The Best Super Bowl Ever

We invite our whole family to come home for dinner on Sundays. If everyone came we could have up to 27, but we usually have 10-12. I do most of the cooking because Marieta could be happy never cooking another meal in her life, and she would rather set up the tables and do the dishes.

On February 2, 2012, known by some as Super Bowl Sunday, Joe, Ellen, David and their families came over, so there were 16 of us. We were having finger foods. I spent the first half of the game cooking and serving the food, catching only glimpses of the game and the commercials.

By the end of the second quarter, the grandkids were ready for something other than the game. I spent half-time getting them settled downstairs with Peter Pan on the big screen.

Just as I sat down for the second half, Ashley, David’s oldest, came up and asked me to watch Peter Pan with her. I spent the 3rd quarter with Peter on the screen and Ashley snuggled against my arm.

Just before the start of the fourth quarter, David, Ellen and their kids left for home. As I sat down to watch the last part of the game, Shelby, age 2, came in with Julie and Casey. Shelby looked at me and said, “Yo Gabba Gabba” and “Let’s jump.” Yo Gabba Gabba is her favorite show, and “jump” means jumping on the huge family room sectional couch.  Downstairs we watched Yo Gabba Gabba while Shelby jumped, danced and sang along. We finished just as the game ended.

Later in the week I would watch all the commercials commercial-free on Hulu and the fourth quarter while on the elliptical. I was happy for the Giants, but I was even happier for me. Grandkids are so much more fun than anything else, and I didn’t have to watch even a second of Madonna.

A Thought on Faith, Hope, and Charity

In our little MTC branch of 40 to 50 missionaries (The Missionary Training Center of The Church of Jesus Christ of Latter-day Saints), districts of 8 to 12 missionaries would rotate in and be with us for almost 9 weeks. To make things easier for us in the branch presidency, we would go through a cycle of 7 subjects for our talks in our Sacrament Meetings. With 7 topics, the missionaries never heard the same sermon twice. (We didn’t need 9, because during the 9 Sundays we would have at least two Fast and Testimony Meetings.) The topics were very basic—faith, repentance, baptism, the Holy Ghost, etc.

Although it would have been easier, I couldn’t give the same talk over and over again. If I didn’t prepare something new, I would get bored listening to myself. This meant I spent a lot of time thinking about and studying the same basics of the gospel over and over again.

For reference material we were allowed to use only the scriptures, Preach My Gospel (the missionary manual of the church) words of the living prophets (recent conference talks), and our personal experiences. Speculations, interesting tangents, and interesting ideas of non-prophets (like C. S. Lewis, for example) were forbidden. We taught Christ’s basic doctrine, since that was what the missionaries were learning to teach.

One of the topics was “Hope.” As I did my research, one of my sources was President Uchtdorf’s October 2008 conference address “The Infinite Power of Hope.” In the talk he said, "Hope is one leg of a three-legged stool, together with faith and charity. These three stabilize our lives regardless of the rough or uneven surfaces we might encounter at the time.”

Each time I prepared my talk (and also when preparing talks on faith or charity) I would come back to this statement and try to figure out how faith, hope, and charity fit together to create a stable, three-legged stool. I’m sure there are many good answers, but I offer my conclusion. It will take me a few paragraphs to explain.

Faith is a principle of action and power. When someone disagrees with the statement that “faith without works is dead,” I think that person misses the point of the scripture. The verse is not about faith versus works, or grace versus trying to earn our salvation. I think the statement tries to teach us that having faith and doing nothing is not faith. If we have faith, we are faithful. If we have faith, we act and we do. If we have faith in Christ, we try to be like him and to be faithful to his teachings.

Hope is about emotions and feelings. If we have hope, we are hopeful. We have confidence and enthusiasm. If our hope is centered in Christ, we have confidence in his Atonement, and we trust that eventually everything will work out for the best.

Charity is the pure love of Christ. If we have charity, we love unselfishly. It is never about what we need or want. We love selflessly, expecting nothing in return, and love as Christ would love.

