Post-Truth: Facts Pale by Comparison

inflation cartoonChuckling to myself, I could not pass up the opportunity to highlight the Oxford Dictionaries’ international word of the year for 2016, post-truth, an adjective defined as:

“relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.”

Why was I chuckling?

Since 2002 my research, writing and consultation to help everyday people learn the whole truth about money, wealth and the economy has fallen mostly on deaf ears. As often as possible I source public-domain Federal Reserve and U.S. Government agency information, statistics and graphs to expound upon the realities of actual inflation, economic policies and central-bank money mechanics.

But it does not seem to matter how “official” my sources are when it comes to who wants to know.

The problem, as I have analyzed it over the years, is that the corporate, for-profit financial services industry appears to enjoy an open-ended, evergreen marketing budget when it comes to “educating” the public on topics of money, wealth credit, debt and the economy. Frankly, I cringe every time I hear the supposed facts and advice of conventional financial wisdom replete with critical contextual omissions. So-called objective facts about money and the economy are half-truths at best when you are not made privy to the big picture.

As defined, and in this case, post-truth is the conventional financial data and advice that simply reinforces erroneous existing beliefs, while appealing to the emotions (Chase Freedom, use credit to pay for a wedding, get rewards, etc.). Self-preservation and the need for growth is the name of the financial-services game when it comes to shaping the scope of monetary facts that get passed on to the “consumer.” What is in your best interest, ultimately, is not their concern, as is the case with for-profit entities.

Buyers beware.

I’m not saying that industry professionals are evil and out to get you. Not at all. Probably most advisors, consultants, bankers, traders, etc. mean well, yet they unwittingly disseminate pricey financial advice no longer relevant to the economic times we live in, and often based on incomplete data, in my view. They suffer the same limitations to their knowledge-base as everyone else via their industry education and training.

After meeting R.Buckminister Fuller, reading his book, Critical Path, and then  co-producing the last leg of his speaking tour in1983, my eyes were opened.  There was no going back. I needed to dig deeper into the history of monetary issues.

Post-truth is not a new concept. For me it began way back in 2002 when heading out on my journey to revise common knowledge about money, wealth and the economy. It has been an uphill battle but that said, I thank you, my readers, for your interest, and, some of you, also, for your business. Your insights about and success in applying the practical steps of The Quality Life Plan nourish me and give me hope.

Perhaps one-by-one people will discover the merit of another way to think about, earn, save, spend and invest money. Perhaps word will spread to help give more people the opportunity to experience financial relief and wealth-building by taking advantage of a sound, out-of-the-box personal finance approach.

Meet the New Boss Same as the Old Boss

FEDSorry to have to break it to you. The truth is that President-elect Donald Trump is not anti-establishment. Certainly he is the opposite to Hillary Clinton in many ways; he will bring different policies to the country and a new look to the White House. Yet these two are only opposite in the same way day is different from night. Day and night together make up one 24 hour cycle of a calendar day. Similarly, Donald Trump and Hillary Clinton together comprised the whole of the 2016 presidential election.

What I’m trying to say is that, all things considered, these two are just two sides of the very same nothing-really-new coin. How could I imagine such a thing? To date, Hillary Clinton and now president-elect Donald Trump have both shown they are beholden to the Federal Reserve Banking System – the root cause of all things financial in the U.S. I concur with what Nassim Nicholas Taleb, philosopher and author of the book, The Black Swan, once said,

“What we need to do is break the financial community’s grip on society.”

In all probability, a Donald Trump presidency won’t break that grip. Certainly a Clinton presidency would perish the thought. The Office of the President intersects with, but does not have final authority over, Fed monetary decisions or policies. Yes, a president can elect new members to the Federal Reserve Board of Governors and also the chairperson and vice-chairperson for a new term. And yes, these elections give a president potential influence over the direction of monetary policy, but that’s it.

I like to use the analogy of nesting dolls to further illustrate my view. When considering the man-made systems of the world (scientific, political, educational, monetary, health, etc.) as nesting dolls, the largest/outside doll would represent the monetary system. The political system then fits neatly inside it as the 2nd largest, 2nd most powerful, and so forth. As such, the monetary system asserts an overriding impact on each and all other man-made systems.

In 2007 we learned something about the Fed from Fed Chairman Alan Greenspan.

“The Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take.”

“No agency” includes the Office of the President. Yet somehow many believe the political power of a president “trumps” all, including that of the financial sector. (Pun intended.)

We learned more about the Fed the year following Alan Greenspan’s statement. In 2008 Bloomberg LP sued the Board of Governors of the Federal Reserve System to discover which banks they had bailed out and for how much. The Board of Governors of the Federal Reserve System appealed in 2009, arguing that they met the requirements of Exemption 4 of the FOIA request because the Federal Reserve Banks in question were “persons,” i.e. private corporations; therefore disclosure would harm them. Though the Board of Governors lost the appeal and turned over documentation in 2011, what they submitted has been reported to have been mostly inconsequential to Bloomberg LP’s FOIA request and expectation.

