.

[Otis11 + 551]

13 hours ago, Enthalpic said:

Short version - already have money working for you.

Not sure If I would list car washes and arcades as recession resistant industries.

Maybe a funeral home, no matter how broke you are the dead still need to be dealt with.  Plus there will probably be a further uptick in gun violence. LOL 

If you don't already have money, then what's the threat of inflation that you're trying to hedge against? Typically Wages keep up with inflation as well (though at about a six month lag) unless it's stagflation.

Yes, if recession and inflation car wash and arcades may not be resistance, but in a purely inflationary scenario, any business should be relatively resistant.

And funeral home would be a good one - though I'm not familiar with the regulations around that. If you're betting on a recession, crematorium would also be good (cremations go up during recessions), and some way to profit from low-end liquor, beer, and cigarettes.

Starting to get off topic, however, so I'll leave it at that.

[Otis11 + 551]

11 hours ago, Jan van Eck said:

Well, let's remember the "Grand Republican Battle Plan" as envisaged two decades ago.  It was to "starve the Beast," meaning Washington and the US Congress spending, by continuing to pass tax cuts until the Fed ran out of money.  Then Republicans would refuse to raise the debt ceiling and finally Washington would be "starved" of cash and forced to cut, cut, cut.   The Republicans of yesteryear literally had wet dreams over that concept. 

The reality turns out to be less pleasant.  The Republicans were fast on the draw to pass the tax cuts, which they did with abandon, and to lie to themselves and to the People that it was for the benefit of Mr. and Mrs. Workingman, when in fact they were designed to cut the taxes levied on "the rich," or the one-percenters  (their own crowd).  That by itself is not surprising; cliques or groups in Washington have historically designed legislation to primarily benefit their group.  Your referenced Washington Examiner article relates how Republicans passed Medicare Part D  (the prescription drug benefit, effectively free medications for old people), which actually happened specifically because George (W) Bush '43 needed to capture the Florida vote for re-election, and Florida is crammed full of old wrecks waiting their turn to die.  By handing those voters the promise of free stuff  (the drugs), he captured their votes.  Traditionalist Republicans are and were aghast at this unorthodoxy, it was a straight Democrat-Playbook move, but George saw the potential and really needed that Florida vote, so in it went. 

And you get this out of Washington politicians.  Presidents typically have a difficult time attracting and keeping talent in the Administration (and particularly the Cabinet and the White House), so the people that do arrive tend to be morally corrupt, or at least dubious.  You might remember the scene with Bill Clinton out on some golf course walking along with Tiger Woods, the two chuckling over their private tales.  When asked later what they were laughing about, Clinton replied:  "Pussy."  So here you have these guys whose lives in large part fixated on their genitalia talking about the women they have had their one-night stands with.  You will recall that Hillary Clinton was considerably more tolerant of this behavior than was Elin Nordegren, who flailed on his car with a golf club, denting up the roof, and then kicked him out of the marital bed and divorced him.  But that is classically American, a population obsessed with genitalia. 

When you take these people and make them "advisers,"  you end up with the pigs and bums from Goldman Sachs on Wall Street coming in and leeching from the public purse, so you have Hank Paulsen demanding a quick trillion to bail out Wall Street.  That bill is now up around ten trillion, nobody really knows, while Wall Street continues to steal residential homes by corrupt Court processes from very ordinary Americans.  Some 22 million homes have been literately stolen by Wall Street with forged and "re-created" paperwork, effectively lies (known legally as Fraud upon the Court), all financed by the Federal Government and nobody goes to jail for the crimes.  This concept is known as "privatizing the profits and socializing the losses" and is a game played by politicians all over in America, both the Dems and the Repubs.  So there is a lot of blame to go around. 

The old Republicans genuinely hope for a societal collapse from their "starve the beast" concept.  They want that because then, so the idea goes, their wealth position will be cemented, and the population will be so starved that they will sullenly accept economic penury in exchange for enough food to stay alive. There is merit in that idea.  It effectively re-creates medieval feudalism, with the landed class, now including Wall Street and the stolen houses, in charge and everyone else a serf working effectively as a plantation slave.  This is classic Depression Economics:  economic depressions can be very pleasant for the landed class, as you can have cooks, and valets, and groundkeepers, and chauffeurs, and all the servants you want, a bit like Downton Abbey with its Edwardian Estate as played out on the British Masterpiece Theatre, and shown to the Americans on PBS. Those workers are cheap, you pay them effectively room and board and a little cigarette money.  They work for you because there is no alternative.

