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2021-07-24 07:00 by Karl Denninger
in Federal Government , 300 references
[Comments enabled]  

One thing you can be basically-certain of: When the government tells you somethin they're probably lying.

After all there's no penalty for it.  And there's no penalty when a government agency breaks the law either.  One of my prime examples of this is The Federal Reserve, which is forbidden to buy or transact in anything other than federal government-guaranteed debt with very, very limited and enumerated exceptions.

The Fed deliberately violated that law when it started buying Fannie and Freddie paper.

Problem: There is no "or else" clause.

Ditto on inflation, of course. The Federal Reserve Act forbids The Fed to "target 2% inflation"; indeed, it forbids them to target anything other than zero as it clearly states: Stable prices.  While errors may not be chargeable against them intentional actions certainly are.

But again: There is no "or else."

Who's responsible for this?  You are.


Because Congress is elected by you.

Contemplate the fundamental reality of pretty-much any organization: A small percentage of persons are in every key role that do 90% of the actual work and without them whatever the organization does either stops or is so-severely impaired that it may as well stop.

Been there done that myself.  I've had a code project on my desk that through planning and such expected to deliver to the organization in a month.  If I walked out, however, there was exactly nobody there who could complete it in three -- if not six, assuming all the other resources (e.g. coders) in the place remained on the job.  I've been on the other side of that too when someone calls me in a panic wanting me to pick up someone else's pieces.  Yeah, I can do it, but sit down before you hear the price.

It's true everywhere.  Water plant?  There's probably five dudes/dudettes there basically make sure it works out of maybe 50 employees.  If three of them walk out how long before the water quality goes out of bounds?

Exceptions?  Where repetition is all that matters, in other words the labor is literally a robot.

"Would you like fries with that?"

Ok.... so now Biden is taking heat from the people he needs to remain in power -- specifically, minorities on the lower end of the economic strata.  The robots, to a large degree.  It gets worse: He was crazy enough to tell a restaurant owner, presumably a supporter or he wouldn't have been there, to pay people more.  Uh.... yeah, that'll work.  NOT.

In the middle of this you have a huge economic bubble at present -- in stocks and housing.  Pricking just the inflation part is going to be effectively impossible yet Biden's administration has to do it, and do it now, because by the end of the year the voter problem starts to show up with the midterms looming.  He loses either House, and The House is almost-certain to go the other way at this point and his agenda is done.

There are an awful lot of spinning plates on sticks right now -- and it only takes one false step for them all to end up in pieces on the floor.

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2021-07-13 07:00 by Karl Denninger
in Federal Government , 220 references
[Comments enabled]  

Uh huh.... inflation fears?

Americans' inflation fears reached a fever pitch in June, rising to the highest level since June 2013 as the price of consumer goods continued to surge, according to a Federal Reserve Bank of New York survey published Monday.

The median expectation is that the inflation rate will be up 4.8% one year from now, a new high for the gauge, and up 3.6% three years from now, the highest level since August 2013, according to the New York Federal Reserve's Survey of Consumer Expectations. 

People always understate inflation -- and their expectations always are less than reality.

How's the price of food doing for this last year?  Gasoline?

Food and energy aren't important, right?  How about health care?

But... remember, Americans also support the government spending more and more money.

Money they don't have, and thus don't tax first.

What causes inflation?

Spending money you don't have.

So why is it, may I ask, that "expectations" as so high?

Maybe you ought to get up and have a look in the mirror; after all, you let the infestation of both state and federal governments go on with all their "unemployment" benefits and literal trillions of spending that was not funded by taxes.

Yeah, I know, there was a pandemic.

That's nice.

Did it require us to put a gun in our economy's mouth and blow its brains out?


You did that, not a virus -- both with Trump and now Biden.


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Read this one folks....

Recent film program graduates of Columbia University who took out federal student loans had a median debt of $181,000.

Yet two years after earning their master’s degrees, half of the borrowers were making less than $30,000 a year.

The Columbia program offers the most extreme example of how elite universities in recent years have awarded thousands of master’s degrees that don’t provide graduates enough early career earnings to begin paying down their federal student loans, according to a Wall Street Journal analysis of Education Department data.

Behind virtually every single one of these students is one or two parents that filed a FASFA with both the college and the government suborning an outrageous scam that has ruined countless young people's lives, along with their gullible or stupid parents who deserve to find themselves in the street with nothing other than their underwear.

Not one of these programs is a reasonable investment with a rational rate of return or odds of success.  None.

