charleshughsmith
Executive Summary
- The most common sources of independent income in America
- Independent wealth is concentrated in the hands of a few, but it doesn't have to be that way
- The promise of the Mobile Creative Model for developing independent income
- The importance of beginning to develop multiple streams of income now, before crisis hits
If you have not yet read The Self-Employed Middle Class Hardly Exists Anymore available free to all readers, please click here to read it first.
In Part 1, we looked at a variety of IRS and other data to conclude that about 15% of the workforce of 145 million earns some self-employment income, but only 15% of those earners (4 to 5 million) made enough to support a middle class life. Of these around 3 million are estimated to be self-employed professionals. Punchline: very few Americans are able to afford a middle-class lifestyle without working for corporations or the government.
In this Part 2, we examine the primary sources for developing independent income, defined as income that is not paid directly by the government or Corporate America or their pension funds (public and private).
The Primary Sources of Independent Income
Thanks to the complexities of U.S. tax law, specifically, how the tax code treats various kinds of income, we have a reasonably precise snapshot of earned and unearned income. We can identify the primary sources of independent income as…
A Promising Framework For Developing Independent Income
PREVIEWExecutive Summary
- The most common sources of independent income in America
- Independent wealth is concentrated in the hands of a few, but it doesn't have to be that way
- The promise of the Mobile Creative Model for developing independent income
- The importance of beginning to develop multiple streams of income now, before crisis hits
If you have not yet read The Self-Employed Middle Class Hardly Exists Anymore available free to all readers, please click here to read it first.
In Part 1, we looked at a variety of IRS and other data to conclude that about 15% of the workforce of 145 million earns some self-employment income, but only 15% of those earners (4 to 5 million) made enough to support a middle class life. Of these around 3 million are estimated to be self-employed professionals. Punchline: very few Americans are able to afford a middle-class lifestyle without working for corporations or the government.
In this Part 2, we examine the primary sources for developing independent income, defined as income that is not paid directly by the government or Corporate America or their pension funds (public and private).
The Primary Sources of Independent Income
Thanks to the complexities of U.S. tax law, specifically, how the tax code treats various kinds of income, we have a reasonably precise snapshot of earned and unearned income. We can identify the primary sources of independent income as…
Executive Summary
- Money functions as a store of value and a means of exchange, but it's possible to have 2 forms (or more) of money simultaneously serving as each
- Having complementary forms of money can provide more resilience to a monetary system – history has a number of examples of this
- A key success factor of such systems is that the forms of money are NOT issues and controlled by the State
- Which new forms of money will arise when the current State fiat money regimes fail
If you have not yet read Part 1: The Fatal Flaw Of Centrally-Issued Money available free to all readers, please click here to read it first.
Separating Money’s Two Functions
Money has two basic functions: it is a store of value (that is, it holds its purchasing power long after you obtain it in trade for goods and services) and it is a means of exchange: there has to be enough in circulation to grease the exchange of goods and services.
Though we are accustomed to one form of money playing both of these roles, there is no reason why each function can’t be served by separate kinds of money—that is, one for exchange and one as a store of value.
This is precisely what we find in the historical record, where bills of exchange, letters of credit (in essence, credit money), paper chits from retailers and other ephemeral means of exchange greased trade while gold and silver or other scarce materials served as stores of value.
As anthropologist David Graeber established in his book Debt: The First 5,000 Years, money arose not from barter—the usual assumption—but from the rise of credit-based exchange and debt recorded on clay tablets, notched sticks or parchment.
In Graeber’s view, the key feature of money used for exchange is that it always has an end buyer. The intrinsically worthless chit issued by a retailer can serve as money through dozens of transactions because everyone trusts that the issuer—the retailer—will accept the chit as being worth an established amount of goods, i.e. purchasing power.
If Joe’s Market issues a chit that can be traded for a can of beans, you and I can exchange that chit as payment of debt or purchase of some other good or service because we know we can always exchange the chit for a can of beans. The chit serves as money.
When gold and silver were scarce in…
The Future of Money
PREVIEWExecutive Summary
- Money functions as a store of value and a means of exchange, but it's possible to have 2 forms (or more) of money simultaneously serving as each
- Having complementary forms of money can provide more resilience to a monetary system – history has a number of examples of this
- A key success factor of such systems is that the forms of money are NOT issues and controlled by the State
- Which new forms of money will arise when the current State fiat money regimes fail
If you have not yet read Part 1: The Fatal Flaw Of Centrally-Issued Money available free to all readers, please click here to read it first.
Separating Money’s Two Functions
Money has two basic functions: it is a store of value (that is, it holds its purchasing power long after you obtain it in trade for goods and services) and it is a means of exchange: there has to be enough in circulation to grease the exchange of goods and services.
Though we are accustomed to one form of money playing both of these roles, there is no reason why each function can’t be served by separate kinds of money—that is, one for exchange and one as a store of value.
This is precisely what we find in the historical record, where bills of exchange, letters of credit (in essence, credit money), paper chits from retailers and other ephemeral means of exchange greased trade while gold and silver or other scarce materials served as stores of value.
