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November 2019 – 7 Ideas and Views Newsletter by Van Mueller
With every day bringing us closer and closer to the long over due economic disaster there will be an ever-increasing amount of misinformation thrust upon the people of North America. In fact, the people of the world will be exposed to an ever-increasing amount of slanted, politicized and yes, even completely wrong information in an attempt to allow our governments, Wall Street and the banks to continue their artificial and even damaging contributions to the economies of our planet. Because of these many and enormous artificial interferences, many people will be harmed dramatically and some permanently.
Our industry has such an important role to play because we truly are the only financial professionals who can ask the questions that our prospects and clients must be asked for them to prepare for the financial devastation of much higher taxes. Not just income taxes, but taxes of all kinds. Sales taxes, property taxes, estate taxes, corporate taxes, excise taxes, gift taxes and now even tariff taxes.
As an example, what will dramatically increased property taxes do to investments in real estate and home ownership? Won't that have a dramatic and negative impact on positive cash flow? Won't that reduce the appraisal value of properties of all kinds? When you think of all of these taxes, start to develop questions about the impact to other investments and the net after tax results of those assets. Please don't assume your prospects and clients give any of this consideration. They don't! That is why YOU must ask these questions.
There will also be dramatic reductions in benefits for Americans and Canadians. Even with dramatic increases in taxes and substantial reductions in benefits, it is important to understand and have your prospects and clients understand that those actions will not even be close to stopping the economic disasters confronting all of us.
Even with dramatic increases in taxes and substantial reductions in benefits, it is important to understand and have your prospects and clients understand that those actions will not even be close to stopping the economic disasters confronting all of us.
One of the absolutely most damaging actions that governments will take is to print more money. Think about that for a minute. Ask your clients this series of questions. Won't the government create legislative remedies for their lack of revenue by dramatically increasing taxes of all kinds. Then won't they pour salt in those wounds by administratively creating more money? Isn't that called inflation? Let's say someone has one million in assets in any of the bubbles. Those bubbles could be the stock market or the bond market or real estate or bitcoin: Anything. For example, Let's use the stock market. The market crashes 50 percent. Now you only have $500,000. Let's say that you are earning 3 percent in an INCOME investment after this happens. You are earning $15,000 of interest on your $500,000 you have left. Here's the sneaky part. Because of inflation, your $15,000 of interest now only buys $10,000 of goods and services. You have now lost one third of the investment results because of inflation.
By the way, and you must really think about this and then ask about this occurrence. You went from essentially having income opportunity on $1 million earning 3 percent or $30,000 per year of income to $10,000 of purchasing power because of an asset crash and inflation and then you have to pay income taxes on the $15,000 which only has purchasing power of $10,000. Using the lowest tax bracket of 10 percent, that is another $1,500 in taxes. Net purchasing power after asset crashes, inflation and taxes is now $8,500. These customers have essentially been made poor in a very short amount of time because they have not developed a strategy to not be harmed by these challenges. Wouldn't an amazing next question be to ask, “What if we could actually take advantage of these challenges rather than be hurt by them? Wouldn't that be worth 45 minutes of your time?”
The other challenges our customers will face will be dramatically increased volatility and longer and longer life spans. Without planning, these issues could actually become overwhelming to our customers.
Without planning, dramatically increased volatility and longer and longer life spans could actually become overwhelming to our customers.
I wanted to provide you with several tools that you can use to combat factually all the enormous misinformation brought forth by the aforementioned entities of government, Wall Street and the banks.
THE FIRST IS www.usdebtclock.org This is an amazing site. I have told you about it many times. However, I have never provided much detail about how to use this vitally important website. Let's take a look at several sections of the website. One other thing before we get started. When you use the mouse on your computer and you place the arrow over the information, it discloses where the information came from. There is no guessing or misrepresentation. The information is provided by the U.S. Treasury or the Congressional Budget Office or the Census Bureau or the Federal Reserve, etc.
The website uses the color red for debt and the color green for revenue.
Let's start with debt. This is listed at the top left of the debt clock. In two months, we went from $22 trillion in debt to almost $23 trillion in debt. How is that possible? When the government temporarily shuts down, they hold back the increasing debt. So, this is the first way that government manipulates information to serve their purposes.