But wait…there’s more. As the prime mover of all things financial, the Fed, no matter the truth of its legal structure, remains the bottom-line issue when it comes to U.S. economic success. That means no president, no matter how opposed to the one before them, is ever truly anti-establishment until and unless they take on the Federal Reserve Banking System.

A monetary system which issues currency that literally depreciates like a car (worth approximately 3 cents today) and decreases purchasing power at the register at an alarming and accelerating pace cannot be trusted. Quietly and systemically it undermines long-term economic growth and stability for everyday Americans. Since financial giants benefit from the current economic set-up, this awareness is not popular. It’s money that rules the world, not politicians.

The Wealth Effect Failure

uneven playing fieldPeople tend to increase spending when the prices of their stock market and real estate assets rise. They perceive it as an increase to their financial security. This is known as the wealth effect.

“The wealth effect is a psychological phenomenon that causes people to spend more as the value of their assets rises. The premise is that when consumers’ homes or investment portfolios increase in value, they feel more financially secure, so they increase their spending. Conversely, when consumers see the value of their homes or portfolios fall, they tend to spend less. The wealth effect attempts to explain why consumers might change their spending habits even if their income and fixed costs have stayed the same.” ~Investopedia

Monetary policymakers consider the increased consumer spending that follows a rise in the price of assets to be an indicator of economic recovery. But is it really and does the everyday family benefit? What is the reality?

  • Higher home prices (significantly increased since 2008) make home ownership  more unavailable to more people. Home ownership is at its lowest rate since tracking began in 1963.
  • Higher home prices also put rental property prices out-of-reach to more people.
  • Home sales in 2016 are not broad-based and people-driven as they were in 2008, albeit via sub-prime loans. Now a large percentage of homes sales are cash sales of homeowners and investors (domestic and foreign) who need somewhere to park assets. Banks offering low interest rates remain an unattractive option.
  • Additionally, the 2016 big bump in home sale prices and purchases are pocketed in 3 main areas of the United States due to the presence of the U.S Government, government contracts, and technology companies: Washington D.C., New York, and San Francisco where tech employees can get home loans based on their stock option prices.

In April of 2016 created a survey they called: Financial Burdens Survey. The respondents ranked their personal finance issues according to the six categories the survey provided. Interesting to me is that a category called, personal debt, was totally absent! Here are their six categories:

•    High cost of living
•    Healthcare costs
•    Insufficient income
•    Taxes (income, property, and/or other taxes)
•    Retirement savings
•    Higher education costs

runaway cost-of-living

Not surprising, one in four Americans responding to the survey said the “high cost of living” was their most challenging personal finance issue. Not only do salaries and wages fail to keep up with the cost-of-living (since the 1970’s) but also the killer – personal debt – takes a growing bite out of incomes.

The wealth effect is a smoke screen. It distracts from any focus being put on the flaws of the monetary system. Rising asset prices favor the haves who own assets (minority), while extracting precious resources from the have-nots (majority).

More decent-paying jobs can certainly help; but alone, jobs cannot make it “right.” Why? The independent-of-governments central banking system pulls the strings. Simply put: The money they issue is systemically devalued via a mathematical formula decreasing money’s purchasing power. Anyone who has studied this, as I have, knows that nothing short of a system overhaul could possibly bring back long-term economic recovery. Even if everyone had a job, their hard-earned money over time will purchase less and less.

The good news is that by this knowledge you can rethink the best ways to earn, spend, save and invest to ensure the most quality in your life with the least amount of stress. That is, until really real change takes place at the monetary system level.

Presidential Candidates, the Fed, and Status Quo

work harder earn less

The battle for President of the United States between Hillary Clinton and Donald Trump rages on towards the finish line, nasty as ever. Despite blinding differences, they each seem to rely on an historically-authoritarian style of delivery (based on dualistic thinking) to underscore their obvious superiority over the other:  Insider/outsider, right/wrong, good/bad, black/white, smart/stupid, experience/no experience, etc. Yet does Nero fiddle while Rome burns? Methinks yes. Like an unattended, festering wound, deeper causation of a messed-up world undermines the lives of everyday people both left and right.

“Church of the Sacred Fed”

A September 2016 Truthout article by Dean Baker, Hillary Clinton and the Church of the Sacred Fed, only confirms the ongoing reluctance to tackle the larger issue of a broken monetary system. Mr. Baker shares the disparate views of the candidates to launch his description of the Fed’s inner workings via funny religious metaphors such as Robert Rubin’s “doctrine of the sacred Fed” and the “anointed” referring to members of the Federal Reserve Board.

