One of the recent comments on this blog was in response to my post about whether patients should be able to direct their care. The “cyberchondriac” patient who comes armed with the latest and greatest in treatment options also reminds me of the patient who has done lots of research about his physician online. The advent of websites that “review” doctors and “score” them based on patient-physician interactions, impressions of care, or outcomes are a new thing that many doctors do not know what to do about.
Now more than ever physicians are being faced with the complete 360 degree evaluation of themselves. This evaluation comes from all directions. Insurance companies evaluate physicians in the form of denials, hospitals evaluate physicians in the form of peer reviews, patients evaluate physicians in the form of outcomes and overall patient-physician interactions. And now, we are being evaluated on the internet for all to see.
The truth of the matter is that there is not much we can do about it. It is essentially the era of the consumer patient and the freedom of information on the internet is merely a confirmation of that. But the problem with most physicians is that we are a hypersensitive bunch. We have become physicians through a ton of hard work, several admissions processes, countless hours of study, and massive personal and financial sacrifice. We seek praise and thus we don’t like it when people talk about us publicly.
The problem with physician websites is that they are just like any other review site. Whether it be for restaurants or hotels, you will undoubtedly have the consumer who thought it was a messy hotel room and that the food was disgusting. There is also the rare but enchanted consumer who loves everything about his meal and stay. There is no standard “Zagat’s” score for the physician and even if there was, it would undoubtedly contain many metrics that physicians have no control over.
The main difference between reviewing other businesses and physicians is that patient outcomes often have nothing to do with a physician but more to do with the patient. Many diseases are incurable and chronic and human behavior and genetics are at the root of many medical problems. Thus, patients who do not have great clinical outcomes are not the biggest fans of their doctors or the medical system. Don’t get me wrong, there are tons of patients out there with debilitating diseases who do not get better but still love their doctors. However, this is not the norm.
Physician reviews? We as physicians must welcome both criticism and praise. We must always know that at the end of the day, not matter what patients do or say, whether they are nice or mean, we are the ones who are looking out for them. That is what we signed up for. We can’t take it personally. We need to view everything as constructive and drown out the background noise.
As one more bit of proof that the education system of the United States is a dysfunctional piece of liberal crap, how else to explain the fact the far-leftist moron Michael Moore actually got funding, which assumes an interested audience, for his latest movie, titled Capitalism: A Love Story, which, according to Reuters, “launches an all out attack on the capitalist system, arguing that it benefits the rich and condemns millions to poverty.” Hahaha!
Well, to be fair, it is not capitalism that condemns millions to poverty, but instead the poor are doomed by the destruction of the purchasing power of the little bit of money that they get and things cost too much for the poor to afford them, and which is deliberately caused by a government so stupid (audience shouts out “How stupid, Wonderful And Wise Mogambo (WAWM)?”) that it deficit-spends money on the poor to alleviate their poverty by allowing the Federal Reserve to produce large, persistent expansions in the money supply with which to buy up the government debt, an expansion of the money supply which erodes the purchasing power of the money, so that the little bit of money owned by the poor doesn’t buy as much!
If the education system of the USA were not so egregiously bad, he would know that fact, and everybody would know that fact, and so when he went to some producers and said he wanted them to finance a new documentary about how capitalism is evil and (I assume) communism is good, they would have laughed in his face and said, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”
Or, alternatively, he could have saved a lot of time and just come to me and asked me and I could have told him, “Hahahaha! Where did you get such a stupid idea? Are you some kind of moron?”
Unfortunately, he did not learn anything from all of that, and actually has the movie concluding that, unbelievably, “Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people, and that something is democracy.” Hahahahahaha!
The use of the extra-long “Hahahahahaha!” is my clever way of indicating that this is where a Junior Mogambo Ranger (JMR) who has achieved even a glimmer of True Mogambo Enlightenment (TME) starts laughing in Sublime Mogambo Scorn (SMS)! Hahahahahaha! Just like that! SMS! Hahahahaha!