If you look in that little box entitled “US National Debt” you will see that taxpayers have more of a financial responsibility than citizens; more than twice as much. Our official spending is $4.5 trillion. Our actual spending is closer to $4.8 trillion. Now I know $250 billion doesn't sound like a lot of money anymore, but it is. This actual spending includes off budget expenditures.
Now, if you look in the green box next to the red box of US National Debt, you will see that we only take in $3.5 trillion in taxes. Is that lower than $4.5 or $4.8 trillion? The difference is called the “Deficit.” If you look to the far right along the top of the clock, it will show that the Federal taxes include the following:
1. Income Tax
2. Payroll Taxes (Social Security & Medicare)
3. Corporate Taxes
4. Excise Taxes
5. Tariff Taxes
6. Estate and Gift Taxes
7. Federal Reserve Remittances (This is interest the Federal Reserve receives from the money they print.)
Right below Federal Revenue it shows state and local revenue. Add the two together and that adds up to $3.4 trillion. If you add in Federal transfers the total federal, state and local spending is $7.6 trillion. If you look two clocks to the left of total spending it shows that our Gross Domestic Product or GDP is $21.5 trillion. If you divide $7.6 trillion by $21.5 trillion you will discover MATHEMATICALLY that we already spend more than 35 percent of everything we make on taxes. Truly, if we increase taxes much more we will destroy our economy. So, doesn't it sound like we can't increase taxes? Well, yes and no. We will continue to reduce the number of taxpayers while increasing the burden of people who are taxpayers. Second, and this is very important, don't assume that anyone in government really understands what they are doing.
If you divide $7.6 trillion by $21.5 trillion you will discover MATHEMATICALLY that we already spend more than 35 percent of everything we make on taxes. Truly, if we increase taxes much more we will destroy our economy.
Below US National Debt you will see the budget untouchables. This is classified as nondiscretionary spending. This included Social Security, Medicare/Medicaid, Defense, Interest on the Debt, Income Security, Federal Pensions and Food and Agricultural subsidies. Spending on those items is currently $3.97 trillion which is about 85 percent of all federal spending, and those costs are increasing dramatically because of the aging of our population, the increase in debt and the turmoil in our world.
Below that the clock shows unfunded debt and interest. Personal debt is approaching $20 trillion. Student loan debt is almost 1.6 trillion. Credit card debt is almost 1.1 trillion and all are increasing.
The clock then shows “Money Creation.” In 2000 the money supply was $4.9 trillion. Currently it is $15 trillion, yet we have not tripled our population in the last 19 years. It also shows that there are still $546 trillion of derivatives.
Here is another important consideration: In the last 12 years we have created asset inflation or asset bubbles. The clock shows we currently have $147 trillion in assets and right above that the clock shows U.S. total debt as $74 trillion. When these values decline by 50 percent during the crash, won't our total assets decrease to $73 trillion giving us a negative net worth? I'm not finished. Please go to the bottom of the right side of the clock. You will see that we have an unfunded liability for Social Security and Medicare of $125.5 trillion. Where will we get that money? We will raise taxes and lower benefits and what ever we are short we will print!!
That is why cash value life insurance becomes more and more valuable. It is pennies that can buy dollars. It is one dollar that can do the work of many dollars. The more the economy is messed with, the more valuable cash value life insurance becomes.
The more the economy is messed with, the more valuable cash value life insurance becomes.
The lower right side of the clock also provides valuable information. Even though our population has increased by 30 million people since 2000 the amount of people in the workforce has decreased slightly. Could that account for the low unemployment numbers? It also shows that the median income in the U.S. is only $2,500 per year higher than it was in the year 2000 even after a 12-year bull market. It shows that less than half of our population is working. It shows that 77 million people are on Medicaid. That is 23 percent of the population of our country. The clock shows the average prices of a house and a car in our country. The clock shows millionaires, retirees living in poverty, uninsured, food stamp recipients. There is so much information. In the upper right-hand corner, there is even a time machine that compares different measurements of these numbers in the year 2023. They are astonishing. The one in the middle is the one that is least likely to happen. That information is provided by the Office of Management and Budget, which is the fiscal arm of the President. The Congressional Budget Office is the fiscal arm of the congress. The one that will be closest to the truth will be the U.S. Debt Clock.
