f you think for one minute that the markets are absolutely 100% free flowing without any influence by the FED as well as other special interest then your 50 years have been spent in a vacuum.
If I thought that you would be 100% correct! <g>
But I should have been more direct for clarity if nothing else. I certainly believe that the Fed "taps" the markets direction in an attempt to temper upward and downward momentum. This is what I attempted to infer in an apparently unclear manner. How successful or unsuccessful the Fed has been is unknowable; I don't believe that anyone of us can say what the market would have done over the last, say 5 years, if the fed had been totally silent. But I'll speculate on that in a few moments.
A chart worth looking at:
tscn.com
I understand technology growth and the information age,etc., but looking at the NAZ over the last two years, especially, I find a little unsettling. Given the rate of growth is the volatility unexpected. If the Fed were not to intervene with a little jawboning what would you speculate the chart to look like. We can only guess, but my feeling is there would likely be more volatility rather than less. It's certainly difficult to come to a conclusion that the government is keeping wealth away from the masses.
For God sake man why do you suppose they tax and penalize early retirement?
I have to assume that you're referring to 401s and IRAs here. The government gave us one heck of a deal here didn't they? Tax deferred contributions and interest/capital gains. Basically an interest free loan based on deferred tax liability. If that isn't a wealth building opportunity, sic gift horse in the mouth, I don't know what is.
You mention tax and penalties. Let me address each separately. Taxes: You have had this opportunity to have tax deferred liabilities and the use of that money free of charge for some approximately 35 years and now you think it should be tax free! That reminds me of a nice lady that called into C-SPAN to complain about her taxes, nice lady...see bought real estate...fixed it up...and resold it. Her thought was that the profits should be tax free. The moderator, quite politely, asked her why she thought her gains should be tax free. Her response was quite simple...she worked hard! Well, gee that seems like a good idea, let's modify the tax code..all people who work hard should be exempt from federal taxes. Personnally, I tend to think that it is pretty reasonable to expect to pay taxes on the tax deferred liability when it's withdrawn.
Tax penalties: The tax code for 401s and IRAs was generated decades ago [someone can look that up if they desire...it's not going to be me]. It was intended to encourage savings for retirement and they established a reasonable age at the time, 59 1/2 when withdrawals could begin. I imagine the thought process was that the benefit was for retirement and one could preclude an "abuse" of the tax code, sometimes referred to as evading tax liability, by setting a reasonable date before which a penalty would be levied.
Taxes are an interesting subject in themselves. Everyone believes their taxes are too high. Along with their employeres don't pay enough, prices are too high, they don't get enough vacation and holidays and a variety of other things. I see lots of people suggest (or demand) modifications to the tax code to be more fair...which usually means they pay less and someone else should pay more. Marriage tax penalty. "My wife and I each make $30K and we pay more tax than two singles each making $30K." That's not fair. Get rid of the Marriage tax penalty." Then what...new taxpayer...."Hey I work two jobs,making a total of 60K, so my wife can stay home with the kids, and I pay more than those two yuppies., that's not fair. Get rid of the Working double tax penalty." Then what, new taxpayer..."I've educated myself and worked hard to get a better job making $60K, I'm paying more than those unambitious slugs, get rid of the Successful-American Worker tax penalty." next tax payer...."I'm a single mom and worked real hard auctioning items on EBAY so I could stay home with my child. I'm paying more than ....Get rid of the Single-mom tax penalty." Looks like Forbes is proposing that only salary and wages are taxable, presumably capital gains are neither and are tax exempt. Republicans say that the wealthy are paying too much; the Democrats are saying the wealthy aren't paying enough. What I would like to see is someone starting off with a revenue neutral baseline with a proposal showing all income levels, wages, salaries and other income and show the entire spectrum of what a fair tax system would be. I don't think you'll see it because there is no fair tax system [at least no one would agree that it's fair.] I'll start off with one, that no one will agree to. Look at the federal revenue and the operating budget; seems to me that government provides a service, based on our population that comes to around $3,000 per head. Each household pays $3,000 per head. You've got a wife and four kids...your bill is $18,000; you're single, your bill is $3,000. Bill Gates...does he still have one child? His tax bill is $9,000. Everyone gets the same services, everyone ought to pay the same bill. [You can play all sorts of games with types of revenue, corporate taxes, gift taxes, etc. and come up with a different number but that's the principle]
How did I get here? I better quit...
Best Regards,
Jim
P.S. If I come across as ticked off, it's not at you TTOSBT. It's at all the damn people that are trying to manipulate me and the Fed is the least of my concerns. |
