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mostlysignssomeportents · 4 years

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Where money comes from

Accounting prof and GND cofounder Richard Murphy wrote an astounding thread over the weekend explaining where money comes from and what purpose taxation serves.

https://twitter.com/RichardJMurphy/status/1337737606688333826

He's since published an edited version under the title "Macroeconomics, money and post-Brexit recovery, all in one Twitter thread," saying it "took four hours and 40 years of thinking to write."

https://www.taxresearch.org.uk/Blog/2020/12/12/macroeconomics-money-and-post-brexit-recovery-all-in-one-twitter-thread/

It's a masterclass in the real world of money creation and taxation, beyond simplistic - and ahistorical - stories about money emerging from barter, followed by confiscation of our money by governments.

The reality is obviously that money comes from government spending. That's how money gets into the economy, because only governments are allowed to create money, so all money starts with government spending.

But what is money? Modern money - money over the past 50 years - is "just a promise to pay." When you borrow £1000 from the bank, you promise to pay it back. The bank opens a loan account and credits your savings account £1000 - a promise to give you that money on demand.

"Two promises. Two accounts. And as a result we get new money. That is how all money is created. It is as simple as that. There is no one else’s money involved in this process. The bank does not lend out the money saved with them."

"There are no notes and coin moved from one pile to another pile to back this all up either. There are just two promises. And then there is new money."

Money is a promise. It's easier for some people than others to get money is that their promises are more credible.

If the government wants to borrow money, it can do so very cheaply because its promise to repay that money is very credible. They have their own bank, and they issue their own money. The government can always repay its debts.*

(*Note we're talking about "monetarily sovereign" governments: governments that borrow in a free-floating currency that they themselves issue - not Venezuela, Zimbabwe, pre-crisis Argentina, or eurozone countries)

When the bank loans you money, you make a promise to repay it. When you put money in the bank, it makes a promise to repay you. Governments - whose promises to repay are credible - back banks' promises through deposit insurance (a promise to create more money if needed).

Murphy asks, why do we even need a government in this picture? Why can't we all just make promises to each other and issue IOUs? Because we need a backstop: an entity that creates currency and can always repay any debt.

It's not just the government's ability to issue currency makes its promises better than everyone else's - it's also the ability to tax. Spending creates money, and taxing destroys it.

Tax is not collected *before* the government spends. The government spends money into existence. It doesn't need to tax us before it can spend money. But taxing limits how much money circulates.

If the government creates money without destroying it, eventually there will be too much money in circulation and prices will go up - inflation. Governments aren't households and they don't need balanced books.

A balanced budget (in which the government taxes as much as it spends) leaves no money to circulate. If there's too much money in circulation - if there's an inflation problem - we might want that, but if governments net-remove money every year, the economy collapses.

But how do you know how much money should be taken out or put into the economy? Right now, we control inflation by targeting a certain unemployment rate, AKA the NAIRU (non-accelerating inflation rate of unemployment).

The theory of the NAIRU is that if a certain percentage of your neighbors are unemployed, there's just enough money in circulation. If there was more, someone would offer them a job (and inflation would kick in). If there was less, there's be more people looking for work.

The NAIRU is supposed to be the sweet spot, but for people whose unemployment is deliberately cultivated in order to prevent inflation, it's not sweet at all. These people must be miserable, scared and precarious or we all suffer from inflation.

It's not just unemployed people: all precarious, low-paid work, all withholding of benefits like childcare and healthcare and retirement and eldercare are there in the name of fighting inflation.

Murphy: "There has to be a better way to manage the value of money than this."

There is. A job guarantee: a job at a socially inclusive wage with good benefits - not paid for with taxes, but with new money creation (as with all government spending).

The new money would then be taken out of circulation by taxing the people earning these good wages at the same rate as their non-jobs-guarantee peers. If this created inflation, we could raise taxes to reduce the money supply (not to pay for the program!).

Finally, Murphy asks why governments bother to borrow at all? Why not just use spending and taxation to manage the economy. The answer is that government debt - bonds - aren't borrowing at all.

They're a way for the government to offer a safe interest-bearing savings account for sums that exceed deposit insurance at your local bank. In the USA, the FDIC guarantees up to $250,000 per depositor. If you've got more than that in the bank when it fails, you're screwed.

So if you're a pension fund or a corporation, you can buy treasury bonds and be guaranteed a small rate of return on them - but, more importantly, you can get the government's promise to pay you back, a promise backed by the ability to create money at will.

It's an important point: not only would "eliminating government debt" take all the money out of circulation, it would also eliminate T-bills, the bedrock of all institutional savings.

Murphy closes by explaining what this all means:

Money comes from governments

Banks wouldn't exist without the government's promises to pay

Taxes don't fund government spending

Taxation happens *after* spending, not before

Governments spend their own money, not taxpayers' money

Taxes control inflation, they don't fund programs

Governments borrow because they choose to (in order to create a safe savings account), but they don't need to

Governments need not ever have debt crises; monetarily sovereign governments can always pay debts in the currencies they issue

Governments set interest rates

Interest rates don't control inflation - taxes do

Full employment at fair wages pays for itself

There is no need for austerity

And finally: "By really understanding something as simple as how money is created - and by being aware that it is never in short supply as a result - we can rebuild from the mess that we are in. We can have the sustainable world we want."

Image: Eluveitie https://commons.wikimedia.org/wiki/File:Bank_of_England,_London.JPG

CC BY-SA 3.0: https://creativecommons.org/licenses/by-sa/3.0/deed.en

#pluralistic

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nocturnals-anonymous · 4 years

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The absolute rage expressed in this piece borders on the righteously murderous. I would wager it’s a sentiment shared by at least 70,000,000 Americans. This mom is angry and tells it like it is:

I was born at the end of Gen X and the beginning of the Millennial Generation, and grew up in a middle class town. Life was good. Our home was modest but birthdays and Christmas were always generous, we went on yearly vacations, had 2 cars, and there was enough money for me to take dance classes and art lessons and be in Girl Scouts.

My 1940s born Dad raised me to be patriotic and proud, to love the war bird airplanes of his era as much as he does, and to respect our flag and our country as a sacred thing. I grew up thinking that being an American was the greatest gift a person could have. I grew up thinking that our country was as strong, and honest and true as my Dad. I grew up thinking I was free.

As an adult, I have witnessed the world I grew up in fall to ruin. I have watched as our currency and our economy have been shamelessly corrupted beyond redemption. Since we’ve been married, my husband and I TWICE had our meager investment savings gutted by the market that we were told to invest in, now that pensions no longer exist and we working stiffs are on our own. We will be working until we die, because the Social Security we’ve been forced to pay into has also been robbed from under us.

I have watched as our elected officials enter Congress as ordinary folks and leaves as multi millionaires. I have watched my blue collar husband get up at an ungodly hour every day and come home with an aching back that we pray will hold out long enough to get him to old age in one piece. Outside of shoes, socks and underwear, almost everything my family wears was bought used. We’ve been on one vacation in 12 years.

We don’t have cell phones, or cable, or any sort of streaming services, just a landline and internet. We hardly ever eat out. Our house is 1400 square feet, no air conditioning. I cook from scratch and I can and I garden and I raise chickens for eggs and meat and I moonlight selling things on Etsy. Still it is barely enough to pay the bills that go up every year while service quality and the longevity of goods goes down. What I just described is the life you can live on 60K a year without going into debt.

At last calculation, when you consider all of the federal, state and local taxes plus registration and user fees, Medicare and SS payroll taxes, almost a third of what my family earns is stolen by the govt each year. What’s left doesn’t go far, just enough to cover the basics and save a little for when the wolf howls at the door.

I watched as my family’s health insurance was gutted and destroyed. Our private market insurance, which we had to have because my husband’s employer is too small to have a group plan, was made illegal. We were left with the option of either buying an Obamacare plan with unaffordable deductibles and insanely ridiculous out of pocket maxes, or paying the very gov’t that destroyed our healthcare a fine for not buying the gov’t mandated plan that we cannot afford. We now have short term insurance that isn’t really insurance at all, and I live in fear of one of us getting injured or sick with anything I can’t fix from the medicine cabinet.

I have watched as education, which was already sketchy when I was a kid, became an all out joke of wholly unmathematical math, gold stars for all, and self-loathing anti-Americanism. My family has taken an enormous financial hit as I stay home to home school our child. At least she’ll be able to do old-fashioned math well enough to see how much they are screwing her. A silver lining to every cloud, I guess.

I’ve sat by and held my tongue as I was called deplorable and a bitter clinger and told that I didn’t build that. I’ve been called a racist and a xenophobe and a chump and even an “ugly folk.” I’ve been told that I have privilege, and that I have inherent bias because of my skin color, and that my beloved husband and father are part of a horrible patriarchy. Not one goddamn bit of that is true, but if I dare say anything about it, it will be used as evidence of my racism and white fragility.

Raised to be a Republican, I held my nose and voted for Bush, the Texas-talking blue blood from Connecticut who lied us into 2 wars and gave us the unpatriotic Patriot Act. I voted for McCain, the sociopathic neocon songbird “hero” that torpedoed the attempt to kill the Obamacare that’s killing my family financially. I held it again and voted for Romney, the vulture capitalist skunk that masquerades as a Republican while slithering over to the Democrat camp as often as they’ll tolerate his oily, loathsome presence.

And I voted for Trump, who, if he did nothing else, at least gave a resounding Bronx cheer to the richly deserving smug hypocrites of DC. Thank you for that Mr. President, on behalf of all of us nobodies. God bless you for it.

And now I have watched as people who hate me and mine and call for our destruction blatantly and openly stole the election and then gaslighted us and told us that it was honest and fair. I am watching as the GOP does NOTHING about it. They’re probably relieved that upstart Trump is gone so they can get back to their real jobs of lining their pockets and running interference for their corporate masters. I am watching as the media, in a manner that would make Stalin blush, is silencing anyone who dares question the legitimacy of this farce they call democracy. I know, it’s a republic, but I am so tired of explaining that to people I might as well give in and join them in ignorance.

I will not vote again; they’ve made it abundantly clear that my voice doesn’t matter. Whatever irrational, suicidal lunacy the nanny states thinks is best is what I’ll get. What it decided I need is a geriatric pedophile who shouldn’t be charged with anything more rigorous than choosing between tapioca and rice pudding at the old folks home, and a casting couch skank who rails against racism while being a descendant of slave owners.

I’m free to dismember a baby in my womb and kill it because “my body my choice”, but God help me if I won’t cover my face with a germ laden Linus-worthy security blanket or refuse let them inject genetically altering chemicals into my body or my child’s. I can be doxed, fired, shunned and destroyed for daring to venture that there are only 2 genders as proven by DNA, but a disease with a 99+% survival rate for most humans is a deadly pandemic worth murdering an economy over. Because science. Idiocracy is real, and we are living it. Dr. Lexus would be an improvement over Fauci.

I am done. Don’t ask me to pledge to the flag, or salute the troops, or shoot fireworks on the 4th. It’s a sick, twisted, heartbreaking joke, this bloated, unrecognizable corpse of a republic that once was ours.

I am not alone. Not sure how things continue to function when millions of citizens no longer feel any loyalty to or from the society they live in.

I was raised to be a lady, and ladies don’t curse, but fuck these motherfuckers to hell and back for what they’ve done to me, and mine, and my country. All we Joe Blow Americans ever wanted was a little patch of land to raise a family, a job to pay the bills, and at least some illusion of freedom, and even that was too much for these human parasites. They want it all, mind, body and soul. Damn them. Damn them all.

#voting #voter fraud #election fraud #ShadowGate #IIA #color revolution #coup #electioneering #gaslighting

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ithinkfi2-blog · 4 years

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Long Term Financing Goals: 5 Simple Steps For 2020

Long term financing goals... Doesn't sound as exciting as long term stay at the beach, does it? Truth is, long term financial goals don't offer immediate rewards. Rather, you have to look at them like seedlings turning into a robust vineyard. If you want to stop working at some point or avoid a potential crisis when unemployment hits, then you simply have to embrace certain types of financial goals as friend, not foe. When the COVID crisis hit, over 14 million Americans faced the unemployment line. How many of those Americans do you think had six months' worth of income stashed away? Not many. Most of us live paycheck to paycheck, with little to no savings and zero retirement planning. That's not living on the edge. That's living in the quicksand. If you're still gainfully employed during these tenuous times, we encourage you to embrace five financing goals that will leave you well-positioned to tackle anything from dental trouble to a million-dollar retirement savings plan. Let's take a look.

