BIG BOX RETAILERS ARE FEELING THE INEVITABLE BITE OF INFLATION AND THE INTERNET

The out of control inflation that is sickening our nation's economy is having a drastic impact on "big box" retailers. This terrible scourge of inflation is eating away at the public's disposable income, and this leave people less money to spend on shopping. Inflation makes it appear that prices are on the rise, but in reality it is people's money that is losing its buying power.

The Internet and on-line shopping have of course had a tremendous impact on the market and the way in which people shop  However, the middle class has always looked for both value and quality when shopping, this means that everyone is not flocking to budget or discounts shops like Walmart.  Amazon will never have the sex appeal of Victoria's Secret. Personally, I dread the thought that Walmart will dominate every facet of the marketplace.

Regardless of Amazon's or Walmart's market share, if things continue the way the are and the Inflation bubble is not corrected, even modestly priced stores like Target will continue to lose ground.

BOSS VS LEADER, OR PERHAPS MANAGER VS LEADER

Over the past few years there has been a growing discussion over leadership styles, with various writers phrasing the issue as “Boss vs Leader”. For the purposes of this article, in order to keep clearly defined terms, the argument will be phrased as “Manager vs Leader”. Within the article the term “manager” will be used to denote persons responsible for guiding an organization. There are several good reasons why this is an appropriate nomenclature, all of which will become more evident as the discussion progresses. The terms Boss, Manager, and Leader will be defined and described as to how they fit within an organization. The graphic below will serve to initiate this discussion.  

 

The above picture is ubiquitous on the Internet, it comes in all sorts of shapes, sizes, colors, and decorations, but the information is the exact same. As can be quickly observed, most of the differences are based strictly upon charisma and personality. How does the term “Boss” fit into the structure of an organization? For the various Internet authors, “Boss” is used as a pejorative to denote anyone lacking in personal charisma.  Anyone holding a position of even the slightest authority can be called “boss” by their co-workers; therefore the term itself becomes vague and generally useless for the purposes of this discussion. A “manager” is defined as someone with a formal position within an organization (from assistant supervisor to CEO or business owner) who has the responsibility and authority to carry out the duties of that position. A manager derives authority because of his official position. A “Leader” is not an official position; rather it is someone who people desire to follow because of perceived personality and character traits.

There is a legitimate question of how effectively managers lead their organizations through their personal mannerisms.  Some issues are quite obvious; nobody wishes to hear their supervisor or company executive exclaim “You need to do what I tell you because I’m the boss around here!”, nor does anyone wish to experience abusive or condescending behavior in the workplace. It is assumed that astute managers desire a harmonious work environment in which their employees can be motivated to work at their full potential.

The study of management and leadership began during the late 1800’s, the University of Pennsylvania has the distinction of being the very first university to offer a degree program focused in this field. The early researchers began their examination by looking at the different characteristics of military and business leaders. They were able to discern different tasks or functions that are common to all authority figures or “managers” in carrying out their duties.  The Five Functions of a Manager, as any business school student can recite, are as follows: Plan, Organize, Direct, Control, and Communicate (Many authors use the term “Staffing” as the fifth function; however, for several good reasons, I prefer to use the term Communicate). How a manager carries out these various functions is the basis for this discussion of Boss vs Leader.

Each of the Five Functions of a Manager requires a different set of skills and knowledge, and different people will approach them in different ways. Below is an explanation of each of the terms.       

• Planning: CEOs and business owners must decide on the future of their organizations by carefully planning in advance. Hypothetically, the CEO of ABC company decides to expand operations into the Southern US. The CEO will issue a statement to the effect “We find opportunity in the South, and expect to expand operations soon.”

• Organize: After plans are decided upon, managers must organize resources (both personnel and material) in order to reach whatever plans or goals have been made. Continuing from the previous example, the CEO of ABC company decided to expand operations to the Southern US. The CEO must now organize company assets by hiring additional employees, moving assets to the South, leasing office space, or doing whatever else is needed to accomplish the company’s goals.

•  Directing: This can also be called Commanding or Leading, the manager directs employees by issuing orders. How a manager goes about directing employees is of the utmost importance, and it will depend on a great many factors.  For example, the CEO of IBM directing the Vice-President of Finance to sell some stock in order to raise working capital will use a very different sort of language than the manager of a fast food restaurant directing a rebellious teenage employee to clean the bathrooms.

•  Controlling: Managers control their company’s resources in order to ensure goals are being met. This is another area in which everything will depend on the situation. The manager of a car dealership may control employees by setting quotas. For example, an underperforming employee may be warned “If you don’t sell three more cars by the end of the week, you’ll be looking for a job”.  A manager may have to address an employee that’s being distracted by personal issues. Example “Get off the phone, and pay more attention to your work”

• Communication: A manager must communicate constantly, both internally to employees and to external stakeholders. The most successful and effective managers are able to communicate very effectively.

