Special Needs Trusts for People Without Special Needs?

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Would it surprise you if your professional advisor recommended “special needs” planning when you don’t have any special needs children or grandchildren?

It’s important to think about things that might happen to your loved ones after you’re gone. Especially as they might be affected by your estate plan.

As advisors, we always try to help you plan for unforeseen financial circumstances and build creditor protections for our beneficiaries whenever possible.

The same type of preventive planning can be done to protect loved ones in a tragedy that leads to physical and/or mental disability.

Consider what happened in this situation, taken from the files of one of our colleagues.

John and Elizabeth had one child and several grandchildren. Their estate documents included a living trust that passed their estate to their only son, Jerry in trust.

At John and Elizabeth’s death, the trust was funded with approximately $1,000,000 after taxes and expenses, which Jerry was free to spend as needed.

The trust provided that if Jerry passed away, anything left in the trust was to be distributed to the grandchildren.

One day Jerry was involved in a terrible automobile accident. Jerry was injured so badly that he was no longer able to care for himself.

The person named as his guardian immediately sought help for Jerry’s medical expenses from Medicaid or other means-based government programs. They were shocked to learn that Jerry’s entire inheritance of $1,000,000 would have to be spent on medical expenses before Medicaid would assist him. As an alternative, the guardian learned that the assets could be placed in a special kind of trust to be used for Jerry’s benefit. But at Jerry’s death, that trust must reimburse Medicaid for what was spent for care during his life. The result in either case is that little or nothing will be left for Jerry’s children.

This result could have been avoided by creating a special needs trust. A special needs trust is specially designed to hold the inheritance of a beneficiary, and to be used for needs above and beyond those covered by government programs. These trusts contain instructions that allow the Trustee to meet the needs of the beneficiary, but prohibit the Trustee from providing for those needs if already covered by Medicaid or other programs. It also prohibits the Trustee from using the assets to reimburse any government program after the beneficiary’s death.

The result in Jerry’s case would be that his needs would be met during his lifetime, and anything left over at the time of Jerry’s death could be passed on to his children.

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Your 2017

MidasMoments: Rob Slee’s Comments on the Nation

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Your highest return on hours invested should occur at the end of each year. Over the next few weeks you should be planning your 2017. Today’s Moment discusses this important topic.

Your Hourly Rate

I’m still amazed that most (90%+) individuals who own their time don’t use an hourly hurdle rate to decide whether an activity adds personal or business value. I think they should, so much so that I’ve written a book to explain how to go about it.

Here are the two key thoughts of my latest book – Time Really Is Money (www.timereallyismoney.com):

– The market values every business activity, and each activity can be priced by the hour.
– It follows that everyone chooses their level of wealth based on how they spend their time.

It turns out that most business owners spend almost all of their time on less than $50 per hour activities. Of course this means that they will not create business value. You can do better.

First, what is your current hourly rate? Second, how can you double that rate in 2017? I’ve found that almost everyone can double the value they bring if they just focus their time on high value-added activities.

After reading TRIM, you should be able to double your hourly rate.

Pick an Unwinnable Fight

Let 2017 be the year you pick an unwinnable fight. I’m not suggesting that you spend all of your time on this endeavor. But plan on investing a solid 250 hours choosing, and then fighting the battle. Remember: the rules of this fight are different than normal.

First, assume that it will take at least 5-10 iterations before a value proposition to the market is compelling enough. If it takes fewer iterations, you probably haven’t built a sustainable niche. Yes, you read it right. I’m encouraging all of you to use a model that guarantees failure. The key is to fail quickly, quietly, and inexpensively.

But we are not psychologically prepared for failure. The only way we will be able to adapt is to ignore that primal part of our brain that says change is bad and use our frontal lobes to rationally observe and choose a path forward. Here’s the proof: when mentoring, even our most seasoned mentors wanted to give-up after the third iterative failure. It’s just human nature.

You deserve to lose if you give-up fighting your unwinnable fight.

My Aha! Moment

Over the past 10 years I have picked numerous unwinnable fights. They all had two things in common. First, the projects intended to create/change industries. Second, politics trumped economics in each of these $50k per hour battles.

