Why I fucking love talking about inflation, deflation, banking, the Great Depression and GOLD

Did you see this shit?



I love old graphs. The farther back they go, the better. That way, you can get the big picture perspective on a subject. The problem with a lot of graphs is people think if they see a big line go up on a graph over the course of 5 years, that means something really, really bad happened or is going to happen. The truth is, 5 years is usually not enough data to make a generalization.

If a broker claimed that, if I invested with them, I would get a return of 150% because they had made that over the course of 5 years, I would tell them to fuck off and ask what they made in the previous 50 years. 5 years doesn’t tell you shit about an investment.

As you can see in the chart, historically, deflation and inflation were, most of the time, balancing each other out. But sometimes it’s not.

Why is that?

A lot of the time, it’s because of war and other forms of government influence. For example, in the chart, you can see around when WWII started and ended there was inflation, followed by a ton of deflation. Inflation and deflation work like weights on an old scale. If the market was a conscious brain, it would always be striving for balance, or as economists call it, equilibrium.

What goes up, must come down.

If you have a monopoly on the currency, though, then you can control it… at least most of the time. Most governments do this with some form of a central bank. Several small, island nations don’t have central banks though. (Source)

Equilibrium is a beautiful economic concept that makes me think of birds flying in formation without needing to talk to each other, or order in chaos, or even just human nature.

Equilibrium is the balance between the forces of supply and demand. It’s the point in a chart where the price is equal to the quantity.

Here’s a hot pic:


But along with market equilibrium AND human nature, comes the exceptions and the outside forces that can effect it.

Like, an entity, such as a government, that has a legal monopoly on currency. (Source) For example, the Federal Reserve in the U.S., instituted in 1913. They can set incentives to cause banks to lower or raise interest rates and they are the only ones allowed to print/inflate/deflate the currency. Which has been paying the bills for a long time. It has also been paying for the rapid rate American imperialism around the world.

And I think people might like it that way.

Having a national bank that is both private and public does have its advantages. For instance, people don’t know they’re being “taxed” in a way. The government doesn’t have to raise taxes, cut spending, or borrow from elsewhere to afford things. They can inflate the currency, by printing more of it into the marketplace, making it less valuable.

Here’s an example:

Say I have 3 Babe Ruth baseball cards and there’s only 100 in the world. It’s a rare baseball card, so it’s worth a lot of money. There were only 100 printed in the world. But say whoever prints baseball cards decides to print 1 trillion Babe Ruth baseball cards. Then what happens? Suddenly, my 3 Babe Ruth baseball cards are worth less money now, because all my friends on the block also have 3-5 Babe Ruth baseball cards. Now nobody is interested in buying a Babe Ruth baseball card, and there are so many of them, so people start using them as kindling for fires, because they’re more valuable as kindling.

That’s what happened, except with currency during the Weimar Republic (Germany). It would take wheel barrows full of paper currency to buy a loaf of bread, it was worth so little. So some found it more valuable to burn for warmth. That’s an extreme example of inflation: hyperinflation. But it hopefully shows an easier understanding of the concept.


Historically, this happens a lot during wars. I’m pretty sure, because war is really, really expensive to fund. War isn’t the only reason, by far though.


War means inflation will go up, usually, because they go off the gold standard to “afford it.”


Always being at war makes unemployment a thing of the past!!!… Maybe?

What do gold and silver coins have to do with anything?


Throughout history, since 600 B.C. to be more exact, (source) people have been using gold and silver on and off as currency. Off during times of war, when inflation is needed to pay the expenses of the war, and back on when the money becomes worthless because inflation has become too high.

The cool thing about commodities, like gold, is that the one that holds it value the most usually out competes the other monetary forms over time, historically. (Source) Hence, it’s historical popularity.

Lydian Lion coin. The world’s oldest coin, from what is now known as Turkey.


This is an example of how it would work.

