The Only Debate Topic That Matters

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Journal of a Wayward Philosopher
The Only Debate Topic That Matters

September 29, 2016
Hot Springs, VA

Loading up the nation with debt and leaving it for the following generations to pay is morally irresponsible. Excessive debt is a means by which governments oppress the people and waste their substance. No nation has a right to contract debt for periods longer than the majority contracting it can expect to live. ” – Thomas Jefferson

The S&P closed out Wednesday at $2,171. Gold closed at $1,327 per ounce. Crude Oil closed at $47.12 per barrel, and the 10-year Treasury rate closed at 1.57%. Bitcoin is trading around $605 per BTC today.

Dear Journal,

Nearly one-third of all Americans – almost 100 million people – tuned in to watch the first presidential debate earlier this week. This represents an increase in viewership by nearly 40% from the 2012 presidential debates, and it almost rivaled television’s biggest draw – the Super Bowl – which received 112 million viewers last year. Apparently the debate was aired on television throughout Europe as well.

I see these numbers and the first thing that pops into my head is a question: how in the world do the ratings agencies know how many people are sitting on the couch in front of a given television?

I didn’t spend too much time with this, but all of the numbers I have seen reference “viewers” and “people”, not “households”. They are very specific about this.

I can’t help but think about poor Winston in George Orwell’s 1984 – he sits down in front of his telescreen and while he is watching it, it is also watching him…

In any case, I am happy to report that I am in the two-thirds majority of people who did not tune in for the first presidential debate. I did skim through the highlights, however, and I was not surprised to see that the single most important issue which will impact hundreds of millions of people negatively was not discussed.

That issue is the U.S. government’s accrual of $200 trillion in unfunded liabilities.

This number is not carried anywhere on the books, but it is very real. In short, these are future financial commitments that have been made to citizens for which there is no revenue support and no real asset backing. The bulk of these unfunded liabilities are related to Social Security and Medicare, but this will have a widespread impact that spreads well beyond those two programs.

Demographics show that 10,000 people in the United States are turning 65 every single day for the next ten years. All of those people have been taxed their entire working lives to fund Social Security and Medicare with the expectation that they will be made whole upon reaching retirement age themselves.

But both of these programs already run deficits to the tune of tens of billions of dollars every year, and that deficit is only going to grow as all of the people reaching retirement age sign up for Social Security and Medicare. Project this dynamic out, along with numerous other insolvent programs, and that’s where the $200 trillion in unfunded liabilities comes from.

How can the U.S. government finance any of the expenditures that the presidential candidates called for on Monday night when it is already on the hook for $200 trillion to the very people who’s productive efforts have supported it for the past 40 or 50 years?

Do you think Uncle Sam will tell the nice elderly couple next door that he has to cut back on their Social Security payments? Do you think he will tell them that he cannot cover their medical expenses anymore?

I doubt it.

Instead, I suspect Uncle Sam will do what he has always done when he came up a little short. He will create some Treasury Bonds and try to sell them to foreign central banks with the promise to tax everyone in his sight perpetually to service the debt. Then when foreign central banks only buy a very small fraction of the bonds he needs to sell, Uncle Sam will call up his friends at the Federal Reserve and ask them to buy the rest. The folks at the Fed will then create a few journal entries on their computer and – voila! – they now have the dollars necessary to buy the bonds. So Uncle Sam sends the bonds over to the primary dealer who delivers them to the Fed. The Fed delivers the money to the primary dealer which keeps a cut for itself and then delivers the rest to Uncle Sam.

So the Feds get their bonds, Uncle Sam gets his money, the Bank gets its cut, and the nice couple next door get their Social Security check. Everybody is happy!

But there is a limit to this magic money machine… the devil is in the details.

This is a bit of a simplification, but as the new dollars work their way into the general economy, they necessarily reduce the value of all dollars in existence. We see this in the form of rising prices on goods and services. This effect is not instantaneous nor is it equally distributed, and there are other factors at play, but over time the act of inflating the money supply raises costs of living across the board. So the elderly couple next door still get their Social Security check every month, but their dollars don’t stretch as far when they go to the grocery store.

