Cost of Living

Making Ends Meet

Old lady walking on water

Grandma Thunder is concerned because we already see price increases affecting our budgets. What will happen after the election?

Price of Gas

We have a store in a Travel Plaza which gives a window into the great American economy. About a month ago we were leaving when we saw tape around the pumps and the cars and trucks had all been chased away. No Gas?  Flying J has the best and most affordable gas in the state, cars and trucks come from far to gas up.  A hillbilly walking from the pumps was disgusted. “Can’t fight the oil companies,” he said, his voice apathetic.

He has a point. Exxon Oil has made 9.45 billion in profits already in 2012, that is almost $104 million per day.  That is a lot of power. it is said that power corrupts and absolute power corrupts absolutely. (Lord Acton)  It seems their power is absolute. They paid only 13 % in taxes, less even than Romney. What can we as mere mortals do about this?

graph and picture of gas pump

California Gas

Our founding fathers crafted a system where power was balanced. The Justice, the Senate, the House and the Executive balance out each other. Two hundred years later this system is still working. Maybe it is not working so well any more for we have a declining standard of living. I think it is working it is just that our Nice Government Men aren’t doing their job. The Government can use the Anti-Trust Laws to stop cartels like Exxon/Mobile riding roughshod over our interests.

There was a question given the President in the second debate:

Your secretary, Steven Chu, has now been on record three times stating it’s not the policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?

Of course it is the job of the Secretary to bring all energy costs down. He has all the tools he needs to break up cartels yet lacks the courage to sue them? Or could it be that he thinks he serves the Democratic Senate Environmentalists? Read my past post “Endangered Species“.

Not too long and the gas was flowing again but the price had hiked to $4.49 per gallon.  The price has been dropping since then and is now down to (gag on it) $4.27 per gallon. I am willing to bet my bottom dollar that when the price settles out it will once again be in a higher range.

Conned again?

Price of Food

I went to the grocery store last week and I spent over an hundred dollars. For just the two of us this is outrageous, and double what I spent only four years ago. Why should prices go up like this?

About five years ago I was on my way back up the mountain where I live and stopped at Ralph’s in Castaic where the store had just had a power failure. I wasn’t concerned because I had cash on me in small denominations. I was able to go in the store, pick out what I needed, use my calculator to add it up and count out exact change and I presented myself to the counter where the computers weren’t working. The cashier was adamant it just could not be done. I left empty handed and went hungry. In times like this you need a food backup. Note well:

  • The food distribution has become increasingly mechanized.  Even Denny’s trucks in prepared meals from a central point.
  • The ingredients of one small taco may travel the distance of more than twice around the globe. Such a system of food distribution is quite fragile.
  • It also raises the question of how healthy such food can be, having been treated with toxic preservatives to traverse such long distances.
  • This is the new age of cyber-warfare and terrorism. You are naive if you believe that you will always be able to walk around the corner and buy all the food you need at Ralph’s. It may well be there but doubled or trebled in price.

The United States government regulations mandate that a proportion of the fuel used must come from renewable energy sources. International food shortages are being exacerbated by taking tracts of land previously for produce and converting these to fuel production. Such bio-fuel farming is subsidized by the U.S. A. government. In the face of growing food shortages it is time to rethink these subsidies and regulations.

There are some things you can do to protect yourself against high food prices and food scarcities.  You can find a community garden. You can grow food in your backyard. There are places out of the city like where we live and work where you can create a safe life.. Most people however have lost the skills. Once again it comes back to getting yourself educated and then acting. We do not learn this data in our schools.

There is a place in New Cuyama where you can go to learn the sustainable lifestyle. They have classes. Click on the title to go to their web site.

Quail Springs

Looking out for a Better Life 

A better system of food distribution is also a conversation you may want to start with your elected officials.

Inflation

Imagine a box10’ by 10’ fully sealed into which you put a hundred dollars and 10 balls. What is the price of each ball?  That is right $10.00.

