Inflation and Taxes

The twin tower threats of “Inflation and Taxes” are the dynamic forces that destroy wealth and undermine fundamental economic opportunity.

The American federal government spends more than it takes in in tax revenue.  Today, the US Senate begins debate to raise the legally authorized debt ceiling by 15% from 12.4 Trillion Dollars to 14.3 Trillion Dollars, an increase of $1.9 Trillion in two years!

$1,900,000,000,000.00

Washington covers this spending gap through two methods:  it borrows dollars and the federal reserve “prints” dollars.

The US government has increased debt in the last two years by $3.62 Trillion – an increase of approximately 39%.

The federal reserve has increased the money supply in those same two years by $1 Trillion - essentially printing money.

The Economist magazine in 2009 wrote:

“Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate.”

No matter how you look at it, this is destructive.  Every dollar that the federal reserve “creates” out of thin air reduces the value of an existing dollar.  The dollar has already lost 95% of its buying power since the federal reserve was created in 1913. 

The long term implications of the increase in debt, and the interest payments necessary to service that debt will require the federal government dramatically reduce spending, increase taxes, or devalue the dollar.  If current attitudes in washington prevail, there are no signs of future reductions in spending.  More likely are continued runaway spending.

That leaves the twin tower threats of inflation and higher taxes.

In 2005, 32.6% of all adult Americans paid no taxes (zero).  Today, that is estimated to have increased to approximately 50%.  This will force Washington to collect more taxes from the increasing minority of citizens who are actually taxpayers.

Is there any doubt about the risks of the twin tower threats of inflation and taxes and the subsequent destruction of wealth and economic opportunity?

The risk and the threats are very real.

Greg Watson

I personally believe that it firmly supports the role of Ethics in a person’s long term business success.  Read my post on The Speed of Trust – Personal Ethics for a more detailed description of the power of Ethics and trust in the business equation.  Business typically calculates results as Strategy x Execution, but there is a Trust Multiplier that is an important factor in long term success:

(Strategy x Execution) x Trust = Results

Here is Darrin’s 10-Point Ethics Checklist, I hope you enjoy it!

1. The Golden Rule: Would I want people to do this to me?
2. The Fairness Test: Who might be affected and how? Is this fair to everyone?
3. The ‘What if everybody did this?’ Test: Would I want everyone to do this? Would I want to live in that kind of world?
4. The Truth Test: Does this action represent the whole truth and nothing but the truth?
5. The Parents Test: How would my parents feel if they found out about this? What advice would they give me?
6. The Children Test: Would I be willing to explain everything about this to my kids and expect them to act in the same way?
7. The Religion Test: Does this go against my religion?
8. The Conscience Test: Does this go against my conscience? Will I feel guilty?
9. The Consequences Test: Are there possible consequences of this action that would be bad? Would I regret doing this?
10. The Front Page Test: How would I feel if my action were reported on the front page of my hometown paper?

That is a wonderful list Darrin shared.

Greg Watson

I routinely integrate the subject of Ethics into every thing that I do.  A person’s true character eventually will always show through in the manner in which they conduct themselves in every aspect of their life.  Personal integrity is all that a true man has once the thin veneer of a surface showmanship is stripped away.  Yet it is this reality that many fail to truly grasp as life’s bumps pierce the thin veneer of their life exposing the character beneath.

Covey says that the Speed of Trust is one of the most powerful forces of life.  Stephen Covey does an excellent job of discussing the life effect of one’s ethical charcter in his book titled "The Speed of Trust" available at Amazon.com.

In his book, Covey talks about how trust flows throughout our lives and directly impacts our relationships in everything that we do.  I consistently choose to live by the rule that integrity, ethics, and honor are the root character of who I am, and that those characteristics are demonstrated in the actions and successes that I experience.  Covey argues that this essence is integrated into your personal and professional life and is largely responsible for your succcesses and failures.

Covey adds the variable of "trust" to illustrate this impact in business success.  Covey states that business success is traditionally illustrated with the formula:

Strategy x Execution = Results

Covey illustrates the role of ethics or trust by adding Trust as a variable to that equation:

(Strategy x Execution) x Trust = Results

The illustration drives home the point that no matter how good your strategy and execution may be, if you are missing that personal characteristic of ethics and trust – your life successes will be reflected in diminished results.

