Monday, February 09, 2015

Can we please balance the budget?

The GDP of the United States was estimated to be $16.8 Trillion in 2014. The "GDP per capita" was $37,075.50. (Now, given that this calculates a total population of 316.1 million people, I'm guessing that some of that is business to business. We don't have that many wage-earners in the US yet. But I'll use the number anyway.)

The 2014 Federal expenditures were $3.7 Trillion. That included a $483 Billion deficit.

If every wage earner, both individual and business, paid the same flat tax rate to the Federal Government, that tax rate would need to be 22.44%, or an average of $11,927 out of that $37,075.50. (by the way, that doesn't take into account the number of actual wage earners, it's total population in including our kids and elders.)

Now, 22.44% is a slightly higher tax rate for Americans than we are used to.  Here's a graph showing what it has been over the last half-century:

If you consider that with a balanced budget we could really get serious at creating jobs, rebuilding our crumbling infrastructure and actually start paying down the Debt, maybe this would be worth it.

But, nobody is talking about charging everyone $11,927.  Some people earn more, and they pay more.  Some people earn less, and they pay less.  But if we all paid our share, and we stayed focused on the idea that we need to pay enough to balance the budget, we could.

Do we want to?  I do.

Saturday, April 26, 2014

Fixing our monetary system

Our current monetary system has three major flaws. What we have to do is find a way to manage these flaws.

The first problem is Fiat Currency. We need currency based on something tangible, not just promises to pay. But we can't go back to the gold 
standard, and the suggestion of sunshine that I saw in an earlier comment wouldn't work because it would give equatorial regions an advantage. My idea would be a currency based on carbon. Not carbon credits, but actual carbon pulled out of the atmosphere and stored in bulk. It's physical and measurable.

The second problem is Fractional Reserve Banking, where banks only have to maintain a fraction of their deposits in the central bank in order to give out loans. This is simply a matter of law. In the 1930's, with the bank reforms pushed through by FDR, the reserve requirement was pushed up. The higher the reserve requirement, the less money the private banks could just invent out of nowhere. This helped keep inflation under control, but I don't think it ever got above 26% in the US. It's much higher in some other countries.

The third problem is Compound Interest, where we pay interest upon interest upon interest again and again and again. I recently got a debt consolidation loan that had a fixed rate, without any compounding. It's wonderful. I think all loans and credit cards should be like that. Need a loan for 10K at 10%, you'll pay $1K in interest for a total of $11,000. That's it. This could be required by law.

The banks would fight these changes tooth and nail every step of the way, but if we made changes like these it would bring our monetary system to heel and make it a servant of the people instead of our money being our master and us being the slaves.

Sunday, March 30, 2014

From Washington State Democrats, how to help Oso

Like you, we are stunned and devastated by the destruction caused by the Oso mudslide.
We’ve already lost over a dozen Washingtonians. With many still missing, this could be one of the deadliest natural disasters in state history.
When one community in our state is hurt, it hurts us all. Our hearts are breaking for the victims taken by this disaster, their families, and all those affected.
With tragedies like this, heroes emerge. We learn about the strength in our communities that we didn’t know was there.
We thank and honor the first responders, relief organizations, civic and government leaders, volunteers, and all those who are working day and night to help those affected.
It’s hard not to feel powerless at times like this. But a donation to help the relief effort is one way that we can do our part.
In solidarity,
Jaxon Ravens
Washington State Democrats Chair

Monday, October 07, 2013

Learn more about the ACA (Obamacare) at Planned Parenthood!

Want to learn more about the Affordable Care Act?  One of the best places to go (in my humble opinion) {Wait, have I ever had a "humble" opinion?} is Planned Parenthood of the Great Northwest.  They have twelve ACA In Person Assisters (ACA-IPA) {Sounds like a beer from Elysian}, and they are in PPGNW clinics in the following cities:
Centralia, Everett, Lynnwood, Marysville, Olympia, Port Angeles, Puyallup, Shelton and Tacoma.

In addition, clinics in King County are looking for a few good volunteers {Interviews in progress} to provide assistance to people looking for more information.  It's an unfunded contract, but if you're interested in helping people that's a great place to go!  And they will be there until coverage begins in January, at least.

Here's a web page to learn more:

And here's a paragraph from that page that applies:

"If you are interested in talking to an assister or setting up an appointment for enrollment assistance: Call 206-320-7610 or send an email to  Include your zip code, and someone will get back to you."

Wednesday, May 01, 2013

The path across the Rubicon

I saw a post on Facebook linking to an NPR article about how the US Treasury is paying down $35 Billion dollars of the National Debt. This is the first time in 6 years that they have done this, so before the 2008 crisis. A couple of questions come to mind.

First, how are they doing this? Are they retiring some of the Treasury bonds early? Normal Treasury bonds are 30 year bonds, although they have shorter term bonds out there as well. Which ones are they paying off? Who owns them?

Second, if this was done 6 years ago, sometime in 2007, why don't I remember hearing about it? Is this something that the Treasury does on a semi-regular basis, no matter who the President is? It reminds me of posts in 2009 up to today clamoring for the President to re-install the solar panels on top of the White House that Reagan had removed in 1981. Actually, if you truly pay attention to the news, you would have knows that President Bush reinstalled them through the National Parks Service near the end of his first term in 2003. Not everything is black and white. I wouldn't have expected a Republican President to direct the Treasury to pay down the National Debt, but I guess he must have.

