Tuesday, March 10, 2015

Turkey Fight!

Living in a rural area has its challenges, but it comes with plenty of rewards. One of the things I've always enjoyed about my adopted home is that while it's not exactly living in the country, it is far enough off the beaten path that there's still plenty of country life to experience. 

One of those things is the flock of wild turkeys that visits my property on a daily basis. They come through and peck at weeds and bugs for me (and occasionally till leaf piles that I put out for them), and they provide a little entertainment with their antics (waking up in the morning to the sound of a turkey running across your roof is funny... after the first time when you've realized what you're hearing).

This morning, that came in the form of a dominance battle between two, sometimes three of the newest jakes in the flock. And this time, I caught it on film:


As I said in the video description on YouTube, I put the fight to "Toreador" from the opera, Carmen, which seemed fitting because like the toreador the song describes, the fight was entertaining and all done for getting the attention of the hens. And all along, the old, experienced, dominant tom in the flock just puts on his full display and struts in the background (off-camera until the 3:50 minute mark).

Enjoy!

Wednesday, March 04, 2015

I Bought The Farm

No, I'm not dead yet (but my posting frequency might lead one to conclude that...).

Recently while listening to the Financial Survival Network podcast, I heard of a real estate investment trust (REIT for short) that got my attention.

There are several kinds of REIT's, but the ones that I really like hold property and rent it out (as opposed to the kinds that hold mortgage debt), and then in accordance with IRS rules that govern these entities, they pay out 90% of their revenues to shareholders as dividends. 

My long-time favorite REIT, Realty Income Corp. (stock symbol: O), is a "triple net lease" REIT, meaning in their rental agreements with their tenants it's part of the contract that the tenant is responsible for insurance, maintenance, and taxes on the property, giving O "nothing but net." 

O rents out commercial properties to businesses with good things going for them, typically on leases lasting one or two decades. It's a very solid, stable way to do business, so I don't consider them to be a holding that I have to think about very much. Chances are that no matter what happens economically/politically in this country, there will be business and there will be a need for commercial space in which to do business.

This is the view looking north from my computer desk where I'm
writing this, land that is used to grow wheat - I wonder if I own
a piece of that now?
However, this kind of investment is a degree or two removed from the most solid foundations for investments: food, clothing, and shelter, the things that people always need. That's where the REIT that I learned of through the FSN podcast comes in: Farmland Partners Inc. (symbol: FPI).

This REIT has in its portfolio approximately 48.7 thousand acres of farmland, which it operates as farmland! These guys are not buying farmland and turning it into shitty condos, strip malls, etc. They're producing food, the primary item of the human "big three," something for which demand never goes away. What's more, the farms FPI owns and operates produce "primary crops," things like corn and wheat, which are often rendered into ingredients but which can be easily stored long-term and later consumed as-is. 

Businesses fail, buildings crumble, money supply inflation puts luxuries out of reach, but food is never an option. If people's discretionary consumption choices become fewer and fewer, it will most likely be the case that a big part of the reason for those dwindling lists of wants is the conscious decision to allocate more of their cash flow to satisfying the need for food. Thus, I look at an investment of this sort as almost being a kind of purchasing power insurance policy, much like ownership of precious metals is: as other asset types may begin to crater during a financial crisis, a company that both owns land and produces food should continue to deliver on cash flows relatively well, which can help to keep one's own cash flow up to snuff for meeting the needs of daily life. So, with these things in mind and after looking over the company's performance, I bought in. 

As always, this is not investment advice, this is just my opinion, do your own research, blah blah blah SEC hocus pocus firstamendmentwhat'sthat? 

Wednesday, February 18, 2015

Missing The Point On Bitcoin

I came across this article a few days ago, basically a hit piece on Bitcoin. There's quite a number of these types of articles out there with more being penned almost every day. This one is a fine example of people who just plain miss the point of Bitcoin, which is similar to how some miss the point of owning precious metals. 

The author, Isabella Kaminska, runs down a list of common slams on Bitcoin and other cryptocurrencies: the value of Bitcoins in United States Dollars (USD) terms has collapsed, drug dealers and money launderers have used it, speculators took a ride on it, some Bitcoin-based operations have failed, etc. 

And you know what? That's all true. But it doesn't matter. To understand why, just replace "Bitcoin" with "USD" in that list of woes, or any other currency for that matter, and it's all still true: the value of the USD has collapsed before, drug dealers and money launderers use USD, speculators trade on wild swings in the value of USD relative to other currencies and to commodities, and plenty of USD-based operations have failed (banks).

The most damning thing on that list is the collapse of the price of Bitcoin, but like any other such event it must be understood in context. Yes, Bitcoin is down massively from its historic high. But as I type this, with Bitcoin sitting somewhere in the ballpark of $241, it's also still up astronomically from where it started: zero. The only people who got stung by the fall from its peak are people who tried to speculate on it and rolled snake eyes. People who mined their coins, or who purchased Bitcoin as insurance against a declining currency (much like the proper use of precious metals) probably are not feeling the sting so much.

That said, as an alternative store of value, Bitcoin's price movements do have to be understood in relation to the relative value of USD. As of now, USD is on a tear globally for several reasons, and therefore things priced in USD will tend to fall in price. Thus, when you compare gold and Bitcoin to the USD, similarities emerge. Have a look at these two charts, and mentally draw a line from peak-to-peak; notice the angle from left to right that they both follow?

One year gold chart sampled from the Money Metals Exchange website,
18 February 2015

One year Bitcoin chart sampled from Coinbase.com, 18 February 2015
The only thing that is really holding Bitcoin back is adoption and use. Kaminska tried to dismiss the level of use at present by making an apples-to-oranges comparison of current daily totals with a long-established credit card processor, failing to take into account (or deliberately ignoring) the massive growth Bitcoin use has undergone since its inception.

Meanwhile, unlike Bitcoin's built-in ultimate limit of twenty-one million Bitcoins that will ever exist, the USD continues to be conjured up out of thin air (the cause of inflation and the loss of purchasing power of each dollar). The USD is teetering on the brink of losing its status as the world's reserve currency, too, which will cause its value relative to other currencies and commodities to plunge. In that environment, alternative stores of value, such as Bitcoin, will rise in relative terms. And that's the point, not all of this other nonsense that Kaminska is throwing at it. When that happens, people like Kaminska who put their energy and time into bashing something they clearly don't understand will be caught out in the financial downpour with no umbrella.


