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

Saturday, January 10, 2015

Unwind Social Security Or Face The Wrath Of Ida May Fuller

In a Facebook group I recently learned of and began following, Natural Rights Libertarian, I saw a post the other day the admin created that briefly told the story of Ida May Fuller, the first person to receive payouts under Social Security. Ms. Fuller worked for three years after payroll taxes had been instituted to fund SS before she retired at age 65.

Ms. Fuller's total contributions into the system, over three years, amounted to $24.75.

Her first monthly check was for $22.54. 

Uh oh.

Ms. Fuller went on to live another thirty-five years to the ripe old age of one hundred.

Oh crap.

Ultimately, Ms. Fuller ended up collecting $22, 888.92.

DOH!

Now, there's absolutely no way that returns from any sort of investment could have turned such a pittance into such abundance, especially when the funds are in the hands of .gov morons. The only way this was possible is due to the true nature of SS, that it is a "pay as you go" system in which funds stolen from today's workers are paid out to workers who were stolen from yesterday. 

Sometimes this can result in a surplus of funds, say if there are more workers today than there were yesterday, retirees die before they receive back from the system an amount at least equal to what was stolen from them, etc. 

But if it's all going the other way, more retirees than workers, people living long enough to collect far more than was ever stolen from them, etc., any surplus that might exist is going to be exhausted, and in the absence of one the inherent problems with the scheme will become apparent that much faster. When there's no surplus and also not enough funds coming in to pay the full amount of what has been promised, the real fun begins.

It's funny how the first recipient of SS turned out to be an extreme "canary in a coal mine" example of the flaws built into the system from the get-go. And it's too bad that the warning wasn't heeded.

On top of that, start adding in recipients who never even contributed anything to the fund and you've thrown gasoline on the fire.

So that's why when .gov gave us working stiffs a 2% SS tax holiday during 2011 and 2012, I put all of that money aside into a retirement account. It's growing, steadily increasing the income being generated from the equities I have those funds invested in. The SS tax holiday has been over for several years now and is unlikely to ever return, so for now the account is growing only under its own steam; I am not contributing any more to it at this time.

On that note, within the thread on the Natural Rights Libertarian group that inspired this post, and what is ultimately the topic here, is this:


This is one of many proposals that are out there to officially and permanently do with SS what I did personally and temporarily. You can click the link to read the full details, but in short, it proposes that the system be split between its present state and an arrangement similar to what I've done, with individual worker choice being the deciding factor in which of the two options comes to dominate. Based on the experience of others, it's highly likely that most would join the private system, and attrition would wind down the old, dysfunctional system over time.

Something of this sort needs to happen, otherwise the millions of Ida May Fullers appearing on the horizon are going to ruin us.

Friday, January 09, 2015

More Copper, and More Crap

The other day when I wrote about sifting through the coins I had on hand to find and retain the pennies that contain valuable copper, I remarked toward the end on how I noticed that post-1982 pennies were of noticeably lesser quality than their earlier mostly copper versions. I wondered if that was just a fluke only to be found in the small sample of pennies I had around.

One of the things I like about my main gig, pest control, is that I walk around outside a lot while doing it. That frequently puts me in places where people drop change. Today was one of those days, and I found several pennies and a nickel while I was out in the field. Among the pennies I found two coppers, and the rest were post-1982 zinc fiat garbage. Once again, I found the pattern:


From left to right, on top are the two coppers, which are a 1975 and a 1982. Below them are the post-1982 zinc pennies I found today, a 1987, 1989, 1997, and that one on the end, which once again I swear is a penny, was minted in 2013

It seems that the copper pennies truly are made of tougher stuff, while the mostly zinc pennies that followed them starting in 1983 simply can't hold up to ordinary use. What garbage these things have become! A perfect representative symbol of the government that stands behind them.

The two copper pennies have joined the others that I found in my change jar when I sorted through it looking for them, bringing the total to 108, which as of the time of this writing is worth $2.00.

