Tidbits Quotations
To Accompany the January 24, 2013 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

The 40 Greatest Quotes From Winston Churchill --- Click Here

"The Nordic model for unemployment insurance," Sober Look, January 11, 2013 ---

"Why Are Some Sectors (Ahem, Finance) So Scandal-Plagued?" by Ben W. Heineman, Jr., Harvard Business Review Blog,  January 10, 2013 --- Click Here

Greatest Swindle in the History of the World ---

The trouble with crony capitalism isn't capitalism. It's the cronies ---

Subprime: Borne of Greed, Sleaze, Bribery, and Lies (including the credit rating agencies) ---

History of Fraud in America --- 

Rotten to the Core ---

Bob Jensen's Fraud Updates are at

PBS Frontline:  Why don't some of biggest fraudsters in history go to prison?
"The Untouchables," Frontline, January 22, 2013 ---
Thank you Dennis Huber for the heads up.

"Should Some Bankers Be Prosecuted?" by Jeff Madrick and Frank Partnoy, New York Review of Books, November 10, 2011 ---

Bob Jensen's threads on Why White Collar Crime Pays Even If You Know You're Going to Get Caught ---

Bob Jensen's threads on Rotten to the Core ---

Jensen Comment
I highly respect this video, although it tends to not blame the major source of the fraud on Main Street --- that blame that falls on government for pressuring Fannie Mae and Freddy Mack to buy up millions of mortgages generated on Main Street without having any recourse to the banks and mortgages companies who knowingly granted mortgages without to borrowers who could never repay those loans. This was compounded by granting loas way in excess of collateral value such as when Fannie Mae had to buy a fraudulent loan of $103,000 on a shack that Marvene (a woman on welfare and food stamps) purchased for $3,000.
Barney's Rubble --- http://www.trinity.edu/rjensen/2008Bailout.htm#Sleaze

"MBA Gender Pay Gap: An Industry Breakdown," by: Alison Damast, Bloomberg Business Week, January 7, 2013 ---

Ross School (University of Michigan) Nearly Erases MBA Gender Pay Gap -(for graduates) ---

At the University of Texas women MBAs beat out the men ---

Jensen Comment
This does not mean that there were no differences between majors. For example, women finance graduates earned about $6,500 less than men majoring in finance, but they may have been paid more than women in management and marketing. I do not know that this is the case, but as in the case of comparing inequality between nations, it's important to note that the degree of equality is not nearly as important as the level of poverty. For example, the Gini Coefficients of equality are about the same for Canada and North Korea, but the absolute differences in poverty are immense.

Accounting firms probably do not hire many MBA graduates from Michigan since Michigan has a separate Masters of Accounting Program ---
It would surprise me if there were any gender differences in salary offers in this MAC program, although there may be some racial differences where top minority graduates have higher offers than whites.

The one question about all this that I would raise is job location. At Trinity University when I was still teaching we sometimes placed a single graduate from our very small MS in Accounting graduating class at a higher salary in San Francisco or some other city having very high living costs.

The ANOVA statistician in me questions gender comparisons across geographic cells having greatly varying living costs. For example the MBA woman landing a consulting job for $140,000 in San Francisco or Geneva really cannot compare her salary with the woman who gets $140,000 in Detroit. In Detroit some relatively nice houses are being given away free to people who will occupy them full time. The exact same house in San Francisco might sell for $845,000. So much for declaring that both women are being paid the same.

It's also difficult to compare salary offers that are variable. For example, it's common to offer base salary plus commissions for majors in marketing and finance for stock brokers and other sales jobs.

In the 1990s it would've also been difficult to compare some salary offers for graduates in finance and computer science. For example, I know about a Stanford Computer Science graduate who was paid minimum wage plus $1 million in stock options. I think this type of hiring declined when the 1990s technology bubble burst and FAS 126R went into effect. FAS 123R pretty much killed stock option compensation.

Bob Jensen's threads on gender salary differences ---

At the University of Texas MBA women graduates edged out men in terms of compensation offers
At the University of Michigan female and male MBA graduates average about the same compensation offers
Why are women MBA graduates from Stanford not faring as well as their male counterparts?

"Why Stanford MBA Men Make So Much More Than Women?" by Alison Damast, Bloomberg Business Week, December 21, 2012 ---

The gender pay gap at Stanford’s Graduate School of Business has female graduates earning 79¢ on the male dollar, the widest discrepancy in earnings between men and women at any of the top 30 business schools, according to new research from Bloomberg Businessweek.

That disparity may seem large, but it isn’t startling to many of the women in the Stanford Class of 2012, who say the figures largely indicate the wide range of career choices they are making.

Take Shan Riku, who worked as a consultant at McKinsey before business school and is now working as head of new business development at Cookpad, Japan’s largest recipe-sharing website. Riku admits she took a pay cut in accepting the position but says she was more interested in taking on a role that would challenge her. It also didn’t hurt that Cookpad encourages families to cook and spend time together. “Many women at Stanford tend to make choices that are a little bit more focused on ‘how do I want to balance my life,’ rather than ‘how can I earn a lot of money,’” she says.

Pulin Sanghvi, director of the career management center at Stanford’s business school, says most of the pay gap at his school can be “attributed to industry choice.” According to Sanghvi, women and men at Stanford who go into the consulting or Internet technology sectors tend to have average starting salaries that are close or equivalent in size. Those 2012 MBA graduates who headed into the consulting field received a mean base salary of $130,636, while others who went into the technology sector earned $118,050, according to the business school’s most recent employment report.

The wage gap comes about partly because fewer women are heading into some of the more lucrative finance fields. For example, 16 percent of male students took jobs in private equity and leveraged-buyout firms, compared with just 5 percent of women, Sanghvi says. The top four industries that Stanford women went into in 2012 were information technology, management consulting, consumer products, and venture capital.

“I think a part of the story of this generation of students is that they have a much larger playing field in terms of career choices,” Sanghvi says. “I don’t think the level of income in a job is necessarily the primary motivator for why someone makes an empowered choice to pursue a career.”

That’s not to say that women at the school aren’t thinking long and hard about their salary offers and how to best negotiate them.

Continued in article

Jensen Comment
This says very little about graduates wanting to become CPAs since Stanford does not offer a career track for taking the CPA examination. The few graduates who do seek to become auditors or tax accountants most likely were CPAs before entering Stanford's MBA program. After graduating they most likely will no longer seek to work for CPA firms as auditors and tax accountants.

Bob Jensen's threads on the gender pay gap in academe ---

"Women Challenge Male Philosophers to Make Room in Unfriendly Field," by Robin Wilson, Chronicle of Higher Education, January 14, 2013 ---

America's philosophy professors are having a party, the sort of gathering that has become an institution at the annual meeting of the American Philosophical Association. In a ballroom on the lowest level of a sprawling downtown hotel here, clumps of men sit talking, laughing, and drinking beer at big, round tables.