Tuesday, February 10, 2015

Proposed Seal of the State of Madison

This was posted to the State of Madison Initiative Facebook page this morning, a draft seal and flag of the proposed new state:


I suggested that they change one feature of it: I don't think the mountains in the background represent the area likely to be proposed as the new state very well. There certainly are mountains here (some of them would probably serve as the dividing line between much of the new state and Washington state, and there are the Blue Mountains in the southeast of the current state, which I live right up against), but wheat fields, apple orchards, vineyards and such placed in the background behind Madison would capture more of the spirit of this region. After all, the creators of this placed "Agriculture" right there in the seal. Other than some logging here and there, there's not a lot of agriculture going on up there in the Cascades that I'm aware of.

It's also good to see "Liberty" and "Molon Labe" right there in the proposed emblem of the new state. As an indication of the character and direction the new state could take, it's very encouraging.

Saturday, February 07, 2015

Attack ISIS Central Bank Style

I came across an article this morning about the possible establishment of a new hard currency in the world, one to be issued by the terrorist group, ISIS:
"ISIS has announced plans to mint its currency in gold, silver and copper. In a statement the group said that it wanted to stay away from the “tyrant’s financial system” and issue a currency that would be “dedicated to God” and get Muslims out of the “global economic system that is based on satanic usury.” -- John Weru Maina
 This isn't a surprising development with these clowns from a theological/historical perspective. Using precious metals as money doesn't eliminate the possibility that someone might charge someone else interest of some kind, but it does go a long way toward curbing or even eliminating the worst kind of financial monkey wrenching: deliberate money supply inflation done to facilitate out-of-control .gov spending, which ultimately falls on you and I like a ton of bricks.

It's a bit ironic then that this fiscally sound move by ISIS could instead be one of the best weapons to use against them, simply by applying some central banking stupidity to the situation: their new money could be gathered up, melted down, and replaced with an increased quantity of cheap fakes, much like what has been done to our coinage here in the U.S. We do it to ourselves, so why not do it to them, too?

State actors and/or enterprising individuals could carry out this financial sabotage of these assholes, and potentially at a nice profit. This would simultaneously drain ISIS of more of their assets and destroy all confidence in their money as their supply of precious metals is depleted and rampant inflation rocks their domain. Since no nation state recognizes them, uncontrollable inflation of their money supply will not be absorbed by foreign central banks using their money as reserves. That would put these shithouse rats on a collision course with the same fate as Venezuela, a country that also has oil wealth but thanks to sheer .gov stupidity really can't benefit from it, and it might even screw over anyone who does business with them.

We get their gold, we get their oil, and all they get in return is funny money and a whole bunch of bombs dropped on their heads, possibly even paid for with what was their gold. Sounds like winning to me!

Wednesday, February 04, 2015

Oil Change and Podcasts Day

It's time to change my car's oil (probably a bit past due, really), so maybe a half of an hour or so of my day will involve that. A 1.5 liter engine with an oil capacity of just 3.5 quarts doesn't take very long to do (and it's nice to get the job done for less than half of what a lube shop would charge).

I've been taking advantage of the wonder that is podcasting lately to tune into news and other information, utilizing my phone as the receiver and replay device. This has been a money saver, too, as I have my podcast client configured to only download new episodes of the podcasts I've subscribed to when my phone is connected to wi-fi. It looks for new stuff at 3am and grabs whatever is out there.

Currently my roster includes:

The Clarey Podcast




I'm keeping an eye and an ear out for more, as one thing I discovered about listening in on this medium is that one can get hooked and burn through new content very quickly. I'm learning about a lot of stuff and being entertained at the same time, so it's easy to go on a listening binge and use it all up quickly. 

Sunday, February 01, 2015

College Humor: "I Don't Care About Sports" Friend

Here's a little something for game day. I'll admit, I'm not a huge football fan, but I do at least enjoy watching the big game. I guess it becomes interesting to me when the stakes are as high as they can get.

But then there's these people, and we all know one...


Enjoy!

Saturday, January 31, 2015

The State of Madison Initiative

Recently I became acquainted with a movement that proposes to divide what is now the State of Washington and create a new state, the State of Madison.

"The goal of the State of Madison Initiative is to create a new state territory in Washington State utilizing select legislative districts turning them into a new Federal Union State called State of Madison (SM) being the 51st to join the union. This state is named after James Madison the fourth president of the United States and is known as the father of the constitution." -- madisonstate.org
The idea, which is not new, is to correct a long-standing problem in this state (one that is experienced by residents in many states): separate the more rural parts of the state from the heavily urbanized portions, which tend to dominate all state-wide and Federal elections and questions of state policy (voter initiatives). Essentially, people in the eastern "half" of this state (as defined by the Cascade mountain range), where I live, have virtually no voice in these matters unless a few of the heavily-populated counties in the western half of the state happen to agree. When we don't agree with them, they tend to win anyway, effectively denying those of us living in the eastern half of this state the right to govern ourselves. Some recent examples: new "laws" infringing on our rights to keep and bear arms; a public school funding initiative with a massive, multi-billion dollar price tag attached that will mostly benefit the western counties; In 2012 when we last selected a Governor, Jay Inslee won over Rob McKenna by roughly three percent of the vote, but he won majorities in only eight counties out of thirty-nine, all on the west side, and in many eastern counties was voted against by 2-to-1 marginsvoters here largely rejected Obama and Biden in favor of Romney and Ryan (just like we rejected the Obama ticket in 2008), but the western counties outnumbered us again and all of our state's electoral college votes went to them; we reject the reelection of our current senators, Murray and Cantwell, over and over, but the western counties send them back to Congress to "speak for us" again and again.

These divisions reflect irreconcilable cultural differences between eastern and western Washington residents, by and large, that necessitate a parting of ways. As it stands now, the majority of eastern Washington residents are effectively governed and taxed without representation by the peoples of a few of the western counties whose interests are often quite different from our own. This is an unjust state of affairs that demands a remedy, and the most equitable and peaceful method of bringing this about is a severance of our governance. 

