Economy

Another Trillion

It didn’t make major news, but it should have. The US government borrowed another $724 billion last week when it sold large amounts of government paper. The odd thing is that the Treasury and the Fed appear to be coordinating their efforts in transitioning US debt from long term bonds into shorter term T bills.

This means that the national debt has grown to $37 trillion. Six years ago, we were at $23 trillion. We hit $36 trillion in late November of last year, meaning that this last trillion in debt was borrowed in just 9 months. We are doubling the debt every 8 to 9 years, and have been for decades– since Nixon took us away from the gold standard.

Of course, this sort of thing can’t go on forever, and whatever can’t go on forever has an end. When is the end coming? In 1891 Robert Louis Stevenson wrote a short story called “The Bottle Imp” that reminds me of this.

The story is about a working class native of Hawaii who buys a strange bottle from a sad, elderly gentleman who credits the bottle with his wealth and fortune, and promises the imp in the bottle will also grant the man his every wish and desire.

Of course, there is a catch, as there usually is in these stories — the bottle must be sold at a loss, i.e. for less than its owner originally paid, or else it will simply return to him. The currency used in the transaction must also be in coin (not paper currency or check). The bottle may not be thrown or given away. If an owner of the bottle dies without having sold it in the prescribed manner, that person’s soul will burn for eternity in Hell.

The bottle was said to have been brought to Earth by the Devil and first purchased by Prester John for millions of dollars; it was owned by Napoleon and Captain James Cook but each sold it. At the time of the story the price has diminished to eighty dollars, and declines rapidly over the course of the story to a few pennies.

The problem here is that as the price approaches a penny, it will become harder and harder to sell the bottle, as the buyer will be in fear of being left holding the bag.

This tale reminds me of our current national debt. As our debt increases, the interest payments will balloon. They can only get so large before default is inevitable. At that point, anyone in possession of a US bond will be stuck with worthless paper. Because of this, the returns for these bonds will have to increase, so as to entice people in taking the risk of buying them, which will make the interest payments higher, thus making the end that much closer.

By Divemedic, ago

How I Became Homeless, Then Not

Yesterday, I talked about struggles and how we overcome them. I have had mine, and most of them were caused by my poor selection of female partners. This is the story of my journey from divorce, homelessness, on to success. Maybe it can inspire someone who is struggling.

I’m going to mention a song today. It’s a song from a genre that I typically don’t like- rap. This particular song was popular while I was in the military, and the reason why I mention it is related directly to a period in my life when I was really struggling: the summer of 1999. Most rap “music” is simply someone talking over music while loosely rhyming. Typically, they are talking about their genitals, drugs, gang violence, or some other antisocial drivel. However, every once in awhile, one of them displays a level of societal truth, proving that they are the exception to the rule of rap being an annoying waste of time.

I had just gotten divorced, and things were financially rough for me. I was making $8.25 an hour as a firefighter/EMT. As a firefighter, you work a 24 on/48 off schedule, and this results in three different sized paychecks:

  • The large paycheck has 106 hours of straight pay and 14 hours of overtime.
  • The medium paycheck has 106 hours of straight pay and 6 hours of overtime.
  • The small paycheck has 104 hours of straight pay.

The divorce was punishing. The judge gave her the car, the kids, child support, and I got all of the debts. Those debts would be taken out of my paycheck before I even saw it. By the time all of my deductions were taken out (including child support) I wound up making an average of about $525 per two week paycheck. Since the rent on my apartment was $535 a month, it wasn’t long before I was homeless. I just couldn’t afford rent, utilities, and all of the other expenses that went with living in an apartment.

I was sleeping on the couches of friends until I could save enough for a buy here/pay here car, then I began living in my car. This was probably the worst time of my life. It took more than 3 months to save enough for a down payment on a 10 year old Ford Tempo. I would go several days at a time without eating. At work as a firefighter, I would eat everyone’s leftover food, and for that reason, they started calling me catfish, because I was a bottom feeder (from the bottom of the pot, you see). I lost 25 pounds in three months. Finally, after 3 months, I was able to come up with the $1200 I needed for a down payment and for the first 6 months’ insurance.

That’s when the song came into play. It was “Bust a Move.” Here are the lyrics that really struck home with me:

Girls are fakin’, goodness sakin’
They want a man who brings home the bacon
Got no money and you got no car
Then you got no woman and there you are
Some girls are sophistic, materialistic
Looking for a man makes them opportunistic
They’re lyin’ on the beach perpetratin’ a tan
So that a brother with money can be their man

So there I was: homeless, broke, and living in my car. I was alone, and couldn’t even have my kids over for visitation, because I had no place to bring them. I was alone: no friends, no money, no place to live. Every day was a search for ways to make a better living. I got a second job, working as a janitor in a theme park. I had to keep that second job a secret from my ex-wife, so she wouldn’t take me back to court to have that extra income be used to calculate a higher child support amount. Things were a bit better, because the extra income from the janitorial work nearly doubled my take home pay. Things were hard, but I knew that I could make it.