I thought I was calmed down and was reaching for a bottle of something alcoholic so as to deaden the pain of my stomach hurting from so much laughing when I started laughing all over again when my eyes again fell across the idea that democracy replaces capitalism! Hahahahahaha! I never heard anything so stupid! Hahahahaha!
The first thing that comes to mind, of course, is “Did democracy finance his stupid documentary, or some capitalist?” Hahahaha!
Beyond that, the mind reels! While we are at it, why not replace the production of expensive gasoline not with democracy, but with a super-majority voting system? And we could heat our houses with gang rule! And we can replace expensive food with some dictatorship! Wow! There’s no end of what you can do if you are willing to be ridiculous! Hahaha!
The dismal fact is, in case you were wondering, that capitalism in free enterprise is the only hope that the poor have, if not by sheer dint of theoretical argument that creating jobs is vastly superior to government handouts, then by the complete lack of any successful enrichment of the poor by any other method, mostly because they involve the government creating more and more money which destroys the purchasing power of the little bit of money that the poor had.
But since we Americans have decided, with a stupidity that absolutely staggers the imagination, to prove, once again, that exact same, sad, sorry lesson repeated and repeated over 4,500 years of history, then investing becomes easy when another lesson from that same 4,500 years of history is to own gold!
In fact, it becomes so easy that you can’t help but giggle, “Whee!”
In another episode where the comics page eerily mirrors real life, a recent “Garfield” cartoon has Garfield confronting a resident rat who has been taking cheese, but leaving IOUs, from the “cheese drawer” of the refrigerator. Garfield threateningly says to the rat “Stop with the IOUs” and the rat calmly holds up his hand in protest and says, with a look of utter sincerity on his face, “No, no…I’m good for it”!
Perhaps it is my Refined Mogambo Sense Of Humor (RMSOH), or perhaps it is my equally-refined Mogambo Sense Of Scorn (MSOS), but either way, using a diseased, lying, filthy, corrupt, thieving rat as a metaphor for Congress is the funny-because-it’s-true part! Hahaha!
I remember it because I was reading the comic strip before I fell asleep on the couch, snoring and snorting and having a wonderful time while taking a well-deserved nap after spending the busy morning writing hate mail to the Federal Reserve (“Dear Morons, I hate your guts because you are the weenies who have so little intelligence that you let the foul Alan Greenspan, chairman of the Federal Reserve 1987-2006, create So Damned Much Money (SDMM) and with So Damned Little Oversight (SDLO) that it allowed massive, MASSIVE bubbles in debt that produced bubbles in stocks, bubbles in bonds, bubbles in houses, bubbles in consumer spending, bubbles in derivatives, and huge, backbreaking bubbles in size and cost of government, and now we’re freaking doomed! Sincerely, Anonymous in Florida and fed up with you clowns!”).
I was just in that delicious part of my nap where I usually begin dreaming of wonderful things that might have been, had I only been prescient enough to say, “Marry you? What? Are you freaking crazy or something?” or “Have some kids? What? Are you freaking crazy or something?” but still buying lots of gold, silver and oil with which to get Fabulously, Fabulously Rich (FFR) so that I could tell lots and lots of other beautiful women, “Marry you? What? Are you freaking crazy or something?”
Let’s just say that fantastical things were getting dreamed up pretty good, if you catch my drift, when the kids come running in with a copy of Barron’s in their hands, yelling, “Wake up, daddy! Wake up! You can raise our allowances even if your income is down! There’s a way to do it! Wake up!”
I was lazily rubbing the sleep from my eyes and carefully watching to see if any of them came close enough that I could reach out and smack them for so rudely waking me up, which I feel empowered to do because that is what my wife did to me for doing the same thing just the other day.
I mean, there I was, early in the morning before the sun was even up, nervously looking at our finances and coming to the only conclusion I could; “The kids have got to go!” Before I knew what I was doing, I went running into their rooms, honking an air horn and anxiously yelling, “Get up! Fire! Get up and get out of the house! Emergency! Get out! Get out of the house!” whereupon they all went rushing outside in their pajamas and I locked all the doors so they couldn’t get back in.