There are many hurdles that this movement must clear on the way to realization of its goal, and historically speaking, the chances are not good. Nonetheless, this will be an interesting thing to watch and participate in, so I plan to keep on with it as things develop.

---

State of Madison Initiative on Facebook: https://www.facebook.com/madisonstateinitiative

Tuesday, January 27, 2015

Chickenomics

I normally eat two chicken eggs each day for breakfast, so I mainly buy the sixty-count packs of eggs since bulk buying stuff like this gets the best price.

Or at least it did.

Recently I walked into one of the grocery stores near where I live to get one of these packs and discovered that the price had gone from $8 to nearly $12 since the last time I had purchased one.

As far as food prices go, .20 cents per egg still isn't bad, but a sudden fifty percent jump in price did give me a jolt. Then when I discovered with the help of the calculator on my cell phone that the price savings per egg of those sixty-count packs versus a one-dozen carton was only .0076 cents per egg, I foamed at the mouth a little.

I went home and put the question to my friends and acquaintances on Facebook: what happened to egg prices? Chicken Armageddon? Egg trucks crashing on icy roads? A poultry general strike?

Then I got the answer I was looking for: blame California.

"The state that consumes the most [eggs] is California, where new animal-welfare laws concerning egg production kicked in on January 1. From now on, all eggs sold in California must come from hens that live with enough space to stand up, fully extend their limbs, and turn their bodies around. That translates to at least 116 square inches of floor space per chicken, according to NPR.
The vast majority of egg-laying chickens in the U.S. do not live in conditions like that." -- Svati Kirsten Narula
The California egg market is so big that changing the law in that state drove eggs prices higher across the U.S. due to the response it necessitated on the part of commercial egg producers: make capital expenditures to give their hens more room, reduce their flock sizes to create room, or both.

I sensed opportunity!

For some time now I've been wanting to get my own hens and produce my own egg supply. I had it in mind to keep just a couple, enough to keep up with my typical egg consumption. My thinking was to keep three hens around for this. That would likely cost me more per egg than just buying them at the grocery store, but if you've ever eaten farm eggs, you know that in terms of flavor the store bought eggs just cannot compete. Add in the increased food security of having a renewable protein source right in your back yard and it's easy to justify the added cost.

It has been my intention to "pasture" my chickens, to let them have open ground to forage on in order to reap the benefits of giving the birds a varied diet, improve soil quality on my land, keep insect and weed pests somewhat in check, etc. Various sources I've read on keeping chickens in this manner inform me that weekly access to at least ten square feet of open ground per bird in paddocks that you rotate them through is plenty to keep the chickens, the soil, and the available vegetation all healthy and happy. For three birds, I could accomplish this with just four 5x6' enclosures, totaling one hundred-twenty square feet.

But here's the thing: I have over twenty-six thousand square feet of land at my disposal, almost two-thirds of which is pasture, and right now I'm not doing anything with it (except for mowing in the summer - ugh). Three hens set up as described above would require just .0075% of that land area. What a waste of space!

I began to think that perhaps in addition to feeding myself, chickens could become a small side business. Curious about this possibility, I surfed over to Craigslist to see what farm eggs go for in my area. At present, the most common asking price is $3/dozen.

From there, I looked up the regulations in Washington state on selling eggs, and I found that small producers (with flocks under three thousand birds) selling direct to consumers are basically exempt from regulation (and the business fees that go with that). A quick check of county codes revealed that Walla Walla county is pretty much only concerned with licensing of dogs and not allowing livestock to run wild.

This began to look more like a gainful possibility!

I started looking up going rates for the breed I'm interested in, Rhode Island Reds, feed costs, and packaging (egg cartons), with the aim of establishing an approximate weekly cost to operate this little business. I had it in mind to acquire fourteen hens, enough to supply me with my two daily eggs and a further dozen per day to sell (roughly, because chickens won't lay eggs every single day of the year). I looked at an online seller, eFowl.com, and discovered that I could save a significant amount on my order by buying just one more hen for a total of fifteen. Thus, I arrived at the following numbers:

Cost of hens: $4.76 per bird for fifteen sexed chicks, including shipping. Since laying hens typically are most productive during their first two years and are frequently replaced at that point, that works out to .05 cents per bird per week during their peak productive years, for a total of .75 cents per week for the flock.

Cost of feed: On average laying breed chickens will take six months to mature. Their food needs change during their different life stages, both in composition and quantity, and the needed amount of provided food is variable depending on the time of the year (due to availability of forage). Price of feed changes, too, of course, so I've gone with a high-end assumption of 1.5 pounds of feed per bird per week, at rounded up local feed prices of $12 for a fifty-pound bag. Rounded up, that is twenty-three pounds of feed per week for the flock at a cost of approximately $5.52. I decided not to bother averaging in the cost of feed per week during their maturation phase since I'm also not attempting to discount their reduced feed requirements during the summer when forage is available.

Packaging: Reusing egg cartons when selling eggs to consumers is frowned on, but fortunately they're not very expensive. I also found these at eFowl.com for fifty cents each in packs of ten. If my hens were to produce an egg per day each, after consuming my two eggs daily I would have ninety-one eggs per week, requiring seven egg cartons. Since that would leave some eggs left over, it's easier to extrapolate this cost over two weeks of production, which would get closer to an even fifteen one-dozen cartons required, for a total of $7.50, or $3.25 per week averaged.

Thus, I have a total estimated weekly operating cost of $9.52. I haven't included the capital cost of building the chicken coop and the paddocks because a) I don't have the information handy and b) these will last many years and can theoretically be amortized down to almost nothing if the operation carries on long enough. Typically, the breed of chicken I am considering will produce two-hundred fifty eggs per bird per year,  so roughly sixteen weeks out of each year they will not produce. This lowers packing costs by $52 per year, or one dollar per week, bringing their approximate weekly operating cost down to $8.52.

During the roughly thirty-six productive weeks each year the birds will have, at current local farm egg prices the flock could bring in revenues of $21 each week, for an annual total of $756.

Therefore, $8.52 x 52 = $443.04 annual operating cost; $756 in revenues - $443.04 = $312.96 profit; $312.96 / $443.04 = 70.64% net profit margin!