And here’s the Aha! moment: get the politics straight by enticing someone in the Matrix to cover you on that front. I call this doing a pinky-shake with the Matrix. Remember, the Matrix is not a monolithic whole; rather, it is comprised of various players with differing agendas. Power/money are always at the top of their list, so show your Matrix partner how they can get more of each by partnering with you.

Spend Time Giving Back

Anywhere you look you’ll find people worse off than you. Spend 50-100 hours in 2017 helping others.

I spend at least a third of my time in this effort each year. There’s nothing in it for me economically, but the world is a far better place if we all give back.

This is my last Moment for a month or so. This year has been one long unwinnable fight for me. I’m reminded of what I used to tell my construction crew members after a particularly long and productive day of building roads: “Fellas, we didn’t get much done today, but tomorrow we’ll give it all we have.”

I hope you all have a great Holiday season, and give it all you have in 2017.
– Rob 

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Our Corridors of Innovation

MidasMoments: Rob Slee’s Comments on the Nation

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Last week we talked about the importance of having a positive relationship with failure. Some of you correctly added that in some areas of the country, failure is not only tolerated, it is worn as a badge of honor. It’s no coincidence that in these areas most of the innovation occurs. It turns out that the US has just 5-6 areas where most of our creative ideas and actions emanate.

These ecosystems of innovation are: greater Boston, greater Chicago, Northern California, Southern California and the great Northwest. So what makes these corridors so special? Aside from fostering a positive relationship with failure, they share three traits: 1) they have at least two major universities that feed the area with new technologies and scores of creative individuals; 2) they’ve had at least 3 home grown technology companies go public with resulting market cap’s of more than $2 billion. Large public technology companies tend to spawn hundreds of smaller private technology companies; 3) these corridors are socially tolerant. You know your region is not tolerant when a pink-haired, heavily-pierced young man walks into a restaurant and all of the parents think: “thank goodness that’s not my kid.”

Global capitalism is a battle between incrementalism and departurism. The incrementalists tend to inhabit the U.S. hinterlands; while the revolutionaries feel more comfortable living in the corridors. Many of you have heard me say that business owners who plan to grow their revenues by 5-10% per year for the foreseeable future are dead before they even get the words out of their mouths. Incrementalists are being replaced by owners who depart from traditional business models and strategies.

So what happens to people who do not live in one of these value-creating corridors? While it’s still possible to be innovative, the creativity deck is totally stacked against them. Because radical creativity in the hinterlands tends to be a cause of great concern to the local denizens. In other words, the metaphorical pink-haired crowd is often ostracized and made to feel uncomfortable. Now you know why I left Ohio more than 25 years ago.

For once, I’m not the only person on earth who is thinking about this stuff. According to Richard Florida, my favorite social geographer, place is not only important, it’s more important than ever. Globalization is not flattening the world; on the contrary, the world is spiky. Place is becoming more relevant to the global economy and our individual lives. The choice of where to live, therefore, is not an arbitrary one. Florida says it may be the most important decision we make, as important as choosing a spouse or a career. In fact, place exerts powerful influence over the jobs and careers we have access to, the people meet and our “mating markets” and our ability to lead happy and fulfilled lives.

Just a few tidbits from Florida’s books:

– new college graduates tend to select the city first (usually within the corridors) that promotes opportunities and personal growth, then they seek a job there

– most patents in this country are issued to companies within the corridors

– most new business models are created within the corridors

So why does this matter to the U.S.? Shouldn’t the U.S. generate the same total productivity inside and outside the corridors of innovation? In theory, the answer is yes. While productivity in the corridors goes way up, output in the hinterlands goes way down. So, other than most of our states continue to generate mainly minimum wage-type jobs and they lack the tax revenues to maintain their infrastructure, GDP for the country should be the same.

And remember, corridors outside the U.S. compete for our talent too.

The foregoing explains my quote in “Time Really Is Money”: the future is already here, it is just unevenly distributed.

– Rob

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My Continuing Positive Relationship with Failure

MidasMoments: Rob Slee’s Comments on the Nation

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I was running my mouth in Boston a while back, as I’m wont to do, when someone asked me a question that stopped me in my tracks. The question: “How does it feel to go through life as a Midas Manager…to never fail?”

Wow. I had no idea that’s how people viewed Midas Managers. Because it couldn’t be further from reality.

