The Individual Mind

Article on ZeroHedge today: 1 In 4 Millennials Rely On Their Parents To Pay Some Bills – Even While Working Full Time.

It’s easy for the older generations to blame Millennials for being lazy, overly idealistic, out of touch, or constantly triggered, but they’ve been dealt a really sh*tty upbringing of an entire youth wasted on Government Education and Work Avoidance which prepare them to do nothing but move on to the next 4+ years of bankrupting University – which also fails to prepare them to think critically, provide a valuable service to society or an employer, or to feed and manage themselves. (At this point we could discuss the value of working as a teen, alternative schooling options, trade schools, the rare college degree that delivers a positive cost/benefit analysis, other routes to acquiring marketable skills and experience, alternative methods of “signaling” to employers and the public one’s competencies and reliability other than a piece of paper from an “accredited” school, the opportunity costs of where and how else that time and money could have been spent,…)

Government, Society, Culture, and Zombie Parents have created a perpetual, protected adolescence for this generation(s?) of many hundreds of thousands of young persons, doing them no favors. At the end of that prolonged adolescence (if it ends) lies debt, disappointment, poverty, broken dreams. These youth were lied to in potentially every conceivable way: economically, psychologically, historically, politically, religiously. The moment they become conscious of the deceptions, when they have that awakening of disenchantment and anger, is when adulthood begins. How much better to wake them up in their early teens, so they can prepare, work, adapt, think, survive – rather than set them up for decades of debt and discouragement that they may never be able to overcome? The moral duty seems clear to me.

An informative podcast on this topic can be found at TomWoods.com (as well as many other good ones on related issues). Harvard-trained psychologist, Robert Epstein, guests and explains how “… adolescence is an artificial construct of recent vintage, unknown in earlier times or indeed in many parts of the world today. The creation of this category, and the assumptions that inform it (by state and society alike) have harmed young people, he argues, and are responsible for the anxiety and angst we associate with the teenage years.”

It would be difficult to find a topic of greater importance than the treatment of current adolescence. For their own health, for their financial well-being, for the influence and direction that they will give to their own families and to Society in the coming decades, it is not hyperbole to say that our future depends upon the youth of today. Unfortunately, their problems are primarily the fault of their predecessors – parents, teachers, politicians, clergy,… – those whose duty it was to guide them well. Instead, these Life Guides have abdicated their duties, at best, and at worst, they have purposefully manipulated and parasitized humanity’s youth for their own motives of profit and power (e.g. mammoth tuition schemes, tax justification, war fodder, votes, marketing for consumption and profits, perpetuating myths and failed ideas,…). The “Adults” have directed those for whom they have stewardship down faulty, expensive and deceptive paths. Stop setting them up for failure. And stop blaming them for that failure,… which is really your own.

As I sit down on New Year’s Eve day to run through end-of-year personal financials, to make sure Gov has gotten its requisite pounds of flesh, and to see that all the tax-related donations and contributions have been allocated (charities, HSA, 529K, etc), I also run a quick review of where we’ve been financially in 2017 (as an economy) and where we might be headed in 2018. Since the financial crisis of 2008, and its decade-long “recovery,” I’ve long-anticipated the next financial correction. Careful to not become too taken in by the doomsayers, I have to admit an affinity for their significant caution. My personal savings and investment approach has been increasingly cautious and conservative as the un-deserved and unsustainable nose-bleed valuations in financial markets (my personal opinion) continue to march upward.

This year has witnessed ever-climbing stock market valuations (with the Dow over 24,000 – after a low in the 7,000 range in 2009) – without any recognizable rise in productivity or demonstrable wealth that would justify it. We’ve seen blockchain cryptocurrencies take off with Bitcoin rising from the few hundred dollars per BTC, to $18,000 or so, and today back in the $13,000 range. Debt and derivative exposures continue to climb. Some estimates place total global derivative exposure as high as $1.2 Quadrillion USD – about 20 times global GDP. As I wrote about a few months ago on this site, the Too Big To Fail Banks that required bailouts in 2008 are more consolidated and risky than ever.

Economic cycles are unavoidable (despite extreme and distorting Gov interventionism to the contrary) and historically well-documented. The unknowns are: when and how big the correction. Inescapably (and thankfully so, IMO), change and disruption occur. In our current times and with growing technologies, however, these arrive at a more rapid pace and to potentially greater degrees. How will the current financial system weather the disruptions? After the creation of the US Federal Reserve Bank in 1913, and the dominance of the US dollar as the world’s reserve currency after WWII via the Bretton-Woods agreement, one might wonder if these monetary systems will be sustainable for another century, and just when they will go the way of previous global currency systems. With major systemic monetary challenges, like the rise of government decentralized cyryptocurrenices, and non-US currency/non-petro-dollar currencies (e.g. Sino-Russian currency alliance), it is unlikely that the US dollar will maintain its 20th century global dominance going forward. (How this will all play into US global military hegemony and funding is the topic for another article,… as is the mass of future debt-dependent, unfunded liabilities to the American public, e.g. Medicare, Social Security, government pensions – which stretch into the $200 Trillion range, in the setting of a current national debt of $20 Trillion.)

