Hunt me down and take my money — please
Hunt me down and take my money — please
It’s October 5, 2022. Here’s the rundown:
Hunt me down and take my money — please
Something to “realize” about the market meltdown
Numbers and links
Hunt me down and take my money — please
I couldn’t get an IRS agent on the phone for two years. Please fund it.
Check out the video from serious person Ted Cruz in the tweet above.
Now, this was tweeted two months ago. But I can’t let it go. There are all sorts of cool stuff about shadow armies and things of that nature that will probably, somehow, scare some diner-goer in Amarillo or something. In all, it’s a pretty cool tweet. You’ve got to hand it to Ted’s social media team.
This tweet was an effort to drum up resistance to the Inflation Reduction Act, which was signed into law in August, and which (among other things) increased IRS funding and enforcement by $80 billion over the next ten years.
Specifically, here’s the funding that the law lays out for the IRS, per an analysis from Ernst & Young:
$45.6b for enforcement, which includes examinations, collections, criminal investigations, legal and litigation support, and digital asset monitoring
$25.3b for operations support, including legacy information technology systems and telecommunications
$4.8b for business systems modernization, including technology to improve customer service
$3.2b for taxpayer services, including pre-filing assistance and education, filing and account services, and funding for the Taxpayer Advocate Service.
The IRS is one of the least-sexiest arms of the federal government, right up there with the Congressional Budget Office. But they both do important work. Most people hate the IRS — it does, after all, take your money away in the form of taxes. But that’s its function, and without it, we can’t really expect the country to function.
Which is why I’m oddly stoked that the IRS is getting some funding. I think that if we want and expect the country to continue to function, then we need to invest in a government that works. That includes the IRS.
I’ve had my run-ins with the IRS. I’ve had my frustrations with the IRS, too. Believe it or not, I, just a few weeks ago, received my 2020 tax refund — I actually received my 2021 tax refund BEFORE my 2020 refund. That’s not a sign of a healthy, functioning system.
And while I spent two years trying to figure out why my tax return hadn’t been processed (and wondering if I was somehow going to be penalized for it), I tried, to no avail, to get an IRS agent on the phone. Not once, in two years, was I able to do it.
Again, not a good sign.
Evidently, most of the resistance to actually funding the IRS stems from the fear that the agency will conduct more audits — and if there are more audits, there’s potentially a higher chance that you or I could be audited. People don’t like that.
While that’s true, the odds of any one of us getting audited are small. And personally, I’d rather go through an audit and have a functional, competent government than potentially have a smaller chance of getting audited. But that’s just me.
I don’t see how it’s helpful or prudent, especially for a sitting Senator, to try and sow chaos and fear about the IRS getting some much-needed funding. I experienced first-hand how that lack of funding has caused an epic slowdown for the agency. We need the government to function if we hope to be able to tackle big problems and issues, be they inflation, climate change, or anything else.
A good rule of thumb: If someone starts spouting off about “shadow armies” who are going to “hunt you down and take your money,” you should probably do a little reading, and think a little deeper about what, exactly, is trying to be accomplished.
As weird as it is, I’m happy to see the IRS (of all god-forsaken organizations) get what it needs to press onward. Let’s do the postal service next.
Something to “realize” about the market meltdown
Some market-related headlines don’t tell the whole story.
It’s been a tough year for investors, there’s no denying that. But the past few years have been a freaking free-for-all for investors, so in a way, it balances out.
Look at the data: The market (gauged by the S&P 500) is down around 25% since the beginning of 2022. That’s…a lot. For reference, during the financial crisis between 2007 and 2009, it fell roughly 50%. So, we’re halfway there!
Despite that, it feels…relatively calm? Sure, a lot of people aren’t happy with what’s happening, as their 401(k) balances get eaten away week by week. And a lot of blame is being levied at the Federal Reserve, which is raising interest rates in a hot and heavy fashion in an effort to tame inflation. It sucks, but they need to do it, even if it causes a recession and takes a bite out of returns.
