Friday, January 4, 2013

Why work?

Well, the December jobs report is in.   Among other things it reveals a “bright spot” that average hourly earnings rose by 2.1 percent in 2012.   Let’s put this under a bit of a spotlight. Based on the latest BLS release, inflation has run up 1.8 percent over the last 12 months, leaving the average working stiff with 0.3 percent increase in purchasing power.  That's not the end of it though.  As of January 1st, that same average working stiff, by virtue of a bill touted by President Obama as “asking the wealthiest to pay a little bit more” is hit with a 2 percent bump in payroll withholding taxes.   My 5th grade math tells me the net result is a 1.7 percent loss in purchasing power.

Now the rich, the really rich, they make their money not so much from salaries as from investments. They love this President.  He has led the US, and the world for that matter, into the largest money printing program in the history of civilization.   All that money has to go somewhere.  To this point, with the weak economy, the greenback printing press insanity is wildly inflating prices of financial assets.  No niggling one or two percent annual increases there.   The S&P 500 stock index rose 13.4 percent in 2012.   On the first trading day of 2013 alone the S&P 500 ramped up another 2.5 percent.  The rich say thank you Barack for driving income inequality to heretofore unheard of levels.  

Someone like me, who played the government game, who does not work and has saved and invested, lives in an incredibly sweet spot.  I get a monthly government annuity that’s inflation adjusted and not subject to the payroll withholding tax.   I reap extraordinary capital gains on top of the solid dividend income thrown off by my investments.  I’m doing better, many times better than the typical working stiff.  But what I want is a sustainably productive economy that rewards work and a bright future for my children.  Those aren’t happening.  I don’t need this government.  I didn’t vote for this government.  I hope you are enjoying it!  

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