Ponzi scheme meltdown the second leg?

K

KINGOFSHORTS

It looks like numbers indicating much bigger layoffs in the future, primarily state/federal workers.

What will be interesting is lets say we cut 1-2 million state/federal employees how will the ponzi scheme hold up. In order for a Ponzi scheme to work you need enough people paying in so that others can cash out.

A big portion of our workforce is state/federal employees. Our federal/state government have been employing more and more people as private industry was offshoring more and more jobs to Red China etc..


So when we start pulling the final rug, I wonder what the impact will be economically. Since those unemployed workers will not be buying your (Made in mexico,china,india,etc..) product.

The irony is lots of private industry make money from the Ponzi thanks to are growing mega federal/state jobforce making up for the lost private jobs.
 
Interesting factoids.

In 2008: 19,437,000 or over 14% of our 137 Million tax payers work for the Government earning an average wage of $51407.

In 2008: when unemployment was < 5%, 6,700,000 or over 2% of the adult population in the US were in Jail or on probation.

2011 Estimate: 40 Million unemployed, 6 Million jailed or on probation and 24 Million on government payroll and in military service.

This is over 50% of our tax payers... Leaving one hell of a load for the remaining tax payers to carry. Add in caring costs for our elders (Social Security and Medicare etc.)

Immigrating to Haiti and starting over from scratch is an easier task.

Reality is we can generate all the taxes we need to operate our govt if we enact a simple 1% tax on all monetary exchange.

Every time you deposit money in the bank you get dinged 1%.
Every trade - ding 1%
Every exchange of consideration gets dinged 1%.
Every foreign transaction using dollars gets taxed 1%

Simply eliminate paper money and go all electronic with the ding built in.

No exemptions or loopholes, All govt agencies work on a cash based balanced budget and all transactions without exceptions get dinged 1%.

No income tax, No sales tax, no property taxes, no gasoline tax, no telecommunication tax... infact, all other taxes of any kind are abolished and declared illegal.

GDP is a false indicator... Continuously Taxed Monetary flow is the bottom line solution.
 
Quote from KINGOFSHORTS:

It looks like numbers indicating much bigger layoffs in the future, primarily state/federal workers.

What will be interesting is lets say we cut 1-2 million state/federal employees how will the ponzi scheme hold up. In order for a Ponzi scheme to work you need enough people paying in so that others can cash out.

A big portion of our workforce is state/federal employees. Our federal/state government have been employing more and more people as private industry was offshoring more and more jobs to Red China etc..


So when we start pulling the final rug, I wonder what the impact will be economically. Since those unemployed workers will not be buying your (Made in mexico,china,india,etc..) product.

The irony is lots of private industry make money from the Ponzi thanks to are growing mega federal/state jobforce making up for the lost private jobs.
More...

Good observations and I've been arguing these same points these past few years. Stimulus goes far beyond the big dollar figures that get debated in the media, it's the more "stealth" like sources of backdoor stimulus by way of parabolic Federal employment, always emerging new agencies and other such ways to offload some of the pressure on the private sector for job growth.

We should also not overlook the fact that these generous guaranteed retirement packages (defined benefit as well) that create little to no incentive for public sector employees to save anything. Therefore, that $40k-$70k salary or whatever it may be goes towards current consumption and kept consumer spending going while the private sector and high double digit unemployment portion of workers fell off. If you take away those generous retirement bennies AND potentially start massively shrinking the size of this sector, it will have a tremendous effect.
 
Creating specific agencies and regulation can be a good way to stimulate the growth of a targeted industry. Like, rebates for solar investments. Similarly, if you want a strong aerospace industry, pump lots of demand through the system by building up your airforce. This can be very useful, but if priorities change, for example, budget cutting, before the industry can really self-sustain, one can end-up hurting the targeted industry more than it helped. Unfortunately, assisted industries rarely want to appear self-sustaining as a result. Well, that is politics for you.
 
Quote from denner:

Good observations and I've been arguing these same points these past few years. Stimulus goes far beyond the big dollar figures that get debated in the media, it's the more "stealth" like sources of backdoor stimulus by way of parabolic Federal employment, always emerging new agencies and other such ways to offload some of the pressure on the private sector for job growth.

We should also not overlook the fact that these generous guaranteed retirement packages (defined benefit as well) that create little to no incentive for public sector employees to save anything. Therefore, that $40k-$70k salary or whatever it may be goes towards current consumption and kept consumer spending going while the private sector and high double digit unemployment portion of workers fell off. If you take away those generous retirement bennies AND potentially start massively shrinking the size of this sector, it will have a tremendous effect.
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Exactly, it is a serious corundum. And you hear of duplicate agencies, like 40 agencies that do the same. Obvious they are BS jobs just to generate more jobs to keep the velocity of money elevated.



Private industry is not going to take up the slack because technology has made humans obsolete in many processes, and the other side is the 2 dollar an hour chinese laborers or the 4 dollar an hour chinese/indian IT workers,programmers,etc.. (White collar jobs)

All Ponzi schemes collapse with a big bang. Look at the Madoff scheme, it worked for decades and then one BIG disastrous bang.

I see the USA in serious trouble. And when you end up with a large idle/unemployed overeducated youth you have problems.


Look at some of these examples. And its the tip of the iceberg. The whole thing is a Madoff style ponzi scheme that is unraveling one piece at a time.

http://www.bloomberg.com/news/2011-...icate-ineffective-programs-cost-billions.html


In 2007, the U.S. Agriculture Department paid $1.1 billion in farm subsidies to 170,000 dead people. Fifteen federal agencies now oversee 30 food laws, and at least four departments compete to administer 80 economic development programs.
 
In 2008: 19,437,000 or over 14% of our 137 Million tax payers work for the Government earning an average wage of $51407.