It was, I admit, probably my most pathetic, desperate attempt to clutch at the only straw I had left, a move that led to the aforesaid incident of my wife hitting me, and the police watching her do it, yet doing nothing about it, and the kids wailing, “We’re so traumatized! He’s a horrible person who doesn’t give us enough money in our allowances! Boo hoo hoo!”
But they were right about the S&P 500 “paying more while making less”! The companies in the S&P 500 have been paying out $21.45 in dividends, which is whole multiples of the $7.90 that they have been actually earning, probably explaining why the index sells at a price so high (over $1,000), that the price-to-earnings ratio is 128! Hahaha! Unbelievable! Hahaha!
So, as the kids rightfully pointed out, the companies in the S&P 500 are paying more than they are making, and so there must be a way for me to pay them more than I make, too, and the only reason that I don’t give them more money to offset their rising costs is that I am stingy and hateful, which is true but not breaking any new ground, just as it is also true that buying these stocks at the price of the index would take an investor 128 years of getting everything the companies earn just to break even! Hahahaha!
It gets weirder when you realize that the companies would go broke long before that, because they are always paying out more than they make!
So I look at them and say, “And what kind of Stupid Moron Crap (SMC) is that?”
It was heartbreaking to see the disappointment in their eyes and hear it in their tender, young voices as they were telling me how monstrously cruel I am and how much they hate me, but I am still buying gold, silver and oil with every dime I can manage to keep out of the greedy, grubby hands of the kids, wife, family members and bill collectors, and soon they will understand why, and, if they are good, like not ever again waking me up from a nap, grow fabulously wealthy, insanely wealthy, preposterously wealthy along with me and all the other people who are buying gold, silver and oil as a defense against unbelievable government deficit-spending and monstrous amounts of money creation by the Federal Reserve, which is so ridiculously easy that you hear yourself saying, “Whee!”
I recently came to a rather obvious, yet remarkable insight. The 20th century was a truly unique and remarkable moment in human history. There is not a single aspect of human civilization that changed less during the 20th than in any of the centuries that came before. Population, economic output, life expectancies, oil consumption, meat consumption and international travel are just a few of the countless factors that changed more between 1900 and 2000 than in any other prior hundred years.
Expectations for the future are with few exceptions rooted in this period of explosive change. Some scholars have traced a variety of trends back into the more distant past, but these works are largely viewed as curiosities on the fringe of economic and social thought. For better or worse most of us are happy to assume the order of things that emerged after the Second World War will hold steady throughout ours and our children’s lives.
Economic growth has been both the great cause and great consequence of the recent pasts explosive change. By rapidly expanding the total available wealth, this expansion has allowed the general population to enjoy unheard of prosperity, without threatening the comfort of the elites.
Growth can be broken into two pieces; basically more people consuming more stuff. Population growth has obviously been the major driver of the first component of growth. From 1900 to 2000 the number of people on the planet rose nearly 4- fold to approximately 6 billion. Just as dramatic was the increase in the number people actively engaged in the globalized economy.
For all the wonders of the Pax-Britannica, world trade really only impacted a small percentage of humanity, in Europe North America and a handful of aristocrats scattered around the rest of the world. Today, only a small number of subsistence farmers are cut off from globalization.
If population growth were the primary driver of economic expansion, we would be living in Malthus’s world. The miracle of the 20th century was the dramatic rise in living standards that accompanied population growth. I don’t have time to recount all the ways in which living standards have improved since 1900. Look around you, the growth is obvious.
Is the 20th century repeatable? In 2100 will our heirs see 2000 through the same eyes that we see 1900? Our entire understanding of the future depends on the answer to this question. It is clear, that attempts to preserve the rate of growth for the next hundred years will smash into the physical limitations of the planet.
Technology is frequently cited as the magical solution to square this circle. Yet, there has never been a major innovation that has shrunk humanities lust for resources.
Adapting to a world of limited growth will be the profound challenge of the next hundred years. The impacts will be both positive and negative, but will shake the very core beliefs of society. This post is the first in a series that I will publish laying out the implications of a limited growth world on our expectations.