I would go to the bank with my paper $1 bill. Legally, I could go to my banker and say, I’d like to take out the equivalent of 1 paper dollar’s worth of silver. The banker would then weight out the silver, and give me the equivalent of 1 U.S. dollar piece of paper’s worth of silver, a certificate. I could then turn around and use it to pay for some groceries or something, or I could do the reverse.

I could go to the bank with my silver, and say, I’d like to get as much paper dollars as I can for this ounce of silver. Then, in return, the banker would give me a $1 paper bill, which I could then go buy groceries or something with.

And most people preferred to carry around the paper rather than a piece of metal. Just for convenience sake. Kind of like how plastic credit cards are easier than carrying around $1,000 in paper dollars these days.

Modern banking and the fractional reserve system

One of the issues I think will be seen as primitive in the future is how we have done banking historically.

I’m a fan of full-reserve banking, regardless of the doomsday naysayers who are akin to fortune tellers. And when I say full-reserve banking, I am meaning banks have to have an account with your name on it, and keep that money in your account on hand.

Wait a minute, banks don’t actually HAVE my money in my bank account?

No! It’s loaned out to other people! Complete strangers!

Which leads us to…

Modern banking, fractional reserve banking, which began with gold and silver roughly like this, in the 17th century:

Someone would go to the banker with something valuable they had, such as silver, which can be made into things or used as a store of value abstractly, like we do with paper currency. The banker would hold it for me and I would pay him to store it there, much like a storage unit.

That is full reserve banking.

But after 100 people did that, the banker would be left with storage unit after storage unit of valuable assets, just sitting there doing nothing.

So, he gives some of my silver to another person. The banker will charge that person interest, a borrowing fee, that builds and builds the longer he goes without paying it back, plus the fee/interest. The banker will get a cut AND I won’t have to pay the storage fee anymore.

That sounds like a deal.

The borrower goes out and buys materials to build a fishing net. Suddenly, he can catch way more fish to feed his family AND there’s fish left over to sell to others who don’t have nets or maybe aren’t very good fishermen but they’re good at something else they’d like to spend time doing. In exchange, people are giving the borrower money that not only pays back the amount borrowed, but ALSO the interest/banker’s fee, and ALSO more money (profit).

Everybody’s happy.

And that’s how it’s still done today, except with paper currency, not tied down by any value instrument at all. We call it fiat money and fractional reserve banking.

(Source: Money facts; 169 questions and answers on money – a supplement to A Primer on Money, with index, Subcommittee on Domestic Finance; U.S. Congress. House. Banking and Currency Committee.)

What the hell is fiat money?

Fiat money is a government mandate on what is declared legal tender. It is given a government determined value and is not tied to anything, such as a store of value, a commodity, anything. It is not representative money like gold certificates.

Here’s what’s weird though.

Fiat money has been used throughout history, and always fell out of favor and crashed due to inflation.

To put it in historical context, the world using fiat currency, as it does now, is not new, and it has only been since 1971 that we’ve been 100% using fiat money. Other countries had fiat currency around for sometimes as long as 100 years and sometimes only 20 years.

It has crashed before throughout history, and that doesn’t mean it can’t crash again. I think people get the idea that the government will take care of everything and smarter people are in charge so things like economic collapse won’t happen anymore.


What goes wrong historically with banking

Now the banker is making the same deal with 70 of the 100 customers he has storing valuable assets in his storage (bank) where he is loaning out their assets in return for more money.

But I want my valuable asset (silver) back. Maybe I want to use it to make jewelry, maybe I want to give it to someone who desires it in exchange for something I desire like bananas or a massage. Anything.

No problem.

So the banker goes to get my silver. But he already lent it out to someone else who is using it and he’s waiting for them to pay it back.

Now the banker is faced with a dilemma.

He decides to borrow another customer’s silver to give to me while he waits for the silver/money to come back from the person who is borrowing my original silver.


Things just got more complex.

What if 70 out of 100 people do that though? What if 70 out of his 100 customers wants their assets back?

Well, he just doesn’t have them.

