Tag Archives: states

Existential Economic Threats: How U.S. States Can Survive Without Federal Money, by Brandon Smith

Posted on May 8, 2021 | Leave a comment

The federal government needs the states a hell of a lot more than the states need the feds. From Brandon Smith at alt-market.com:

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This article was written by Brandon Smith and originally published at Birch Gold Group

We all knew it was coming; the alternative economic media has been warning about it for years. Eventually, monetary intervention and bailout after bailout by central banks always leads to devaluation of the currency and inflation in prices. Helicopter money always ends in disaster and at no point in history has it ever produced positive long-term results for a society.

The federal reserve has generated trillions in fiat dollars over the course of a single year (on top of the tens of trillions created in the past decade), all in the name of offsetting deflation. This deflation was NOT caused by the pandemic, it was caused by the government response to the pandemic.  On top of that, the shutdowns of “non-essential businesses” and the lockdowns in general ended up being useless in slowing the spread of COVID-19.

All the information, all the facts and all the science supports the anti-lockdown crowd. Conservative run states that removed lockdowns and mandates months ago are seeing falling infection and death numbers and local businesses are on the mend. The problem is, government authorities don’t seem to care about this. It appears that their intention is to double down and continue demanding restrictions stay in place for the long haul.

In other words, they are going to FIND an excuse to keep the mandates going. If no reason exists, they will create a reason. Consider for a moment the fact that COVID-19 is mutating constantly, and like any other virus there are new strains that pop up every year. Just as we have a seasonal flu, we will probably now have seasonal COVID.

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State Lawmakers Attack Federal Misuse of National Guard, by Brian McGlinchey

Posted on April 12, 2021 | Leave a comment

This is a trend that should be wholeheartedly encouraged. From Brian McGlinchey at starkrealities.substack.com:

“Defend the Guard” laws would prohibit deployments to war zones without a congressional declaration of war

Fed up after years of relentless National Guard deployments in undeclared wars, state lawmakers across the country are pushing legislation that would prohibit the use of Guard units in combat zones without a formal declaration of war by Congress.

The bills are being promoted by BringOurTroopsHome.US, a self-described organization of “right-of-center” veterans working to end American involvement in “endless wars” and restore congressional authority over war-making. The libertarian 10th Amendment Center is also backing the cause.

The proposed laws would require governors to determine the constitutionality of orders that place Guard units on federal active duty; where they’re deemed unconstitutional, the governor is required to take action to prevent the unit from being surrendered to federal control and sent into harm’s way.

The first “Defend the Guard” bill was conceived and introduced by Air Force veteran and West Virginia state legislator Pat McGeehan. While no state has enacted the law yet, interest is spreading widely, with legislators now pushing the measure in 31 states.

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Are You “Living In A Death Spiral”? These 6 States Will Collapse During The Next Recession, by Mac Slavo

Posted on December 15, 2016 | Leave a comment

As a survival strategy, you want to live in a place where the ratio of government beneficiaries to productive, private-sector people is low. At the top of the list of states where it is not is New Mexico, where there are a staggering 148 dependents per 100 private sector workers. From Mac Slavo at SHTFPlan.com via zerohedge.com:

Being on the hook is not going to be pretty when interest rates are raised back up, and debts come due. At a personal level, it will mean more stress and juggling to make ends meet. For the larger economy, it will mean cities and states unable to meet obligations or balance their budgets – ending in bankruptcy, and bailouts. Meanwhile, millions of people are relying on that money to keep coming in order to survive. Something is going to go very wrong.

Relying upon government to function and send you money is not a secure plan.

The mathematics are terrifying and dismal, and so is being caught up in these collapsing states.

In the next phase of the financial crisis, the debt supercycle will become the most defining feature of the big hurt that will fall on nearly everyone.

That’s the dire warning that Goldman Sachs issued about what they termed the Third Wave of the global collapse. But it hasn’t come, at least not yet:

This wave is characterised by rock-bottom commodities prices, stalling growth in China and other emerging-markets economies, and low global inflation, Goldman Sachs analysts led by Peter Oppenheimer said in a big-picture note.

This triple whammy has its roots in the response to the first two waves of crisis — the banking collapse and European sovereign-debt crisis — and it is all part of the so-called debt supercycle of the past few decades.

To continue reading: Are You “Living In A Death Spiral”? These 6 States Will Collapse During The Next Recession,

 

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Posted in Debt, Economy, Government, Pensions

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Plunging Personal Income Tax Revenues Slam State Budgets In April, by Tyler Durden

Posted on May 27, 2016 | 1 comment

Tax revenues have always been a good economic indicator. From Tyler Durden at zerohedge.com:

This April, personal income tax revenue fell by an average of 9.88 percent compared to the same period last year in the 32 states for which Reuters has data (Puerto Rico as well). April is the most important revenue month for states because it contains the tax filing deadline and taxpayers tend to wait until the last minute to pay any taxes that may be owed from the prior year.