After clicking around on some articles today, I’ll share some that expand on related topics. Doug Casey shared some thoughts in an interview this week discussing central banking, the historic errors of economic “experts,” the economic interventions that make the market distortions (and eventual correction) much worse than they could have become without central bank and government interference. One excerpt:

“… the Fed has dropped interest rates to near zero. I used to think it was metaphysically impossible for rates to drop below zero. But the European and Japanese central banks have done it.

“The other thing they did was create megatons of money out of thin air. This hasn’t just happened in the U.S., either. Central banks around the world have printed up trillions of currency units.

“How many more can they print at this point? I guess we’ll find out. Plus, it’s not like these dollars have gone to the retail economy the way they did during the “great inflation” of the ’70s. This time they went straight into the financial system. They’ve created bubbles everywhere.

“That’s why the next crisis is going to be far more serious than what we saw a decade ago.”

Charles Hugh Smith wrote an article at Peak Prosperity entitled “The Inescapable Reason Why the Financial System Will Fail: Credit cannot expand faster than fundamentals forever.” He describes the fundamentals of debt creation via credit, and the global central banks’ efforts to goose the economy by making credit almost free with near-zero interest rates. However, this has had extreme consequences, which few are willing to recognize.

“By lowering interest rates and bond yields to near-zero, central banks deprived institutional owners who rely on stable, high-yielding safe investment income—insurers, pension funds, individual retirement accounts, and so on—of exactly what they need: safe, stable, high-yield returns.

“In this ‘do whatever it takes’ environment, the only way to earn a high return is to buy risk assets—assets such as stocks and junk bonds that are intrinsically riskier than Treasury bonds and other low-risk investments.”

If you wonder why the stock market looks like it’s doing so great, and the economy seems to be humming along by some measures, Mr. Smith just described to you the rot upon which those numbers are predicated. Once interest rates were artificially driven into the floor by central banks in order to juice the economy, there was no longer any return on “safe” investments. In order to seek out a return, the majority of the trillions of dollars that have been created by the central banks has been ploughed into the stock market in order to chase returns. That is just another form of “inflation,” currency devaluation, monetary expansion. The Dow doesn’t sit at 25,000 because it’s worth it. It’s “valued” at ridiculous levels because it’s been the last refuge for those who need to make a return on their investments,… and for those who fear LOSING money on their deposits because of zero and even negative interest rates on deposits. This is not a normal, market environment. This is the consequence of distorting interventionism. The misallocation of those savings and investments, which would not be there otherwise, will become obvious once assessments correct down to accurate values. When that happens, those that sought return at the expense of safety, will experience significant losses.

The third of the articles I’ll share today was written by David Stockman, a former (and repentant) US Treasury official, who offers uncommon insights into decades of economic interventions and cycles. (Check out his excellent book which summarizes his experience in and perspective on the US economy: The Great Deformation.) He considers our current situation The Greatest Bubble Ever and reinforces what has been described above. He points out that personal savings rates are at near historic lows, asset valuations at record highs, and there is no dry powder left in the Fed’s armory to deal with the next correction. This time will be a doozy.

“Valuation levels have never been higher relative to income and forward prospects. Central banks have never been on the precipice of a multi-trillion cash extraction and pivot to QT (qualitative tightening). And nine years of central bank fostered bubble inflation and fake recovery have never rendered the casino so complacent. In all, we’d say Wall Street is calling the sheep to the final slaughter.”

In summary, 2018 will bring significant challenges and change. But that’s good – although not painless. True valuations need to be found. Sustainable paths set upon. The unsustainable and the failing exposed and purged. Preparing appropriately and anticipating disruptions will make the transitions smoother, perhaps even profitable for the prepared. Alternatively, entrenching oneself in traditional asset classes, long-established systems, misguided nationalism, and poorly-founded economic beliefs may bring more discomfort than many are prepared to deal with. Stay nimble, challenge everything, live well beneath your means, and enjoy the innovations and change that the future holds.

And have a Happy New Year!