Finally, in the upper left-hand corner of the clock, information is provided for states and other countries. What must be made apparent to prospects and clients is that the governments of the world need revenue: Lots of it. Much of that revenue is necessary to take care of their people who don't have anything. So, they will be coming with all guns blazing after anyone who has money. If you don't plan now you will lose the opportunity to be in control of how much they are going to take. Also, there are strategies that can be used to replace what the government, Wall Street, banks, hospitals and nursing homes took while you were alive using pennies on the dollar. Shouldn't our customers be made aware and isn't the biggest mistake we make assuming that they know any of this information?
There are strategies that can be used to replace what the government, Wall Street, banks, hospitals and nursing homes took while you were alive using pennies on the dollar. Shouldn't our customers be made aware and isn't the biggest mistake we make assuming that they know any of this information?
I am going to share one more site this month and then next month I will share several more.
THE SECOND SITE IS www.truthinaccouting.org
This site has helped me to inspire an enormous number of people to take action. It provides accurate financial information about the Federal government, all 50 states and the 75 largest cities in the United States. The site should be used to show how badly underfunded pensions and healthcare are at the federal, state and city level. Where will these entities get the money that will be required to keep the promises made to Americans for retirement and healthcare benefits. Shouldn't you at least ask the questions of whether these entities can keep the promises they have made. Should additional planning be done to make sure that our customers are okay even if the promises aren't kept? Also, if the promises are kept, where will these entities get the money? Can states and cities print money? Of course not. Won't there be higher taxes of all kinds? Who will they get that additional revenue from? What if you live in a good state or city? Are you still in tax jeopardy and why are you still in tax jeopardy? Under “About” at www.truthinaccounting.org, they have an explanation about their debt clock. It clearly states that their clock does not include the unfunded liability for Social Security and Medicare. If it did the true debt would be $119.9 trillion plus the unfunded liability for Social Security and Medicare of $126.5 trillion for a total of $246.4 trillion. When you start to add it up it becomes astounding. That is almost 11 years of our current GDP. We will never pay this money back. All you have to do is the math.
Then, under the “News” section there are hundreds of articles you can access to inspire your customers to action. Also, under news you can subscribe to “Bills Blog” for free. A couple times a year they ask for a donation. I am glad to do it because of all the sales they have helped me make. This is delivered every week day to your email. It is so beneficial.
The most important section is “Resources”. They start with the Financial State of the Union. Right under that phrase is a PDF report that asks you to view it. When you click on here you will receive an in-color PDF that summarizes the financial state of the federal government. The federal government is currently about $105 trillion in the hole.
Then, under resources please click on the Financial State of the States. Again, please click on the part that says you can download the PDF of the information. The most recent report was just completed in September. Of the 50 states, 26 receive a D or an F grade. Nine states received an F. Only 3 states received an A. There are several states with over $200 billion in unfunded liabilities. Where will they get the money?
Of the 50 states, 26 receive a D or an F grade on the Financial State of the States. Nine states received an F. Only 3 states received an A.
Finally, under “Resources” you will find the Financial State of the Cities. It asks to download the report. The last update was in January of 2019. 63 of the 75 largest cities in the U.S. do not have enough money to pay their bills. The cities have $330 billion of unfunded debt. Where will they get this money? Will they raise taxes? Yes. Will they lower benefits and services? Yes. Will they do a combination of all of those things? That is the most likely action they will take. Will it even be close to enough? Of course not. How will they provide the promised benefits then? They will go hat in hand to the federal government who can print money and ask for a bail out, won't they? Is there a precedence for this? Of course. We bailed out New York and Detroit. We bailed out General Motors and Chrysler. All the legislators are in cahoots with each other. I'll vote for your bail out if you vote for mine. Who will be left holding the bag? America's taxpayers. Only you can intervene. There is a new feature under resources called the Pension Database. You can examine the pensions of each state from 2009 to 2018. These two sites have made me a lot of money and have helped my prospects and clients to clarify in their own minds what actions they should be taking to stay in control of their financial and retirement futures.
Next month I will share several more places to provide information that will help our customers to understand why much of what they are being told is not to their benefit. These sites will help you to inspire more appointments and better results in those appointments.