It saddens me when I see this simple truth proved out in real life, where people of otherwise respectable talents make life choices regarding their personal ethics and trust.

Covey goes on to describe the role of trust in our life of relationships – describing five different circles of trust.

Five circles of trust:

1. Self-Trust
2. Relationship Trust
3. Organizational Trust
4. Market Trust
5. Societal Trust

These relationships influence every aspect of our lives.    If you can’t trust yourself (self-trust), will you be able to build healthy relationships and friendships?  If you can’t maintain healthy relationships based on trust, will you be able to participate in larger organizational relationships?  Or will you consistently find yourself on the outside looking in? 

Covey goes on to describe the principle of market trust.  What is your reputation within the market?  Have you established a reputation of associations that cast doubt on your trustworthiness?  And within society, how do you personally contribute to trust in your personal relationships, organizational relationships, and market relationships.

You can examine your behaviours of trust by evaluating thirteen behaviours of trust.  Do you:

• Talk Straight
• Demonstrate Respect
• Create Transparency
• Right Wrongs
• Show Loyalty
• Get Better
• Confront Reality
• Clarify Expectations
• Practice Accountability
• Listen First
• Keep Commitments, and
• Extend Trust

Covey’s book "The Speed of Trust" is one of the most important books that a person can read.   Trust can be an assest and the lack of trust can be a liability, both personally and financially.  It is a fundamental concept that can be a life altering experience. 

Covey breaks character and competence down further into what he calls the "4 Cores of Credibility" – integrity, intent, capabilities, and results.  When you combine integrity, intent, and trustworthiness – you have a rare person; and capabilities and results will follow!

So what was the focus of the news report today?   A greeting card!

The outrage reported is about a card that appears to be offering a glass of wine with the following message:

Front Message:  Pardon Me

Inside Message:  Would you care for some Liquid Clothes Remover?

The card features an attractive image of what appears to be a male offering a glass of wine with an inside message asking "Would you care for some liquid clothes remover?"  (see snapshot below)

So is there an ethical issue here worth reporting?  Hallmark appears to have removed the card from the site following the news story, and below is a snapshot of the product that caused the outrage.  What do you think?

The news report suggests that the card is marketed to children – and that was the focal point of the outrage of the news report.  While it may be true that some of the Product Red line are oriented towards children and that may be a market demographic that has responded to the line, I could find no credible source that Hallmark actually launched any kind of marketing campaign that targeted children with this product line.  And no source that would legitimately suggest that they targeted this specific card towards children.

So is there any real issue here?

Today, it appears that Hallmark has pulled the card from their website.  Browsers to the page that used to display the card are now met with a "technical issues" error message.

Hallmark is one of the leading manufacturer’s of cards.  A trusted source, and a name brand that implies "the very best."  So it is not suprising that rather than risk even the potential of compromising their reputation, that Hallmark would pull this card.

So let’s consider the business ethics of the situation.

Did Hallmark do anything wrong?  Did Hallmark do anything unethical in their creation or marketing of this specific card?  Does it change your opinion if you believe that children might buy the card?

The facts of the situation are very clear, Hallmark did nothing wrong.  There is no evidence to suggest that the card was created or marketed in an inappropriate or unethical manner.  Hallmark’s history and today’s apparent action to pull the card suggest that Hallmark cares very deeply about even the hint of impropriety.

So while it may not be a card that I want my granddaughter’s boyfriend to give her, I will still be proud to have him give her a Hallmark card.  Hallmark’s slogan "When You Care Enough To Send The Very Best" still holds true in my opinion.

Would you like to know who the Top 5 sites are who are sending 280,261 people to watch your competitor’s video?

Video is one of the hottest new viral marketing tools that we use to drive traffic to our websites.  For every video that we create for use on one of our websites, we also create a second version that we publish on YouTube.  If you can create a unique and entertaining video, it quickly can acheive a viral marketing effect as friends share it with their friends.

YouTube is giving you the referrer stats to your competition’s top referrer’s …

John Reese recently sent me an email message with an interesting competitive research tool that allows you to look at how your competitors are doing – and more importantly know who the TOP 5 referrer sites are to your competitor’s videos.

