Proverbs 22:3 NLT

A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.

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there is a decay of conscience, the pulpit is responsible for it))) --


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In Defense Of A Nation

Monday, September 9, 2013

By Michael Mccune: The Rant (US Government auditor for 16 years -Madoff Mistake, He Wasn't Elected- (( to Have Michael send you the Rant to your Email contact Him Here (( mccrant@gmail.com))

Madoff Mistake, He Wasn't Elected
Bernie Madoff is languishing in the Federal Correctional Institute in Butner, NC, convicted of running a Ponzi that garnered him about $50 billion.
 
A Ponzi scheme, named after Charles Ponzi because his operation was the first to take in large quantities of money in 1920, is simply a ruse to attract investors. Typically, higher rates of return are promised on the investment. The promoter sells his idea by taking advantage of the audience's lack of knowledge or competence to grasp the realities of the Ponzi setup.
 
In that scenario, the operator must eventually fail because of three reasons. First, the promoter tires of the juggling game and simply disappears into the night--politely taking the remaining funds with him. Second, since the scheme is based on a continual infusion of investment to fund the higher returns any slowdown in investment collapses the scheme. The lack of liquidity shown by decreasing returns triggers fear among investors creating, in essence, a run on the bank. Third, external forces, such as a sharp downturn in the economy can cause many investors to seek a refund as the funds are needed elsewhere to maintain a lifestyle. 
 
Madoff's was but the largest of the many Ponzis that have been privately operated. Our government, ever quick to pull the trigger against law breakers, deemed such activity a crime even though the investors willing paid their money for the promise of a higher return than could otherwise be collected. The government declared all Ponzis to be fraudulent activity and Charles Ponzi went down in history when his was the first prominent case.
 
But all of the convicted Ponzi operators lacked two things to be successful in their work--they were never elected officials at the federal level and they couldn't print their own fiat. Madoff's $50 billion is mere ante money in the scheme the government is operating. In fact the government has been so successful at its first attempt--Social Security--that it has added vastly to its repertoire of schemes since.
 
We, the citizens, were duped but continue to allow this to happen because we don't want our grandparents or parents or even ourselves to have to be encumbered with 'family' matters as mundane as aging. Politicians play on our compassions and periodically show their own by giving a Cost of Living Adjustment (COLA) to the current recipients.
 
Like last year's 1.7% increase. While it is welcome, I defy anyone on Social Security to demonstrate how this met their needs imposed by inflation. Energy, food and housing costs are all on the rise by more than 10% in the last year, all are necessary to living, yet the government officially set the COLA at 1.7% and there was no visible protest.
 
Unfortunately, even the 1.7% increase was above the government's ability to pay without the printing press it controls. Those on Social Security will claim they "earned" the benefit. Can't disagree with them there but I will take exception to being taxed to support the Ponzi called Social Security.
 
In the reasons for failing Ponzis in the third paragraph of this Rant, Reasons No. 2 and No. 3 are the chief causes for Social Security's financial problems. To be sure, Reason No.1 was also in play back in the days when we had the Permanent Social Security Trust Fund available. Those thieves (retired of deceased elected officials) stole that taxpayer-provided bounty to make their financial manipulations more palatable. But with the cushion gone in exchange for a  fistful of Congressional IOUs, an almost guaranteed slowdown in economic growth to continue into the foreseeable future and a citizenship slowly strangling on myriad layers of taxation for social programs, the current officials are going to be left holding the bag unless the printing press is run at full rpm.
 
Now America is less than four months away from the onset of the biggest government Ponzi--the ill-named Patient Affordable Care Act and its attendant host of regulations and confusing 'exchanges'.
 
Already the private sector has worked through the numbers and knows it cannot work on a company level. To defuse that protest, the Executive Branch issued an Order delaying the implementation date. But it hasn't slowed the problem this Ponzi will cause.
 
Several large companies, like IBM, have taken steps to remove pensioners from the crippling costs associated with this debacle. Otherwise they would be forced to raise sales costs to the point they wouldn't be able to be competitive and have to close their doors (which may happen anyway if they cannot rid themselves of enough full-time employers to get under the mandated line of 50.) Even the elected officials ran through the numbers and found out they wouldn't afford the program--so they were exempted from the mandates and subsidized unabashedly from the printing press via another Executive Order.
 
Obamacare's Ponzi promised many things--few, if any, can be delivered over the long haul. Like Social Security, when the number of people reaching benefit age surpasses the number of people working, even a printing press won't cover the problem for long. Then there will be a run on the proverbial bank. In the case of the 'insurance turned tax program' the breaking point will come when more people are receiving healthcare subsidies than are paying into the program.
 
Take a close look at the geographic numbers in America. More than 79 million people are retired. The economy is supporting under 100 million full-time jobs and has only 46 million jobs listed as part-time or temporary. For how long is that going to work for any government social program?
 
You have to admire a Ponzi operator's nerve from a private perspective. When you own the printing press and can guarantee the investment inflow through tax rates, it takes no nerve, just a sale of your vote at worst or a "Present" vote at best to abdicate authority to the Executive Branch.
 
But what this country cannot long stand is two sets of financial rules--one for the governed and one for the elected. The breaking point is steadily getting closer. The implementation of the Patient Affordable Care Act will be the straw that breaks the camel's back--if the camel can make it that far.
 
Who knows how much we might have bilked from the rest of the world if we had had the foresight to elect Bernie Madoff instead of our last two Presidents?
 
Bernie's only crime was not running his Ponzi from within the disgraceful halls of government but he knew what he was doing. He might even have revived our economy by bringing full-time jobs back to the United States just to operate the Ponzi. 
 
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson
 
As first noted last Friday, I am still in discussion to turn distribution of the Rant over to VMI as the marketing agent. As soon as more information is available on the switch, you will be informed. The free use of the Rant by passing it on to others will be eliminated when this arrangement is complete. If you have others who would like to continue accessing the Rant, please have them contact me prior to the change taking place.-Mike

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