Top Five Memorial Day Historical Facts

“Top Five Memorial Day Historical Facts”
Ty J. Young Editorial

While we enjoy the day off from work with BBQs and beach trips, it is important to remember the reasons we celebrate Memorial Day. It represents a day of remembrance for all of the fallen soldiers who gave their lives to protect this great and mighty nation.

While markets and your money remain the focus of our business throughout the year, we should remember there may not be any markets, nor any money, and therefore no retirement, without the ultimate sacrifice of brave and patriotic young men and women serving our country over the past two centuries.

Memorial Day was first recognized during the Civil War, as widows in Boalsburg, PA laid wreaths on the graves of their husbands and members of their community. It received official recognition by General John A. Logan, commander in chief of the Grand Army of the Republic, who issued his General Order #11 on May 5, 1868, asking for a day of remembrance “… for the purpose of strewing with flowers, or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion.” The orders expressed hope that the observance would be “kept up from year to year while a survivor of the war remains to honor the memory of his departed comrades.”

Below is a countdown of our top 5 historical facts to remember when celebrating this Memorial Day!

5. Rolling Thunder biker gangs head to nation’s Capital. Biker groups first rallied on Memorial Day in Washington, D.C. back in 1988, to draw attention to the plight of Vietnam veterans and those left behind during the war. The first group consisted of 2,500 bikers. Today, the numbers have swelled to over 300,000, and it has become an annual event. The group is aptly named for the B-52 bombing campaign during the war also known as “Rolling Thunder.”

4. It was first known as “Decoration Day.” Memorial Day was originally called Decoration Day because of the practice of “… decorating graves with flowers, wreaths, and flags.” Although the common name did become Memorial Day, it was not officially designated by the government until 1967.

3. We remember our fallen in All-American fashion. From the Indy 500 to parades in small towns across America to the good old fashioned backyard BBQ, Americans celebrate Memorial Day like only Americans can! While a solemn and important holiday to remember, because of those who have been lost in battle, it is a day we can also celebrate the freedoms bought and paid for by the American military.

2. Flags fly at half-staff until noon. Tradition mandates that flags are only flown at half-staff until 12 p.m. on Memorial Day. Then they are pulled back up to the top of the staff until sunset.

1. At 3 p.m. all Americans are to pause for a moment of silence. In 2000, Congress passed a law entitled “The National Moment of Remembrance.” All Americans are asked to stop at 3 p.m. on Memorial Day and observe a moment of silence as an act of national unity.

From the Battle of Belleau Wood to D-Day, from the Battle of Inchon to Khe Sanh, and of course the more recent race to Baghdad, American soldiers have paid the ultimate sacrifice for our people to enjoy the freedoms we often take for granted today. Let’s remember, we can make this the greatest time in history; we are already the greatest country in history. We are Americans with a capital “A.” There is a time to discuss the events of the world and how they can affect your money, but this week let us all take the time to remember those who gave the ultimate sacrifice for the freedoms we enjoy.

Have a great Memorial Day everyone!

Negative Interest Rates – What Does That Mean?

“Negative Interest Rates – What Does That Mean?”
Ty J. Young Editorial

A NIRP (Negative Interest Rate Policy) is an “…unconventional monetary policy tool whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent.”

In English? A drop in demand and prices means we are entering a deflationary cycle. In order to stimulate demand, the Fed lowers rates, all the way to zero if necessary – making the cost of money less. In theory, you can go below zero in what is called, negative interest rates.

If our central bank – the Federal Reserve – implemented a negative interest rate policy and private banks joined them, they would actually charge you to keep money in its bank. Instead of receiving 2% on a Certificate of Deposit (CD) at the bank, they would charge you 2%. So, if you had $100,000 in a CD receiving 2% interest, at the end of the year your CD account value would be $102,000. If your bank had a negative interest rate policy, it would be $98,000. You would be losing money.

