“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!

13 Comments

  1. Jim Sinclair states that the U.S. dollar could easily collapse as a result of Russia deciding to accept any monetary currency
    in exchange for oil.
    Right now oil sales are tied to the Petro dollar.
    If we keep pushing Russia to the brink of war, what is to stop them from saying, “okay, we’ll now accept
    payment for our oil in any foreign currency.”
    All the other currencies of the world would gain from this, and the U.S. dollar could tank completely in days.
    Putin, former KGB, would do anything to keep us from taking over Crimea.

    What is your take on the possibility of this happening and the impact on the U.S. dollar?

  2. For Elinor, I am not that smart, but we hear confusing reports that JP Morgan Chase and Goldman Sachs are playing both sides? Kissinger is there also? I wonder if the negative interest rates on the dollar is a better gauge as an answer to your question? Negative interest rates implies the dollar is worth nothing?

    Questions without answers is maddening.

    Karen

  3. Catherine, Thank you for your interview with Mr. Bergman since he is in my neighborhood it is most helpful in relieving disappointment when trying to do the right thing. I believe in the right thing since it takes away confusion. It is, inside my mind, a great equalizer of all things extreme.

    Ego, Education and Intelligence are prized possessions. Easy to sniff out. Dangerous things when taken to extremes. Humility is much more difficult whether the prize was held once or never at all.

    Anger and outrage is useful in the right circles. You might be surprised.

    The wrong places it’s frowned upon. I’ve experienced both.

    The courts? What do we do about the courts? The judges that seem to be appointed purposefully with strings at the top of their heads…ya have to laugh at the pathetic sanctimonious lets make believe circus of it all. Their only purpose is to take even their own best and brightest government workers and suck their livelihoods right out of ’em. The kangaroos are hoppin’ with soon to be empty pouches.

    We debate higher mind in this house and would like to hear more since we are fairly educated and wonder how it might practically apply to where we are today? Especially, with livelihoods threatened and so much time spent on economy little time is left over for such seeming luxuries.

    Hugs to everyone that works so hard and battles it out with purpose instead of the approval love fest!

    Karen

  4. Okay people…All I keep hearing in the U.S. dollar is on the brink of collapse. Yet, the dollar is the strongest currency in the world, primarily because people are trying to find a place to invest their money…and the dollar looks like the strongest place.
    My question is what do I do with all my liquid assets. Yes, I can buy some gold with a percentage of my liquid assets.
    What do you think about this idea: Buy bonds from Canada, Singapore, and Australia which are governments which are
    solvent and likely to remain so. This way I will not be so tied into the U.S. dollar if the market collapses or goes down significantly.

    Your thoughts please!! Thank you in advance.

  5. Catherine, Can you let us know where and when you will address? I’d also like to know what you think of John Mauldin and his work along with Grant Williams? Going from full to discount broker is really getting tough. I can’t get phone calls returned…or when they are returned I’m out for a couple hours and then I can’t get them returned again. I’m always in the lurch. I’m in need of comprehensive unbiased help which might be more than I can expect, but this is no way to live.

    When I mention ego and humility I’m not kidding. I get this awful feeling that Ego has trumped God (I’m not religiously fanatical at all). What I’m trying to say is this “thing” has become the Hunger Games. I don’t want to play. Maybe the public with all its fear and desperation is smarter than given credit for. Searching for answers in a variety of places is an astute mind. And we need answers. The information is so confusing and complicated no single person can deal with it all. Yet, we are belittled as if we are stupid by this beast of a system.

    Thanks once again for trying to shine a light. I just hope it’s not too late for me or mine after putting in endless hours of work. Or anyone for that matter.

    Karen

    • Karen:

      I am going to address portfolio strategy this evening.

      I read John Maudlin and Grant Williams on occasion. When I do, I find their work useful. I also think they are still pretending that a major part of the economy does not exist – I prefer investment models that integrate the covert side.

      For many years while the debt markets were growing, US investors enjoyed high returns on risk free assets. That world is over – it was bound to be temporary. Now we live in a world where returns are decreasing in most areas and everything has risk.
      In part, this is because there is no such thing as a financial solution to a political problem. You can not solve lawlessness with how you manage your money. You can only try to evade fraud, and then imperfectly.

      In a world where the financial system is being run by the covert side and everything has risk, the greatest asset is – as David Yates describes in his reply to one of your recent posts – perceptive clarity.

      We take responsibility to help ourselves in a manner which – as best we can – helps others – we invest in activities – as best we can- that help the world move forward in a positive manner. The process is organic, messy, human.

      Risk means we win some and we lose some. Success comes from managing that process in a way that we continually return to “at bat” smarter and better each time. We learn.

      Carrying the wisdom derived from past losses BUT NOT THE emotional pain of past losses into the application of current resources is IMO invaluable to getting a better performance today. If you are interested, read James Montier on Behavior Investing. Very good book.

      Each person is different – but that is my two cents.

      Yes, there are whole aspects of the system that have become “hunger games.” We can evade it, outwit it, try to shift it or participate in it. What is advisable is to NOT whine about it. Whining is a sound that signals to hunger game members, “I’m over here – come eat me next.”

      Hope that helps.

      Catherine

  6. Hi Catherine,

    I found David’s comment yesterday and did not get it until I woke up this morning (had not seen it before). Perception on the ability to see a different way. I get that now…maybe not strongly enough to help myself like I need to, but at least I had the first aha along with my wow feeling to your comment about hunger games and whining. Never thought of myself as a whiner nor those around me, but I like that you said that since for me it was a good thump on the head. A jolt. I might be unusual that I like criticism in its full meaning since it helps me grow and since I am out-spoken by nature. I worry very much about the love fest here in America for leadership.

    My confusion has been where scary things are spoken about here yet we are not to be afraid. Not to go along with fear-mongering yet there is so much scary stuff here. But, I think I also get a rather nuanced way of reporting it to open up to the light of day rather than using it as a weapon. There is so much information here and so much that “can” seem contradictory (perception) I think that I might have made a sad mistake of kill the messenger due to my exhaustion from it all…and wondering if I’m even up to the task. I so want to be. I keep struggling for knowledge and what to do and not to do I fear that at times I lose it while not thinking how it will be received. I’m sorry for that. But if I had not said what I was thinking I would not have had such a great opportunity “to get it” that you and David gave me.

    It’s always a struggle to write. To say what one is trying to say. I thank you and David for helping me see what I could not. I was once such a free spirit and loved life so much that when I awakened to something being so wrong…well lets just say I’m on a quest for re-birth.

    And, even writing here having always been the private type is risky to me. Could be a part of my internal conflict. Along with your knowledge and intelligence. That alone is scary!

    Your sincerely trying to get it subscriber,

    Karen

    • Karen:

      In my experience, not much gets done in a state of fear. When I am in fear, there are more risks that there are resources or time to address them. When I have trouble getting out of a state of fear, I pray the Deer’s Cry. Everyone is different, but it may work for you:

      http://wowzone.com/lorica.htm

      Sounds to me like you are keenly aware of the spirit of evil when it is present. One of the things that helped me was studying and learning about evil – how it works and how it transmits. Then spiritual warfare was the study of how to manage its presence – and hot to create shields between you and it.

      Important to understand that death is not the worse thing that can happen. If you have not read Dying to be me by Anita Moorjani, I recommend.

      Here is her TED speech: https://www.youtube.com/watch?v=rhcJNJbRJ6U

      2 Timothy 1:7

      For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind.

      Glad you are getting something here!

      Catherine

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