The association calls the gathering a reception, but everyone here knows it as the "smoker," even though no one is allowed to smoke anymore. It caps the first day of sessions at the association's Eastern Division meeting and is not only an occasion for old friends and colleagues to catch up but also a time for young job candidates to talk informally with professors at campuses that have faculty openings.

The smoker is also notorious for making women uncomfortable. Tales abound of how, two decades ago, drunken male faculty members at the event chased young female job candidates and, more recently, of female junior professors getting propositioned by their senior colleagues there.

Some female philosophers who attended the association's meeting here late last month did not even give the reception a chance. They skipped it in favor of their own gathering over Domino's pizza and red wine. "We avoid it at all costs," said Shay Welch, an assistant professor of philosophy at Spelman College who held the "woman friendly" party at her home with a couple of dozen people. "It's almost like there is this tiny parallel universe women have created where women in philosophy hibernate."

The two gatherings in Atlanta are emblematic of what's happening in philosophy, where a small group of female professors is trying to shake up the field. The women want to broaden the discipline to embrace feminist ideas, raise the number of women in the faculty ranks, and put an end to sexist remarks and behavior.

But they have found the field more resistant to change than are many others in academe.

Most philosophy departments and conference meetings are still saturated with men. More than 80 percent of full-time faculty members in philosophy are male, compared with just 60 percent for the professoriate as a whole, according to 2003 data compiled by the U.S. Education Department, the latest available.

Women at the conference here didn't miss opportunities to observe how isolated they felt: One who waited in line at the hotel's Starbucks said she had counted 10 men in the line, plus her. The 16.6 percent of all full-time faculty members in philosophy who are female constitutes the lowest proportion of women in any of the humanities and is lower than the proportion of women in traditionally male fields like mathematics and computer science.

At the meeting in Atlanta, the association's Committee on the Status of Women sold black-and-white buttons that said: "Philosophy: Got Women?" A very explicit blog, "What is it like to be a woman in philosophy?," publishes horror stories by women describing sexual harassment and gender bias on their campuses and at scholarly meetings. A new petition, started by men, encourages senior male philosophers to refuse to speak at philosophy conferences that include few, if any, female presenters; it has about 1,000 signatures.

"There is a groundswell of movement right now," said Linda Martín Alcoff, a professor of philosophy at Hunter College of the City University of New York, who is president of the association's Eastern Division.

'Jerks in Philosophy'

Ms. Alcoff and other women say that despite the overwhelmingly male nature of their discipline, faculty members picked her as president in part because those who vote in the association's elections are more likely than others to endorse change, and because the association's nominating committee assembled a diverse slate of presidential candidates, including a black male and two feminist philosophers. "One of my goals is to increase diversity," Amy Ferrer, the association's new executive director, told The Chronicle.

She is hardly the first to try. The Society for Women in Philosophy has been promoting women's work in the field since 1972, and Hypatia: A Journal of Feminist Philosophy was established in the mid-1980s. In November the philosophy association created a new Ad Hoc Committee on Sexual Harassment to study the problem. The action came exactly 20 years after the organization first issued a statement condemning sexual harassment. While complaints of harassment may have dropped to a trickle in most academic fields, in philosophy the issue remains a major problem.

"Where else but in the U.S. military are women the targets of such regular abuse by their own close colleagues?" Ms. Alcoff wrote in a 2011 issue of the association's Newsletter on Feminism and Philosophy.

While Ms. Alcoff said she doesn't like the way women have historically been treated at the smoker, she has not endorsed abandoning it, because all association meetings have social gatherings. But the harassment, she said, must stop.

Next fall the association's Committee on the Status of Women will begin visiting campuses to evaluate the treatment of women in philosophy departments and recommend changes.

Some prominent men in the field say sexual harassment is real. "There are some jerks in philosophy," said Walter Sinnott-Armstrong, a professor of philosophy at Duke University who sits on the association's Board of Officers and supports the committee to study sexual harassment. "I have seen people hitting on female philosophers where I thought they shouldn't."

Continued in article

Jensen Comment
Philosophy Departments now tend to have the lowest numbers of majors on campus:

"Decline of the Humanities," by Stephen Hsu, MIT's Technology Review, September 25, 2009 ---
From an essay by William Chace, professor of English and former president of Wesleyan and Emory. The American Scholar essay  --- http://www.theamericanscholar.org/the-decline-of-the-english-department/

... Here is how the numbers have changed from 1970/71 to 2003/04 (the last academic year with available figures):

English: from 7.6 percent of the majors to 3.9 percent
Foreign languages and literatures: from 2.5 percent to 1.3 percent
Philosophy and religious studies: from 0.9 percent to 0.7 percent
History: from 18.5 percent to 10.7 percent
Business: from 13.7 percent to 21.9 percent

In one generation, then, the numbers of those majoring in the humanities dropped from a total of 30 percent to a total of less than 16 percent; during that same generation, business majors climbed from 14 percent to 22 percent. Despite last year’s debacle on Wall Street, the humanities have not benefited; students are still wagering that business jobs will be there when the economy recovers.

Continued in article

Jensen Comment
Since philosophy graduates from undergraduate programs in the past often opted for Law Schools it can only hurt philosophy departments even worse with the decline in opportunities of law graduates ---

Some philosophy departments have experienced such declines in the numbers of majors that those departments are among the first departments in their humanities divisions to offer online degrees:
A Fully Online Philosophy Degree from the University of North Carolina at Greensboro
"Virtual Philosophy," by Steve Kolowich, Inside Higher Ed, May 17, 2012 ---

This begs the question of whether top Ph.D. candidates in general, men and women, are opting for disciplines other than philosophy such as medicine, science, education, and business.  It would be interesting to see research on whether one reason for the miniscule number of female philosophy professors is due in large measure to self selection of other Ph.D. program alternatives for women. Since female graduates on average have higher grade averages than men, it may well be that the proportion of female philosophy professors to male philosophy professors would soar if the student demand for undergraduates in philosophy soared across the USA,

Bob Jensen's threads on gender ---

"CEOs want to raise the retirement age to 70," by Suzy Khimm, The Washington Post, January 18, 2013 ---

A lot of CEOs have gotten on the deficit-reduction bandwagon, but they’ve often been loath to push for specific proposals, endorsing instead an overall “framework” for fiscal consolidation that’s big and bipartisan.

That’s now starting to change: A group of the country’s leading CEOs from the Business Roundtable has put out an entitlement reform plan that proposes to raise the eligibility age for both Social Security and Medicare to 70.

Leading Republicans have long rallied to raise the eligibility age for Social Security to 70, but the Business Roundtable’s recommendations for Medicare go significantly further than the GOP consensus: During the fiscal cliff negotiations, for instance, Boehner proposed raising the Medicare eligibility age from 65 to 67 years, while the CEOs want to push it three years higher.

