Dear Mr. Burien;
I have signed up for TRFA emails but have a couple of questions I hope you can answer.
In your "Know the Truth, and the Truth will make you free?" article you state,
At present only about 1/3rd of Government's gross income is tax income. Two thirds is non-tax income from the return on investment funds and moneys generated from government enterprises operations. Government "budget" reports show the tax income, governments Annual Financial Reports or as most local governments call it, their Comprehensive Annual Financial Reports - show cash flow from tax, investment, and enterprise income. The public has been provided the budget reports for review as the Annual Financial Reports of government were kept for all intents and purposes invisible to the public due to the money involved percolating therein.
What I want to know is what is done with these investments and their income? Do local and state governments use them for off budget expenses or do these investments just sit in some managed account and continue to grow? I don't understand the purpose of these investments.
I look forward to your response.
David
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REPLY TO DAVID FROM WJB
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David:
It would take me a thirty page response to list the many tactics used.
The #1 which most are aware of is government pensions. In this regard what most are not aware of is the employees do not own 1c of those funds. Local governments set them up as strictly participatory which is like if you buy a ticket on a train. You ride from point "A" to point "C" but you do not own one piece of the train. With the games played here, the government employee is getting screwed as well as the public.
The #2 (but getting close to being #1) is that government is promoting debt at the front door and funding the same debt through the back door. In fact on top of government funding their own debt, most private credit debt and mortgages are also funded by government as the "investor" through the banks and institutional agencies. That CHASE or B of A credit card you have in your wallet or that mortgage you have for your house is backed primarily with government investments. Government is the primary beneficiary of those fees and interest charged as the investor, not the banks or mortgage companies, and you only thought they were just getting taxes from you.
The #3 is self insurance or a plethora of advance liability account primarily created to establish a wealth base.
No investment "sits there". It is where that money is invested that is the power base, or where that return is spent as discretionary money not being derived from tax income whereby accountability to taxpayers is given.
Here is an exaggerated example but to the point:
Picture if your city had a small dog pound that was an annual budget item of 40K per year and you could get an actuarial projected liability fund created for the pound. In this fund you projected what would be needed to pay the 40K by return (at 5% interest = 800K) You also had the actuary project what would be needed to move and rebuild the pound (350K), a liability amount in the event the dogs from the pound escaped and killed someone (1,000K), projections for dog food, medical, cost increases going out twenty years (an extra 10K per year or at 5% = 200K, and last but not least; you have 50 dogs in the pound now, you project that this number will increase by fifty per year so at the end of 10 years you will have 500 dogs in the pound, so accounting for the projection at year 4, 5, 6, 7, 8, 9, & 10 you then say come year ten you will need 400K per year + inflation adjusted to be 500K per year, or on year ten to meet basic annual operating costs at 5% interest would be $10,000,000.
So here on our dog pound currently as a budgetary item of 40K per year we have created an advance forward liability account containing:
800K + 350K + 1,000K + 200K + (down the road) 10,000,000K = 12,300,000K
Now that amount may be invested at 10% return getting $1,230,000
Not a bad venture return using a 40K per year budgetary dog pound advance forward liability funding account as the basis to create this wealth base. Is that advance forward liability account a surplus of funds? No, they would be using actuarial approved projections for a designated liability account and I am sure the city or county attorney went over it several times to make sure the "i"s were dotted and the "t"s crossed.Would this ever come up in a publicly presented budget discussion? Not a chance unless the issue was pressed and disclosed from the outside.
They pass their own laws and statutes from the inside to do exactly what they are doing.. If you could get your county to pass a law that you could rob one bank a year, no problem (unless you rob two that is). But you can rest assured they will never do that, it is not in "their" interests.
Keep in mind that if you set up something like this example given for a dog pound, mums the word, otherwise you may be shot or locked in you own dog pound by an irate taxpaying public.
The city of Prescott, Arizona did something similar in 1998 for a little city cemetery, 214K annual budgetary item and an advance forward liability account set up with 21 million funneled in to meet that advance forward liability for the dead and buried.
Walter Burien
P. O. Box 2112
Saint Johns, AZ 85936
Tel. (928) 445-3532
email: WalterBurien@CAFR1.com