A tiny obligation (in red) to be paid from a giant capital base (white milk jug). The mystery of the government economy as revealed by CAFRs.
By David Tulis
(Second of two parts.) I’ve been thinking a great deal lately about comprehensive annual financial reports (CAFRs) and how their existence might been a boon to American commoners, the American “public.” Walter Burien, who has bought much needed attention to “deep government” and its financial power base, suggests legislatures acknowledge the wealth revealed (at least partly) by CAFRs and create TRFs, or tax retirement funds.
These funds would pay for government operations and allow for a rollback of taxation in city, county, state and national jurisdictions. Such an unburdening of the economy would be a tremendous encouragement for wealth creation, real risk taking, entrepreneurship and hard work. Chattanoogans and other Americans would be able to watch their local economies take off.
In this second part of an interview July 4 at Copperhead 1240 AM radio in Chattanooga, Mr. Burien is in the middle of saying how government-owned financial centers have power to control media companies by controlling their advertising. Click here for Part I of this fascinating free market revelation.
Walter Burien Same thing with any Fortune 500 company, Microsoft, AT&T, Johnson & Johnson. If they came forward with national disclosure, they could run them [into] the ground. Two, since they own 55, 65 or 75 percent of the company through collective ownership networked through the private associations, they could replace the entire board of directors and the CEO on a vote. That’s a very powerful position.
**** Government was not supposed to operate at a profit. The way they got around that was, say a city, county, school district, whatever, earned F$100 million profit for the year. What they do is they sit down, create a liability account, or on an existing liability account they’ll take that F$100 million, move it into a liability account, and, poof, they remove a F$100 million profit now designated as a liability. On all the CAFRs currently, until ’99 they gave the gross income, the gross standing. They’ve modified it, now that people are looking, to net balances, net income.
David I noticed that.
Walter Burien In business, it’s a big difference. So it’s very important to look through the notes to spot those liability accounts they’ve created. Many are just parking zones to move their profits into so they can designate them as a liability, to maintain the power base.
Let’s talk about the remedy. This is very important. Hopefully, your listeners will catch this and not forget it. All taxation is, is a revenue source, period. Investment income, revenue source. Enterprise income, revenue source. So government has three sources of revenue. Taxation, investment income and enterprise income. The only thing they’re admitting to the public is taxing income. But you can consolidate the financial picture here — you know, just mention the pension fund. It generated almost F$7 billion in 2011, F$3 point something billion in 2012; F$4 billion in 2010. You can consolidate the investment capital, enterprise contributions into what I call a TRF, a tax retirement fund, set up identical to a pension fund, same managers. same structure, whole nine yards. Instead of designating the return to paying salaries and benefits at retirement, TRF funds are structured to designate the returns and contributions from enterprise operations to retire taxation, knock it out altogether. Not needed. You can replace it incrementally, city level, county level, school district level, state level, to where the local governments are operating and meeting their budgetary requirements from the return on the TRF funds. Taxation not needed.
David What would happen is we would have a booming local economy if the burden of taxation were removed from your business, your friends’ business in Chattanooga. A thriving economy.
Walter Burien You’re putting all people on the same page for the first time in history. I want to explain how this could create a thriving economy for the next thousand years. A TRF is structured to meet the ongoing budgetary requirements for that local city, county, state, school district into perpetuity so taxation is not needed. If you look at the state retirement fund that you’re looking at right now, say a TRF fund was created at exactly the same time, and it is now generating F$6 billion a year. What’s the state’s operating budget? I haven’t looked at Tennessee. but let’s say it’s F$11 billion. You’re halfway there. OK? In fact that with the TRF fund you’re consolidating the existing investment funds and getting contributions from the enterprise operations, in most cases you can build a fund in four to five years that’s generating enough revenue to satisfy the budgetary requirements for those local governments. Plus: taxation not needed.
David May I suggest, that since the theory of [Nooganomics.com] is local economy, this is really a local economy booster. We can have an incredibly free and local economy here in Chattanooga.
Walter Burien You could have the local county pool, which has a membership of F$185 a year, in four years it could be F$55. Now you want to benefit the local population on every point of the return generated.
David But there’s a kind of problem there, too, when you think about it. If everyone is getting everything for free, then what you are getting is a whole new form of dependency that might not be good morally.