The group wants a slew of other changes as well: higher premiums for wealthy beneficiaries, chained CPI and more private competition for Medicare and private retirement programs.

“Even though most of these modernization initiatives would be phased in gradually, the immediate benefits would be enormous. First, they would put Medicare and Social Security on the sound financial footing needed to provide a sustainable retirement safety net. This would represent a major step forward in reducing the growth of government spending,” Gary Loveman, CEO of Caesars Entertainment Corp. and Business Roundtable participant, wrote in the Wall Street Journal.

The Business Roundtable believes its proposals would save the government $300 billion in Medicare spending and extend Social Security’s solvency for 75 years. But the changes would also come with costs to others as well. By eliminating Medicare coverage for those between 65 and 70 years old, the plan would send more individuals into Medicaid and the newly created health-insurance exchanges, as not everyone would continue to work or be covered by their employers’ insurance, explains Tricia Neuman, a vice president at the Kaiser Family Foundation.

That would drive up health-care premiums overall in the exchanges, as there would be older, sicker people getting coverage, says Neuman. In states that don’t elect to participate in the Medicaid expansion under Obamacare, lower-income people in their mid- to late-60s could also become uninsured, particularly those who are in physically demanding jobs they might not be able to continue until they’re 70. Overall, raising the eligibility age “would reduce federal spending but would do so in a way that shifts costs to other payers and raises overall health care costs,” says Neuman, who’s examined the impact of raising the age to 67.

On the flip side, proponents of the changes argue that raising the retirement age makes sense given the rise in life expectancy, and that sacrifices are necessary to ensure the solvency of entitlement programs. “What has happened to Social Security over years is because people are living much more longer, it’s moved more toward a middle-aged retirement system,” says Eugene Steuerle, a senior fellow at the Urban Institute.

Continued in article

World Life Expectancy Map --- http://www.worldlifeexpectancy.com/index.php

Life Expectancy Trend for the United States --- http://www.aging.senate.gov/crs/aging1.pdf


As a result of falling age-specific mortality, life expectancy rose dramatically in the United States over the past century . Final data for 2003 (the most recent available) show that life expectancy at birth for the total population has reached an all-time American high level, 77.5 years, up from 49.2 years at the turn of the 20th century. Record-high life expectancies we re found for white females (80.5 years) and black females (76.1 years), as well as for white males (75.3 year s) and black males (69.0 years). Life expectancy gaps between males and females and between whites and blacks persisted.

In combination with decreasing fertility, the life expectancy gains have led to a rapid aging of the American population, as reflected by an increasing proportion of persons aged 65 and older. This report documents the improvements in longevity that have occurred, analyzing both the underlying factors that contributed to mortality reductions and the continuing longevity differentials by sex and race. In addition, it considers whether life expectancy will continue to increase in future years. Detailed statistics on life expectancy are provided. A brief comparison with other countries is also provided.

While this report focuses on a description of the demographic context of life expectancy change in the United States, these trends have implications for a wide range of social and economic programs and issues that are likely to be considered by Congress.

From the University of Pennsylvania (Wharton):  The U.S. Deficit is Tremendously Understated
"A Proper Accounting: The Real Cost of Government Loans and Credit Guarantees," Knowledge@Wharton, December 5, 2012 ---

Bob Jensen's threads on entitlements ---

How can you get a tour package in China that will give U.S. citizenship to your new babies?

"The Ethics of ‘Birthing Tourism':  U.S. Maternity Hotels Cater to Pregnant Chinese Women," by Accounting Professor Mintz, Ethics Sage, January 21, 2013 ---

His 63% marginal tax rate is a disincentive to carry on as a professional golfer
"Mickelson plans 'drastic changes' in response to tax hikes," by Mike Walker, Sports Illustrated, January 20, 2013 ---
Thank you Paul Caron for the heads up

Jensen Comment
I think Phil needs to sit down for a long chat with Mitt Romney or outgoing Treasury Timothy Geithner ---

"France Proposes an Internet Tax," by Eric Pfanner, The New York Times, January 20, 2013 ---

Is Technological Inequality Exacerbating Income Inequality?

"The Smartphone Have-Nots," by Adam Davidson, The New York Times, January 16, 2013 ---

Earlier this month, Larry Mishel, the president of the Economic Policy Institute, stood at a lectern in a small hotel conference room in San Diego and fiddled with a computer until his PowerPoint presentation flashed on the screen. Mishel then composed himself, paid tribute to his intellectual opponent sitting in the front row and began a speech that, he hopes, will reorient the U.S. economy away from the 1 percent or the 0.1 percent and toward the rest of us.

¶ Mishel’s session at this year’s meeting of the American Economic Association, titled “Inequality in America,” tellingly coincided with other sessions called “Extreme Wage Inequality” and “Taxes, Transfers and Inequality.” As the financial crisis wanes, economists are shifting their attention toward a more subtle, possibly more upsetting crisis in the United States: the significant increase in income inequality.

¶ Much of what we consider the American way of life is rooted in the period of remarkably broad, shared economic growth, from around 1900 to about 1978. Back then, each generation of Americans did better than the one that preceded it. Even those who lived through the Depression made up what was lost. By the 1950s, America had entered an era that economists call the Great Compression, in which workers — through unions and Social Security, among other factors — captured a solid share of the economy’s growth.

¶ These days, there’s a lot of disagreement about what actually happened during these years. Was it a golden age in which the U.S. government guided an economy toward fairness? Or was it a period defined by high taxes (until the early ’60s, the top marginal tax rate was 90 percent) and bureaucratic meddling? Either way, the Great Compression gave way to a Great Divergence. Since 1979, according to the nonpartisan Congressional Budget Office, the bottom 80 percent of American families had their share of the country’s income fall, while the top 20 percent had modest gains. Of course, the top 1 percent — and, more so, the top 0.1 percent — has seen income rise stratospherically. That tiny elite takes in nearly a quarter of the nation’s income and controls nearly half its wealth.

¶ The standard explanation of this unhinging, repeated in graduate-school classrooms and in advice to politicians, is technological change. The rise of networked laptops and smartphones and their countless iterations and spawn have helped highly educated professionals create more and more value just as they have created barriers to entry and rendered irrelevant millions of less-educated workers, in places like factory production lines and typing pools. This explanation, known as skill-biased technical change, is so common that economists just call it S.B.T.C. They use it to explain why everyone from the extremely rich to the just-kind-of rich are doing so much better than everyone else.