Hillary Clinton is said to have “denounced” Donald Trump for his comments calling on the Federal Reserve Board to raise interest rates. Apparently, however, this was not her real reason for denouncing him. Her real reason was:

“You should not be commenting on Fed actions when you are either running for president or you are president.”

Disappointing but not surprising, the article fails to venture beyond the Fed’s shoreline to reveal the skewed mathematical mechanics that drive a global monetary system, and the erosive damage to economic stability left in its wake. You see, anyone who makes the effort to learn about how central banks work (The Fed for the U.S.) discovers that, today, only the deep state of powerful self-interest (typically those at the top of money pyramid and their governmental cronies) actually benefit…and not by accident; whereas everyday people lose ground little by little over time.

In my view, this exchange between presidential candidates of differing perspective on the Fed exists safely within the shores of the status quo since there is no money in truth. Will the root cause of the lack of economic growth, increasing poverty and homelessness, incomes not keeping up with the cost of living, mounting personal debt and the stress that is literally killing people, ever be revealed and understood so genuine solutions might be put forth?

I wonder.

Can Mounting Personal Debt and Economic Recovery Coexist?

Drowning in debtThe saying “The proof is in the pudding.” applies to proving if America is in an economic recovery…or not. My view all along has been that there’s no way America could be in a recovery phase due structural mechanics of how central banks issue currency into existence, especially given the post-meltdown extravagant dump into the system of newly-printed money via Quantitative Easing (QE). This Wizard-of-Oz official monetary strategy, I believe, has led most Americans merrily down the yellow brick road.

Reality? According to a recent study released June 8, 2016 by CEO Odysseas Papadimitriou, personal credit-card debt for 2016 is expected to surpass that of the years leading up to the Great Recession of 2008. Here are some of their additional findings.

“We paid off $26.8 billion in credit card debt during the first three months of 2016, which isn’t as good as you might think, considering that it’s the smallest first-quarter paydown since 2008 and nearly 25% below the post-recession average.

“This first-quarter pay down covers just 38% of the $71 billion we added to our tab in 2015.

“With 8 of the last 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits.

“The first quarter of 2016 shares a lot of similarities with Q1 2007, including the pay-down amount, its size in relation to the previous quarter’s build-up and the charge-off rate at the time. That is not good news for consumers, considering the financial turmoil that followed the last time around.”

CardHub’s projection for 2016 is that, for the first time ever, Americans will collectively hold about $1 trillion dollars in outstanding credit-card balances. Breaking it down, that’s approximately $8500 per household, almost exactly what it was in the last quarter of 2007 ($8463 according to the Federal Reserve), just prior to when the bottom fell out of the economy.

Does a growing personal-debt bubble mean we are headed for another crash?

Logic would tell us that economic recovery and increased personal debt cannot exist at the same time, in the same space. If there really was a recovery, wouldn’t households have enough money to at least pay down debt and not grow it? So if you’re seeing what I’m seeing, you also get the blatant contradiction between an official pronouncement of recovery and the hard evidence of increasing personal debt.

The only winners here are the credit card companies raking in an average of 15% interest on money borrowed. The solution for the people, as I see it, is to accept the fact of a downward spiral in the macro economy (due particularly to the failure of incomes in keeping up with the cost-of-living), and learn how to succeed anyway.

Go with the flow.

How to earn, spend, save and invest today requires rethinking due to money’s systemic loss of value. My research tells me that the everyday person cannot depend on a for-profit financial services industry to have their best interest at heart. Though creative ways to protect you and your family from the ravages of enslaving debt exist, most financial planners probably won’t tell you about them because the training and education they receive is a direct reflection of their link to the banking industry.

I believe we are on our own in regards to truthfully assessing economic reality, and need to increase our financial IQ in order to consider and apply creative financial strategies capable of establishing long-term financial stability. That is, instead of blindly trusting all of what the financial “experts” encourage us to do.

The Power Behind the Throne

The Effect of a Debt-Based System“And the banks–hard to believe in a time when we’re facing a banking crisis that many of the banks created–are still the most powerful lobby on Capitol Hill. And they frankly own the place.” Sen. Dick Durbin (D-Ill.) 2009

Could anyone actually miss that the United States is in a presidential election cycle? I don’t think so. As November draws closer, the election of a new president consumes more of the news and more our conscious awareness. People protest, and are concerned about how the next president, his/her ideas and power, will affect the course of history.

Yet, all the while, the true monopolistic power thrives behind the throne, unnoticed and un-protested. The banking industry acts as if it is but a humble service industry (financial services industry), while actually the master system of all American systems, political, educational, environmental, agricultural, health, and legal. It hopes you never peak behind the curtain to discover who really pulls the strings.

In 2009, I wrote about the Use-Cash Movement in the United States founded by small-business owner Chaz Valenza. However now, with “swiping” to pay for most everything, using cash shifts increasingly to an “old school” approach. What’s more, as we speak, banks are exploring ways to end cash use altogether. A May 2, 2016 Bloomberg article, Inside the Secret Meeting Where Wall Street Tested Digital Cash, reveals a new development in moving towards a cashless society. So why all the secrecy?

