Don't believe the hype.

Instead, dig for the evidence.

In late May, I had researched enough about bitcoin to be willing to start dipping my toes into this new economic paradigm.  There are a lot of videos from "experts" who are saying that the value of a bitcoin could get as high as $10k, $50k, $100k or even higher.  After searching for some kind of perspective I found a post and a video that pointed out that when you put the price of bitcoin on a logarithmic scale, it tracks the creation of coins based on the original design.  That sold me.  It showed the bubbles as bubbles that popped, and showed the increase in value as par from the design.

So, starting in June, I started putting small amounts into bitcoin, with no real plan at that point what I was going to do with it.  I was getting messages from some friends saying that they were involved in some exciting things, and I did some research.  The potential was there.  Our finances were at a point where we could take a risk.  And I started getting excited about the possibilities.  My wife, bless her heart, got sick and tired about me being excited all the time without actually doing something about it, and pointed out that we could afford to take a risk.  "Just do it!!!"  Ok, fine.  I did.

Over the months of June and July, I bought 2btc, 1eth and 1ltc.  Not a small chunk of change for that time period.  And then I launched into some investments.  Trading, mining, one crazy site that flopped because it was silly.  I didn't lose much.  The bigger question is what I have gained.

A lot.  This is real, folks.  I know there is hype out there.  I have not paid any of my bills yet with bitcoin, but I'm planning to.  I haven't actually pulled any of the gains into US dollars yet, but I will.  More than anything else, I'm just having fun watching it grow.  And it is growing faster than anything else that I have ever tried.

I've been an invester for 17 years, learning slowly, growing my portfolio slowly, and planning for the long term.  I'm taking that mindset and experience into cryptocurrencies like bitcoin, etherium and interesting ideas like coss (Crypto-One-Stop-Solution).  I have not seen energy like this since the late 1990's when the Internet first came online.  Since Facebook really started building in 2006 after going public.  Anyone who thinks that this is a bubble is going to be kicking themselves in 10 years.  Because this train is moving.  Where exactly it is going, nobody can say.  Because nobody knows where this Administration is going to take us either.  But I'm going to place my bets on this new version of currency and what it can do to my bottom line.  I have a plan for 1 month, 6 months, 1 year and 10 years.  If you're interested, let me know.

It's time for me to start something new.  Join me, if you want to.  I'll see you at the top.

On Bitcoin and Taxes

Dear Congresswoman Jayapal,

I am getting into investments using cryptocurrencies like Bitcoin, and I have been researching how to pay taxes on the gains from various investment opportunities in that industry.  The IRS has come out with some guidelines related to virtual currencies, most notably "Notice 2014-21".  I have a number of questions that I will be addressing directly to the IRS on the subject of income taxes and capital gains taxes, but I wanted to bring your attention to one aspect of the Notice that caught my attention, with the hope that you will be able to consider the implications and draft legislation to address my concern.

I would like to present two of the questions from Notice 2014-21, questions 6 and 8:

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Question 6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?

Answer 6: Yes.  If the fair market value of property received in exchange for virtual currency exceeds the taxpayer's adjusted basis of the virtual currency, the taxpayer has taxable gain.  The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency.  See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.
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Question 8: Does a taxpayer who "mines" virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

Answer 8: Yes, when a taxpayer successfully "mines" virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.  See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.
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The first question is dealing with capital gains, the difference in value between when the virtual currency is bought and when it is sold.  The second question is dealing with taxes upon generation of the virtual currency.

This would mean that gains from mining, even cloud mining contracts that people may purchase around the world, need to be tracked for tax purposes so that the fair market value of the coins generated by the mining can be determined according to basic accounting rules, whether that be First In First Out or some other method.  However, it also means that any transactions conducted in bitcoin for real world goods and services would be subject to capital gains taxes on the difference between when the coin was generated and when it was exchanged for real currency or goods and services worth fair market value.  That sounds to me like double taxation.

I would be interested in discussing this at some point if you are interested and in town.  I know that a lot of people are getting into these currencies, and ensuring that the rules are fair would make it easier for a lot of people to pay the taxes they owe so we can get on with growing the economy.

Also, I wish that the taxes we paid on bitcoin generation like mining could be paid IN bitcoin.  That might actually be kind of cool.  Might also help balance the federal budget.  Just a thought.