¶ For two decades, Mishel has been a critic of the S.B.T.C. theory, and that morning in San Diego, he argued that broad technological innovation has been taking place so steadily for so long that the rise of computers simply can’t explain the recent explosion in inequality. After all, when economists talk about technological innovation, they are thinking beyond smartphones; they’re usually considering innovations that affect production. Business innovations — like the railroads, telegraph, Henry Ford’s conveyor belt and the plastic extruders of the 1960s — have occurred for more than a century. Computers and the Internet, Mishel argued, are just new examples on the continuum and cannot explain a development like extreme inequality, which is so recent. So what happened?

¶ The change came around 1978, Mishel said, when politicians from both parties began to think of America as a nation of consumers, not of workers. President Jimmy Carter deregulated the airline, trucking and railroad industries in order to help lower consumer prices. Congress chose to ignore organized labor’s call for laws strengthening union protections. Ever since, Mishel said, each administration and Congress have made choices — expanding trade, deregulating finance and weakening welfare — that helped the rich and hurt everyone else. Inequality didn’t just happen, Mishel argued. The government created it.

¶ After Mishel finished his presentation, David Autor, one of the country’s most celebrated labor economists, took the stage, fumbled for his own PowerPoint presentation and then explained that there was plenty of evidence showing that technological change explained a great deal about the rise of income inequality. Computers, Autor says, are fundamentally different. Conveyor belts and massive steel furnaces made blue-collar workers comparatively wealthier and hurt more highly skilled crafts­people, like blacksmiths and master carpenters, whose talents were disrupted by mass production. The computer revolution, however, displaced millions of workers from clerical and production occupations, forcing them to compete in lower-paying jobs in the retail, fast-food and home health sectors. Meanwhile, computers and the Internet disproportionately helped people like doctors, engineers and bankers in information-intensive jobs. Inequality was merely a side effect of the digital revolution, Autor said; it didn’t begin and end in Washington.

¶ For all their disagreements, Autor and Mishel are allies of sorts. Both are Democrats who have advised President Barack Obama, and both agree that rampant inequality can undermine democracy and economic growth by fostering despair among workers and corruption among the wealthy. This places them in opposition to some right-leaning economists like Gary Becker, a Nobel Prize-winning professor at the University of Chicago, who told me a few years ago that “inequality in earnings has been mainly the good kind,” meaning it rewards those people with the education and skills most needed, helping the economy.

¶ How are we to make sense of these competing claims? I asked Frank Levy, the M.I.T. labor economist who hasn’t fully committed to any one particular view. Levy suggested seeing how inequality has played out in other countries. In Germany, the average worker might make less than an American, but the government has established an impressive apprenticeship system to keep blue-collar workers’ skills competitive. For decades, the Finnish government has offered free education all the way through college. It may have led to high taxes, but many believe it also turned a fairly poor fishing economy into a high-income, technological nation. On the other hand, Greece, Spain and Portugal have so thoroughly protected their workers that they are increasingly unable to compete in the global economy.

Continued in article

"Rethink Robotics invented a $22,000 humanoid (i.e. trainable) robot that competes with low-wage workers," by Antonio Regalado, MIT's Technology Review, January 16, 2013 --- Click Here

"Rise of the Robots," by Paul Krugman, The New York Times, December 8, 2012 ---

Catherine Rampell and Nick Wingfield write about the growing evidence for “reshoring” of manufacturing to the United States. They cite several reasons: rising wages in Asia; lower energy costs here; higher transportation costs. In a followup piece, however, Rampell cites another factor: robots.

The most valuable part of each computer, a motherboard loaded with microprocessors and memory, is already largely made with robots, according to my colleague Quentin Hardy. People do things like fitting in batteries and snapping on screens.

As more robots are built, largely by other robots, “assembly can be done here as well as anywhere else,” said Rob Enderle, an analyst based in San Jose, Calif., who has been following the computer electronics industry for a quarter-century. “That will replace most of the workers, though you will need a few people to manage the robots.”

Robots mean that labor costs don’t matter much, so you might as well locate in advanced countries with large markets and good infrastructure (which may soon not include us, but that’s another issue). On the other hand, it’s not good news for workers!

This is an old concern in economics; it’s “capital-biased technological change”, which tends to shift the distribution of income away from workers to the owners of capital.

Twenty years ago, when I was writing about globalization and inequality, capital bias didn’t look like a big issue; the major changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather than between labor and capital. So the academic literature focused almost exclusively on “skill bias”, supposedly explaining the rising college premium.

But the college premium hasn’t risen for a while. What has happened, on the other hand, is a notable shift in income away from labor:.

"Harley Goes Lean to Build Hogs," by James R. Hagerty, The Wall Street Journal, September 22, 2012 ---

If the global economy slips into a deep slump, American manufacturers including motorcycle maker Harley-Davidson Inc. that have embraced flexible production face less risk of veering into a ditch.

Until recently, the company's sprawling factory here had a lack of automation that made it an industrial museum. Now, production that once was scattered among 41 buildings is consolidated into one brightly lighted facility where robots do more heavy lifting. The number of hourly workers, about 1,000, is half the level of three years ago and more than 100 of those workers are "casual" employees who come and go as needed.

All the jobs are not going to Asia, They're going to Hal --- http://en.wikipedia.org/wiki/2001_Space_Oddessey
"When Machines Do Your Job: Researcher Andrew McAfee says advances in computing and artificial intelligence could create a more unequal society," by Antonio Regalado, MIT's Technology Review, July 11, 2012 ---

Are American workers losing their jobs to machines?

That was the question posed by Race Against the Machine, an influential e-book published last October by MIT business school researchers Erik Brynjolfsson and Andrew McAfee. The pair looked at troubling U.S. employment numbers—which have declined since the recession of 2008-2009 even as economic output has risen—and concluded that computer technology was partly to blame.

Advances in hardware and software mean it's possible to automate more white-collar jobs, and to do so more quickly than in the past. Think of the airline staffers whose job checking in passengers has been taken by self-service kiosks. While more productivity is a positive, wealth is becoming more concentrated, and more middle-class workers are getting left behind.

What does it mean to have "technological unemployment" even amidst apparent digital plenty? Technology Review spoke to McAfee at the Center for Digital Business, part of the MIT Sloan School of Management, where as principal research scientist he studies new employment trends and definitions of the workplace.

Every symphony in the world incurs an operating deficit
"Financial Leadership Required to Fight Symphony Orchestra ‘Cost Disease’," by Stanford University's Robert J Flanagan, Stanford Graduate School of Business, February 8, 2012 ---

 What if you sat down in the concert hall one evening to hear Haydn’s Symphony No. 44 in E Minor and found 5 robots scattered among the human musicians? To get multiple audiences in and out of the concert hall faster, the human musicians and robots are playing the composition in double time.

Today’s orchestras have yet to go down this road. However, their traditional ways of doing business, as economist Robert J. Flanagan explains in his new book on symphony orchestra finances, locks them into limited opportunities for productivity growth and ensures that costs keep rising.