As anthropologist David Graeber established in his book Debt: The First 5,000 Years, money arose not from barter—the usual assumption—but from the rise of credit-based exchange and debt recorded on clay tablets, notched sticks or parchment.
In Graeber’s view, the key feature of money used for exchange is that it always has an end buyer. The intrinsically worthless chit issued by a retailer can serve as money through dozens of transactions because everyone trusts that the issuer—the retailer—will accept the chit as being worth an established amount of goods, i.e. purchasing power.
If Joe’s Market issues a chit that can be traded for a can of beans, you and I can exchange that chit as payment of debt or purchase of some other good or service because we know we can always exchange the chit for a can of beans. The chit serves as money.
When gold and silver were scarce in…
Executive Summary
- Crisis intervention as policy = bad decision-making
- Why politics will defer dealing with the big problems, even though that will make them even bigger
- Why more taxes are in your future
- The criticality of increasing our alternatives — without our agitation, the government will appropriate from us while claiming "there's no other option"
If you have not yet read Part 1: Things Are Unraveling At An Accelerating Rate available free to all readers, please click here to read it first.
In Part 1, we examined how the dynamic of lowering interest rates to boost debt-based consumption inevitably leads to debt saturation and lower consumption. It also generates instability and rising systemic risks. As the returns on the central bank tricks of lowering interest rates and encouraging borrowing diminish, the resulting unraveling is speeding up.
There is another core dynamic at work: TINA, there is no alternative.
When There Is No Choice, Bad Policies Abound
In this week’s podcast with Chris (What To Expect From The Fourth Turning We're Now In), guest Neil Howe noted that crisis intervention is the result of authorities “feeling they had no other choice,” a.k.a. TINA. In this frame of mind, the eventual consequences of crisis intervention policies are ignored in the pressing desperation to make the financial and political pain of crisis go away.
As policymakers around the world soon discovered, TINA policies are habit-forming. Since they had no choice but to bail out the parasitic, dysfunctional banking sector, and goose debt-based consumption with cash for clunkers, mass purchases of mortgages, etc., they also had no choice but to continue these interventions, lest the desired result—expanding consumption and a rising stock market—falter.
Substituting crisis intervention for long-term constructive policies leads to bad policies, for the simple reason that…
The Coming Age Of Confiscation
PREVIEWExecutive Summary
- Crisis intervention as policy = bad decision-making
- Why politics will defer dealing with the big problems, even though that will make them even bigger
- Why more taxes are in your future
- The criticality of increasing our alternatives — without our agitation, the government will appropriate from us while claiming "there's no other option"
If you have not yet read Part 1: Things Are Unraveling At An Accelerating Rate available free to all readers, please click here to read it first.
In Part 1, we examined how the dynamic of lowering interest rates to boost debt-based consumption inevitably leads to debt saturation and lower consumption. It also generates instability and rising systemic risks. As the returns on the central bank tricks of lowering interest rates and encouraging borrowing diminish, the resulting unraveling is speeding up.
There is another core dynamic at work: TINA, there is no alternative.
When There Is No Choice, Bad Policies Abound
In this week’s podcast with Chris (What To Expect From The Fourth Turning We're Now In), guest Neil Howe noted that crisis intervention is the result of authorities “feeling they had no other choice,” a.k.a. TINA. In this frame of mind, the eventual consequences of crisis intervention policies are ignored in the pressing desperation to make the financial and political pain of crisis go away.
As policymakers around the world soon discovered, TINA policies are habit-forming. Since they had no choice but to bail out the parasitic, dysfunctional banking sector, and goose debt-based consumption with cash for clunkers, mass purchases of mortgages, etc., they also had no choice but to continue these interventions, lest the desired result—expanding consumption and a rising stock market—falter.
Substituting crisis intervention for long-term constructive policies leads to bad policies, for the simple reason that…
Executive Summary
- Why currency wars are heating up, and will get more intense from here
- Why it’s critical to understand the influence that Triffin’s Paradox has on the situation
- Why global crises will cause the dollar to strengthen further
- What will happen next
If you have not yet read How Many More “Saves” Are Left in the Central Bank Bazookas? available free to all readers, please click here to read it first.
In Part 1, we reviewed the deterioration of the dominant narrative of the past six years—that central banks can move markets higher and generate growth more or less at will. In shorthand: central bank omnipotence.
Three dynamics are undermining that narrative: diminishing returns on central bank monetary policies and public relations pronouncements; a collapse in oil prices that is destabilizing a key sector of the global economy, and the strengthening U.S. dollar, which is wreaking havoc on emerging-market currencies and economies.
If central banks really had such absolute control of the financial universe, would they let these three trends undermine their policies and power? The answer is clearly “no.”
There are a number of other factors undermining the “central banks are in control” narrative, but the field of battle where central banks are most likely to lose is foreign exchange (FX), for two fundamental reasons:
1. The FX market dwarfs the central banks. The equivalent of the entire Federal Reserve balance sheet ($4.5 trillion) trades in the FX markets every few days. Given the size of the market, central banks cannot manipulate the FX market via proxies or direct purchases for long. The only central-bank controlled factors that influence FX are interest rates paid on government bonds and money-printing. The first supports the currency, the second weakens it.