And that’s the problem with fractional reserve banking. People eventually want their money/silver/valuable assets back at their convenience. They don’t want to wait on someone to pay back the banker who can then pay you back. And if 70 of the 100 people who are customers want their assets back all at once, the banker doesn’t have the assets to give it to them, and the bank goes bankrupt, has to close, and everyone has lost the assets AND money they put in.

That’s a run on the banks.

That’s what that looks like historically, that’s what it looked like during the Great Depression, and that’s what that looks like in modern day banking. BUT it’s a little different in modern banking and money.

The government requires banks to carry a certain, very small amount of deposits, only 4-6%. But we also have FDIC insurance, which is where the government guarantees that up to $250,000, you will be able to take your money out of your account, whenever you want, because they have the power to print limitless amounts of money, in case the bank doesn’t have it.

Regardless, throughout history, we keep doing it over, and over and over and the same thing happens: bank failures aka banks go bankrupt. There are long periods of time where they don’t go bankrupt, but eventually, they do.


That’s a financial fraud to me. It’s the same idea as Social Security and insurance. There’s no Social Security account with your name on it, holding all the money you’ve paid into it throughout your life. The money you are paying now goes to the people collecting Social Security NOW.

Insurance and social security requires a pool of more money coming in than is going out. A legal ponzi scheme, that if a private company does, they go to jail.

Which is why social security is about to become insolvent too, if something isn’t done to fix it, by someone much smarter than me.


If I run a bank and everyone is dropping off silver or gold, and more are dropping off assets than they are taking out, everyone looks like they’re getting richer. There’s more to lend and more profit can be made potentially and everyone is betting on more and more people to drop off their valuables, which the customer eventually plans to take out and retire on.

That’s what happened during the Great Depression.

Everyone who had invested their pennies or fortunes, depending on who you were, thought profits would go up forever, that the country was in a new age of progress, and so they invested more and more.

In 1913, the Federal Reserve Act instituted the Federal Reserve, and reduced the amount of gold backing the dollar had from 100% to 40%. This caused a fuckton of inflation.

Inflation made the economy look great. Everyone was getting credit and loans at unbelievable interest rates. Cities seemed to be built in a day. Everyone was getting jobs right off the boat, everyone saw their standard of living go up from where they had been before, and the stock market was booming. There seemed to be an endless supply of capital. Capital meaning something that increases the ability to make something. For example, a construction truck to build a house, or investment money from your uncle, or the stock market, or a credit card.

However, what goes up, must come down.

Eventually people wanted to collect and the money wasn’t there.

It started when Great Britain didn’t have the tax revenue to go to WWI, so they went off the gold standard.

Bold, underline, put. in. red. Blame the Brits!

There was a (compared to how we know it turned out later) “small” run on the British sterling, which caused Britain to put in exchange controls on their money that weakened the gold standard greatly, and caused a huge amount of inflation, because gold being tied to a currency stabilizes it so there’s not too much inflation.


Side note about how a gold standard works:

There is a limited amount of gold in the world, except what hasn’t been mined yet in the ocean, because the world doesn’t know how to mine for it yet. Because there’s a limited amount of gold, the price is relatively “fixed”. When tied with paper currency, we can, for example, say 1 piece of paper equals .5 ounce of gold, and we can keep it that way, because the price doesn’t fluctuate very much, without government intervention. But, that’s usually the way it goes.

Anyway, back to WWI and Great Britain and how them going off the gold standard started the Great Depression.

This worked like a domino effect on the American economy and then in the rest of the world later. I imagine because the history and economy of America and Britain are intertwined moreso than we were, at least at that time, with other countries.

So everybody panicked and took their money out of the stock market and the banks all at once in response.

Overnight, banks went bankrupt and the stock market had the biggest crash it had ever seen before.

This is an inflation adjusted, long term historical look at the stock market in the U.S.


Look! The stock market will go up forever!!!… Maybe?

As you can see, if you’re reading this, you’ve probably witnessed worse crashes happening to the stock market than the Great Depression. Isn’t that crazy to think? But more about that in another post.

