Tuesday, February 21, 2012

Work, Save, Die?

What about retirement? Work for 40 plus years, save at least 10% of your income, RETIRE FROM WORK and then you die. This type of thinking promotes accepting that you allow the bankers to steal your saved labor and they get to retire while you pay for it. Let me give you a simple example of a college student graduating and earning $30,000 from the time they are 22 years of age to the time they are 65 years of age. Lets assume that person's salary doesn't increase and also the Federal Reserve doesn't continue their easy money policies which creates the inflation that requires the necessary increases in salary. Contrary to what you are told, inflation is not a monetary phenomenon. Actually, lets assume the Federal Reserve is abolished! Also in our example we assume that you save 10% of your income which equals $3,000 per year. We shall also assume that your investments earn 6% per year. In our example we shall also include that the employee and employer contribute 6.20% each to FICA. Therefore the employee's FICA is $1,860 and the employer's FICA is $1,860 for a total of $3,720 saved per year. Notice that the employee actually pays for FICA which means it's not an entitlement because you paid into it. When you run these assumptions at age 65 the person would accumulate $1,015,861 for a retirement nest egg. So NO I do not support the notion of work til death. If you want to then it should be your choice. Here's the math.

Friday, February 10, 2012

Where In Bankruptcy Law Do Bondholders Get Bailed Out?

When global banks make loans to government, businesses, or people they get rewarded for the good loans and should be punished for the bad loans. It's not capitalism on the way up and socialism on the way down. It's not this way for 99% of the people, so why should 1% of the world's elite expect this outcome? Especially when considering that this problem was created by the international money center banks and the country's central banks. The Hegelian dialectic of problem, reaction, and solution perfectly explains the situation we are in today. The big banks create lax lending standards through exotic mortgages and teaser rates to borrowers whose only needed qualification is the ability to fog a mirror. These loans create the bad situation we are in today and borrowers can't obviously repay these loans. The people's reaction is one of anger and now the solution is austerity. Even worse, is the solution of amputating both legs after they just sawed off two arms only three years earlier. Remind you that this proposed "solution" is coming from the same people who created the problem. Wow, this really is 1984 and George Orwell was right.