But, it's actually better than this, because the part I left out is the two eggs per day that I would eat. At twenty-five cents each, I would get fifty cents of eggs per day, or $3.50 worth per week, for approximately thirty-six weeks, for a total of $126 per year. With current grocery store prices costing me roughly $144 per year for eggs, and since I don't have to buy eggs from myself, my actual cost of feeding myself two eggs per day all year long could drop to around $48 (since I might have to buy eggs for four months out of each year, at the current cost of $12 for a sixty-pack purchased each month). I would thus recapture the difference, adding $96 per year to my overall cash flow, putting the annual total profit at $409.

There are lots of variables here, things that can't be predicted, costs that I've deliberately estimated on the high-end, etc. However, given the margins here I can be reasonably sure that I would have to work very hard at making this venture unprofitable to flip these numbers into the red. Looking at it in terms of my original plan to just keep enough hens to feed myself, the operating costs of keeping the birds plus buying eggs to make up for their unproductive weeks ends up costing about eleven percent more per year than just buying eggs from the store. Since I want to keep chickens anyway, I might as well put a little more effort into them and make a profit while I'm at it.

Therefore...


Sunday, January 25, 2015

This Taxpayer Is No More!

I think I finally figured out how to stop paying taxes legally.

Just tell the IRS that you're dead. Once they've got it in mind that you are, apparently no amount of evidence will convince them otherwise:

"Siegfried Meinstein discovered that he was dead in April. He seems to be handling the news well.
“It isn’t really a problem in my daily life,” he said, sitting at a table in his Upper Arlington assisted-living facility. “Everybody accepts my money.” 
This probably requires a little more explanation, so here it is: The Internal Revenue Service thinks 94-year-old Meinstein bought the farm, bit the big one, took a permanent vacation. 
And despite his family’s best efforts, the IRS hasn’t changed its mind." -- Lori Kurtzman

Saturday, January 24, 2015

The 529 Is The IRA Political Coal Mine Canary

If you haven't heard of a 529 plan, chances are you're not alone. 529 plans are tax-advantaged savings accounts meant to pay the college expenses of a designated beneficiary. Contribution limits on these accounts are quite high, growth in these accounts is sheltered from taxes, and at present withdrawals are tax-free if used for allowed education expenses. Despite this, not very many people in the U.S. use them

The same is true of IRA accounts. In terms of assets, these accounts hold a tremendous amount in U.S. dollar terms. But in terms of ownership, the number of people who have them is quite small.

This is a very important point: the value of the assets don't matter; the number of people in those pools is what matters.

Why?

Because when it comes to sacrificing one person to another, a politician must always choose a minority to go after in order to gain the support of an immoral majority to whom he or she promises some of the loot.


As the above-linked article points out, this is a proposal going nowhere in the face of the new Congress, which has come to be dominated by the GOP. It also mentions the not unimportant detail that this proposal would apply to gains on new contributions to 529 plans, not on existing balances and their resulting gains.

But that's a "for now." In the future there will be a different Congress, and they may be put there by people who think they're being screwed over because this Congress won't give them the goodies that Obama and his ilk promised. Same with the promised limits of the application of the proposal: it may start with just part of these accounts, but when the free lunch offered in exchange for attacking one part of what the minority has never materializes, they'll come back for the rest. 

This is why individual retirement accounts are becoming a very risky investment for individuals, as telegraphed by this move: not because of fluctuating account values and the possibility of poor investment performance, but because of political risk. There are rules in place about how these accounts are supposed to be treated and promises made that go along with them. It has been the same for 529 plans. But now that president openly talks about changing the rules and breaking those promises, because he and others like him know that the  number of people they are attacking is quite small and the lost votes won't matter to them. The same is true of IRA accounts, and the coming attack is not new, but at this stage not as loud and in the open in part because IRA owners are greater in numbers than 529 owners. All the same, being an IRA owner puts you in a numerical minority, which politically is difficult and costly for any given political party to defend. Consequently, they won't, or if they do then they won't be around for long. It's only a matter of time.

What can you do to defend yourself? Don't make yourself a target, for one: just don't open and fund this kind of account. If you already have one, at the very least stop further funding of it, and possibly consider shutting it down and take the tax hit (which is where I find myself right now - I stopped funding my IRA accounts years ago, but as of yet have not emptied them; procrastination could cost me!). When considering alternatives, keep this in mind: it is harder for .gov to steal what is tangible and privately held. That could be everything from buying and personally holding precious metals, to investing in rental property, or even creating and running a small business. Basically, keep your wealth in stuff that .gov will have to send people with guns to take rather than stuff they can get from you with the flip of a switch.

Thursday, January 22, 2015

The myRA And Automatic IRA Enrollment: Not A Leg Up, But A Leg Trap


Last year in his SOTU address, Obama pushed a savings vehicle called the "myRA". Basically, it's a severely limited Roth IRA that is only invested in .gov bonds.

This year in the SOTU, Obama called for automatic IRA enrollment of employees at any company with more than ten employees.

It hasn't happened yet, but the next step will be a call to make it law that these automatic enrollments be in the myRA. 


That's all this is, no two ways about it. People who allegedly can't afford to open retirement accounts on their own (which is a bald-faced lie) will be conned into loaning money to .gov at rates of return that won't even keep up with inflation. The siren song of "savings security" that these lying .gov predators promise completely disregards the loss of purchasing power that one's funds will suffer by languishing in such a poorly performing account. 

No doubt that once .gov has suckered a sizable number of people into these accounts, the rules that define and govern them will be changed. The two key things that I expect they will alter will be to lift the lifetime contribution cap on these accounts, presently $15k, and to impose penalties and taxes on savers who attempt to withdraw their principle, which at present is something one can do in any Roth IRA. They will count on the apathy of automatically-enrolled participants in this scheme to continue throwing money down this hole and will continuously increase the maximum size of these accounts in order to do so, while imposing penalties on withdrawals in order to double-dip their victims.

This is a trap, plain and simple. Stay out of it and build your own security. 

Wednesday, January 21, 2015

State Of The Union Address 2015 Summarized

I've been out working all day, so I'm going to keep this brief and get to my beer and chicken wings.