Deflation during the Great Depression

The Federal Reserve responded to the crash by raising interest rates, in the hopes of increasing the demand for dollars. This just made the situation worse, as raising interest rates causes more deflation!

People started hoarding their money. They couldn’t trust to put it in the stock market or the banks because they could lose it. Businesses had to stop hiring and had to lay people off because they lost all their money that was in the bank. They had to close their shops because the investment money dried up when it was lost in the stock market. As people took their money out of the banks, there was less paper money in the marketplace, which made it more valuable. People didn’t spend what they had very much and knew it would be more valuable the next day anyway so they continued to hold onto it.

All of this compounded on itself and made the deflation even worse, a deflation spiral downward.

Look at the Great Depression and how peoples’ incomes dropped after the stock market crash.


With no gold standard holding us back, growth in the economy will go up forever!!!… Maybe?

In 1934, Congress passed the Gold Reserve Act, devaluing gold to 40% of its real value. Probably because they were hoping that devaluing gold would cause people to hold less gold, and inflate the currency more. That’s just conjecture though.

Unemployment: Great Depression vs. Great Recession

15% of the GDP was lost during the Depression, compared to the 1% that was lost during what is now called the Great Recession of 2007-08. 25% of people during the Great Depression became unemployed. 1 out of every 4 people you knew was unemployed. Compared to the Great Recession, which had a top unemployment rate of (by the government numbers) 5%. I think it was higher, however, because most sources I have read have stated such. Some saying it almost reached the height of the Great Depression.

Here is an alternate unemployment rate measurement. The larger measurement that shows a larger unemployment rate includes long term and short term discouraged workers, who were taken out of the official government measurement as recently as 1994.


How America got out of the Great Depression: War

In 1934, the government nationalized all gold by ordering the banks to give their gold supply to the U.S. Treasury. They also suspended exchanging paper money for gold.

They raised the maximum income tax rate from 25% to 79% and the minimum income tax rate went from .375% to 4%. To put it in perspective, currently the maximum income tax rate is 55% and the minimum is 0%. Regardless, raising the income tax didn’t help get the country out of the Great Depression. Neither did President FDR’s New Deal. Not even a blip on the recovery radar.


And then World War II broke out.

The U.S. used to have a defense policy, meaning, don’t attack unless attacked first. Then the Japanese government bombed Pearl Harbor, and that sounded the alarm that it was time to go to war.

I think culture cannot be underestimated when it comes to things that seem to be laws like laws of economics. Americans, having seen their country under attack and fellow citizens killed in cold blood, became focused on justice and patriotism.

Men seemed less concerned about the huge national debt and new hefty taxes and instead ran to their local government offices asking what they could do to help the war effort. Sometimes this meant enlisting, sometimes this meant signing up for a large government contract.

The war was good for employment

As more men enlisted in the military and more businesses began to switch from whatever they were building before to war goods, unemployment numbers began to decline sharply from 25% to under 10%. Not only that, but as men were going to war, businesses, who had previously fired women who were working if their husbands already had jobs, were employing a whole 50% of the population (women) that they hadn’t been employing before. So then the employment numbers looked REALLY good. Everybody seemed to have a job, and a good job, a manufacturing job that produced real “stuff,” unlike the services based economy we have now.

There was more money entering the marketplace, trading hands within the country and outside of it, growing the economy. Or at least looking that way.

Women, employment, and equality

It is my opinion that the war also helped raise women’s standards of equality.

It used to be that men worked all week and handed over their paychecks to their wives on payday, so that she could pay the bills, go grocery shopping, and use it to basically run the household, while he headed to the bar to kick up his feet with his male pals at the end of the week. The women raised the children, the men helped make them, maybe played with them for a while, but mostly spent all their time working long hours, trying to do their part to contribute to the household.

I think both roles are respectable, and I cannot say for sure which one was more difficult because I never lived that life, but from what I have read, women didn’t really have the glory the men got, regardless of how much work they put into the children and the household at large.