Further, because Treasury Bonds are a debt instrument, Uncle Sam is now deeper in debt; debt that he must pay interest on. This means Uncle Sam needs even more money to consistently meet his obligations.

So the act of creating new money also created new debt which created a future need for even more money… uh oh!

Take a look at these two charts comparing the expansion of the money supply on the left to the growth of U.S. national debt on the right. You can see the two go hand-in-hand.
Dollars and Debt
As the debt grows, the declining marginal utility of credit expansion diminishes since more and more new money is required for debt-service. The monetization of government debt locks the system into a death spiral.

To me, this is the only debate topic that truly matters because this alone has the power to drastically reduce the standards of living of hundreds of millions of people regardless of what happens with any other issue.

But of course you can’t talk about the inner workings of a debt-based monetary system and still produce the riveting sound bites necessary to keep nearly 100 million people glued to their television screen. It took me all morning just to write about it, partly because it is so boring that I kept thinking about all of the other things I could be doing with my time.

I suppose the fact that there is no true political solution to this problem is a factor also. It’s hard to stand up and tell people its broke and unfixable, and then say: Vote for me!

Fortunately, you don’t need political solutions… you can create your own solution. Take a look at this graphic created by Rosland Capital from some information on their gold IRA page.
Rosland Capital Gold Traits Table
This graphic illustrates why both gold and Bitcoin are superior to the U.S. dollar, both as a monetary instrument and as an asset class.

One of the first steps towards creating your own solution to the inevitable problems associated with the unfunded liabilities is to build a healthy position in both gold (and silver) and Bitcoin as part of an antifragile asset portfolio. For me, I think precious metals should make up at least 10% of an asset portfolio. For Bitcoin, I think 3-5% is a good benchmark.

As the dollar continues to devalue, I think we can absolutely expect to see higher prices for both gold and Bitcoin in dollar terms. So we are basically shielding our capital from the ill-effects of Uncle Sam’s debt binge and the Fed’s monetary inflation.

Gold and Bitcoin are the only two financial assets that are not simultaneously someone else’s liability. More accurately, they are the two financial assets that hold no counterparty risk. Compare this to the U.S. dollar, whose primary counterparty is $19 trillion in debt with accrued liabilities totaling $200 trillion.

Currencies come and go, but the precious metals are constant. J.P Morgan himself testified before Congress in 1912: “Gold is money. Everything else is credit”. I suspect the day will come when that statement will apply to Bitcoin as well.

We offer a primer on asset allocation to all members of the Zenconomics Report, including how to acquire and manage these assets. Additionally, our monthly newsletter is focused on how to leverage these macroeconomic trends in your favor to build a small fortune over the next 3-5 years.

You don’t have to be a victim to the monetary madness that is playing out in real time. Educate yourself, master your finances, build an antifragile asset portfolio, work towards financial escape velocity, secure your digital communications, and utilize participatory Gamma systems where relevant, and I think you can create a brilliant future for yourself regardless of what the rest of the world does. These are all items we cover in the Zenconomics Report.

Ralph Waldo Emerson wrote: “The good news is that the moment you decide that what you know is more important than what you have been taught to believe, you will have shifted gears in your quest for abundance. Success comes from within, not from without.

It’s your call…

More to come,

Signature

 

 

 

Joe Withrow
Wayward Philosopher

For out-of-the box coverage of market updates, major events in the financial markets, the evolution of monetary policy, and how to position your finances to benefit from developing macroeconomic trends, please join the Zenconomics Report!

We also track a small portfolio of stocks according to the Beta Investment Strategy, and the monthly newsletter explains how we think anyone can build a small fortune over the next several years by catching a major financial trend that is just now beginning to play out.

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Maximize Capital; Minimize Crap

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Journal of a Wayward Philosopher
Maximize Capital; Minimize Crap

September 20, 2016
Hot Springs, VA

He achieved success who has lived well, laughed often, and loved much;
Who has enjoyed the trust of pure women, the respect of intelligent men and the love of little children;
Who has filled his niche and accomplished his task;
Who has never lacked appreciation of Earth’s beauty or failed to express it;
Who has left the world better than he found it,
Whether an improved poppy, a perfect poem, or a rescued soul;
Who has always looked for the best in others and given them the best he had;
Whose life was an inspiration;
Whose memory a benediction…
To know that even one life has breathed easier because you have lived,
This is to have succeeded.
” – Bessie Anderson Stanley

The S&P closed out Monday at $2,139. Gold closed at $1,316 per ounce. Crude Oil closed at $43.80 per barrel, and the 10-year Treasury rate closed at 1.70%. Bitcoin is trading around $608 per BTC today.