The four non-copper fiat garbage pennies and the nickel, the materials composing each being worth less than the face values of those coins, will be deposited at my bank. 

Thursday, January 08, 2015

The Attack on Charlie Hebdo

Gun ownership in France: http://www.gunpolicy.org/firearms/region/france

From the above, under the section entitled, "Right to Possess Firearms":
"In France, the right to private gun ownership is not guaranteed by law."
Translation: In France, private gun ownership is hindered by state authorities.

Problem: People who don't follow laws are not hindered by laws.

Result: "It's A Butchery" - 12 Killed In Terrorist Attack On French Satirical Magazine Charlie Hebdo: Live Webcast 

How yesterday could have turned out if the French state had not been putting good people at a disadvantage against bad people:


Wednesday, January 07, 2015

Silver For You, Silver For Me

Can I interest you in a free half-ounce of silver? I can help you get that if you're looking to diversify into precious metals. If you want to just get to it, scroll down to the end of this post where I explain how. If you would like to consider some thoughts on why you should own precious metals, read through this post to the end.

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There are many kinds of insurance that a person can buy: health, life, auto, home, etc. These things are meant to financially cover injuries to those things, to "make whole" the damaged thing or party and restore them to the condition they were in prior to the covered incident.

But what about your money?

I'm not talking about stuff like FDIC insurance, which guarantees the total of your deposit in a bank (up to a certain limit, but that's a topic for another day), or insurance against theft of your money. I'm talking about insurance on the value of your money, its purchasing power. The purchasing power of your money is separate from the sum total of it, and in this day and age it needs protecting, too. 

Against what? 

Inflation.

What is inflation?

Inflation is simply an increasing supply of money chasing a relatively static or decreasing supply of goods and services. Essentially, if today there are X dollars, and tomorrow the government decrees that there will now be X+1 dollars, but tomorrow there will still only be as many widgets available to spend dollars on as there are today, then tomorrow people who have access to that +1 can offer more dollars for the available widgets than people who do not have access to the +1. The supplier of widgets will of course accept the +1 by raising his asking price to match, so if you didn't have access to it, no widgets for you. Deflation is the opposite of this.

Who has access to the +1? For the most part, it's big banks, which receive the "money" created out of thin air by the Federal Reserve (in other countries, from their central banks). From there it moves out into the economy via a list of connected parties titled, "Not You."

Those people and entities then have the newly created "money" at their disposal as they buy and sell in the same market place you participate in, which for most of us is via the wages that we earn from our labor. 

Why does inflation matter?

Sometimes your wages will do a decent job of keeping up with inflation, but most of the time they'll not. Other times, the supply of goods and services can increase to match the increased money supply, but if there's extended periods of high unemployment, it won't be happening. Generally, inflation will be the case, because central banks actively create it, purposefully avoiding deflation, as a matter of policy!

The thing that can get hit the hardest, however, is the purchasing power of your savings: the money you set aside for future use. The resource that you traded some of the finite time of your life for could be dropping in value and become worth less than it was on the day that you earned it through no fault of your own!

Isn't that nice? You work hard, you save some of what you've earned to create some security for yourself, and then along comes .gov, printing money to cover its own stupid moves, thereby devaluing your savings, your labor and your time on this earth.

What can an individual do about this?

There are a couple different things you can do to mitigate this very real problem, and the topic of this post is one of them: precious metals.


These are two silver 1oz rounds that I recently purchased from Money Metals Exchange. They've joined the various pieces of silver I already owned, and will be joined by pieces that I will be buying in the future. I also hold a little bit of copper and gold, too.

Why precious metals?

What can silver (or other precious metals: gold, platinum, copper, etc.) do for you? 