So, how do the three fit together? Let’s assume that we feel prompted to visit someone who is sick. If we follow this prompting with faith, we go. Perhaps we grumble to ourselves that we are inconvenienced or that we won’t do any good, but we go.

If we have hope, we go with enthusiasm and confidence. Perhaps we won’t be able to do any good, but still we go with a smile and a happy heart. Perhaps we go to feel better about ourselves or to finish an item on our to-do list, but we go cheerfully.

Finally, if we have charity, we go with no thought for ourselves. We try to see the person as Christ would. Our concern is for that person, and our only desire is help in whatever way we can.

In the case of a missionary, if he knocks on a door, he shows faith. If she has a smile on her face when the door opens, she demonstrates hope. If the concern is only for the person opening the door, and how he or she might help that person, then he or she does it with love. He or she is not thinking about checking a box or meeting a goal.

If we have faith, we go. If we have hope, we go cheerfully. If we have charity, we go for the right reasons. These are my thoughts on the three-legged stool which is stable, even when the surface is rough or uneven. Life is much better when we do, when we do it cheerfully, and when we do it unselfishly.

NCIS and Alzheimer's Disease

My favorite TV show by far is NCIS. (For those of you surprised by this, I admit to liking Glenn Beck a lot, but not as much as NCIS.) I didn’t start watching NCIS until the 6th season. I started by watching the older shows on a USA Network NCIS marathon on a vacation and was hooked immediately. NCIS stands for Naval Criminal Investigative Service, and the show solves crimes related to the Navy or Marines.

This week’s episode featured Bob Newhart as a retired NCIS Medical Examiner. His character suffers from Alzheimer’s disease (AD), and he made a visit to his old NCIS office in Washington, DC. While there he became confused. Once the staff solved this week’s crime, they helped Bob Newhart remember his time at NCIS by showing him a video of the people he helped during his career.

Since my dad has AD, the episode hit very close to home. Recently I put together a video for of our 2010 Thanksgiving dinner. I made sure to take a short clip of each of my children, each of their spouses, and each of their children. I edited the whole thing down to 20 minutes and added labels for each person. Like the NCIS episode, I thought I could help my dad remember and get to know his children and grandchildren. Unlike the NCIS episode, when I showed my dad the video, he couldn’t concentrate on it enough to watch it. A little too much of him had already slipped away.

His AD started with what seemed like normal senior forgetfulness. We realized something was wrong, when he would ask the same question more than once or make the same statement more than once. At first he would remember that he had already asked that question. Once he was diagnosed with AD, he knew enough to be depressed and frustrated.

We try to visit my folks every two or three months. Living with him everyday, my stepmom doesn’t notice the changes as much as we do. We notice with each visit that he has lost interest is something he used to like and has lost a skill he used to have.

In the early stage of AD he still liked the news and sports. Slowly he has lost interest in both. He would try to follow and participate in conversations. Now he mostly listens. He still knows his wife, his dog, his children, and his brothers and sisters, but he can’t remember much about them. He is always surprised to learn we have six children and that they are all married with children. Lately he has been discouraged with me when he rediscovers that I don’t have a job.

From what little we knew about AD, we expected him to lose things, to wander around looking for things, and to become confused at times. This seems to happen to all of us at one time or another. What I didn’t understand or expect was that so many other things would be erased from his memory.

We notice especially how he loses skills one by one. Throughout his life he could fix anything and could do just about anything with wood, glass, or electronics. On one visit we noticed he stopped fixing things. For example, a door latch needed oil, but he couldn’t remember to do it or how to do it. On another visit we saw that he couldn’t remember how to work the thermostat. This last visit he had forgotten how to shave. He can still read, but he doesn’t, because he can’t hold on to the context. Now when he looks at a tool, he can’t remember why or how he would use it.

I finally bought a couple of AD books so I would know what to expect. It’s not good. Far from just losing short-term memory or becoming confused more often, AD erases everything. In the end a person has no skills at all, and may even lose the ability to talk and and to walk.