Now add another hundred dollars.  What is the price of each ball?  There is now a total of two hundred dollars in the room and the price of each ball will be $20.00. The price of each ball has just gone up.

It works exactly in the same way in the whole economy.

The Federal Reserve is tasked with keeping an adequate amount of money circulating in the economy. Too little and the markets slow down, too much and prices begin to rise.

So what is all this about Quantitative Easing, QE1, QE2, QE3 and now we get QE4 and so on to QE99 and more. . .  Most people don’t understand monetary policy and moreover what is being done is done behind a screen of smoke and mirrors.  You may well ask what our elected officials have been doing about this problem. The House has passed a bill to audit the FED, something that hasn’t happened in over 100 years. That’s right. NO AUDIT EVER. The Audit-the-Fed Legislation was stopped by Obama and the crusty Democratic Senate where the bill still languishes today.  Benanke says that if audited it would open up a can of worms. How very right he is. The simple truth is that when the Federal Reserve pumps too much money into the Economy, prices go up and your standard of living is compromised.

It gets worse.

What Benanke is doing is saving the banks at your expense. He is buying up financial assets (loans) from the commercial and investment banks and other private institutions like AIG Insurance.  I have a friend who works in the title section of the Bank of America and he has told me of the mountain of repossessed house titles still languishing on the books, not yet moved out and back into the economy. This is a stuck flow and only when all is cleared out, will we begin to approach anything like normal in the housing market.

So what the Fed is doing is buying back this bad debt from the banks. The exchange is very simple. It is our good American debt backed by taxpayers in exchange for all the bad debt owned by banks. He is letting the banks (who accepted and issued the bad loans) off the hook.

The most annoying thing about the fed policy is that the FED is also paying the big banks NOT TO LEND money. They had a pay-for-no-lending program initiated during the crisis. The sad thing is that this bank handout continues while average Americans who have lived within their means earn nothing on their savings.

The FED is paying banks 0.25% interest on their excess reserves banked with the FED. This money.  0.25% interest isn’t much, but it’s more than the banks are paying you to keep money in your savings or money-market account. The Fed needs the smoke and mirrors; they need a way to continue to secretly bail out banks without it being obvious.

How successful have they been? Over the past few years, this program has secretly funneled about $12 billion in risk-free cash (rough estimate) directly to the banks, just for being banks and for not lending. I ask you what is the job of a bank; is.it not to extend good credit, especially to Entrepreneurs? The financial crisis is over now, and the banks are in good shape. But the Fed’s still pays them not to lend.

Now it is fine for me to say that the Democratic Senate is not doing their job, and they aren’t;  that the Fed isn’t doing their job and they aren’t;  that the Department of Justice with its antitrust power is not doing their job and all of this is true. If they were we would have a better standard of living.

But let me ask you a very salient question, are we doing our job?  In the broader scheme of things a good system has a balance of power. We are tasked with keeping our elected officials in line. That’s why we have a vote. Time to get educated!.

I encourage you to read Magic Money. It is light and entertaining way to get in your financial basics and it is free for a limited time.

Book on banking

Quote for the Day

The cost of living is going up and the chance of living is going down – Flip Wilson  

T

Propositions

Griping Grandpa gives Simple Guidelines to help you with the Voting Process

Grandpa

Every four years we are asked to make our recommendations on which one of two pre-selected politicians should be allowed to live rent-free in the White House for the next four years.

Eenie, meenie, minie, mo…

But that is not the only decision we are asked to make; there are also other, more local matters thrown in. These are called Propositions.

Now, the purpose of government is to maintain order and to serve the best interests of the people it represents. More broadly, it should also serve the best interests of mankind as a whole and even of all life on planet Earth, now and in the future.

What government tends to do instead is expand its own power and influence at the expense of its people. We, the people, should always be on guard against this. With that in mind I have developed a set of simple guidelines to help me with the voting process. You may find these guidelines useful too.