YouTube has just added a new "referrer" statistic on all of their Video Pages … if you look directly below a video, you will see a tab labled "Statistics & Info" (see image to the left) … click on that tab, and it shows the Top Five websites that are sending traffic to that video …

Once you have clicked on the Statistics & Info tab, you can see a list of the Top 5 sites linking to this video.

What does this mean?

If you have any competitors who have videos posted on YouTube, you can immediately see the Top Five websites that are sending traffic to *THEIR* videos … great competitive information on who actually is driving traffic to your competition … those five websites then become great resources that you can target.

In the video stats example above, would you like to know about a site that sent your competitor 200,746 clicks to their video?  Over two hundred thousand people watched their video from that site!  That is a fantastic piece of competitive data to know!
 
Possible ideas that you can use to target those five websites:

• offer them custom videos (created by you of course) that they can use for their sites …
• offer them a free copy of your products for them to review …
• if you have an affiliate program,
• contact them about reviewing your product and offer to set them up with an affiliate account.
• if you have the ability to offer them a higher commission rate, give them a premium commission …
• offer them custom unique articles on their topics (with a link back to your website of course)

Why are these five sites so valuable? 

Because these are sites that are driving REAL traffic …

How else could you use this information? 

You can review these five sites and see if they have Google AdSense on them … and if they do and you do any AdWords PPC (pay per click) advertising, you could do a site specific ad buy through Google and buy ads on that specific site thus diverting traffic from your competition to your site.  And did you know that with a few special techniques that you can actually buy Google AdWords ads on a specific URL?
 
And of course, if you have any videos of your own posted on YouTube … log into your account and disable the display of these stats so that your competition does not use your referrer stats against you … like you are going to do to your competition  …
 

If we were to compare the size of the small business economy with the rest of the world, the US entrepreneurship and small business economy would rank third in the world behind the US medium and large business economy and Japan.

The size of the US small business economy would rank ahead of Germany, the United Kingdom, France, and Italy.

Entrepreneurship and small business represents the best of the driving forces that have sustained the US economy, jobs, and wealth preservation while other segments of the economy have struggled with outsourcing, commodity inflation, and international competition.

The Iowa Caucuses are begining to wrap up and the Obama factor is driving Obama to a win.

Statewide Obama is getting 37% … but in precincts where the Obama factor kicked in drawing stunning numbers of new voters into the process, Obama won 50% of the votes.  A powerful factor that can not be ignored as the canidates move to New Hampshire and beyond.

Disclosure:  I did not vote for Obama.

The quote is from Anais Nin:

We don’t see things as they are.  We see things as we are.  
                                                               Anais Nin (1903 – 1977)

How we see things is critically important!  Our marketing message must reflect how our target customer base perceives themselves and the environment that they exist within. 

Most marketing messages fail not because the product is itself bad or wrong for the market - in fact, it may very accurately reflect "how things are" and be a perfect solution for our customers needs – but rather the message fails because it does not resonate with our prospective customer base.  Simply, the message does not reflect how our customers "see things are."  Thus the very customer that our product or service may be perfect for does not see it that way.

Are you crafting your marketing message based on facts about how things really are?  If you are, you are likely missing a sigificant part of your market – because your message is not resonating with them "as they see things are."

The changes that are occuring now under President Kibaki are exciting and the outlook for the future of Kenya has never been brighter.  While that view might be expected from those of us that truly love Kenya, it is also showing up in the mindset and character of the populace of Kenya.

While I would normally talk about GDP and economic growth or the effects of the Anti-Corruption and Economic Crimes Act, the IMF Poverty Reduction and Growth Act, or fiscal and monetary policy.  It was far more interesting to see social proof of the citizens outlook for economic growth and opportunity.

Social proof came from the most unlikely source.  Google monitors search activity by region, by country, and by year.  Currently Kenya ranks #1 in the world for searches on the search phrase "Entrepreneurship" … an interesting statistic demonstrating social proof of interest in entrepreneurship in the country of Kenya.  In the picture below details Google Trends search results for 2007 searches for the phrase "Entrepreneurship." 

So is Kenya the hotbed of entrepreneurship?  Perhaps not, but it demonstrates that hope and dreams of a passionate citizenry!  It was a honor to have the Kenyan Amassador in our home.  He and his wife reflect the values and opportunities that make the future bright for Kenya.