What Republicans forget is that this approach will result in a violent outburst, and you saw that in Colombia, where the idea was promoted that the "rebels" were country criminals involved in the drug trade; in reality, the gangs were the result of economic class warfare, with the oppressed going after their oppressors, typically by kidnapping and demands for large ransoms, and also the violent takings of land and plantation stores. In America, there are so many guns around that some analogous uprising will likely occur, and the rich will see their estates invaded and their families murdered.  These are very unpleasant prospects, yet I view them as inevitable.  In my view, house purchases in Eastern Long Island, an area known as the Hamptons, is a loser.  Those estates will suffer home invasions, lootings, arsons, and murders in the coming unrest. There are simply not enough policemen to keep the lid on.  The Chinese see the same possibility and have invested in facial-recognition software and obligatory papers, the hated "Passbook" system that led to violent overthrow in South Africa, which the Chinese actually think they can nip in the bud with their Gulag prison system  (as does the USA with their own Gulag prison system, although that is in the main designed to imprison black males, and will be unable to cope with the violence of whites in class warfare, but I digress). 

The financial turmoil from the tax cuts will wreck the US economy, simply because at some point, assuming interest rates ever rise, the interest on the debt becomes unpayable at current Federal revenue rates.  The old-line Republicans with their starve-the-beast ideas actually think that, at that point, the entitlement programs will be abolished.  That is political orthodoxy, but it ignores reality.  If the entitlements disappear, then what they now support, the millions of the impoverished living paycheck to paycheck, will massively default on their debts, and the social mechanism that valves that debt off, the bankruptcy courts, cannot handle that load.  Violence will ensue. The last time the USA had that scene was in the riots following Rodney King, and at one point at least 50 cities were ablaze. As the poorer populations expand rapidly, and society has become more extreme in the distribution of wealth, the violence will be uncontrollable.   You can hand out MRAPs and armored vehicles to police departments like so much candy, it is not going to do anything to stem what comes. 

You can only get a handle on the Federal Debt (and deficit) by massive restructuring.  One aspect of that would be the discharge of vast numbers of Federal Bureaucrats, those people who commute into and out of Washington each day in droves of millions, and spend their time holding meetings and accomplishing effectively nothing. For example, "Homeland Security" has some 165,000 employees and arguably accomplishes nothing, other than to dream up airport patting of Xerox salesmen and gawking at the genitalia of passengers with those fully-body x-ray scanning machines, that so graphically reveal dangling testicles, penis length and girth, and women's breasts.  And again, they design these machines to titillate, not to improve aircraft security, all that is a colossal gong show.  No thinking person today takes the Federal Government bureaucrats seriously. 

Politicians of both parties are aghast at the idea of firing even one Federal employee, as they are the single most vocal voting bloc and have the largest voter turnout of all groups, and large numbers live in Virginia.  Virginia is a critical "swing State" in Presidential elections, and is a "purple" State, can be swung either way, so nobody gets fired.  But you do need to discharge that million bureaucrats because the consume vast salaries, but also do a lot of damage by dreaming up ever more crazy Regulations, which end up codified into law at the books of "Consolidated Federal Regulations," known as the "CFR."  If you are not attuned to this, or run against it in your work, I can assure you that you have no concept, zero, of just how bad and how totally ridiculous those Regulations are and have accumulated, as each succeeding generation of bureaucrats add to the stock of ever increasing CFR's. 

Trump purists have the idea that he, and only he, would have the big brass balls to actually do it, to go fire a million bureaucrats, but unfortunately he has also become obsessed with the Washington siren song of re-election, and has succumbed to the political reality that he needs that voting bloc and the electoral votes of Virginia to gain re-election - so he will not.  And if Trump is not the man to do it, then in my view it cannot be done, ever. Playing at "President" is totally seductive, you have 400 men as your Praetorian Guard, your fleet of aircraft that would make a Sheik or Sultan blush, your limousines, your grand State Dinners and meeting the Queen (and your family having dinner with her, and Princes and Presidents), you ability to go order the entire world around,  and Trump is not a Ralph Naderite figure of asceticism, so Trump, that lover of granite marble tops and gaudy curtains and bathroom fixtures and hanging with Epstein figures, also will not do the firing.  Conclusion: it is not going to happen. 