Here’s the deal: Midas Managers fail at least 10 times more than anyone else. I fail maybe 20 times more than the typical person. And, here’s my New Year’s gift to you: failure is a good thing.

We all need to develop a positive relationship with failure. The key is to fail quickly and cheaply.

You knew this day would come: it’s time to take the red pill.

The traditional way of growing a business calls for doing more of the same thing….to do it the same way…and hopefully generate 10-20% more result. Traditionalism, like watching Old Yeller, makes me weep.

I maintain the traditional way relies on an incremental status quo approach; whereas, the Transformation Age now relies on an exponential revolution. The former penalizes failure; the latter depends on it.

You were warned: that splinter in your mind just got bigger.

In the traditional model, established processes are used to generate growth. Since everyone already uses the processes, everyone can be held responsible for performance within fairly strict guidelines. For instance, filling-out a certain form…calling a certain person…alerting the bureaucracy, etc. are all known and expected steps in the status quo process chain. Anyone who deviates substantially from the known processes is admonished or fired.

In the Transformation Age model, the goal of the business model is to destroy the traditional, and in the process, generate unbelievable performance metrics. I’m an investor in several businesses that generate more than $10 million in sales and $4-5 million in profits – per employee! These models are mashups of technology, intellectual capital and market opportunities.

It may well be that the future finally caught up to Ray Kurzweil’s concept of singularity…where machine intelligence goes hand-in-hand with human intelligence.

And here’s the important part of transformation: none of it will work right the first 6-8 times you try it. Early failure is a certainty.

Yes – you read it right. I’m encouraging all of you to use a model that guarantees failure.

The key is to fail quickly, quietly, and inexpensively. As I say at many of my talks: “I prefer to look like an idiot in small group settings.” And so should you.

But there’s a rub: We are not psychologically prepared for failure. The only way we will be able to adapt is to ignore that primal part of our brain that says change is bad and use our frontal lobes to rationally observe and choose a path forward.

How does one fail early and often yet recover? The answer: test, test, test; fail, fail, fail. Package your value proposition and put it out there on a limited basis. Study who is eating the dog chow and why. Adjust as needed. When you have the right mix, follow the Heads & Shoulders strategy: rinse, lather, repeat. Never getting out of the shower surprisingly translates into setting up a never-ending value proposition buffet. Geez…talk about mixing metaphors. This splinter in my mind definitely needs to go.

Do not make the traditional mistake of “building out the entire system…then launching it on an unsuspecting public.” That will break you. Why? Because H. L. Mencken had it right when he said: “No one ever went broke underestimating the intelligence of the American people.” In other words, you’ll over-shoot the market the first few times out of the gate.

So repeat after me the Nicheaholic credo: Only through failure can we find success.

Now get out there and start failing.

– Rob 

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Let’s Talk About Finland

MidasMoments: Rob Slee’s Comments on the Nation

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Since none of us have been to Finland, nor are we likely ever to go, I thought it would be nice to write about that Scandinavian country in today’s Moment.

First a factoid. Back in Napoleon’s time, Finland was owned by Sweden. I miss the days when one country could own another. But the much maligned Swedish King at the time – Gustav IV – chose the wrong side of a war and lost Finland to Russia. Who knew?

This is the same King Gustav, by the way, who graces the Great Room in the Slee mansion. A few years back I bought a gilded mirror that Gustav himself presented as a bribe to an Italian Duke. Something about marrying off a daughter. This mirror has special meaning to me because every day when I gaze into it I see royalty. Ha!

Enough about that.

Today I want to talk about Finland’s education system. Keep reading, because this gets good.

Finland’s education system is considered one of the best in the world. In international ratings, it’s always in the top ten. However, the authorities there aren’t ready to rest on their laurels, and they’ve decided to carry through a real revolution in their school system.

Finnish officials want to remove school subjects from the curriculum. There will no longer be any classes in physics, math, literature, history, or geography.

The head of the Department of Education in Helsinki, Marjo Kyllonen, explained the changes:

“There are schools that are teaching in the old-fashioned way which was of benefit in the beginning of the 1900s — but the needs are not the same, and we need something fit for the 21st century.“

Instead of individual subjects, students will study events and phenomena in an interdisciplinary format. For example, the Second World War will be examined from the perspective of history, geography, and math.