It would be so nice if life were like a TV show and a short video would bring everything back to mind. It is sad, but not every problem can be solved in 42 minutes. Pete

Forget Bond Funds

I guess I’m mostly finished with all the talk of the end of our financial world, so I’ll summarize.

During periods of deflation, especially with increasing FUD (fear, uncertainty and doubt), you want to be in cash. During times of low inflation and decreasing FUD, you might want to carefully be in stocks. During times of high inflation, especially with increasing FUD, you want to own stuff.

Cash means currency (the US dollar or something stronger), bank certificates of deposit (because they have very small penalties if you cash them in early), very short term bonds (US treasury bonds and perhaps the municipal bonds of states in good financial shape), and money market funds.

Be careful not to think of bond funds, especially medium or long-term bond funds as cash. The value of bonds goes down when interest rates go up. With interest rates at historical lows, you don’t want to own bond funds or long-term bonds. (I’m trying not to give advice, but, if you are in an intermediate to long-term bond fund or treasuries due in 5 to 30 years, get out quickly.)

If your 401K lets you choose between a stock fund, a bond fund, and a money market fund, then right now you probably want to be in the money market fund. If you think the US economy is improving or showing signs of improvement, then you’d want to choose a stock fund. If you think interest rates are going down, then, and only then, would you choose the bond fund.

So, for now, forget bond funds. Pete

We know how this ends. Part 4

Deflation means the value of stuff goes down (deflates) and the value of money goes up. Especially when people are fearful, they want to hang on to their money. Because money is dear, the demand for the stuff money buys goes down. When the demand for stuff goes down, the prices drift down. In other words, with deflation you can buy more stuff for the same amount of money. For example, the Deseret News recently published a price comparison of various consumer goods. The cost of a grocery cart of 15 items was $119.74 this time last year and only $116.08 this year. Money was worth more at the grocery store this year.

Inflation means the value of stuff goes up (inflates) and the value of money goes down. In other words, money buys less and less stuff. The same grocery cart of 15 items might cost $125.00 after a year of inflation. For most of us, inflation is what we know. When I was a child, a candy bar was a nickel. When I was a teenager, a Taco Bell burrito was 19 cents. Our first home was only $36,000, and we sold it a year later for $39,000.

During times of deflation, cash is your friend and debt is your enemy. You don’t want to owe money in times of deflation, because it costs more and more to repay a loan. During times of inflation, cash is better spent or invested in stuff and debts are generally easier and easier to pay down.

These definitions suggest you would want to own money (currency, treasury bonds, and government-insured bank CDs) during times of deflation, and own stuff during times of inflation. “Stuff” is things that are not measured in dollars, like real estate (acres or square feet), precious metals (ounces or bars), wheat (bushels), fuel (gallons, barrels, or BTUs), or stock (shares in a company).

Fear, uncertainty, and doubt complicate this simple picture. Stocks in general do poorly when FUD is high, no matter the inflation rate. When FUD is high precious metals may behave more like currencies, going up when logic suggests they should go down.

In summary, during times of deflation you want to own money and be free of debt, especially high-interest debt. During times of low-to-moderate inflation, you want to own stuff. If FUD is low, you could include stocks in your list of stuff. If FUD is high, you almost always don’t want stocks. During times of hyper-inflation, when FUD is bound to be high, you want to own stuff that people really need, like food, fuel, water and dry goods. Pete

We know how this ends. Part 3

Freedom Fest, mentioned in a previous post, got me thinking about scenarios. As I understand it, “scenario” comes from the Italian word for scenery and refers to an imagined or projected sequence of events. So, while I’m thinking about how to survive between now and the end of the world, I’m imagining a few scenarios.
In these imaginings, I assume as true the following:

1) The USA is already spending much more money that it takes in. In fact, about 30 cents of every dollar we spend right now is borrowed.

2) The USA has made a lot of promises to pay for things without knowing how we will pay for them. These promises are the so-called “unfunded liabilities” for social security, healthcare, government-guaranteed mortgages, and government-guaranteed pensions.