I lived in my car for about six months, parking it in various places so I wouldn’t have the cops called on me. I showered at work: once when I got there, then again when I left. On the third day, I was able to shower at the city’s owned gym, because city employees got a free membership.

That lasted until I found a woman willing to rent me a room. She was s supervisor at the theme park where I worked who found out how much I was struggling and decided to help me out by letting me rent her spare bedroom for $200 a month. I lived there for about three months, until she moved to Montana. Now here I was, just over a year after my divorce, and had to find another roommate.

That brings us to the summer of 2000.

The place I was living wasn’t great- it was in the middle of one of the most dangerous, most crime filled neighborhoods in Orlando, but it was cheap, and it was all that I could afford. If I remember correctly, my share of the rent and expenses was around $400 a month, my car was another $300 a month, and by the time I was done with the “must have” expenses like gas, insurance, and the like, I had $200 a month left over for food and other things. While still rough, things were much better than they had been just a few months before. Sometimes, I would only have $30 to last from one payday to the next, and $15 of that went to gas to get me to work.

Meanwhile, I didn’t stop working to get myself out of the situation I was in. I was working two jobs and began going to school at the same time. I spent the next year getting my Paramedic license, and along with it, an AS in Emergency Medicine. That was a miracle for my monetary situation.

It was now the summer of 2001.

My pay in the fire department was so much better at that point. As a Paramedic, I was finally making $10.65 an hour. On the days that I was acting engineer, I got an extra 75 cents an hour. It was during this time that I moved out of my ghetto apartment, and moved into an apartment in a better neighborhood. I had two roommates in this new place, a woman and a man. It was a good arrangement for them, because my now three jobs meant that I only slept there one night out of every three. It was good for me because it was half a mile from my fire station, and I could have my kids over for visitation. I was still living there on 9/11. Yeah, that 9/11.

It was that experience that gave me a unique perspective on needs versus wants, as well as how to make your money stretch. I know what it means to struggle, I know what it means to know that your next meal is likely days away.

That’s why I become so offended when the current generation complains that the generations that came before had it easy, while complaining that they can’t buy a house. Bull crap, they just don’t have any idea what the difference is between a need and a want.

The world doesn’t owe you a thing. You can have the lifestyle you want, but you can’t expect others to give it to you, you have to earn it. Doing so requires hard work and consistently making good decisions. One of those decisions, perhaps the most important of them, is the person you choose to partner with. That is the decision that I have struggled with more than any other, and I am glad that I finally got that one right.

By Divemedic, ago

Property Taxes

Florida Governor Ron DeSantis says that property taxes are nonsense, in that you are essentially paying rent to the government in exchange for owning property.

“You should own your property free and clear,” DeSantis said at a recent roundtable in Jacksonville. “I think to say that someone that’s been in their house for 35 years just has to keep ponying up money — you don’t own your home, if that’s the case.”

He’s right, but at the same time, things like police, fire, and schools need to be funded. The thing that surprised me about this article was that the state’s tax on real property accounts for 18% of county revenue, 17% of municipal revenue and between 50% and 60% of school district funding.

So the elimination of property taxes would mean that counties would have to cut 18% of their expenditures. Using Orange County (where Orlando is located) as an example, they have an annual budget of $7.2 billion. (pdf alert) That would mean that the county needs to cut $1.3 billion from its annual budget. From their budget, they spend money on:

In this budget, we have purposefully allocated resources to address critical areas that are essential to ensuring the well-being of our residents by investing in affordable housing, preserving the environment, fueling economic development, strengthening public safety, improving transportation, expanding mental and behavioral health services, and enhancing children and family services programs. We will also develop a plan for expanding services to homeless people.

Orange county’s property tax proceeds total about $969 million of that budget. Can they make some cuts?

  • $16.1 million is for affordable housing programs
  • Neighborhood Centers for Families (NCF) $7.5 million for mental health, early childhood development, youth empowerment, family support, and youth recreation.
  • The Citizens Review Panel (CRP) recommends grant funding for small and large nonprofit organizations that provide vital services to Orange County children, youth, and their families. CRP funding is budgeted at $4.1 million for the fiscal year 2025.
  • resources to advance environmental initiatives $100 million per year
  • Tourist Development Tax revenue budget for fiscal year 2025 is $345 million. Let businesses fund their own development.

Without even trying, I have found $472.7 million in cuts. That’s halfway to eliminating property taxes. It can be done. Government shouldn’t be an endless source of pork that is being used to buy votes. Government should stay out of our pockets and provide only essential services through taxes. They should ask for donations for any extra services.

