Stocks rallied yesterday in celebration of… almost summer? Traders were still trying to make sense of last week’s up-and-down numbers, an FOMC meeting, and thickening storm clouds in the EU.
What’s in your wallet? Can I get a “whoop-whoop” from anyone who likes paying taxes? [insert cricket chirping sounds here] Of course, nobody likes to part ways with their hard-earned money in what seems like throwing bars of gold into the deep blue or burning Benjamins. It is our duty as citizens to pay taxes and we do it despite the pain, and we know in the back of our minds that without it the country could simply not function. Agree? Reluctantly, but I am sure you do. But perhaps, you are thinking, they, meaning those government folks, can do a better job at managing it. After all, we have to manage our household budgets, don’t we?
You are chuckling, perhaps, but it IS that simple. The Government is just like a household with money coming in and expenses to be paid. The Treasury is like the person in charge of managing all that. The Federal Government has all sorts of expenses, like paying the 4 million or so folks that work for it. Then there are the supplies needed to get the job done, like pens, computers, bombs, ships, etc. There are buildings to maintain; yes, they need paint, landscaping, and er… leaks that need patching. Oh, and there are soft expenses like interest expense on debt. Wait what? Yes, you know about this, it is the Federal debt. It is like a $3.3 trillion dollar credit card balance. Can you imagine what that must be like to manage? That debt is the result of not having enough income to pay the expenses. Have I gotten you all hot and bothered yet?
If this were your household, what would you do? Well, you can start by cutting expenses, you know get rid of some of the unnecessary things. But what are those? I am sure that there are government expenses that are the equivalent to that gym membership you pay for every month but haven’t used since… you forget when. Ok, spend less, now what? It’s obvious right? MAKE MORE MONEY? You and I work hard, make smart investments, and even look for side-hustles to add some income, but what can the Government do? Well, in the olden days, you could just forcefully take over another country and raid its coffers, but seeing as that is not really in fashion anymore, modern governments can only increase income by… RAISING TAXES.
So, here is the challenge, friends: spend less and bring in more income. We are in election season, which means we will hear and consider lots of promises. One group will tell you that they are going to cut taxes while another group will tell you that they are going to provide more services. I don’t know about you, but I would love to get more services AND pay less taxes. But you know, just as in your home budget, that world simply doesn’t exist. Can I remind you about that $3.3 trillion debt that will not only simply go away, but is actually costing more and more since interest rates have gone up in the past 2 years? There’s that.
So, you lay everything out on your dining room table. The bills, the credit cards, the savings passbook, your brokerage statements, your W-2s and 1099s… and you sharpen your pencil. You know that if you want to improve things you will have to learn to live with a bit less, pay down debts, and look for more income. Wait, more income for the government means higher taxes 🤯. Living with less means, um, literally living with… less. Can you think of a Government service you can live without? I am sure you can, but then I am sure that there is some other person out there who can live without a service that you can’t live without. Is this complicated? It sure is, and it is often the dividing line between politicians. Oh, did I mention that those politicians are employees of the Government? There is this really interesting TV series I want to watch, but I can only get it on a streaming service that I am currently not subscribed to. I am thinking of asking my wife if we can add the service, but I already know what her answer will be.
YESTERDAY’S MARKETS
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