Given the various functional areas of management, and the wide spectrum of organizations and circumstances, it is clear that different managers will be focused on certain of the Five Functions. From the examples above, the CEO of a large company will be focused almost exclusively on Planning. Organizing, and Communicating, with little time to Direct or Control employees and assets. A department manager at the local department store will be focused on Directing and Controlling, with little opportunity for anything else.

Taking into account all the information discussed above, it becomes apparent that an individual manager will adjust their management style depending on the situation. Generally speaking, there is no one with an absolute personality of evil Boss or saintly Leader; everyone has some mixture of both personality traits and everything will depend on a given situation. It should be emphasized that the best leadership style is the one that is appropriate to the situation and will motivate employee to reach their fullest potential.

BOSS VS LEADER

There are all sorts of articles on the Internet trying to compare the qualities of a "Boss" and a "Leader". Much of what has been written seems copied from one author to the next. For my next article, I will explore the different leadership styles, and provide some clarity on how they function in an applied basis given different scenarios.
Stay tuned my dear friends, the article should post within the next few days.

THE POWER TO TAX IS THE POWER TO DESTROY

"The power to tax is the power to destroy" is the classic American expression, it originated from an 1819 Supreme Court  decision. What does this mean? It means exactly what it says: the ability of a government to levy taxes gives that same government the ability to destroy an industry or an entire economy. When governments want to destroy an industry, but banning the industry would be unpopular with the voters, they can simply tax the industry to death. It has been done many times, for example, many states have harsh cigarette taxes that are so onerous many people have difficulty affording their habit. On the other hand, governments can do inadvertent damage by carelessly taxing industries. The perfect example of a bad tax came during George H. Bush's administration. He made the now infamous statement "Read my lips, no new taxes", but Congress didn't get the memo. They forced Bush to raise taxes on luxury items such as yachts. Soon enough, the yacht building industry in the US was utterly destroyed.

Today we have a war on food. Governments are picking and choosing what is appropriate for people to consume. Philadelphia is the first city in the nation to impose a "soda" tax, and business is already dropping. Why are governments making such decisions? It should be left to the individual to decide what he/she wishes to consume. People have been eating and drinking for thousands of years without any problems. But wait, here come concerned politicians looking at the the next election and all of a sudden they know whats good for everybody.

Today, they are targeting soda. Tomorrow the target for a destructive tax could be coffee, rice, bread, alcohol, meat, or vegetables. The politicians have a powerful tool, and they are all too eager to use it.
Politicians have declared war on soda

THE HUBRIS OF JANET YELLEN, THE FEDERAL RESERVE, AND CONGRESS

Janet Yellen, the Chairperson of the Board of Governors of the Federal Reserve Bank (in other words the “leader” of the Federal Reserve Bank), went before a Congressional committee on Tuesday February 14, 2017, and presented what is basically a routine report. If this report is taken at face value, everything will seem to be just fine, without a problem in sight. However, after careful examination, given our understanding of money and economics, we can conclude that Mrs. Chairperson Yellen is full of crap.

I will analyze her report, line by line, and tell you what her words really mean when taken in the context of my previous posts to this blog. She begins by painting a very rosy picture of the overall economy and job market, citing reduction of unemployment and rising wages.

Since my appearance before this Committee last June, the economy has continued to make progress toward our dual-mandate objectives of maximum employment and price stability. In the labor market, job gains averaged 190,000 per month over the second half of 2016, and the number of jobs rose an additional 227,000 in January. Those gains bring the total increase in employment since its trough in early 2010 to nearly 16 million. In addition, the unemployment rate, which stood at 4.8 percent in January, is more than 5 percentage points lower than where it stood at its peak in 2010 and is now in line with the median of the Federal Open Market Committee (FOMC) participants' estimates of its longer-run normal level.

What price stability? Has Mrs. Yellen gone to the grocery store lately? Has she been paying attention as the price of food and consumer goods have skyrocketed over the past twenty years? The cost of college tuitions and medical care, have increased exponentially over the same period of time, and they are continuing to increase at a tremendous rate. Where is the maximum employment? There are more than 45 Million Americans on food stamps, and most of them have been unemployed for quite some time US Department of Agriculture Food Stamp statistics. 

Mrs. Yellen continues by quoting several different statistics and comparing the ups and downs of the economy. The numbers are obscure enough to confuse even the most astute Congressperson. Getting past all the happy talk of the 1.5% increase in the Gross Domestic Product, she finally arrives at a discussion of monetary policy. This is where the original mandate of the Federal Reserve was found; it was supposed to be the guardian of US currency by ensuring that the US dollar retained its proper value on the world market.