By Divemedic, ago

Lies

 Two years ago, the Republicans caved by giving President Biden a blank check to borrow whatever and how ever much money he wanted to spend. On that day, the US debt stood at $31.46 Trillion. Within a month, the US had borrowed another Trillion dollars. Here we are with $36.21 Trillion in debt. (By the way, our national debt is the same now as it was on inauguration day, FYI)

They are borrowing money at incredible rates. We now are borrowing $1.5 Trillion each and every year.

It took this nation over 200 years to borrow a trillion dollars. Trump did it in seven months, Obama did it in only 6 months. It took Biden 9 months to borrow his first Trillion dollars, but he soon got better at it. His second trillion took three months, borrowing $2 trillion in his first year. In fact, he has increased the national debt by 118% in just two and a half years.

Biden increased the National Debt by 30% in four years, a total of $4.5 trillion.

President Trump increased the National Debt by 141% in his first four years.

Obama increased the debt by 194% in eight years.

President George W Bush borrowed his first trillion dollars in two and a half years. He borrowed his second trillion a year and a half later. Another two years, another $1 trillion. All told, President Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.

It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.

George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.

Reagan borrowed his first trillion in 6 years, and doubled the National debt during his eight years in the White House.

Carter increased the National debt by 150%, but “only” borrowed $300 billion in 4 years. I guess that was when $1 Billion was real money.

Ford increased the debt by 147% in 3 years., Nixon by 135% in 5 years, Johnson by 116% in 6 years, Kennedy by 106% in 2 years, Eisenhower by 108% in eight years.

Democrats, and Republicans, both in a contest to see who can spend the most in our society of “how much can you give me if I vote for you.”

Remember when the Biden spokeswoman told us that borrowing trillions didn’t cost anything because it was already accounted for? Note that we weren’t really allowed to increase the debt until we divorced from the gold standard during the Nixon administration. Ever since then, spend, spend, spend. This nation creates money as fast as computers can create the 1′ and 0’s at the Fed. This can’t continue. By definition, anything that can’t continue, won’t. There is no amount of voting that will fix this.

By Divemedic, ago

The Cold, Hard Truth

In our recent discussion, many of you say that this financial situation the nation finds itself in is fixable. All we have to do is eliminated this Federal department, that one, and then convince the recipients of all the Fed Bucks that it’s for everyone’s benefit that they stop getting government checks. Do you even hear what you are saying? Comments like this are simply not realistic:

  • Once DOGE is done and we quit using the Federal Reserve Note…
  • Flat Taxes have to come with spending cuts and entitlement program reform…
  • Did you know that snowballs last longer in hell if you put little hats on them?

Ok, that last one is me. Still, there is no way that millions of Federal employees, a hundred million welfare recipients, and 70 million Social Security recipients are going to sit idly by while DOGE and DJT tell them that the money faucet is being shut off. Even the medical field, my own profession, cannot survive without government money.

  • In 2022, 53% of Americans received at least a quarter of their income from government aid, up from 1% in 1970.
  • Government transfers account for 18% of all personal income in the United States
  • One in four Americans received Medicaid in 2022
  • One in five Americans received Medicare in 2022
  • One in five Americans receive Social Security
  • 12% of Americans are on Food Stamps, and 39% of children in school receive free lunches at school
  • In fact, Americans received $3.8 trillion in government transfers in 2022
  • Then there are employees. There are 28.5 million people directly employed by governments in the US.
  • Millions more are employees of businesses that owe their livelihoods to government largesse.

More than half of the residents of this nation are net receivers of government funds, and there is no recovering from that. To illustrate- what would you say if DJT and DOGE announced tomorrow that to save the nation, the entire Social Security and Medicare system was ending on January 21, but the taxes would remain in order to pay off the massive $40 trillion in debt? Would you be OK with that, or would you scream some variation of “That’s my money! You took it from me, and I want it back?” Or would you calmly walk into personal bankruptcy, secure in the knowledge that your personal sacrifice saved the nation?

Call it doomsaying, call it black pill, call it what you want- but saying that we can vote our way out of this is foolishly mistaken. There are no cuts, no magic wand waving, and no solution that the people of this nation will accept until they are forced to accept it. This only ends when the current system collapses.

Whatever your own personal theory on how to save this sinking fiscal ship, there isn’t one that enough people will accept that will be doable. It just isn’t going to happen. Instead of fixing it, we kept kicking the can down the road, and we will continue to do so until it all collapses.

This isn’t a new thing- I have been telling people this for 20 years.

By Divemedic, ago

Fair Share

The refrain from the left is that the “rich” need to pay their “fair share” as if they aren’t paying taxes. Let’s take a look at what that means.