Picture a seesaw. On one end is your savings in fiat currency (such as dollars). On the other end are the things you can buy with your dollars. At the moment you earn your dollars, the seesaw is flat, level from the end your dollars are on to the end the things you can buy are on. If you spend your newly-earned dollars immediately, the exchange of value should be roughly equal. But if you set some of your dollars aside for a rainy day, inflation causes the end of the seesaw they're on to dip. 

If instead of setting some of your dollars themselves aside (such as in a savings account at your bank) you were to exchange them for some silver, your silver joins your dollars and the things you can buy on the seesaw, and the arrangement of them changes: your dollars remain on one end of the seesaw, but your silver moves to the opposite end, and the things you can buy with your dollars moves toward the center.

The value of precious metals in dollars moves up and down over time in response to various factors, so at times your precious metals holdings can be worth more than what you originally paid for them, and at other times less. Your dollars, in terms of inflation and deflation relative to the goods and services available to exchange them for, can do the same thing. The key difference though is that while .gov can just create more dollars out of thin air, and often does, no one can do that with precious metals: a finite quantity of them exists in the universe, and no bureaucrat anywhere, ever, can simply decree that there will be more. Thus, as .gov debases the value of your saved dollars by bringing more of them into existence from nothing, it then takes more dollars to equal a unit of silver, so any silver that you own becomes valued in a higher number of dollars. Your access to the things you need and want, goods and services, thus becomes more stable - it sits closer to the center of the seesaw, which remains level between its ends - because your savings was placed into something with a value that frequently changes inverse to the value of dollars. 

When inflation is increasing and your dollars are becoming worth less relative to the goods you need to buy, but your savings in metals have increased in value, you can exchange them back into currency and buy the things you need, possibly at the inflation-adjusted value they used to have when you originally earned your dollars. That is, you preserved the purchasing power of your money in the past, helping to keep it at the value it had when you earned it then for your use now, or even further into the future. 

That is how precious metals can be a sort of insurance on the purchasing power of your money. You could make money on metals if a speculative bubble develops (at which point it might be a good idea to step back into fiat currency for a time; your mileage may vary), but for the most part precious metals' beneficial use is as a means of protecting the value of the resources you earned by exchanging some of your finite time on earth for them, time that you can never recover.

How do I get some?

There are several ways you can participate in the ownership of precious metals, but the method I'm writing about here is physical possession of your savings in metals. That picture above of those one-ounce rounds, those are some of my actual rounds in my hand.

I bought them from Money Metals Exchange (MMX). You can, too.


And this is where that free half-ounce of silver comes in.

Money Metals Exchange has a referral program. When existing customers of MMX send new buyers their way (per household), MMX offers free silver to the client who made the referral and to the new customer: silver for you, and silver for me (that's whether you buy silver or some other product).

You will get your free half-ounce round of silver along with your first order once you have paid it in full. But, you will only get that free half-ounce if you complete one additional step:

When you place your order, you must inform Money Metals Exchange that I sent you.

If you do not complete this step, you will receive the metals you ordered, but you will not get that free half-ounce round of silver.

To do this, at the time you place your order, inform MMX that Paul Zimmerman from Dixie, Washington sent you (you'll need to specify the town I live in because there are several Paul Zimmermans out there...). 

You may be able to do this online at the same time that you place your order, but you can also do it by sending them an email, or by calling MMX at 1-800-800-1865 immediately after your order is placed (be sure to reference your order number!). 

If your order ships before you've let them know I sent you, you're not going to get that free silver, so be sure to do it!

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If you've been thinking about diversifying into metals for added financial security and peace of mind, or if you already have some but are not already an MMX customer, take this offer! 

I'm not an MMX employee, just a customer. I'm trying to help you and me at the same time by posting this offer. As MMX points out on their website, few Americans own even a single ounce of gold or silver, but through destructive monetary policy our government is screwing all of us.

Every gram of precious metal that you can add to your holdings will benefit you, and it's hard to beat free!

Search Paul E. Zimmerman.com

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