Response to Godfather Politics

I was sent an email from a family member copying and pasting from a recent post by Gary DeMar on Godfather Politics. I just spent about 20 minutes rewriting it. Too bad their comment section is limited to 5,000 characters, but maybe this will get back to them somehow. I'll put the link to the original in the first comment.

Think about this for a moment. We are debating how the health care insurance companies should control our healthcare choices by taking away our choices and our money. In essence, we are debating how these private corporations should control our lives. It’s maddening that we are sitting back and letting it happen.

We are an economic version of zombies.

I realize that we didn't have any vote for the people who finance the campaigns of the candidates who said they would repeal Obamacare, but then these elected officials are unwilling to do it anyway because so many lives depend on the current insurance system. Five Supreme Court Justices, appointed by both Republicans and Democrats, ruled in a 5-4 decision that healthcare is the province of the State. It’s amazing. ”O well, I guess we’re going to have to figure out how to do this.” This is a republican democracy of the first order. Is it creeping fascism, creeping socialism, or something else? The debate rages forever.

Who believes that the multi-millionaire business executives are competent to tell the entire health care market how healthcare should be run and financed? What about the doctors that provide the care, the nurses that take care of us in hospitals or the pharmacists that provide our medicines? Shouldn't they have a voice in these decisions? These are literally the same multi-millionaire corporate board members whose banking companies finance our wars, heavy industry manufacturing builds the weapons and extra-governmental economic agents stir the pots in foreign countries directly or even through the CIA that get us into wars that we can’t win and spend money we can't get through taxes so we have to go further and further in debt for.

We’ve already let it happen with education. The education industrial complex is encouraging the privatization of the schools that teach our children and turning them into corporate slaves intellectually and economically, and yet there are the same people — conservatives included– who continue to support teachers unions and public schools financed by our property taxes. If it’s OK to turn our children over to private corporations to be educated, then why not our whole lives?

We need a massive nation-wide uprising. I’m not advocating violence but a loud voice and movement that says, “Stop controlling our lives and controlling our money!”

Let us make our own healthcare choices, without having the cost of those choices drive us into the poorhouse. Once this is done, we won't have to go back and say, “I can’t afford it. Please, save me.” There are fair-market ways to take care of everyone. Other countries already do it, and there are many different models that we can learn from and adapt to our circumstances. All we have to do is look. It might mean extra medical savings accounts to prepare for a medical emergency but many fully developed national health care systems don't require it. And of course we should be driving our cars a year or two longer or backing off on extravagant vacations or not eating out as much. Reducing our footprint on this green Earth is something we all need to take responsibility for.

We really do need to take better physical care of ourselves. Even with all the information we have on smoking and the higher taxes, people still smoke. I watch unhealthy-looking people stand in line and pay $45 or more for a carton of cigarettes. I see fat people waddle around who can barely step up on a curb. These people need motivation to change their habits, and they need the support of a strong community safety net to make sure that they don't fall through the cracks. Nobody is alone in this, if we pull together.

We did need the government when it came to automobile insurance, life insurance, or homeowner’s insurance. All of those insurance systems are heavily regulated on the back end where we can't see them. I can go online and shop for a policy and price for all three of them from a multitude of companies because of those regulations.

Why not do the same for health care? We've tried letting the market take on the job. The problem is that health care is so lightly regulated that any company in the world can claim to be a health insurance company for their own employees or anyone else. Amazon is probably already getting into the insurance business. Same with Wal-Mart? Heck, there are probably some churches that want to create their own insurance pool with their own rules, co-pays, deductibles and decision making panels. With this many actors in the insurance market, doctors and medical providers have to spend Billions of dollars paying people to make sense of it all. Why increase government regulation in the health insurance industry? Because it would save us those Billions of dollars every year!

Market mandated healthcare insurance has driven up costs tremendously, well over and above the natural increase in prices that we have seen over the last hundred years or so. Our grandparents had large families. They did not have to have health insurance, and yet they were able to pay the doctor. Or in GGrandpa James' case he could BE the community doctor and a very respected member of his community. How did they do this? Health insurance is the product of government mandates in the economy during World War II. It was a way to get around the wage and price controls after World War II because Congress was too slow to release those controls and it was also a way to start reducing what companies had to pay their employees. The marketplace did a workaround to beat a government edict, and it resulted in an insurance nightmare that we are now living in.