This covers the main points of the speech that president gave last night in D.C.:


What was said? Doesn't matter; It's statism, so just know that it's going to cost you.

Tuesday, January 20, 2015

"Mining" For Silver On My Couch

Yesterday while I was having a slight cabin fever attack (I'm home a lot since this time of the year slows pest control to a crawl at my latitude), I decided to take care of a gaping hole in my home defenses: I needed a safe. Going forth and hunting around the area for one got me out of the house in a constructive way.

What I mostly found was either way beyond my needs (huge safes priced in the thousands), or metal cabinets so pathetically flimsy that an intruder could pry open the door of one and escape with its contents long before myself or another could arrive to respond with lethal force. 

But at one location, almost the last one I visited, I found a real, fire resistant safe with a dial combination lock that was marked down hundreds of dollars from its MSRP because of a few scratches. I saved big because of something I can fix with a few pennies worth of paint (if I could be bothered to do so). Somewhere, there is a shipping insurance company that is hating life. 

With my new safe loaded up, I started on my way home, which included a stop at one of my banks to empty my safe deposit box of the silver I've had stored in it for a few years. This was a big part of the reason I sought out a safe: events can transpire that lead to depositors not being able to access what's theirs, be that because of massive banker and .gov incompetence, natural or man-made disasters, or even outright theft of safety deposit box contents and other accounts by chronically indebted, criminal governments

While I was at it, I decided to take out some rolls of U.S. half dollar coins to see if I could locate any that contain silver. The branch had $90 worth available, so I took them all. This is something that I've done before with success, and similar to my relatively new hobby of collecting big gains simply by hanging onto pre-1983 U.S. pennies. I need to have some cash on-hand at home in case disaster strikes and my bank accounts are not accessible, so if I failed to find any silver coins, I could simply hang on to the rolls for that purpose.

I haven't done this much since the first time I tried it and blogged about doing so back in 2012, today being only the third time that I can remember. Perhaps I should try it more often though, because just like my first attempt at it, this time there was another silver coin hiding among the fiat junk: this 1969 piece, which at the time of this writing has a melt value of $2.65. That's a 430% gain with zero risk simply for finding the coin. 

It has now joined my other silver holdings, including the 1967 half dollar coin I found a bit over two years ago. This is fun to do, and always worth it when you manage to find one of these coins, but it is only going to get harder and harder to do so: lots of other people have been sorting through these coins for years and taking them out of circulation just like I have. For building security with precious metals, this is not the way to do it, simply because you won't find enough of them to acquire a meaningful amount of silver. Instead, you should buy it from dealers like I also do and treat this kind of acquisition as supplemental only.

Sunday, January 18, 2015

MoneyMetals.com: China’s Global Gold Supply "Game of Stones"

I saw this article a few days ago on the Money Metals Exchange website, and it came to mind last night as I considered increasing the amount of precious metals that I buy each month:

China has a 4-way global gold supply domination strategy. And it’s starting to corner the market.
First, China buys physical gold in world markets...
...Second, it keeps virtually all domestically mined gold “in house”...
...Third, China partners with or buys high grade, in-situ gold (and silver) projects around the globe...
...Fourth, and virtually impossible to quantify with a reasonable level of accuracy, are China’s efforts to purchase “off the books” gold production from what are known as informa or artisanal gold miners in Africa and South America.
 And the reason that I do so:
One of these days, at a time of its choosing, China may reveal just how much gold it does hold, alongside a possible decision to enable a newly gold-backed currency, the Yuan, to make its debut on the world’s financial stage. Such an event would have profound implications for the primacy of the U.S. dollar, as well as America’s ability to continue running printing press deficits, long financed by Chinese purchases of U.S. debt instruments, to the tune of several trillion dollars.
When this event takes place, it will become evident to the world’s financial players that, as Rickards so poignantly remarks, China’s true gold reserves will have become “a dagger pointed at the heart of the dollar.”
Like I've said before, I consider precious metals ownership to be a form of insurance. If you don't own any, now is a good time to get started.

Saturday, January 17, 2015

Washington State: Not The Worst For Retirees, But Inslee Is Trying

This morning I saw a link to a Kiplinger piece posted back in September on states that tax retirees the hardest, and after flipping through it I saw a link to a list of the states that are the easiest on them.

The worst.

My state, Washington, is not on either list. 


You have to love this "taxation without representation" thing that Inslee has going on, how he wants to just do stuff by decree now. He didn't come up with the idea without help, of course. Maybe we could dump Inslee into Puget Sound? (I'm sure he would scream for the completion of an environmental impact statement first as he tipped over the edge of the plank, lol.)

Aside from the simple fact of .gov making life harder by reducing my disposable income for its own
ends (it exists for its own sake, definitely not to serve us), the thing about this stuff that really eats at me is what it means for the business pursuits I have: as I build these things up and watch them come to fruition, I do so knowing that I will eventually tear them back down before I flee this place for a friendlier environment. 

Any business is essentially a means to an end, but if one puts his or her heart and soul into it, especially into work one truly loves doing, then one also wants to imagine their creation becoming a legacy and enduring forever. It becomes more than something you do, something outside of yourself; it is you. Knowing that looters like Inslee are waiting in the wings with an army of parasites to pounce on any successes, however, naturally makes one want to protect their work, which is an extension of themselves, by doing the only thing that is a truly effective defense against the kind of violence Inslee promotes and represents: withdraw it from the world.


Friday, January 16, 2015

WA.Gov And Inexperienced Small Businesses Will Give Rise To Big Pot

A couple years ago when the voters of Washington state were presented with the choice to legalize marijuana or not via Initiative 502, I joined a majority of active voters that November in approving the measure. I'm not much of a fan of the stuff myself, so I was voting in accordance with my morals and ethics, primarily in this case it being a matter of forbidding the state from assaulting people who engage in peaceful, consensual behavior. 

The measure basically called for running marijuana production, distribution, and sales in tandem with liquor control here. The existing liquor control board was tasked with setting up licensing and various other regulations on this newly legalized industry within our state. 

