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John A

OK, gonna rant for a bit...

- - - - 1. - - - -
Forget cell phones and laptop computers; forget DVD's and iPods.

Can't. For example, my parents bought their first TV after over twenty years of marriage - and at that, were among the first in the neighborhood. Money spent that could have been "saved" I suppose. Today, add monthly signal provider charges cable/satellite/FIOS/whatever or "save", presumably by trying to get over-the-air signals as they did (which was not very practical before and now worse with signal-babndwidth-splitting and HD). Actually I do save this as I do not have a TV BUT I do have an internet connection, which they could not. I suppose I could "save" by not having it...

My father grew up having one of his chores the taking out of "night soil" and was happy to pay for indoor plumbing and sewage. OK, maybe could not have "saved" there as the government levied tax to install the pipes whether wanted or not, but Dad bought the fixtures.

What I am saying is that we spend a lot of money on things that were science fiction or completely undreamed of in my parent's (presumably your grandparent's age) youth, and which they would have happily bought.

- - - - 2. - - - -
There is a lot in the article, and doubtless the book, but in the article the bit[s] about "consumption" tax, well, come on.

We are taxed on anything we buy already. In my State, which has a sales tax, the claim is that food is not taxed. But I can recall reading, in the mid-1950s, that of 24 cents for a loaf of bread 22 cents were post-harvest taxes.

But you can easily implement a consumption tax with a Form 1040 that says: "How much did you earn this year? How much did you save? Now pay tax on the difference."

Yikes. Spend everything and pay no tax? Brilliant! That will really encourage saving! Oh, and note this probably covers the point immediately above: the company that buys corn from a farmer would pay a "consumption" tax, etc. Which is probably another reason why the reveiwer does not think a consumption tax need be applied at point-of-sale, he means to the person[s] actually consuming since every other step of the way has already been taxed. Or something.

Invest $1,000 a month in 3% bonds and in 40 years you'll have almost a million dollars. Invest the same $1,000 a month in a diversified portfolio of stocks earning the historical average of 8% and you'll have more than $3.5 million.

Well... Unless those 3% bonds are what are called "triple tax-free" in which case you'll get roughly the same amount unless all taxes on income is done away with so as to render the 8% the same as the 3%ers now, which is what he is claiming. Like to see it, but while I certainly agree investing at least some of what is called "disposable income" is the way to go he grossly overstates under current conditions.

Exacerbated by (All these numbers are corrected for inflation. If inflation runs at 2%, you can expect a 10% return on the stock market. In the end, you'll have the equivalent of eight million of today's dollars; if prices double, you'll have 16 million instead of eight.) Spot the flaw? Simple: he is saying if you invest NOW the equivalent of one grand per month over fifty years... But that 1000 this year becomes next year's 1000 worth 980, which becomes the next year's 1000 worth 960...

= = = = = =

I think the quote is paraphrased "If you ask three economists how to invest you will get five answers."

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