“On a recent Monday in April, more than 100 executives from some of the world’s largest financial institutions gathered for a private meeting at the Times Square office of Nasdaq Inc. They weren’t there to just talk about blockchain, the new technology some predict will transform finance, but to build and experiment with the software.”

The event, put on by a San Francisco company, Chain, is one of many start-up software companies determined to digitally transform the monetary system. Their spin? Cash transactions take precious time to process while digital transactions are instant. And in a world where credit access has conditioned the consumer mind to expect instant gratification, a digital monetary system appears to be a likely next step.

But…but….but… What about choice? What about the personal privacy cash provides? Fugetabout it! Just more old-school silliness, right?

I like to share the Barnum and Bailey Circus analogy: If you want popcorn while under the “big top” and it costs $15.00, you have no choice but to pay the price. The banking industry, also, has become the only game in town; those who own the gold make the rules and so rule the world, including, in my opinion, the President of the United States.

However the same voluminous intensity of emotions, protests and assertions over potential presidents is nowhere to be found. For some reason most people simply go along, are not paying attention, are too incredulous to do their own research, or only mention the sacrilege of a ruling monetary system in hushed tones. This may never change but just in case; here are some of personal benefits of keeping cash alive.

•    Transaction privacy
•    Personal choice
•    No bank interest charges (overdraft, credit cards, loans, lines of credit, etc.)
•    Possible 5% vendor discount upon request
•    Fiscal responsibility that credit use has destroyed
•    Ending the instant gratification mindset credit use has encouraged
•    More time when you don’t have to work faster/longer to keep up with debt

Though using cash is just one small response to a behemoth debt-based and often predatory banking industry, the personal benefits alone, including greater peace of mind, make it worth the effort. Imagine: We no longer made purchases we don’t need, with money we do not have to impress people who do not really care about us.

If more people were willing to make a habit of using cash despite the convenience of digital transactions, we not only could strengthen our own money-management skills towards building real wealth, but also send a message to those who own the gold.

“Any system which gives so much power and so much discretion to a few men, (so) that mistakes – excusable or not – can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic – this is the key political argument against an independent central bank… To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers.” Milton Friedman, American Nobel-Prize-winning economist, 1912-2006

A New Mindset about Wealth and Money

Change Your Mind. Change Your LifeEarlier this month a CNBC article came out with a statement of the obvious which most people have already known for a long time: the economy has not really gotten better. Duh. All the while soon after the 2007-8 economic meltdown and the initiation of the QE strategy of infusing currency in to the system, over and over again, in this way and that, we have been force-fed how the economy was improving.


The article goes on to say:

“Fully 59 percent say the economy is ‘getting worse’ against just 37 percent who say it is ‘getting better.’ That gap of 22 percentage points is the worst since August, according to Gallup, which polled 3,542 adults.”

Given tax payments recently filed, a rising cost-of-living, especially for life’s basics of food, energy and housing, for most people, incomes continue to remain flat. The notion of living within one’s means for the 99% now sounds more like a cruel joke. Credit has necessarily taken center stage as an essential component to the family budget in ways totally unimaginable just 10 years ago. Mounting debt means people try to work more and faster (if they have a job at all) in a desperate attempt not to drown under its compounding waves.

It’s a formula for disaster:  anxiety + overwhelm + sleeplessness = chronic stress, poor health and family distress. I hear it in the voices of some people when they answer my phone call. Their low-toned “hello” speaks loudly to their discouragement.

The fact is, the system is not about to change in our favor. Trust me on this. As far as I can tell, we would probably have to live through a more devastating meltdown than we’ve already been through before the powers-that-be would begin to consider any type of reform. And maybe not even then. They breathe the rarified air at the top of the monetary pyramid, and have way too much to lose by changing a system designed to mostly benefit themselves.

Unless you are someone in the top 1% to maybe 10% utilizing the conventional financial strategies and tools that leverage your debt to get ahead, such strategies are likely not to help you but rather push you deeper into the cycle of credit and debt.

The solution as I see it:  If personal initiative can come into play, there is a way out for many people. Yet, sadly, those affected by debilitating obstacles of chronic stress, poor health and family distress, have little capacity left to take-in new information that could actually help them. On the outside chance there are still readers who have enough strength of will and curiosity to think outside the proverbial box about how to shift their downward financial spiral to an upward one, here’s my answer.

It’s first a shift in your mindset, a two-step process to renew your understanding of money and wealth. Once accomplished, the concrete steps to take thereafter, that I wrote about in my February 2016 blog, Reset for Lifestyle Longevity, make a whole lot more sense because a new mindset provides the foundation for you to rebuild, endure and succeed. It will empower you to turn your financial ship around.