Three of our favorite blogs are: Positive Economic News, Carpe Diem, and Calafia Beach Pundit. Each posted a over abundance of great economic news last week:
From Positive Economic News:
1. Toyota raised its world 2009/10 sales forecast by 3 percent citing a recovery in demand for autos.
2. September consumer confidence is now at its highest level since January of 2008!
3. Chinese industrial output and other far east economic data surprised to the upside in August.
From Carpe Diem:
1. California and Florida Housing markets continue to improve. California’s home sales increase for the 14th straight month and Florida’s string of sales improvements as now stretched to a full dozen.
2. Back in March, Intrade odds had the possibility of Q3 growth at 25%. Now those odds are a 95%
3. Nationally, the inventory of homes on the market has now fallen to April 2007 levels.
From our Beach Pundit:
1. Current mortgage rates are now the deal of a lifetime… (both conventional and jumbo)
2. In aggregate, US financial burdens are down.
3. The pundit shows three charts providing a distinct turn for the better in the housing market.
Q3 draws to a close this week. And our favorite bloggers will likely continue to diet on a healthy supply of good news reports.
Friday 25 September 2009 had two significant events. First, there was a full committee hearing on Ron Paul’s bill H.R. 1207 to audit the Federal Reserve. Second, Chief Judge Edith Jones of the United States Court of Appeals for the Fifth Circuit, directly under the United States Supreme Court and covers Florida, Georgia, Alabama, Mississippi, Lousiana and Texas, issued an order for a three judge panel to hear an issue brought about apportionment regarding the House of Representatives. Both of these actions, should they be brought to fruition, would seek to restore essential checks and balances found in the United States Constitution and reduce the centralization of power.
END THE FED
Murray Rothbard argues in The Case Against The Fed that because depositors are entitled to demand their deposits at any time and because by its nature fractional reserve banking cannot sustain all depositors demanding their deposits at the same time therefore fractional reserve banking is fraud.
Because of the inherently fraudulent nature of fractional reserve banking bank runs were a common occurrence before the FDIC and Federal Reserve system. However, because of the cartel nature of the FDIC and Federal Reserve system individual bank failures are no longer to be feared by depositors because of the implicit guarantees.
These implicit guarantees have been turned into actual guarantees with the $100k limit being increased to $250k, which returns to $100k on 1 January 2010, the FDIC’s reserve fund being depleted and the Treasury extending a $500B line of credit to help placate owner’s of $13T+ of FDIC insured funds.
This has introduced tremendous moral hazard. Moral hazard is the economic principle that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. As a result, people do more due diligence on the movies they watch than the banks they deposit their currency in.
For example, with FDIC insurance the moral hazard occurs often without conscious or malicious action. Depositors have been trained to seek out the highest yields without regard to the underlying stability of the bank because when there is a bank failure the losses are socialized through increased FDIC insurance premiums, inflated away by the Federal Reserve through increasing the currency supply or a myriad of other fraudulent, deceitful, immoral or often illegal means. The lynchpin of the current banking system, which is inherently unstable and will fail, is the Federal Reserve.
Consequently, the Federal Reserve is built on a fraud and the attendant effect on the rest of the economy is to distort normal market operations through both the supply and cost of currency. This is illegally and unconstitutionally perpetuated through legal tender laws which violate the Constitution in regards to the monetary provisions in Article 1 Sections 8 and 10, the 10th Amendment and confounded the definition of a dollar and serve to centralize power.
But this immoral system, conceived in iniquity under cloak and dagger as explained by G. Edward Griffin in The Creature From Jekyll Island, has been perpetuated for nearly 100 years and despite humanity doing just fine for thousands of years many cannot conceive of an economy should the Federal Reserve be razed. Nevertheless, because the system is built on fraud and because sunshine is the best disinfectant therefore the Federal Reserve has strongly challenged any type of public audit, accountability or oversight despite it being in the best interest of American citizens.
AUDIT THE FED
As the wretched vampire squid is dragged into the sunlight and revealed for the parasite it is then increased political pressure will be brought to bear on the immoral institution. Ron Paul’s bill, which received a full committee hearing, is the first major step in this direction in a long time.
