THE MAGIC FORMULA
Economics
Economics is the study of the production, distribution and consumption of goods and services.
The Economic Cycle is
1. Saving
2. Investment
3. Production
4. Consumption.
Saving is the start of the cycle. Consumption is the completion of it.
The importance of each is in the order of their occurrence. Savings is senior to—and essential for—investing to occur. Investing is senior to and enhances production. Without production there is nothing to consume.
Economy wise, consumption is the least important of all the activities.
Consumption does not drive the economy. Consumption directs the economy.
Consumption is the sole determinant of one’s Standard of Living.
Taxes
A tax acts as a penalty for engaging in the activity being taxed.
The income tax taxes (penalizes) savings, investing and producing. It leaves consumption undeterred.
The National Retail Sales Tax penalizes consumption. The NRST leaves unfettered savings, investments and production.
Maximum economic growth therefore evolves from a retail sales tax burdened society. Maximum economic damage is done by an income tax burdened society.
Social Security
Social Security is a compelled savings plan.
Currently the government uses social security funds to further its own projects: wars, welfare, deficits. None of it is available for private investments (phase 2 of the economic cycle).
The privatization of the social security system would make funds available for economic growth. The following lies regarding privatization of the SS system have prevented that move:
1. You are selling the system to corporations.
Truth: The individual owns it. The social security funds one deposits become part of that individual’s estate.
2. Corporations will reap all the benefits.
Truth: The individual makes the decision on which approved fund to invest. Treasury Bonds or Treasury Bills are both available. All funds may be invested there. Options are available to invest in approved private investments. (Venture capital and futures options are generally not approved, e.g.)
3. Nothing is gained by the individual through privatization.
Truth. Should the individual die early, the remaining fund can be bequeathed to family members for immediate dispersal, or can be put into that individual’s social security fund.
Truth: Other private funds yield greater returns than Treasury Bonds or Treasury Bills.
Truth: The government has no access to those funds. They are as safe as any other individual property; many times safer.
