“Follow the Money” – Financial Transparency with William Bergman

“In a digital age, data about money is worth more than money.” ~Nicholas Negroponte

This week, the Director of Research at Truth In Accounting in Chicago, Bill Bergman, joins me for a discussion of financial transparency. Bill has a remarkable background – economist at the Federal Reserve and analyst at leading brokerage and investment research companies.  Bill also has a history of using financial transparency to ensure that our resources are lawfully managed. He was forced out of the Fed when his research into money laundering got too close to the truth. A rare breed among first rate economists, Bill does not stop with the official reality. He follows the money to find the real opportunities in the real economy.

Do you think “financial transparency” is a mundane topic? Think again! This is about “money hunting!” Let me give you some examples.

Despite an excellent employment history, you are unable to find a job and are living on unemployment insurance and food stamps. You call the support phone line for food stamps and get someone in India working for JP Morgan Chase to answer your questions. This means the US government is paying you to not work when you could be working and paying taxes doing that job. The government is, in fact, spending more money to ensure that you do not have a job. And to do so, they are paying an extra mark up to a bank that received bailout gifts in the billions.

Then you realize that farm land in your county is lying fallow funded with federal farm subsidies surrounded by people with no work who are drawing federal government subsidies. However, your food stamps are paying for food shipped in thousands of miles from Latin America.  Why not grow fresh food locally if it lowers subsidies being paid to people who are not working? Perhaps healthy, fresh food would lower health care expenses as well. The government is, in fact, spending more money to ensure that they finance large corporate systems outsourcing food production to other countries.

The economics made no sense – a complex drain of tax dollars and financial debasement. It does, however, make sense for politicians whose campaigns are funded by the resulting capital gains on the stocks of the corporations that operate the system and win the government contracts.

If you follow the money, opportunities to generate income locally in a manner that would save government money are everywhere.

  • Corporate contractors paid $25-150 an hour plus mark up by the federal governments to do jobs that could be teleported into your community. Your neighbors currently living on government subsidies would love a job for $10-20 an hour plus health care insurance. Local businesses will not get the opportunity to compete because the government contract budgets are not accessible;
  • Perhaps you do not notice the FHA foreclosed property across town that could be purchased and rehabbed for $100,000. Yet, it sits empty while HUD funds a public housing complex rehab for $250,000 per unit. Costs are loaded up with generous “fees for our friends;”
  • You have not thought about the federal prison in the next county. Your spouse is working two jobs to cover household expenses and to pay federal taxes. In an entire lifetime, your family will pay $154,000 in federal income taxes. It turns out that this is the cost for one year for one prisoner to process through the criminal justice system. If you understood what it cost you, maybe you would feel differently about incarcerating non-violent criminals for growing medicinal marijuana for people who can not afford health insurance; or,
  • Maybe you would have felt differently about the bailouts if you have known that the banks enjoyed gifts and loans in an amount equivalent to at least several multiples of all of the outstanding residential mortgages in the country.

There is no more powerful tool to bring about real change than financial transparency. Turn on the lights and the profit potential is everywhere.

This is the last week of the month – so no Money & Markets this week!