2. The FX market is still an open market, influenced by government bond interest rates, trade deficits and surpluses, perceptions of risk and speculative bets. This mix is much more dynamic than the two levers controlled by central banks: setting interest rates targets and creating new money to buy bonds.
Let’s trace the primary dynamics of the FX market, which is currently being destabilized by the rising U.S. dollar…
What Will Happen Next For the US Dollar
PREVIEWExecutive Summary
- Why currency wars are heating up, and will get more intense from here
- Why it’s critical to understand the influence that Triffin’s Paradox has on the situation
- Why global crises will cause the dollar to strengthen further
- What will happen next
If you have not yet read How Many More “Saves” Are Left in the Central Bank Bazookas? available free to all readers, please click here to read it first.
In Part 1, we reviewed the deterioration of the dominant narrative of the past six years—that central banks can move markets higher and generate growth more or less at will. In shorthand: central bank omnipotence.
Three dynamics are undermining that narrative: diminishing returns on central bank monetary policies and public relations pronouncements; a collapse in oil prices that is destabilizing a key sector of the global economy, and the strengthening U.S. dollar, which is wreaking havoc on emerging-market currencies and economies.
If central banks really had such absolute control of the financial universe, would they let these three trends undermine their policies and power? The answer is clearly “no.”
There are a number of other factors undermining the “central banks are in control” narrative, but the field of battle where central banks are most likely to lose is foreign exchange (FX), for two fundamental reasons:
1. The FX market dwarfs the central banks. The equivalent of the entire Federal Reserve balance sheet ($4.5 trillion) trades in the FX markets every few days. Given the size of the market, central banks cannot manipulate the FX market via proxies or direct purchases for long. The only central-bank controlled factors that influence FX are interest rates paid on government bonds and money-printing. The first supports the currency, the second weakens it.
2. The FX market is still an open market, influenced by government bond interest rates, trade deficits and surpluses, perceptions of risk and speculative bets. This mix is much more dynamic than the two levers controlled by central banks: setting interest rates targets and creating new money to buy bonds.
Let’s trace the primary dynamics of the FX market, which is currently being destabilized by the rising U.S. dollar…
Executive Summary
- The 6 Factors
- Rising inequality
- Reversion to the mean
- Cost overages
- Diminishing returns
- Misleading measurement
- Expertise mismatch
- Why the 'success' of the Federal Reserve and other world central banks is ultimately dooming them to failure
If you have not yet read Why Our Central Planners Are Breeding Failure available free to all readers, please click here to read it first.
In Part 1, we examined a variety of reasons why the apparent success of Keynesian monetary and fiscal policy may be transitional and brief rather than permanent.
Here in Part 2, we delve into the six other dynamics that make success destabilizing.
Rising Inequality—Perceived and Real
The highly touted “recovery” has been highly uneven in its distribution. The benefits of rising income and wealth have flowed disproportionately to the top 5%, 1% and even 1/10th of 1%. Those who didn't make it onto the limited-seating Recovery Bus feel the gap between the prospects and wealth of the top tier and their own wealth and prospects widening. Indeed, psychological studies find that we assess our wealth and social position not by our actual material prosperity, but by the narrowing or widening of the perceived wealth gap with our peers.
This is precisely the situation in the U.S. and China. Both economies are supposedly expanding smartly, but the gains are concentrated in a relative few hands; the Rising Prosperity Bus has few seats. The vast majority perceive themselves as being left behind, and that is highly…
The 6 Reasons The Next Economic Rescue Will Fail
PREVIEWExecutive Summary
- The 6 Factors
- Rising inequality
- Reversion to the mean
- Cost overages
- Diminishing returns
- Misleading measurement
- Expertise mismatch
- Why the 'success' of the Federal Reserve and other world central banks is ultimately dooming them to failure
If you have not yet read Why Our Central Planners Are Breeding Failure available free to all readers, please click here to read it first.
In Part 1, we examined a variety of reasons why the apparent success of Keynesian monetary and fiscal policy may be transitional and brief rather than permanent.
Here in Part 2, we delve into the six other dynamics that make success destabilizing.
Rising Inequality—Perceived and Real
The highly touted “recovery” has been highly uneven in its distribution. The benefits of rising income and wealth have flowed disproportionately to the top 5%, 1% and even 1/10th of 1%. Those who didn't make it onto the limited-seating Recovery Bus feel the gap between the prospects and wealth of the top tier and their own wealth and prospects widening. Indeed, psychological studies find that we assess our wealth and social position not by our actual material prosperity, but by the narrowing or widening of the perceived wealth gap with our peers.
This is precisely the situation in the U.S. and China. Both economies are supposedly expanding smartly, but the gains are concentrated in a relative few hands; the Rising Prosperity Bus has few seats. The vast majority perceive themselves as being left behind, and that is highly…
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by blaggers