  1. Vote against all tax increases and fees, even if they don’t hurt me personally. Reason: we, as individuals, have to live within our means and so must government.
  2. Vote against legislation that favors one group over another. Reason: favoritism is unfair. We should all be equal under the law.
  3. Vote against any law that would further limit freedoms. Reason: we are supposed to live in the land of the free.
  4. Vote against any law that adds complexity. Reason: Complexity is the enemy of efficiency and increases bureaucracy. Even more important: ignorance of the law is no excuse, so the laws should be so simple that everyone can understand them.

What we should expect from our politicians is responsibility. We should be suspicious of promises designed to get more votes, such as promises of tax cuts from a government that is in debt. Also be leery of fear-based legislation. Remember the saying that we have nothing to fear, except fear itself.

So what are the things we should vote in favor of? Simple:

  1. Any legislation that will save money up the road.
  2. Any legislation that levels the playing field (but isn’t costly or restrictive).
  3. Any legislation that restores lost freedoms.
  4. Any legislation that makes life more simple and enjoyable.

men placing votes in the ballot

Happy voting and may the best candidate and the best propositions win!

 Quote for the Day

 Government is not reason; it is not eloquent; it is force.
Like fire, it is a dangerous servant and a fearful master.

George Washington.

The Tipping Point

Some Scary Facts about the Upcoming Election.

Mount Rushmore

I have a picture at our store of Mount Rushmore with carvings of Washington, Jefferson, Roosevelt, and Lincoln. We owe these men our freedom and our past prosperity. A customer stood in front of the picture and then turned away, “If these fine men could see what was going on right now in America,“ he said, “their statues would crack from side to side, and their faces would break out in toxic pimples.”

Persuasion is the American way. Were it not, would there be billboards and and political ads even on the TV and the Internet? We may grow impatient with these interrupting banners, but are they not superior to having soldiers come out to force us to be and think and act in a way they think is the better for us. We need to be vigilant. Can we use our democracy to make sure we keep the freedoms given by the founding fathers. We are at a tipping point, where America could go either way.

Grandma thinks that Obama and his team are good at the gentle art of persuasion. He and his team excel at Marketing, and Public Relations but unfortunately also at Propaganda and it is this last thing that gives some concern. We do not want to go the road of Europe for that leads to poverty, decline, and the worst scenario, Big Brother.

little boy facing soldiers

Facing up to the Challenge

We have struggled and muddled along through this economic decline but the full recovery has been elusive. Could it be that there is no real understanding of economic basics. We are not taught this vital data in our schools and yet it is this knowledge and this understanding, that will set us free and we will have the leaders that we deserve.

In the second debate Obama was asked, “What is the biggest mis-perception that the American people have about you?” Obama answered that he is not socialist and remains fully committed to free enterprise. His actions and his legislation in his first four years tells a different story. The big question is: “Does he understand the economy, the markets?” because if he doesn’t we cannot afford another four years of muddling through.

A few definitions:

A free market is a market where the price of a good or service is determined by supply and demand.  The American dream that Obama  often touts is not actually possible in a Controlled-Democracy. It exists only in a climate of fair and free competition. Entrepreneurs do not thrive in a Controlled-Economy. They need the freedom and the space in which to create.

A controlled market is a market where a Big Government controls education, health care, and welfare and eventually grows into Big Brother, where Big Brother also controls our lives. Why is this gradual evolution inevitable?

  • Power is corrupting and concentrated power is not rendered harmless by the good intentions of those who create it.
  • When markets are managed or controlled, we get bureaucracy  (Reams of paper, lots of pen and ink and lots of computer compliance reports) Bureaucracy is a poor substitute for real production.  So as a small business owner, I have concern as the burden of complicated regulation settles down on the nation.and further slows down the economy.
  • Europe is now heavily socialistic. Free health-care, free elderly-care, and debt-crises everywhere. Europe has been moving in this socialistic direction for almost a half a century and have now arrived.  Take a look at the declining standard of living, their high taxes, and the higher prices. Do we want to go that way?
  • We are at the tipping point. We can go down with them OR WE CAN TURN IT AROUND AND BRING THEM BACK UP WITH US.