Now, with WWII, they were more independent, making their own money, not relying on a man financially, which is currently the #1 reason women stay in abusive relationships with men today. They are dependent on them financially, or at least feel stuck. I think financial freedom, whether you’re a woman or a man, can also contribute to your social freedom. Maybe that’s just my American values seeping out subconsciously, but that’s at least what it seems like to me.

The social stigma of a woman having a job, while not eliminated, was reduced, because everyone was so focused on the values of justice and patriotism, which seemed to override previous values that a woman’s role is to be head of household, except on her tax return. In that case, the man is head of household.  So again, doing the work without any of the glory that a man got.

Now women could physically, practically prove they were just as capable as men by literally doing the work men had previously done. Which in my opinion, subconsciously planted seeds in people’s minds that women could possibly be capable of doing things men could do and sufficiently.

How did the government pay people to fund the war?

They went $321 billion more in debt.  They taxed, spent, inflated, and borrowed.


This is U.S. debt in terms of percentage of GDP

It’s hard to see that well because the bottom chart is zoomed out but do you see how closely it matches in with the very first inflation/deflation graph I showed you?


I overlaid the U.S. historical inflation rate with the inflation adjusted price of gold to see if there was a correlation. I know it’s hard to see clearly but it was the best I could do. To me, the peaks and low points seem to line up the closer we get from the 1970s on.


What happened in 1970? 

The country went off the gold standard completely. This caused inflation to rise, and stay inflated for what looks like the longest amount of time since 1650. It seems that as inflation rose to high levels again, the price of gold skyrocketed. Also in 1970, it became legal for private ownership of gold again. The high spike might be due to that too. It’s hard to say because there are so many variables someone smarter than me would have to control for.

What happened in the 1980’s that caused the price of gold to drop so drastically?

The central bank raised interest rates and gave incentives to banks, who typically do the same thing when the Federal Reserve does something. It’s a complex process that involves buying treasury bonds that I would love to cover in a different post.

As interest rates rose, it made less sense to own gold. It made more sense to hold on to your money and put it in savings. People sold their gold because it was at an all time high and became very wealthy if they sold at the right time.

How deflation is bad

The bad part though, was that GDP shrunk. There was less money going around in the marketplace. Business didn’t hire as much because it made more sense to hoard the money, considering it could be more valuable later. The unemployment rate went up.

How deflation is good

The Federal Reserve was destroying dollars to make the currency rarer, and and it became more valuable. Foreign countries bought U.S. dollars in the hopes that they would gain more value tomorrow.

How inflation is bad

The reason they raised interest rates was to control the inflation rate that people were afraid was rising too fast and too high.

High inflation means higher prices, especially on commodities such as food and energy, which is why oil prices went up to very high levels in the 70’s and the government had a failed policy of rationing, which is also something I’d love to cover in another post because this one is already incredible long.


In 1970, the U.S. went off the gold standard, remember? Also, inflation has stayed up since then. Prices have also gone up.

High inflation discourages savings because the money becomes less valuable over time, and if the inflation rate is higher than the interest rate you would get on a savings account, the money’s value gets eaten away and there’s no real incentive to keep saving.

How inflation is good

Inflation is good for paying off debt and racking up debt because you can pay it back with inflated dollars. There’s more money in the marketplace going around, printed by the Federal Reserve and expanded by the banks. Say I have a student loan debt of $8,000 in 1980. By the time I pay it off in 2000, 20 years later, my income is $50,000 and $8,000 seems like nothing, so I pay it off.

Here’s another interesting one on the price of gold historically.

Notice that when inflation goes up, the price of gold goes up. That’s because paper dollars are becoming less valuable and gold is staying relatively the same, since there is a more fixed amount of gold in the world than paper. I will show you what it looks inflation adjusted too.



