Tuesday, November 24, 2015

90% Tax Rates

Let me tell you how it will be
That's one for you, nineteen for me
--The Beatles

Interesting review of the infamous 90% top marginal tax rate imposed during the 1950s--something many progressives would like to reinstate today. After accounting for tax deductions and loopholes available during the period, studies suggest the effective top tax rate paid was about 45%--not far from today.

Moreover, few earners actually made it to the top bracket (which actually made it to 91%)--given that there were a mind boggling 24 different tax brackets (there are seven today). Only earners bringing in an inflation adjusted $3.5 million found their way into the 90% bracket.

An important result of the '90%' period is that total tax receipts did not increase. In fact, total receipts have not changed appreciably since 1950.

The author also links to a study that includes a graph of fraction of total taxes paid by group. Analysis indicates that the highest quintile of earners have increased their share of total income taxes paid from 55% in 1980 to nearly 70% today.

Unfortunately, this is unlikely to discourage progressive from wanting to take more.

Monday, November 23, 2015

Junk Sale

All you got is this moment
The twenty-first century's yesterday
You can care all you want
Everybody does, yeah, that's ok

While stocks party on, junk bonds have been reluctant to join the fun.

In the old days, bonds were viewed as 'smarter' than stocks. Movement in bonds often served as harbingers for stocks. The riskiest of bonds thus served as canaries in the coal mine.

Whether that pattern comes to fruition here remains to be seen, of course. The current divergence between stocks and junk is noteworthy nonetheless.

position in SPX

Sunday, November 22, 2015

Edible Gold

"Gold, gentleman, can be melted down and recast, is virtually untraceable...making it, unlike diamonds, ideal for smuggling...attracting the biggest and most ingenious criminals."
--Colonel Smithers (Goldfinger)

"You can't eat gold," some say. Well, you can't eat $20 bills, either. The issue is not the nutritional value of gold, but whether it serves as a better medium of exchange and store of value than paper currency.

On that basis there should be little doubt. Paper currency can be printed until there are no more trees. In fact, in the era of digital currency, there is no limit as to how much is 'printed.'

The supply of gold, on the other hand, is limited. It is also divisible, recognizable, portable, and durable. These are all desirable characteristics of money.

This is why people have always fallen back on gold as a reliable money for thousands of years.

The more accurate statement is that, over time, you can eat more of what gold will buy than what that $20 bill will buy.

position in gold

Saturday, November 21, 2015

Unaffordable Care Act

I need you to soothe my head
Turn my blue heart to red
--Robert Palmer

Growing awareness that the 'affordable' aspect of the Affordable Care Act is a myth. Obamacare is pairing higher deductibles with higher premiums--a feat that only a government-sponsored insurance program could achieve.

Sadly, this was completely predictable.

Friday, November 20, 2015

Drying Up

The moon looks mean
The crew ain't stayin'
There's gonna be some blood
Is what they're all sayin'
--Jay Ferguson

Report shows Baltic Dry index, a composite of international cargo shipping rates, marking all time lows.

The message here is clear: weakening global demand, with China on point.

Thursday, November 19, 2015

Taking in Strangers

I see you on the street and you walk on by
You make me wanna hang my head down and cry

Individuals who voluntarily take strangers into their homes and care for them do so presumably for humanitarian reasons. They peacefully open their hearts to others because believe that it is the right thing to do.

Individuals who want to force others to take strangers into their homes and care for them are not humanitarians. They are oppressors, autocrats. They seek to impose their will on others thru use of threat of violence.

Perhaps this oppression is justified by use of some form of greater good accounting. Nonetheless, the principle of Do No Harm is violated.

Wednesday, November 18, 2015

Getting Physical

I've been patient, I've been good
Tried to keep my hands on the table
It's getting hard this holding back
If you know what I mean
--Olivia Newton-John

Despite paper gold prices hitting recent lows, sales of physical gold, such as US gold eagles, are at levels not seen since the credit market meltdown.

Have also noticed premiums widening between spot gold price and price of gold products at dealers such as APMEX.

Combine these data with observations that COMEX bullion is leaving warehouses around the world and you have an increasing divergence between the paper and physical markets.

position in gold

Tuesday, November 17, 2015

Alternatives to Militarism

"You seem to be the very thing you set out to destroy. Giving evil for evil. Hatred is turning you to stone."
--Esther (Ben-Hur)

Ron Paul prescribes the correct alternatives to militaristic retaliation against the Paris terrorism last weekend. Focus on free trade and friendly relations. Abandon 'regime change' and other forcible manipulations in foreign lands. Respect sovereign borders of other nations.

Develop self-defense capacity at home to repel aggression. But do not turn that capacity around and use it offensively.

Promote and exemplify peace and freedom. This is the true leadership position.

Monday, November 16, 2015

Hawk Heaven

"This business will get out of control and we'll be lucky to live through it."
--Rear Admiral Joshua Painter (The Hunt for Red October)

In light of the Paris terrorist attacks, watch campaign rhetoric turn hawkish. Should a bomb subsequently go off on US soil, watch candidates trip over themselves to push the DEFCON button.

My first thought was that organized terrorist groups would not want such escalation to happen in a US election year. My second thought is that this might be precisely what these groups want.

Sunday, November 15, 2015

University of Juvenilization

"You can't handle the truth!"
--Col Nathan R. Jessup (A Few Good Men)

Captures the current state of affairs on many campuses throughout the country pretty well.

A free mind cannot develop unless it sheds the protection of juvenile thought in pursuit of truth.