The flip side of a free market economy is not only socialism, but ugly “Monopoly”, or “Too Big to Fail” or “Playing God” or “Crony Capitalism”  

Here is a classic example:
After giving $94.7 billion to the Big-Bank in taxpayer bailout money, J.P.Morgan/Chase made the following acquisitions.  Note: Dimon (the CEO) is an old Chicago crony and a big political contributor to the Obama campaign.

  • 2000 J.P.Morgan merged with Chase. This merger included two other large and old banking institutions. No anti-trust action was brought by the Obama administration.
  • 2008 J.P.Morgan Chase acquired Bear Sterns. No anti-trust action was brought by the Obama administration.
  • 2008 J.P.Morgan Chase took over parts of Washington Mutual. Now you see a Chase Banks on every corner. There was no anti-trust action. 
  • 2010 J.P.Morgan acquired Cazenova, a premier investment bank in the UK.
  • 2012 J.P. Morgan declined to declare how much the bank makes on the food stamp program. The bank has contracted with 24 states to administer the food stamp program and when last we heard takes its  generous bite.
  • 2012 J.P. Morgan declared a two BILLION loss, defrauding its investors.

Obama says “J.P. Morgan is one of the best-managed banks there is,” and Dimon (the CEO) “is one of the smartest bankers we’ve got.”

Obama is proud of his Dodd-Frank banking regulation but it isn’t working. Two thirds of Dodd-Frank has not yet been implemented and we are already four years past the start of the economic crisis.  Banks and the Big Insurance giants are back to same ol’, same ol’; back doing business as usual

There is a swarm of lobbyists buzzing around Washington lead by Jamie Dimon of J.P. Morgan/Chase who want to kill Dodd-Frank.

Do you bank with Chase? Do you think it okay that the bank plays lotto with your deposits?

It is not every bank can lose two billion from investment banking and stay solvent  Some smaller banks are looking to sell out because they fear they will be unable to hire compliance teams to address the complexity of the Dodd-Frank legislation. I ask you also how many small businesses will also fail under the compliance and financial burden of the long and very complex ObamaCare. Small Business is the biggest employer in the nation. Are you surprised we have an employment problem?

Recently Sandy Weill, previously of Citigroup, suggested that we bring back the Glass-Steagall Act of 1933 for it is this law that brought about a half a century free of financial crisis.  “I think good things are simple,” says Weill, “and I think what I’m saying is very simple.” A separation of commercial and investment banking makes good sense to yours truly, Grandma Thunder.

Romney says that regulations and oversight should be clear and simple, easy for all citizens to understand and easy to enforce.

Romney talks in basic economic principles that show a sound understanding of the private sector. What I don’t know is whether he is up to standing up to the Big Banks that continue to create Politics IOU.

.yellow Explosion

F R E E   D O W N L O A D
OR
READ BY CHAPTER BY CHAPTER

In the last election Grandma voted for Obama’s hope and change, but she has been disappointed. What Grandma likes about Romney is his sense of fairness, his sense of equity.  It seems to come from a deep and abiding faith. So she keeps her fingers crossed that he will regulate effectively, and clean up the tax code, making it better for the middle class and small business. She is hoping that he will be able to take us over the tipping point and point us back in the direction of freedom. She would like to see him bring back the prosperity. Only time will tell.

If once again power corrupts and he doesn’t come through, we independent voters are likely to switch again and tip the other way. Wouldn’t it be nice to find a President strong enough and with enough integrity to be worthy of a second term?

Quote of the Day

“Modern day economists want to “Play Market” instead of letting the market be a market; they underestimate the complexity of society as a living organism . . .