The top 1 percent of taxpayers pay nearly double the income taxes than the bottom 90 percent. The top 1 percent of taxpayers paid more than $1 trillion in income taxes while the bottom 90 percent paid $531 billion.

The share of income taxes paid by the top 1 percent increased from 33.2 percent in 2001 to 45.8 percent in 2021. Over the same period, the share paid by the bottom 50 percent of taxpayers fell from 4.9 percent to just over 2.3 percent in 2021.

That’s right- the lowest 50% of wage earners paid just 2.3% of all income taxes, while the top 25% of wage earners pay 89.3% of them.

So just how much do you have to make to be in that upper 50%, or upper 25%? To be in the top 50%, a taxpayer must earn at least $46,637 per year. In order to be in the top 25%, a taxpayer would need to make $94,440. The top 25% isn’t all that rich- there are tons of people like nurses, firefighters, restaurant managers, electricians, and auto mechanics who fall into that top 25% category. The top 10% of wage earners? Those are people making $169,800 or more. Those are your doctors, chiropractors, accountants, lawyers, and many entrepreneurs. Successful, to be sure, but hardly evil people playing the part of Ebenezer Scrooge.

The left claims that they are only going to raise taxes on people making more than $400,000 per year. That is the top 3% of all wage earners, a group that is already paying more than 24% of their income on taxes, and who are already paying 60% of all Federal income taxes.

Even if we were to confiscate every penny made by the top 5% of earners, the government would only get $6.1 trillion. Since the government spends more than $6.2 trillion a year, that amount wouldn’t even be enough to run the government for the year, and I guarantee you that those wage earners wouldn’t be there to fleece next year.

No, when the left tells you that they want to increase taxes, they mean for everyone. Of course that won’t affect them, because they are getting a cut for themselves. You didn’t think that those billions going to Ukraine were all for beating Russia, did you?

By Divemedic, ago

Better Than You

California Senate committee advances a bill that would provide no money down/zero percent interest home purchase loans to illegal immigrants. The amount of the loan is for up to 20% of the home’s value, and is intended to permit the illegal to come up with the down payment for a traditional mortgage. The loan is to be repaid when the home is refinanced, sold, or transferred. If a family decides to hold on to a home, there are no provisions for repayment, potentially allowing the loan to not be paid back. Ever.

No add to this Harris’ proposal to hand out another $25k, and you see what’s going to happen in California. Illegals will be the only ones who can afford homes in California.

By Divemedic, ago

Collapse

As empires collapse, the government employees/legislators begin to loot the treasury in preparation for the coming hard times. I believe that we are there. In support of this, I offer the increasingly blatant examples of Congress making hundreds of millions, the Bidens selling access, this morning’s story about CBP agents on the take, and someone in the Arkansas Department of Education creating a fake $66 million contract that, according to the vendor, doesn’t exist.

I have been posting on this since 2009, nearly since this blog began.

  • Reagan borrowed his first trillion in 6 years
  • George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.
  • It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.
  • President George W Bush borrowed his first trillion dollars in two and a half years. He borrowed his second trillion a year and a half later. Another two years, another $1 trillion. All told, President Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.
  • Obama borrowed his first trillion in 13 months.
  • Trump borrowed his first trillion in just over 7 months. In all, he borrowed about $8 trillion in four years.
  • Biden has borrowed $6 trillion in the three and a half years he has been in the Oval office. Now we are borrowing a trillion dollars every 5 and a half months.

The US treasury has borrowed $24 trillion in the past 15 years.

By Divemedic, ago

Printing Your Way Out of Debt

The US Treasury just announced that they will be “buying back” outstanding treasury notes during the next quarter for the first time in more than 20 years.

The Treasury Department has undertaken only two previous series of buybacks in the past century. The first took place during the 1920s. More recently, Treasury bought back $67.5 billion of outstanding debt via 45 operations held between March 2000 and April 2002

What followed the first buyback was the Great Depression.

They are claiming that the intent is to make the bond market more liquid. No, what the effect is, is to print our way out of debt. They are going to conjure up $2.5 billion out of thin air, and buy back treasuries with it, in the hopes that people will say “Oh, they aren’t in as much debt now, so I guess I will lend them some more money.”

The first operation is intended for May 29. Through July, the Treasury plans weekly buybacks of up to US$2 billion of nominal coupon securities, and up to US$500 million for Treasury inflation-protected securities (Tips).

This will place more money in circulation and will result in more inflation. There are currently $27.4 trillion in outstanding treasury notes, plus an additional $7 trillion owed to the SS trust fund. A couple of billion isn’t going to do shit, especially when they continue to borrow about $100 billion per day.

This nation and its economy are screwed.

By Divemedic, ago