Here are the game changers:

1.    The complete definition of “wealth” offers the possibility of living a prosperous life based on seeking and achieving wealth according to the Oxford English Dictionary’s definition in its proper sequence: Personal and spiritual well-being (intangible wealth) are cited prior to defining wealth as material abundance.

2.    Money is not what you think. It is a private product due to interest charged for its use. Search and find information never revealed by financial advisors about how what is called, the fractional reserve banking system, works against your best efforts, and is the hidden enemy of household finance.

Without a new mindset, you’ll hardly see the point in adding more effort to your already packed day. But as you change your mind, you just might find a new resolve.


A Very Brief History of Taxation in America

“100% of what is collected is absorbed solely by interest on the Federal Debt … all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government.” ~The Grace Commission Report, 1984

taxslave-213x300As April 15 nears…thought you would find this research on taxation in America timely if not interesting.

No one living before the Constitution of 1787 could have believed the seven ways to Sunday Americans are now taxed. Under the Declaration of Independence and the first American constitution of 1777, The Articles of Confederation and Perpetual Union, association among the confederate states and a state’s interaction with federal authorities was 100% voluntary.

Though paying taxes was a voluntary act, the federal legislature (never referred to as government), did have legitimate operating expenses, and depended on property taxes collected from and given by the states voluntarily in varying amounts. It was this inconsistent funding that historians thereafter have considered the deal-breaker issue for what has been called the “failure” of this first American union.

A Second Constitution Provides New Powers of Taxation

The untold rest of the story? The Framers of the U.S. Constitution of 1787 seriously wanted centralized authority which was non-existent under The Articles. Far from being commoners, the Framers of the 1787 U.S Constitution were either landed gentry of prominent families, or had risen to the strata of aristocratic American society due to intelligence, education and intent, as did Benjamin Franklin, the tenth son of a soap maker. Make no mistake; these men gleaned knowledge about governance and taxation from the British Crown and the Church of England’s system of tithing. The U. S. Government came into existence with the establishment of the U.S. Constitution of 1787.

Not long thereafter, in 1791, Alexander Hamilton lobbied Congress. He wanted an excise tax to accelerate the payment of national debt incurred during the American Revolution. Also known as the Act of March 3, 1791, this tax law enforced government’s new ability to compel performance (force and the power of distraint giving authority to seize personal property for payment.) Unaccustomed to this new form of government and laws of the U.S. Constitution, some of the earliest Americans took offense. Hamilton’s excise tax incited them to rebel in the 1794 Western Pennsylvania Whiskey Rebellion. An excise tax laid on the manufacture of alcohol had not lawfully applied to them. Those who then lived in Pennsylvania, an original state established under The Articles, were called “free inhabitants” and lawfully remained so.

Here’s why.

According to the law definition of territorial jurisdiction, only those living on land owned by said government are also subject to its laws. As of 1791 U.S. Government federal lands consisted of the Northwest Territory but excluded the original thirteen states of The Articles. Even so, President Washington sent in troops to silence the tax protestors of the Whiskey Rebellion.

In 1798, the Fries’ Rebellion led by John Fries of Pennsylvania, opposed the enforcement of a direct federal property tax. Even though the Whiskey and Fries’ Rebellions had not been waged on lands subject to U.S. Government territorial jurisdiction, the federal government captured and convicted rebel members for the supposed act of treason. John Fries was pardoned by President Adams after his conviction. Fries had been a “turn-coat” infiltrator for the government militia against those of the Fries’ Rebellion.

Theft of Private Property

“[E]very Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his. The great and chief end therefore, of Mens uniting into Commonwealths, and putting themselves under Government, is the Preservation of their Property.” ~John Locke, English philosopher and political theorist, 1632-1704

Taxation on labor (income tax) was an unimaginable, unheard of kind of tax until the latter half of the nineteenth century. Labor was one’s personal property, the bread of life of natural and common law. To tax labor was considered direct theft, an outright assault against property rights of the individual.

The first income tax act Congress passed was the Tax Act of 1861. The Act stated the territorial jurisdiction of which and to whom the tax would apply:  “every person residing in the U.S.” Yet, this tax was never enacted.

Soon to follow, Congress passed the Revenue Act of 1862 which led to the creation and opening of the Bureau of Internal Revenue (BIR) to collect the new income tax. For the first time, a tax on one’s labor was imposed on the people of the United States. Its purpose was to defray the many costs incurred by a Civil War already underway.

Again, in 1864, Congress authorized an additional income tax to augment the payment of war debt. This 1864 additional tax required Americans pay five percent when earning between $600 and $5,000, seven and one-half percent if between $5,001 and $10,000 and ten percent on anything above $10,000. After the Civil War, the rate modified to a flat rate of five percent and then to two and one-half percent. With the purpose of the income tax to pay off Civil War debt, the Revenue Act of 1862 was repealed and ended in 1872.