Moving on to the issue of the military:  let's remember that, at the onset of WWII, the US Navy was a "small boat Navy."  Yes, it had some battleships from WWI and the inter-war years, which mostly got sunk at Pearl Harbor, but mostly it was stuff the size of corvettes and frigates.  The USA has these two very wide oceans that separate it from the world, and aside from Russian submarines there is really nothing out there to do serious damage. Notwithstanding, Newport News Shipyard has these contracts to just keep building this vast fleet of very expensive aircraft carriers, each of which costs around $13 billion, and needs some 5,000-man crew to keep operational. What do you get for that?  You get the ability to project power on the world stage - but you need none of that for actual coastal defense, let's get real here. And it is the same story with the other very expensive military hardware.  Can you scrap it all, demobilize that huge army, and go hunker down behind the borders?  Well, you don't need an army for the Canada border, and you need very little for the Mexico border, so the answer is Yes.  Armies are expensive because you incorporate all these future obligations, health-care and retirement pensions as well as the hardware costs.  So it can be dispensed with, but that requires a change of mindset. 

The current mess of expanding deficits and debt is largely the result of one man:  Dick Cheney.  But that paranoid wreck is long gone, so forget about him, and start to unwind the huge net he has cast, fire the bureaucrats, fire the military contractors, get rid of it all, and start fresh.  I actually thought Trump could pull it off.  Nope, he too has succumbed to the siren song.  Oh, well. 

 

Thank you for taking the time to write all of that out - very interesting view points to consider. To confirm I'm following your response, your essential position is that we should cut the military because it's unnecessary, however you are fully aware these cuts will make little meaningful impact to the actual deficit. From that perspective we unarguably must cut entitlement spending and size of federal staff, but no one can actually accomplish that because it would be political suicide. As such, the only plausible options out are either massive inflation (turning everyone into a wage slave except the 'ruling' class) or revolution (which i personally view as unlikely given military technology and how easy it would be to cordon off sections of desirable places to live as 'safe zones' for the wealthy).

Did I understand that correctly?

Would it not be possible to simply stop promising more entitlements, have the 'inflation' adjustment not keep up with actual inflation by under-representing the true state of things, and freeze (or at least severely limit) new hiring at federal agencies to the point where the agency shrinks based on retirements? Would this not be politically feasible (because people wouldn't notice the effect for longer than a presidential term) and still reduce entitlements, current wages, and future liabilities?

Additionally, if entitlements are phased out slowly enough, it will mitigate any shocks to those receiving them. (IMO most of these entitlements are actually business subsidies to those companies that use unskilled labor - and has a huge psychological detriment to those receiving them. There are other ways to take care of the most vulnerable that are more productive - but that's really getting off topic)

[Jan van Eck + 7,558]

1 hour ago, Otis11 said:

Thank you for taking the time to write all of that out - very interesting view points to consider. To confirm I'm following your response, your essential position is that we should cut the military because it's unnecessary, however you are fully aware these cuts will make little meaningful impact to the actual deficit. From that perspective we unarguably must cut entitlement spending and size of federal staff, but no one can actually accomplish that because it would be political suicide. As such, the only plausible options out are either massive inflation (turning everyone into a wage slave except the 'ruling' class) or revolution (which i personally view as unlikely given military technology and how easy it would be to cordon off sections of desirable places to live as 'safe zones' for the wealthy).

Did I understand that correctly?

Would it not be possible to simply stop promising more entitlements, have the 'inflation' adjustment not keep up with actual inflation by under-representing the true state of things, and freeze (or at least severely limit) new hiring at federal agencies to the point where the agency shrinks based on retirements? Would this not be politically feasible (because people wouldn't notice the effect for longer than a presidential term) and still reduce entitlements, current wages, and future liabilities?

Additionally, if entitlements are phased out slowly enough, it will mitigate any shocks to those receiving them. (IMO most of these entitlements are actually business subsidies to those companies that use unskilled labor - and has a huge psychological detriment to those receiving them. There are other ways to take care of the most vulnerable that are more productive - but that's really getting off topic)

You would only cut the military budget if your objective were to provide only for "Defense."  If you want to project military power around the globe then you can spend as much as you like.  But realistically, if all you want to do is "Defend" the shoreline, then you don't need a fleet of nuclear aircraft carriers to do that. 

For example, right now there is a big military procurement contract to go build what are known as "Littoral combat ships."  They are not to protect the USA, that can be done easily enough with shore guns and shore aircraft. Those expensive ships are built for the purpose of protecting "Other peoples coastlines."  For example, the coast of the Philippines.  Now, if you find that to be a worthwhile objective for Americans to go spend their money on, then you go build those ships.  But if not, then building them is nothing more than a huge drain on the treasury in order to finance some military shipyards. 

Military contractors are going to continue to take huge gobs of taxpayer money as long as you let them do it. They have no shame.