Put these guys at the helm - what could go wrong?
What do we have now? Basically, an expensive, inefficient infant industry that is being smothered to death in its crib by regulation and insanely high taxation on one side, with the help of a bunch of wanna-be business owners on the other that don't have the capital to weather the predictable storms and who should have known better. Here are select portions of the article I've linked to that spell out what has happened and where this is likely to end up going:

 "SEATTLE (AP) — Washington's legal marijuana market opened last summer to a dearth of weed. Some stores periodically closed because they didn't have pot to sell. Prices were through the roof.
Six months later, the equation has flipped, bringing serious growing pains to the new industry.
A big harvest of sun-grown marijuana from eastern Washington last fall flooded the market. Prices are starting to come down in the state's licensed pot shops, but due to the glut, growers are — surprisingly — struggling to sell their marijuana. Some are already worried about going belly-up, finding it tougher than expected to make a living in legal weed...
...State data show that licensed growers had harvested 31,000 pounds of bud as of Thursday, but Washington's relatively few legal pot shops have sold less than one-fifth of that. Many of the state's marijuana users have stuck with the untaxed or much-lesser-taxed pot they get from black market dealers or unregulated medical dispensaries — limiting how quickly product moves off the shelves of legal stores...
...So far, there are about 270 licensed growers in Washington — but only about 85 open stores for them to sell to. That's partly due to a slow, difficult licensing process; retail applicants who haven't been ready to open; and pot business bans in many cities and counties...
...In Washington, many growers have unrealistic expectations about how quickly they should be able to recoup their initial investments, Simmons said. And some of the growers complaining about the low prices they're getting now also gouged the new stores amid shortages last summer.
Those include Seitz, who sold his first crop — 22 pounds — for just under $21 per gram: nearly $230,000 before his hefty $57,000 tax bill. He's about to harvest his second crop, but this time he expects to get just $4 per gram, when he has big bills to pay.
"We're running out of money," he said. "We need to make sales this month to stay operational, and we're going to be selling at losses."
Because of the high taxes on Washington's legal pot, Seitz says stores can never compete with the black market while paying growers sustainable prices...
..."I got retailers beating me down to sell for black-market prices," said Fitz Couhig, owner of Pioneer Production and Processing in Arlington.
But two of the top-selling stores in Seattle — Uncle Ike's and Cannabis City — insist that because of their tax obligations and low demand for high-priced pot, they're not making any money either, despite each having sales of more than $600,000 per month." -- Gene Johnson
Basically, what you have are a bunch of people who dove head-first into producing marijuana for the newly legalized Washington state market, without first taking into account two hugely important things:

1) The state was authorized by I-502 to limit the number of retail outlets that could exist (counties and municipalities were authorized to restrict them, also, and many have), creating a bottleneck between their farms and the market;

2) The tax to be placed on legalized marijuana sales, a 25% excise on wholesale and retail sale, also spelled out in I-502, would set a price floor under the legal marijuana crop which was high enough for the black market to potentially undermine (and it sounds like they have).

The rest of it pretty much sounds to me like basic business myopia, where the operators failed to look further down the road and notice that there might be lean times ahead and set aside money accordingly. Most of them probably disregarded the added costs .gov was putting on them (not to mention the costs of a brick and mortar business: rent, insurance, utilities, maintenance, payroll, etc.) and assumed that all the consumers here would come out of the shadows and shop in the relative safety of the licensed market, leaving the licensed producers rolling in cash like the black market producers do now. They probably started living it up thinking the inflow of money would never end. Nope.

Banks are still worried about the Feds and are cool to getting involved with these licensed operators here and in Colorado, so most if not all of the financing to get these operations started had to have come out of the pockets of the owners. Since it sounds like a lot of them are crashing on the rocks now, they'll probably cease to exist or sell their operations. Because of the aforementioned Federal/banking hurdles, it's going to take buyers with cash hordes large enough to handle the ups and downs of these severely hobbled markets. Who might that be?

Probably the biggest players in an industry that have been dealing in combustible consumables for a very long time, at least one of whom has been operating for nearly two-hundred years.

When the day comes that a multi-national starts scooping up grow operations and filling the limited market in this state with a stable, quality supply of marijuana, which will begin to lock out small operators due to economies of scale, I expect the wailing to be deafening. What could keep that at bay would be some simple forethought and discipline on the part of the now-existing producers. I'm guessing that they won't figure that out in time, however, and when they find themselves sidelined by a major player, they'll have no one to blame but themselves. 

Thursday, January 15, 2015

Oxford University Press And The Breakfast Food That Shall Not Be Named

I saw this on my Facebook news feed this morning and just had to laugh:


"One of the biggest education publishers in the world has warned its authors not to mention pigs or sausages in their books to avoid causing offence.
Oxford University Press (OUP) said all books must take into consideration other cultures if they hope to sell copies in countries across the world.
As a result, the academic publisher has issued guidance advising writers to avoid mentioning pigs or "anything else which could be perceived as pork" so as not to offend Muslim or Jewish people." -- Ewan Palmer
I guess that means that OUP will be striking the following offensive texts from their library:
 “He has forbidden you only dead animals, and blood, and the swine, and that which is slaughtered as a sacrifice for other than God.” (Quran 2:173)
 "And the pig, because it has a split hoof, but does not chew the cud; it is unclean for you. You shall neither eat of their flesh nor touch their carcass." (Deuteronomy 14:8)
What nonsense.

It's BACON!


Oh no, don't say that word!


Oxford University Press apologizes.

Charlie Hebdo, they are not.

Wednesday, January 14, 2015

Budget Cuts Hinder The IRS; Switch To A National Sales Tax, Cut The IRS To Fit Its Budget

Among the things you couldn't possibly get me to shed a tear over, even if you were to rub cut onions directly on my eyeballs, is the IRS singing the blues over difficulties the agency faces due to budget cuts.