1. Diminish Debt

Debt is like a revolving door. If you can never seem to get out of it, then you're doing something wrong. Credit cards come with a ton of great perks, like cashback on purchases, airline miles, and more. But, it's not wise to carry a huge revolving line of credit. It's also unwise to merely pay the minimum balance each month and allow interest payments to accrue. If you can't pay your card off at the end of each month, you probably don't want to keep swiping it. The thing about credit card debt is it's kind of like pouring sand into a jar with a hole in the bottom. It prohibits people from saving for them because, how can they build a savings fund when they're so far in the hole to someone else? So, if debt's your problem, the first thing you want to do is stop accruing more debt. Then, it's time to see how you can scale the mountain. Here's the best way to armor up and take down debt:

Track your spending (down to the penny). See where you're wasting money that can be directed toward your "get out of debt" plan. A daily dollop of self-control can stack up greatly in the monthly scheme of things. Consider your convenience store runs, coffee stops, and weekly lunch dates to start.

Create a budget. Allocate every penny of your weekly or bi-weekly paycheck. Hold yourself accountable to that budget. If you need to eliminate the vacation fund for a year, do it. If you need to forego your $50/week restaurant budget, do it. Releasing yourself from the burden of debt is worth tightening the budget for at least a year.

Check your interest rates. Things like student loans and mortgage payments typically come with low interest rates. It's not uncommon to see anywhere from 3% to 5%. Credit cards, however, can soar upwards of 19%. That's why you're going to want to go after those kinds of debt first. Paying too much interest is like throwing away money each month. So, that high-interest rate card needs to be tackled first.

Check your balances. The other factor that matters is your balance. Once you know which cards have the highest interest rate, you're going to want to tackle them in order from worst to best. Sometimes, the impulse is to get rid of the cards with small balances first. But, you actually want to go in the opposite direction and take down the biggest offenders first.

Why does this work? Well, let's look at the numbers. Say you have three major debts. If you're able to up the ante and allocate 20% of your monthly income to this endeavor, you're looking at a pretty good strategy. For someone who earns $3,000/month, that's about $600/month. What you want to do is direct $100 to one, $100 to another debt, and $400 to the largest debt. As you pay off one, maintain that same $600 and use it to attack the remaining two, then the last one, and then... dare we say it... you're free.

2. Spend Less, Save More

We know, we know. How cliché. But, the thing about clichés is that they're often repeated because they're often true. If you're still living paycheck to paycheck, be afraid, be very afraid. Given the tenuous times we live in, families need to have an emergency fund set aside for at least six months. If you and your spouse have things like restaurants and pocket money in the budget, slash them right away. Make 2020 the year that you feel proud that you've been able to account for every dollar in your budget. What else can you do to spend less and save more?

Stop the unnecessary shopping. If you need to delete the Amazon app form your phone, do it. If you remove the instant gratification temptation from your fingertips, you may be more successful. Stop "hunting for bargains," too. We tell ourselves we actually saved money when we spent $25 on a sweater that was marked down from $75 (when we didn't even need the sweater).

Pay with cash only. If you need to drive down to the local Walmart or Target to pick up a few household items, limit yourself to a certain amount of cash. This will do a couple of things. First, it will prohibit the impulsive shopping. Second, it'll force you to only buy the things you need. Plus, there's something psychological about handing over cash vs. swiping a card. You feel it more and will be, in a perfect world, less tempted to go overboard.

Shop Smarter. Whether you're a household of two or seven, grocery shopping is expensive. So, it's time to shop smarter in this arena. Shop according to the sales ad and don't be afraid to clip your coupons and use them at the checkout line. Fifty cents here and twenty cents there adds up to tens of dollars over the course of a month and guess where that can go? To that debt you're trying to eliminate.

With the ability to save more, you're opening yourself up to a host of scenarios that will give you tremendous peace at night. First, you can establish a thousand-dollar emergency fund. This is for anything from dental work to ductwork in the house. It's also for the four new tires your vehicle is going to need at some point. Second, you can establish a safety net. COVID has been a major wakeup call for those of us who live paycheck to paycheck. Imagine you were able to save six months' worth of income? That would make the nail-biting stop almost instantly. If you pull down $3,000/month, that's $18,000 and no small feat. But, if the worst thing were to happen, and you become unemployed, you don't have to drop down into panic mode. Instead, can sit pretty on nearly $20,000 that can be economically balanced if tough times hit.

3. Get Ready for the Golden Years

The days of pensions are fading further and further into the distance. And Social Security was never designed to be someone's primary source of income upon retirement. So, that needs to be supplemented if you want to be able to enjoy your retirement more fully. An IRA is the standard way to meet your retirement goals. And there are two different options here:

Traditional IRAs offer tax-deferred growth. That is, like an HSA, your contributions are tax-deductible in the year you make them.

Roth IRAs allow you to withdraw funds without a tax burden. So, if you think you'll need to withdraw from your IRA sooner than later, then you might want to pay your taxes upfront and have access to it whenever necessary.

We used 20% as a viable example of getting out of debt. So, what's a good goal for an IRA? Well, let's start with the best-case scenario. Right now, the IRS caps the maximum contributions to traditional and ROTH IRAs at $6,000/year, or $500/month. Folks over the age of 50 are allowed to save $7,000/year. If you've shoveled out of all your debt and have the wherewithal, definitely opt for $500/month because, in retirement, how long do you think you'll go on soaking up the sun and playing with your grandchildren? Twenty years? Thirty years? Well, in 30 years, if you earn $3,000/month, that's just over one million dollars. See why it's smart to start young and go hard? Of course, $500/month simply isn't a viable option for many families. We love to play around with IRA calculators to see what's right for people. But, remember, the sooner you start, the more wiggle room you'll have. If you're ready to start making waves in a retirement fund, then contact us today to open your very own IRA.

4. Hinder Your Healthcare Burden

Have you ever considered a health savings account (HSA)? It's a portable savings account that allows you to nestle away money for healthcare completely tax-free. The money you deposit into an HSA rolls over each year, alleviating any sort of "use it or lose it" stress. It's completely controlled by you, not your employer and you get to call all the shots on how the money is allocated. Some people liken HSAs to "medical IRAs." That is, you grow the account slowly over time and only take it out whenever you see fit. If, ten years down the line, there's a major medical expense, an HSA can help prevent you from sinking into tremendous debt. But, even in the day-to-day as you're saving, there's an immediate benefit to an HSA. Whatever contributions you're able to deposit into your account, they're completely tax-deductible. If you work for a company that's willing to contribute, their contributions are not included in your taxable income, either. These amounts are capped, however, at $3,550 for individuals and $7,100 for families. However, when you hit 55, you're allowed to squirrel away an extra $1,000, free and clear. If you think this is right for you, feel free to download our HSA application today.

5. Consider a Side Hustle

If you're ready, willing, and able to tackle debt and save more but simply don't have the finances for it, then make 2020 your year of the side hustle. In the days since the COVID pandemic, more and more people are starting to work from home. Is there something you can do on the nights and weekends from the comfort of your own home? Sure there is! If numbers are your game, then you should know there's a real need for virtual bookkeepers. If organization is your talent, then you should also scan the online ads for virtual assistant positions. If your fingers type as fast as fingers can go, then you may be able to work as a transcriptionist from home on nights and weekends. Teaching English online is another viable option. Also, the almighty Amazon posts remote jobs to their Career Services page and customer service, as a whole, lends itself to the remote lifestyle. If you have time to binge watch Netflix, then you have time to earn a few extra hundred each month.

Long Term Financing Goals You Can Meet

Each of the goals listed above are considered long term financing goals because they can't be achieved with the swipe of a card or the deposit of a singular paycheck. But, that's okay! It's like planting a garden. You start with a tiny, little seed and then, over time, harvest six-foot sunflowers. There's no way around it, you simply have to diminish your debt first. For some, that may be a three-year endeavor. And that's okay! This is a goal and it's not meant to be met in three or four months. Then, once you get your personal savings and retirement plan up and running, you're truly going to feel wonderful. This feeling of satisfaction doesn't carry the same punch as a new pair of high heels or a new golf club. It carries a better punch because you'll be proud of yourself as you watch something grow. If you're looking to start an IRA, money market account, personal savings account, or HSA, we hope you'll get in touch with us today! We'll pair you with just the right tool to meet your long-term financial goals. Here at iThink Financial, we've built ourselves on this motto: people helping people. We're a credit union that fosters healthy financial management and wants to see our customers flourish, not drown in faulty debts and loans. Come join us for any one of our webinars and seminars where we help people do just that! Whether you need to build a better budget, save for a home, or want to plan for financial crises, we're here to help you formulate the best game plan and use all the resources at your disposal.

Get more information here about Atlanta Georgia Credit Union.

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continuations · 6 years

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World After Capital: Economic Freedom (Intro, Universal Basic Income)

NOTE: I am resuming posting excerpts from my book World After Capital. The last post was the beginning of Part Three of the book. Today’s post is the the introduction to the concept of economic freedom and how universal basic income makes this freedom possible. Unfortunately the current online version is out of sync as I am experiencing issues with gitbook.

Economic Freedom

If you were to quit your job right now, could you still afford to take care of your basic needs? Could you pay for food, shelter, clothing, and so on? If you are retired, what if your company suddenly stopped paying your pension? If you are supported by a spouse or partner, what if you left that person?

If you could no longer meet your basic needs, then you are not economically free. Your decisions on how much of your labor to sell and whom to sell it to, whether to stay with your partner or not, which city or rural area to live in, are not free decisions. Many people in the U.S. today are not free in this fundamental sense.

A recent survey in the U.S. asked respondents if they had enough money to pay for a $1,000 emergency. Over two-thirds said they did not [59]. Other studies have found that about 75% of Americans over 40 are behind on saving for retirement and 31% of all non-retired adults have no savings at all [60] [61].

Crucially, if you are not economically free, you are not free to participate fully in the Knowledge Loop. Hence economic freedom is a cornerstone of the Knowledge Age. We must make people economically free so that they can participate fully in the Knowledge Loop. We want more people to be free to make music and create art that has the power to inspire. And we absolutely need people to have the time to learn new knowledge, from practical skills such as gardening to the latest theoretical physics. We need more people to create new knowledge using what they have learned. And finally we need more people to share their knowledge with the world for others to learn.

We have massive problems, such as climate change, to overcome and we need more participation in the Knowledge Loop than ever. To free us up to do so, we must be able to embrace automation, not fight it for fear of losing our livelihoods.

Universal Basic Income

Economic freedom is a reality today for some—those sufficiently wealthy, tenured professors, retirees with pensions and savings. How can we make it a reality for everyone? The answer is to provide everyone with a guaranteed ongoing income to cover basic needs, including housing, clothing, and food (see earlier chapter on Needs). This income would be unconditional, i.e. it would not depend on whether someone is married or single, employed or unemployed, rich or poor.

At first blush this idea of a so-called Universal Basic Income (or UBI) may seem crazy or outrageous. Getting money for having done nothing? Getting paid simply for being alive? Isn't that communism? Or socialism? And where would this money come from? Won't people simply descend into utter laziness and drug addiction? We will look at each of these objections to UBI in turn, but first let's consider arguments for UBI as a way of achieving economic freedom.

Concerns about economic freedom are by no means new. When the American republic was in its infancy, economic freedom seemed well within everyone's reach. There was plenty of land to be had (so long, of course, as one was willing to take it by force from Native Americans). As a result, any family could make ends meet by living off the land. Even back then, though, observers such as Thomas Jefferson and Thomas Paine understood that land would some day run out. They raised the specter of a time when citizens might be forced to trade labor to others in order to provide for their basic needs—when they would be economically unfree [62]. All the way back then they concluded that an alternative to land was to give everyone enough money to be free. The idea of a UBI in the U.S. thus goes back to the earliest days of the nation.

If you don't find this historic argument for UBI compelling, consider the case of air. We all breathe air to solve our basic need for oxygen. We can all afford to breathe air because air is free and well distributed around the globe (important caveat: regulation is required to keep air clean, we had lots of trouble with air pollution during industrialization and in China right now it is estimated that more than one million people die every year from air pollution [63]). Our freedom is not restricted by having to find air. The power of UBI is to make us equally free when it comes to our other basic needs, by making food, housing, clothing (the solutions to our basic needs) affordable and accessible by everyone!

As I argued in the earlier chapter on Capital, as a species, we have developed our technologies enough so that we are now capable of meeting everyone's basic needs. Farming can generate enough food for everyone. We can easily make enough clothing for the world. We can even provide everyone with shelter. All of this has been made possible by knowledge, the knowledge that humanity has created over millennia. And our technological progress is accelerating while global population growth is slowing down. So from here on out it will only get easier.