Walter Burien That’s when you’ve got to kick yourself. No one is getting anything for free. In the past, the government has been getting everything for free. And you have had the productivity value incrementally being increased and drained from the population. You had every which way shape and form being taken from the population applied, and the population is being drained to nothing. That’s what’s creating the train wreck. You know, the 200-car train roaring at 300 miles an hour toward a one-mile thick concrete wall. But when you take taxation now out of the picture, the population maintains its productivity value. They get to go up in their wealth; they are driving the economy *** .
David If you listen to the expert on comprehensive annual financial reports, the government and the media want us to believe government is poor, that every budget year there’s a struggle, programs are going to have to be cut, teachers are going to have to be laid off, retirement benefits are going to have to be reduced, insurance payments by county governments by staff are going to have to be cut back, as it was promised in Hamilton county that the Cadillac insurance program was going to be pared back. But Walter Burien’s analysis of governments in the United States brings him to conclude that we have — that THEY have more than F$100 trillion in collected liquid investment assets. Walter, tell us a little bit more about this figure. ****
Walter Burien *** Here’s something that really got me furious about eight years ago. Government promotes debt at the front door and they use their own investment assets through the back door to fund their own debt. *** Say for example you called me this morning, and you said to me, Walter, I’ve got $5 million in cash sitting here on a table in front of me.
I’m going to send it to you. I want you to start a mortgage company. I’m going to buy a shopping mall for F$5 million in Chattanooga, and I want you to underwrite my mortgage. So you send me f45 million in cash and I start a mortgage company. You present a shopping mall to buy in Chattanooga, I underwrite your mortgage and I charge you 12 points on the mortgage. You tell me I get to keep 4 points and I return 8 points to you under the table. You buy the shopping mall. Now you tell all your neighbors and business associates, “Oh my G–, I should’ve never bought that shopping mall for F$5 million. The mortgage payments are killing me. Can I borrow F$10,000 help me out on my mortgage payments this month?” Well, when you forget to mention that it was your F$5 million in the first place, that’s a slight bit of misrepresentation there.
Starting about 35 or 40 years ago, government began setting up their deals with the banks, they started their own financial enterprise operations, to funnel all their investment capital into these operations. Then, when they had a bond issuance, they would use their own investment capital to fund their own debt. Now they needed parking zones. They were bringing in so much cash they needed some place to park it. What better way to park it than to promote a debt and fund it with your own investment capital and let it sit there for the next 20 to 30 years to maintain your own power base. The public is not looking at the basics. They were kept off in la-la land, intentionally. Great effort was made to have not a peep not a mention not a word. ***
I get thousands of phone calls from people talking about their cities and their counties their state is raising taxes, this, that and the other. They can go on for two to three hours. I’ve learned to stop ’em. I say, I have got a couple of questions for you. Do you know how much cash you have in your pocket? They say, “Yeah, I know. Why do you want to know?” I say, “I don’t want to know. I just want to know that you know.” “Yeah, I know how much cash I have in my pocket.” “Do you know what your checking account balance is?” “Yeah.” “Do you know how much your investment worth is?” “Yeah, I’ve got a pretty good idea.” “Do you know what your net worth is?” “Yeah, I know exactly what it is. Why do you want to know.” I say, “I don’t want to know, I want to know if you know.” [So Mr. Burien asks about the person’s city.] “How much cash does your city bring in?” “I have no idea.” ***
So here what is basic and fundamental to each and everyone one of us since we were little kids until we die (unless we get Alzheimer’s at 95), we keep a running total of how much cash we have in our pocket, our checking account balance, our investment totals and our net worth. But as far as it goes with government, they’ve created an intentional void, a vacuum in the cognitive thinking of an entire population for the last 65 to 70 years. The basics. The basic fundamentals. They look at how much they brought in last year, five years ago, 10 years ago and say, “Damn!” They’ve expanded 1,000 percent on their gross income, or maybe in 25 years 3,000 percent. *** Government, state local and federal, brought in more money than the entire population. and when people hear that, they say, “How could that be possible?”
David So government is really parasitic, and the parasite is growing larger than the host.
Walter Burien They are takeover specialists run by attorneys. You look at the majority of your congressmen and senators, governors, 60 or 70 percent are attorneys. And the public votes for these people not even realizing they are attorneys. We all know the reputation of attorneys networking among each other.
Very good information; keep it coming.