"Patented Book Writing System Creates, Sells Hundreds Of Thousands Of Books On Amazon," by David J. Hull, Security Hub, December 13, 2012 ---

Philip M. Parker, Professor of Marketing at INSEAD Business School, has had a side project for over 10 years. He’s created a computer system that can write books about specific subjects in about 20 minutes. The patented algorithm has so far generated hundreds of thousands of books. In fact, Amazon lists over 100,000 books attributed to Parker, and over 700,000 works listed for his company, ICON Group International, Inc. This doesn’t include the private works, such as internal reports, created for companies or licensing of the system itself through a separate entity called EdgeMaven Media.

Parker is not so much an author as a compiler, but the end result is the same: boatloads of written works.

"Raytheon's Missiles Are Now Made by Robots," by Ashlee Vance, Bloomberg Business Week, December 11, 2012 ---

Jensen Comment
Historically, graduates who could not find jobs enlisted in the military. Wars of the future, however, will be fought largely by drones, robots, orbiting orbiting satellites. This begs the question of where graduates who cannot find work are going to turn to when the military enlistment offices shut down and Amazon's warehouse robotics replace Wal-Mart in-store workers.

If given a choice, I'm not certain I would want to be born again in the 21st Century.

The Sad State of Economic Theory and Research ---

"Nonprofit Compensation Report: The Most Comprehensive Analysis Available," GuideStar, 2012 --- Click Here

"A Tale of Four Tax Returns," NPR, January , 2013 --- http://video.pbs.org/video/2324404112
These are 2010 tax returns. The examples mention that the Earned Income Tax Credit allows some low and middle-income taxpayers not only avoid income taxes but receive cash refunds in excess of what was withheld from paychecks. The "Tale" seems reasonably well balanced except for its failure to mention how many low, middle, and high income taxpayers avoid taxes by participating in the underground economy ---
Case Studies in Gaming the Income Tax Laws ---
As I've mentioned repeatedly I'm in favor of eliminating lower rates on capital gains tax rates provided capital gains are indexed for inflation losses.

Why do some charities fear elimination of home mortgage and real estate tax deductions even if charitable deductions are retained in the tax code?

Itemized deductions need to exceed a certain threshold to be a tax advantage relative to the standard deduction. If too many itemized deductions are eliminated while the charitable contribution deduction is retained, it may no longer be advantageous for many taxpayers to opt for taking itemized deductions. Incentives to make charitable contributions thereby decline even if charitable contributions are still allowed. Even if itemized deduction minimums are eliminated, the incentives to make charitable contributions for tax purposes may be destroyed unless taxpayers are contemplating enormous contributions to charities. This will not be the case for most taxpayers.

"Charitable groups fear tax victory in ‘fiscal cliff’ deal will prove hollow," by Bernie Becker, The Hill, January 13, 2013 ---

Charitable groups notched a big victory in the year-end tax deal but say the fight to preserve their tax deductions is only beginning.

The “fiscal cliff” agreement preserved the tax deduction structure for charitable contributions, a policy that both Republicans and Democrats have sounded open to changing in recent months.

In fact, the deal signed into law would actually help spur more donations, according to a study by the Tax Policy Center. But charitable groups say they fully expect their deduction to be under threat in the weeks and months to come.

“We are viewing this as an interim victory,” Steve Taylor, senior vice president at United Way Worldwide, said about the fiscal cliff deal. “We recognize that it was really good for us, but we also didn’t spend any time celebrating."

Negotiations over the debt ceiling and looming automatic spending cuts have yet to heat up, nonprofit officials say, and Democrats and Republicans still remain deeply divided over how to proceed on fiscal matters.

“We don’t feel like anything’s secure for this year,” said Alison Hawkins, the director of external affairs for the Philanthropy Roundtable, told The Hill. “The sequester cuts, the debt ceiling — we view all of those as potential threats to the charitable deduction.”

The fiscal cliff deal is just the latest twist in a debate over the charitable deduction that has lasted throughout President Obama’s term in office, with the administration consistently pressing to limit how much of a deduction wealthy taxpayers can take.

At the same time, the White House pressed charitable groups to stand with Obama during last year’s battle over raising tax rates on the highest earners, and charitable groups have been fighting against deduction caps they say would limit donations from the wealthy.

In addition to preserving the charitable deduction, the tax deal raised rates on family income above $450,000 a year to 39.6 percent, and increased the top capital gains rate to 20 percent.

Those changes, the Tax Policy Center says, are projected to increase charitable giving by $3.3 billion, or just over 1 percent, in 2013. Under current law, higher tax rates mean a healthier deduction for taxpayers who itemize.

The Tax Policy Center also said that another provision in the cliff deal that worried some non-profits — the reinstatement of the so-called “Pease” limitation on deductions — would have “negligible effects on the tax incentive for charitable giving.”

The Pease limitation cuts itemized deductions for taxpayers over a certain threshold — $300,000 for couples. Pease was reinstated, along with a reduction of personal exemptions for the wealthy, after being phased out in the 2001 tax deal.

But Hawkins said that her group would seek an exemption for charitable donations from the Pease limitations, and that reinstating Pease could set the stage for further chipping away at deductions.

“Anything that could potentially tinker with or limit deductions, we’re opposed to,” she said.

Taylor said United Way Worldwide had expected Pease to come back, and predicated that the combination of a preserved charitable deduction and higher tax rates would lead to more robust donations this year.

But Taylor also said that local United Ways had already expressed concern about the Pease limitations, and that the mere enactment of a limit on deductions could lead to fewer donations. Local United Way officials are scheduled to come to Washington to discuss tax issues with policymakers next month.

Charitable groups are also concerned that the cliff deal checked off some of the more high-profile proposals, especially on the tax side, with negotiations over the debt ceiling, the sequester cuts and even a government spending agreement still looming.

Almost immediately after the recent deal, Obama started pushing for further tax changes that he said would take away deductions that are available to the rich, yet out of reach for most taxpayers.

“I guess to the extent that Congress may be unwilling to revisit tax rates, that does seem to put limits on deductions even more in the forefront,” Taylor said.

And with both Democrats and Republicans continuing to press for changes to the tax code, albeit in different ways, charitable groups say they have no idea when their fight will be over.

The White House, for instance, has said its proposal to cap deductions at 28 percent, instead of the top marginal tax rate, is about fairness as well as finding new revenues.

“If they continue to put forward the 28 percent proposal, we’re not going to consider this over,” Hawkins said.

Taylor said that he felt more confident about congressional support for the charitable deduction. But he also acknowledged that the deduction could be on the chopping block until the debate over tax reform is done, and Washington’s search for revenue is over.