“It is customary nowadays to speak of social engineering. Like “planning” this term is a synonym for “dictatorship” and “totalitarian tyranny”. The idea is to treat human beings the same way in which the engineer treats the stuff out of which he builds bridges, roads and machines. The social engineer’s will is to be substituted for the will of the various people he plans to use for the construction of his Utopia.”

Joseph Von Mises.

The Presidential Debates

Grandma on “The Good, the Bad and the Ugly”

Grandma Thunder

The GOOD
Hats off the American Undecided Voter!
The best thing about this debate was the quality of the penetrating questions.

Here are some examples:
To Governor Romney: How are you different from George Bush?

To the President: Your energy secretary, Steven Chu, has now been on record three times stating it’s not the policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?

To Governor Romney and to the President: What do you believe is the biggest misperception that the American people have about you as a man and a candidate? Using specific examples, can you take this opportunity to debunk that misperception and set us straight?

These questions show great depth and intelligence. This raises an interesting point, if elections are won in the middle, why all the costly political spin? I  am guessing that few informed (middle of the road) voters are fooled by all the spin.

(See my next post, “Presidential Issues” for commentary on the answers we got to these questions)

The BAD
The moderation in both the first and the second presidential debates left some room for improvement.  Before I was a small business owner I was a teacher and this is when I trained young debaters and moderated and ran debating contests. In a good debate it is the moderator, who sets the rules, defines the parameters, controls the flow of the conversation and sets the tone of the debate.

Neither debater, not Romney and not the President, seemed to figure out how the interchange was supposed to go in this the second debate. Apparently a question was read and given to one or the other contestant who was given only two minutes to answer. It was logical to expect that the person who did not answer would be given the second two minutes to refute or comment.

According to Crowley the last two minutes of each cycle was supposed to be a free for all. That never works and it didn’t work here either. The result was that Romney missed his biggest moment in the debate.

Here’s how it went:
QUESTION:
Since both you and President Bush are Republicans, I fear a return to the policies of those years should you win this election. What is the biggest difference between you and George W. Bush, and how do you differentiate yourself from George W. Bush?

ROMNEY: Thank you. And I appreciate that question.

I just want to make sure that, I think I was supposed to get that last answer time (referring to the second two minutes of the prior question) I want to point out that that I don’t believe…

OBAMA: I don’t think so, Candy.

ROMNEY: … I don’t believe…

OBAMA: I want to make sure our timekeepers are working here.

ROMNEY: The time — the time…

CROWLEY: OK. The timekeepers are all working. And let me tell you that the last part, it’s for the two of you to talk to one another, and it isn’t quite as structured as you think. But go ahead (to Romney) and use these two minutes any way you’d like to, the question is on the floor:

When Romney got to speak he answered the prior question, the one he was waiting to answer. When he did answer the Bush question it was a superb answer but it had already lost its impact.

I always find political MAKE WRONG unattractive. Why do we all agree that one side has to be right and the other wrong? I just happen to think that both can be right for it depends on the situation, the condition and the circumstances, and these things change.  This can also be valid regarding the truth of a statement.

So in a debate it is vital for a contestant to give the time and place and circumstances for each QUESTION OR ANSWER or it all goes awry and we have each contestant stating emphatically “that is false” or :”that is not true”.

Both the President and the Governor acted at times like my naughtier high school students, taking opportunity to make each other wrong, failing to listen, interrupting, and rambling without answering the specific questions. Romney was weakest on taxes, while Obama was weakest on energy.

There was some finger pointing and interrupting, although this debate didn’t quite degenerate to the level of the Vice Presidential debacle where Biden interrupted Ryan 82 times.

The UGLY
There are some questions that should have been asked but weren’t:

  1. Why would you be better at the helm than your opponent during a crisis?
  2. In what way are you limited or restrained or circumscribed by the radical elements in your own party?
  3. In what way are you influenced by big donors as to your policy decisions and your platform?

Nothing was said about the fiscal cliff that looms ahead.maybe as early as 2013. Federal Spending is out of control.