The military cannot, at least not legally, be used to "defend" internally against revolution.  The Founding Fathers specifically were wary of standing armies, did not want any army except in time of war, and instead opted for civilian militias.  That is where the 2nd Amendment and the right to bear arms comes from. This principle of non-military involvement in uprisings was coded with the Posse Comitatus Act, which specifies that the military is to remain in their barracks. In practice, I find it hard to believe that a President would not ignore Posse Comitatus and order the army out nonetheless, which it did during the Vietnam years when various Marches on Washington were made.  In those cases, the army was sent to encircle the Pentagon with fixed bayonets.  The protesters then inserted flowers into the gun barrels of the soldiers.  As those soldiers were draftees, they were not all that keen on Vietnam in the first place, so no shooting on civilians.  Then along came Kent State. 

Today the army does not draft; the top brass is shell-shocked over the fallout from the draft in Vietnam.  The disadvantage of this is then you end up with a military that gets disconnected from the civilian population it is supposed to be drawn from and is supposed to protect.  The military then becomes an instrument of force for a distant government.  At that point the USA starts to look like Venezuela. 

In America, revolution is very much a possibility.  The guns are out there.  Yet the population itself has lost interest in the original concepts of liberty, of self-evident truths.  Nobody knows how that would end up.

Moving on the "entitlements," you cannot simply do away with them, but you can install "means tests."  For example, Medicare and Social Security would be limited to those with no money. Means tests would dramatically lower the bills.  You are correct in observing that vast gobs of cash are paid to corporations as effective entitlements.  The various US sugar companies are a good example of this. Can you remove corporate entitlements?  Only if you can dismantle Wall Street. And you can only do that if you are prepared to raid some Wall Street bank, haul off the executives, and pack them off to Guantanamo, let them have breakfast with the mujaheddin. The gorging of the taxpayer stops the next day. The pigs get the message.

Edited August 15, 2019 by Jan van Eck

[Madistan 0]

6 hours ago, Otis11 said:

if entitlements are phased out slowly enough, it will mitigate any shocks to those receiving them. 

Thanks, I needed a good laugh. By slowly phasing out entitlements, people will not notice they are sick, or hungry or without a home. Ingenious!!!!

[ronwagn + 6,290]

22 hours ago, Zhong Lu said:

There's also the minor point that as things get more and more automated, the only solution is "socialism" or some sort of universal basic income.  

The average person isn't smart enough to compete with the AI that we will have in the future.  How else are you going to keep society from exploding if there isn't some form of wealth distribution from the top (the ones who control the AI) to everyone else? 

Socialists have always made the same statements and they ALWAYS make things far worse. Socialism does not work.

[SR71 + 6]

perhaps Chinese billionaires and provincial governors, who, BTW, have been known to hold back transfer of income tax receipts from provinces to Beijing, will be able to replace president-for-life  Xi with less of a hardliner. Just like Andropov and Gorbachev replaced Brezhnev ( although they were helped by Brezhnev dying while still in office)

[ronwagn + 6,290]

On 8/17/2019 at 11:07 AM, SR71 said:

perhaps Chinese billionaires and provincial governors, who, BTW, have been known to hold back transfer of income tax receipts from provinces to Beijing, will be able to replace president-for-life  Xi with less of a hardliner. Just like Andropov and Gorbachev replaced Brezhnev ( although they were helped by Brezhnev dying while still in office)

Isn't it more likely that they end up in the Chinese Gulag or whatever it should be referred to as?

[ronwagn + 6,290]

On 8/15/2019 at 8:12 AM, Otis11 said:

If you don't already have money, then what's the threat of inflation that you're trying to hedge against? Typically Wages keep up with inflation as well (though at about a six month lag) unless it's stagflation.

Yes, if recession and inflation car wash and arcades may not be resistance, but in a purely inflationary scenario, any business should be relatively resistant.

And funeral home would be a good one - though I'm not familiar with the regulations around that. If you're betting on a recession, crematorium would also be good (cremations go up during recessions), and some way to profit from low-end liquor, beer, and cigarettes.

Starting to get off topic, however, so I'll leave it at that.

I managed a furniture store for a large chain. My career there lasted fifteen years before they cashed out of their lease-back stores which numbered about seventy. Most of the leases were up by then. 

I started out as a salesman making a nice $700 a month guarantee about 1968. Fifteen years later inflation probably cut the value of that guarantee in half yet the amount never changed. That was through inflation called stagflation. When President Nixon tried to put price controls in place they would change model patterns by changing button patterns etc. It became much more difficult to hire decent help.