Tag

economy

Lifestyle, Small Business, Taxes and Investing

Why Trade Wars Never Work

An old nemesis has returned to the United States and other nations around the planet: protectionism. These leaders, and the voters who bought their snake oil, falsely believe protecting their borders by building walls, taxing imports, claiming currency manipulation and threatening to dissolve trade agreements will bring jobs back home. They’re wrong.

What these well-intentioned people forget are the lessons of history. They forget about The Tariff Act of 1930, also known as the Smoot-Hawley Tariff, the one piece of legislation that hastened, accelerated and prolonged The Great Depression. People forget about the jobs created that did not exist before due to current trade agreements and the lower prices consumers paid for goods and services.

The misguided perception that jobs will be created for nations with trade deficits by preventing trade does not work. And we are dangerously close to poking the sleeping giant again. Once a trade war begins it is hard to stop the cascading effects. The damage is swift and painful with few options available less painful. Best to leave the sleeping beast where she is. But politicians sometimes have an agenda we all pay the price for.

But why do trade barriers cause job loss? If the U.S. has a massive trade imbalance, curtailing imports should bring the jobs home to create those products, right? It’s not that simple. Today we will explore why curtailing trade destroys jobs in all countries involved. Open trade is beneficial to everyone.




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Early Retirement, Frugal Living, Lifestyle

Kill the Economy and You Will Not Even Notice

It does not take long when you wander the blogs of the ‘retire early’ community before you hear the common refrain: If everybody did this stuff it would kill the economy. To which I promptly call bullshit.

Bill Gates and Warren Buffett managed to not spend over $100 billion of their money over the last few decades and the economy has done fine. In the 1950s the savings rate was much higher and the economy more vibrant. When the research is reviewed there is no doubt excessive debt, a low savings rate and excessive spending have more to do with an anemic economy than any responsible spending will do.

People look for any excuse they can to remain married to their poor habits and lack of self-control. It is easier to complain about successful people than it is to take responsibility for your own actions. Somehow these people have been bullshitted for so long they actually think poverty is the only way to keep the economy going. Really? They think the only way to survive is to spend every nickel they have. They think living on the financial edge of ruin from the first light breeze is what makes the economy purr and provides job security. Where does this nonsense come from?Continue reading

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Lifestyle

In Support of Law Enforcement




l_camden_mentor_cops-2-1It breaks my heart when I hear reports of police shooting and killing an unarmed black man. This morning I read a report where a police officer in West Virginia was fired because he did NOT kill a man demanding to be shot, a so-called suicide-by-cop incident. Readers of this blog are aware I live in the county where the trial of Steven Avery took place; the topic of the Making a Murderer documentary on Netflix.

Black people are incensed by the killing of unarmed black men by police; they should be. White people are also killed by police, but there does seem to be a bias toward “shoot first, ask questions later” mentality when black men are involved. For a while it looked like retaliation killings of police officers at random would accelerate. It seems to have died down (or I miss the news reports).

Police have been the target of criminals for longer than the Black Lives Matter movement. I agree, black lives do matter and police need to act appropriately regardless the color of skin a suspect has. The moment police are targeted for harm, however, you have to stand up and just as loudly proclaim: Blue Lives Matter, too.

I have been critical of the police most of my life. I am critical of all government. With authority comes responsibility. Police are highly trained professionals asked to run into harm’s way when shit goes down. There is no doubt in my mind 99% of law enforcement officials are men and women of high moral character, values, and ethics. Unfortunately, the 99% of law enforcement officials who are honest are asked to make some very difficult decisions without all the facts, where lives are at stake, and given limited time to make the call. Some days you are damned no matter what you do. There have to be days it sucks to be a cop.Continue reading

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Taxes and Investing

How Fast Does Inflation Rise?

U.S. Yearly Inflation Since 1900Media continually warns of impending inflation due to all the money printing by central banks around the world. The concern is real. If inflation spikes bonds will suffer massive loses and stocks will also suffer a painful decline. It is past time we look at the facts about inflation, how fast it rises, and what causes prices to spike.

Planning for retirement and when reviewing investments, inflation is a consideration. A review of historical inflation data will help in the decision-making process. By reviewing the historical data also clearly shows why inflation accelerates, including solutions to protect yourself. We will focus on inflation data in the U.S. I have reviewed price data for other countries and further back than the U.S. data. The conclusions are the same.

Recent Inflation/Deflation Dilemma

The current deflation started in the stagflation days of the 1970s. Back then unemployment and inflation were both high. Economists were beside themselves on what to do. How can you have high inflation (caused by excess demand) and high unemployment (caused by low demand)? Except they had it all wrong. Demand was high and businesses were not incentivized to increase production, thereby creating high unemployment and high inflation at the same time.

Paul Volcker at the Federal Reserve and President Reagan applied a two-prong approach. Volcker raised interest rates to kill inflation and Reagan pushed supply-side economics through Congress, providing tax incentives for businesses to ramp up production. It took time to steady the economy, but within two years inflation was down and the economy was humming.

Supply-side economics has been in vogue since the success of the early 1980s. Unfortunately, the medicine required by the economyContinue reading

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Lifestyle

Living Without Money, the Spending Fast and Buy Nothing Day

51bWz-LER7L._SX322_BO1,204,203,200_The Western word is being destroyed by a select group of people determined to live within their means. From artist Ted Dave and his Buy Nothing Day movement to Daniel Suelo who decided to live without money to Jeff Yeager and his spending fast to Mr. Money Mustache and his grand scheme to keep spending low, even when income rises, we face the greatest economic crisis of our generation. Or are we?

All too often we act as if the economy were an actual living being. It is not. The economy is only a construct of the human imagination. Can you image any animal living in crisis because their local economy collapsed? Even humans, thousands of years ago, did not worry about this crazy thing we call the economy. Somewhere between there and here we convinced the vast majority of people they are duty bound to feed this imaginary beast.

Spending lubricates the beast. It does not matter if the spending is on stupid stuff. Buy a Hummer and save the economy, they say. That was the mantra a decade ago. Remember the government’s response the 9/11 attacks? We were encouraged to keep spending to show the terrorists we would not be affected by their actions. But the terrorists did win! They got us, as a group, to engage in insane spending habits sure to destroy the one thing we worship above all others: the economy.

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