The question thus is not whether we have the ability to meet everyone's basic needs, but rather whether an economy and a society that accomplishes the necessary resource distribution and allocation. That is exactly where UBI comes in. UBI enables the functioning of markets for basic needs such as food, clothing and shelter without forcing people into the Job Loop. UBI lets everyone freely participate in these markets. UBI thus frees up attention, frees up people to live where they want to and with whom they want to.

Industrial society presents us with two fundamentally different ways of distributing and allocating resources. One is individuals meeting their needs by participating in a market economy; the other is government providing solutions for people's needs directly. Those options form the extreme ends of a spectrum with a variety of “hybrid” arrangements in the middle, such as government subsidized or rent-controlled housing for which people still need to pay some rent. UBI solve the allocation issue while avoiding reliance on an ever-expanding government sector. Put differently, UBI recognizes just how effective markets have been in the allocation of resources, and by contrast, how many distortions are introduced by direct government activity, such as government built housing. UBI is the opposite of communism and socialism in that regard. It is all about reducing the size of government activity.

After World War II in the U.S., only about 5% of people were employed by government, which in turn comprised about 42% of the economy [64] [65] [66]. In the Soviet Union, by contrast, nearly 100% of people were employed by the state, and the state owned close to 100% of the economy. We now know quite well which system was more effective at allocating resources. Nevertheless, the size and scope of government employment and the government sector have gradually expanded here in the U.S. and in Europe. In many European economies, the government sector now accounts for a half or more of the economy.

I have only mentioned food, clothing and shelter when talking about basic needs, but what about education and healthcare? Can UBI cover those as well? That might seem wishful thinking given how quickly education and healthcare costs have risen, especially in the U.S. Yet UBI can cover these basic needs as well, and to understand how, we need to look at how technology is driving down the prices of almost everything. Technology can make education and healthcare far more affordable than they are today.

#world after capital #economic freedom #universal basic income

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allwoodjacee95 · 4 years

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life insurance medical questions

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life insurance medical questions

life insurance medical questions (and answers to questions you might need) - even if you don’t want to purchase auto insurance on your life. We will help you make a more informed decision after you’ve found the best auto insurance companies. It’s not all bad that you can’t buy liability insurance in your lifetime, because there are so many factors we don’t even know about. Here is one of the main factors – the right to have your life insurance as a loan that will protect you and your dependent (and sometimes entire family as well). There are three insurance-for-hire companies: GEICO is well known as a well-known company with a long history of providing auto insurance to people over 30 years of age. But is GEICO the best, for insurance or for a kid to do so? Is GEICO a great company to work with for insurance? If so, why would insurance be expensive that people want? Here are the major reasons:. life insurance medical questions, so please to talk to a licensed to see what options might be available. The cost of your insurance premiums depends on many factors, some of which are not as difficult to determine. If your family has a college degree, there are certain health concerns that insurance companies cannot cover. There are various types of health insurance. The following are some, also known as high risk health insurance. These health insurance plans offer health insurance coverage for those who have a catastrophic health condition or who are addicted to drugs. The more risky your lifestyle gets you for the cost of health insurance, the higher your chances of being denied coverage, and the bigger your premium. The average Indian now gets health insurance through their employers. What exactly does the health insurance coverage cover? Some plans do not cover all of the health conditions that you had previously had. The insurance coverage is provided by the government of India. So not as comprehensive, but also available for a few reasons: The plan covers more than just healthcare. One. life insurance medical questions at $16.00 per policy length per year and up to $30 per month for a 12 month term policy. We’ve also been evaluated for your home insurance, too. We have all of our coverage in a single quote form for our renters, home, auto and your personal properties. We have also been evaluated for coverage of non-residents. We’ve been working in the insurance market with many of the best competitors and are happy to assist with this type of quote process, as well. To get a quote for renters insurance, start with our basic quote tool, and see what we think is the . It’s a lot easier for us to help our customers understand what they need, and then get quote quotes to save you money. Then we can customize an insurance plan in real-time, saving you time and energy in the quote comparison market. In addition to giving you a great quote, there are other ways to save money. The insurance policyholder.

Get FREE Life Insurance Quotes

Get FREE Life Insurance Quotes Enter your ZIP code below to view companies that have cheap auto insurance rates. Secured with SHA-256 Encryption This is the one-industry-specific option that s best for most individuals. In every state, a large number of people are buying life insurance for business, financial, education, retirement. While insurance is a fundamental part of managing your finances, it can provide a wide array of benefits. These benefits are explained below. If you think insurance makes you feel safer, you re not alone. Nearly one-quarter of Americans say they d like to be covered by their spouse s policy. That may seem overwhelming — after all, you’re going to die and your kids will get a stipend. But there’s a way to make sure your own spouse doesn’t have a policy — and that’s with , a . You think there are a lot of bad insurance companies out there? Maybe.

Why life insurance companies require a medical exam

Why life insurance companies require a medical exam for most policy types, including term and permanent life insurance. Most companies offer term life insurance rates for under $100,000 of coverage. The same is true for whole life insurance, even if it’s less expensive. Term is often used for a few years. Whole life insurance companies don’t usually charge the same rates for premiums when rates are higher from certain insurers. Term life insurance is also called “temporary insurance,” because it lasts for a set amount of time. If the term of a policy is less than that given by insurance companies, the insurance company might cancel the coverage. However, if the policy provides for death benefits for the “term,” the coverage won’t become effective. Term life insurance is generally less expensive than permanent life insurance. However, it is still possible to get life insurance with no health question, and some policy types simply require you to answer health questions on the application. Life insurance with health questions is simply.

Life Insurance and Medical History

Life Insurance and Medical History. If you’ve been with the right company for more than four years, your premium has increased when added the new policy. You’ll receive a premium payment once your health and vehicle life insurance policy is settled. But if you’re a smoker, you’ll want to check to see if there’s any chance your policy will stay in full force. Nicotine is a toxic drug. Any medical questions you may have in your doctor’s lab, or information from the insurance company you had a previous relationship with, may require lab work. If you haven’t been affected by a problem, or found out about a problem, your family will be forced to provide proof that you’re fully insured. And there’s nothing to worry about. You may have questions about where your insurance company is based (and how they know the company’s price), or if you’re even enrolled in Medicaid, the health insurance program.

Other Life Insurance Application Sample Questions

Other Life Insurance Application Sample Questions by : You may qualify for coverage provided the premiums are high and coverages are reasonable. These types of policies will provide coverage for the insured s surviving family if an unexpected event occur, including leaving such a large estate. In addition, the insurance may provide coverage for: If you think your insured may need immediate life coverage, you should check for a policy that will offer coverage even to the level of life insurance. You may need life policies or other types of life insurance from different companies. These types of policies may be the most common. If you need immediate coverage with multiple types of coverage, ask your agent or specialist to answer your questions to familiarize yourself with all of the necessary information. This will help you find the best policy for your family if a family member needs life insurance. A life insurance policy for a named beneficiary can be a valuable part of your estate as a trust. In this situation, then, you can call to set up an allowance to cover.

It’s not just easier life insurance, it’s an easier life.

It’s not just easier life insurance, it’s an easier life. For example, and are a huge part of what makes so many people so satisfied. But if someone has an illness like a heart attack or stroke, their life insurance can potentially go to them. The same thing for those who have diabetes. It’s not just their diabetes, but their overall health and their financial situation. And they really want to get life insurance. Because they’re not just those types of people, but they can’t afford it. This is one of the great things about life insurance for anyone. So the first thing that we’ll say is that everyone has different needs and goals. And if you want to make sure that you’re working with someone, it’s important to make sure that you’re making sure you’re getting the coverage you need for your situation. And you shouldn’t think that you’re going to overfund what you’re looking to get from life.

Get Life Insurance Quotes Now

Get Life Insurance Quotes Now, If You ve Never Had Insurance, you still don t have any money left in your wallet to help support your family if you’re widowed. That’s right — one of the first major death benefits will not make a financial impact on a family or household for the foreseeable future. If your spouse was to die during your early working years, your spouse will have to pay for all of their life insurance costs but will be spared the loss of their own pension income or their children’s college education, which would have been a financial burden for them. In fact, there are other options out there that will make the cost of life insurance lower, less expensive and more affordable — which in turn would make life insurance cheaper, less stressful and not penalized by other factors — but that’s not them. This is to say, they do have options. Here’s one: Be prepared with information about your spouse’s life insurance policies. .

Do Agents Add to the Cost of Insurance?

Do Agents Add to the Cost of Insurance? No. The only way to find the best price for auto insurance is to get quotes from multiple companies. It is illegal to drive without auto insurance, and you certainly don’t want to. But if you have an accident and need to file an SR-22, then the company you choose will have a higher accident rate. In Oklahoma, most drivers on the road carry basic insurance, but drivers with bad credit or low incomes may want to purchase additional coverage. Some companies can offer discounts if you pay your premiums and you never make a claim. They’re not required to offer it, but having one of their insurance agents on your side could save you money on your auto policy. They can give you a quote online or over the phone for a policy, or they can provide information about discounts. Paying extra for your car insurance may seem nice, but in the vast majority of cases this is the wrong decision. Some insurance companies offer this benefit to drivers with good credit, with.

Life Insurance Made Easy

Life Insurance Made Easy If you are looking for wholesale auto insurance or wholesale wholesale life insurance quote, or for wholesale (or and wholesale health insurance in the state of Texas) and get a quote for a life insurance policy with a $500,000 death benefit for the policy term, you will need to contact the insurance company directly, so you just need to do a phone call to the insurance representative. If you are looking for wholesale car insurance but get a quote, you will need to call your agent directly. Here are a few more things you should know regarding wholesale insurance: You can purchase wholesale car insurance from a private source. You can speak with an agent at any independent agent. The policies offered are generally cheap but make your business easier by providing lower rates for the amount of insurance you need. If you are ready to start shopping for an independent, online wholesale insurance agency, or wholesale whole life insurance quote, make sure to always start browsing around for a new car insurance agency that is right for you.

To get the most affordable rates for life insurance, you will usually need to take a medical exam. Learn how to schedule, prepare for, and what to expect from the exam.

To get the most affordable rates for life insurance, you will usually need to take a medical exam. Learn how to schedule, prepare for, and what to expect from the exam. As with other , this exam will consist of answering a series of questions about your health. For example, a medical exam usually includes height, weight, and blood pressure. The most important aspect of the exam is the last three to five minutes. You are asked to complete a series of questions about your health, your family, and other major issues that may impact your life insurance rates. The final question is to be answered by an insurance agent on the phone. An independent agent will take your information, including any questions asked, and sell it to you. Most life insurance companies will require you to take your medical exam. But if you have a history of an , the insurance company may request you take a . The examination is also very serious, and it could cause the insurance company higher rates than what you are paying. Although life insurance companies usually ask for your medical exam before we will, your doctor may ask for it when we are making a recommendation for a product. The only times these exams will.

Preparing for a life insurance medical exam

Preparing for a life insurance medical exam may include a blood test, a urine sample, and a medical exam. This provides the testing provider with more information as required, and the testing provider can request a quote from both medical providers and insurance companies. In addition, if the health examination is scheduled for a month or two, the health exam provider can schedule a free medical examination at some additional times. It may also be necessary to schedule a medical exam if one is scheduled for a short period of time. The insurance company will also want to find out if the patient has any other medical conditions that could affect the coverage. By doing so, the testing will help the testing provider determine if the health exam is required on the application. For example, a person who uses tobacco would face higher premiums if the medical exam is scheduled for the week that they plan to take the insurance coverage. The insurance provider may still require a blood test before determining that a person has a lapse due to a medical diagnosis or if the person is stopped on a highway or.

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ronaldmrashid · 6 years

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The Average Spending Amount In Retirement Is Surprisingly High

According to the Bureau of Labor Statistics data, “older households” – defined as those run by someone 65 and older – spend an average of $45,756 a year, or roughly $3,800 a month.

I don’t know about you, but spending $45,756 after-tax a year in retirement sounds like a lot! Based on a 20% effective tax rate, $45,757 is equivalent to $57,195 a year in gross income.

To generate $57,195 a year in gross income requires an investment portfolio of $1,429,875 generating 4% a year. Could it be that the average 65+- year-old retiree is a millionaire?

Given we know the average 60-69-year-old American retiree has only about $198,000 in their 401(k) and only $63,000 if we look at the median 401(k) account balance, something seems off.

Or, we can take the positive view that everything seems to always turn out OK in the end. After all, if you are a current retiree over the age of 65, you likely have some pension income and are certainly eligible for Social Security.

Add on some financial help from respectful kids, and all is good for current retirees. Unfortunately, the same might not be true for future retirees.

Average Retiree Spending Amount By Category

Let’s look into the juicy details from the BLS data. There are seven categories in total, which may be an interesting way to categorize our own retirement spending plans.

