Truth Before Dishonor

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Posts Tagged ‘inflation’

How Are The Banks Getting Wealthier?

Posted by John Hitchcock on 2011/10/08

Jazz Shaw wrote an article about the increasing Federal spending (despite the Left’s whining claims of “draconian” cuts), which caused me to write my own article on the subject. In doing the research for my article, I found some very interesting data. But it didn’t dawn on me what I found until a couple hours later, when I was playing with my grandson. Then, it was an “Aha!” moment.

According to the Federal Government, the Consumer Price Index rose 3.8 percent for the twelve months ending in August. You can get a 30-year fixed rate mortgage for 3.5 percent, with a 3.772 percent APY. Even if inflation stays at 3.8 percent and doesn’t increase (and I guarantee it will increase by quite a bit in that 30-year window), the bank is losing buying power by writing that mortgage. And that’s before taxes and paying employees. Add in the tax burden and paying employees, and the bank is losing even more. And the bank has to pay interest on the money it borrows that it lends to other people, so the bank is losing yet more.

If the bank made a 100,000 loan with a 3.772 APY, that means, basically, that the bank would gain 3,772 dollars in a year on its 100,000 investment. But a purchase that cost 100,000 would have increased in cost to 103,800 dollars. Meaning the bank’s buying power, with its investment, has actually shrunk.

And the US has either the highest or second highest corporate tax rate in the world, depending on whether Japan went through with its planned corporate tax cuts or not. So that 3,772 dollar profit, which doesn’t even keep up with inflation, gets taxed heavily.

So, how are the banks getting wealthier? Definitely not by writing 30-year mortgages with 3.5 percent interest rates, that’s for certain.

Posted in Conservative, economics, Liberal, media, Obama, politically correct, stereotype, Tax, TEA Party | Tagged: , , | 1 Comment »

About Those “Draconian” Spending Cuts

Posted by John Hitchcock on 2011/10/08

As most Americans expected, they didn’t happen. According to the CBO, Federal spending increased by 4.2 percent in Fiscal Year 2011 over Fiscal Year 2010. So, all that Democrat screaming about all those horrible and draconian spending cuts didn’t actually happen. What a surprise.

Jazz Shaw reports:

We still have a long way to go in sorting out the pressing issues facing the nation, and we don’t all agree on the solutions. Foreign policy questions abound, our energy policy is a mess and we still need to bring down those unemployment numbers. But at least there’s one thing we’ve managed to nail down, and that’s spending. Everyone figured out that we have to cut costs and stop running up the deficit, leading us to take quick, substantive action. So… how’s that working out for you? According to the latest CBO report… meh.

Defense spending, where Democrats look first for any cutting? It increased a lethargic 1 percent, as did Medicaid spending. Social Security and Medicare, on the other hand, increased 4 percent, according to The Hill’s reporting. That would mean none of those four even reached the total Federal Budget increase of 4.2 percent. So where was the huge increase?

According to the OMB, Defense spending in 2010 accounted for 19 percent of the Federal Budget, Social Security was 20.4 percent, and Medicare and Medicaid combined for another 19 percent. That means an entire 58.4 percent of the Federal Budget fell below the overall increase in Budget spending, large chunks of it well below. That really leaves only interest on the debt and non-defense discretionary spending as places to look for the major increases in spending. And the interest rate is near zero, record-low territory.

All these draconian cuts? Didn’t happen. All these draconian cuts in non-defense discretionary spending? Absolutely didn’t happen. But, hey, maybe the Federal Government increased spending by less than the inflation rate? We can hope. Oh well, that hope would be dashed. According to the Federal Government, the Consumer Price Index rose by 3.8 percent in the 12 months ending in August. That would mean that, while Defense spending didn’t come close to matching inflation, the overall Federal Budget increased faster than inflation. And as I’ve shown, non-defense discretionary spending necessarily increased much faster. Draconian cuts in non-defense discretionary spending? That was a big lie.

And here’s a real kicker for people putting money in savings accounts. You can get 1 percent interest on your money. That means, if you put 10 dollars in a savings account last year, it would be 10 dollars and 10 cents now. But what cost 10.00 last year costs 10.38 this year. Your ten bucks you saved and got interest on just lost 28 cents in buying power, so you’re 28 cents worse off than when you started. But then again, you get the added pleasure of paying taxes on that dime you got in interest. So you’re actually worse off than that 28 cent loss in buying power.

All while the government keeps spending more and more while claiming to make “draconian” cuts.

Posted in economics, Elections, Liberal, media, Obama, politically correct, politics, society, Tax, TEA Party | Tagged: , , , , , | 3 Comments »

Maligning Rick Perry

Posted by John Hitchcock on 2011/09/12

Can we please agree to leave that in the capable hands of the Democrats and mainstream media (which are one and the same)? Let’s have our differences of opinion and let’s base those differences of opinion on facts about our various candidates’ positions and records. But let’s cut out the trash talk and leave that to the Leftists and mainstream media (which are one and the same).

I am not a Rick Perry supporter. I am a Sarah Palin supporter. And since Truth Before Dishonor is mine, Truth Before Dishonor has already endorsed Sarah Palin for President. But Dana Pico, an author here, has endorsed Rick Perry on this very site. And I very clearly said then that I don’t need the trashing of Rick Perry or their supporters in that thread. I gave my opinion on things I don’t like but also gave my opinion on things I do like about my third choice. And I based it on historical record.