Continued in article

Teaching Case from The Wall Street Journal Accounting Weekly Review on January 11, 2013

Deductions Limits Will Affect Many
by: John D. McKinnon
Jan 03, 2013
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com WSJ Video

TOPICS: Cash Flow, Governmental Accounting, Income Tax, Individual Income Taxation, Individual Taxation

SUMMARY: "The bill that cleared Congress Tuesday boosts the tax rate for single filers making more than $400,000 and married couples filing jointly making more than $450,000, or roughly the top 1% of filers. But provisions that reduce the value of personal exemptions as well as most itemized deductions, including those for mortgage interest and state income-tax payments, will affect about twice as many people since they carry a lower income threshold-$250,000 for singles and $300,000 for married couples."

CLASSROOM APPLICATION: The article can be used in a tax class covering individual taxation. One question addresses a graphic that can be used in a governmental accounting class.

1. (Introductory) Based on your reading of the article, list the major changes to individual income taxes coming in 2013, due to the legislation designed to avoid the "fiscal cliff."

2. (Advanced) What is the "fiscal cliff"? Has its economic impact been avoided via the legislation signed into law on January 1, 2013? Explain your answer.

3. (Introductory) Access the graphic entitled 'Cash Flow' in the online version of the article. To whom is the cash identified in the graph flowing? Over what time period will the cash flow occur?

4. (Advanced) Click on the related video in the article. What payroll tax changes will be implemented in 2013 as a result of the legislation implemented on January 1, 2013? In your answer, state the difference between payroll taxes and income taxes from both an individual taxpayer's perspective and from the perspective of the government use of the tax receipts.

5. (Advanced) When will these law changes impact practicing accountants' workloads?

6. (Advanced) One of the goals often stated by U.S. leaders is tax simplification. Based on your understanding of the tax law changes, do you think this goal is being supported or achieved? What factors in the article hinder attempts at tax simplification?

7. (Introductory) Based on statements in the article, when is Congress expected to renew efforts at tax code simplification?

Reviewed By: Judy Beckman, University of Rhode Island

"Deductions Limits Will Affect Many," by: John D. McKinnon, The Wall Street Journal, January 3, 2013 ---

One of the biggest tax increases in the fiscal-cliff bill is also one of the least understood: a set of limits on tax deductions and other breaks that will hit far more households than the bill's rate increases for top earners.

The bill that cleared Congress Tuesday boosts the tax rate for single filers making more than $400,000 and married couples filing jointly making more than $450,000, or roughly the top 1% of filers.

But provisions that reduce the value of personal exemptions as well as most itemized deductions, including those for mortgage interest and state income-tax payments, will affect about twice as many people since they carry a lower income threshold—$250,000 for singles and $300,000 for married couples.

Those new limits drew complaints from some groups that benefit from deductions, particularly charities that depend on tax-deductible donations. They worry that new curbs on deductions, coupled with other taxes on higher-income Americans, will put a damper on giving.

"We are concerned," said Diana Aviv, president of Independent Sector, a coalition of foundations, nonprofits and other charitable groups. "The big question for us now is, if we are [also] increasing rates on folks…does the combination create a greater disincentive for people to give?"

Enlarge Image image image

The debate foreshadows bigger fights in 2013, when Congress likely will try to overhaul the federal tax code, in part by further narrowing tax breaks.

The new limits are "like another cannonball being fired across our bow," said Jerry Howard, chief executive of the National Association of Home Builders. "Clearly, it shows that the notion of limiting deductions is still one that's being considered by policy makers."

But a J.P. Morgan analyst, Michael Feroli, predicted that the new tax-break limits "should not directly affect…giving to charities or taking on more mortgage debt."

The limits—known as PEP and Pease—were originally part of a budget deal passed by Congress in 1990, and were in effect for more than a decade. The Bush-era tax cuts of 2001 gradually got rid of PEP (which stands for "personal exemption phaseout") and Pease (named for a Democratic congressman who pushed for the deduction limit).

Now the fiscal-cliff bill calls for their return, at least for higher-income people.

The PEP and Pease limits work on the same basic principle, limiting the value of exemptions and deductions for households that exceed a threshold. For example, the Pease limitation reduces a household's itemized deductions by 3% of the amount over the threshold. The reduction can't exceed 80% of the total deductions.

A couple with income of $400,000 average about $50,000 in itemized deductions, according to IRS statistics. Because their income would exceed the $300,000 threshold by $100,000, their allowed deductions would be reduced by about $3,000 to $47,000—potentially boosting their tax bill by about $1,000.

The original proponent of the deduction limit, the late Rep. Donald Pease of Ohio, viewed it as "the best available means…to ensure that nobody could game the system," given the growing number of tax breaks that were being passed by Congress, said William Goold, his former chief of staff. The limit might be viewed now as dated, but "the goal remains as valid now as it did then," he added.

From a political standpoint, the limits allow the Obama administration to achieve its long-sought goal of raising taxes on people making more than $250,000. PEP and Pease represent about $150 billion of the tax increase of about $620 billion over 10 years, making them a key element of the deal.

But some groups that benefit from itemized deductions—charities, for example—worry that the Pease provision might cause donors to be less generous.

Continued in article


Bob Jensen's taxation helpers are at

The national taxpayer advocate has recommended that taxpayers be allowed to tell the IRS to accept their return only when filed on paper, thus preventing e-file tax-identity theft. So far the IRS has failed to allow this. Less effective methods are to request an "electronic filing PIN," available at www.irs.gov, and file Form 14039, "Identity Theft Affidavit," so that the IRS might apply additional return-screening procedures. Sadly, conventional credit-monitoring services are useless against income-tax identity theft.
"E-Filing and the Explosion in Tax-Return Fraud Identity-theft cases rocketed to 1.1 million in 2011 from 51,700 in 2008. The IRS has a backlog of 650,000," by Jay Starkman, The Wall Street Journal, January 13, 2013 ---

Now that Americans finally know the tax rate they'll be paying, it's time to start thinking about the annual drudgery of filing their returns. It's also the season when identity thieves begin ripping off those returns and stealing billions in false or misdirected refunds. Tax fraud, amazingly, is now the third-largest theft of federal funds after Medicare/Medicaid and unemployment-insurance fraud.

Tax-identity theft exploded to more than 1.1 million cases in 2011 from 51,700 in 2008. The Treasury Inspector General for Tax Administration last summer reported discovering an additional 1.5 million potentially fraudulent 2011 tax refunds totaling in excess of $5.2 billion.

Why has identity theft rocketed through the Internal Revenue Service? Because American taxpayers, urged on by the IRS, have taken to filing their income-tax returns electronically and arranging for refunds to be directly deposited into bank accounts. E-filing is appealing because it provides an electronic postmark confirmation that the return was filed on time. When it is combined with direct deposit, a refund can arrive in as little as seven days. In 2012, 80% of individual returns were e-filed, fulfilling an initial goal Congress set in 1998. The result is an automated system in which the labor burden is transferred to the taxpayer.