During the hearing testimony was heard from both Austrian economist Tom Woods, author of Meltdown, and Scott Alvarez the general counsel for the Federal Reserve. As the general public becomes aware of the tremendous damage this institution and those on Wall Street have done hopefully they will adopt the spirit of the Founding Fathers.
Mr. Alvarez, or should we say Chicken Little, decides to terrorize those who advocate in favor of H.R. 1207. He testified:
These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation. … Higher long-term interest rates would further increase the burden of the national debt on current and future generations. Adoption of H.R. 1207 also could disrupt the nation’s relationships with foreign central banks and governments, relationships which are helpful in supporting the Federal Reserve’s efforts to fulfill its statutory missions, and erect barriers to official cooperation among central banks and governments. Foreign central banks and governments likely would be less willing to engage in financial transactions with the Federal Reserve if these transactions were subject to policy review by the GAO as H.R. 1207 would allow. These transactions, such as the deposit of international reserves and bilateral currency swap arrangements, help support the role of the dollar as the worldwide reserve currency
For example, first comes the audit of the Federal Reserve system. Next comes the legislation to end it. Then comes a reenactment of legislation like the Coinage Act of 1792 to prevent future similar behavior which reads:
SECTION 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, * * * every such officer or person who shall be guilty of any * * * of the said offenses, shall be deemed guilty of felony, and shall suffer death.
Bicameralism is the practice of having two legislative or parliamentary chambers. The United States Congress is modeled after the British system which was composed of the House of Lords and the House of Commons. The United States Senate is composed of 2 Senators from each state while the House of Representatives is under Article I Section 2 to be “chosen every second Year by the People of the several States”. Under the doctrine of apportionment the House is to grow as the population grows and it did for the first 130 years of the Republic except in 1840. But the Reapportionment Act of 1929 limited the size of the House to 435.
Currently, Congress Critters have a constituency of about 700,000 instead of about 50,000 like they did before the Reapportionment Act. This has served to consolidate power and make the Congress Critters less responsive to The People. The 17th Amendment was ratified in 1913, the same year the Federal Reserve Act was passed, and provided for the direct election of Senators. The eviseration of these two checks and balances in the American political machenirey has made it easier for special interests and lobbyists to influence elected officials.
With the House often gridlocked with 435 members imagine the chaos of getting everyone aligned if there were over 1,300? Ironically, increasing the number of Congress Critters through proper apportionment would likely have the effect of greatly decreasing the size of government because special interests would have much less influence and control with politicians likely much more accountable to their constituency. Therefore, I find this order by Judge Jones for a hearing on the apportionment issue to be extremely interesting and a positive development regarding the decentralization of power.
The auditing of the Federal Reserve system would be very beneficial for the powers of truth and justice. The Federal Reserve system should be viewed as counterfeiters because they enjoy a legalized counterfeiting franchise and are able to engage in creating new fiat currency with legal tender status and doing so amounts to confiscation through inflation which is a form of taxation without representation or due process of law. Unmasking these costumed terrorist counterfeiters will bring to light and the conscience of The People the degree to which they are being stolen from.
Likewise apportionment could result in Congress Critters being more responsive to their constituency who could demand the repeal of the Federal Reserve Act and the implementation of legislation like Section 19 of the Coinage Act of 1792. Humanity has survived and thrived for thousands of years without a Federal Reserve. Consequently, auditing and abolishing the Federal Reserve will be a great development for humanity and reduction in the centralization of power.
Disclosure: Long physical gold, silver and platinum and no position the problematic GLD or SLV ETFs.
It is hard to believe that the Commission on the Measurement of Economic Performance and Social Progress would consider that freedom and personal responsibility have little relevance to the quality of life, but I haven’t been able to find any discussion of freedom or personal responsibility in their recently published report. The Commission, whose members include Amartya Sen and Joseph Stiglitz along with a list of other prominent academics, was established by the President of France, Nicolas Sarkozy.