3) Higher tax rates, which is viewed by some as a way of getting out of this mess, leads to lower tax revenues. As tax rates go up, taxpayers work harder to lower their taxes, mostly by using government-approved loopholes. As taxes go up, GDP tends to go down, which means the higher tax rates are offset by lower earnings.

4) Fear, uncertainty, and doubt (FUD) are bad for business. The many new regulations and pending tax hikes are producing more and more FUD.

To these assumptions we have to consider a lot of variables. How many seats will conservatives win in congress in November? Will a lame duck congress pass even more regulations and tax hikes? Will congress repeal Obamacare or the latest financial reform bill? Will the courts find Obamacare unconstitutional? Will President Obama win re-election? When will the Iraq and Afghanistan wars end? When will Iran attack Israel? How soon will congress tackle the unfunded liabilities.

Each different set of answers produces a different scenario. For example, one scenario might be that conservatives gain seats in the House and the Senate, but not enough to repeal Obamacare, that the courts invalidate parts of Obamacare but leave us wondering what to do next, that the wars go on indefinitely, that President Obama loses to Hillary Clinton in 2012, that Iran holds off on an Israeli attack, and that congress does very little to limit spending. Another could be that conservatives take back both houses of congress, Mitt Romney wins the presidency, Obamacare is repealed, the wars go on, Iran threatens an attack, and congress keeps on spending.

As I think through the possibilities, the results of each scenario are not as complicated as you might expect. In the short term, especially because of the FUD factor, the economy will sputter and flounder and recover a little and sputter again. Even though the government is spending, printing and borrowing like crazy, people are afraid to spend money. They hang on to the dollars they have. Employment remains high. In the short term, we can expect very low inflation or even deflation. In the short term, we would want to put our savings into things that increase in value during deflation.

In the medium term, the economy will continue to struggle along, but the bigger deficits will force interest rates higher. In any scenario I can dream up, I don’t see the government solving the spending problems quickly. As interest rates go up, inflation will start up again. In the medium term, we would want to put our savings into things that do well with moderate inflation. By “moderate inflation,” I mean 5 to 10 percent inflation per year.

In the long term, there is the chance the government could tackle its spending, but, if it did not, moderate inflation could turn into high inflation (10 to 20 percent) or hyper-inflation (20 percent per year up to 100% per day). If the government did not tackle spending and continued to print more and more money, we could go from moderate inflation to hyper-inflation almost overnight. In the case of hyper-inflation, investment decisions are the easiest. Pete

More to come.

We know how this ends. Part 2.

If we believe in the Bible, we know how this world ends. Just when Israel is on the brink of annihilation, Christ will come and usher in 1,000 years of peace. At some point between then and now, a lot of bad stuff that will happen. The problem, which I think about a lot, is how to get my family safely from now to then.
Trusting “in the arm of flesh,” which I take to mean trusting in our own abilities and resources, or in the resources of governments, is a losing strategy. Still, it makes no sense to do nothing and simply hope God will save us from every inconvenience. The most logical course of action is, I think, is to trust in God, live good lives, stay cheerful, and prepare for whatever might happen.

So, what will happen? In addition to wars, earthquakes, plagues, and pestilences, there are bound to be a few inconveniences. The Internet might go down for a day or two, the cable could go out, and phone service might be spotty. The DVR might miss a few shows. Costco might stop giving out all those free samples.

In case you are wondering, I am not just trying to be funny. I want you to know that I know how ridiculous it is for me to try to avoid every difficulty. I know how foolish it is for me to think I could keep our savings intact in a complete financial meltdown.

What do I mean by a “complete financial meltdown?” The US dollar would become worthless, as would every other paper currency. If there is a severe shortage of food, precious metals would likely be worth very little. Any dollar denominated savings and investments would evaporate overnight. We would have to barter with what we have for what we need. Our survival would likely depend on how well we and our families, friends, and neighbors could work together to help one another. We would likely have to learn to live for an extended time without electricity, heat, air conditioning, or running water.