Housing: $1,322

Housing is surprisingly the largest expense by far for the average retiree. With the median home price in America at roughly $225,000, spending $1,322/month on housing seems quite high.

Every personal finance enthusiastic should have their house paid off by the time they retire. After that, all that’s left should be maintenance costs, property taxes, insurance, and utilities. Therefore, it’s clear that the average retiree still has a mortgage to pay.

If the average retiree had no mortgage, their housing cost would be closer to $300 a month based on the average home price in America. Pay off your mortgage folks! And certainly, reconsider the wisdom of renting for life. Renting long term is like shorting the stock market long term. Not a good idea.

Transportation: $567

$567 a month for transportation cost is another surprisingly high figure given seniors get discounts for public transportation.

For example, in San Francisco, depending on income, seniors get a 50% – 100% discount on their monthly MUNI pass, which includes buses and subways. Thus, their total cost, if they rely exclusively on public transportation, is either $0 or $47 for their monthly MUNI pass in one of the most expensive cities in America.

As a senior, spending $6,814 a year for transportation makes it seem like they are constantly getting ripped off at the auto mechanic shop. Yet according to the BLS, the average household of other ages spends $9,000 a year on transportation costs.

These ongoing auto expenses is one of the main reasons why everyone should spend no more than 1/10th of their gross income on a car. Overpaying for a car is truly one of the biggest personal finance killers for the average American.

With senior discounts for public transportation and the invention of ridesharing, transportation costs should come down over time.

Health care: $499

I’m pleased to see that health care cost averages “only” $499 a month or $5,988 a year. The average health care cost for a working individual is closer to $20,000 a year and heavily subsidized by the employer.

All this horror talk about health care costs spiraling out of control in old age seems to be exaggerated, so long as you have Medicare or some type of subsidized health insurance program.

Just make sure you consider purchasing a long-term care insurance policy before its needed. The cost of long-term care can completely wipes out the average retiree’s savings.

Average healthcare premiums are nearly $20,000 for a family

Food: $483

$483 a month for food is reasonable. With so many early-bird specials starting at 5pm, how can a retiree not save money? What a nice life to eat a steak dinner for 60% off, watch some TV when you get home, and go to bed by 8pm.

Let’s just make sure the average retiree doesn’t get a hold of a food delivery app. If so, their food budget will go out the window.

Personal Insurance / Pensions: $237

I don’t quite get this category because an early retiree is supposed to not be working. But the BLS explains that this figure is for those in the household who are still employed pay Social Security tax and perhaps some contribution to Social Security.

In other words, one of the secrets to retirement is keeping your spouse working! By having a partner work past 65, it’s much easier to spend up in your retirement. Just make sure the working partner doesn’t resent you for living the good life.See: How To Get Your Spouse To Work Longer So You Can Retire Earlier

Charitable Donations: $202

$202 a month or $2,429 a year in charitable donations accounts for roughly 4.2% of annual gross spend. 4.2% is a respectable amount since the average percentage of gross income donated to charity is closer to 3% in America, or $2,081.

It’s much better to donate your money while alive than after you’re dead. At least if you donate while living, you can see and gain satisfaction of knowing your money is getting put to good use.

Entertainment: $197

$197 a month seems low for entertainment. When you have all the time in the world, it’s easy to spend more money. Think about going on a 21-day luxury cruise to the Mediterranean or flying to Hawaii during Polar Vortex season. These activities cost money!

But what I’ve found in retirement is that it costs less than I thought to be entertained. With so many free parks and activities open while most people are working, there’s always something for me to do in San Francisco.

Because you’re so much happier being free, you don’t require as much expensive entertainment to counteract all the stress you experienced while working.

The Average Retiree Lives The Good Life

My main conclusion from the BLS data is that the average retiree is doing splendidly well.

Being able to spend $45,756 after-tax or $57,195 in gross income each year is a handsome sum of money given the median household gross income is roughly $61,372.

Put differently, the average retiree is able to spend 94% of the median household’s gross income without having to work!

Given having the freedom to do what you want, when you want is truly the biggest booster of happiness, is it any wonder why our happiness increases with age?

Based on this data, none of us should ever again dread getting old. But I will say, based on first-hand experience of leaving the workforce in 2012 at age 34, it’s absolutely worth it to consider accelerating your retirement date.

It’s one thing to have money and freedom. It’s another level of satisfaction to have money, freedom, and health. Make no mistake, your body will slowly begin to fail you as you get older.

It will take longer for you to recover from an injury or sickness. You’ll begin to feel more aches and pains after playing sports. And you’ll slowly start to lose your mental sharpness, especially if you aren’t consistently exercising your mind through the creative arts.

Making sacrifices for early retirement is worth it. Putting in the effort while you have the energy isn’t a big deal.

If possible, shoot to retire between 40 – 50 years old. Such an age range provides the maximum amount of time for wealth accumulation while also minimizing regret for working not enough or too long.

Retirement Amounts By Age Shows Why The Average American Is Screwed

The Negatives Of Early Retirement Nobody Likes Talking About

Readers, are you surprised about how much the average 65+ year old retiree spends in retirement? What categories surprise you the most and why?

The post The Average Spending Amount In Retirement Is Surprisingly High appeared first on Financial Samurai.

from https://www.financialsamurai.com/the-average-spending-amount-in-retirement-is-surprisingly-high/

#Financial Samurai

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deanewaldman · 4 years

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Funding the Unfunded, and Their Mandate

The Unfunded Mandate is a legal contradiction and humanitarian nightmare that is also antibusiness. It needs a permanent fix, not a modification, adjustment, reconciliation, and most definitely not Washington style “reform.”

What is the Unfunded Mandate?

In 1986, Congress passed EMTALA (Emergency Medical Transport and Active Labor Act), colloquially called the anti-dumping law. Its ostensible purpose was to prevent one hospital from “dumping” (transferring without medical justification) a critically ill patient or women in labor to another hospital because the patient has no money or insurance. Dumping would allow the first hospital to avoid paying the costs of very expensive care for which it will get no payment.

EMTALA created a new class of patients called the Unfunded Mandate. These patients receive very expensive care for which neither hospital nor providers will be paid. Of course they — institution and physicians — must still pay their own expenses, from nurses’ salaries to electric bills.

Very, very large sums of money are involved. Four years ago at my own medical center, the cost of uncompensated care for the “unfunded” was $233,000,000, which represented one quarter of the Hospital’s entire annual operating budget. Can you name any industry where federal law requires individual businesses to give away 25% of their goods and services, and stay in business while prohibited from raising prices?!

Hospitals are forced to do whatever they have to in order to keep their doors open: over-charge insured patients, $2 per aspirin, double billing, creative accounting, up-coding, cherry picking patients, etc. Many are illegal and yet are done every day. Further, hospitals aggressively go after insured patients who have unpaid bills — the underinsured.

Who are the “Unfunded”?

Most assume that “unfunded” is synonymous with uninsured. While unfunded certainly includes the 45-50 million Americans who have no health insurance, there are tens of millions more who are also unfunded or underfunded–the underinsured for whom insurance doesn’t protect.

Contrary to public belief, health insurance is not supposed to pay for care. It is intended to protect the families from financial disaster in the event of a very large medical bill, one they cannot afford to pay. The millions of Americans who signed up for ACA Bronze level insurance are part of the unfunded. They have a 40% co-pay which makes them under-insured in the event of any illness that requires hospitalization.

According to the Commonwealth Fund 2012 Biennial Health Insurance Survey, as many as 84 million Americans who are insured through their employers do not sufficient coverage to avoid bankruptcy in the event of major illness.

Do not forget our veterans. They wait forever to see a doctor because they are “unfunded.” VA hospitals have insufficient funds as well as inadequate systems and culture to provide care in a timely manner to those who need it now.

When you include all the groups above, “unfunded” refers to essentially every American.

Funding the Unfunded

Systems thinkers say the best way to “fix” a problem is to dissolve it: change the system so the problem ceases to exist. We can dissolve the unfunded mandate — by funding it.

Create Health Savings Accounts (HSAs) for all 320,000,000 Americans, whether citizen or not. Fund these HSAs out of tax dollars, and allow people to put in more if they wish without limit.

Allow the money to accumulate over time: no use-it-or-lose-it. HSA funds can only be used for medical expenses and health insurance. Mandate that every American purchase at least catastrophic health insurance that pays out when some upper limit of dollars expended is reached, for instance, a sizeable fraction of the total amount in the HSA.

There is ample precedent for such a mandate. First there is Medicare, which for decades has been taking out a certain amount each month for medical spending after age 65. Then there is the ACA penalty tax for not purchasing insurance. Other countries have similar mandates.

In Germany, the government takes money out each month from every citizen to pay for health insurance that the individual chooses. If the person is working, it comes out of payroll. If unemployed, it comes out of unemployment benefits. If retired, it comes out of pension distributions. By law, every German citizen must have insurance. Non-citizens are not included.

The Budget

Conservatives will instantly react: where is the money coming from? How will we fund it? That is actually the easy part. Consider how much money Medicaid, Medicare, and ACA subsidies expend through insurance intermediaries and don’t forget to include the cost of their massive bureaucracies.

Now imagine that we place $5000 per year in personal HSAs. With 320,000,000 Americans, that equals $1.6 trillion. According a newly released Deloitte study, in 2012 the U.S. spent $3.4 trillion on healthcare when our population was 313 million. Thus, two years ago, before the ACA was implemented, the U.S. spent $10,863 on every man, woman, child and baby in this country, more than double what a “Universal HSA” Plan would cost.

And, oh by the way, that $5000 would pay for health care not healthcare BARRC-bureaucracy, administration, rules, regulations, and compliance.

What about the poor?

In 2012, the U.S. spent $8290 for every Medicaid enrollee ($415 billion÷50 million people). Putting $5000 per person into HSAs to cover their insurance and medical costs would save $165,000,000,000 dollars a year.

While certainly there is a primary altruistic purpose to pay for medical care for the poor, there are also practical, fiscal advantages. A healthier populace is both less expensive and will generate more GDP, whether citizen or non-citizen. Further, there is the personal responsibility that comes with managing one’s own health care dollars.

What about illegal (“undocumented”) residents?

At present, illegal residents comprise a major portion of the cost of the unfunded mandate. They are not eligible for either Medicaid or ACA subsidies and typically are uninsured. Yet they need medical care and end up generating large uncompensated costs that force the hospital to “get creative,” or close their doors. The Census bureau reports that at least 59% of illegal residents pay taxes.

For ethical as well as practical reasons, the undocumented should get HSAs like citizens, and then they should pay for their own insurance and their own care just like everyone else. Those who might balk at paying $65 billion a year ($5000*15 million people), keep in mind you are paying more than that right now because of the Unfunded Mandate with illegals showing up in ERs.

In universal health care countries, the undocumented are generally excluded from the national mandate to provide care. Go ask two million Turkish guest worker, non-citizens in Germany where and if they can get medical care.

At present, the issue of mandated care without compensation for people who are in the U.S. illegally is unfair, unethical, inconsistent, and avoidably expensive. Let’s discuss it openly and decide what to do by consensus.

What about seniors?

Most seniors have paid in to the Medicare Trust for 40 years. They should be bought out, i.e., the amount they put in plus some nominal growth factor should be placed in individual HSAs. The cost of care for seniors would plummet, as Medicare would cease to be controller of our health care and return to its original model–a mandatory savings account for retirement. Medicare fraud would cease to exist as the individual carefully watches his or her own funds, and no one is billing the government.

Fully insured yet unfunded!

This is certainly the most worrisome group – those who have full coverage but cannot get the care they need.

Government has only one way to “cuts costs” – by medical rationing. Thus, ACA’s IPAB (Independent payment Advisory Board), tasked with cutting costs, will make certain high-dollar items like chemotherapy, kidney dialysis or heart surgery, unavailable to people over certain ages or possibly with genetic disorders. That will cut costs by denying care. Their catch phrase could be dead patients are cheap patients.

A person's insurance might be fully funded; the patient might even have a well-funded HSA; but if the care is not funded (authorized), then effectively, that patient is unfunded. He or she will not receive necessary, even life-saving, care. This is happening right now in Great Britain.

Conclusion

Funding the Unfunded Mandate with some Universal HSA Plan would dramatically reduce spending on healthcare and would be self-sustaining. Neither of those statements is true for our current healthcare system. Universal HSAs would eliminate a massive, inefficient, and wasteful federal (and State) healthcare bureaucracy. The Plan would restore economic (buying) power to the consumer and thus infuse free market forces into healthcare. There would be strong buyer incentives to economize as well as competition among sellers, neither of which exists at present.

I often use the phrase We The Patients to emphasize our commonality: we are all patients or we will be. Unfortunately, We The Patients are also We The Unfunded. We must fund ourselves.

