I wish it were as simple as Just Blame the FED. I don't believe it is. It wasn't the FED who nearly half a century ago made it desirable for our biggest companies to invest in building their most modern production facilities overseas. Nor did the FED have anything to do with the improvements in everything from cars to TV's by foreign makers while American companies were raking in record profits and investing almost zero in making improvements here.
Our problems may have come to a head now, but they've been growing for at least the last half century or more. You cannot put the blame on any one Administration, but as I see it the Politicians, CEO's, FED, SEC, Unions, etc. etc. etc. have all added at times to the problems, and rarely do they contribute to the solution.
Perhaps the answer is going on the gold standard, but if we pegged it at $1000 an ounce I'm not sure we have enough gold. Perhaps it should be the Uranium Standard, counting only weapons grade we certainly should dominate the world there, and I'd bet $100,000,000 an ounce would be less than what Iran is spending to try to get it.
I'm more inclined toward accounting for our National Worth in an honest manner and comparing it to our debt. By National Worth I'm talking about putting a fair price on all that's represented by the Federal Govt. From what I gather the govt. still owns much of the property in many of our states, while we'd pay State Taxes on totally unimproved property we own, I doubt that the Federal Govt. pays anything to the States for all the property they own, developed or not. I certainly could be wrong about this.
To my way of thinking, reality ought to play a part in the way things are accounted for. As I remember it, Manhattan was originally purchased from the Indians for a handful of beads. If it never was sold after that today it would be depreciated down to a value of one bead, the reality is, it's worth far more than that. While this is obviously an exaggeration, it's not an exaggeration that we often buy things which legally are depreciated by tax law, but in fact appreciate, often dramatically.
Yesterday I visited the Reagan Library and the Air Force One exhibit there, I recommend it to all. I mention it because that Boeing 707 that's now probably a half century old can be found all over the world as I understand it. They don't fly many here in the U.S. but elsewhere where noise considerations aren't as great and the companies can't afford better they're still in use. I suspect that even now they sell for more than when they were originally purchased, and far more then they were depreciated to. My point isn't that no depreciation be allowed, just that perhaps we should rethink the idea and only do it where it's valid. I suspect that many corporations with small profits or losses would have rather large profits if depreciation weren't permitted when assets truly don't depreciate, and humongeous profits if the realistic value of property owned were considered.
Personally I own a number of rental properties, I've honestly never had a year where I put more money in my pocket then they cost me, but only in the last year or two has my net worth not gone up, sometimes rather substantially. While I still have substantial equity in nearly all of them, it's dramatically less then it was 18 or so months ago. Like anyone in my position I have depreciated in the manner that's allowed, but I would still be a RE investor if it wasn't allowed. Long term I still believe RE is a good investment.
I don't know how or who could put a fair price on everything owned by the U.S. Govt, but if everything that's owned were put at fair market value, including all the gold, I suspect we might not have issued $1 for everything we're worth. Perhaps gold can once again be the standard, but the limit on how many dollars we can issue shouldn't just be based on our gold holdings, base it on all we're worth.
Gary |