Naturally, they're doing their best to figure out ways to hurt you with these developments:

"With a week to go before tax season opens, taxpayers were already bracing for a potentially "miserable" filing season. It turns out that it could live up to the hype.
Internal Revenue Service (IRS) Commissioner Koskinen has advised employees that the budget cuts will result in reduced services to taxpayers. In an email to employees sent earlier today, Commissioner Koskinen advised that "realistically we have no choice but to do less with less." -- Kelly Phillips Erb, Forbes.com
I'll get to the list of bad things predicted for you and I in a moment, but first, I'd like to propose an alternative to the income theft perpetuated against us all by the U.S. Federal tax code as it presently exists: let's switch to a consumption tax. Instead of your pay being withheld from you, you receive 100% of your wages, with no need to file any sort of paperwork with the IRS. There will be no refunds, because there would be no excess withholding to return to you. You would simply pay a sales tax on goods and services that you purchase.

Now then, what they say is going to happen due to the IRS budget cuts, and how it would be different without this insane taxation scheme:

1. Identity theft could increase

Current tax scheme: 
What the author of the piece is referring to here is fraudulent filings with stolen Social Security numbers that collect the various refundable tax credits (earned income, tax credits for dependent children, etc.). The thief gets an electronic deposit to their checking account in your name, disappears, and all kinds of fun ensues when you try to file your return.

National Sales Tax: If we had a national sales tax and no income taxes, this probably wouldn't even be a thing. If there's nothing to file for, there's nothing to fraudulently file for. Any credits that .gov might try to keep in place could be rendered into a different form and distributed in a different way, such as kicking the funds down to local DSHS offices where recipients would be required to file in-person. It would be much, much harder for an identity thief to steal money that way.

2. Refund delays

Current tax scheme: It's pretty obvious what the deal is here, as it simply is what it says. A reduced budget means fewer people and machines processing returns, so a very long line of filings moves at a slower pace. People who count on receiving their refund check every year have to wait longer, which could mean anything from delaying a planned purchase or investment to having their utilities shut off.

National sales tax: If there's no withholding from your paycheck, there can be no excess withholding. There would be nothing to file with the IRS, and no return to wait on. You would already have all of your money.

3. Lags in correspondence

Current tax scheme: This is similar to #2, fewer people and machines means longer wait times to get all kinds of stuff done, sending letters to you obviously being one of those things. If you need a question answered, it's going to take even longer to get an answer. As the author of the piece says on this point, the IRS sends letters that begin with "We need more time..."; you can be sure that the lag in correspondence only goes one way, as they will certainly continue to demand that you file your papers and send a check on time...

National sales tax: You would no longer correspond with the IRS, so it simply would not matter how slow they get. The only people who would correspond with them would be people like me, a business owner. Exactly as I am now a sales tax collector for the state of Washington, so would I be for the IRS. Despite Olympia's best efforts to make sales tax collection and remittance to the state coffers needlessly complex, it is still vastly more simple than dealing with Federal income taxes. A national sales tax would likely be as simple as the state sales taxes I handle now; extrapolated out over the whole of the nation, this switch to a far more simple system, with fewer entities even required to correspond with the IRS, would likely fix this issue simply by reducing the sum total and the complexity of the correspondence, even if the IRS were made far smaller than it is now.

4. Fewer resolutions

Current tax scheme: I have to assume here that the author is referring to those times where the IRS comes up with one set of numbers (higher) and the tax payer being shaken down comes up with a different set of numbers (lower).

National sales tax: This problem simply goes away. You won't get into these kinds of disputes with the IRS if you are not the owner of a business that is tasked with collecting the national sales tax. You pay your taxes at the register when you purchase goods and services, and that's it. If you are the owner of a business, this would only be a problem for you if you're an undisciplined moron: as it goes now with sales taxes here in Washington state, when I receive payments from my clients, I immediately divert the sales tax portion of their payment to a separate account so that the funds are always on-hand and ready to go when I file my quarterly returns with Olympia. It's simple!

5. Unanswered calls

Current tax scheme: This is similar to #4, so no need to go into detail.

National sales tax: Same as the above, this really isn't a concern unless you're a business owner, and then probably only if you're the aforementioned undisciplined moron type.

6. Shutdowns

Current tax scheme: The IRS commissioner has warned of some possible furlough days during the year, which basically just means more delays across the board. The root of the problem here is simply the size of the agency, an effect of all of the crazy things it's required to do owing to our overly-complex Federal tax code: the IRS is so freakishly huge right now that funding cuts can lead to the need to shut the whole thing down periodically so that it's spending as little as possible.

National sales tax: Because a much smaller number of entities would be dealing with the IRS (instead of hundreds of millions of individuals), the agency would not need to be nearly as large as it is now, would require a much smaller budget, and as such would be easier to fund adequately and could easily avoid this kind of scenario. Depending on how often businesses would remit sales taxes to the IRS, it may not even be necessary to have the agency running on anything more than a skeleton crew between return periods. If the model we have here in Washington state is any indication - I can complete my quarterly sales tax filing in about five minutes online - it may be possible to shrink the IRS to a tiny fraction of what it is now, permanently.

Fewer Audit Closures

Current tax scheme: What's being referred to here is finalizing audits of tax payers when a dispute arises, so fewer closures means more audits hanging in limbo while the IRS overcomes its budget woes.

National sales tax: Again, simply not an issue for anyone but undisciplined moron business owners. Audits would still occur with disciplined, intelligent business owners from time-to-time, but that would just be a records check procedure, which owing to the relative simplicity of a sales tax scheme could be completed in an afternoon.

For now I'm leaving out any discussion of related issues with a national sales tax, such as concerns that such taxes are regressive, rates that would be required, exemptions or lack thereof on certain classes of goods, the special interest power built into the current system, etc. I also am not going to discuss specific proposals that are out there right now for something exactly like or similar to what I've described. Today I just wanted to illustrate the basic fact that under what we have now, the structure of the beast forces nearly all of us, whether we receive returns or otherwise, to deal with this bloated, unstable agency that just demands more and more money as it heaps abuse on the very people it needs money from!

Just think about it: would you prefer to keep going with this annual paperwork ritual and the stress and anxiety that comes with it, or would you rather just pay your taxes at a cash register and walk away?


Tuesday, January 13, 2015

Asset Diversification, Gaining A Degree Of Omnipresence, Achieving Independence

Yesterday's post about Bitcoin turning six years old got me thinking about another topic: Asset diversification.

Diversification is often spoken of in the context of stock and bond investments, and many seem to leave it at that. There's far more to it though: diversification of your assets should include other kinds of investments and your sources of income.