Negative interest rates have not been tried and are not being tried in the United States. Japan and the European Central Bank currently have a negative interest rate policy – the results have been economic stagnancy and contraction.

Why would a central bank or private banks do this, and who would keep money at a bank which offered only negative interest rates? Well, the answer to the second part of the question is … you would not. The first part of the question is the same answer – they would not want your money at the bank. They would be trying to force you to invest in the marketplace as you search for a higher yield. That is a dangerous and unconventional policy that could jeopardize a country’s currency and muddy the stock markets.

I. Why Have a Negative Interest Rate Policy?

1. Force investors into the stock market. It is an admission of how weak your economy has become, but if you need people investing in paper assets, this is a way to do it. Unconventional and historically rare, negative rates do not drive people to keep their money in the bank.

2. Improve a country’s trade balance. Export driven economies – as found in Japan and Europe (Germany), two areas with negative interest rates – benefit from a weakened currency. Going below zero certainly weakens the currency, and should therefore give a boost to export sales.

II. What Are the Perils of a Negative Interest Rate Policy?

1. Economic stagnation. Massive public debt, stimulus, quantitative easing, and the lowering of interest rates until they go negative has been happening in Japan for 20+ years… the result has been economic stagnation and no growth. Europe is now on the same trajectory. There is always a reckoning, but until that occurs, your economy will best be described as a “zombie” economy. Stagnation hurts wallets, lowers standards of living, and limits opportunity – none of which is something you would want for your country.

2. People could begin to hoard money. If a bank charges you to keep your money there, you will eventually choose to move it into more productive places, such as the stock market. But, at some point, you may recognize the weakness in all of these options, and begin to simply keep money in the proverbial mattress. Money hoarding creates bank runs and falling stock prices, and you get what the NIRP was trying to avoid, a recession … or worse.

3. Money is simply eliminated. The end of the NIRP life cycle could be one of the worst outcomes you could imagine – the elimination of physical money. With the rise of bitcoin and other alternative sources of money, many people would prefer the convenience and efficiency of a money-less society. With credit cards and the nature of digital banking, that world is already here. But negative rates drive people from the bank, which means they will be using cash more. That limits the government’s access to information about how much money you have, and therefore how much money it can tax. As we all know, governments will not let that happen. The logical progression of negative rate policy, carried to its ultimate conclusion, is the elimination of physical money. If that were to happen, it also eliminates in large measure your freedom of action – since all action will become digital.

III. Can the U.S. Benefit from a Negative Interest Rate Policy?

1. Yes – if other countries are doing it, and we’re not. Not only do we retain a 0.37 current Federal Funds Rate, above 0, but we consistently have signals from the Fed that their intention is to raise rates. Our economy has grown – anemically and artificially – but nonetheless we have grown as compared to other countries. When Japan and the European Union have negative interest rates, it lowers the value of their currency, which in turn, strengthens ours.

2. Sort of – It lowers rates which means it lowers prices – good for the wallet. Although a price collapse can signal a recession or even a depression, a stable decline of prices is always good for your wallet, and your household balance sheet. The drop in oil prices over the last 24 months, for example, has been a great benefit to middle class families and their wallets. Lower rates are a reflection of a drop in pricing.

There has been pressure in the U.S. for negative interest rates. Former Treasury Secretary Lawrence Summers (served under Clinton), has publicly advocated for negative interest rates as a way to help the economy. Pulling money out of the banks and into investments is what he believes will happen. Lost on him and others is why trillions in stimulus and quantitative easing did not do the trick. But it is worth noting that many leading Democrats are in favor of NIRP. That would be a mistake.

The United States has the deepest capital markets, the strongest economy in the world, and the strongest currency in the world. While we may face unprecedented challenges ahead, we have never failed to meet and defeat whatever stands in our way. NIRP is a bad policy and a defeatist policy, let’s not let the politicians go down that road.