The Commission’s report seems to have plenty to say about the limitations of GDP, and various issues concerning measurement of quality of life and sustainability, but the closest it comes to recognition that freedom might have some relevance to the quality of life seems to be in a sentence discussing freedom to exercise political voice. While it is good for people to be permitted to complain about restrictions on their liberty, it seems to me might be better if they had less restrictions on liberty to complain about. The authors give the impression that they consider that only the latter two words in the call for “liberty, egality and fraternity” are relevant to the measurement of social progress.
I would have been pleasantly surprised if the Commission’s report had endorsed the theme running through this blog that human flourishing must be a self-directed activity and that liberty is necessary for self-direction. (Some posts discussing these concepts are here, here and here.)
However that would have been too much to hope for. Although the relevance of rights is widely recognized in discussions about political institutions, the importance of the right to self-direction is often overlooked when it comes to discussions of the merits and demerits of alternative policies. Rights are routinely overridden when democratically elected governments consider that more important matters are at stake such as “social justice” or even the well-being of the people whose rights are infringed.
I had hoped, nevertheless, that the report would give some recognition to research findings that people value freedom. For example, it could have mentioned John Helliwell’s finding that people tend to have higher life satisfaction in countries in which a high proportion of the population are satisfied with their freedom to choose what to do with their lives (see NBER Working Paper 14720). The Gallup World Poll shows that satisfaction with freedom in France (82%) is somewhat higher than the U.K., but lower than in the U.S. (88%), Australia (91%) and Denmark (96%).
The fact that the vast majority of people in democracies tend to be satisfied with their freedom is related to economic freedom and civil liberties (as shown here). In addition, people would not be expected to feel that their freedom is being unduly restricted unless they are not permitted to do things that they actually want to do. But their sense of personal competence and self-respect must be weakened when responsibility for important aspects of their lives – such as family health care, education and saving for retirement – are taken out of their hands by paternalistic governments.
There is some survey information available to compare the extent that people in different countries feel that they have personal responsibility for what happens in their lives. Data from the World Values Survey shows that French people tend to feel that they have less control over their lives than people in the U.K., U.S. or Australia. The French also scored lower than people in the U.K, U.S. and Australia on the Gallup World Poll question asking whether respondents were proud of something they did yesterday. The Commission seems to overlook such matters.
I am sympathetic to the Commission’s view that more research should be done to assess the links between various dimensions of the quality of life. It is disappointing, however, that the Commission does not recognize freedom as an important dimension of the quality of life.
I have mentioned the LBMA’s “A Guide to the London Bullion Market” as few times on this blog. It is now available on their website.
I would strongly recommend it to anyone who wants to increase their understanding of how the gold industry operates, particularly at the wholesale level. The sections on gold forwards, lease rates would also be of value to those interested in Professor Fekete’s work on the basis.
I really got a laugh out of the report from Bloomberg that the Democratic Party of Japan (known in the parlance as DP) won an historic victory in the recent elections, coming to power for the first time in decades with “a pledge to support households battered by two decades of economic stagnation”, whatever that is supposed to mean, but which is, upon even casual inspection, Standard Political Crapola (SPC).
The interesting part is that the new prime minister, a guy named Hatoyama, said “he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs”, which is so laughably, ludicrously impossible, especially in such a corrupt, lopsided economy that it makes me, a stupid American who really doesn’t know what in the hell he is talking about, who lives thousands of miles away, in another country and hemisphere, turn up his nose at the sheer stink coming from that idea! Phew!
Of course, this valuable piece of Righteous Mogambo Scorn (RMS) is because it is obviously, obviously too, too late for that.
It is too late, just like it is too late here in the USA, and just like it is too late almost everywhere else, too, where years and years of increasing government spending and control means that government IS the economy, and shrinking the size of government obviously shrinks the economy! Hahahaha! Oops!
So, to the Japanese, I say, “Hahaha! Too late for that, you dumb Japanese chumps! Now you are going to pay a huge penalty for being such morons with your fiat money, and then especially involving the idiot Americans and their fiat money!”
