Articles on Economics and Investing
revised Jan. 7, 2013
Kenneth A. Kuhn

I took the time to study investing in great detail and as a result I have made a lot of money with wise investments. There is no short cut -- you have to do the work.  The money you make from investing is what you earn for making the effort. It is not free money nor is it luck.  People who believe in luck do not make money -- they win (very rarely) money. 

I am working on, as time permits, a number of articles about the science, mathematics, and thought process of practical investing.  You lose money the easy way. You make money the hard way.  There are many popular myths, gimmicks, and scams that provide the easy way to transfer your money to someone else.  When the man with money meets the man with experience, the man with the money gets the experience and the man with experience gets the money .  If you take the time to study investing then you can avoid the traps, make money, and live a rich life.

My hope is that sometime during 2012 and 2013 to have at least a few articles ready to be posted below.  These articles will form a series of lectures on investing. Stay tuned ...

Investing versus Gambling   This is an age old question with lots of mis-information.  This chapter explains the real difference which you must understand in order to become a good investor.

Choosing Quality Dividend Stocks There is a related spreadsheet: dividend_screen_sample.xlsx .  By popular demand this is another chapter in what will be my book on sane investing.  I describe the method I have used for years to build a great dividend stock portfolio.

Failure of the Progressive Tax  This essay shows how the progressive tax has conditioned the population into thinking someone else should be paying taxes and thus has limited the ability of government to collect taxes.

Voting Your Economic Stake   This essay explores one of the reasons we have run-away government spending and proposes a method for the population to regain control.

Social Security Explained  This politically neutral article explains how Social Security works and debunks a number of myths pro and con.

Using taxation to Increase Average Income This essay addresses the paradoxical question of whether taxation can be used to increase the average income of society. I present a proof of how this seemingly impossible feat is remarkably easy to accomplish.  Who says taxes are bad?  Have I gone completely mad?  Well, perhaps mad like a fox.  Read and learn an important trick in the science of deception.

Unfair Taxation in Alabama  Alabama taxes are often accused of being very regressive.  However, when complete, rather than craftily omissive, accounting is used the picture changes drastically. 

The Trillion Dollar Scandal I really should have called this The Multi-Trillion Dollar Scandal as the total price tag is going to be closer to ten trillion than one trillion.  This is a detailed explanation of the financial debacle that hit the United States starting around 2006.  It was no accident.  It had been building for many decades and all political parties are guilty.  I connect the dots of how a long list of programs to "help" the poor were used as cover and added up to the sub-prime crisis and how a sequence of deregulation (by BOTH political parties, not just Republicans) added up to the Wall Street crisis.  These were actually two separate but related debacles.  I point out that any one of the dots would not have done the deed.  It was the collection of dots that added up to the perfect storm.  I also point out some needed reforms although none will be enacted.  Update: Since this was written in Oct. 2008, more information has surfaced that further implicates the various parties.  As critical as I was of the government and other parties it turns out that I was not critical enough.  The new information makes an even stronger case that the Securities and Exchange Commission was either very involved in the scandal or totally incompetent.  The Federal Reserve and the U.S. government have been working very closely together to place the entire country into permanent and deep debt for the enrichment of the elite types who are in control.  Trust in anything has been destroyed and market will not recover for a very long time.  I recently discovered a significant omission in the major dots -- it is The American Dream Downpayment Act of 2003 signed by Bush on Dec. 16, 2003 after passing in both the Senate and House by unanimous consent (no records kept) -- so do not blame just Bush -- as described in my article the Democrats and Republicans have almost always acted together -- thus I doubt there are really two parties.  This act provided $10,000 for sub prime borrowers to make either a down payment or to cover closing costs.  Although the size of the act was small, ~$200,000,000 per year, the multiplier effect of practically zero percent down payment levered the effect well into the billions per year.  This plus coercion by HUD to Freddie, Fannie, the banks, and others to facilitate bad loans insured that there would be a huge housing crash.  It was not an accident.  Eventually, I am going to revise the article to include new material.