My daughter did not get my "tech gene"; it is what it is.  Every kid is different; some follow one of their parents, some follow the other, some go their own way.  Plenty of parents try to shove their kids into the "one true college way" irrespective of their interests and capacity simply because they went, or for ego reasons are married to the idea of that sheepskin hanging on the wall.

When she announced she was thinking about pursuing a course of study that had the same sort of potential return and cost I told her point-blank she was free to do as she wished as an adult but I wasn't going to assist in any way with a course of action that, on the numbers, was likely to ruin her financially.  Had I been willing to file said paperwork she might have done it and likely would have gotten hosed.

In other words behind virtually every one of these disasters is one or two ego-driven *******s who claim to be "parents."  They, more than anyone else, bear primary responsibility in that they went along with and facilitated the scam which was trivially-discernable if you have more than two working neurons in your head.  I can excuse a young person with stars in their eyes but not their parents who literally sold their kid(s) down the river and ****ed their futures due to their own overblown egos.

Decades ago, when I came of age, you could spin pizzas or flip burgers and pay for school.  All there was at the time were Pell Grants and Stafford loans -- beyond that, you paid with money or got scholarships.  The cost was reasonable and as such going to college just to do it was a rational decision and you could work a part-time job to pay for it -- including a place to live and food to eat.  Yeah, you had a cinder-block dorm with two twin bunk beds and a shared shower and crapper between your room and the next one for each pair of two students, and the food in the chow hall was cafeteria-style garbage, but it worked.

It worked well enough in the decades before, by the way, to put men on the moon.  If we can manage that with what the college system was capable of it was plenty good enough and produced a thriving middle class.

But even when I came of age for many it had turned into a scam.  Many degree programs, even in STEM fields, were basically job farms for single companies or a very small piece of the whole, tailored in such a way as to "feed" their recruitment.  If you didn't detect that and bail off you'd better like working for that particular piece of corruption when you got done or you had a worthless piece of paper because there was enough specialization in the so-called "degree" that it was best used to wipe your ass anywhere else.

The universities got away with that and so it expanded, and in particular expanded into post-graduate studies where the cash flow was greater.  Then a few people figured out that they could run that scam and declare bankruptcy, sticking the lenders with the debt that they underwrote without paying a bit of attention to the actual job prospects.  This led to changes in the law, where you can't discharge student loans in bankruptcy, rather than forcing the lenders to underwrite and thus put a stop the colleges running the scam in the first place.

Obama did even worse -- he took the entire shooting match and federalized it, removing all discipline in that regard.  Of course, being where Obama got his "degrees" from is this a surprise?

What's the answer?  Simple -- force the colleges to cut that crap out by removing the money.

  • No more federal student loan backing of any sort.  Pell Grants and perhaps Stafford for undergrad, ok.  Beyond that?  Nothing.  Period.

  • No more bankruptcy exemption.  Force lenders to underwrite both students and programs or run the risk of a bankruptcy filing after graduation that causes the lender to eat the balance.  

  • Ban co-signers on such loans as void due to public policy.  No, Mom and/or Dad do not get stuck if you can't pay post-graduation.

Do those three things and cost of said "education" disappears instantly like a fart in a Church; those programs that cannot justify their expense with real-world earnings will be impossible to fund and thus will disappear.

As they should.

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2019-02-13 14:50 by Karl Denninger
in Federal Government , 442 references
[Comments enabled]  

There's simply no other way to express this....


These numbers are for only three months, so for the full year multiply by four.

Again, the total "social insurance and retirement" tax grab is $274 billion.  Social Security is a 12.3% tax (up to the cap) and Medicare is 2.9% (no cap.)  The split is thus roughly-speaking ~19% Medicare, the rest (81%) Social Security.

If you want to get down into the detailed numbers they don't "quite" add there because there is both spending and tax revenue that gets bucketed in each from the various line items.  But it's not off by much; the "line item" (without the bucketing) comes up as 74/26 -- not materially different.

81% of $274 billion is $222 billion.  Social Security spent $251 billion.  That's a ~29 billion shortfall.  Not good but there are a lot of Treasuries held against that requirement, and by 2026 the budget impact as a percentage starts to fall because the boomers start to die, statistically speaking.  In other words Social Security had a ~12% shortfall over the first three months, indistinguishable from my last look (12% .vs. 13%.)  This is easily fixable on a forward basis without much economic pain.