Third question came from another search result that came up when I was looking for more information. It seems that NPR did a story about a government report from the year 2000 talking about the changes that would need to happen if the Federal Government was able to retire ALL of the debt. There are some major foundational aspects of our financial and monetary system that would have to change, and the report talks about them.

First, investors looking for an asset free of credit risk can no longer count on an abundant supply of U.S. Treasury securities, and Treasury securities may no longer provide a reliable benchmark for other interest rates.

Second, the Federal Reserve may have to change the mechanisms by which it conducts monetary policy.

Third, continued surpluses after the public debt has been paid off will require the Federal. government to acquire assets; either directly or though the Social Security Trust Fund. This raises issues about what kinds of assets might be acquired, and the best way to manage this task.

This research brought me back to a concept I've been thinking about for several years, wondering how a government agency could operate without debt. I believe that our monetary system has flaws, and they have been identified many times in many different venues. The most blatant expression of them was in the movie Collapse, which is about the work of Michael Ruppert. He identifies three main issues with the current monetary system.

  • Fiat Money, value set by a promise, not connected to any real commodity like Gold.
  • Fractional Reserve Banking, with banks only required to hold a percentage of their on-book assets in the central bank.
  • Compound Interest, meaning that we pay interest on interest on interest when we take out a loan.

There are solutions for these issues. It's not easy, and it takes a great deal of change in the way we think about money. But it would be possible. If anyone is interested, I can expand on these ideas and continue. But please let me know that you're reading by commenting below.

Tuesday, January 08, 2013

Basic Mortgage Rules

This is a list of the fundamental rules that should apply to all mortgages, at least if we want the housing market to be part of the foundation of the economy.  Any relaxation of these rules, at least given our current monetary system, threatens to undermine the entire system.

1. 30 year fixed rate.  No  more variable rate mortgages.  If someone signs to buy a house, it needs to be a fixed rate for the entire length of the mortgage.

2. Max 30% of household income.  If someone doesn't earn enough to pay the calculated mortgage payment based on the 30 year fixed rate, then they can't afford the house and should not qualify for the mortgage.  It's just too hard on families to have 40%, 50% or more going into housing.

3. Minimum 20% down payment.  Saving money is a critical skill, and if someone can't save up money to pay a down payment on a home, then they don't have a handle on their finances well enough to be a secure credit risk.

4. Mortgages may not be sold to other banks.  No more mortgage backed securities or derivatives.  If a bank goes out of business, that's another can of worms, but a bank should be held to the risks of the loans they issue.

These are severe restrictions on the current housing market.  I know that.  I also know that foundation level rules like this create a way to prevent people crashing through the floorboards and our entire economy held hostage by foolish investors who don't live in or care about the communities they are lending to.  It's just too expensive not to establish rules like this.

Friday, September 14, 2012

Minecraft and the Industrial Revolution

I've been playing Minecraft for about a year, and I'm having a lot of fun.  My son got me into the game, and it's pretty much an addiction.  Go figure, that's why it's one of the  most successful independent games out there.

What I've been enjoying the most is the Mods that are out there, and the skill and imagination that people are putting into their work.  I've watched most of the Youtube videos from people like Direwolf20 and Zerzera, and it's amazing how they can get the different components of multiple mods to connect and interlink to create incredible machines and systems that do what they want done.  It's people like this who I want involved building space stations and moon bases.  I'm not kidding.  If we give our kids games like this, open sandboxes with resources, tools and self-defined goals, they'll train themselves to be able to put things together that will amaze us all.  And even better, this is an international movement.

What I was thinking about this morning was from the book that I'm currently reading, Peak Everything.  The Industrial Craft mod adds generators that burn coal, and oil that you can burn or refine into fuel, which is more efficient in generating electrical power.  The Forestry mod adds biogas and other plant derived fuels like peat which you can burn like coal.  The goal, of course, is to have more and more power available in various forms to run machines and tools.  Just like in the real world.

What seems to be missing is costs associated with it.  There's no pollution from burning the coal, there are no lasting effects from the oil that gets spilled in water or on land.  There's no way to see environmental impacts.  Of course, it's a game, and such things would spoil the game environment and make it "too much" like the real world.

But it is real.  And while I can understand wanting to play a game without the costs, some of us are thinking about and working on solutions to these problems in the real world and we're looking for help from the imaginations of our kids to find the solutions that will keep our real world able to support us for the long term.  So something needs to be added, as an option, to help keep pollution and environmental effects in mind.

The best example of what I'm looking for already exists in the game, but it's part of a non-technical mod, although one that many people who play and record the game are using as a technical mod.  I'm referring to Thaumcraft2, a mod that adds magic to the game including "vis" for positive energy and "taint" for negative energy.  Players can research how to use resources in new ways to create new tools and machines, and can even give themselves the ability to see the levels of vis and taint in the surrounding environment (which is a 16x16 block going from the top to the bottom of the world).

What if, and I'm posting this because this is far above my own programming skills, burning coal in Industrial Craft caused pollution, and spilling oil on water or land caused additional pollution in the surrounding chunk.  And there would be a way to create a visor or something that lets you see the level of pollution.  And maybe a new machine that would help you reduce the pollution from the chunk.

Again, this would be an additional mod to Industrial Craft itself, so optional only if you want to use it.  But it would bring the game a bit closer to the real world, and get our kids aware of sources of pollution and what they could do about it.