Until 1913, for forty-one years, no substantial effort was made towards the reinstatement of the 1862 income tax law. Prosperity in America reigned supreme during that period; the only tax funding the government was a tariff tax on imported goods. However, during that same period, the Supreme Court focused on several tax cases.

Supreme Court Tax Cases

An 1883 Supreme Court decision, Butchers’ Union Co. v. Crescent City Co., 111 U.S. 746, cited that one’s labor was, in fact, one’s property. Then, in another case, Pollock v. Farmers’ Loan & Trust Co, 1895, the very same Supreme Court that had supported the passage of the Tax Act of 1864, did an about-face and decided against a proposed Income Tax Act of 1894.

The Pollock v. Farmers’ Loan & Trust Co.1895 Supreme Court decision against the Tax Act of 1894 determined it to be a direct-tax scheme and therefore unconstitutional. Given that taxation of real estate (personal property) was lawfully a direct tax, so also would be the taxation of any and all personal property, including money earned from one’s labor. Therefore, a tax on labor was exempt from the explicit tax powers of Congress granted in a portion of Article I, Sections 2 and 9 of the U.S. Constitution.

Article I. Sections 2 and 9:
“Direct taxes shall be apportioned among the several states,” and “no capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”

Decisions of the United States Supreme Court were to be bound to the written law of the U.S. Constitution, the professed law of the land.

“This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.” Article VI, U.S. Constitution

Yet in 1913, the government overturned the 1895 Pollock v. Farmers’ Loan & Trust Co. decision. What happened? The U.S. Government laid a claim. It said that a 1913 Sixteenth Amendment to the Constitution gave them the authorization to levy an income tax on the people without the constitutional requirement of apportionment confirmed by the Supreme Court.

However, another Supreme Court case challenged government plans to renew income taxation. This was the 1916 Stanton v. Baltic Mining Co. 240 US 103 case. It decided that the U.S. Constitution clearly stated that direct taxation of the people must be apportioned to a State by a certain percentage of a State’s representation. In other words, this Supreme Court decision established that the Sixteenth Amendment had not altered, added, or removed any words from the Constitution.

“…[the 16th Amendment] conferred no new power of taxation…[and]…prohibited the…power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged….” ~Stanton v. Baltic Mining Co. 240 US 103

Given Supreme Court rulings are bound to the Constitution, one would rightly assume apportionment as regarded direct taxation would be reinstated. Wrong. “Justified” by the Sixteenth Amendment, the U.S. Government reinstated its powers of income taxation. The BIR increased their staff and operating systems to capture the coming new big wave of government funding.

The Rest is History

Most Americans in 1913 paid no income tax. The average annual earnings of a middle-class family were approximately $800 and only people earning $3,000 or more annually were requested to voluntarily comply by filing a 1040 form to pay a one percent in taxes. A one percent income tax rate ninety-nine years ago has morphed to a graduated tax-rate of fifteen to thirty-five percent depending on one’s yearly earnings.

In 2016, those married under 65 filing jointly need to file if they make more than the filing threshold requirement for W-2 income of $20,300. This actually ends up as a much lower dollar amount(inflation –adjusted) than the $3000 original threshold requirement of 1913:  In 2016 inflation-adjusted dollars for $3000 in 1913 is $71,851, which, if using the same $3000 threshold amount, would mean only those today making $71,851, or more, would need to file income tax.

Perhaps needless to say, many questions arise from the chronology of these facts and events.

“You are among the millions of Americans who comply with the tax law voluntarily.” Form 1040 Tax Instruction Booklet, 1992

Reset for Lifestyle Longevity

“A hero is an ordinary individual who finds the strength to persevere and endure in spite of overwhelming obstacles.” Christopher Reeve, American Actor 1952-2004

hoccAre you drowning in stuff? “Tidying guru” Marie Kondo tells us, “Most people have three times more stuff than they need.” Not only does having too many things suck energy to manage and maintain them, but it also perpetuates the overlooked personal problems caused by debt.

Since the economic meltdown of 2007/2008 a new and different economic landscape has risen up from the ashes. With the good old days of the dot com and housing bubble but a memory, all things financial are different now. We have had to learn how to navigate in unfamiliar territory. Some call it the new normal, other the new economy. At any rate, it appears that the rules to the game of long-term financial stability have definitely changed.

While the cost-of-living has risen dramatically for basics like food, housing, and energy (which are NOT factored-in to the official rate-of-inflation), earnings have remained flat, at best. The spend, spend, spend, model has failed almost everyone, except, that is, the traditional financial services industry that happily collects their credit-card interest income.