Due to the drop in income taxes, and April being near the end of the fiscal year for many states, states that were depending on a strong inflow of revenues in April are now left scrambling to fill budget gaps. The narrative being used to paper over the real issue of the economy only producing lower paying jobs, is that the drop is being driven by less capital gains taxes, as Don Boyd, Director of Fiscal Studies at the Rockefeller Institute of Government in Albany, NY. puts forward:

“The kinds of income that are kind of driving this are particularly capital gains related to the stock market. If you had to find a No. 1 culprit, that’s it.”

To be sure, a flat market in 2015 hurt capital gains taxes that states collected in April. However, an even bigger reason for the dip is that despite what we’re told about strong fundamentals underlying the economy, the fact of the matter is that jobs are being created have been in low paying sectors, and jobs that were created in higher paying sectors were mostly part-time, which pay less than the average sector wage. As a reminder, since January 2015 the economy has added primarily bartender and waiter jobs.

States that were hardest hit were Louisiana (down 81.5%, the plunge due in part do a change in the way refunds are issued), North Dakota (down 34.7%), New Jersey (down 14.8%, which as Reuters notes, has a tax structure that depends on wealthy residents – or lack thereof), Illinois (down 28.8%, which is no surprise as millionaires are fleeing the state in droves), and Ohio (down 41.3%).

One state that actually saw some upside was Kansas, which after slashing income tax rates in 2013 is now seeing personal income tax revenues up 23%.

With the market continuing to trade sideways, and as the economy continues to create lower paying jobs, which is now the new normal, states will be forced to reconsider just how much income tax revenues can be relied upon to fund those out of control budgets.

http://www.zerohedge.com/news/2016-05-26/plunging-personal-income-tax-revenues-slam-state-budgets-april

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State/Local Pensions Systems Face Disastrous $3.4 Trilliont Funding Hole, by Attracta Mooney

Posted on April 12, 2016 | Leave a comment

The state and local pension system implosion has been a slow-motion train wreck that has lasted several years and will last several more, unless there is some sort of grand collapse all at once. The situation grows increasingly dire. From Attracta Mooney at the Financial Times via davidstockmanscontracorner.com:

The US public pension system has developed a $3.4tn funding hole that will pile pressure on cities and states to cut spending or raise taxes to avoid Detroit-style bankruptcies.

According to academic research shared exclusively with FTfm, the collective funding shortfall of US public pension funds is three times larger than official figures showed, and is getting bigger.

Devin Nunes, a US Republican congressman, said: “It has been clear for years that many cities and states are critically underfunding their pension programmes and hiding the fiscal holes with accounting tricks.”

Mr Nunes, who put forward a bill to the House of Representatives last month to overhaul how public pension plans report their figures, added: “When these pension funds go insolvent, they will create problems so disastrous that the fund officials assume the federal government will have to bail them out.”

Large pension shortfalls have already played a role in driving several US cities, including Detroit in Michigan and San Bernardino in California, to file for bankruptcy. The fear is other cities will soon become insolvent due to the size of their pension deficits.

Joshua Rauh, a senior fellow at the Hoover Institution, a think-tank, and professor of finance at the Stanford Graduate School of Business, who carried out the study, said: “The pension problems are threatening to consume state and local budgets in the absence of some major changes.

“It is quite likely that over a five to 10-year horizon we are going to see more bankruptcies of cities where the unfunded pension liabilities will play a large role.”

To continue reading: State/Local Pensions Systems Face Disastrous $3.4 Trillion Funding Hole

 

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They Really, Really Want Your Money by Robert Gore

Posted on October 13, 2014 | 2 comments

States have been called the laboratories of democracy. If so, then these laboratories are like Dr. Frankenstein’s, or one of those secret, sinister installations where mad scientists supervised by demented bureaucrats cook up chemical and biological agents that can wipe out humanity. State and local governments are burdened by promises made to their employees they cannot keep. Unlike the federal government, they have no recourse to a money-creating central bank, and cannot, except through accounting legerdemain, run deficits. The states have had a variety of creative, albeit perturbing, responses to fiscal stress. In the future expect them to get even more “imaginative.”

Last week Bloomberg.com hailed an increase in the average state pension funding ratio—the percentage that a pension is funded—from 68.7 to 69.3 percent. The article was more cause for concern than celebration. The increase was the first in six years, after five years of “recovery,” and was propelled by the stock market’s hefty ascent last year. The S&P index is not going to rise nearly thirty percent every year, and pension funds have been using unrealistic return assumptions to guide their contributions (many assume 7 to 8 percent, with high quality long-term bonds, which are a good portion of their investments, yielding less than 4 percent). Ominously, the pension funding ratio is much higher than that for promised medical care. The Pew Charitable Trusts, which have done several studies on states’ funding gaps, puts that ratio at under 5 percent in 2010, and it probably has not improved much since then. The total shortfall is at least $1.38 trillion. Continue reading →

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