The Only Debate Topic That Matters

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

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… Continue reading “The Only Debate Topic That Matters”

Monetary History in Ten Minutes

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

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 Zenconomics Report July Issue

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

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 Moral Value of Money

submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email

Journal of a Wayward Philosopher
The Moral Value of Money

March 17, 2016
Hot Springs, VA

The S&P closed out Wednesday at $2,027. Gold closed at $1,264 per ounce. Crude Oil closed at $38.50 per barrel, and the 10-year Treasury rate closed at 1.94%. Bitcoin is trading around $415 per BTC today.

Dear Journal,

Last week we examined the majesty of mindfulness, and we suggested that politics was the bane of human civilization. There are many reasons for this, but at the core is this: politics is based on coercion. Politics rests upon the notion that those who gain political power have the right to force people to do things against their will using the police power of government. This is always a zero-sum game: one side wins and the other loses.

The U.S. federal government collects roughly $3 trillion in taxes annually. The civics textbooks tell us that taxes are the price we pay for civilization, but I have to ask: where does all of this money go? Continue reading “The Moral Value of Money”

The Three Debt Bombs of 2016

submitted by jwithrow.debt bombs

Journal of a Wayward Philosopher
The Three Debt Bombs of 2016

December 29, 2015
Hot Springs, VA

The S&P closed out Monday at $2,056. Gold closed at $1,068 per ounce. Crude Oil closed at $36.81 per barrel, and the 10-year Treasury rate closed at 2.23%. Bitcoin is trading around $428 per BTC today.

Dear Journal,

Happy holidays and a belated Merry Christmas to you! We had quite the festive Christmas here at the Withrow Estate, but we are gearing down now. The family has dispersed, the gifts have been assimilated, the eggnog has run dry, and only the Christmas tree has survived wife Rachel’s de-decoration spree. In fact, the tree only survived thanks to your editor’s steadfast resistance.

Like the last of the Lighthouse Keepers, I diligently rise to light the tree first thing each morning – unwilling to abandon my responsibility in lieu of Christmas day’s passing. When the evening finds little Madison and wife Rachel sound asleep, I somberly extinguish the lights knowing full-well that the Christmas tree’s days are numbered.

Moving my gaze from this wonderful holiday season over to the financial markets: the financial press is celebrating the Fed’s 0.25% rate hike as an act of wisdom and prudence. The Federal Reserve has announced that they will carry out such a 0.25% rate hike four times per year for the next four years in an effort to get back to a more “normal” interest rate environment. Though the pundits will cheer this on as sensible, the likelihood of such a centrally planned endeavor coming to fruition is slim-to-none.

The purpose of the financial markets – and all markets – is price discovery. Prices are not something to be “fixed” by a higher authority; they are instead the result of countless individual actors in the market place. Prices form as buyers and sellers determine where they can agree to get the deal done. Continue reading “The Three Debt Bombs of 2016”

Becoming Antifragile

submitted by jwithrow.

Journal of a Wayward Philosopher
Becoming Antifragile

September 16, 2015
Hot Springs, VA

The S&P closed out Tuesday at $1,970. Gold closed at $1,102 per ounce. Oil closed at $44.59 per barrel, and the 10-year Treasury rate closed at 2.18%. Bitcoin is trading around $227 per BTC today.

Dear Journal,

Wife Rachel cornered me the other day: “I saw what you did in your newest post!”, she said in an accusatory tone.

“Whatever do you mean, honey?”, I asked innocently.

“You talked about Madison buying me a walker when I am old!”

I couldn’t contain my laughter. It’s the little things that I find most amusing.

Last week I delved into global finance and speculated that a currency crisis in the U.S. was on the horizon. It is just unreasonable to create trillions of dollars from thin air on a regular basis and expect the world to accept those dollars ad infinitum. I observed that government has no intention of ceasing its monetary escapades, thus currency ruin is inevitable. Continue reading “Becoming Antifragile”

The Individual is Rising: 2nd Edition

submitted by jwithrow.The Individual is Rising

Journal of a Wayward Philosopher
The Individual is Rising: 2nd Edition

September 4, 2015
Hot Springs, VA

The S&P closed out Thursday at $1,946. Gold closed at $1,124 per ounce. Oil closed up at $46.75 per barrel, and the 10-year Treasury rate closed at 2.19%. Bitcoin is trading around $230 per BTC today.