When could we expect such a meltdown? I have no idea. Lately we certainly seem to be intentionally speeding toward our national financial ruin, but the process could take ten or twenty years. The Zimbabwe dollar is still worth something. A fifty trillion dollar note is still worth 50 cents or so. We are so conditioned to value currency even when it has no intrinsic value that it will take some time for everyone to understand and believe how bad things are.

In the meantime, we can enjoy and perhaps even profit from our follies. As I quoted in the last email, “If you prepare for the end too soon, you could miss a lot of good trades.” I also like to compare our situation to a game of musical chairs. We might as well enjoy the music, even if all the chairs are gone. Pete

We know how this ends. Part 1.

Early in July Marieta and I attended Freedom Fest in Las Vegas. Mark Skousen, who writes a financial newsletter I like to read, puts on the conference. He teaches economics (Columbia University), writes a lot of books, and loves free markets. His non-partisan, libertarian conference brings together all sorts of people. I was there for investment advice. Marieta came to keep me company.

We had a great time listening to all sorts of opinions. Here are a few:

“China has grown 8.2% per year over the last 40 years. Look to China.”

“China’s growth bubble is about to burst. Get out of China.”

“If government grows faster than GDP, you can’t get out of the [recession] box.”

“When your outflow exceeds your inflow, your upkeep becomes your downfall.”

“A water crisis is coming. Buy companies with water rights.”

“Stocks are having a 90% off sale. What’s not to like?”

“Ten times book value is as much risk as you want.”

“The Dow should be at 3000.” (Right now it is at 10,400.)

“A killer wave is coming.” (Recession is the first wave. Then the bargain hunters come in hoping for an upturn. The Government continues to tax and spend, resulting in a killer wave, even bigger than the first wave, which takes everyone out. This theory came with a chart of what happened to the stock market in the Great Depression.)

“Something for nothing societies eat everything, including next year’s seeds.”

“When it is dark, you can see the stars.”

“All paper currencies will fail.”

“You can’t hedge against a complete collapse, so we don’t think about it.”

My favorite quote was, “If you prepare for the end too soon, you could miss a lot of good trades.”

There were a few political presenters. One debate was about Israel. George Gilder, an author I like a lot, was very pro-Israel. The other guy represented a group of Jews against Israel. He argued that the Jews should leave Israel to the poor, victimized Palestinians. He also hated Christians because they believed all Muslims would go to hell. Marieta and I were stunned at the very emotional comments, pro and con, from the audience.

A trade show was part of the conference. You could buy gold (8 booths), invest in oil drilling (5 booths), become a Libertarian (3 booths), buy investment newsletters (6 booths), buy investment books (12 booths), move your money to an offshore bank before the US government starts taxing your transfers in 2013 (3 booths), invest in foreign currencies (4 booths), find a broker or money manager (5 booths), and buy DVDs of all the conference presentations. (My booth numbers are approximate.) There were a few more unmemorable booths.

To and from the show Marieta and I listened to Gerald Lund’s book about the Willie and Martin pioneer handcart companies. My 2nd great-grandfather Jens O Peterson and his wife Anne went in the Willie company.  Marieta also had a ancestors in the Willie company, of which one died at Rock Creek Hollow and another died at South Pass. The wonderful book was a weird accompaniment to the investment conference. The conference was all about protecting your savings in times of trouble, and the book was all about people with no savings and no resources just trying to survive and remain faithful.

I have a few thoughts on investing, which I will share in the next post. Pete

It is hard to be nice.

I try to be nice, but being nice is getting to be harder and harder.