At the present time, the claim is that “healthcare is plagued by barriers to entry for potential new suppliers of services”, which is false, and “patients do not see bills until after services have been offered,” which is true. No other industry does this, because no other industry has been allowed to get away with it. How many people sign a contract to buy a car before they know the price? Big healthcare companies often won’t allow their own medical facilities to build in certain areas because they have decided that there is no “need” because there is not enough profit in that area for them to make. Governments would love to have new hospitals, doctors offices and other types of medical offices, but if insurance companies decide that they can't make sufficient profit by offering insurance products to the people in a county, then the citizens of that county are left to rot by those insurance companies. There is nothing the government can do in those cases. Competition is supposed to be a good thing in a market, but profit taking is all that the current medical industry leaders seem to care about.

There are dozens of competitive pizza businesses near where we live. That's because competition works when there are enough small players in the game to be able to provide for the market need for that product or service. When big players get into an area, it stifles or destroys all of the other players, and government is helpless to restore those jobs because the tax dollars coming from the big players become necessary for the survival of the municipality. That's when you know that the corporations have really taken over, and it's happening all over the country.

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Evidence from other countries illustrates why lowering these barriers to entry is important. In India, Devi Shetty, a surgeon, has taken advantage of economies of scale to develop large, 1,000-bed hospitals that make health care more affordable. Dr. Shetty’s heart treatment hospital charges $2,000 for open-heart surgery—American hospitals average slightly more than 150 beds and charge between $20,000 and $100,000 —while providing high-quality care. Dr. Shetty is currently setting up a chain of similar hospitals in the Cayman Islands to make his services more accessible to patients from the United States as well as the rest of the world.

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The U.S. health care system is generally not a competitive marketplace. In particular, current law largely restricts consumers to purchasing insurance within their own states. Additionally, current tax policy offers a tax advantage to employer-based health insurance but not individually purchased insurance, causing most Americans to gravitate toward job-based coverage instead of buying insurance on their own. These distortions, generated by government policy, have largely insulated consumers from their health care choices. (Heritage)

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These paragraphs are accurate enough, but the fault doesn't lie in the government policy because that could be changed if representatives would just change them. They are prevented from changing them because of the influence of the big players in the market who don't care about anything other than maintaining their own monopoly control.

We’ve seen what the market can do with the airlines after deregulation. More options. But also decreased quality of service, because shaving the food available down to Planters Peanuts and Coke products has saved a lot of money. And the objective of airline design is now to smash as many seats as possible into as small a space as possible. The giant media corporations took control of the broadcast television through well placed government operatives, so the market found a way around it and we got the cable and satellite industry. When consumers grew dissatisfied with fewer options and higher prices, the market stepped in. Now we have Netflix, Hulu, Amazon, and a slew of other competing options, and that's great. But now the Cable companies are trying to take control by offering a version of ala carte services and driving all of the smaller players out of the market. Here's hoping that our anti-trust laws will be used to break these monopolies up like they did Standard Oil and AT&T, which by the way are both back bigger and stronger than ever. The government had a monopoly on mail, so UPS, FedEx, and others got in the package delivery service and the world is better for it. But these corporations are also heavily regulated and many of them use the Postal Service in their own routing of packages because it's cheaper than doing everything themselves.

Email has had a devastating effect on the Post Office, but so has the crazy scheme cooked up by Republicans in Congress that required them to fund their retirement system 75 years into the future in an attempt to destroy it entirely so that the big corporations like UPS, FedEx and others that finance their campaign can earn all of the profits instead of letting the Post Office fulfill it's Constitutionally mandated duty.

Our tax system is certainly a nightmare, and if healthcare insurance is so important to our elected officials, why not make out-of-pocket payments deductible? Because it would mean fewer people paying taxes and they're complaining about that enough already. Why not take the healthcare finance money directly from everyone and then pay the expenses through an efficient government-run program like Medicare or Medicaid which already do that? Of course, we know why — power and control. The insurance companies want the power and control over our healthcare decisions to rest in their hands, not ours. Because don't forget, we are by definition our own government, per our founding documents and based on everything we hold sacred in our country.

If we can fix this mess, there will have to be a transition period to a fair system. But the way we are going, we’re going to get the giant fast food version of healthcare. Would you like fries with that?

GOP launches effort to replace Obamacare with something that works (Satire)

Republican leaders in the House and Senate held a press conference today to announce their plan to replace the failing health care system in the United States.  Speaker of the House Paul Ryan spoke about their comprehensive solution by describing the thinking process that went into the development of the plan.