Read More click here:- Fixing US Healthcare

you can see Related blog on Tumblr: - Affordable Healthcare

#Affordable Healthcare #Fixing US Healthcare

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729renegades · 5 years

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BUSINESS LESSONS FROM THE TELLY

Studies show that staff are far more productive when they feel enthusiastic and motivated.

And, I’m willing to bet most of your staff spend less than half their time at work being genuinely productive… I speak from experience NOT from any judgement.

I’m also willing to bet, this is as frustrating to you as it is to me… but here’s the thing, you and I are usually the major cause of the problem.

Now, it never ceases to amaze me how we can find business lessons in the strangest of places.

I was reflecting on this very subject recently when Lady G and I were watching the Great British Menu. For those who don’t know this programme, it’s a competition involving professional chefs from all over the UK who each cook four unique dishes of food. These dishes are then judged, first by a fellow chef then again by a group of food critics.

The prize? Four chefs go to the final and get to cook one course each in a 4-course dinner for 60 guests at a special banquet!

So, what’s the lesson in this you may wonder?

The initial reaction from the judge is not what you might expect… there’s no immediate criticism, no, “What the f*ck were you thinking!”… no shouting, no screaming, no bollockings!

Instead, after the chef cooks one of their dishes, they then sit down with the judge and they share the dish together.

As they eat, the judge simply asks the chef if he or she is happy with what they’ve produced… questions like, “is that the flavour you were hoping for from this sauce?” or “happy with the texture of your sweetbreads?”

Imagine doing this with your staff.

It doesn’t take long for even the least aware member of staff to realise that you’re actually alluding to a concern you have and pointing out a potential problem without having to scream and shout about it.

The disarming nature of the question encourages the staff member to actually think about their answer and quickly realise there’s room for improvement.

But then, the Judge ends with a really great question … “what score (out of 10) would you give yourself for this (dish)?”, and this is genius in its simplicity.

You see, by asking the staff member to score themselves you’re really asking… “Is this your best work?” or “Could you have done even better?”

The score your staff member chooses can often reveal a lot about them.

Awarding themselves a justifiably high score will show confidence whilst a justifiable low score will show they are aware of the low standard of their work and therefore give you the opportunity to ask what they could do to improve that score.

Of course, they could give themselves an unjustifiably high score… which would be sign of overconfidence or arrogance. This would require you to point out the areas of improvement needed and why.

Or, they might give themselves an unjustifiable low score which would indicate either humility or lack of confidence. This would require you to point out their great work and encourage them to build on that.

What a great way to help our people feel enthusiastic and motivated, to encourage them to want to work well and to align their goals with those of our businesses?

So, what else can we do to develop our people?

Motivate

It’s a myth that people are only motivated by money… in reality, it’s based on giving people an appropriate combination of rewards such as career progression, responsibility, influence, recognition, security, challenges and feedback.

And remember that what motivates you and me, doesn’t necessarily motivate your staff!

Manipulating and bullying people simply does not work. It leaves them demotivated. The key to successful motivation is not only their attitude but yours.

Try treating employees as partners in the business, keep them informed, ask for their views, provide a comfortable working environment, the right training and equipment for the job.

Build up an atmosphere of trust and teamwork, not defensiveness and fear. A company run on fear is a miserable place to work, full of people who avoid making decisions in case they are wrong.

Avoid blame — and acknowledge that mistakes are an inevitable part of the learning process but encourage people to ask for help when difficulties arise.

Keep communication open and honest. Hold regular brief meetings to plan work, establish goals and discuss any special events and deadlines. Share any news and problems and give employees credit publicly for their achievements.

Take an interest in people’s lives and be prepared to chat about the things your employees are interested in. Listen actively to whatever people have to say.

Celebrate

Let them know what is expected of them. The objectives you identify for the company need to be turned into practical, achievable goals for the individuals working in it. If employees can see how their success contributes to the big picture, they will feel motivated and enjoy being part of the team.

Agree realistic but challenging goals that directly benefit the business. Ensure they can influence and monitor the results they are being asked to achieve then celebrate their achievements.

Give everyone a chance at success. For example, a book-keeper is more likely to stop debtors taking liberties if he or she has responsibility for bringing the figures down. The book-keeper also needs to know why this matters so much. If employees understand problems, they often come up with solutions themselves.

Communicate

Most employers find it all too easy to complain about employees’ mistakes. If you’re going to criticise, do so in ways that’ll help them improve. But more importantly, try to praise their achievements ten times as often as you point out errors!

Let your employees know how they are doing but remember, the objective is to improve performance, help learning and build their motivation and self-esteem. Any feedback that doesn’t contribute to these goals is counterproductive.

Respond quickly and be clear on the issue. Allow time to do it properly and show real feelings. Be delighted or disappointed. Don’t save up praise or criticism for reviews, or for when you lose your temper.

Don’t make it personal. Describe the consequences of an action, rather than criticise the person. Keep your praise and negativity entirely separate. Never end with negativity. Once the message has sunk in, encourage the employee to think through with you how to get better results.

Deliberate

You can never win an argument with an employee. The loser will become demotivated, and that is not in your interests as an employer.

If disagreements arise, limit the damage. Carefully, separate facts from opinions and emphasise the areas where you agree.

Listen while they talk and acknowledge their opinions even if they are at odds with your own.

Try putting yourself in their shoes.

Give people room to save face, especially after criticism, failure or disappointment. Riding roughshod over them simply leads to poor morale, low productivity and high staff turnover.

Remunerate

Handled badly, pay can be a terrible demotivator at every level in your business. Be aware that every pay packet sends a message and employees are sensitive to its nuances. If you pay less than the competition, expect to have demotivated employees. And if you give rises only when people threaten to quit, you are rewarding disloyalty. Also, avoid paying higher rates to attract new employees, current employees will resent it.

Be careful with year-end profit as a target for bonuses. Employees may not see a direct link between their efforts and their bonuses as the delay may be too long.

People know the profit figure may be altered for tax reasons and only a few employees will believe their efforts can influence the result.

The most visible or obvious part of any remuneration package is salary which can be made up of several elements including basic pay, commission, bonuses, profit-related pay and share dividends. That said, many of the most motivated people are also some of the lowest paid (e.g. nurses and teachers)

Many employees appreciate company contributions to pension, insurance or healthcare schemes and it’s often much cheaper for companies to offer access to group schemes like pensions than it would be for employees to purchase individual rights

Company cars are always a popular perk for many employees despite increasing taxation on cars and fuel.

Consider staff discounts on your products or services.

Subsidised meals and accommodation can be attractive benefits to many staff.

Rewarding staff through company events and days out can be very effective. You can use them to reward specific achievements, like achieving quarterly sales targets. It is a particularly useful way of rewarding groups of people and helps build team spirit at the same time.

For many employee’s money and benefits are not the main motivator. Doing something worthwhile or working for a worthwhile cause is all the motivation they need.

Stimulate

You need to know which individual employees are ambitious and which are likely to be content to stay in the same jobs. Identify which employees have the capacity and desire to learn new skills.

Take every opportunity to make people’s jobs more satisfying. Increasing the variety of tasks employees undertake makes work more stimulating.

Give employees the chance to shoulder more responsibility and increases their sense of involvement. Swap people around so they can try each other’s jobs and appreciate each other’s roles. This develops versatility and team spirit.

You risk losing talented employees if they are under-used, frustrated or bored. Find out what they want by asking them what you could do to make their jobs more rewarding. Ask employees the key question: ‘If you could improve just one thing about your work situation, what would it be?’

Whatever you do to attract, retain and develop your people, remember this, they are your most valuable asset. Happy staff means happy customers. Happy customers mean more sales. More sales means improving profits. Improving profits means happier business owners.

So, if you want to be happy, look after your people!

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kennethherrerablog · 5 years

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8 Moves to Help You Retire Early — Even If You Don’t Make Six Figures

For some of us, 30 minutes seems too long to wait (especially if it’s lunchtime). But if you’re thinking about retirement when you’re in your 30s, you could be looking at another 30 years.

That’s because at 59½, you can start withdrawing from your retirement accounts without penalty and at 62 you can start taking partial Social Security.

But those days can seem far off, especially if you’re in a job you don’t love and have too many cities unchecked on your travel bucket list.

If you’ve decided you don’t want to wait until your 60s to retire but don’t think you make enough to retire early, then keep reading.

Do You Need a Six-Figure Income to Retire Early?

TL;DR answer: No.

Long answer: The equation for early retirement isn’t just mathematical. If you can commit to learning some basic personal finance concepts, changing behaviors and putting a little extra work in now, you can retire early — even if you don’t make a lot of money.

But that doesn’t mean you can retire early on any lifestyle.

The average household pre-tax income is around $73,000 and the average American household spent around $60,000 in 2017, according to the Bureau of Labor Statistics.

That spending includes expenses you might not have in retirement, like pension contributions, but excludes income tax — which you still have to pay on most retirement account withdrawals — so it’s a reasonable amount to base retirement calculations on.

But if you want to live off of $60,000 for 40 years, you’d have to save almost $2 million before retirement. Which, if you have 20 years to save, would require you to contribute over $2,000 a month to retirement. Feasible for some, but not for all.

8 Steps to Take Now If You Want to Retire Early

If you want to retire before 66 but your income doesn’t allow you to invest thousands of dollars a month, we’ve got eight simple — though not necessarily easy — steps you can use as a starting point to set your retirement planning up for greater success and earlier achievement.

1. Write Down Your Goals For Retirement

Before you start, figure out when and how you want to retire.

Create a projected annual budget for your first year in retirement. Make educated guesses as to how much you’ll travel, whether you’ll have a mortgage, what your healthcare could cost, and what the cost of living in your dream retirement location might be.

Then look at your current budget, and adjust your expenses to determine how much money you’ll need to withdraw that first year. It won’t be 100% accurate, but it’ll give you a goal to shoot for in your savings.

Once you’ve decided what you need every month, you can plug that into a retirement calculator to see how much you need to save every year and for how long.

2. Automate, Automate, Automate

Since you’re trying to retire early, you’ve officially committed to never missing a monthly retirement account contribution again. Congratulations!

But that means you can no longer plan your retirement contributions around what you have left at the end of the month. You have to make them a priority, and the easiest way to do that is to automate your contributions.

Because you’ve already figured out how much you need to have saved, you can figure out how much you’ll need to contribute from each paycheck and set it up as an automatic transaction.

Is that amount too big for you right now? Work up to it. Start with an amount that seems a little uncomfortable and increase it by 1% a month until you get to your goal. You’ll eventually get used to living without that money.

3. Lower Your Living Expenses

Depending on how you’re living, your initial calculations may have said you need upwards of a $2 million nest egg to retire. Want to know how to lower that number?

Lower the amount you’ll need to live on in retirement!

You may spend $60,000 annually now, but what if you could live on $50,000 per year, or $40,000? That would significantly decrease the amount you’d need to save to retire.

Focus on the big things first: housing, transportation, food and taxes.

Get a roommate or rent a room out on Airbnb, buy an affordable used car you can pay off in less than two years, and cook at home more. Adopting these few lifestyle changes can make a bigger difference than a lot of little cost-cutting moves combined.

Also, the more you contribute to your 401(k) — or comparable plan — and HSA (Health Savings Account) each year, the less money you owe in taxes!

You can play around with how much your savings will speed up your retirement by using the “multiply by 25” rule. The rule basically states that once you know the amount you need to live off of in retirement (including contributions to an emergency fund for unexpected costs), multiply that by 25. You’ll achieve financial independence — the ability to live off your investment dividends — once you’ve hit that number.

This rule of thumb is based on the assumption that your retirement will last 30 years, so if you want to retire at 35, you’ll need to adjust those figures if you plan to live past 65.

Using the multiply rule, if you want to withdraw $60,000 every year from your retirement fund without touching the principal, then you’ll theoretically need $60,000 x 25, which is $1.5 million.

But if you can cut your expenses to $45,000 per year, you’ll reach financial independence once you hit $1.125 million. That’s $375,000 less!

If you start cutting your expenses today, you’ll free up money to invest as well. Double win!

4. Increase Your Income Now

If you’ve cut every expense possible and you’re still struggling to increase your savings rate, you might need to increase the amount of money coming in.

If you’re working with a lower income, you can’t afford to wait for raises and promotions to gradually increase your paycheck. If you don’t focus on investing now, you’ll have to save significantly more over time to reach your goals.

Here’s an example of the total you’ll need to invest to reach roughly $113,000 by age 55, as calculated on the Securities and Exchange Commission Compound Interest Calculator.