Medicare, on the other hand, spent $153 billion but took in just $52 billion.  That's a shortfall of 66%; that is, two thirds of it is unfunded.  You would have to more than triple the Medicare Tax Rate in order to bring it to parity.

That's an "improvement" over the nearly 75% deficit in the first month but we are in fact talking about bleeding out in two minutes rather than three; the outcome does not change.

Add to that "Health" (Medicaid, mostly) and it's much worse; now you take in $52 billion but pay out nearly $300 billion.

Note that the deficit thus far is $319 billion.  If you were to get rid of the deficit between Medicare and Medicaid .vs. tax receipts you would almost close the deficit to zero.  If you also increased the FICA tax rate by 13% (to just under 7% for "each half"), increased the income cap where it stops being collected or some combination that wounds up in the same place as well the deficit would be effectively zero.

$319 billion over three months equals roughly $1,300 billion, or close to $1.3 trillion in deficit for the entire fiscal year.  The only good news is that April is usually a strongly positive month (as a result of taxes being due) but either way the deficit is almost-certain to be in the neighborhood of $1.1 trillion this year.

You cannot fix this with either taxation or cost-shifting. It is mathematically impossible to do so.

For example you'd have to nearly double the individual income tax rate on everyone, including the middle class; to close the gap by increasing the corporate tax rate you would have to raise it by more than an insane and utterly impossible 600%.  Any claim that we can solve this by making people pay "their fair share" is a flat-out lie.

You cannot get there by "cutting spending" on other than these programs either; if you cut all "other spending" to zero along with transportation and education you'd only cover 30% of the deficit.  Cutting military spending to zero (which is obviously impossible) wouldn't get there either.

There is only one way to solve this problem and that is to collapse Medicare and Health spending by 80%.  You can only resolve the problem by collapsing the medical and health insurance monopoliesforcing everyone to publish a price for everything and charge everyone the same price, where said price must be handed out before service is provided, along with telling everyone involved that for any and all conditions in which a lifestyle change will remove the need for treatment government will pay zero unless the person in question makes that change.

The trend is not improving and it is not "The Next Generation" that will have to deal with this.

This has to stop right damn now or it will blow up before we get through the next Presidential term -- and no, you cannot tax your way out of it either.  The people in Washington DC -- Congress and the President -- must be held personally and politically responsible for their refusal to deal with the only way to put a stop to it, which is to destroy the medical monopolists using existing, 100+ year old law, and to do it right damn now.

And if they refuse we the people must enforce our demand for them to do so.  They will refuse, I remind you, unless forced by the people -- and there are peaceful and lawful means to do exactly that (e.g. a general strike.)

Nothing less than the literal existence of this nation as a Constitutional Republic is at stake.

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2019-01-25 07:00 by Karl Denninger
in Federal Government , 144 references
[Comments enabled]  

Yes, we need a wall.  Why?  Because bad people sneak in without one.

They do with one too, but it's harder and thus there are fewer attempts, and even fewer successes.  That's good, not bad.

You have to want more illegal invaders to refuse physical barriers.  Just as locking your car or house does not make it impossible to steal from either, it increases the difficulty and thus makes it less-likely.  $5 billion in the context of the federal budget is just over one tenth of one percent of spending.  Any gain in security is worth that amount of money.

But if you want to stop the insanity generally you have to force Congress to keep the promise it made when Reagan gave amnesty to illegals: You must stop the handouts.

Reagan was promised wide-scale immigration reform to end the enticement to come illegally, on a permanent basis, in return for amnesty for illegals already here.  He gave Congress the amnesty.  He never got the elimination of the enticements and it was the Democrats that didn't give it to him.

This is the same political party refusing now and it does not matter that most of those reps and senators are no longer serving; the party itself is the same.

Trump therefore should demand, before any further negotiation, that the past promise be fulfilled.

It's not that hard to do:

  • 100% E-Verify, under criminal felony penalty for failures to do so and business seizure for a second offense.  No exceptions.  This is trivially enforceable; employers already have to file 941s to report withholding taxes.  Add one field for each employee that must contain the E-Verify control number on each report.  Change the law so that non-reporting or false reporting on a 941 is a felony criminal offense with a statutory penalty of $5,000 per employee, per month not reported or falsified and that all directors, officers and employees involved in producing said false report are subject to a year in prison, consecutively, for each employee not reported.   This instantly ends employment capability for illegal invaders.

