Tuesday, October 15, 2013

Why Fiat Kills An Economy...L&C

My recent articles have been directed at the ills of fiat based currencies. In the US the media bows to the government and the Fed concerning issues of debt, currency and standard of living. This week I want you to look at two examples of the fiat based economy. Keep in mind that 40 state governments need and receive 31% of their revenues from the federal government, which in turn pass economic stimulus to their city and county government agencies. These leaders forget that their citizens do not have a rich uncle to pass economic stimulus to them. The first example is local government seeking revenues without the appearance of raiding taxes.
Whitestone Bridge
When I was young I got a job pumping gas at the old Hess station. At the same time regular gas was .30cents per gallon. Also, at the same time the toll on the Whitestone Bridge which connects the Bronx to Queens and Long Island was .25cents each way or .50cents a day. This bridge also connects to the road to the George Washington Bridge and the major interstate highway 95, to which there was another toll, but in this example of local costs to citizens, I will not include the second toll. In addition to the toll, you have to include gas which is also taxed, insurance, ditto the ever present men in blue to add to the dangers of everyday transportation.
As the years passed and citizens sought ways of avoiding inflation, ridership declined on the bridge as people used the bus or subway, especially after the first oil embargo and gas prices doubled. In response the city raised the tolls, again and again. Long story short the cost of the toll on the bridge soon distanced itself from the price of a gallon of gasoline. At present it cost $6.50 one-way or $13.00 per day. By the way it is set to rise again in 2014.
I use the cheapest phone plan there is at $29.99 a month. I can talk on the Internet, but a phone is needed for many things beside communication. My phone bill averages $41.00 per month. How can that be when it is suppose to be under $30. per month? Good question and the answer is fiat debasing of money and corruption by the so-called regulators. Let's take a look.
I was charged $2.00 for texts. I never text, but to open a message from unknown sources, cost me.
I pay .61 for Administrative Fee which means I now pay for the phone companies employee wages.
I pay .67 for County Gross Receipts Surcharge - whatever that is?
I pay $1.43  for Federal Universal Service Charge - again paying phone company costs.
I pay .24 for MTA Telecom Surcharge. City fees paid by me.
I pay .45 for Regulatory Cost Recovery Charge. whatever that is
I pay .99 for State Telecommunications Excise Surcharge. helping the state, I guess.
I pay $1.20 for 911. Again paying some body's salary.
I pay .12 for City District sales Tax - telecom. Finally, someone admits a tax.
I pay $1.55 for City sales Tax - Telecom. another tax.
I pay .30 for Local wireless 011 Surcharge. I thought that I already paid for this?
I pay $1.38 for N.Y. state Sales Tax - Telecom. Thought I paid this one too?
Bottom line: taxes are over 25% of phone costs. Way too much!!
People avoid inflation as best as they can, but government spends more than they receive and they burden their citizens beyond reason. P.S>: Con Ed the utility company is asking for $450 million when their costs are down because they use natural gas which was paid for in the past in the transition from oil. Now, Con Ed says it is because of Hurricane Sandy. Con Ed does not put something aside for rainy days. They just take your money. Can't wait for the decision of the regulators who basically rubber stamp all requests.
Liars & Crooks: our government leaders for play acting and not doing what the constitution says, "promote the general welfare."
Cry Wolf
too many times and the effect wears off. In 2011 the market dropped over 1K points on the debt fear. Last year, it did little damage and this year, traders felt that a deal would be reached. They were right, but it only extends until mid-January. One of these days, there will not be a deal and the cry will fall on deaf ears.