Anyway, crude and rude xenophobic insults and senseless bigotry aside, an example of this is that, here in America, the birthplace of sheer stupidity in central banking (by which I mean the disastrous Federal Reserve), our economic performance as a result of the same kind of constant stimulus is that non-farm payrolls have been falling and are now about back to where they were in 2000, meaning absolutely zero (non-farm payroll) growth for 9 years!
A lot more people seeking the same number of jobs is pretty bad, especially when the number of people is still rising while the number of jobs is actually still falling! Yikes!
Meanwhile, however, the government has spent its time growing bigger and bigger, like a huge, cancerous, oozing lump that is growing on your neck and already people are being repulsed by both the sight and the smell of it, and now there are 6% more people on “government payrolls” than there were in 2001, which is only the tip of the iceberg.
And, as if to add insult to injury, they all make more money than you! Hahaha! For the first time in history, the average pay of a government employee is higher than the average wage of non-government employees! And when you add in their generous benefit packages, they make a lot more, and they are not going to take it kindly that you want them to suffer losses in pay and employment like us average morons out here.
So that is One More Big Reason (OMBR) why the government will keep borrowing more and more and spending more and more, which is why the Federal Reserve must create more and more money and credit, which expands the money supply more and more, which makes prices go up more and more, sometimes in bubbles, which must, and always do, bust back to their intrinsic value.
And such government and banking insanity as we are seeing today is the One Big Reason (OBR) – perhaps THE One Big Reason (TOBR) – why you must buy gold, silver and oil, apart from it being, you know, so easy that you squeal with girlish delight, “Whee! This investing stuff is easy!”
How do you pay at the checkout line? Between checks, credit and debit cards, and online payment services like Paypal, it’s sometimes surprising when we see someone pull out actual cash these days. The way you pay may seem to be of little importance, but in truth, the money doesn’t all spend the same.
Particularly if you’re under 30, you probably use – and grew up using – a debit card for a lot. It just makes so much sense; less bulk in your wallet, less for a pickpocket to lift, less chance of getting caught at the store five dollars short. Plus, it’s trackable – the money that you spend on a debit card no doubt comes with online banking, allowing you to look back at the end of the month and determine why the grocery money ran out so quickly.
The trouble with this idea that debit cards are more trackable than checks or cash, according to Hong Kong researcher Dilip Soman, has to do with the fact that humans, not computers, have to do most of the work involved in that tracking on a day-to-day basis. According to his research, we have mental “pools” for how much money we’ve spent on broad categories of purchases – housing, food, entertainment, and so on – and each time we complete a transaction, we subtract the transaction price from the appropriate pool, mentally.
Regardless of your mental faculty with basic arithmetic, doing this mental juggling requires that you remember the transaction. As it turns out, debit and credit card transactions leave very little in the way of a mental imprint. If you consider the process of a card transaction, it’s easy to see why: with a card, you swipe, sign a slip, and you’re done – you don’t even have to look at the total. (Today, if the transaction is small enough, you don’t even have to sign, most places; new technology has also removed the physical contact of the swipe, opting instead for touchless systems like PayPass.) If you write a check, on the other hand, you have to take the time to write out the full transaction amount in words and numbers, cementing the exchange in your mind. Cash would seem to provide the lowest imprint – nothing to write, nothing to sign – but with cash, a physical exchange occurs. You can tell how much you’ve spent from moment to moment simply by checking the amount remaining in the wallet.
On top of this, social and behavioral researchers Morewedge, Holtzman, and Epley recently described a broader phenomenon related to card use, called the “accessible account effect.” They suggest that people perceive the sting of a financial transaction as a fraction – the cost of the good being purchased versus the amount they have to spend. If the pool of money is the $100 in your wallet and the season box set of The Wire is $50, that’s half of your money gone. With the increasingly common setup of a debit card linked to the checking account where your paycheck direct deposits, however, the pool of money you have to spend becomes an arbitrarily large number compared to the amount of cash you would reasonably be carrying, so that $50 is a very small fraction of your available funds.
A month later, you’ve spent that $50 ten times over, easy as a wave of the card-hand. All of this stealth spending can add up to one big, painful blow to your finances. Fortunately, the research says you won’t remember it, anyway.