This system will be introduced for senior students, beginning at the age of 16. The general idea is that the students ought to choose for themselves which topic or phenomenon they want to study, bearing in mind their ambitions for the future and their capabilities. In this way, no student will have to pass through an entire course on physics or chemistry while all the time thinking to themselves “What do I need to know this for?”

The traditional format of teacher-pupil communication is also going to change. Students will no longer sit behind school desks and wait anxiously to be called upon to answer a question. Instead, they will work together in small groups to discuss problems.

The Finnish education system encourages collective work, which is why the changes will also affect teachers. The school reform will require a great deal of cooperation between teachers of different subjects. As a result, newly trained teachers will get a pay increase.

To borrow a favorite Slee twins aphorism, the Finnish transformation to education is exactly the same but different from the approach I will take to the American education system when I’m finally appointed Benevolent Dictator (which could happen any day now).

I believe the left brain stuff can be almost entirely learned online now. Look at Khan University for proof. So US students going forward will learn left brain subjects outside of the classroom. Schools will be used solely for socialization and right brain problem solving.

Imagine if our kids spent at least half of their education solving real world problems rather than focusing on useless theory? We would have an army of value creators.

Here’s an example. Outside of school students would learn basic math, including geometry. Inside of school they would work in groups learning how to build houses. And on and on.

After 8-10 years of this our students would be both left and right brained.

Who’s with me?

– Rob 

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Gifting Strategies for the Family Business

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Gary Fitzgerald’s Newsletter, Let’s Talk About……

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Every day in America there are stories of families losing their multi-generational business or family farm because they had to liquidate in order to pay estate taxes. Most estate planners strive to reduce the impact of estate taxes as much as possible. Tools and techniques such as irrevocable life insurance trusts, family limited partnerships, gift trusts, and others may be employed to reduce the estate tax. And with some charitable planning, estate taxes can be eliminated altogether.

The Gifting Strategy

One strategy to reduce estate taxes is the use of lifetime gifts. For 2016, you can give away up to $14,000 worth of assets each year to any number of recipients, with no gift tax consequences. If you’re married, you and your spouse can give away up to $28,000 each to any number of recipients.

Therefore, a married couple with three children might give away $84,000 worth of assets, including shares in the family business, to their children each year. Over 10 years, the total amount given away could total $840,000 worth of shares, and more if the annual gift tax exclusion is increased by the government to reflect inflation.

If you assume a 40% tax rate, transferring $840,000 worth of company shares from the senior generation to the next generation saves over $336,000 in estate tax. In addition, any growth in the value of the shares after the gifts are made will not be included in the senior generation’s taxable estate.

If you give away more than $14,000 worth of assets to any recipient in one year, the excess is subject to gift tax. No actual tax payment will be due on amounts given up to the lifetime gift tax exemption amount, currently $5,430,000 for 2016. To the extent that the lifetime gift tax exemption is used, it reduces the estate tax exemption at death, dollar for dollar.

Once the $14,000 annual gift tax exclusion and the lifetime gift tax exemption are exceeded, there would be gift tax payable on those excess gifts. (The gift tax is owed by the giver, not by the recipient.) Paying gift tax might be a good trade-off, however, if your estate eventually avoids estate tax on the gifted assets as well as the future growth of those assets.

Valuation Discounts

When using a gifting strategy, the addition of “valuation discounts” may help you give away even more shares of your company at a modest gift tax cost. (Note: There are potential regulations coming that may limit or eliminate these discounts.)

Gift and estate taxes are based on asset values. If the gift tax rate is 35%, for example, and you make a taxable gift of $1 million after using up your gift and estate tax exemptions, you’ll owe $350,000 in gift tax.

However, some assets are hard to value. Shares of a family business fall into that category. How much is your company worth? If you give 10% of the shares to your daughter, how do you value that gift for tax purposes?

To withstand IRS scrutiny, you’ll need to have your company appraised. The appraisal must be done by a qualified appraiser, as defined by the IRS. Moreover, the appraiser can’t be someone who’s connected to you or your company. If you ask the CPA who has prepared your tax returns for the last 10 years to value your company, the IRS might not accept the result as an unbiased opinion. To find a competent appraiser, ask your advisors.