E-filing contributes to tax complexity as the IRS demands ever more data for reporting of wage, interest and brokerage income with more tax forms. A discrepancy may result in a rejection code, a letter from the IRS Automated Underreporting Unit, or a computerized audit out of a centralized IRS office in Ogden, Utah. There's no cost to the IRS for requesting extra information when it's received electronically.

Targeting taxpayers for audit is a major factor behind the IRS's push for e-filing. E-filed returns are available for audit several months sooner than paper returns, allowing more time before the three-year statute of limitations expires. The IRS has even boasted that its e-file database is "a rich and fertile field" for selecting audits and has estimated that if its "screeners could be reallocated to performing audits, they could bring an additional $175 million annually."

Fraudulent tax returns can come in the form of tax-identity theft, refund fraud, or return-preparer fraud and are difficult to prosecute. With e-filing, evidence of fraud is difficult to find. There are no signed tax forms, envelopes or fingerprints, and e-filing promises quick refunds.

It's easy for criminals to e-file using a real name and Social Security number combined with a phony Form W-2 (wages) or fabricated Schedule C (business income). The refund can be posted to an anonymous "Green Dot" prepaid Visa or MasterCard MA +0.20% purchased at a drugstore. Such cards have a routing and account number suitable for direct deposit. The IRS may even correct a fraudulent return to refund the estimated taxes that the real taxpayer already remitted, as happened to one of my victimized clients.

Another form of fraud is when an unscrupulous return preparer modifies the bank-routing information on a return so the direct-deposit refund will wind up in his own bank account. He might increase the deductions so a return will show a larger refund due, with only the increase routed to his bank account. The victim will know nothing unless the IRS sends an audit notice.

Other preparers have abused the return information of former clients to file false refund returns in subsequent years. Criminals have established physical offices and websites displaying names of major tax-preparation franchises in order to gain genuine return documents and signatures from unsuspecting victims.

The IRS will replace a lost or stolen refund check. However, a stolen refund using an altered or erroneous routing number on a tax return will generally not be refunded until the bank returns the funds to the IRS. Otherwise, the taxpayer's sole recourse is a lawsuit against the return preparer.

Millions of Americans now pay the IRS via an Electronic Federal Tax Payment System debit. Unlike ordinary creditors paid electronically, the IRS is in the business of sending refunds but it doesn't compare names on bank records against its own files. So, with just the routing information from a personal check, a skilled criminal can use the electronic tax-payment system to transfer funds from a victim's bank account as an estimated-tax payment to another stolen name and Social Security number, then file a refund claim transferring the stolen funds to his own account. (This can be prevented by having your bank place an "ACH debit block" on your account.)

Fraud is a major problem for states, too. Using TurboTax, a 25-year-old woman e-filed a fraudulent 2011 Oregon return reporting wages of $3 million and claiming a $2.1 million refund—and the Oregon Department of Revenue sent her the refund. In October, a hacker stole 3.8 million unencrypted tax records from the South Carolina Department of Revenue. Georgia reports that 4% of its returns are fraudulent.

If you become a tax-identity theft victim, immediately seek a referral to the IRS Identity Protection Specialized Unit or the Taxpayer Advocate Service using Form 911. Keep in mind that it can take over a year to resolve. The IRS has a backlog of 650,000 cases.

The national taxpayer advocate has recommended that taxpayers be allowed to tell the IRS to accept their return only when filed on paper, thus preventing e-file tax-identity theft. So far the IRS has failed to allow this. Less effective methods are to request an "electronic filing PIN," available at www.irs.gov, and file Form 14039, "Identity Theft Affidavit," so that the IRS might apply additional return-screening procedures. Sadly, conventional credit-monitoring services are useless against income-tax identity theft.

Continued in article

Why do thieves want taxpayer ID numbers?

The most obvious reason is to collect your tax refund before you get around filing for it. They would also like our earned income credits to flow to them in tens of billions of dollars in cash that does not belong to them. The primary reason nearly half the taxpayers collect tax refunds rather than pay any income tax is due to those earned income credits. And the Cliff Prevention and NASCAR Racetrack Construction Bill passed on January 1 restored those earned income credits big time.

This worked wonders in preventing credit card number thieves from sifting through trash containers
"To fight identity theft, IRS proposes rules for truncating identifying numbers," by Sally P. Schreiber, J.D., Journal of Accountancy, January 3, 2013 ---

Bob Jensen's Fraud Updates ---

Bob Jensen's tax helpers ---

Bob Jensen's Fraud Updates ---

Why not also require teachers to wear gang colors and tattoos as a symbol of gang loyalty?

"Gangs are Latest Excuse for Not Closing Failing, Half-Empty Chicago Schools," by Kyle Olson, Townhall, January 14, 2013 --- Click Here

Instead of appropriately dealing with gang-related violence, an independent Chicago school closure commission is recommending no school closures because such a move could force students to cross gang lines.

So in Chicago, gang violence is the “new normal” and instead of combating and gaining some control over the problem, city leaders are simply accommodating it.

Wow. Gangs of street punks are now influencing public policy and million dollar decisions. It looks like they really have won.

Of course the Chicago Teachers Union, which stands to lose money if schools close, agrees with the recommendation.

The CTU has been arguing against school closures for some time, as the union is looking to stave off an increase in the number of non-union charter schools, which serve about 50,000 students. A moratorium on school closures would naturally mean that more union teachers will be needed and their dues money will keep flowing to the CTU.

Chicago Public Schools are facing a $1 billion budget deficit and now that the district has locked in an expensive three-year collective bargaining agreement with the CTU, reducing labor costs is not really an option. But consolidating schools and streamlining operations is.

But now taxpayers might have to continue to pay to operate half-empty schools because city leaders don’t seem to be willing to deal with gangs. The Chicago Tribune reported there are 100,000 empty seats in schools in a district that has 400,000 students.

“CPS built new schools to relieve overcrowding in some communities but failed to close enough of the older, emptier ones, often caving to community pressure,” the newspaper reported.

Those half-empty schools are among the city’s worst performers academically.

The latest excuse shows the CTU will stop at nothing to protect the miserable status quo, regardless of the consequences for Chicago’s children.

"America’s Future? Look to Illinois," by Fritz Pfister, Townhall, January 11, 2013 --- Click Here

Somewhere along the line I remember a song about how you can take the kid out of the country, but you can’t take the country out of the kid. Guess one could write a song, you can take the kid out of Chicago but you can’t take Chicago out of the kid.

In October of 2008 my warnings went unheeded regarding candidate Barack Obama. All one needed do to see America in four years was to look at Blagojevich’s Illinois. It turned out worse than imagined.

Blagojevich’s Illinois was reeling in corruption, political favoritism, extra constitutional mandates, and unfunded pension liabilities growing exponentially due to quid pro quo union contracts.