If I disagree with liberal or progressing thinking, I am branded as disagreeable. If I disagree with President Obama, I am a racist for not giving him a chance. If I watch Fox News, I am a bigot. If I listen to Glenn Beck, I must be endorsing all hate speech. If I do not support same-sex marriage, I must hate all gay people. If I am against raising taxes, I am a tea-bagging, hate-filled, non-charitable excuse for a human being. If I am against killing babies about to be born, I hate all women. If I am against the new health care laws, then I support every conservative crack-pot who says or does the wrong thing. If I believe President Obama is a Socialist, I must be too angry, too partisan, too vocal, and too disrespectful of the Office of the President. If I do not support cap and tax legislation, I must want to ruin the earth and all the animals and people who live upon it. If I don’t support generous pensions to teachers, then I hate all children. If I want lower taxes and a balanced budget, then I must be a heartless, unfeeling, hateful rich guy who wants the rich to get richer and the poor to get poorer.

Only if I say what is politically correct and support social justice for all can I be redeemed from my un-nice, unenlightened state. Only if I make my money with a green job, drive a GM hybrid car, shower in a trickle of water, give all my money to the government, rid myself of all fur and leather, stop using plastic bags, and never wash my driveway with water from a hose, may I call myself a good-hearted, kind, non-hateful person. Only if I rid myself of every non-liberal opinion may I call myself nice.

Am I ever allowed to disagree in a nice, non-disagreeable way? I guess I better keep that answer to myself. Pete

Independence Day and Hamburger Buns

My daughter Julie called this morning and asked if we could bring 3 dozen hamburger buns to our family 4th of July celebration. Right then I wondered if we could find that many buns at the last minute. With millions of people purchasing hamburger buns today, I worried there might be a shortage.

After lunch Marieta and I went to Costco expecting and finding a very crowded store. I started to panic when I saw no buns in the bakery department, but Marieta suggested we would find some bakery items in another part of the store. She was right (of course). Near the freezer cases there were racks and racks of bread and buns. The hamburger buns were fresh, inexpensive, and plentiful. Because Costco sold the buns in bags of 2 dozen each, we bought four dozen. I was impressed. This whole capitalism thing is amazing.

I thought about how different it would be with a “planned” economy. A government commission would start meeting months in advance of the holiday. Studies would be commissioned and data collected. Resources would be allocated to produce exactly 1 hamburger bun for all persons over the age of 3 (who needs 2; we're all too fat). Literally hundreds of laws would be passed to insure that all buns were produced by union workers, that all ingredients were properly approved and inspected, that buns contain only organic, whole grain flour, that each bun had exactly 17 sesame seeds (some people don't like sesame seeds, so the seeds would be kept to a minimum), that each bun would conform to a certain texture, freshness, and size (forget the idea of an extra large, high calorie bun), and that all packaging would be biodegradable and recyclable. Millions of dollars in advertising would be spent to encourage us to line up early for our buns and to remind us how lucky we are to have the government protecting our right to have only non-trans fat oils in our buns. Prices would be fixed, profits would be limited, and special bun taxes would be added to provide buns for those people who could not afford them.

Many congressional leaders would be taken by surprise when they learned of the hamburger bun disaster. Shortages in organic flour and union bakeries would significantly slow the production process. Allocation problems would leave some areas of the country, notably Washington, D.C. and Chicago, with way too many buns, and other parts of the country with way too few. Protesters in support of birds and insects would stop a last-minute attempt to use non-organic flour. The average police person, used to spending most of the Independence Day weekend with his or her family, would have to work overtime to keep the bun lines orderly. Many people would spend hours in line only to learn that there were only enough buns for children and seniors.

The government commission would eventually apologize for the shortages, but it would not accept responsibility for forgetting to provide buns for hot dogs or for the arrests of those mothers and fathers who attempted to make homemade buns. Eventually the Supreme Court in a 5-4 decision would reaffirm our right to eat high-fat hot dogs and to bake our own buns, but that would not happen for almost a decade. The President would interrupt all fireworks displays to tell us that President Bush was responsible for all the bun problems (he had not thought to create a government bun commission sooner) and to announce a new bun stimulus program which would guarantee Independence Day buns to every American for years to come. He would also notify us of an executive order which would rename the 4th of July holiday to Government Appreciation Day.

