Archive for the ‘economics’ Category

My Career Plans

Thursday, May 7th, 2009

My career goal is to make a bunch of money so that I can spend my time focusing on my passions:

  • My religion (The Church of Jesus Christ of Latter-day Saints)
  • My family
  • My liberty
  • Food (eating, not cooking) - My wife is a rock’n good cook.
  • Recreation - particularly skiing, biking, and basketball.
  • Cars

How the heck am I going to do that? Ummm . . . I’m not sure; but I am living by some principles that will help me get there:

  • Spend less than I make
  • Only use debt as an investment tool (education, home, business, etc.)
  • Never use debt to buy a toy
  • Tithe 10%
  • Save 10%
  • Continue my education (in and out of school)
  • [I keep writing "I" or "me" but really everything I just listed fully involves my wife and family so I should use "we"]

My talents are:

  • Teaching - my key is focusing on underlying principles.
  • Long, hard, manual labor - keeping my head in the books for more than a few hours is taxing, but when I’m doing physical work I get in a zone where I become almost unstoppable. I HATE leaving a job undone.
  • Fixing things - this talent really manifested itself when I competed in automotive repair. At the request of my teacher, I entered and won a competition at the local level. That spring-boarded me to state and national competitions where I took 1st and 2nd respectively. Before that point I knew I enjoyed it, but I had no idea how good at it I was.

Throughout the path of my career I would like to:

  • Work in the automotive industry - I think market research would be a good fit.
  • Work in the renewable energy industry - solar, wind, hydrogen, geo-thermal, and others fascinate me!
  • Write a book - I have one outlined already. I should write a post to tell you about it.

Near term:

I am using my time at the Census Bureau to gain some experience working with surveys and data. I might even pursue a Master’s degree in survey methodology or applied economics. I think this will position me well to make a transition into market research. I hope to end up in positions where not only do I analyze markets, but I also develop strategies for capitalizing on them.

My current job, while not particularly fulfilling, has been a great opportunity for my wife and I to get on our feet. We both graduated from college last year. We followed that shortly with a new baby.

Blogging has introduced me to a whole new skillset. I am working to become proficient in:

  • Basic Wordpress development
  • Web writing
  • Web Analytics
  • Various forms of online advertising
  • Basic web design using Photoshop and/or Illustrator
  • My latest project was a blog for my mom: http://mamacrane.com

So, going back to the orginal question of how I plan to make a pile of money, I obviously don’t know. But I think I am positioning myself well to take advantage of opportunities that come my way.

What do you think? Am I headed in the right direction? Are there other essential skills I ought to be developing?

Note: I hate MLMs and am not interested in getting involved in one. I have to throw that out there because this last year, for some reason, has brought on a bombardment of MLM proposals. MLMs do not fall under my career goals.

Share This

Posted in Automotive, economics, liberty | 1 Comment »

Our National Wallet Full of Credit Cards

Thursday, April 16th, 2009

I like to compare the government’s spending habits to me or you living off a Visa card. So when I stumbled on to this illustration by Jess over at WallStats.com I had to share. He made it for a blog post called Visualizing Uncle Sam’s Debt at mint.com. It basically illustrates what the Federal Government owes to our top 7 foreign lenders, but on a household level. Check out the original post if you want a little more explanation.

3301187814_34d9717481_o

Jess has an amazing talent for taking complicated piles of data and presenting them in beautiful, simple layouts. Well done!

Share This

Tags: ,
Posted in economics | No Comments »

Reader Question: Spend or Save to Fix the Economy?

Thursday, February 26th, 2009

A comment was left asking a question that many of us have wondered about:

Answer me this: I hear economists on TV talking about people not buying as many things which is part of the problem in our recession.  Then I hear other people talking about people not saving enough.  Which is it?  Or a little bit of both?

Simply put, the lack of spending is a symptom while the lack of saving is one of the causes. Allow me to explain.