Once you have hired an appraiser, expect to see a detailed report that sets out several methods of valuing your company. Weighing all these possibilities, the appraiser will come out with an estimated value: the price that a knowledgeable, arm’s-length buyer would pay for your company.

Suppose, for example, the appraiser puts the value of your company at $10 million, based on revenues, profits, assets, and so on. You give your son 14% of the shares. Is the value of that gift $1.4 million?

Not necessarily. Your son would have no control of the company with a 14% interest, if you have the other 86%. Your son might have a difficult time selling his shares because few buyers would be interested in acquiring a small piece of a closely-held family business. (The shareholder’s agreement may also restrict your son’s ability to sell his shares without your consent.)

Because of this lack of control and lack of liquidity, the 14% interest that you gave your son would not be worth $1.4 million, in this hypothetical example. The appraiser you’ve hired might state that a valuation discount should be applied; for such gifts, 30%-40% discounts are common. Assuming a 30% discount, for example, giving away 14% of the shares would actually be a $980,000 gift for tax purposes, not a gift of $1,400,000.

Of course this helps tremendously in terms of tax savings and is certainly worth considering.

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Every Forty Years – Revisited

MidasMoments: Rob Slee’s Comments on the Nation

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It took longer than expected, but Nixon’s Silent Majority finally showed up last week. I suspect Nixon knew at the time that mainly uneducated white men would comprise this majority, because back then, that was the main demographic of America.

I wonder if uneducated white men, like most Americans, have economic amnesia. For reasons I can’t understand and therefore can not explain, people can not remember that every forty years the economic system of America resets itself. Walk with me.

Let’s start with the 1810’s. The Panic of 1819 was the first major peacetime financial crisis in the United States followed by a general collapse of the American economy persisting through 1821. The Panic was characterized by the financial and industrial imperatives of central bank monetary policy, making it susceptible to boom and bust cycles. This sure sounds familiar.

Who can forget the Panic of 1857? This was a financial panic unlike any the US had seen to that point. It was caused by a declining international economy and over-expansion of the domestic economy. It was ended by the Civil War, or the Panic likely would have likely lasted a decade.

The War between the States (as we still call it in the South) bought the US several decades of economic prosperity. Then the Depression of 1893 hit; it was one of the worst in American history with the unemployment rate exceeding ten percent for half a decade. Everything went economically wrong in the 1890s. We’re talking strikes; massive business contraction; and assassinations. Admit it – you had no idea.

The 1930s need no introduction. But historians are still arguing about the causes and should-have-dones of the Great Depression (I suppose the 1890 depression was just Good). Bernanke spent an academic career trying to better understand and explain this decade of America’s economic history. Some days I wonder if he learned anything. In any event, we once again had to fight our way out of depression.

Many of us clearly remember the 1970s. During the 70s, the Vietnam War had just concluded so we got busy fighting each other. The golden age was over and the U.S. entered a recession. Pandora’s box opened wide – from a severe energy crisis, to high inflation to high unemployment. Unless you were a Pittsburgh Steelers fan, this was just a lousy decade.

When we add 40 years to the 70s, we get to the current economic catastrophe-in-making. I’ve been convinced for several years that we needed to let the system reset itself in 2008. But no, the government had to “save us,” thereby assuring that the people who caused the problems would be rewarded, and further guaranteeing that this decade would be lost. With no solutions at hand, the Fed and government are busy rearranging deck chairs on the Titanic, and now there’s a new Captain who seeks to be “unpredictable.” Wow.

Since I seem to be the only person on the planet who has noticed this forty year trend, I feel free to explain it. There is only one commonality since 1810 – and that’s humans. Humans are greedy, fearful animals. We’ll do stupid things if allowed. It is the government’s responsibility to keep us honest, or at least force us to pay the piper when we mess up. If we would just flush the toilet every decade – by crushing those who create the problems – we wouldn’t have major recessions/depressions every forty years.

But voluntarily resetting the system represents a collision between democracy and capitalism. You can’t get elected by saying that you’ll turn off the money spigot, so get ready for $1T+ annual budget deficits and probably a war, because that usually solves a major economic downturn.