Dear Journal,

The first leaves of Autumn have begun to fall, and each new morning is now accompanied by a light breeze. Little Maddie seems to share her father’s love of the season, as she enthusiastically gathers black walnuts from the yard to feed the squirrels.

Here, squirrel, squirrel, squirrel… I have an apricot for you!

Yeah, she calls the walnuts apricots. I am not sure where that came from.

Madison has also been debriefed on the proper way to carve a jack-o-lantern, and I test her knowledge daily.

“Maddie, what’s the first thing we have to do to make a jack-o-lantern?”

“We have to carve the top and get the gunk out!”

“And what are we going to do with the gunk?”

“We are going to throw it on mommy!”

…I think you are ready, kiddo.”pumpkin

It is truly the simple things that make this life worth living.

We spend most of our time in these journal entries and especially in the Zenconomics Report discussing complex topics within the world of money, finance, and economics, but that is only because we want to be able to enjoy the simple things. Continue reading “Maximize Capital; Minimize Crap”

The Gamma Phenomenon

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Journal of a Wayward Philosopher
The Gamma Phenomenon

September 5, 2016
Hot Springs, VA

Humanity in our time remains in infancy. We are essentially unlimited creatures, yet we have been wallowing in abject poverty – physically, mentally, and spiritually. We have natures that are suited to high adventure, yet we remain stagnant. Why? Because we’ve been conditioned only to exist, not to live.” – Prester John, A Lodging of Wayfaring Men

The S&P closed out Friday at $2,180. Gold closed at $1,329 per ounce. Crude Oil closed at $44.25 per barrel, and the 10-year Treasury rate closed at 1.60%. Bitcoin is trading around $605 per BTC today.

Dear Journal,

Little Madison is approaching her second birthday, and somehow she has already picked out her own birthday gift. “I want to ride Leo the horse…”, she says with a hopeful sparkle in her inquisitive blue eyes.

Naturally, her father considers all of the things that could possibly go wrong in such a scenario. Do you want to mommy or daddy to ride with you?

No! I want to ride all by myself.

As best I can tell, to observe a toddler is to observe human nature in its purest form… before all of the social conditioning, group-think, and peer pressure begin to alter behavior.

Assuming this is correct, the need for high adventure, exploration, and excitement seems to be embedded into the core of human nature. Madison possesses a zeal for life, and she does not tolerate any restrictions on her freedom to play and explore. Any curtailment, indeed even the threat of curtailment, is met with fierce resistance and extreme displeasure. Continue reading “The Gamma Phenomenon”

The Zenconomics Report August Issue

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Journal of a Wayward Philosopher
Zenconomics Report August Dispatch

August 31, 2016
Hot Springs, VA

The S&P closed out Tuesday at $2,176. Gold closed at $1,314 per ounce. Crude Oil closed at $46.42 per barrel, and the 10-year Treasury rate closed at 1.57%. Bitcoin is trading around $573 per BTC today.

Dear Journal,

The August issue of the Zenconomics Report has gone out to members of our network. In this issue:

Low trading volumes and little volatility in the financial markets this month… The state of the sovereign debt markets… Two large banks pass on negative interest rates to clients… The latest on monetary-financed fiscal programs in Japan… Global investment demand for gold the highest on record for the first half of 2016… All eyes on the Federal Reserve next month… A quiet change to IMF’s special drawing right currency… A correction hits the gold stocks sector… the Zenconomics Report Model Portfolio updates… Two new additions to our model portfolio

This month we added two new positions to our model portfolio which is constructed according to the Beta Investment Strategy. This portfolio is designed to capitalize on the prominent macro trends in the world of finance, and it is built to be fluid and flexible when trends change.