Turning to monetary policy, the FOMC is committed to promoting maximum employment and price stability, as mandated by the Congress. Against the backdrop of headwinds weighing on the economy over the past year, including financial market stresses that emanated from developments abroad, the Committee maintained an unchanged target range for the federal funds rate for most of the year in order to support improvement in the labor market and an increase in inflation toward 2 percent. At its December meeting, the Committee raised the target range for the federal funds rate by 1/4 percentage point, to 1/2 to 3/4 percent. In doing so, the Committee recognized the considerable progress the economy had made toward the FOMC's dual objectives. The Committee judged that even after this increase in the federal funds rate target, monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

 That said, the economic outlook is uncertain, and monetary policy is not on a preset course. FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to the economic outlook and associated risks as informed by incoming data. Also, changes in fiscal policy or other economic policies could potentially affect the economic outlook. Of course, it is too early to know what policy changes will be put in place or how their economic effects will unfold. While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity. I would also hope that fiscal policy changes will be consistent with putting U.S. fiscal accounts on a sustainable trajectory. In any event, it is important to remember that fiscal policy is only one of the many factors that can influence the economic outlook and the appropriate course of monetary policy. Overall, the FOMC's monetary policy decisions will be directed to the attainment of its congressionally mandated objectives of maximum employment and price stability.

Why did Congress make the Federal Reserve responsible for full employment? How is the banking system supposed to do this? Is the Federal Reserve going to call every business owner in America and demand they hire additional employees? The idea is ludicrous!!! The economy is made up of individuals; every day those individuals make choices which affect the economy. Trying to quantify every individual employment decision on a neat little graph is ultimately misleading, because the numbers will not tell the whole story.

Mrs. Yellen and the Federal Reserve have failed to carry out their most basic fiduciary responsibility, that of maintaining stability of the US dollar. The rise in prices in consumer goods, in college tuition, and in every facet of life, is a direct result of their careless stewardship of the public’s money. A person working full time and earning up to $10 an hour is not able to support themselves because the money they’ve worked so hard to earn is constantly losing its value, and this makes it appear as if prices have risen. This is how inflation works, and the Federal Reserve has been advocating for ever increasing inflation since the 1930’s.

Allow me to quote Ludwig Von Misses, one the great economists of the Twentieth Century, as he spoke out against the sort of inflationary policies favored by our banks and government.

The great inflations of our age are not acts of God. They are man-made, or, to say it bluntly, government (bank) made. They are the off-shoots of doctrines that ascribe to governments the magic power of creating wealth out of nothing and making people happy by raising the “national income” (GDP).

HERE IT COMES

I've always respected Jim Rogers, even if we have different points of view. However, in this latest interview he manages to hit the nail on the head. We are facing an economic disaster of an unprecedented magnitude. This disaster (as I have discussed in previous posts) will be caused by: Hedge Fund gamblers on Wall Street putting hundreds of Trillions in the derivative market; the Federal Reserve that constantly increases both the money supply and cheap credit, thus putting incredible inflationary pressure on the US dollar which can only result in a period of drastic deflation; and the structural economic weaknesses that have been caused by the Elites within both major political parties with their spreading of Marxist ideology and implementation of so called "free-trade" agreements which have caused immeasurable damage to US industry.I am a firm believer in Capitalism and the benefits of the free market system; however, greed, corruption, and sneaky politicians, have no business being in the marketplace.

https://www.lewrockwell.com/2017/02/tyler-durden/headed-way-economic-catastrophe/

I'VE BEEN VERY BUSY.

I've been extremely busy these past two weeks: a family member in the hospital, employees calling in sick, employees not coming to work when they are supposed to, and even my wife has been under the weather. I hope my previous post "WHY ARE WE STILL USING 130 YEAR OLD BULLET TECHNOLOGY?" was informative and entertaining. It took me several days to write, I kept dozing off every time I tried to finish it. Hopefully, my schedule will return to normal next week. 

WHY ARE WE STILL USING 130 YEAR OLD BULLET TECHNOLOGY?

Gunpowder has been around for quite a long time, for just over a thousand years. Historians have been able to trace the origins of the first weaponized use of gunpowder to sometime before Genghis Khan and the rise of the Mongol Hordes that swept through China. When gunpowder reached Europe, sometime during the Thirteenth or Fourteenth Centuries, the first cannons and hand held weapons were invented. Those early muzzle loading muskets were large and heavy, and required a sort of bipod to be used properly. Musket technology continued to advance until the earliest breech loading muskets came onto the scene during the late Eighteenth Century. Breech loading muskets were the first weapons to use self-contained cartridges, and were much easier and more efficient to load than the earlier muzzle loading variety.

Improvements to technology and warfare proceeded on an even pace, until the late 1800's when modern smokeless powder was invented. Smokeless powder was a vast improvement over black powder. Cartridges could now be loaded much hotter than any black powder weapon; this meant greater projectile speed which increased accuracy, projectile distance, and penetration power. The first application of smokeless powder was for military use, but it was soon adopted for hunting and personal use.