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The key word here is "taxpaying" workforce.

I believe the number of gov't workers is larger than 14% if you include those who work for the gov't and do not pay taxes.
 
Well I suppose you can add in prime military contractors and all unemployed receiving benefits and retirees receiving social security to the govt subsidized roll. Might as well add in all foreign entities receiving aid. Probably closer to 50%.

I still believe stripping all the fat, charging a flat 1% monetary exchange tax and requiring cash balanced budgets is the only way to mitigate the ponzi affect and get back on track.

No individual tax filings.. just business filings tied to their EIN much like sales tax. If its all electronic taxes are collected and remitted each day.

As long as the $ remains the world's reserve currency we collect world wide. The fed can distribute the funds on a per capita basis to each state. The states distribute per capita to the counties which trickles down to each municipality. There would be a lot of accountants and lawyers out of work.



Quote from nutmeg:

In 2008: 19,437,000 or over 14% of our 137 Million tax payers work for the Government earning an average wage of $51407.

----------------------

The key word here is "taxpaying" workforce.

I believe the number of gov't workers is larger than 14% if you include those who work for the gov't and do not pay taxes.
More...
 
40 Million unemployed, 6 Million jailed or on probation and 24 Million on government payroll.

This is over 50% of our tax payers... Leaving one hell of a load for the remaining tax payers to carry. Add in caring costs for our elders (Social Security and Medicare etc.)

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As being my own consultant and 1099, I show very little in personal income that is taxed. I follow the tax code but still show far less than what I make. Of course I pay property tax, sales tax, this tax that tax, but I no longer fall under AMT as I did when I worked as an employee of the Private Equity Firm. Due to the "Current" economic situation and political climate, we all opt'ed to go straight 1099, no base salary, no benefits, only the access to our Client book, pitch books, and offices & Jets (Company pays gas) when we need them.

Also, I'm learning how to shoot my AR 15 at 200 yards, spot on. I know how to use my 9mm at a range but learning how to use it on the "GO"...running, moving, etc.

So, when this Ponzi Scheme does meltdown, No worries on my end.


With that said, there are some good observations, as I read the thread. Yet, the stone hard and cold fact is; there is not a damn thing anyone on this thread can do about the current situation. It is outa our hands. The economy is local and it is even more local now as in "Your own house hold".

Plain and simple. The current political movement pushing us towards socialism, the Old Dog Republicans who are not going to change anything, the FED who will continue QE3,4,5,6, the destruction of Jobs, the devaluation of the dollar, Higher Energy, Higher Food prices ....all out of our control.

They only control we have is how much money we can make, make hay while the sun shines, kick ass and take names and build our wealth. Of course I put God first before money but I'm sure God's deep understanding of the current situation is to play by the rules, help others when you can and KICK ASS AND MAKE MONEY.

The Meltdown has begun and all we can do is either be pro-active or Re-active. 90% of Americans will be Re-active.
 
Quote from PocketChange:

Interesting factoids.

In 2008: 19,437,000 or over 14% of our 137 Million tax payers work for the Government earning an average wage of $51407.

In 2008: when unemployment was < 5%, 6,700,000 or over 2% of the adult population in the US were in Jail or on probation.

2011 Estimate: 40 Million unemployed, 6 Million jailed or on probation and 24 Million on government payroll and in military service.

This is over 50% of our tax payers... Leaving one hell of a load for the remaining tax payers to carry. Add in caring costs for our elders (Social Security and Medicare etc.)

Immigrating to Haiti and starting over from scratch is an easier task.

Reality is we can generate all the taxes we need to operate our govt if we enact a simple 1% tax on all monetary exchange.

Every time you deposit money in the bank you get dinged 1%.
Every trade - ding 1%
Every exchange of consideration gets dinged 1%.
Every foreign transaction using dollars gets taxed 1%

Simply eliminate paper money and go all electronic with the ding built in.

No exemptions or loopholes, All govt agencies work on a cash based balanced budget and all transactions without exceptions get dinged 1%.

No income tax, No sales tax, no property taxes, no gasoline tax, no telecommunication tax... infact, all other taxes of any kind are abolished and declared illegal.

GDP is a false indicator... Continuously Taxed Monetary flow is the bottom line solution.
More...

That 1% rule will only add about 140 billion in tax revenue.

The government needs to stop spending,starting with education. Stop giving more money to the schools that do the worst. I'm tired of schools being paid to fail. The government should only pay for kids to know the basics...reading, writing, and math. Everything else should be on the parents as a paid elective. Biology, P.E. home economics, history, spanish....those should all be paid electives. Most people will not use 80% of what they learn in school anyway, so why would we pay for it? The the students that want to learn, learn like they did in the old days. Get their own books and study it. Librarys are free and should be in use more anyway.
 
1 % of GDP is just a small fration.
Add 1 % of all monetary exchange of any kind.
All Deposits
All withdrawals
All Tax exempt (wholesale, Manufacturing)
All Foreign tax exempt where $ is used to settle (all oil contracts)
All Trading Buys
All Trading Sells

Just ding every $ exchange of any kind 1%.
No exceptions, no loop holes.

As long as the dollar remains the reserve currency of the world the world pays 1% too.


Quote from peilthetraveler:

That 1% rule will only add about 140 billion in tax revenue.

The government needs to stop spending,starting with education. Stop giving more money to the schools that do the worst. I'm tired of schools being paid to fail. The government should only pay for kids to know the basics...reading, writing, and math. Everything else should be on the parents as a paid elective. Biology, P.E. home economics, history, spanish....those should all be paid electives. Most people will not use 80% of what they learn in school anyway, so why would we pay for it? The the students that want to learn, learn like they did in the old days. Get their own books and study it. Librarys are free and should be in use more anyway.
More...
 
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