If history holds true, we’ll soon experience an every forty year reset. It will last at least 4-5 years, maybe a decade. The big question is: will you be ready when it comes?

– Rob 

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What Would Bill Do?

MidasMoments: Rob Slee’s Comments on the Nation

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The mental journey of my recent book – Time Really Is Money – began when I first heard the story of Bill Gates and the $100 bill. Apparently Bill was strolling through an airport (as if) when he by chance wandered upon an unclaimed $100 bill. The question before him was: could he—a man who makes well over $1 million per hour each year, which equates to more than $300 per second—afford to stoop and pick up the bill?

Over the years pundits have argued that either Bill should have had an underpaid underling snatch the bill, or that he should just keep walking. The reason being is that literally every step Bill takes is worth far more than $100.

The story got me thinking: shouldn’t Bill Gates, or any businessperson for that matter, have an hourly rate that determines whether to take a business action? I think so. Managers of corporations use similar rates—called hurdle rates—to help them decide whether to invest in a project. A positive investment opportunity generates a return that exceeds the hurdle rate, and vice versa.

Why don’t individuals who own their time use an hourly hurdle rate to decide whether an activity adds personal or business value? I think they should, so much so that I’ve written TRIM to explain how to go about it.

Here are the two key thoughts of TRIM:

Ÿ The market values every business activity, and each activity can be priced by the hour.
Ÿ It follows that everyone chooses their level of wealth based on how they spend their time.

It turns out that most business owners spend almost all of their time on less than $50 per hour activities. These activities are tactical, often clerical, and can be readily bought in the marketplace. When you multiply 2,000 annual hours times $50 per hour, you get $100,000 per year. Yet the typical small business owner earns less than $75,000 per year, and here’s the more important part, they create little or no business value. This is a secret of U.S. business ownership: 90% of owners never create a valuable business. Rather, even in the face of tremendous risk, the typical owner works for a low hourly rate.

Why do tens of millions of people who own their own time work for such low rates? Don’t they know they will never be financially independent unless they work for rates well above $250 per hour? The answer to these questions is found within this book, but—spoiler alert—it centers around the fact that most people don’t associate hourly activities with creating value or wealth. So they will never have wealth.

But the wealthy have figured it out. They only engage in activities that promise to create a certain level of value. Or, stated another way, they only “work” when they can add a certain amount of value to a project. For the people at the top of the Ladder of Success, this hourly number exceeds $5 million. Bill Gates, for example, created more than $5 million per hour in wealth in the year before this writing. Steve Jobs, Warren Buffet, Larry Ellison and hundreds more have similar hourly rates. I have a partner in one of my businesses who will not engage a business discussion unless it promises to add more than $10 million per hour in personal value. And, like the people mentioned previously, he greatly exceeds this figure in practice.

But most owners are lifestylers, meaning that they own their own time so they can live a good lifestyle. These owners forego creating business value so they can live the good life—now. Unfortunately for this group, the Transformation Age is the lifestyle business killer. Most lifestylers will not be able to keep their current level of earnings, let alone create any value.

The mission of TRIM is to show readers that they can have both great lifestyles and create more valuable businesses.

Btw, that’s what Bill did.

– Rob

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The Math Of America

MidasMoments: Rob Slee’s Comments on the Nation

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This may be the most unsettled period in non-war US history. No wonder both presidential candidates have the largest negatives since such statistics have been compiled. But what really is going on here? It appears the math of America is so bad that even many Matrix denizens have finally woken up.

Let’s review some highlights:

– Every year for at least for the next 5 years the US will exceed $500 billion in trade AND budget deficits and will generate more than $2 trillion in unfunded liabilities. Each year. This will continue until the system fails. Then Grampa Slee’s words about life will ring true: it’s bad for a while, and then it gets worse.

– Yet the debt math is worse than the Government admits (imagine that). Hundreds of billion$ are being added to the public debt each year which are being erased from the official deficit number due to the peculiarities of government accounting. For instance, during the last two years nearly $200 billion was borrowed by Uncle Sam to fund student loans, but that didn’t count in the official deficit because these outlays are considered “investments”, not spending.