Age Started Monthly Contribution Total Contributed at Age 55 Balance With 7% annual return 30 $150 $45,000 $113,848 35 $230 $55,200 $113,147 40 $375 $67,500 $113,080 45 $685 $82,200 $113,571

You can see from the example that someone who starts investing at 45 will have to contribute an additional $37,200 by the age of 55 to get the same return as someone who started at 30.

So if lack of income is keeping you from making your monthly contribution goals, ask for a raise or promotion, spend a year doing a side hustle or find another way to help you meet your goal as soon as possible.

5. Pay Off Debt

The market has historically returned 9 to 11% on investments. When we adjust for inflation, that becomes 6 to 8%. Alternately, a new credit card averages 17.2% interest and graduate student loans are running north of 6%.

Having debt of any kind will eat away at your returns over time, but especially any debt with interest rates of 6% or more. Focus on paying these debts off above saving for retirement

6. Optimize Your Retirement Accounts

A lot of people think they need to optimize (or set up accounts for the greatest profitability) before they start investing for retirement. Let’s debunk the myth right now: Saving comes first, optimizing comes second.

People aren’t putting off retirement because they don’t have a perfectly balanced portfolio, the fees are too high or they can’t find a good financial planner. They don’t retire because they haven’t saved enough money.

If you want to retire early, focus on saving first, then learn what will make your savings work harder for you. When you’re ready to start optimizing your portfolio, you’ll find it’s not as hard as might think.

Here are a few ways to optimize your retirement savings:

Get your employer’s 401(k) match.

Open a Roth or traditional IRA (or both!).

Take advantage of the Roth IRA if you’re in a low tax bracket.

Opt for low-cost mutual funds with fees of 1% or lower.

Roll over your old 401(k)s into an IRA to consolidate accounts.

Avoid taking early withdrawals or 401(k) loans.

If you hire a financial advisor, make sure he or she is a Certified Financial Planner with a fiduciary responsibility, which means they are legally obligated to act in your best interest.

That’s all you need to know to build a successful retirement portfolio. If you’re interested in learning even more about investing, check out some of our favorite books on the subject.

Think about diversifying your investments beyond the stock market, too. Investing in real estate or starting your own business aren’t quite as easy as socking money away, but they’re good ways to add a safeguard to your retirement plan.

7. Start a Business

A lot of early retirees don’t think about starting a business, but doing so serves two purposes.

First, if you retire at 50 or 55, you’ve still got a good 20 years of life left, during which you’ll want to stay active mentally and physically. There are only so many cruises and golf games to keep you stimulated.

Second, a business can help you retire earlier than planned. If you do it right, you can rely on extra income from your business (instead of investments) to be your retirement income.

Many retirees will use their years of professional experience to open consulting firms, coaching businesses or other passion projects. Or you can start something totally different than your lifelong gig.

Whatever business you want to launch, start part-time while you’re still working full-time so the business has time to grow, and you can invest money into it gradually.

8. Do Your Best to Stay Healthy

A major factor to consider in retirement at any age is the cost of healthcare.

Medicare isn’t available until 65, so many early retirees have to consider non-subsidized healthcare. Premiums for family coverage without a government subsidy average a whopping $1,168 per month for an average $8,803 deductible. That can derail the best-made retirement plans.

There’s no way to control the unexpected, but you can do your best to control long-term health risks. The leading causes of health-related death are heart disease, cancer and respiratory diseases. Exercising and eating healthy will go a long way in cutting down your healthcare and life insurance costs over time.

Finding additional income streams, making lifestyle changes and committing to better money habits aren’t quick fixes, but working to save those extra dollars now can help put you on the road to early retirement.

Jen Smith is a former staff writer at The Penny Hoarder. She and her husband paid off $78,000 of debt in less than two years on two less-than-average salaries. She gives money saving and debt payoff tips on Instagram at @modernfrugality.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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mikemortgage · 5 years

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Top five return-killing portfolio mistakes, including owning too much Canada

A few weeks ago, our company 5i Research launched a new portfolio analytics service, allowing customers to ascertain their investment goals, income needs, risk parameters and other factors, and to determine whether their current portfolio is set up properly to meet these personalized goals. Whether it is for a ‘second opinion’ on a broker-advised portfolio or someone who is a true ‘do it yourselfer’, many investors simply need some more advice in how to set up a portfolio properly. Even in only a few weeks of operations, we have already noticed some common trends in our clients’ portfolios. Our bet is some of these might apply to you as well.

Spend more money

Most brokers and fund companies want more of your money to invest, because of course, fees. However, many baby boomers these days are in excellent financial shape. They have worked, saved and invested. Some have solid pensions (see below). Many of these investors, if one was to give a completely unbiased opinion, should be investing less and spending more. Take that trip, give money to your kids, donate to that charity: Most Canadians dramatically overestimate how much money they are going to need for their retirement. Many investors have giant portfolios that do nothing but grow bigger each year. Now, no one wants to run out of money. But most everyone wants to have more fun. Spend a little.

The yield curve has inverted: Here’s why investors shouldn’t freak out and go to cash

Five things investors always forget, from the power of dividends to the futility of market timing

Five approaches to achieving the right asset mix for your portfolio

Too many small and insignificant security positions

We get it, no one likes to take a loss. But is there any point in keeping a 0.3 per cent position in a stock in your portfolio? Think about it: That stock could quadruple and its impact on your portfolio wouldn’t even be more than six months’ worth of dividends on some companies. And — admit it — you know it’s probably not going to quadruple. Sell your losing, small positions. Clean up your portfolio, take a tax loss, and buy something better.

Too much invested in Canada

Investors who spend in Canada do need to be worried about currency risks. But Canada represents less than five per cent of world capital markets. Is there any need to be 80 per cent invested in your own country? Most investors do have a ‘home-bias’ and like to buy what they know. But having too many assets in Canada causes you to miss out on faster growth internationally, and on companies you just can’t get good representation from within Canada. The healthcare and tech sector are good examples. Sure, Canada has a handful of good companies in these sectors. Looking internationally, though, you’ll find hundreds, in all sorts of market caps and with all sorts of growth potential. Diversify more internationally and reap the benefits.

No consideration of pension

This a common problem we see. Many investors, lucky for them, have solid pension plans. Yet many fail to consider this when they are setting up their portfolio’s asset allocation mix. We can argue that, with a solid pension covering most if not all of your ongoing spending needs, an investor might not need any fixed income exposure in their portfolio at all. Sure, a larger allocation to stocks ‘looks’ riskier, but when you have that steady pension cash flow coming in month after month, you can withstand more market volatility. If your pension exceeds your expenses, you can even buy more stocks each month with the difference and get even greater potential compounded returns.

Too many banks and dividend stocks

We know (most) investors like the banks, and we know that all investors love dividends. We will be brief, as we know Canadians are overweight the financial sector. If you layer on exposure through ETFs and mutual funds, we might dare to say Canadians have way too much exposure to banks. Now, unlike others shorting the sector we are not particularly planning for a downturn, but having 30 per cent, 40 per cent or 50 per cent of any sector is never a good idea. Now, you might say, ‘It’s OK I also own telecoms, utilities and pipeline stocks.’ But, in many market cycles, all dividend stocks move in tandem. Thus, you might only have 25 per cent in banks, but you might have 55 per cent overall in dividend stocks. Maybe think about some growth exposure as well, or non-dividend stocks that allow you to defer taxes and (likely) pay lower taxes than dividends upon their sale.

Peter Hodson, CFA, is Founder and Head of Research of 5i Research Inc., an independent research network providing conflict-free advice to individual investors (http://www.5iresearch.ca).

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jamieclawhorn · 6 years

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Top stocks for 2019

Andy Ross: Diageo

Given 2018 was a tough year for investors in the UK, my top stock for 2019 is a defensive company that managed to increase its share price last year.

Diageo (LSE: DGE) is not reliant on the UK for sales as it’s a global business, operating in over 180 countries with a portfolio of over 200 drink brands. Given Brexit uncertainty is likely to drag on well beyond the March deadline, I think this global reach will be popular with investors this year. I reckon Diageo should stand out in 2019, and so it seems do other investors as the P/E of 23 is quite hefty.

Andy Ross does not own shares of Diageo.

Kevin Godbold: Britvic

We face a lot of uncertainty heading into 2019 and I’m putting my faith in a business with sound quality indicators operating in a defensive industry. My pick for the year is soft drinks provider Britvic (LSE: BVIC), which has a record of steady annual growth in revenue, earnings, operating cash flow and the dividend.

City analysts predict decent rises in the dividend payment for 2019 and 2020, with the payments covered almost twice by earnings. The share price has been consolidating and the valuation is modest. I think conditions are ripe for a share-price advance during the year.

Kevin Godbold owns shares in Britvic.

Rupert Hargreaves: IG Group

If 2019 is going to be anything like 2018, investors are in for a rough ride. With this being the case, I’m picking IG Group (LSE: IGG) as my top stock for 2019.

As one of the world’s largest online trading businesses, IG should thrive in volatile markets. Even though the group is facing headwinds in the form of regulations, which will hit the profitability at the group’s spread betting and contracts for difference business, I reckon IG’s diversification and international footprint will allow it to continue to thrive for many years.

Today the shares are trading at what I would call a bargain valuation of just 11.4 times forward earnings and offer a dividend yield of 6.9%.

Rupert Hargreaves does not own shares in IG Group.

Tezcan Gecgil: GlaxoSmithKline

I expect 2019 to be a memorable year for big pharma and healthcare stocks. Due to its rock-solid dividend and growth potential, my top choice is GlaxoSmithKline (LSE: GSK).

Despite management’s efforts to boost the company’s financial strength, since 2014 the shares have not done much for investors. However, I am now excited about the recent merger announcement between GSK and its US counterpart Pfizer, creating a leader in over-the-counter products. They will spin off their consumer healthcare brands in a new venture of which GSK will own 68% and contribute with its top brands, including Theraflu, Sensodyne and Voltaren. Watch out for this winner.

Tezcan Gecgil does not own shares in GlaxoSmithKline.

Royston Wild: Begbies Traynor Group

Begbies Traynor (LSE: BEG) may not be the flavour of the month right now, its share price diving in response to late December’s half-year trading statement.

But as the UK economy struggles in response to the drawn-out Brexit saga, an event that threatens to persist well into the year, I reckon it’s the perfect stock to buy for 2019.

The AIM-listed business recently announced a 40% pre-tax profit drop between May and October, to £0.6m, but this was due to the impact of prior acquisitions. In truth, trading remains strong – revenues were up 8% in the period, with the business reporting “increased activity levels across both operating divisions”. And momentum is likely to remain robust given the economic backcloth which is already driving solvency numbers sky high.

Right now Begbies Traynor trades on a cheap forward P/E ratio of 14.6 times and carries a 4% corresponding dividend yield. This, in my opinion, makes it a brilliant buy.

Royston Wild does not own shares in Begbies Traynor Group.

Edward Sheldon: Unilever

Economic and political uncertainty is elevated right now, and I believe there’s a good chance this uncertainty will persist throughout the year. As such, I’m picking ‘defensive’ stock Unilever (LSE: ULVR) as my top stock for 2019.

Unilever owns a fantastic portfolio of food and drink, homecare and personal care brands, and its products are used by over 2bn people across the world every day. Whether the global economy is expanding or contracting, you can be sure people will still buy Unilever’s products such as Dove deodorant, Domestos cleaner or PG Tips tea.

While Unilever’s price-to-earnings (P/E) ratio is higher than the average FTSE 100 P/E, I think it’s worth paying a little more for the stock, as the company has a number of high-quality attributes such as consistent cash flows, a high return on equity and a great dividend growth track record.

Edward Sheldon owns shares in Unilever

Alan Oscroft: Royal Dutch Shell

A fall once again in the��Royal Dutch Shell (LSE: RDSB) share price has given us a second bite at my current favourite investment. The FTSE 100’s biggest company is now on well-covered forecast dividend yields in excess of 6%.

Shell kept its payments going throughout the oil price crisis (and you could have secured a yield of more than 8% in early 2016), and it has not once cut its dividend since the end of World War II. I really don’t see that track record coming to an end any time soon.

That makes Shell my top pick for 2019 and well beyond.

Alan Oscroft does not own shares of Royal Dutch Shell at the time of publication.

Roland Head: Mondi

The most profitable investments aren’t always the most glamourous businesses. I believe that’s true of FTSE 100 cardboard packaging group Mondi (LSE: MNDI). The share price of this £8bn firm has doubled over the last five years, but I think there’s more to come.

The recent market sell-off has left the stock trading on just 9.5 times 2019 forecast earnings, with a dividend yield of 4.3%. In my view that’s too cheap for a company with an operating profit margin of nearly 14%, and a track record of growth and innovation.