In my opinion, the name of the “making it” game today consists of two main components:

  1. Reallocation, and
  2. Increased earnings

In the world of personal finance, the four major moving parts to coordinate are: how to earn, spend, save and invest. A less well-known, but vitally important player is reallocation. In other words, the liquidation of big-ticket items such as boats, homes, cars, saving, or money from the stock market etc., in order to reallocate funds to move your life forward in some way. It could be to pay down debt, create a down payment, provide emergency funds to hold you over until you find new work, invest in a cash-flow business, or purchase a needed something. The point being that by reallocating your existing assets, your quality of life will be improved and give you more options (and breathing room), going forward.

Here are my personal finance recommendations to help you build that all-important solid-financial foundation. Savings and investments are very important but in today’s new economy the MOST important thing is to ensure your financial foundation for long-term peace of mind. You’ll know the “foundation” has been established when you have more money coming in to your household than going out for at least four consecutive months.

1.    Write down your short-term, mid-term, and long-term financial goals and put them somewhere to easily reference.
2.    Review your goals weekly.
3.    Assess your current financial status. On a monthly basis, how much money a) comes in, and b) goes out? Dedicate a notebook or Excel spreadsheet to this four-month project of tracking your expenses. Create a line-item and category for each and all your expenses. Don’t forget things like eating out and entertainment. Save all receipts and record out-of-pocket information each day. On another page, track the source and amount of money that comes in each of the four months.
4.    Be diligent, watch and learn and try not to judge yourself.

If after your four months you find you have more money slipping through your fingers than coming in, consider the following:

5.    Use your list of current itemized expenses to create an action-plan. Decide how and by when you will lower the cost or eliminate entirely certain line-items. Be bold!
6.    Make debt-elimination a high-priority, the final goal is to be able to live within your means and pay-as-you-go.
7.    All the while as your expenses and earnings start to align, it is still very important to actively seek and find ways to increase your monthly cash flow. Otherwise you will fall back to accessing credit again in order to stay ahead of cost-of living increases that just keep coming.
8.    As you focus on ways to increase cash flow, consider an independent trade or service that people will always need. For example, car mechanics, computer techs, hair stylists, barbers, clean-water suppliers, delivery-service providers etc. Additionally, you can find legitimate ways to earn good money from online.
9.    Once you have diminished or paid off credit-card debt, destroy all but one credit card since easy-credit access becomes an addictive mindset regarding the perceived need for instant gratification. Do NOT keep this remaining credit card in your wallet. Leave it frozen in a bowel of water in your freezer to build time into your decision-making process.
10.    To ensure your financial foundation more quickly, you may want to reallocate existing assets. Since money (itself a debt instrument) is worth the most today than it will be tomorrow, it’s best to put it to work for you, today. Don’t forget to consider anything you have in savings, retirement funds or the stock market.  (Remember the stock-market 2008, and for your information, the U.S. Government is currently floating the idea of nationalizing. e.g. borrowing from, your 401(k)’s and IRA’s given the 19.3 trillion-dollar deficit. In other words, individuals would lose control over their account while the government instead would ration out annuity-type payments.)
11.    Use cash. Most people will pay more attention to what they spend when it comes straight out of their wallet.
12.    Stop using shopping as a form of entertainment. Shop purposefully using coupons, during sales, and buy bulk whenever possible. Also, consider shopping recycled, including for cars.
13.    Include and educate your children in the how and why of your decision-making process (should you accept this mission) and invite their imitation of your mindset and efforts.
14.    If you do have savings and/or investments (after possible reallocation), keep some of YOUR money entirely outside of the banking-services industry. They use your money. More and more people are moving their bank capital into hard (tangible) assets that can hold value.

A stable present-time financial situation will increase your well-being. Increased personal well-being allows for a more well-thought-out decision-making process.

I hope by now you realize that the corporate financial-services industry will never tell you the whole truth about how money works against you. Yet official statistics of entities such as the Bureau of Labor Statistics and the Federal Reserve provide huge clues reflecting the hidden story.

The missing (secret) piece is systemic in nature, not political. The impersonal mechanics of a man-made monetary system grind away giving obscene profits to those at the top of the money pyramid while, at the same time, serving only to make everyday families increasingly vulnerable. The only way out (short of a new global system) is to personally make it a priority to learn new strategies designed to assist wealth-building for the “little guy,” and that are relevant to the economic times we live in.

In closing, may this recent New York Times excerpt be motivation to help move you into action!

“The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than 65-year-olds had in 2003, after adjusting for inflation, according to data from the Federal Reserve Bank of New York released Friday.” Wall Street Journal, February 12, 2016

Part of the Machine

“By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some….The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.”Economic Consequences of the Peace, 1919 by John Maynard Keynes, economist

Part of the machineIn 1936 Charlie Chaplin wrote, directed and acted in the silent film, Modern Times. His film was a statement on the many social issues brought on by the Great Depression, including the then world of modern industry. At one point in the movie, he is working on a conveyor belt that starts speeding up. He struggles to keep up as he screws nuts faster and faster but eventually collapses in a total meltdown that lands him in the hospital. Afterwards, he is in and out of jail, helps others who struggle with hunger, finds new work, and ultimately faces an uncertain future.