Zerohedge ran an article this past week in which a former economist of a big financial corporation referenced the financial crisis of 2007, when the “Too Big To Fail” banks were bailed out by the US Government in order avoid a supposed nation-wide (if not global) financial meltdown. Regardless of what the outcome of a financial system allowed to fail might have meant in reality (true chaos and catastrophe versus a return to actual and appropriate values), the point of the article is that the TBTFs remain TBTF. The system has not been fixed. These institutions should not be protected to the point of an oligopoly of massive corporations that can threaten to take down an economy. For some that have interest in and understand the business cycle, allowing businesses to fail (before they become artificially massive and de-stabilizing) is healthy and proper.

I add the opinion that it is not only banks that must be allowed to fail, but also governments,… and businesses,… and people. Failure is a mandatory part of improvement, finding efficiencies, making progress. The costs, distortions, and energies that are wasted in denying necessary failures (and propping up the individuals and entities that should be allowed to return to their sustainable baselines) are infinitely greater than the costs of the failures and adjustments would be. But people (voters) LOVE to keep those wealthy and powerful ensconced in their protected and well-entrenched positions, boots securely anchored on their necks, via bailouts, corporate welfare, perpetual re-election, etc.

Even more broadly, it seems clear to me just how important a universal principle “allowed failure” is. Aside from the economic and political, the principle is vitally important in our personal endeavors, child rearing, relationships, and employment. Some pain and discomfort are very useful as reality checks and appropriate motivators. Removing uncertainty and noise in order to find the true, base value of the things, people, and goals in our lives provides necessary insight to make best decisions and improvement plans. There is some degree of pain involved in any of the above. But is not pain that is experienced in order to find growth actually an investment – a useful cost? In contrast, self-imposed pain that is suffered in the attempt to avoid a much-needed reckoning and return to true value is pure waste, procrastination, and wishful thinking. Embrace the failure. Own it. Learn from it. Traverse the pain. Let us hold our chins high and move forward with better plans and approaches. Let us not only adopt the principle of allowed failure for our own growth, but demand it from those that live at our expense and make decisions which significantly affect our lives.

With the recent shootings in Las Vegas, there has been an endless stream of commentary and opinion about gun violence and shootings in the U.S. An article by John Whitehead spurred some thoughts on root causes. While many will blame guns and gun laws, I think that the culture of violence in this country may be the most causative issue. Some of the points below are shared by Mr. Whitehead, others are my own, synthesized from observations over the past decade and more.

It seems to me that the U.S. is a very violent nation at baseline. This country has a hyper militaristic, nationalistic, and law enforcement culture of violence. It is the only country in the world that has a global military empire that gets away with drone bombing the planet, overthrowing autonomous regimes, interfering with everyone else’s country – all to the applause of the American masses. The associated mindset of force permeates everything. The PTSD’d soldiers return to become cops that use force to drive every component of people’s lives in our hyper-legislated society – where every infraction is ultimately enforced at the point of a gun. They shoot people’s dogs like they were cockroaches – estimated at 10,000 dogs per year per some sources. The Drug War (which I’ve written about and shared to these pages) is at the center of racist, family-destroying, life-altering, unemployment-causing, hyper-violence which is the result of both (1) government’s failed and impossible enforcement, and (2) from the violent drug supply side of dealing and trafficking that only exists because of the distorted economics of Prohibition.

Catalonians in the street this week to protest efforts by Spain to suppress their secession. (picture from Krieger’s site).

Michael Krieger wrote a great piece this week about the global, human trends toward decentralization – in contrast to the centralized, authoritarian approaches that governments use to coerce cooperations and impose controls. He hits a number of enlightening topics: economics, crypto currencies, China, US politics, corporate cronyism, media’s waning control of the minds of the masses,…. Do yourself a favor and expose your mind to his perspectives. Well worth your time, in my opinion. An excerpt:

“Decentralization is an idea whose time has come. As I write this, conscious people across the world are creating systems of human empowerment, while powers of centralization desperately fight to preserve control. We aren’t the ones reacting to them, they are reacting to us. That’s not a fight they can easily win– the only question is how much are they willing to destroy in a futile quest to stymie human progress?

“Strategically, much of the current battle is about exposing power structures for what they really are by making them reveal their true thuggish natures. We must do this by creating systems that are transparently superior and more ethical than existing systems, which will then force their hands. If governments insist on thwarting human progress merely to retain control, it’ll be clear to all that they don’t work for the people, but rather, for themselves.”

(Victor Hugo, well-renowned author, poet, artist of 19th century France)

“A film from the Competitive Enterprise Institute, adapted from the 1958 essay [I, Pencil] by Leonard E. Read.” Mr. Read was a grocery chain owner and in the 1940s, he founded the Foundation for Economic Education in response to market-distorting New Deal interventionism.

This video is a 6 minute adaptation based on his essay.  The existence of a “simple” pencil illustrates and is the culmination of the cooperation and interaction of millions of people across the globe, interacting in a decentralized, spontaneous, mutually-beneficial way.