As such, you’ve probably seen headlines like this:
or this:
These can be, understandably, alarming things to read. It’s hard to fathom $46 trillion — let alone try and think of all that money simply disappearing. But that’s kind of the point I want to get at here. That money didn’t disappear, because it didn’t actually exist in the first place. The monstrous “wipeouts” being cited here are referring to declines in stock valuations and market capitalizations.
The market was, for more than a decade, pumped up to crazy levels with unicorn farts (zero-percent interest rates) and fairy dust (QE money thrown into the markets). Now, we’re seeing some of it deflating. In my opinion, it’s hard to even think that there’s an actual loss in value for many of these assets.
Obviously, huge declines in stock values can have real-world consequences, such as mass layoffs and more. But the key thing to note here is that these losses are unrealized — meaning that money didn’t actually disappear. The perceived value of an asset went down.
So, no, $46 trillion didn’t disappear. It never existed in the first place. It was unrealized. Nothing is “realized” until it’s sold — most of us, especially those of us who aren’t financial professionals or high-level investors and traders — would do well to remember that. You don’t lose until you cash out. And if history tells us anything, it’s almost impossible to lose if you simply sit tight and let things work themselves out.
Yes, the market has been hard to stomach. But it’s important to keep our heads, here. Unless you’re liquidating some investments to pay for a big purchase (as I am, naturally) or about to retire, if you were to ignore the markets for the next three or four years, odds are, the market will have regained all of its losses and then some.
Just look at where we are compared to when the market cratered at the beginning of the pandemic:
We saw an insane run-up in the markets after the pandemic, and now, we’re paying for it in the form of higher prices and inflation. We’re coming down after a sugar high. If you invested in broad-based assets like index funds and ETFs, odds are, you have more money now than you did a few years ago.
So, let’s all relax. Yes, the market’s going to take a beating. We’ll probably experience a recession — there’s no avoiding that, on a long enough time scale. But just remember: You don’t lose until you cash out. In fact, many professionals may tell you that now is the time to BUY rather than sell, as investments are essentially “on sale.”
Ignore the trillion-dollar “wipeout” headlines. They’re designed to get your blood pressure up. Tech companies losing billions in market capitalization are fine — they’re worth trillions. They won’t even feel it.
I’ll leave you with this, too. Ben Carlson writes on his blog that the S&P 500 has been down 25% or more nine times since 1950. On average, the following year, returns have been 21.8%. And after ten years, 213.7%. Let’s all relax.
Numbers, links, and more
$557 billion: The cost to the U.S. economy every year due to gun violence. (Bloomberg)
$870 per month: The average cost of daycare nationwide. (The Atlantic)
2.4%: What the Atlanta Fed is now forecasting for GDP growth during Q3 2022, surprisingly. (Econbrowser)
The five best financial innovations ever — thoughts? (Morningstar)
Supremely unconfident: Confidence in the Supreme Court is at a record low, falling 20 percentage points over the past two years. (Gallup)
“Fuck that place…and fuck the people inside it too”: An interview with Michael Fanone, a D.C. police officer who was nearly beaten to death with a Blue Lives Matter flag pole on January 6. (Rolling Stone)
You have to hand it to Cruz, the “shadow army” is a pretty effective meme. Mainly because it speaks to the fear that a lot of middle class people and businesses owners have of the IRS.
Even if they’re not fudging a little bit here and there, many people still have a fear of the agent finding something they didn’t know about. And statistically there are certain small businesses (like chiropractors) who deal in cash and are more prone to underreporting.
I think the big thing is that most people think these agents will be coming after the middle class and not rich people (like Cruz).
And there’s some evident to support that fear. After all when the IRS goes after the wealthy they’re taking on an army of lawyers and accountants and complex laws. So it’s obviously easier and the targets are more plentiful among the middle class.
And you’re right nobody or almost nobody wants to give up their hard earned money to be spent for things they may or not think are worthwhile.