So how is this like today, you may ask? From my perspective only the times, the people and the platform have changed; the 21st century digital world of computers, and those of us dependent on them, has replaced the analog world of most all things mechanized. Yet the struggles continues and uncertainty looms larger than ever.

A January 7, 2016 article in the prestigious magazine, The Atlantic, asks, “Why do Americans Work so Much?” I remember in the 1960’s and 70’s when the news was that the advent of the computer would totally reverse the typical work week of 40 hours; we would have much more free time due to increased productivity and the efficiency provided to workers by the computer. Oh well, so much for that idea. Now many people work 7 days a week just to avoid the Monday-morning overwhelm of emails and texts that come in over the weekend.

John Maynard Keynes, a 20th-century British economist who greatly influenced the current monetary system, believed back even before the 1960’s, that industrialized countries would be so productive by now that we would be enjoying 15-hour work weeks. He also believed that “the standard of life” would rise across the board for people of every social stratum. How can such supposedly smart people be so blind to reality? Perhaps, in his case, it’s because during an important phase in his economic career he was employed by the British government and did not want to rock the boat.

The Atlantic article goes on trying to assess what might have gone wrong as most Americans still have to work at least 40 hours a week. The answer? If you can find the nose on your face, you can solve this unfathomable mystery. But first, economist, Benjamin Friedman’s, cites his three theories in the article.

1. “Perhaps people just never feel materially satisfied, always wanting more money for the next new thing.”
2. “In an era of ever fewer settings that provide effective opportunities for personal connections and relationships, people may place more value on the socializing that happens at work.”
3. “American inequality means that the gains of increasing productivity are not widely shared.”

Not bad but certainly only scratching the surface. You probably already know what I’m going to say…it’s the system! Here’s a thumbnail overview on what happened.

Starting early in the 2nd century, the goldsmiths of a community acted as money changers; they were the banks to the public. Called Strong Room Keepers, these men figured out how to cheat the system by lending out more gold (at interest) than they had on deposit. This was the beginning of the global banking fractional-reserve system.

While in the middle ages Canon law of the Catholic Church forbade loaning at interest. It became a crime in Europe, called usury. They believed that “the purpose of money was to serve society to facilitate exchange of goods to lead a virtuous life” and that interest added on to money hindered such purpose.

Then the British Free Coinage Act of 1666 tipped the balance of power back to the money changers according to Alexander Del Mar, head of the U.S. Department of Weights and Measures in the late 19th century. It “altered the monetary systems of the world. The specific effect of this law was to destroy the royal prerogative of coinage, nullify the decision in the Mixt Moneys Case of 1604 and inaugurate a future series of commercial panics and disasters which, to that time were totally unknown.” A now familiar trend was set in motion.

In 1694 the first privately owned central bank was established and became the model for central banks worldwide: The Bank of England.

In America until the 1764 Currency Act, colonies flourished because they used something called colonial script, a debt-free paper money not backed by gold or silver. Then, no big surprise, the Currency Act outlawed the colonies from continuing to print their own money.

The first privately owned central bank in America was started in 1781 and called The Bank of North America. The privately owned U.S. Federal Reserve Bank (central bank) began in 1913 after two other failed attempts at central banks in 1791 and 1812. These four banks were and are of private origin despite the U.S. Constitution, Article I, Section 8’s mandate for money to be controlled by the Congress. “The Congress shall have power to coin money, regulate the value thereof and of foreign coin, and fix the standard of weights and measures.”

Thereafter, money issued by every central bank throughout the world was loaned into existence with interest. Money itself became an I.O.U. (Federal Reserve note) Over time as a nation’s debt grows, simple interest turns into compound interest. To repay national debt would collapse the economy due to a banking-system dependent on debt.

This very process of debt expansion (called wealth creation by Alan Greenspan) trickles down to individuals and families who eventually have more money going out (due to mounting debt) than they do coming in. While paying debt-service on borrowed money, a family’s working capital erodes and tips the scale towards lacking sufficient funds to cover expenses. The vicious cycle begins as present and potential future earnings are depleted: unmanageable amounts of debt require increased access to larger amounts of credit. All the while, these debt-service interest payments travel up the money pyramid as profits to banking shareholders and their colleagues.

Why do Americans work so much? They are under the tyranny of debt. Charlie Chaplin’s Modern Times was only the beginning of the personal and social issues brought on by the loss of purchasing power in a debt-based system where your interest payments continue to consolidate in fewer and fewer hands at the top of the wealth pyramid. Thus the gap between the haves and have-nots grows ever wider. Different times demand a different approach to personal economics; those who see the writing on the wall are called to revise and update their financial strategies if to thrive and not drown in debt.