Fox News would probably be the only network critical of the name change. The Tea Party movement would likely rename itself to the Kiss My Buns Party. Al Gore, completely misunderstanding the meaning, would likely try to join the party. A few friends of President Obama would lobby for a law requiring green food coloring in every Government Appreciation Day bun. The only company approved by Congress to make the GAD bun food coloring would be located in Chicago.

Happy Independence Day. Pete

This Doesn’t End Well

I was helping one of my kids with a tax return and noticed an amazing refund. The husband and wife had approximately $1,500 withheld from their paychecks for federal income tax. Back when I was their age, getting back half of that amount would have been great. Getting the full amount back would have been incredible. So, how big was their “refund” this year? Would you believe $4,500?

As you might guess, they are not complaining, but I was shocked. Days later I am still in shock. The additional money came from tax credits (credits, not deductions) for having a child, for having jobs (making work pay), and for paying college tuition.

While I agree these are worthy, deserving, well-intentioned credits, I couldn’t help but think about where the government gets the money to be so generous. A quick calculation would suggest that $1,500 came from my kids’ withholding, $2,000 from the 50% of us who pay income tax, and $1,000 from China and others who have enough bad financial sense to loan money to the USA.

How can our government afford to be so generous when it has to borrow $2 for every $5 it spends? The standard answer to our debt is to say we will raise taxes on the rich. Unfortunately, raising taxes does not increase revenues.

An article entitled “Maryland’s Mobile Millionaires” appeared in the March 12, 2010 issue of the Wall Street Journal. The article explained how a tax increase on millionaires designed to increase tax collections had actually lowered the monies collected. For 2008, the year the tax increase was enacted, the number of millionaires in Maryland fell sharply to 5,529 from 7,898. So even though the tax rate went from 4.75% to 6.25%, revenues from millionaires fell by $257 million. Part of the decrease likely came because of the recession, but part of the decrease was due to rich people moving to states with lower tax burdens. Of the millionaires who filed Maryland tax returns in 2007, one in eight did not file a return in 2008.

This is just one example of how raising taxes on the very rich does not increase revenues. As taxes go up, a few rich people will move to another country, but most will make changes to their investment strategies. They just lower their income by moving more of their money to tax-free or tax-deferred investments. Then they wait for the government to learn again that higher tax rates produce lower revenues.

This doesn’t end well. The government will borrow more money in the short term and print more money in the long term. Taxes will go up for everyone. Eventually our lenders will quit lending. Our currency will be significantly devalued. Government services and entitlements will be cut. The pain will be enormous. We will learn again that good intentions may pave a road we do not want to travel. Pete

What We are NOT Getting

I can’t stop myself from writing a few words about the current health care debate.

A little Internet research suggests that the US spends about 16% of our GDP on health care (GDP or Gross Domestic Product is the total of all goods and services produced in a country), while other modern countries with government-run health care systems spend closer to 10% of their GDP. These percentages are used as a strong argument for passing health-care reform.

What gets me writing is how little these numbers have to do with the bills before the US Senate and House. We are not choosing between a free-market system and a government-run system. We are choosing between a bad system and a very bad system.

Our system today includes private hospitals, health-care professionals, insurance companies, lawyers, government taxes, regulations and reimbursements, and lots and lots of paperwork. Obamacare simply adds more regulations, more taxes, more reimbursements, special deals for unions and certain states, and payoffs for drug companies, insurance companies and lobbyists (like the AARP) to get them to sign on to the changes. Obamacare is not a government-run health care system that will suddenly bring our costs down to 10% of GDP. It is our current system made worse.

Those in favor of the bills before Congress repeat a mantra that goes something like this: “Our health care system is broken, so we have to try something else.” The problem with this argument is that the change may not be for the better. If my hand hurts, for example, and if I have tried to stop the hurt using traditional methods, then I could decide to try amputation. It’s an alternative. It’s a change. It even might stop the pain. But it is also ridiculous. And it is also ridiculous to think that more taxes, more regulations, more paperwork, and more mandates will save any money at all.

I understand that we have problems with our health care system, but I don’t understand how Obamacare will solve anything.