Trends

Simon Black, in his investment newsletter, had some interesting statistics that I thought worth examining:

1) Number of people renouncing US citizenship: Four years of exponential growth. [Source: Bloomberg / IRS]

2008: 146
2009: 742
2010: 1534
2011: 2048 (estimate)

2) Number of Facebook users: Eight years of viral growth. [Source: Facebook]

August 26, 2008: 100 million
April 8, 2009: 200 million
September 15, 2009: 300 million
February 5, 2010: 400 million
July 21, 2010: 500 million
January 5, 2011: 600 million
May 30, 2011: 700 million
September 22, 2011: 800 million
February 4, 2012: 845 million


3) Number of Americans on Foodstamps: A disturbing, tragic long-term growth trend. [Source: USDA's Supplemental Nutrition Assistance Program]

2007: 26.3 million
2008: 28.2 million
2009: 33.5 million 
2010: 40.3 million
2011: 44.7 million

4) Number of FBI/NICS background checks to obtain a firearm in the United States: Eight years of consistent growth.  And baby, we ain't seen nothin' yet. [Source: FBI]

2004: 8.69 million
2005: 8.95 million
2006: 10.04 million
2007: 11.18 million
2008: 12.70 million
2009: 14.03 million
2010: 14.41 million
2011: 16.45 million


5) Number of requests the US government made for Google user data: 4 straight reporting periods of astounding growth. [Source: Google]

6-months ending 12/31/2009: 3,580
6-months ending 6/30/2010:  4,287
6-months ending 12/31/2010: 4,601
6-months ending 6/30/2011:  5,950


6) US federal government budget outlays: a never-ending growth trend of out-of-control spending. [Source: CBO, OMB]

2000 budget: $1.9 trillion
2001 budget: $2.0 trillion
2002 budget: $2.2 trillion
2003 budget: $2.2 trillion
2004 budget: $2.3 trillion 
2005 budget: $2.4 trillion
2006 budget: $2.7 trillion
2007 budget: $2.8 trillion
2008 budget: $2.9 trillion
2009 budget: $3.1 trillion
2010 budget: $3.6 trillion
2011 budget: $3.8 trillion


7) And last but not least, US monetary base as of January 1st each year [Source: St. Louis Fed]

2001: $ 616.7 billion
2002: $ 673.7 billion 
2003: $ 719.6 billion
2004: $ 756.8 billion
2005: $ 793.8 billion
2006: $ 825.2 billion
2007: $ 843.5 billion
2008: $ 851.4 billion
2009: $1,730.2 billion
2010: $2,010.1 billion
2011: $2,057.1 billion
2012: $2,647.7 billion

Simon's purpose with these statistics is to encourage gold purchases. My purpose is different. 

Think about the world we are creating. A world where people are heavily armed. A world where the money supply is going crazy. A world where the government spending is out of control. A world where the government is watching you more and more. A world where people needing government assistance to eat is skyrocketing. 

If you like this world I suggest you vote for Obama or Romney (whoose major policies are not that much different.) If you do not like this world, I suggest you do not vote for Obama or Romney. 

Are You Unemployed?

People tend to focus on the wrong numbers. Here is an example of a number that one should be considered:

There are currently 132,409,000 nonfarm employees. In December of 2000 there were 132,481,000 employees. How's that for job growth? -- Michael Shedlock, Global Economic Trend Analysis blog

The chart tells us of a great change in the American work force-women entering it in record numbers. Right now we have a different factor going on the gentrification of America as the Baby Boomers age. We have returned to the workforce participation of 1982. Of course there are temporary factors like the person who realizes that there are no jobs to be had and they quit looking. Maybe they could make this into a game show? 

Here is the number you should focus on, the true unemployment rate:

The true unemployment rate is 15.1%. 

Why I Oppose Same Sex Marriage

Many libertarians favor same sex marriage. I am basically a libertarian, but oppose same sex marriage. In a libertarian society, I would not care. But is a society that lacks freedom, like ours, I oppose it. This article tells you why:

On Thursday, administrative judge Solomon A. Metzger ruled that religious liberty did not exempt the seaside retreat, which is associated with the United Methodist Church, from renting its facilities out for purposes that violate its moral beliefs.

In March 2007, Ocean Grove Camp Meeting Association declined Harriet Bernstein and Luisa Paster’s request to rent its Boardwalk Pavilion for the ceremony. The couple sued, claiming they had been discriminated against on the basis of their sexual orientation. In December 2008, the state Division on Civil Rights found the Christian campground had likely violated the state Law Against Discrimination (LAD) and joined the case.

This is the basic problem with same sex marriage is that it is combined with the coercive power of the state to destroy religious liberty. If a religious group can not regulate its own activities on its own property, then there is no limit to what the state might do. 