Over at Hot Air, yesterday’s Quotes of the Day article was about Rick Perry’s truthful statement that Social Security is a Ponzi Scheme and the fact he won’t back down from that truthful statement. But like all long comment threads, it devolved into something else. And I want to get past the lamest of circular firing squad malignings and get to the phony math that one commenter in particular used in his poorly thought out maligning of Governor Perry’s record.

As of 8/31/01 (the end of the 2001 fiscal year, the last for which George W. Bush exercised budgetary authority), outstanding debt of the State of Texas totaled $12.561 billion.

Below is a summary of outstanding debt at the end of each fiscal year under Perry’s authority.

2002: $14.824 billion (18% increase year-over-year)
2003: $15.973 billion (8% increase)
2004: $17.555 billion (10% increase)
2005: $19.377 billion (10% increase)
2006: $21.011 billion (8% increase)
2007: $24.244 billion (15% increase)
2008: $27.996 billion (15% increase)
2009: $31.780 billion (14% increase)
2010: $35.692 billion (12% increase)

2001 – 2010
Debt growth: 184.2% (12.3% per year)
Inflation: 18.7% (1.9% per year)
Population growth: 18.2% (1.9% per year)
Debt growth in excess of inflation and population growth: 147.3% (10.6% per year)

The effect of the 2001 amendment allowing the DOT to issue debt was seen in the 18% increase in the State’s debt between 2001 and 2002. However, DOT debt hardly accounts for the 184.2% total increase in the State’s debt during Perry’s governorship.

steebo77 on September 12, 2011 at 2:22 AM

Texas expenditures, 2001: $38.834 billion
Texas expenditures, 2010: $80.181 billion

Increase in expenditures, 2001-2010: 106.5% (8.4% per year)
Inflation, 2001-2010: 18.7% (1.9% per year)
Population growth, 2001-2010: 18.2% (1.9% per year)
Increase in expenditures in excess of inflation and population growth: 69.6% (6.0% per year)

steebo77 on September 12, 2011 at 2:30 AM

Let’s start with some basic math, shall we? A percentage increase in anything over 10 years does not break down into 1/10th of the percentage increase per year. The basic Law of Compounding covers that, so all the “per year” bits are very much wrong. Next up, some basic algebra. You cannot add unlike items. 2a + 3b =! 5ab. Growth in “inflation” plus growth in “people” does not equal growth in “inflation people”. Again, dealing with that math problem, the Law of Compounding comes into play. Growth in inflation plus growth in people plus growth in inflation with the people growth will come closer to the truth.

Now for some “inflation” talk. Back when Carter (the worst President since the 1940s until Obama surpassed him and became the worst President ever) was President, food and energy were part of the metric in determining inflation. Since then, those two items — which increase in cost much faster than the rate of inflation — were removed from the official inflation rate, thereby artifically lowering the actual inflation rate. That right there puts a hammerlock on Budget v Inflation. But let’s continue. Healthcare expenses always increase faster than inflation. And State Budgets must account for Medicaid (which is a healthcare expense that always increases faster than inflation), a Federally mandated State expense. Education expenses increase much faster than inflation. And State Budgets must account for education expenses. And States use energy, which increases faster than inflation. All of these points, compounded by population growth, illegal immigrant population growth, the Law of Compounding, drive a rather large hole in Budget v Inflation.

Now, Steebo77 likely bungled his way into his failed-math maligning of Rick Perry, but that would make him an unwilling failed-math willing maligner. I have said before, and I continue to believe, Rick Perry is a Big State Government Bell Curve Tenther, but I will not use multiple-stage bad math in an attempt to destroy Rick Perry, a man who would do a lot to help the US recover from the Socialism of today’s Democrat Party machine and Ruling Class, Inside-The-Beltway Republicans.

Posted in Character, Conservative, economics, Elections, media, Philosophy, politics, society, TEA Party | Tagged: , , , , , | Comments Off on Maligning Rick Perry

Another “Sarah Palin Was Right” Article

Posted by John Hitchcock on 2011/06/23

Back in November, Ben Bernanke said of his QE2 printing press hyper-drive that his goal was 2 percent inflation. Sarah Palin said, in November, that it would cause inflation. We’re now officially at 3.6 percent inflation and that number is growing steadily and rapidly.

Bernanke expected QE2 would weaken the dollar (it has) and improve our net exports. Sarah Palin said that any net improvement would only be temporary. Again, Sarah Palin was right.

Bernanke expected QE2 to result in greater business investment. Sarah Palin said, in effect, “not so fast there, bub.” And then she explained exactly why it wouldn’t work and exactly why businesses aren’t investing. And again, Sarah Palin was right.

All the supersmart elite Leftists, such as Bernanke and Krugman and all the other Keynesians, mocked Sarah Palin’s pronouncements and said she didn’t know economics. The actual economic news on all fronts is totally “unexpected” news to all the supersmart elite Leftist Expert Economists, but precisely what Sarah Palin predicted.

The American Thinker has all the facts and figures, including quality charts.

Posted in Conservative, economics, Elections, media, Obama, Over-regulation, Palin, Philosophy, politically correct, Politically Incorrect, politics, society, Tax, TEA Party, truth | Tagged: , , , , | 1 Comment »

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