These days, most of my "eggs" are in one basket: my pest control business. It accounts for approximately 82% of my annual income, the other 18% coming from other sources. Pest control is a fairly stable industry, so it's not at all much of a risk to just rely on it (unless something huge happens, like an unforeseen regulatory change; there is always the epistemic limitation typically stated, "past performance is not indicative of future results," especially when it comes to jackass bureaucrats) . There are two external factors that bear on this line of work which can slow it, or even put an end to the whole show, however, and these must be hedged against: time and physical aging.

Physical aging brings obvious problems with it: one's body will only carry a person so far before it begins to deteriorate, making many kinds of work hard or even impossible to do. Pest control can be a very physical occupation, so there is a natural limit on how long a person can carry on doing it in this regard.

Time limits the income to be generated from the activity, too, for a simple reason: there is only so much time in a day, and a person can't be everywhere at once. It happens to me all the time during my busy season: I'll be committed to one job that pays X, and I'll get notice of an alternative that pays X+1, but I can't be there to take advantage of it.

That is why I divert my surpluses into other opportunities, and always remain on the lookout for new ones. Therefore, aside from pest control, I currently have a hand in:

Equity and debt investments (stocks and bonds)
Forex trading (currencies)
Rental property
Cash value life insurance
Precious metals
Cryptocurrencies
Entropia Universe
Blogging (Hi!)

Later on this year, I plan to launch a couple of small side businesses that will take advantage of some of the half-acre+ of land that I live on these days, too.

By involving myself in all of this stuff, I am helping to smooth out any waves that may come along and rock my pest control boat. As many of the above activities are passive in nature, they also help me "be more places at once" in that they carry on earning while I am awake and working or playing, while I'm asleep, etc., and several of them tap into economies from around the globe. They also pretty much do not require any physical exertion, so I am able to make the wear and tear I inflict on my own body "worth more" by diverting surpluses I generate from activities that do into these non-physical, gainful activities.

Eventually I want my passive and low-activity income sources to surpass my pest control business, at which point I will likely shutter it, for the ultimate goal here, of all of these activities, is to bring all of my interactions with other people as close to being purely voluntary as possible, to own all of my time.

Monday, January 12, 2015

Bitcoin Turns Six

I spotted this article over at Sovereign Man today: 
This may be the most important transaction in the history of finance
 "Six years ago today, Satoshi Nakamoto, the developer and founder of Bitcoin sent ten units of the cryptocurrency to his colleague Hal Finney as a test.
This was the very first bitcoin transaction ever recorded. And it may possibly go down as one of the most important financial transactions in modern history."
What's the big deal about Bitcoin? Simon Black puts it nicely:
"Centralized, un-backed paper currency is one of the worst experiments in the history of finance.
We have awarded total control of our money supply to a tiny elite of unelected bankers that has the power to conjure trillions of units of currency out of thin air in its total discretion.
It has left in its wake an endless trail of busts, panics, recessions, and depressions, not to mention the greatest level of financial inequality that the world has ever seen.
Now– inequality is nothing to gripe about. Equality in and of itself is an absurd ideal.
Human beings are all different. And wherever one person’s skills are more economically valuable, that person will achieve greater wealth.
It’s a simple calculus. Improve the skills to improve the income.
But what this centralized paper monetary system has created is an environment where people rise to the top, not through skill and talent, but by graft and bloodline.
If you were born middle class, you stay middle class. You keep fighting to make ends meet, you keep going into debt, and you keep getting penalized with negative interest rates for saving your money.
And if you were born rich, you stay rich… even if you’re a complete moron.
This is banana republic stuff, brought to you by an absurdly corrupt monetary system.
The idea of Bitcoin changes all of that."
But how does Bitcoin change this stuff?
 "What really makes Bitcoin revolutionary...is its Decentralization.
No one has any control over it. No one can manipulate its supply. No government can destroy it.
And NO ONE can use it as a tool to reward bankrupt governments at the expense of responsible savers.
This is an extraordinarily noble idea: take the power out of the hands of the central banks and let the market decide."
That's why I dabble in it with my tiny cryptocurrency miner. Participating in the growing cryptocurrency market is part of my asset diversification efforts, with this example sharing many similarities to my ownership of precious metals.

Sunday, January 11, 2015

Income Taxes: If Auberon Only Knew The Half Of It...

"Each system of taxation has its own peculiar group of evils. To take but one example: Income taxes necessitate inquisition and odious interferences; they create a system of government spies; lead to action being taken very improperly and upon questionable guesses by officials whose one view is likely to be to increase their takings; under every imaginable system must be unequal in their incidence; cannot from their nature be decided in cases of dispute either in an open court or in a secret court without much annoyance to the taxpayer; strike all visible property more severely than the less visible forms, lead to much evasion and untruthfulness: become complicated to the last degree owing to the innumerable methods of earning income in modern life; involve metaphysical questions which recall the dialectics of the middle ages; tend to drive capital into risky employments outside the country; whenever much raised, are likely to cause the corruption of officials on whom the returns depend; are a standing menace, [owing to the ease—a mere stroke of the pen—with which they can be increased] to traders and owners of property; are infinitely hurtful to the small men, but tend to be unremunerative, as Leroy Beaulieu has so well shown, except when they are applied to the mass of small properties, since the larger properties, when singled out for attack, even if they do not disappear, are comparatively unfruitful as a field for taxation (thus defeating by a natural check the unwisdom and injustice of trying to make any special class supply the common compulsory fund); destroy the advantage of free trade, even in a country which allows imports to enter freely, since they raise the price of articles produced in an almost excessive degree, owing to the fact that each class of producers necessarily adds his own rate of profit to the tax that he himself pays, and to the tax paid by all those who have preceded him as manufacturers of the same article in the earlier stages of its manufacture—with the consequence that each product of the market that passes through the hands of several producers and distributors, pays the tax several times over before it becomes a finished article, as well as in each case the special rate of profit added to the tax by each producer and each distributor; are therefore unfair to traders who themselves pay income tax and may have to compete with traders in other countries not burdened with income tax (though, it should be said, probably burdened in other ways); and commit the capital crime of making property less desirable, and of weakening the public desire to save and invest." —Auberon Herbert

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