HomeLAND Equity Line of Credit

This is the typical path to financial ruin.

1. You open checking account.
   
2. You get tired of bouncing checks.
   
3. You get a credit card.
   
4. You max out your credit card(s).
   
5. All of your extra money goes to making debt payments.
   
6. You get a HELOC (Home Equity Line of Credit). It's a large quantity of "free" money to pay off your debt and get some extra stuff you've been wanting.
   
7. There's no turning back now.
   

So what is the U.S. Congress doing?

1. They pass bills to spend money.
   
2. They get tired of being restricted by the Federal budget.
   
3. They pass more spending bills anyways.
   
4. The Republicans block the bills based on silly ideologies.
   
5. They get a HELOC (HomeLAND Equity Line of Credit) in the form of an economic stimulus package. They now have "free" money to spend on their pet programs (give condoms to the poor, chase the global warming windmill, etc.).
   
6. There's no turning back (unless our U.S. Senators get wise).
   

Declaration of Independence from Consequences

I put my own spin on an assignment for a course I'm taking on the U.S. Constitution.

When in the course of human events, people make choices that result in painful consequences, and it becomes necessary for society and government to absorb these consequences. It is therefore assumed that the Laws of Nature and of Nature's God should be separated from their consequences.

We hold these truths to be fundamentally self-evident, that all men are created equal, so why should any one man or woman suffer more than another if they make bad choices or participate in activities that put them at personal risk. People are endowed with unalienable Rights, that among these are Eat, Drink and be Merry. Whenever any form of government becomes restrictive in these rights, it is the right of the people to vote entitlements and protections for themselves, so that they might have Safety and Happiness.

There are plenty of excuses why one should not suffer the consequences:
"I didn't know it was wrong"
but if I did know it was wrong: "I didn't realize what would happen",
but if I did know what would happen: "I didn't mean for it to happen",
but if I did mean for it to happen: "I was just joking"
but if I wasn't really joking, it's not my fault because: "My friends dared me." or "Everyone else was doing it" or "I had bad parents" or ...

We the people declare that there will no longer be any consequences to any action and that we can do whatever we want, because people that is the key to happiness. But if it's not the key to happiness...

Value for No Effort - The New American Dream

In a recent post I wrote about inflation and I've been thinking more about how we got to our current financial condition.

This is inspired by Thomas Paine, who wrote:

What we obtain too cheap, we esteem too lightly; it is dearness only that gives everything its value.

This is my postulate:

Speculative bubbles get over inflated due to people wanting value with minimal or no effort on their part.

Here are supporting examples:

1. Gambling - For the minimal effort of playing a game of chance, a person hopes to win more than they spent. Gambling is the "founding father" of the delusion leading to "value for no effort" thinking.
   
2. Lotteries - Gambling for the masses. For the small price of a ticket, a person hopes to get a very large winning.
   
3. The Stock Market - For the price of a share of stock, you hope the company holding the stock will give you big returns while you do nothing. I was sucked into this one even though I hated working at a public company and hearing all the time about providing value to share holders while working my butt off and barely scraping by. The light bulb went on recently when I was explaining my stock strategy to my daughter and she asked "Isn't that gambling?". I rationalized what I was doing, yet have found that she was right.
   
4. Credit Cards - By giving someone a small plastic card with your name on it, you can receive goods and services without any effort. I'm also a victim of this. Although I convinced myself that I was smart by paying off the balance every month, I was actually stupid since I was experiencing the separation between value and effort. (We have recently put our credit cards away).
   
5. Home Equity Loans - Once again getting cheap, easy money. (I must confess that I am not innocent of this example).
   
6. Ballot Initiatives - By simply marking "yes" on the ballot next to your favorite cause with no thought were the $100 million is actually coming from (In my home state of California, this would be building a hospital for the orphans of war veterans using recycled grocery plastic bags and run entirely by solar panels and wind mills. It would also employee all of the people who recently lost their jobs in an unrelated industry, provide housing for the poor and a habitat for an endangered desert rat all while alleviating traffic congestion).
   
7. Bailouts - Legislatures spends days carefully crafting a law that results in the expenditure of way too much money that will take countless generations to pay for it. (I sure wish someone like Mitt Romney was crafting these bail outs).
   
8. Pensions - A person works for a company for many years and upon retiring receives a comfortable pension. This is a dream of many Americans. Do the retirement wages represent only contributions made by the company during the person's employment? I'm guessing that some percentage comes from the value produced by someone actively working somewhere.
   

I repeat Thomas Paine's words: What we obtain too cheap, we esteem too lightly.

What are the consequences of these examples?