“After much deliberation and thought, we have come to a consensus that Obamacare has failed our great country, and that our citizens deserve better.  The principles that guided the development of this plan were articulated very well by his speech on Tuesday night.  Those principles are to expand choice, increase access, lower costs, and at the same time, provide better health care," Ryan said.

“This new plan will allow our young people to remain on their parents plans, will not discriminate against preexisting conditions, will provide choices in the marketplace for health care insurance and doctors, will pay doctors and health care facilities fairly for the wonderful work they do taking care of our citizens, and will help state governments provide for their people by moving decision making power out of the hands of a federal bureaucracy.”

Ryan pledged that nobody currently covered by a plan that came from the Affordable Care Act would lose coverage, and that the 20 million people who still do not have coverage will get access to a doctor soon under the new plan.

“Families in our country are hurting, and we have to fix this dire problem with a solution that works for everyone.”

When asked for specifics, Speaker Ryan said “everywhere you now see Obamacare or the ACA, you will now be required to call our healthcare system by a new name.  You can call it Trumpcare if you like, but after consultations with our base, we have come up with a new name that pleases everyone.  Let the word go forth that the new standard of care on our nation is the American GAS Act.  This will solve all of our problems, I guarantee it.”

Democratic minority leader Nancy Pelosi responded to the Speaker's announcement by asking reporters to look carefully at the details of the legislation and inform the American people that as citizens it is our responsibility to be aware of what is happening on Capitol Hill.  “The exact details of how much tax money it will take to change all references in our laws and administrative procedures, not to mention mandating that all media outlets begin using the new name for our health care system, Trumpcare, is not known yet, and we look forward to those discussions.”

When asked what Pelosi thought of the change to the American GAS Act, she replied, “I will need to speak with Speaker Ryan about what he thinks it stands for, but I'm confident that it means what I think it means after the President's speech.  America gives a shit.  I suppose the base that he was referring to was the oil and gas industry, and they came up with the idea because that industry wanted more advertising.  But then you never know.”

“But please realize,” she concluded, “that this new Act by Congress does not actually repeal any of the aspects of the previous law.  Because all of those provisions are extremely popular with the American People, and even this President is smart enough to realize that removing health care access from people is a bad idea today.  So we'll see what happens but I am of course hopeful for our future.”

The most terrifying words...

In 1980, while running for US President, Ronald Reagan described the nine most terrifying words in the English language. "I'm from the government and I'm here to help." This was a libertarian battle cry, and it described a world where the free market reined supreme.

It also told the people of my country that we were on our own. That the government was not here to support them, that it didn't care whether we worked or starved, lived or died. That our incoming President of the United States did not care whether we worked or starved, lived or died. Being eleven years old in 1980 I remember watching this speech on television, but I don't remember my grandparent's reaction. Probably because they had left the room in disgust. Being of the Greatest Generation, they knew exactly how much of a lie that was.

In 2003, I heard nine words over the telephone that terrified me. "The results came back, and your cancer is confirmed." I have never been so scared in my life. I was actually at work, and so the first person that I was able to talk to was my supervisor and department director. They could see how scared I was. And they had my back. My employer based health insurance covered it. Without that insurance, my wife and I would likely have had to sell our condo. But not everyone has an employer with the resources and willingness to provide great health insurance to their employees. And so many of our people don't have employers at all, either self employed or not employed. What were they supposed to do if they ever got a phone call like that?

That's why I started getting politically active in 2003. That's why I worked my way up the ranks within the Democratic Party to Chair of my local party organization, and that's why when Bernie Sanders put out the call for Medicare for All in 2015, I dropped everything to help him. Longshot, yes. But my fight with cancer was a shot across the bow, and I wasn't going to take no for an answer.

At the Democratic National Convention in Philadelphia, I stood watching and listening on Thursday night hoping that the winner of the Democratic Primary would say the right thing. These are the words that she used: "If you believe that every man, woman, and child in America has the right to affordable health care, join us." I sat down, devastated. I said then and I say now that we need to do better than that.

This morning I was checking my phone, and someone I got to know during the campaign told me the four most terrifying words in English language. "I don't have insurance." This is a mother with kids, someone who cares about her community and wants to build her community. And she is worried about getting sick. This is not acceptable. This is not tolerable. This is why I fight, and will not stop fighting until we never, EVER, hear those words from anyone in our country again.