There are three things that are bringing us closer to a possible second recession; the federal spending, the national debt and the European fiscal crisis. That this subject was not addressed at all was an ugly omission.

The graph above shows two major areas of concern. One the spending is out of control but even more important than that is the low GDP.

We need to remove obstacles that cut across our ability to produce as a nation.  This subject is covered in Politics IOU in a light and entertaining  way. Getting serious about what is a serious subjectthe following things adversely impact our ability to produce as a nation.

  1. Environmental regulations that stop industry and/or the development of new energy sources.  Some social constraints are sane and needed but the environmental lobby is now way out of whack. Now they are stopping progress.
  2. The Union rules reward seniority rather than performance and set wages so high as to force American corporations to take their labor overseas. We are in a global market and in terms of jobs the unions may well have priced us out of the game.
  3. In 1913 government abdicated responsibility for the nation’s finances and gave control over to international bankers. The Banks have had centralized control for more than a century and  the finances of the world are now in pretty shabby condition. How to resolve this situation was brushed under the ugly carpet of the usual spin.  We have to face up to this for we cannot do this to our children.

Let me conclude, though, by saying that all things considered, if either Obama or Romney gets elected they are both better than many of the presidents who have come before, with the exception perhaps of Washington, Jefferson, Lincoln, Roosevelt, Kennedy and Reagan. We have a good crop this time round, and while it may not be all that apparent, things may well be getting better.

May we be spared another Nixon. Remember that Nixon was elected by a landslide.We the electorate aren’t all that good at choosing our leaders.

May we do a better job this time round and may it all turn out alright.

Quote for the Day

Great leaders are always great simplifiers, who can cut through argument, debate and doubt to offer a solution everybody can understand.

Colin Powell

The Only privilege a President has is to Serve

Grandma Thunder Job Description for a President

I decided to share this with you from my latest book “Politics IOU – the Election that Freaked the Elites“. (Ella Bevan is my writing pen-name) From Grandma Thunder here is the excerpt:

(Gonzali Larkin is a third- party presidential candidate representing “The Producer’s Party” in the book)

“Hello. My name is Jay O Brannick and I blog for Gonzali Larkin.

In the news today: A Senator was upset when criticized for the recent pay raises Congressmen are giving each other. he believed the people can’t be trusted to oversee the politicians. His solution: Deny the public access to all political data.

Gonzali thinks he has it back to front. He thinks because the people elect the President they should be able to demand good leadership. He promises that if he is elected his only privilege will be to serve.

I asked him to give me a job-description for a President and this is what he said:

• It is the job of the President to inspire his people and to lead them forward strongly
• It is the job of a president to force in transparency; when politics and business are engaged in openly, there are no evil dealings.
• It is the job of the President to keep good order.
• It is the job of the president to control change so that the change rate is acceptable.

Birds flying in formation

A Good Presidential Candidate

Then he looked up at me with his lazy smile and said, “You know I once asked my first wife that question when I first thought of running for president eight years ago and you remind me of that morning.”

We know that his first wife died of cancer soon after this conversation, so the smile was a little whimsical. Three years ago he remarried Annalin, our most popular choice, according to survey, for our First Lady.

“And what did your first wife say?” I asked, not quite sure if I should press the question. He was okay on it.

“She reminded me of when the kids were young and how I handled them . . .

Teamwork

Team Players with a A Worthwhile Cause

  • Make sure they have enough to eat and a safe place to live.
  • Never take a toy away unless you have a better one to give.
  • Be willing to play Umpire, and to regulate their games so they learn to play fair.
  • Don’t allow anyone to bully, not others and not each other.
  • Reward them generously but only when they contribute.
  • Reinforce the idea that they are a part of the family, of the town and of the world.
  • Believe in their ability and their innate goodness and turn them into team players.

Quote for the Day
There go the people; I must follow them for I am their leader.
Alexandre Ledru-Rollin