Let's imagine that you find a $100 bill tucked in the pages of an old book. This is money that has not been circulating in our economy and therefore has not been providing stimulus for many years. You decide to take your family out to dinner. You end up tipping big and spend the entire $100. What happens to it? It goes to the suppliers of the food, pays a portion of the utilities and mortgage for the restaurant. The waiter takes his/her tip and wages and spends it else where. The restaurant owner takes their profits and also spends it. The supplier pays their suppliers and buys the fuel to deliver the produce. And so on.

Basically, the $100 get spent over and over again and creates a magnified boost to the economy.

Likewise, the above examples of "value without effort" result in economic stimulus in the form of increased consumption, excess growth in businesses, etc.

In Physics, the Law of Conservation of Mass says that the mass of a closed system will remain constant, regardless of the processes acting inside the system. In other words, matter cannot be created/destroyed, although it may be rearranged.

In economics, I would assume there are similar principles. However, the "pay later" invention of mankind has made it possible to complicate the Law of Conservation of Money by making our closed system include the future. Excess now means deficiency later.

Blah, blah, blah. I'm sure no one made it this far due to boredom. I'm tired and I'm going to bed ;-)

Anti-religion lessons from Jesus

This blog is a pretty bold thesis, saying that we can learn lessons from Jesus that are anti-religion. This blog was inspired by a recent news article related to a federal judge ordering a school "to stop promoting religion and prayer in the classroom and at school events".

At first I reacted negatively. I am religious. I pray. This is obviously anti-religion and anti-prayer. But then I started thinking about it. My recent study of Jesus' words came to mind. Jesus was very critical of the religion of his time. I could exhaust you with examples. A whole book in Matthew is dedicated to his criticisms. Here's an excerpt:

Matthew 23

1 Then spake Jesus to the multitude, and to his disciples,
2 Saying, The scribes and the Pharisees sit in Moses’ seat:
3 All therefore whatsoever they bid you observe, that observe and do; but do not ye after their works: for they say, and do not.
4 For they bind heavy burdens and grievous to be borne, and lay them on men’s shoulders; but they themselves will not move them with one of their fingers.
5 But all their works they do for to be seen of men: they make broad their phylacteries, and enlarge the borders of their garments,
6 And love the uppermost rooms at feasts, and the chief seats in the synagogues,
7 And greetings in the markets, and to be called of men, Rabbi, Rabbi.

It's interesting that even with an oppressive, secular government (the Roman's), most of Jesus' criticisms were reserved for the Jews. One of the few comments he had for the Roman government was "Render to Caesar the things that are Caesar’s, and to God the things that are God’s". This was of course a response to a question from the religious people he was criticizing, and they were trying to trap him with a trick question.

It's also interesting that the religious people are responsible for bringing him to trial and crucifying him. When the secular government (Pilate) found no fault with Jesus and tried to show mercy and release Jesus, the religious leaders chose to release the dangerous Barabbas instead.

Do people have a right to fear religion? Sadly yes. Even today religion fuels many violent conflicts.

What should religious people do? The answer is simple. Live your religion.

I don't like checklists

I've never liked checklists. A little piece of paper telling me what to do and how to do it. I always wonder who made the checklist. What gave them the right to tell me what to do? I don't mind "to do" lists that I make myself. Then I'm just reminding myself to get stuff done that I want to. Of course, a checklist would have helped me on one camping trip where we ended up with no spatula to flip pancakes.

Several years ago I took my kids to a Young Eagles event. They give kid's a chance to fly in small planes (my daughter got to be the pilot as well!). As my kid's were getting ready to get in the airplane, the pilot carefully went through his checklist. I thought it was a little silly since he had been flying groups all day and had probably already checked his plane a dozen times.

Recently, I came to a better appreciation of checklists while on a project at work. A coworker, who happened to be a certified flight instructor, helped me understand better the value of checklists. Checklists are one reason why flying is safer than driving.

More recently I read a magazine article on checklists (I must have been really bored in the doctor's office, but I'm glad I read it). It talked about the value of checklists in many businesses. The most obvious is in hospitals, where checklists actually save lives.

Okay, so if you have read any of my blogs, you might realize that I'm about to make an analogy. So, here it is.

Checklists are like morality and religion. There are a lot of people who don't like morality or religion and see them as some arbitrary rules that some unknown person invented who has no right to tell anyone what they should do. Yet, like checklists, morality and religion can provide value in many ways, safety being a big one.

I could go on and on but I'm tired and I'm sure you get the point :-)

Some Good News for the New Year

I've been blogging mostly about controversial issues and "doom and gloom" predictions. I decided to share some good news.

With all the talk of global warming and the peril our planet is in, all that it takes is a drive across country to make you scratch your head in wonder. There is still a lot of nearly pristine land and abundant resources. There are blue skies. Why aren't we using them?

The problem is how to take advantage of these extra resources with the main problem being water supply. This article shows how researchers have developed an approach to provide grazing lands in arid lands that can be irrigated with salt water.

By doing this, they can free up other lands for typical agriculture. Go BYU!