Mondi is on my short list of shares to buy for 2019.

Roland Head does not own shares in Mondi.

G A Chester: Polymetal International

I tipped mid-cap gold miner Polymetal International (LSE: POLY) this time last year. A weakening gold price for much of the year didn’t help its cause, and while it outperformed the FTSE 250’s 15.6% fall, a decline of 10.7% was hardly cause for celebration. However, I’m sticking with the stock as my top buy for 2019.

Its earnings are forecast to increase 20% this year, giving a P/E of 10 and a PEG ratio of 0.5. This valuation is cheap and suggests great scope for a strong rise in the share price. There’s the added attraction of a prospective 4.8% dividend yield.

G A Chester has no position in Polymetal International.

Paul Summers: Diageo

Reflecting my rather cautious view on the UK economy and stocks in general, my top pick for the year is drinks giant Diageo (LSE: DGE).

Most people tend to continue consuming alcohol in troubled times, regarding it as an affordable luxury. With ‘sticky’ brands including Smirnoff, Guinness and Baileys, the £66bn cap is surely one of the best defensive plays in the FTSE 100.

But growth could also be on the cards. In addition to its potential in emerging markets, there are rumours it could soon enter the lucrative cannabis space by adding marijuana-infused drinks to its portfolio.

Trading for 22 times earnings, Diageo’s share price is unlikely to skyrocket over 2019 but its truly global reach should ensure that any Brexit-related shenanigans have minimal impact on its bottom line.

Paul Summers does not own shares of Diageo.

Want To Boost Your Savings?

Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled “The Foolish Guide To Financial Independence”, which is packed full of wealth-creating tips as well as ideas for your money.

The report is entirely free and available for download today, so if you’re interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

More reading

Is Footsie dividend stalwart Shell’s dividend under threat?

Two super FTSE 100 dividend stocks I’d buy for 2019

Why I’d pick the GSK and AstraZeneca share prices to beat my State Pension

One dividend growth stock I’d buy alongside the GSK share price

Two FTSE 100 stocks Warren Buffett might buy

The Motley Fool UK owns shares of and has recommended Britvic, GlaxoSmithKline, and Unilever. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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thegloober · 6 years

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How to plan for an uncertain financial future

The tricky part about retirement planning is uncertainty.

Uncertainty in retirement planning comes from three major sources.

1. Current and future income

Doctors are fortunate in that they have very high job security. Even if you were to be let go from your current position, there will almost always be another position somewhere in the country (although you might have to move out of your current metropolitan area).

However, the high income doctors currently enjoy is hardly certain to persist in the future. Healthcare in America is very expensive, and government and private insurers are continuously looking for ways to cut physician reimbursement (or at least slow its growth). There has almost always been a pessimism from physicians about the future of doctor salaries (although previous fears from the past few decades have largely gone unrealized).

2. Investment volatility

The second form of uncertainty in retirement planning comes from the volatility of investment returns.

It is easy to plug in a single number for your investment return in a calculator or investment spreadsheet.

The reality, of course, is that the stock market does not go up 10% every year. The volatility of the stock market is why equity returns are so high in the first place, and the stock market doesn’t always deliver high returns, even over long periods of time.

For example, the historical volatility (standard deviation) of the S&P 500 is 20% per year. Assuming that each year’s investment returns are independent (i.e. not correlated) with the prior year’s returns, then over a 35-year investment horizon, the standard deviation of your investment returns is 20%/SQRT(35) = 3.4%.

Many investors like to be 95% confident that they will meet their investment goals, which means you would need to plan for a long-term return that is 5.6% (3.4% x 1.65) lower than the expected return.

Over the course of decades, the difference between an 8% return and a 2.5% return is millions of dollars.

3. How long you’re going to live

The final form of uncertainty is not knowing how many years of retirement spending you will need to save for.

We’ve all had patients or friends who worked their whole life to reach retirement, only to pass away early in retirement from a sudden illness. In retrospect, they did not need to save anything in retirement if they knew they would die shortly after retiring (actually, they probably would have retired earlier had they known).

On the other end of the spectrum, you could live to be 100 or more. Most retirement calculators assume a retirement of 30 years, but more and more people are living longer than that.

You can look at an actuarial table from the CDC or another source to know the average life expectancy at your desired retirement age, but of course, you could live much longer (or much shorter) than that. Your retirement plan has to be able to handle the “worst” case scenario, which would be a long retirement.

Flexibility is the solution to uncertainty

Because of this uncertainty, most of us will have to save significantly more than what we will eventually spend in retirement — the difference will go to our heirs when we die.

There will always be some uncertainty in retirement planning, but the single theme that binds many of the methods to reduce uncertainty in retirement planning is flexibility.

There are many forms of flexibility when it comes to retirement planning:

1. Spending flexibility

This has been discussed previously by others, and for good reasons — this is one of the most important forms of flexibility in retirement planning.

If you are willing to decrease your retirement spending if the stock market does unexpectedly poorly (especially early in retirement), then you can probably use a higher withdrawal rate compared with someone who is inflexible in your retirement spending needs.

How do you increase spending flexibility? The easiest way is to reduce your fixed expenses. If you don’t have a mortgage or a car payment, then a higher percentage of your income becomes discretionary income. It’s much easier to cut a vacation or two from your retirement spending budget than to downsize your home.

2. Flexibility in your retirement date

Having flexibility in when you’ll retire will make saving for retirement a lot easier.

If you have a certain age in mind (such as 65) when you must retire, then you’ll probably need to save more and invest more conservatively to make sure you have hit your retirement number by that age.

On the other hand, if you have a willingness to work longer if necessary to reach your retirement goals, then you can probably save less (and spend more) during your working years. You can also invest more aggressively during your working years. Paradoxically, this means you might actually be able to reach your retirement number earlier than if you have a set retirement age in mind.

3. Job flexibility to increase and decrease work hours

Another key form of flexibility is your ability to easily increase or decrease your work hours. Doctors may be paid more or less in the future, but if you work in a shift-based specialty (hospitalist, emergency medicine, anesthesia), then you have the ability to simply work more to keep up with whatever income or lifestyle you want to have (up to a point).

Similarly, if you want to reduce your hours because you’re way ahead of your timeline to meet your retirement goals, it’s easy to do so. While other specialties may have some room to work more or fewer hours (e.g. take more or less call), physicians in shift-based specialties can more confidently project their future pay.

4. Retirement income sources that are independent of how long you’ll live (“health flexibility”)

Obviously, none of us know how long we will live, and we need to plan accordingly. Of course, we all would rather have the potential to live for many, many years after we retire as opposed to being limited by a degenerative, life-limiting illness such as heart failure, cancer, or Alzheimer’s. And for many of us, simply working until we die is not a desirable option.

However, from a financial perspective, you can increase your “health flexibility” by having more of your retirement savings in forms where how long you live does not matter.

Pensions and Social Security are the best examples. These retirement income sources will pay you benefits for as long as you live.

Annuities are another way to increase your “health flexibility”. While the safe withdrawal rate in the Trinity University study was calculated to be 4%, annuities will generally pay 6% or more (and this is after the insurance company takes their cut). This is because a retiree who uses a 4% withdrawal rate rarely runs out of money, but they have to plan in case they do have a long retirement.

An annuity ensures a stable lifetime income stream, but if you put your entire retirement savings in a fixed annuity, no money will be left to your heirs, and if your retirement expenses unexpectedly jump (e.g. increased healthcare costs), you could run into major cashflow issues at the most inopportune time.

Conclusion

Because of the uncertainties in future income, investment returns, and life expectancy, most physicians will end up saving much more than they will ultimately spend in retirement. However, various forms of financial flexibility allow you to “hedge” some of this uncertainty. Consider increasing one or more of these forms of “flexibility” as you think about and create your own retirement plan.

What do you think? What is the biggest source of uncertainty in retirement planning? Are there any other forms of “financial flexibility” that you would add to my list?

“Wall Street Physician,” a former Wall Street derivatives trader , is a physician who blogs at his self-titled site, the Wall Street Physician.

Image credit: Shutterstock.com

Source: https://bloghyped.com/how-to-plan-for-an-uncertain-financial-future/

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isaacscrawford · 7 years

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The Death of Objectivity

By MICHAEL TURPIN

For veterans of the healthcare industry, the current debate over the future of the Affordable Care Act – and proposed changes that would fundamentally alter Medicaid and individual market exchanges – is a frustrating battle of ideologies with the future of healthcare at risk. Our debate over who should be eligible for expanded coverage and how we reform reimbursement is often laced with self-preservation, which in our case means preserving an employer-sponsored system that is riddled with inequities, opacity, dubious middlemen and weak public and private sector fiduciary oversight. Those who provide, pay for and/or consume healthcare are drowning under rising per capita costs while many in the middle of these transactions grow fat.

As brokers, consultants and advisors, we have to face an inconvenient truth: we have presided over and benefited from a system in crisis. Not everyone believes our industry’s purpose is noble or necessary.

Health system stakeholders long to deal direct with employers. Many professional benefits managers hate being on the end of the latest pitch from their advisor to sell a project or broker to hawk a new product to increase commission income. In the digital age, there is a heavy bias in favor of disintermediation and the elimination of distribution costs that are often not easily rationalized.

How does one grade the contribution of a sentinel? How does a client know whether the advisor who is paid a commission or fee is acting out of self-interest or as a trusted change agent?

How one makes money is as important as how much one makes in certain industries. There are ethical implications to anyone who adds cost to a healthcare system fraught with waste, fraud and abuse. This expense translates into higher cost and erodes the ability for employers and public entities to finance care for those that are often most in need.

In the last two decades, ineffective regulatory and advisory oversight of the financial and healthcare industries has allowed abuses to take place in the form of mergers and protected opacity in pricing.

Sentinels – insurers, brokers and other intermediaries – often take the position that things could have been alot worse had they not provided oversight of procurement and payment. Yet, it feels like the cop who is asking to be congratulated because only half the suspects got away.

It’s actually hard to find a healthcare stakeholder who does not feel disabused for the role they play in this broken system. Everyone has a chip on their shoulder.

Doctors routinely wave out-of-network, out-of-pocket and steer patients to outpatient clinics and/or in office therapies to maximize reimbursement. Not-for-profit hospitals and outpatient clinics purchase drugs under special non-profit 340B provisions, affording them steep discounts from drug manufacturers and then significantly inflate pricing to patients while pocketing the difference.

Reserves at many non-profit insurers are as high as 400% of required capital reserves — and growing again. For-profit insurers engage in a range of obfuscation practices to preserve profit per member by leavening margin across a range of services they provide. When once asked how they could live with their business practices, a wry CEO remarked to me, “we’ll keep hiding the Easter eggs and you keep looking for them.”

Perhaps the worst offenders are certain larger Pharmaceutical Benefit Managers ( PBMs ) who engage in opaque pricing, formulary manipulation and contractual games of semantics to maximize their share of profit from drugs they neither produce nor consume. The roster of enablers magnifies the problem with consultants, brokers and agents who charge for services that they often cannot deliver in managing RX benefits. Caveat emptor to the generalist HR buyer who, in good faith, hires a generalist broker to manage a highly complicated pharmacy contract with an educated PBM.

Employers are often more focused on avoiding disruption than acting as responsible fiduciaries to drive market reforms. By abdicating to their insurers or a less than qualified advisor, employers have failed to drive fundamental market reforms that would otherwise slow or reverse the inevitable march toward a single payer system as a means to escape the unsustainable consumption and financing of healthcare. Market reform requires change agents and reformers. Its seems that only when faced with regulated or market based disintermediation does the brokerage and consulting community wake up to the need to change the system.

Greed Is Not Good

While insurers and other third party players in the healthcare system argue their role as sentinel is invaluable to prevent abuses in overtreatment, waste, fraud and abuse; one might argue the fee-based advisor should be the purest form of intermediary in our business. We exist in a world of carnivores and while it does not serve any purpose to malign any for profit firm’s focus to maximize profit; we should develop a thicker skin when those same stakeholders get angry at our efforts to affect their profiteering.

We cannot condone practices that unnecessarily inflate healthcare cost. Rising costs reduce corporate earnings, affect jobs, bonuses and GDP. It is a sin of omission that many intermediaries don’t understand and we have to accept that many ineffective advisors are part of the problem.

The role of benefits and risk advisor is that of a physician. The Hippocratic Oath of “first do no harm” should apply to everything that we do. To successfully eliminate egregious pricing, non transparent business practices, waste, fraud and declining public health by structuring a thoughtful plan of health and benefits for any employer is to serve a nobler purpose. We need to have a major voice about national reform and not only take an interest when our own industry is at risk. We should take an interest and have a position on Medicare and Medicaid which impact almost 150M Americans – including friends, family and parents. We live in a symbiotic ecosystem. If a bomb goes off in Economy, people in Business Class go down with the plane.