Blago was a living example of liberal economic illiteracy when he quadrupled fees on trucking companies not realizing trucks have wheels, and 25,000 jobs were lost overnight. The exodus from Illinois was underway.

After getting caught with something ‘golden’ Blago was impeached, tried, and sent to prison leaving behind a state in financial shambles.

Enter Pat Quinn from Chicago. Another graduate of the Chicago School for Liberal Economic Illiteracy Quinn shoved through the biggest tax increase in Illinois history during a lame duck session.

That was in January 2011 with projected revenues that would solve all Illinois’ money woes with $7 billion in new revenue. By the end of 2011 the tax increased revenue by only $6 billion, and Quinn began his version of austerity measures which of course failed.

To see where Obama is taking America look to Illinois at the end of 2012. Here’s the report card; unfunded pension obligations up, budget deficit up, deficit spending up, unpaid bills to state vendors up, credit downgrade probable, talk of more taxes.

You can expect the same results from the economic illiterate in DC as the economic illiterate in Illinois. Obama’s attack on the wealthy with the cliff tax deal, and new Obamacare taxes will kill jobs too, just on a grander scale.

Obama must have at least one liberal adviser with a calculator because the day after raising taxes over $600 billion on the wealthy Obama was calling for a trillion more in revenue by eliminating deductions for the evil rich who are keeping the economy down.

Liberal hopes were dashed during the just concluded lame duck session in Illinois. While the state is bursting into flames of insolvency citizens were aghast that the lame duckers didn’t move on pension reform, gay marriage, and bans on assault weapons.

Continued in article

Bob Jensen's threads on entitlements are at

Spendthrift --- http://en.wikipedia.org/wiki/Profligate

A spendthrift (also called profligate) is someone who spends money prodigiously and who is extravagant and recklessly wasteful, often to a point where the spending climbs well beyond his or her means. The word derives from an obsolete sense of the word "thrift" to mean prosperity rather than frugality,[1] so that a "spendthrift" is one who has spent his prosperity.

"IMF: Yes, America is profligate," by Howard Schneider, Washington Post, January 11, 2013 ---

"The Trillion Dollar Trick," by Peter Schiff, Townhall, January 16, 2013 --- Click Here

. . .

In reality, our government has been creating more than one trillion dollars out of thin air every year for the past five. The only difference is that the blatant dishonesty of a trillion-dollar platinum coin is so easy to understand that the public simply couldn't be expected to swallow it. The American people are more than willing to be fooled, but they won't tolerate so simple a ruse.

People have a long and intimate history with coins. Some of us collected them as kids, and we all touch and see them every day. Unlike currency bills, we know intuitively that a coin's value is supposed to come from its metal content. That's why quarters are bigger than dimes. As a result, most people have viscerally rejected the platinum coin idea. To assign an arbitrary, sky high, valuation to a small piece of metal strikes most people as a deceitful, desperate act. They are right.

However, the same people have no problem with images of thousands of crisp paper notes flying off the printing presses. The acceptance is not impacted by how many zeroes the bills contain. People simply believe that paper money derives value from the numbers, not the paper. This was not always so. Paper money originally entered the public awareness as promissory notes to pay different amounts of gold. Once people got used to the paper, few really cared when the gold backing was finally removed. As a result, the public would likely have been much more accepting of the Fed printing a trillion dollar bill than the government minting a trillion dollar coin. But there was no legal pathway for the Fed to simply give that money to the government.

The government, not the Fed, mints coins, so they did not have to rely on the Fed to create value out of thin air. That is why the platinum coin idea was so seductive, if ultimately unsellable.

Jensen Comment
Peter could have simplified his posting by simply stating that the only problem with the trillion-dollar platinum coin is nobody in the world would/could make change when using it to pay an invoice. The same problem would exist for a trillion dollar bill. The only way to print money out of thin air is to print bills in denominations small enough to easily make change using existing currency.

The way the Fed actually prints money out of thin air is called "Quantitative Easing" ---

Federal Reserve Chairman Bernanke announced this week that he plans to continue printing money out of thin air until the unemployment rate lowers to 6.5%. With the explosion of robots in manufacturing an unemployment rate this low may be unattainable ad infinitum.

Why worry about a debt ceiling if the government is can simply print money to pay its bills?

Welcome to Zimbabwe where there is already a 100 trillion dollar bill. It takes more than two to by one chicken egg ---

As of November 2008, unofficial figures put Zimbabwe's annual inflation rate at 516 quintillion percent, with prices doubling every 1.3 days. Zimbabwe's inflation crisis was in 2009 the second worst inflation spike in history, behind the hyperinflationary crisis of Hungary in 1946, in which prices doubled every 15.6 hours


One day before we know it there will be USA trillion dollar coins or bills that will be used to make change for $100 trillion dollar bills and coins.

"Record Taxpayer Cost Is Seen for Crop Insurance," by Ron Nixon, The New York Times, January 16, 2013 ---

Jensen Comment
Corporate megafarms have it pretty good in the USA. Taxpayers subsidize their profits while, at the same time, also bear the risk of their crop failures. The above article also shows how the crop insurance is a windfall for private sector insurers. If climate change persists with drought disasters it can only get worse for taxpayers. Oops I forgot, the government will simply print new money to pay off the megafarm corporations.

Oops I forgot, the government will simply print new money to pay off the megafarm corporations. Who cares if it rains or shines?

From the Scout Report on January 18, 2013

In an era of declining fortunes, cities and regional authorities look
around for tax revenue

Airlines Accused of Gaming Tax Rules

RTA alleges United, American Airlines using 'sham' office for fuel

Lawsuit: 'Sham' United office dodges sales taxes

The Impact of the Great Recession on Local Property Taxes

Tax Policy Center

The Urban Institute: Economy and Taxes



"Hospital Will Stop Delivering Babies, Thanks to Obamacare," by Steven Ertelt, Life News, January 17, 2013 ---

. . .

A southwestern Pennsylvania hospital will stop delivering babies after March 31 because its obstetricians are either leaving or refocusing their practices, and because hospital officials believe they can’t afford it based on projected reimbursements under looming federal health care reforms.

The Windber Medical Center, about 60 miles southeast of Pittsburgh, is losing two obstetricians and two others are shifting their focus more to gynecology.

Hospital officials say the population of women of child-bearing age is dropping and that the number of births the hospital would be called upon to perform isn’t enough for it to provide the service in the face of lower reimbursements under the federal Affordable Care Act.

The hospital delivered about 200 babies each year since restarting its obstetrics program in 2005.

Officials aren’t sure how many jobs will be lost.

Continued in article

Scholars Propose Tax Reform to Prevent a Healthcare Disaster
"The $86 Billion Fix:  A group of scholars propose a plan that could put a brake on health care spending," Stanford Graduate School of Business, January 7, 2013 ---


Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/