Surely I am exaggerating. Health and Human Services just announced this gem:

In August 2011, the Department of Health and Human Services issued an interim final rule that will require most health insurance plans to cover preventive services for women including recommended contraceptive services without charging a co-pay, co-insurance or a deductible. The rule allows certain non-profit religious employers that offer insurance to their employees the choice of whether or not to cover contraceptive services. Today the department is announcing that the final rule on preventive health services will ensure that women with health insurance coverage will have access to the full range of the Institute of Medicine's recommended preventive services, including all FDA -approved forms of contraception. Women will not have to forego these services because of expensive co-pays or deductibles, or because an insurance plan doesn't include contraceptive services.

I thought that your plan would not change? What this means is that a religious organization must, if they provide health care, also provide contraception. What if your religion does not believe in artificial contraception? Tough. This will probably means that people who work in Catholic hospitals will have to get their own health insurance since it will no longer be provided by the hospital. The charities effected were graciously given an extra year to obey. 

While I do not agree with the Catholic church's position on birth control, I find it abhorrent that someone would be forced to pay for an act they feel is immoral. Even worse, it is inevitable that the abortion pill RU-486 will be classified as a contraceptive. 

I blogged about Slouching Toward Gomorrah recently. The process is speeding up. 

David Stockman on Crony Capitalism

David Stockman on Crony Capitalism from BillMoyers.com on Vimeo.

Moyers is inaccurate in his introduction. He confuses tax rates with taxes. This is a common error. The amount of taxes that the wealthy paid went up even though the marginal tax rate went down. Taxes rates went down for everyone, not just the wealthy. 

Here is an excerpt from the interview:

BILL MOYERS: What do you mean by the free money that banks are using overnight?

Well, by that we mean when the Fed, the Federal Reserve sets the so-called federal funds rate at ten basis points, where it is today, that more or less guarantees banks can go into the Fed window, the discount window, and borrow at ten basis points.

And then you take that money and you buy a government bond that is yielding two percent or three percent. Or buy some corporate bonds that are yielding five percent. Or if you want to really get aggressive, buy some Australian dollars that have been going up. Or buy some cotton futures. And this is really what has been going on in our markets.

The cheap funding, which is guaranteed by the Fed, the investment of that cheap funding into speculative assets and then pocketing the spread. And you can make huge amounts of money as long as the music doesn't stop. And when the music stops then all of a sudden, the cheap, overnight money dries up. This is what's happening in Europe today. This is what happened in 2008.

And then people are stuck with all these risky assets, and they can't fund them. They owe cash to the people they borrowed overnight from or on a weekly basis. That's what creates the so-called contagion. That's what creates the downward spiral. Now, unless we let those burn out, it'll be done over and over. In other words, if, you know, if a lesson isn't learned, then the error will be repeated over and over.

Guardedly Pessimistic or "The Brain That Wouldn't Die"

More and more people are starting to realize the dire situation our government is in. The reason I am guardedly pessimistic is that I still hope that some changes will be made in our government. I find it difficult to believe that the government will not take some action. But of course there is one of my favorite aphorisms- Never Underestimate the Power of Stupidity. Maybe our government's fiscal policy is like that old movie, "The Brain That Wouldn't Die." 

There are a few people like me who have been predicting this for some time. Personally in order to avoid being dependent on Social Security, I took steps. Many of my contemporaries did not. A lot of my steps did not go as well as I had hoped, but I am working on that. 

Ron Paul was one who understood. He made this comment in April 24, 2002:

“Federal Reserve policy will continue at an expanding rate with massive credit expansion, which will make the dollar crisis worse. Gold will be seen as an alternative to paper money as it returns to its historic role as money. Erosion of civil liberties here at home will continue as our government responds to political fear in dealing with the terrorist threat by making generous use of the powers obtained with the Patriot Act. … The Congress and the president will shift radically, expanding the size and scope of the federal government. This will satisfy both the liberals and the conservatives. Military and police power will grow, satisfying the conservatives. The welfare state, both domestic and international, will expand, satisfying the liberals. Both sides will endorse military interventionism overseas. … During the next decade, the American people will become poorer and less free while they become more dependent upon the government for economic security. … I have no timetable for these predictions, but keep them around and look at them in five to ten years. I hope and pray that I am wrong on all accounts.”

Ron Paul was right of course. 

Doug Casey Research wrote an interesting article last week about government spending entitled "The US Government is Bankrupt." Although I recommend you read the whole thing, if you are so inclined, here is the most important part that explains why the crisis is happening:

As with Social Security, the demographics for Medicare are disastrous. Again, 12% of the population now is over 65, but by 2030 it will be 23%, so, everything being equal, spending is going vastly higher. But it's much worse than that because of skyrocketing medical costs. Note that there is no necessity, in a free market, for medical costs to rise. Rather, they should be expected to fall, like the cost of most technology.

I still do not think that the US Government is bankrupt because I expect they will repudiate Medicare. Are you ready for this? If not I suggest two things you can do right now. Cut your expenses to the bone and save, save, save. Exercise and lose weight. I am starting to do both. Are you ready?