What are you waiting for? Make these two sites an important part of your daily learning.
Let's get started with idea #1.
We're passing on two of the newsletter's monthly sales ideas - every issue of the newsletter contains 7 ideas, plus one idea for the Canadian market. Subscribe to get them all.
Idea #3: Seven Year Car Loans Can You Imagine?
In 2019, more than 30 percent of all the car loans written in America are for periods longer than six years. Essentially that means that for most of these people the loan will outlast the usefulness of the car. The monthly payments could last far beyond when the tires and break pads wear out. The loan could potentially last beyond the time when the current car gets traded in for a new one. Many people could not afford these loans if they were three or four or five or even six years. They are buying cars they really can't afford because they can stretch the loan out longer and longer.
This is already beginning to create problems. More than seven million Americans are already more than 90 days behind on their car payments. When the economy crashes what do you think will happen to that number? What will happen to the already desperate auto industry when the downturn happens? What impact do you think this will have on the economy? This gets uglier and uglier by the minute. Think about this for a minute. Most Americans will be buying and paying for a car they really never own. Could anything by more disheartening?
If you could start adding this all up, we are in for a real economic disaster. Are your customers ready? Will they survive? Could they turn these events into opportunities? Do they want to turn these events into opportunities? Isn't the only way to know what the want is to ask? Please, please ask them.
Title: Americans Buy Cars With Piles of Debt
https://www.wsj.com/ (The Wall Street Journal, October 2, 2019)
https://www.wsj.com/articles/the-seven-year-auto-loan-americas-middle-class-cant-afford-their-cars-11569941215 Subscription required
Title: A record number of Americans are 90 days behind on their car payments
https://www.cnbc.com/ (CNBC, February 12, 2019)
Idea #5: Free Everything!
Medicare For All, Universal Child Care, Free College Tuition, Cancellation of Student Loan Debt, K-12 Additional Funding, Universal Income for Everyone! Here are the proposed price tags. Please remember the government always predicts the costs on the low side.
1. K-12 additional funding: $800 billion
2. Universal child care: $1.07 trillion
3. Free college tuition: $610 billion
4. Canceling student loan debt: $640 billion
5. Universal $10,000 income for everyone: $3.2 trillion
6. Medicare for all: $32 to $50 trillion
These add up to between $67 and $85 trillion over a ten-year period. That is an additional $6.7 to 8.5 trillion per year in new revenue to fund these programs. We already collect $3.4 trillion of taxes at the federal level and $3.2 trillion of taxes at the state and local level. If we add these new programs the federal budget would expand to between $11 trillion and $12 trillion. If you add the local and state revenues now, we are talking between $14 and $15 trillion of total revenue needed by the government. That is 75 percent of our GDP. What would be left for the rest of us? Before you laugh this off, consider this: They Have The Votes!
Here's another list of some recommendations.
1. 33 percent payroll tax increase bringing the total to 47 percent.
2. A 25 percent income surtax which would increase the minimum bracket to 35 percent and the maximum bracket to 62 percent.
3. A 42 percent value added tax.
4. A mandatory public premium averaging $7,500 per capita, this is equivalent to $12,000 per individual NOT otherwise on public insurance.
5. More than doubling all individual and corporate tax rates.
6. An 80% reduction in non-health federal spending.
7. A 108% Gross Domestic Product (GDP) increase in the national debt.
8. Impossibly high taxes on high earners, corporations and the financial sector.
9. A combination of approaches.
Does any of this sound good to anyone who will be required to pay for all the “Free” programs? Who will these programs be free to? Please read this information. It will blow you and your customers away.
Title: The Eye-Popping Tax Hikes Needed to Pay for Medicare for All
http://www.thefiscaltimes.com/ (The Fiscal times, October 28, 2019)
Title: Funding "Medicare-for-all" with taxes on the rich "impossible," study says
https://www.foxnews.com/ (Fox News, October 29, 2019)
Title: Warren's Middle-Class Tax Dodge
https://www.wsj.com/ (The Wall Street Journal, October 17, 2019)
https://www.wsj.com/articles/warrens-middle-class-tax-dodge-11571262914 Subscription required
Title: The Fallacies Underlying the Warren Social Security Plan
https://economics21.org/ (E21, October 7, 2019)
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