If you want your money protected from government policies and interference in the marketplace, then call us today and find out how. 877-912-1919



Trump Tax Plan is Specific and Pretty Good

“Trump Tax Plan is Specific and Pretty Good”
Ty J. Young Editorial

When Larry Kudlow, a former Reagan Administration economist, CNBC Host, and talk-radio show host, says he likes your tax plan, then maybe that is a tax plan worth taking a look at.

Kudlow weighed in on Presidential Candidate Donald Trump’s tax proposals and found a lot to like. While many thought leaders prefer a “Fair Tax,” and a majority of economists believe the country needs some form of significant tax reform, few Presidential candidates offered specifics regarding what tax reform would look like during the campaign season. If you just listened to the mainstream media, you would believe neither party is offering many specifics. But in Trump’s case, there are plenty of specifics, and they do provide meaningful tax reform.

I. What Does Donald Trump’s Tax Reform Accomplish?

1. Lowers taxes on everyone. If you are making $25K as a single person, or $50K as a married couple, you have ZERO tax liability. It eliminates several tax brackets and lowers the top bracket significantly. There are 4 tax brackets under the Trump plan – 0%, 10%, 20% and 25%. The highest current bracket of 39.5% is lowered down to 25% – that is significant tax reduction.

2. Corporate taxes will be reduced dramatically. From one of the highest rates in the world of 40%, coming down to one of the lower rates globally – 15%. This would apply to all forms of corporations – C-corps, S-corps – and Kudlow has commented this will move all sorts of labor and capital back to the United States… it would be a windfall.

3. Corporations will get a deal to bring cash home. A one-time repatriation fee of 10% on money American companies bring home is lower than the tax rate where they are holding the money, or the taxes charged on a US Tax return. The American company brings the money home to be deployed into the economy, and pays less than the taxes they would have for that given year, either here or abroad. The government still sees revenue they would not have if the company left their money over-seas! It is a win-win for everyone: the corporation, the government, AND the American people in jobs and income!

4. It will eliminate the ‘Death Tax.’ No more estate/inheritance taxes. As Trump says himself, “… You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.”

There are many people on TV who say when you lower taxes, you lose revenue, and we already have a massive deficit and debt. But that is a false statement – history and evidence prove lowering tax rates increases government revenue. Historically, politicians have simply spent more money when they receive more revenue. But the fact is you obtain greater revenue when you lower taxes.

II. How are the Trump Tax Reductions Covered?

1. Trump reduces or eliminates individual deductions and loopholes available to the very rich. Middle class and low-income tax filers are protected, but the wealthy will lose their deductions and exemptions.

2. His plan ends the corporate foreign income exemption. Corporations can defer taxation on income earned abroad, where they face double taxation. Trump is adding to the foreign income tax credit so corporations can avoid double taxation when they lose their deferral exemption.

3. Trump eliminates corporate deductions. They become unnecessary due to the lower corporate tax rate.

Almost all economists agree, both on the left and the right, the country badly needs a tax reform plan. Even President Obama launched his bipartisan Simpson-Bowles Tax Reform Commission, which called for lower and flatter rates, but then the President ignored his own commission’s recommendation. Hillary Clinton, the leading Democratic nominee, has called for higher tax rates on everyone. Her opponent, Senator Bernie Sanders, has called for tax rates of 90% and more. Today, only Trump has a plan that is fair to all Americans, and is paid for by eliminating tax loopholes and exemptions.

While Trump and Clinton (and Bernie) have put forward different ideas regarding changes to our tax system, one thing is certain – the country has a bloated, inefficient, and in some cases lawless tax system that does not seem to work for the majority of people who labor for a living. The only candidate, so far, with a plan, specifics, and a way to pay for it, is Donald Trump.

Regardless of who you vote for, make sure your retirement investments are protected from the ups and downs of the market, and from the impact of the Presidential race. To learn how you can achieve safety of principal along with a reasonable rate of return, call us and we will explain exactly how it works. 877-912-1919.