This one is inflation adjusted gold prices. Notice also how when interest rates go down, gold prices go up. That’s because the currency becomes more volatile, so people will buy more gold, increasing its value, because there’s less gold in the marketplace, and gold becomes a more stable, reliable place to store your money over a long term horizon.


And here’s historical interest rates.


And here are interest rates overlaid with gold prices.


The one exception to gold prices going up and down with interest rates was during the South African and Yukon discoveries of gold. That makes sense to me because finding a fuckton of gold is going to make everyone start buying up all the gold they can get for free, by mining it. So when regardless of when interest rates went down, the price went up. That seems to be the only time though.

However, there was also the discovery of gold in California and Australia in the mid-1800s. I wonder why interest rates went up AND gold prices went up at the same time. You would think with more gold circling the marketplace, the price would go down, because of inflation.

Well, let’s see how much gold was actually mined, and how much it was worth at its height, and how much was actually found. That way we can determine if the amount found was enough to flood the marketplace and reduce or increase the price.



$2,000,000,000. 2 billion!

It seems to me that California and Yukon didn’t find all that much gold. So I guess my hypothesis is right that interest rates are almost always matching up with the the price of gold.


I couldn’t find a graph for it, but they found a measly $2,000,00o in today’s dollars.



South Africa

I find this number hard to believe, but the value of the gold found in South Africa was, $750,800,531,800. Wow, $750 billion.

Worth more than over all the gold in the world ever found, COMBINED, by 1930.


And that, my friends, is why interest rates didn’t affect gold prices during the South African gold rush. It flooded the market with gold, causing the price to increase when it was discovered, and crash harshly once it was all mined, because there was more in the market place, which caused the price to go down. It became worth less because there was much more of it in the economy.


The short story of Bernie Madoff OR The biggest fraud in history

Bernie Madoff ran an investment firm that required more money coming in than was going out. He cut huge checks that were hard to believe, because the whole thing was too good to be true.

Then the financial crisis happened around 2008, and people started taking their money out of their investment accounts because they were losing 37% of what they had put in. However, when people went to pull their money out of their accounts, they couldn’t, because it didn’t exist in the first place.

Bernie Madoff became a great scapegoat to the government and population at large. The judge, in fact, said that “the message must be sent that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll.”

Bernie Madoff became the face of the near end of capitalism, and a show of how greedy capitalism makes people do morally bad things.

And what he does was truly horrible.

It was fraud, plain and simple, which we already have laws on the books for. But when it came to prosecuting him, the government used him to set an example, and he was sentenced to a ridiculous 150 years in prison and restitution of $170 billion.

Not to say he didn’t deserve a big punishment, but murders have an average punishment sentence of 20 years. I think after everyone lost their savings and retirement in the 2007-08 financial crisis, people wanted blood, revenge, and justice to make themselves feel less helpless.

So that is the short story of the biggest fraud in history.

Corporatism and punishment for crimes in America

Capitalist greed, is what everyone thinks was the sole cause of the 2007 financial crisis. It was a big part of the blame, and that’s undeniable, but also, who is giving out the permits and punishing the financial industry, that makes billions with a hundred million in fines?

This is an amazing infographic of the largest corporate fines and settlements since 2007


The largest corporate fine in U.S. history goes to the Gulf of Mexico oil spill in 2010. BP was fined 110% of their income, $4.5 billion.

I remember this when it came out. It was all over the news when the spill happened and I remember the public wanted blood. It involved the sinking of an oil rig, which spilled oil for 87 days. 11 people went missing.11 people went missing. It was “sealed” in 2010, however, reports in 2012 said the oil rig was STILL leaking. The cause was defective cement on the rig, done by Halliburton, which received a punishment of $1.1 billion. One of the government’s favorite corporations to give contracts to without competition. Who “lost” $23 billion from Iraq. No punishment. They’re the ones who got to steal all of the oil from Iraq by building oil “infrastructure”.

Regardless of Halliburton being the cause, BP was punished more.

In contrast, the Exxon mobile spill? Their fine was 1% of their income.

