you are contractually not permitted to divulge, as part of your employment.

                       

What you can divulge about your special securities knowledge is vague. Many individuals are convicted of merely lying to government investigators, as in the Martha Stewart case.

                       

Yes, there is an advantage of being an ‘inside player” in the securities field; that has to do with the job or work you may have in the securities industry. But this is not illegal. It does cause a disadvantage to investors who choose to engage such inside players when it’s often unnecessary.

                       

I always suggest investors avoid dealing with inside players. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Your Cost of “Government Default”

                       

Politicians in Washington have a different interpretation of government default than what it is in the real international financial field.

                       

To politicians, true danger is any event that doesn’t help get them elected or keep them in office

                                           

So why not make the debt ceiling higher? It allows them to spend more despite high budget outflows

                       

In the real world, bondholders would prefer to have their interest and principal payments held up temporarily, for assurances, the U.S. were trimming its budget to make all its payments in the future.

                       

Not the other way around, with government kicking the proverbial problem down the road every few months until the U.S. becomes another bankrupt Greece or Portugal. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Penalizing Savers

Politicians love to tax “the rich” but they’re really taxing savers who believe in the compound interest table and know how it works over a number of years.

                       

Save $1,000 of earnings each year for only 25 years at 6% and you have amassed $58,100. Put away $10,000 annually and you have over $581,000, in just 25 years, If you stopped adding to the money, because part has been taxed away, , you would have far less capital.

                       

You probably still consider yourself middle class; your net earnings have been modest. But you’re labeled “rich” by liberal politicians who want to tax you all along, to support their “poor” voting bloc.

                       

Ironically, most of the finger-pointing politicians have far more wealth than you, whether actually earned or inherited.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Chrystal-Ball Futures Markets

           

Some have create a futures market on a subject of importance to their company. They feel that certain points of view, though a gamble, can be prescient, if the gamblers or speculators have no inherent bias in their choices.

           

Future projections on business concerns always are difficult to estimate. If any can be predicted with more independent accuracy, they would be immensely practical.

           

But caution is needed. For such markets to have value, they must

have lots of independent input. Sampling should be efficient and unbiased.

                       

I find that is almost impractical in most business projections. However, futures markets may have their place in foretelling political outcomes and general marketing concepts.(See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

       

Joseph Schumpeter’s Influence

           

Those who know the least about capitalism rant the most about its negatives and never appreciate its overwhelming positives. To those I would suggest a review of the life and work of Joseph Schumpeter, the Austrian-German-American economist. He died in 1950 and has been since overlooked in academic circles and the media.

           

His view of “creative destruction,” how the demise of established companies led to a growing economy has been the foundation of the American dream for so many.of its citizens

           

Personal incomes have doubled every fifty or sixty years in America, when entrepreneurial zeal is permitted to operate.

           

Yet, left-leaning politicians will never guess there is any economic opportunity without government being the instrument of largess.(See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)

College Marketing

Too many schools market themselves by appealing to the baser instincts of students. The idea is to fill the rosters by making it easier to attend. So many graduates are unable to find real, practical jobs. Or why we have so many grads with easy-to-get law degrees and few who are doctors and scientists.

Affirmative action is practiced, not just for conventional minorities. It is there for any group that is not equally represented in attendance (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole tweets.)