Imitation Wealth

I have a rich friend who is far more wealthy than I am. But thanks to my Visa Platinum, I can live the exact same lifestyle that he does—at least for a time. My imitation wealth will eventually run out and I will no longer be capable of living like my friend. In fact, I will be much worse off than in the beginning.

Now, think about all your neighbors and family members who have been living on imitation wealth for years. Think of the boats, cars, houses, vacations, and other luxury items that were bought using imitation wealth. Think about your state and federal government. They too have been operating on imitation wealth (think of how long you’ve been hearing about the national debt, budget deficits,  and borrowing from China).

Eventually, imitation wealth runs out. It just so happens that millions and millions of people all ran out of imitation wealth at one time. How? I blame it on the Federal Reserve.

Saving Helps the Economy as Much as Spending

Unless you hide your money under a mattress, your savings are in a bank or some other investment fund. This saved money is not horded outside the economy. On the contrary it is loaned out and put to use in the economy. Saving your money stimulates the economy just as much as spending.

Addicted to Spending

Spending money we don’t have got us into this mess. Just like a drug addict who tries to fix his problems with more drugs, spending more money that we don’t have will only alleviate the pain temporarily. A spending overdose is likely.

The Fix

All the sexy solutions you hear about on CNN have about as much substance as Paris Hilton. Spending borrowed money will not fix the economy. Unfortunately, those *solutions* also seem to have Paris’ appeal. The real solution is simple and boring: live within your means, encourage your friends to do the same, and vote for politicians who will too (I know, few exist).

So if we need more REAL wealth instead of more imitation wealth, how do we get it? Through job creation? ‘H’ no! More on that soon.

Share This

Tags: , , ,
Posted in economics | 3 Comments »

The difference between Obama’s Stimulus Plan and FDR’s New Deal

Tuesday, February 17th, 2009

Obama’s Stimulus plan is similar in many ways to FDR’s New Deal. Where do they differ? The gold standard. The current stimulus efforts are not subject to the same monetary printing restraints that FDR’s New Deal faced. Now our only protection against inflation and hyperinflation are the men in charge.

Similarities

Both plans operate on a similar philosophy: deficit spending. It’s the same philosophy that “Quick Cash” stores thrive on:

My rent and car payment are both due this week. I don’t get paid until next week. No problem. I will run down to the “Quick Cash” store, get a loan, and I’ll be out of this bind. I certainly couldn’t and wouldn’t do this on a regular basis, I just need some temporary help.

Apply the same philosophy on a national scale and you have a government stimulus plan:

We are in a bind. Consumers are not consuming, lenders are not lending. Jobs are being lost. Let’s run down to the “Quick Cash” store. We will get a trillion dollars to get consumers to spend, banks to loan, and employers to hire. We certainly couldn’t and wouldn’t do this on a regular basis, we just need some temporary help.

Where does the “Quick Cash” come from?

“Quick Cash” stores commonly loan money against your car title. Governments, on the other hand, have three sources of revenue: taxes, borrowing, and printing. They can choose to use any combination of the three to produce the needed “Quick Cash,” but there are dangers in over-tapping any one of the three sources. Fortunately, taxes and borrowing have built-in limiters. Printing, however, has no natural limiter.

I discussed the 3 sources of government revenue, their limiters, and the dangers of each here.

The Big Difference

Until 1971 we used a gold standard. Every dollar was attached to a certain value of gold. We could only print more dollars if we got more gold. FDR’s New Deal doubled the national debt by borrowing piles of money to fund all the government projects, but because of the gold standard the government couldn’t fund the projects by printing money.

Today, we no longer use the gold standard. The amount of money printed is only limited by the people in charge. How are we to ensure they won’t print us into nasty inflation or even hyper-inflation?

image source

Share This

Tags: , , , ,
Posted in economics, liberty | 1 Comment »

Are we paying for the Obama bailouts and stimulus packages via taxes, borrowing, or printing?

Monday, February 9th, 2009

Ever wondered where the billions and billions of bailout/stimulus dollars come from? This will help.

Any government has three and only three sources of revenue: taxes, borrowing, and printing. Any money that a government spends has to come from one of these three sources.