Various rifle cartridges, most people will never shoot anything over .40 caliber

Smokeless powder has improved over the past 100 years; modern powders provide bullets with ever increasing speed and power. However, the technology has remained the exact same. A cylinder is filled with primer and powder, capped with a bullet, and then inserted and fired from a firearm. Why are we still using weapons that are based on technology developed during the 1800's? There must be modern alternatives to this process of shoving exploding powder filled cartridges into a gun and hoping the gun will fire, and not blow up in our faces as has happened many times throughout history.

Over the past century there have been a few attempts to replace weapons that use gunpowder. The 2013 Annual of Guns & Ammo magazine featured a story that was originally printed in the year 1965, the topic was something called the "Gyrojet". This weapon used a rocket type projectile that was far more advanced than anything that uses exploding powder. The various guns ranged in caliber from 7.52mm through 20mm could be fired at various velocities, without any perceptible recoil. The Gyrojet could have revolutionized the world's understanding of small arms technology. Unfortunately, it never gained the interest of either military or civilian customers.

  

Modern science has developed several alternatives to powder filled cartridges. Among those alternatives are: electric guns, directed energy weapons, and some other ideas using advanced technologies. Directed energy weapons, such as microwave weapons, have been in military use for decades; but it is unlikely they will ever be popular or made available to the civilian market. Perhaps the most practical and realistic option for the near future is the electric gun. The electric gun uses an electromagnetic pulse to propel the projectile down the barrel of a gun. This allows the projectiles to reach incredible speeds, with far greater power and distance than any gunpowder weapon. The History channel featured an episode of its "Modern Marvels" program dedicated entirely to the electronic gun, about 20 years ago. The US Navy is beginning to place "rail" guns of some of its vessels; these are the same electric guns that were featured on the History Channel program 20 years ago. The Navy estimates that when fully implemented the rail gun will be able to shoot projectiles for distances of more than 100 miles. The rail gun technology can be miniaturized and adapted to civilian style weapons; however, traditional gun manufacturers would be put out of business as a consequence.

A schematic of an electric gun

I am not certain how long the use of gunpowder in weapons will continue. For the present, the use of electronic guns is still in the experimental stages. Millions of people own gunpowder firearms, and those guns still get the job done, so gunpowder will still be around for the foreseeable future. But if electronic guns ever become available for civilian use I might buy one, or I might not; it depends on the price.

MY THOUGHTS ON TRUMP'S IMMIGRATION BAN.

Let’s examine President Trump’s immigration ban, with reason and logic. Unfortunately, too many people have allowed emotions, hope, anger, and political hysteria, to guide their opinions.  At this blog, I always try to determine the Truth, even if nobody likes it; therefore, this analysis it guaranteed to make everybody unhappy. Let’s first list the known facts, before we begin analyzing and speculating.

First, this temporary suspension of immigration is perfectly legal. There is no question about its legality; the Courts will side with Trump. There is all sort of garbage being printed on the Internet and in the mainstream media; but it’s just that: garbage.

Second, several previous presidents, including Obama and Clinton, have implemented the same kind of immigration suspension. Nobody cared or protested then, why should they care now? Most of the noise and protest seems to be politically motivated, and is being spread by the same folks that voted for the other candidate in the recent election. Therefore, the protesting can be viewed as irrelevant.

Third, the countries being blocked have Muslim majorities; but in several of the nations there is a definite Christian minority that is also affected. Many Christian families have been directly affected by the ban, so it’s incorrect to call this a “Muslim” ban, as many people are prone to do. Discrimination or racism does not appear to be the goal of the administration in this matter; regardless of how certain misinformed people wish to portray it.

Fourth, the ban affects the nations of: Iraq, Iran, Syria, Yemen, Sudan, Libya and Somalia. This list is rather short and peculiar; there are several other nations that should have been added in order to effectively block terrorists or fanatics from entering the US.

The ban is temporary in nature, covers very few nations, and ignores nations such as Saudi Arabia which provide the most material for terrorists groups. Like any sort of legal restriction, if someone wishes to violate the law they will find a way around it. Drugs have been illegal for many decades and the US government has spent billions of dollars in the fight to eradicate them; but they are still flowing into the US by enormous quantities. Terrorist groups spend a great deal of time and effort when studying a potential target; they look at every detail when planning an attack. Blocking groups is easier than blocking individuals, and most of the terrorist attacks on US and European soil have come from individuals acting alone.

I don’t believe this immigration ban will prove to be effective in accomplishing its stated goal of blocking terrorists. The countries targeted are too few, and generally speaking have limited ties to organized terrorist groups targeting the US. There are more effective ways in which the Trump Administration can fight terrorism and Muslim fanatics. In my opinion, this immigration ban will ultimately prove to be nothing more than a publicity stunt.