Washington’s dirty little secret they don’t want you to know about

Written by admin on May 14th, 2011

Have you filled up the gas tank lately?

If you have then you know it is a pain at the pump for everybody in America. But the real pain is something most middle Americans don’t even know about, and I’m not even talking about the 47% of the country that does not pay taxes. No, I’m talking about the people who do pay taxes and work their butts off to make a living.

Like a lot of Americans, I am not a happy camper and I am not happy with the incredible misdirection this country is going in with its spend, spend, spend policies. I’m not sure what its like in your house, but in mine if we can afford something, we can afford something, but we don’t have the luxury of printing money by the truckload to spend beyond our means. The main problem is, these spending policies are only going to further weaken our economy.

This afternoon Pres. Obama is to make a speech explaining how we’re supposed to get out of this mess – or how it is often described by this current White House – “potential financial Armageddon.” In my opinion if there are not significant spending cuts, we’re going to see a lot of pressure on the market. Unfortunately I think this speech will probably be long on rhetoric and short on details. That seems to be the style in Washington these days.

Okay I promised you the dirty little secret that Washington doesn’t want you to know about and here goes… Now most of you reading this blog are pretty sophisticated, far more than the general public, but the reality is that we keep debasing currency and this is why commodities and why oil to a large part are going up in pricing. Yes, I know about the Middle East and all the problems there and it certainly is a factor that cannot be ignored. However, we are seeing the demand from around the world.

The world has changed and we unfortunately still believe we are the crème de la crème superpower and leaders of the free world when in fact, things have shifted subtly and ever so stealthily to Asia. You cannot expect all the jobs in a country to be exported and still have a strong economy. That’s what many corporations did here in the US simply because it was more profitable to do business overseas and not deal with all of the regulations that keep getting more and more onerous in this country.

So okay I know this is a rant, but quite frankly I think it is reflective of a lot of thinking out there in terms of being frustrated, angry, and just plain mad at the lack of real leadership. What bothers me more than anything else is the fact that the politicians are only interested in one thing and it’s not the country. They may say it’s the country, but in reality it’s getting re-elected that really matters to them. This is not what this country needs nor wants at the present time. We are living in a very, very competitive world and unless we have some idea of what we’re doing and how to do it, we will be subjected to more and more pressure on the dollar and therefore on our lifestyles.

Here’s an idea that has been kicked around for a long time, but never seems to get any traction. Why not just do away with all of the so-called tax benefits like home mortgages and such and just have a simple flat tax? If you’re an entrepreneur in a country that was built on entrepreneurship, you need to know what the tax basis can be and what you’re going to face in the future. If everyone just paid a flat tax no matter how little or how much money you had, I would consider that to be a fair system. Why should you be penalized for being successful? It’s insane!

Now I’m lucky – if you can call years of hard work, luck. I can afford to pay higher taxes, but the reality is why should I pay higher taxes when up to 47% of the country pays no taxes? I came to this country from England because of a tax policy that offered no incentive for anyone to get ahead. I came here when most Americans used to save money, most Americans had a job, and most Americans felt good about the future.

Fast-forward a generation and you see what has happened. We exported millions of jobs and now we have no choice but to buy countless goods from the countries that actually have the factories to produce these items. Yes, I know there are a few exceptions such as the automobile industry, Caterpillar, and a few others that have kept jobs in the country, but the reality is that we’ve given away so much and gotten so little in return.

It’s time to make a stand and make some hard decisions. The entitlement mentality is insane and everyone knows that there is no money. Period. If you print more money to pay for these entitlements and further debase the currency this will just force a further push upward in the price of gasoline and also other necessary goods like food. It’s interesting to me that they come out and say, well the inflation index isn’t bad, but how can they say that when they leave out these two crucial elements?

Okay, that’s it. I’ve said enough and you know where I stand on the subject, but now I want to welcome your comments – either pro or against. One thing we still have going for us is that this is still a country of free speech and free markets.

One last thing, we’ve just finished the first quarter and I expect we’re going to have some phenomenal markets both on the upside and the downside and I’m confident that our Trade Triangles will show us the way.

Tune in today (and every weekday) at 1 PM to catch my afternoon MarketClub TV market update and also at 7 PM every Thursday to grab those upsides and avoid the downward swings.

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