  • No welfare or other government program of any kind that is in whole or part funded by the Federal Government (specifically: Medicare, Medicaid, Section 8, Food Stamps, WIC, S-CHIP, Education, etc) may be provided to any household unless all residing there are verified US Citizens or permanent residents.  Require prosecution for lies on said forms verifying eligibility and require that any such lie is a felony.

  • No medical treatment without proof of payment is required of any facility except as pure charity care to any person who is not a lawful permanent resident or citizen.  All such care amounts, if provided without payment, must be publicly disclosed no less often than quarterly in aggregate along with the total amount of actual collected payments for services by all medical facilities (in other words if they're going to try to make you pay for it under the table they have to disclose it.)

  • No remittances may be sent out out of the country without positive identification and proof of lawful residency or citizenship from the person doing the sending.  Period.

  • No birthright citizenship.  Come here and crap out a baby, it's a citizen of whatever nation you are but isn't an American citizen.  You must be a citizen to confer citizenship at birth.  Period.

  • Unlawful entry must be defined as a criminal felony and permanent bar to future entry for any reason.  If you wish to claim asylum, come to the border and lawfully request it.  If you wish to visit, come to the border and lawfully request entry.  If you cheat from this day forward no matter how or why you are permanently barred from ever entering the United States.

  • Those nations which border ours must be held responsible for any person who is on their soil and makes an attempt at unlawful entry, or who is turned away or deferred during an asylum request until their case is heard.  If you are our neighbor and call yourself "friend" and "trading partner" then start acting like one.  If someone illegally enters from your nation you have a responsibility to take them back when we catch them.  If someone comes into your nation with the purpose of requesting asylum in our nation and you allow them to do that's fine, but that person's safety and place to live is on you until their claim is adjudicated.  What you do from there and whether you let the people in to make said claims in the first place is your business.  Any nation that refuses, even once, to take back an illegal invader caught after unlawful entry from their nation, or a person with a deferred or refused asylum request that presents at our shared border has all trade and border crossing closed until it accepts back the person or persons it allowed to attempt to invade our nation from their land.

For those already here who, the claim is, we should "take care of" (e.g. Dreamers, etc)

  • If you came here as a child and are now an adult you must have graduated High School and demonstrate proficiency at a minimum standardized testing level in all applicable subject matter, including the English language, to qualify for further deferment.  While there are some "Dreamers" who are college students or even graduates at this point virtually all covered by this program are now adults.  ROUGHLY HALF have failed to graduate High School, demonstrate functional literacy in English or both.  These are not "Dreamers", they are public charges and must not be given anything beyond the theft they've already accumulated.  That one in ten -- or one in 100 -- is a high-achieving college graduate or student does not in any way extend to those who are either slugs or thugs.

  • If you came here as a child and still are one you must complete your education and become proficient in English. Drop out or get kicked out and you both lose your eligibility and are immediately deported.

  • You must have an executed Affidavit of Responsibility as for any other legal immigrant by an existing citizen who is responsible for you.  In other words you must have a citizen sponsor who both can and will take financial responsibility to prevent you from being a public charge.  This is required of legal immigrants and it damn well needs to be required here too.

  • You must not have a criminal record of any sort more-serious than a routine traffic violation.  Any conviction for an offense against the public peace including robbery, DUI, drug dealing, shoplifting and of course more-serious criminal activity, whether by conviction or plea, is an automatic disqualifying event, without exception.

  • You must document that you have either received all of your support from your sponsor or have lawfully worked and paid taxes in full.  This includes educational, medical and other government-funded expenses; if you received public education you or your sponsor must repay the fully-laden per-pupil cost of same.  If you received medical care under Medicaid or similar you must reimburse the full amount spent on your care by the government.  If you worked under the table you must demonstrate that you personally paid all the taxes otherwise due including both halves of FICA.  If you haven't done so up until now as a result of intentional conduct (e.g. working for cash under the table) you may be excused from criminal liability for your intentional conduct but you must report and pay all such tax arrears anyway, including interest and penalties as with any other intentional underpayment and you must begin to do so immediately and on an agreed payment plan without exception, or your sponsor must do so, until it is all paid off.

  • Assuming the above is met you may have a provisional green card however you still go to the back of the line and are subject to all of the above until your turn comes up in our normal, legal immigration proceeding.  Once your turn does come up you may have full permanent residency and ultimately apply for naturalization as may any other lawful permanent resident.

That's the minimum opening requirement.

If we do not shut off the welfare state for illegal invaders we will never solve the problem.

Leave the government shut down until this is passed first.

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