Stupidity Repeated This is a commentary about an announcement on Dec. 4, 2008 from the moronic government about a new program to make home loans as low as 4.5 percent. A new debacle begins. The concept seems to be that a new debacle will help us get out of the problems of the previous debacle -- thus the title.

Wrongful Evicitions and Government Lies   Warning: Do not read this if you are a sensitive sheeple as you will be offended.  This is a commentary concerning the Jan. 7, 2013 settlement between a number of large banks and Federal regulators concerning alleged wrongful evictions during the housing debacle.  I expose a huge lie in all of this.  It is related to the above two pieces.  I will be accused of being insensitive for this piece but that is not relevant.  The question is am I right or am I right?  When I am fed a lie I feel compelled to point it out.  I am just the messenger -- no matter how politically incorrect the message is.

An Economic Comparison Between Gasoline and Electric Cars   I like the concept of electric cars but the economics just do not add up right now.  Even ignoring the cost of batteries, electricity is only moderately cheaper than gasoline (as of late 2008).  It is a lot cleaner however and this article points out several non-economic virtues that have a value although it is hard to assign a number.

An Economic Comparison Between Gasoline and Ethanol (coming soon)We have been forced to pay a high price for ethanol in the name of "green" and it does not even reduce overall pollution.  The key focus of this short article is comparing the price versus value of various gasoline/ethanol blends at the pump.  Ethanol looks cheaper if you do not know the facts.

How Not to Save Money on Gasoline   This is a short article that illustrates the economics (or the lack there of) of shopping around for the lowest price gasoline.

The Economic Knowledge of Poor People  Warning: Do not read this if you are a sensitive sheeple as you will be offended. This is a link to the commentaries section of my web site where I posted a short essay/rant about entitlement syndrome.  All I did was write a collection of common statements we all have heard.  Those statements are highly offensive to me as a working person not dependent on government handout.  My essay/rant appears to be highly offensive to those who can only accept things presented in a politically correct manner. So there is something to offend everyone.  The topic has nothing to do with investing but does explain the economic perspective of a lot of people.  This short piece illustrates the total disconnect in our society that is driving the push towards socialism.  The piece is horrible but you need to understand it.

How to Select Dividend Stocks (coming soon) -- I specialize in the selection of dividend stocks for my portfolio.  A portfolio of good dividend stocks provides an income that automatically increases with inflation and also with growth of the companies.  It is not hard to do this.  You only need to understand certain fundamentals.  I reveal my methods in this article.

In addition to basic lectures on investing I am working on some short (some may be long) articles on the following topics.  I put these here to be memory jogs so I will not forget. I only get to work on these sporadically as I do so much else.

Social Security -- a huge rip off designed to make it difficult for low-incomers to get ahead -- but in the name of "helping" them.  With carefully selected partial data Social Security can be made to look good.  I show the complete numbers that social security advocates do not want you to see.  In years past, the general population was led to believe that Social Security was their primary retirement and as a result saved little, if anything.  That was the trap and it worked perfectly.  Smart people knew that Social Security was only a supplemental payment and that it was important to save for retirement.  Now that the non-savers are retiring they "need' more money.  This is the basis for increasing the amount withheld from paychecks for Social Security thus reducing the amount one is able to save for retirement thus making Social Security a necessary function.  Th irony is that having a Social Security system strengthens the need for it.  Few understand this and the article I will post will explain this in more detail. 

Progressive taxation and the corresponding progressive income scale -- lowers income for low-earners while raising income for high earners.  Not many people are aware of the progressive income scale  which more than compensates for progressive taxation and I explain the details.  Perhaps you will understand why a number of prominent liberal wealthy types seem to be nutty and advocate for higher taxes on themselves.  They are just nutty like a fox.

True tax reform -- Most methods you hear about concerning fair tax and similar phrases are little more than neo-socialism with clever marketing.  I show a method that is simple and very effectively gives the population the power to limit government growth and spending yet provides funding for needed projects.

