Authored by Clint Siegner via Money Metals,
Gold and silver prices moved higher for a second week. The odds of a September rate cut by the Federal Reserve were bolstered by dovish comments from Chairman Jerome Powell, during the central bank’s annual meeting in Jackson Hole.
The odds of a rate cut also got a boost when the Bureau of Labor Statistics announced a massive downward revision of more than 800,000 jobs last week. Turns out the unbelievable jobs reports the BLS has been publishing month after month were just what skeptics thought they were... nonsense.
Stimulus addicted markets also got a boost from the terrible jobs news.
The S&P 500 closed back near all-time highs. The Federal Reserve note dollar, on the other hand, got clobbered,and bond yields fell.
It would be hard to overstate just how profound a couple of changes made to U.S. law in 1913 have been for American society.
That year brought both the ratification of the 16th Amendment to the constitution and a federal income tax as well as passage of the Federal Reserve Act which established the privately held central bank which has managed our money and markets with such disastrous effect.
Consider what has happened in income and taxation against the yardstick of gold.
Gold was valued at a fixed exchange rate of $20.67/oz in 1916. The average annual income was roughly $600. A single household earner was able to produce that income.
In other words, a typical husband earned 30 ounces of gold per year.
The income tax, which was sold to voters as a very modest tax on wealthy households, applied only to incomes over $3,000.00 at a rate of 1%. People who earned more than the equivalent of 150 ounces of gold per year paid 1% of income in excess of that amount.
Had incomes kept up with gold, those 30 ozs per year would translate to roughly $75,000 in today’s dollars with gold at $2,500/oz. Unfortunately, they have not kept up. The average salary today is roughly $60,000 or 24 ounces, i.e. 20% below what it was all those decades ago.
It now takes two earners in most households to produce the gold equivalent income that a single earner achieved in 1913. The picture gets dramatically worse after accounting for what has happened to income taxes.
If the IRS had indexed the original threshold income tax to gold, only those earners above $360,000/year would be paying income tax. The sad reality is that anyone with even a of adjusted gross income must pay, and the income tax rates begin at 10%. Those considered wealthy as defined in 1913 pay at least 35%.
And don’t forget that 43 U.S. states have their own income taxes also, compounding the burden.
Today’s system is far from what was sold to Americans. The past century has been an economic disaster for households.
If early 20th century Americans had some way of knowing the consequences for their descendants, they would never have supported the Federal Reserve or the 16th Amendment.
Authored by Clint Siegner via Money Metals,
Gold and silver prices moved higher for a second week. The odds of a September rate cut by the Federal Reserve were bolstered by dovish comments from Chairman Jerome Powell, during the central bank’s annual meeting in Jackson Hole.
The odds of a rate cut also got a boost when the Bureau of Labor Statistics announced a massive downward revision of more than 800,000 jobs last week. Turns out the unbelievable jobs reports the BLS has been publishing month after month were just what skeptics thought they were… nonsense.
Stimulus addicted markets also got a boost from the terrible jobs news.
The S&P 500 closed back near all-time highs. The Federal Reserve note dollar, on the other hand, got clobbered,and bond yields fell.
It would be hard to overstate just how profound a couple of changes made to U.S. law in 1913 have been for American society.
That year brought both the ratification of the 16th Amendment to the constitution and a federal income tax as well as passage of the Federal Reserve Act which established the privately held central bank which has managed our money and markets with such disastrous effect.
Consider what has happened in income and taxation against the yardstick of gold.
Gold was valued at a fixed exchange rate of $20.67/oz in 1916. The average annual income was roughly $600. A single household earner was able to produce that income.
In other words, a typical husband earned 30 ounces of gold per year.
The income tax, which was sold to voters as a very modest tax on wealthy households, applied only to incomes over $3,000.00 at a rate of 1%. People who earned more than the equivalent of 150 ounces of gold per year paid 1% of income in excess of that amount.
Had incomes kept up with gold, those 30 ozs per year would translate to roughly $75,000 in today’s dollars with gold at $2,500/oz. Unfortunately, they have not kept up. The average salary today is roughly $60,000 or 24 ounces, i.e. 20% below what it was all those decades ago.
It now takes two earners in most households to produce the gold equivalent income that a single earner achieved in 1913. The picture gets dramatically worse after accounting for what has happened to income taxes.
If the IRS had indexed the original threshold income tax to gold, only those earners above $360,000/year would be paying income tax. The sad reality is that anyone with even a of adjusted gross income must pay, and the income tax rates begin at 10%. Those considered wealthy as defined in 1913 pay at least 35%.
And don’t forget that 43 U.S. states have their own income taxes also, compounding the burden.
Today’s system is far from what was sold to Americans. The past century has been an economic disaster for households.
If early 20th century Americans had some way of knowing the consequences for their descendants, they would never have supported the Federal Reserve or the 16th Amendment.
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