The Zenconomics Report is 100% independent, and all opinions are our own. It is also 100% free, though it is only available to members of our network. For access, simply sign-up using the form below or at http://www.zenconomics.com/report.

New members receive access to all previous monthly issues, and we will also send you two free reports as a ‘thank you’ for subscribing.

Assess, Mitigate, Implement, and Prosper is a report detailing the concept and implementation of asset allocation. Asset allocation is about strategically spreading your capital out across several different asset classes, and it is a critical part of the Beta Investment Strategy. This report also covers the ins-and-outs of managing an investment portfolio, including the risk management techniques that everyone should understand before putting a dime into the stock market.

The Zenconomics Guide to the Information Age is a 28 page report covering money, commerce, jobs, Bitcoin wallets, peer-to-peer lending, Open Bazaar, freelancing, educational resources, mutual aid societies, the Infinite Banking Concept, peer-to-peer travel, Internet privacy, and numerous other Information Age tips and tricks with an eye on the future. This guide is designed to be very practical – each section is loaded with action items – but it is also written to be entertaining as well.

To financial freedom!






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Monetary History in Ten Minutes

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Journal of a Wayward Philosopher
Monetary History in Ten Minutes

August 23, 2016
Hot Springs, VA

Money, moreover is the economic area most encrusted and entangled with centuries of government meddling. Many people – many economists – usually devoted to the free market stop short at money. Money, they insist, is different; it must be supplied by government and regulated by government. They never think of state control of money as interference in the free market… If we favor the free market in other directions, if we wish to eliminate government invasion of person and property, we have no more important task than to explore the ways and means of a free market in money.”Murray Rothbard

The S&P closed out Tuesday at $2,183. Gold closed at $1,343 per ounce. Crude Oil closed at $46.81 per barrel, and the 10-year Treasury rate closed at 1.58%. Bitcoin is trading around $585 per BTC today.

Dear Journal,

Little Maddie is rapidly approaching her second birthday, and I swear she is going on twelve. Like her mother, Madison is quite adept at the art of talking, and she communicates with us very well. This makes life so much easier when she tells us exactly what she wants for dinner; it makes life just a touch more difficult when she wakes up in the wee hours of the morning and tells us she wants to watch Mickey Mouse.

While this seems terribly inconvenient to her parents now, I can only imagine how immaterial it will seem when Maddie is a teenager and we just hope she comes home before the wee hours of the morning. Nevertheless, it all makes perfect sense when she looks up at us with her blue eyes shining bright and says I love you sooo much!

Moving on to finance… Continue reading “Monetary History in Ten Minutes”

The Plight of the Founder

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Journal of a Wayward Philosopher
The Plight of the Founder

August 10, 2016
Hot Springs, VA

Why don’t you judge for yourselves what is right?” – Jesus of Nazareth, Luke 12:57

The S&P closed out Tuesday at $2,181. Gold closed at $1,338 per ounce. Crude Oil closed at $42.69 per barrel, and the 10-year Treasury rate closed at 1.545%. Bitcoin is trading around $590 per BTC today.

Dear Journal,

My mind wanders off of the beaten path once again this week as I finish up A Lodging of Wayfaring Men by Paul Rosenberg for the second time. As I read this book, I can almost ‘see’ the plight of the founder as it has played out over and over again throughout human history.

In order to understand the plight of the founder, we must first understand a key function of life… all life. The basic laws of thermodynamics tell us that closed systems naturally evolve towards a state of maximum entropy; entropy being the amount of energy not available for work.

Life systematically reverses entropy. Continue reading “The Plight of the Founder”

Ten Things To Do Instead of Voting

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Journal of a Wayward Philosopher
Ten Things To Do Instead of Voting

August 4, 2016
Hot Springs, VA

Every election is a sort of advance auction sale of stolen goods.” – H.L. Mencken

The S&P closed out Wednesday at $2,163. Gold closed at $1,364 per ounce. Crude Oil closed at $41.08 per barrel, and the 10-year Treasury rate closed at 1.54%. Bitcoin is trading around $584 per BTC today.

Dear Journal,

Election season is now in full swing here in the U.S. – much to the agony of those of us who believe in human liberty, voluntary association, and participatory networks.