The corruption of tax deductions for charity -- It is very expensive for the government to be in the charity business which is what happens when deductions are allowed for gifts to charity.  This opens the door to money laundering via crafty charities.  Many auditors are required to investigate whether the money is being "properly" used as defined by the government.  Being a tax free organization allows the government to dictate operations and limit free speech.  One example concerns a preacher endorsing or speaking against a particular candidate for office.  That kind of free speech can not be allowed if the organization is tax free.  It is much better for everyone to as Jesus Christ would say today, "Pay what they owe to the government and give what they wish to charities." Then a preacher or anyone else could say whatever they want as a private citizen.  Then all the auditors and investigations and funneling of tax-free money to "undesirable" enterprises would be eliminated.

Election reform -- Again, most methods you hear about are little more than neo-socialism with clever marketing to fool the sheeple.  I illustrate a method that actually makes it possible to put qualified leaders in office -- unlike our current system.  Although not strictly part of economics or investing, it is related in that good government is necessary.

Economic issues of health care reform -- Health care is very expensive in the United States and has been growing at several times the inflation rate.  That can not continue.  For example, extrapolating the roughly $7,000 per capita spent in 2008 to 2098 using a very conservative and probably too low a growth rate the figure comes to $7,000,000 per capita.  That will not happen because the system would crash many years prior.  The problem with every concept I have seen proposed by either those that won or lost the election of 2008 involves hiding the cost via a complicated shell game that few in the population can understand and adding the remainder cost to the national debt.  With 100% certainty I can tell you that any such concept will ultimately fail.  I break down the economics of this and point to a required change of thinking -- i.e. view health care as an expense of life rather than a benefit one is entitled to.  I point out why the cost is high and what really can be done (although unlikely to happen) that could make the cost manageable.  Ironically for me (I am a devout anti-socialist) the solution involves the quasi communist/socialist concept of public ownership -- similar to a public utility.  I use the description, quasi, because the concept is often erroneously equated to socialism but there is an important distinction.  This is a very brief synopsis.  The details will be in the article.

How to steal wealth by giving it away -- The real purpose of wealth redistribution is for it all to flow to the economic elite via low incomers.  The little people or sheeple as I often refer to them never figure this out and gladly march right into economic slavery.  The stolen wealth comes from the middle class and lower upper class.  The poor have nothing to steal and still won't after wealth redistribution.

If the income of the "evil" rich is reduced then the result will be higher taxes on the middle class -- This concept is not well understood and this brief note will explain it.  The short of it is that because of the steep progressive income tax the majority of personal income tax revenue comes from the high earners -- the ones everybody complains about. Middle class and below pay remarkably little tax although they are under the mistaken belief that they are taxed to death.  It follows that if their incomes were reduced to levels that the broad population thought was fair then the income tax from that group would radically drop.  A broad and significant tax increase across the population would become necessary to compensate.  When I hear people complain about the high earners I ask the question, "How much more in income tax would you be willing to pay in order for those people not to make so much money?"  This concept is so far out of their thinking that they have a hard time grasping. 

If there was one million dollars to either give to the CEO of a company or disperse to 1000 low paid workers -- which is better?   Believe it or not it is much better to give it all to the CEO.  The government collects the maximum possible tax from this.  This counterintuitive result is a consequence of the progressive tax system.  Disbursing it among lower incomers would turn into an expense for the government with the current tax system. This note will explain the details.  With a flat tax structure one could make a strong case for the wide disbursement.

The difference between social investing and socialism -- with clever wording the two can be made to appear the same although there is a huge difference.  In short, social investing makes it possible for people to work and earn their way up the ladder and with minimum cost to society while socialism is a scheme to transfer wealth to the economic elite by building economic traps in the name of "helping" those people and with great cost to society.

An analysis of taxation versus welfare -- This analysis explores the concept of net income after tax and net income after welfare versus the time and effort required.  It seeks an answer to the question as to what level of taxation versus what level of welfare would it make little sense to work.  I worked the mathematics of this out many years ago and set it aside as the results are kind of scary.  I had forgotten about it but recently discovered my old notes and realized that I should put them in presentable form.  It is something to think about.  The concept is obvious but I explore where the thresholds are.

See my Writings Page  for some related and thought provoking writings.

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You are invited to visit my main web page at . There is a variety of material there - mostly information for my electrical engineering students, pictures and stories of my cats, and my writings against socialism.