– Retirement? Ha! The median working-age couple has saved only $5,000 for their retirement, while 70% percent of couples have less than $50,000 saved. The majority of Americans are planning to tap social security for most of their retirement funding. Yet there is no social security trust fund. The ratings for future presidential debates will be Super Bowlish when it’s finally discovered that Grandma can expect her future monthly SS payments to drop by more than 50%.

– Basic education is a disaster. Sixty six percent of all U.S. fourth graders scored “below proficient” on the 2013 National Assessment of Education Progress (NAEP) reading test, meaning that they are not reading at grade level. Even more alarming is the fact that among students from low-income backgrounds, 80 percent score below grade level in reading. Reading proficiency among middle school students isn’t much better. On the 2013 NAEP reading test, about 22 percent of eighth graders scored below the “basic” level, and only 36 percent of eighth graders were at or above grade level.

– College education is a disaster. The media talks a good bit about the trillion$ student loan debt, and the fact that much of this will never be repaid. But here is the unstated crisis: the fact that more than half of those who start college fail to finish. More math: only 15 percent of the bottom half of the US population (based on family income) have earned a college degree and only 9 percent among the bottom quarter. At a time when the majority of new jobs require post-secondary education, this is a national shame. Not only does it limit individual socioeconomic advancement, it minimizes the country’s capacity to make the most of talent that exists at every level and in every neighborhood.

– And all of the while, 80% of our private biz owners aren’t increasing the market value of their businesses.

No corporate earnings growth…historic indebtedness at all levels…and on and on and on.

The only reason we don’t have mass riots in the streets right now is that most Americans are terrible at math.

What’s the real problem in America? The upside down math is proof that we have been consuming more value as a society over the past 25 years than we have created. No amount of monetary and/or fiscal stimulus can change this fact.

Our only hope to maintain US sovereignty is that we change our education system so that our students become whole brain thinkers, and at the same time all of the rest of us change our behaviors to generate more value than we consume.

And that’s something we didn’t hear in any of the debates.

– Rob

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Is It Time To Blow-Up The Matrix?

MidasMoments: Rob Slee’s Comments on the Nation

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As you may recall, I am living the first Matrix movie. Specifically, I’m playing the role of Morpheus, battling beyond reason the simulated reality created by the machines. In my real reality, the machines are the U.S. institutions (political parties…special interests…mass media) that have conspired to create the Matrix. The Matrix works for them by taking from us.

The Matrix has been busy as usual and would have us believe a number of things that promote their interests, but hurt us. The problem, of course, is that less than 5% of us have escaped the Matrix. The machines and their agents parasitically live off the 95%, and would efface the escapees if they could. But we are a wily bunch and not easily snuffed.

The Matrix continues to feed us many untruths, such as: all new jobs are created equal; Americans have finally learned their lessons and have paid off much of their debt; that inflation is low and will remain so; that the Fed has things under control; that the political system can manage the country; that there’s an answer for the $20 trillion national debt and $100 trillion in unfunded liabilities; that somehow the US is different from Europe; that social security has a trust fund, and on and on.

Beware the Matrix, for it feeds itself without regard to the truth or facts. Remember, you’re not just supplying food to the Matrix.

You are the food.

Since I have been living outside the Matrix for some 20 years, I do not believe most of what emanates from there. Especially when it comes to elections.

Most people think the coming presidential election is about a status quo Democrat running against a chaotic Republican. Would that it were so simple.

What’s really going-on is a national referendum trying to answer the question: Is it time to blow-up the Matrix?

This election is really a first of its kind. This is the first time the Matrix has lost control and has been exposed for what it really is: elites and self-serving institutions that will do anything to maintain control.

I’ve been preaching for years that eventually we would destroy the Matrix, if for no other reason, than to save America. Will it happen now? I don’t know. I’m not sure we’re fully ready for the truth or the responsibility of reformulating our country. I also doubt that an outsider without his/her party’s full support can destroy the Matrix.

Of course, it doesn’t help the cause that the chaotic Republican has consistently displayed unthinkably boorish behavior. This has not only called into question his fitness to serve, but it has also enabled the Matrix to focus attention on his personal shortfalls rather than the country’s ills.

Ross Perot – where art thou?

I still believe the Matrix will eventually fall. And that upheaval will make this election look tame.

– Rob  

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