“I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding!”

While I don’t recommend anyone purchase BTC (current price here), I find it not only interesting for its potential future value (more gamble than investment), but particularly useful as a hedge against currency devaluation. I  bought some a few years ago as support for the underlying philosophy of a fiat currency divorced from government printing presses, aka Fed credit expansion. Today, at $3,700/BTC, those few would not significantly alter my financial status or retirement potential if sold, but certainly make it fun to follow.

Charles Hugh Smith makes some very good points about the motivations for the creation and purchase of BTC in this referenced article that mainstream (non)thinkers will likely miss. Bitcoiners tend to be concerned about: unsustainable national and global debt levels, government cash restrictions, capital controls, wealth preservation, distrust of the financial system with concern for its long-term viability, and the next financial collapse of what many recognize as a market of excessively over-valued assets.

BTC may be nothing more than pure speculation and gambling for some. However, many of us that support the cryptocurrency see it as a potential source of safety, diversification, personal control and perhaps the beginnings of the next great disruption that blockchain technologies are introducing. The risks are huge. The technology could fail. Governments could outlaw it outright. It could merely be the modern day tulip bulb frenzy. Regardless, the technology and the ideas behind it are significant. Even if it fails, what comes next is sure to undermine the status quo.

mtr

Article from The Sun today:

“Angry MPs urge Brits to boycott Amazon as it’s revealed the online giant’s UK tax bill HALVED last year – while sales soared. Politicians and campaigners rounded on the US giant for coughing up ‘peanuts’ to the Taxman despite raking in £1.4 billion.”

Today’s enlightened, individual mind commentary: Brit Gov Officials want to boycott Amazon as an extortion tactic for more tax payments. They apparently want AMZN to pay taxes on their revenues of £1.4 billion, while the competitive, low margin retail business only profited £24.5 million. Gov wants more than the £7.4 million paid in corporate taxes,… and the estimated 24,000 jobs it has and will create in the country. AMZN “isn’t paying its fair share!”

Regardless of actual profits and payments, that is always the mantra of statist apologists – everybody paying their fair share, turning over their property and income and choice and lives. I really don’t care much about people and companies paying their fair share. I am much more disturbed by people and governments that take more than their fair share of other people’s time, product, property; that take more than their fair share of lives lost in endless war and people kidnapped in a prison cell for non-violent “crimes;” their fair share of intimidation and manipulation and threats and extortion and lies and fraud and waste and controls and abuse and dogs shot and civil assets confiscated without trial and failed public education and corporatist favoritism which drives out competition and the fair markets upon which an open and free economy depend.

They take more than their fair share of causing distorted economics and the resultant unintended consequences, of manipulating interest rates to near zero with all of the subsequent artificially driven debt purchasing into the credit and valuations bubbles which will inevitably burst – once again harming the general public but sparing the most irresponsible who tend to be bailed out with public funds and protected by the powerful; more than their fair share of failing those who have made themselves dependent on the promises of the ultimately undeliverable – politically provided health, Ponzi pensions, unfunded entitlement liabilities, poverty programs, education, jobs, safety, security, peace; more than their fair share of supporting heroin growers in Afghanistan via trillion dollar soldier- and society-destroying military ventures which aid the ongoing deadly and recently much-advertised “opioid crisis” back home and lead to jailing or shooting the well-provisioned end user and dealer in the US; of never-ending global interventions which lead to violent blow back from people that hate the destabilizing aggressions and drone bombs and political interferences and resource extractions in their countries and lives; more than their fair share of manipulating news media with its incessant stream of inanity and manufactured crises and personality disorders writ large that turn the viewership’s minds to malleable mush – the ideal fertile ground to grow the nationalist, myth-based, emotionally reactive, and mis-informed mental garbage piles from which important decisions are made at the ballot box.

Indeed, you should be very worried about fair shares. However, I argue that the takers of others’ fair shares are those that should be critiqued and constrained, rather than those taken from.

Just when you thought progress wasn’t being made, technologic advancements and plunging prices in lighting over the past 200 years put things in a different light, so to speak. From man’s early history B.C. it took about 400 labor hours to produce an hour of light equivalent to a 100 watt bulb. Today, that light unit costs a few seconds of labor, or a few pennies of income. Also, due to technologic advancements, consider the availability and falling costs of refrigeration, climate control, transportation, clothing, food, water, plumbing, communications, shipping,…. The poorest 1% of Americans live with comforts that royalty of a few generations back could never have dreamed of.

See statista’s The Cost of Light Through the Ages.

 

*image from The Free Thought Project

** also, see my essay Failure Institutionalized: The Folly, Costs and Consequences of the War on Drugs.