This chart from the Federal Reserve seems to indicate that a large portion of these packages is being funded by newly printed money.

Glen Beck explains the chart (4min):

Remember that the chart only reflects the initial $700B bailout package (and a few smaller ones). The $800B plus stimulus package will more than double the spike you see in the chart.

Alarming?

Share This

Tags: , , ,
Posted in economics | 4 Comments »

Government’s 3 Sources of Revenue

Saturday, February 7th, 2009

I’m working on a post about our reaction to the stock market crash of 1929 and another about how we are paying for the current bailout and stimulus packages being passed. I’m preceding both posts with this quick discussion about government revenue.

Any government has three and only three sources of revenue: taxes, borrowing, and printing. Any money that a government spends has to come from one of these three sources.

Taxes

History clearly shows that a good, strong government is necessary. Without it, society falls into an anarchic mess. Taxes provide the needed resources for a government to function.

History also shows that government needs to have limits. Without them, society falls into a tyrannic mess. Taxes, by nature, have a built in limiter. If a government over taxes, it will destroy its people’s productivity and lose their confidence. The people will eventually demand lower taxes and the government will be forced to comply or collapse.

Borrowing

Governments commonly borrow from other governments. A government with an immediate need (usually war) can borrow money then pay it back later. Like any loan the money has to be paid back with interest.

Just like with taxes, the amount a government can borrow is limited. The limit comes from other governments’ willingness to lend. It’s just like my personal credit rating. If I over borrow or fail to pay back a loan, creditors will not be willing to lend me more money. The same holds true for a government.

Money borrowed by government can be described as a tax on future generations. We don’t have to pay right now, but eventually someone does.

Printing

Governments can print money. Just like over taxing and over borrowing, excess printing is very dangerous (discussed below). Unlike taxing and borrowing, however, printing does not have a built in limiter. In the past, America used a gold standard to limit printing. For every dollar printed there had to be one dollar worth of gold. In those days, you could go to the bank and trade your printed dollars for their equivalent amount of gold. This limited how much money the government could print. In 1971 America abandoned the gold standard and began to rely solely on the Federal Reserve trusting that they wouldn’t print too much.

The Dangers of Over-Printing Money

(skip this section if you are already familiar with the dangers of hyper-inflation)

As a government increases the amount of money, the value of that money decreases (inflation). I call this the buffet effect. Last time I drove through Las Vegas I stopped and ate at a fancy buffet. The food was so abundant that I would take one bite of each food then throw the rest away just so I could try more foods. If you contrast that to my attitude right after a fast, then you understand the effect of printing money.

History has shown that over-printing can cause an entire society to collapse (here, here, and here). Think about it, policemen, firemen, teachers, bakers, you, me, and everyone else wouldn’t go to work if the payment we receive is worthless or close to worthless. Organized society literally stops.

Inflation Tax

(skip this section if you are already familiar with it)

While at first sight it might appear that printing money is like creating wealth out of thin air. It’s not. Printing money is a tax on the people—a disguised tax. Imagine that the government prints $1billion and uses it to build a new road. That money is paid to contractors, architects, planners, etc. These people in turn spend that money on their own needs. As the newly created money is disseminated into the economy, prices of everything else go up a little bit (everyone’s money is less valuable). Now, I have to spend more on my needs than I did before. The extra money everyone has to spend is the tax that paid for the new road.

Why would a government fund projects through printing?

I’m sure the reasons are numerous, but here are the basics:

  1. What if a government wants to expand its spending but doesn’t dare raise taxes. It could print money and take advantage of the inflation tax.
  2. What if a government wants to expand its spending but other government’s are becoming less willing to loan money?
  3. What if a government has debts from past borrowing that are coming due? Pay the debts with printed money.

Comments? Questions?

Coming soon: Are we paying for the bailouts and stimulus packages via taxes, borrowing, or printing? Stay tuned.

Share This

Tags: , ,
Posted in economics | 3 Comments »

Close
E-mail It