This is not capitalism like many people believe. This is pure corporatism, which is not the same. Capitalism includes competition. Corporatism is when government gives special privileges to businesses and in return, businesses give kickbacks to the government.

Who is getting all their campaign money from the financial industry?

The status quo politicians that the people keep voting into power over and over, who are incumbents because they watch the news, and the news skews the headlines to achieve their political aims and biases.

And nobody pays attention to the rest of the article.

They see the headlines and it puts ideas in their head that are really just catchy click bait but it’s TV and magazines too.

That’s my hypothesis anyway.

There is no better solution to fixing the American economy. Sorry.

Sure, we have safety nets like social security, welfare, medicaid, medicare, and unemployment programs. The U.S. is middle of the road to the lighter end of tax rates compared to other industrialized nations.

tax rates world ranking 300k


Here are the real numbers on how taxed we really are:

We have a 35% corporate tax rate, 0-12% corporate tax rate for state-local taxes. The global corporate tax rate, for comparison, is 24%. (Source)

We have a 0% to 55.6% income tax rate that includes federal, state and local taxes. (Source)

Payroll tax pays 15%-19% for social security and 2.9%-3.8% for medicaid/medicare. (Source)

25% of the GDP goes to taxes. (Source)

I’m not saying the country should have higher tax rates. But I do think that having moderate tax rates and fewer safety nets than other industrialized countries shows a lack of efficiency in how the money is being spent.

This is which taxes make up the government’s tax revenue:

2010 Federal Revenues Pie


Your income tax and your employer’s payroll tax bill make up the majority of the pie. Even though we have the highest corporate income tax among the OECD countries, it still makes up a small percentage of the revenue. Corporations are already taxed 39% of their revenue/profit. Making it higher, in fact, does causes businesses to move their operations elsewhere, where costs are cheaper, so they don’t have to decide to raise their prices, and lose customers who come across a cheaper product made overseas.

Here’s how our taxes are spent:


This sucks.

It really fucking sucks. Because what are we going to cut? The biggest pieces of the pie are health, social security, and defense. It might be nice to have less of an imperialist boot in the face of every country on earth, but even if we cut half of that, it’s still only 8%, and that money would probably need to be swallowed up to pay for social security and healthcare for people who really need it.

I also find it sad that 16% is spent on military but only 4% on veterans. I’ve never been in the military. I don’t know what that’s like. But I imagine watching your friends die in front of you for some rich politician’s political aim deserves more than 4% of the entire budget. Especially when 16% is being spent on starting or maintaining more intervention. I think if you work any job where your risk of dying or being injured is high, you should probably have more benefits than someone working a cushy white collar office job where they sit at a computer all day like me.



It makes sense to me more now why we are so in debt. Because who wants to deliver the bad news? So we keep borrowing, printing, and inflating.

What about raising taxes on the rich? (There’s a graph for that too.)


The rich actually do pay the majority of the taxes.

Let’s go over the list of why all the great solutions are not great solutions at all:

  1. The U.S. doesn’t pay income taxes that are too high OR too low. It’s more moderate to light, compared to the rest of the world.
  2. Income and business taxes already pay 40% of what they earn.
  3. Corporate taxes make up only 8% of the government revenue but they are already taxed 39% on what they make. Too much and they could move overseas, resulting in higher unemployment, meaning even less tax revenue, and people needing to collect on government programs even more. Detroit is an example of this.
  4. Wasteful spending is not the culprit. The majority of taxes are being spent on healthcare, social security, and to a lesser degree, defense.
  5. The rich already pay the vast majority of the taxes. 97% if the tax revenue comes from the richer, top 50%.

I thought when I started this, after I dug into the research, I would be able to find the most common sense solution. Now, I don’t.

But what I have gotten out of the research, is that any politician giving you any of these solutions is full of shit and just trying to get votes to stay in power OR they’re uneducated on the real research on the topic.

Another thing I understand more now is why we borrow so much money from China and Japan. It buys time until someone smarter than us comes up with a better solution.