Sadly, the barriers to entry to the advisory business are ridiculously low. Unlike other industries where size and expertise is paramount to success and barriers to compete are limited for new entrants, any individual can pass a simple life and health exam and be licensed to advise clients on healthcare procurement. Size is not a determinant of capability. I’ve seen highly qualified competitors successfully hang their own shingle to start their own business. Some of my heroes and mentors in our business are idealogues and change agents who get offended by the status quo. They make enemies by simply doing their jobs.

Across a 35-year career, I’ve witnessed countless acts of self-interest and unselfish service. It comes down to incentives, the culture of the firm and its people. When I meet a prospectibe employer paying $750,000 for healthcare advisory services to a life agent when $200,000 is adequate to cover my services, I resist the temptation to shadow price the compensation arrangement that is tantamount to highway robbery.

When I give a speech on the need for reform, I risk offending people who honestly believe they are not part of the problem.

We Serve a Noble Purpose

We are the last line of defense in the fourth quarter of healthcare in America. It’s even odds that within a decade we will have a single-payer system as a result of runaway health care inflation and the lack of private sector appetite to drive market-based reforms. If the pie shrinks, everyone’s share gets smaller. In a time where firms are looking to give 10%-15% ROE to investors, low single-digit organic growth means consolidation and job losses to increase economies and reductions in expenses (which are largely comprised of human capital). In the end, being liked could cost you your job. Being tougher with all stakeholders could end up saving your own skin.

The most valuable person in this frenetic landscape of self-preservation is the objective agent, broker or consultant. To be guided by a higher purpose and to understand every dollar saved and excessive dollar of margin eliminated is a job saved, a bonus rewarded or an investment in capital equipment and improved earnings for clients.

It’s our job to help prevent crises and “kick the can down the road” politicians from reneging on retiree medical and pension commitments made to public employees in lieu of wage increases. It is advocating for the least among us. It is preventing excessive profiteering and insisting on affordable healthcare for all Americans. It’s standing up to your own political party, your own boss or a senior industry executive and not blinking.

Humility isn’t thinking less of yourself, its thinking of yourself less of the time. In our zealousness to promote and protect employer-sponsored insurance, we need to do a better job as cops and regulators of free market solutions. We need to push clients to do the right thing. We need to be less cozy with vendors and fulfill our fiduciary obligations. We need to be more comfortable with transparent fees and tying our performance to outcomes instead of activity.

We are cops and evangelists. We are an imperative and essential last line of defense but if we are sleeping with the enemy, we can’t be objective enough to have the hard conversations required to change the system.

My mentor once told me that if you do not see yourself as a change agent, you aren’t one. No one said it would be easy nor fun to be the heavy or the bad cop in the conversation, however the best and brightest in our industry see themselves as zealots for change. They may not be always liked but they are respected. They don’t rant like maniacs demanding reductions not justified by a client’s experience, but they are thoughtful advocates who are always sitting on the client’s side of the table and content in the knowledge that every dollar they save, helps the market reform itself, improves public health and reinforces the integrity of an employer-based system. It can succeed if we develop a more symbiotic system based on natural tension, trust and social responsibility.

Michael Turpin is a 35 year veteran of healthcare and employer sponsored insurance. He has served as CEO of Oxford and United Healthcare Northeast as well as a national practice leader for Mercer, USI, Marsh and Johnson & Higgins. He is a published author of three books and a frequent speaker and contributor to public and private forums.

Article source:The Health Care Blog

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tortuga-aak · 7 years

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Wall Street found a parasite growing in the US economy that could spur the next recession

Reuters

Wall Street's short sellers are beginning to talk about healthcare as the next major threat to the US economy.

Costs are so high that the market will have to correct sooner rather than later.

Left unchecked, a market-led correction will be brutal.

Imagine a parasite living in the US economy, siphoning off the cash that has powered the middle class for decades. We know it's there, but no one — on the right or the left — is talking seriously about how to slow its growth.

This parasite is our healthcare system. It is already causing more damage to the economy than you know, and at least one group of people seems to have this figured out: the same Wall Street doomsayers who predicted the financial crisis.

Here's what they know, in the broadest terms. Healthcare spending took up 4.8% of consumer spending in 1984, hit 8% in 2014, and then surged to 10% by 2016, according to the Bureau of Labor Statistics.

Business Insider

Now of course there are some on Wall Street who see this as a reason to go long, with some companies poised to rake it in as baby boomers age and costly diseases like cancer proliferate.

But the crowd I'm talking about is focusing instead on what inefficiencies in pricing are doing to American wallets. They're looking at the bad actors in this healthcare system, the drug companies that are taking a 60-year-old medicine and jacking up the price, the middlemen that inflate costs by inserting themselves between patients and providers. This crowd has noticed that these bad actors are pervasive in our system.

So the bet here is simple: America, one way or another, will be forced to confront the parasite that is its healthcare system, and the companies that are using the sleaziest tactics will be picked off first — by prosecutors, lawmakers, insurance companies, or the press — leaving sick customers in the lurch.

Short sellers (investors who bet that stocks will go down) are talking about this thesis at conferences and sending it around in their email newsletters. They're learning about scams and picking off weak companies to bet against. They see rising costs as a bubble that will be either gently deflated through federal-government intervention or violently popped by the merciless hand of the market — with a savvy investor making money either way.

We have three options for dealing with this problem going forward:

We can handle rising cost with good policy and change the way we think about paying for healthcare.

We can handle this with bad policy and deliberately shift rising costs to consumers while the government abdicates its responsibility for the health of not only the American people but also the American economy.

Or we can do nothing, which would result in more rising costs, more corporate rent-seeking behavior, and ultimately a recession as household resources go toward medicine and treatment instead of new cars, homes, clothes, or toys.

The US is hurtling at full speed toward the third option. That's because, at least realistically, the government has no plan to rein in costs. Healthcare costs today make up a sixth of the economy; the Centers for Medicare and Medicaid Services estimate that the share will grow to a fifth in just eight years.

Blame Bill and Mike

There's an origin story for how Wall Street became aware of the gravity of this situation: Valeant Pharmaceuticals. The company's stock plunged 90% starting in October 2015 after the Street (and prosecutors) became aware of how Valeant was abusing the system to shove expensive drugs down the throat of insurance companies.

In other words, Valeant — then under the guidance of CEO Michael Pearson — was the poster child for big pharma's even bigger greed. What's more, no one could ignore it because Wall Street's loudest megaphone, the hedge fund billionaire Bill Ackman, was telling everyone and their mother what a great stock it was. He got in himself, and, like a lot of his peers, he lost his shirt.

Now that the dust has settled we know what Ackman, who joined Valeant's board, should have known:

Valeant was handing fat rebates to any middleman that stood in the way of getting an insurer to pay for expensive Valeant drugs.

It was spending tons of money acquiring and marketing old drugs instead of developing new ones.

It used its own pharmacy to push out Valeant drugs at a mind-bending rate as long as insurers would continue to foot the bill.

It was finding ways to make copays disappear so customers would never know how much their drugs were costing insurers.

These are just some of the games Wall Street learned how to sniff out in big pharma, and once the short sellers on Wall Street could see it, they started to see it everywhere.

A few weeks ago I spoke with Andy Slavitt, the man who ran the Affordable Care Act — also known as Obamacare — during the Obama administration, and he briefly touched on how to improve price transparency in healthcare.

"It's going to take more than a few tweets from the president to bring real reform," Slavitt said, just before he hung up the phone. "Once pharmaceutical costs reach 25% of Medicare, we're not going to like the choices we'll have to make."

We can handle this well

First things first: Just because we're not ready to tackle this doesn't mean the market isn't.

Wall Street has noticed that the market is pushing payers in a different direction. For one, more costs have shifted to consumers (part of why everyone is so outraged), and instead of our outdated fee-for-service model that pays the industry only when people are very sick, payers are experimenting with bundled payments — structuring payment on the basis of expected costs — and selective points of care. They're also trying to avoid expensive hospitals, sending patients to lower-cost outpatient facilities for common treatments.

But this is happening unevenly, and a lot can go wrong. When sick people are involved, the collateral damage of bankrupted companies and panicked executives eyeing falling stock prices can be death.

So we should handle this correctly. On top of changing the way we pay for care (and thus incentivize care) we should make drug pricing transparent. We should allow Medicare to negotiate drug prices. We shouldn't allow drug companies to charge Americans a premium and pretend that it's going to research and development (it's not). We should change regulations for marketing pharmaceuticals. We should curb the pharma lobby's power.

There are glimmers of hope. Twenty-one states have passed laws addressing balance billing — when an out-of-network healthcare provider charges you for whatever your insurer didn't pay for. California and other states are trying to bring transparency to middlemen called pharmacy benefit managers; such companies often take a cut from drug companies and manage plans for insurers, but neither party knows the deal a PBM has cut with the other. It's secret, and it's stupid.

Stocks, by the way, are starting to fall on this news:

Express Scripts, the largest PBM, has seen its stock price decline by 17% over the past year. (This after one of its biggest clients, the insurer Anthem, sued it in a 2016 lawsuit accusing it of overcharging.)

Stock prices for the largest for-profit hospital managers, Tenet Healthcare and Lifepoint, have fallen by 30% and 6% over the past year.

The Food and Drug Administration has sped up generic-drug approval, putting pressure on prices.

Unfortunately, none of this is enough. It's barely a start. Corruption still abounds, and we've done little to save ourselves from the chaos that could result from more dramatic, disorganized, market-led change.

We can handle it badly

So far, the healthcare debate in the US has centered on Obamacare — a program that covers about 10% of Americans — and doesn't go far enough in addressing the larger system's incentives.

We're embarrassing ourselves.

At least, I was embarrassed while watching a meeting of the Senate Health, Education, Labor, and Pensions Committee during the second (or maybe third) attempt to repeal Obamacare. The meeting was about curbing the rising cost of prescription drugs, and most of the Republicans were off doing something useless in secret that eventually they would have to undo clumsily in public.

It was a frustrating session. Powerless Democrats listened as experts outlined ways to control costs that seemed fairly simple but are actually fairly insurmountable in our current system in which pharma money talks louder than any congressional expert witness. Sen. Sheldon Whitehouse, a Rhode Island Democrat, sounded exasperated. He said the Senate could solve drug pricing "in a week" if it weren't for the Supreme Court's Citizens United ruling on campaign spending — the pharmaceutical industry has spent billions of dollars lobbying Congress to keep this system opaque.

Whitehouse thinks billions might be overkill. "We tend to come cheaper than that," he said, disgusted.

Andy Kiersz, Business Insider

Now, perhaps you're saying to yourself, "Linette, Bernie Sanders has a plan."

Let me stop you right there. Bernie Sanders has a political pipe dream at best (a political litmus test at worse) that won't pass one chamber of Congress, let alone two. There is no plan.

We can do nothing

When I say Wall Street has caught wind of this, I don't mean the whole of it. Some money managers in this market are still howling at the moon, shaking their fists at the Federal Reserve, blaming the distortions caused by low-interest rates for our economy's slow growth.

But the economy is weak, in part, because of bad policy in healthcare — policy that has allowed healthcare expenditures to choke the life out of middle-class wallets.

On Monday the Federal Reserve Bank of New York released a report saying discretionary consumer spending had finally reached the place it was in 2007. In other words, Americans are finally spending as much on things like dining out and going on vacation as they did in 2007.

It's about time. As the New York Fed points out, discretionary spending recovered more slowly than it did in past downturns.

NY Fed

One of the reasons for this, we can extrapolate, is the rising cost of nondiscretionary spending in healthcare. In a previous report, the New York Fed noted that unlike "discretionary services, nondiscretionary services expenditures ... fell less during the recent recession than they did in the early 1980s recession, primarily because real health care expenditures held up better in this recession."

In other words, healthcare is gobbling up more and more of our paychecks. Even if the government stopped paying for stuff (i.e., we get rid of assistance through programs like Obamacare) someone has to pay for our country's sick.

In a service-based economy like the US this matters a lot. The New York Fed thinks that Americans aren't spending because they're saving and that they're saving because they're worried about slow growth going forward. That could be true. But it could also be true that Americans simply don't have the money they used to because out-of-pocket healthcare costs are rising.

America is nothing without a growing class of people who buy school supplies for their kids, take vacations to national parks, eat out at restaurants, and do all the things middle-class Americans have done since the 1950s. That's happening less and less, and Wall Street is starting to pinpoint one inescapable, intractable reason — and there's no plan to stop it.

When the next recession comes, don't be surprised if healthcare costs are what delivers it.

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