Once again the intelligentsia have convinced people that their future hinges directly upon the outcome of the next presidential election, and inevitably we non-voters are denounced for lack of patriotism by the 40% of the population who still place their faith in the voting booth. Naturally, our first reaction is to stand up for ourselves and explain our position:

“The essence of politics is coercion and, if necessary, violence…”, we attempt to explain in vain. Continue reading “Ten Things To Do Instead of Voting”

The Infinite Banking Concept: Privatize Finance and Become the Bank

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How many people out there live month to month and use credit cards to fill in the gaps?

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I am not kidding when I say that you can use the Infinite Banking Concept to privatize finance for generations to come. If you think long-term, you can eliminate the need to borrow money ever again. Your personal bank will warehouse all the capital your family ever needs to live the life of their choosing.

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The Zenconomics Report July Issue

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Journal of a Wayward Philosopher
Zenconomics Report July Dispatch

July 28, 2016
Hot Springs, VA

The S&P closed out Wednesday at $2,166. Gold closed at $1,348 per ounce. Crude Oil closed at $42.00 per barrel, and the 10-year Treasury rate closed at 1.51%. Bitcoin is trading around $657 per BTC today.

Dear Journal,

The July issue of the Zenconomics Report has gone out to members of our network. In this issue:

The state of the sovereign debt markets… Negative interest rates come to Canada… Japan’s new “stimulus” announcement… the ECB may soon expand its QE program… Capital flight into U.S. markets… Alan Greenspan publicly endorses a return to the gold standard… Brexit updates… How to build a small fortune in 3-5 years… the Zenconomics Report Model Portfolio updates

Our model portfolio is off to a good start, and we added one additional position this month. The model portfolio is constructed according to the Beta Investment Strategy, and we have several other positions on our radar currently. Frankly, we expect this portfolio to skyrocket over the coming years as debt continues to build and negative interest rates continue to spread.

The Zenconomics Report is 100% independent, and all opinions are our own. It is also 100% free, though it is only available to members of our network. For access, simply sign-up using the form below.

We will also send you two free reports as a ‘thank you’ for subscribing.

Assess, Mitigate, Implement, and Prosper is a report detailing the concept and implementation of asset allocation.

The Zenconomics Guide to the Information Age is a 28 page report covering money, commerce, jobs, Bitcoin wallets, peer-to-peer lending, Open Bazaar, freelancing, educational resources, mutual aid societies, the Infinite Banking Concept, peer-to-peer travel, Internet privacy, and numerous other Information Age tips and tricks with an eye on the future.

To financial freedom!

The Beta Investment Strategy

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Journal of a Wayward Philosopher
The Beta Investment Strategy

July 22, 2016
Charlotte, NC

Most people think the secret to making money by investing is to find the stock that will go up. They all want to be an alpha investor, the big man on campus… That’s the whole game, they believe – seeking alpha… But the trouble with alpha is that it is unreliable… In the long run, it’s beta that makes fortunes, not alpha. Every study proves it… A beta strategy is completely different from an alpha strategy. Instead of trying to beat the market, you make the market your friend. It’s not your enemy. You don’t try to beat it; your just want to join it. And go along with it.” – Bill Bonner, Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years

The S&P closed out Thursday at $2,165. Gold closed at $1,332 per ounce. Crude Oil closed at $44.56 per barrel, and the 10-year Treasury rate closed at 1.56%. Bitcoin is trading around $655 per BTC today.

Dear Journal,

Wife Rachel and I are back in the Queen City for the weekend with little Maddie in tow. Accustomed only to mountains, pastures, and the wide-open spaces of the countryside, Madison stares up in awe at the tall buildings that loom overhead. Accustomed only to backwood country roads, her father tries very hard not to curse at all of the other motorists he shares the highway with.

We travel back to the city of our marriage this weekend to celebrate a soon-to-be new addition to the world of humanity. Friend Wade will soon be a poppa!

Rachel comes bearing gifts for the mother-to-be Kristi and her soon-to-be son, Thomas. I come to share a stiff drink with Wade and tell him how amazingly hard child-rearing is. Madison has been instructed to wake up crying at 3:00 am to hammer home my point. Continue reading “The Beta Investment Strategy”