Dear Journal,

Wife Rachel took it upon herself to berate me for my past few journal entries. She said they were too gloomy. She also berated me for failing to provide any light-hearted family updates. As any good husband would, I flipped the selective hearing switch on and pretended not to hear her.

After a couple years of marriage I have learned that there are times to trust her judgment and times to ignore it. Choosing what to order from a restaurant is a good time to discount her judgment, for example. Despite my unwelcomed reminders, she has a tendency to order a meal completely unrelated to the theme of the restaurant. I am quite sure the chef is shaking his head when her order comes in. “Hamburger and french fries, are you kidding me? This is an authentic Italian joint!”, he exclaims in the kitchen. I just chuckle to myself: At least she ordered a glass of Chianti.

Relating to and connecting with other people is her forte, however, so despite outward appearances I listen carefully when she advises me on such matters. Her emotional intelligence never ceases to amaze me. Maybe it’s just a woman thing, but I suspect years of studying finance and economics hasn’t help improve my own EI much, either. So if Rachel says I should incorporate more light-hearted matters into my writing then I feel compelled to talk about her poor menu choices. Thanks honey!

Moving on to another fun topic; I launched the second edition of The Individual is Rising this week. The Kindle format will be free on Amazon all day today, and then will be discounted at $2.99 all next week. Continue reading “The Individual is Rising: 2nd Edition”

The Nation Is Not the State

submitted by jwithrow.nation

Journal of a Wayward Philosopher
The Nation Is Not the State

August 11, 2015
Hot Springs, VA

The S&P closed out Monday at $2,104. Gold closed at $1,104 per ounce. Oil closed out just under $46 per barrel, and the 10-year Treasury rate closed at 2.24%. Bitcoin is trading around $267 per BTC today.

Dear Journal,

Last week I suggested that the growth of the nation-state in the 20th century brought forth the rise of collectivism. I speculated that we may have reached peak collectivism and thus inferred the nation-state model may be ripe for decline, however. Today I will point out the troubling macroeconomic trends once again in support of this speculation.

The democratic nation-state model has grown so massive largely because the political class has bribed people with half-baked social insurance (welfare) programs across the board. This has led to a massive accumulation of debt throughout the entire western world. Simultaneously, the demographics of many western nation-states is such that there are more aged people drawing from pensions and national social insurance programs than there are younger workers to pay for them. This dynamic has resulted in an absolutely gargantuan accrual of unfunded liabilities.

What this means is most governments in the western world are already bankrupt. Many people remain unaware of this fact because governments have kicked the can down the road by manipulating interest rates ever lower (negative in places!) and creating huge amounts of national currency out of thin air via the central bank mechanism. More and more people are slowly waking up to reality, however, and this is leading to a loss of trust in the nation-state model. Continue reading “The Nation Is Not the State”

The Beer Theory of Credit Quality

by Bill Bonner – Bonner and Partners.com:credit

Here’s a firsthand report directly from one of our dear readers:

Greetings from Greek islands. Although news seems bad from reading papers etc., life here is rolling along. I am vaca with family and pulled out 500 euro from ATM last night (Sunday, June 28) on island Hydra. Restaurant accepted Amex. So far so good.

Yes, so far, so good.

But the steamroller is still rolling.

Americans aren’t really interested in what happens to the Greeks – unless they happen to be on “vaca” there. But the chief obstacle in Greece is the same one in China and in the United States: too much debt.

The Germans and Greeks can blab, hondle, and bluff all they want. It won’t go away.

According to financial services company Credit Suisse, Greece has total debt – including households, businesses, and government – equal to 353% of GDP.

But U.S. debt is even higher at 370%. Germany, that supposed paragon of financial virtue, is at 302%. And China, with its state-controlled economy, is at 250%.

All are in good shape compared to Britain. It has total debt equal to 546% of GDP. Japan is in an even worse state. Its total-debt-to-GDP is 646%.

And if the Credit Suisse numbers are correct, Ireland is off the charts with total debt equal to more than 1,000 times GDP.

But the Greeks are feeling the heat because they can’t service their public sector debt right now. They can’t pay it for the very same reason they got it in the first place – false pretenses.

First, they claimed they met the guidelines for entry into the euro zone. Then they claimed they could afford to live in the style to which they became accustomed. Then they claimed they would pay back the money they borrowed to make payments on the debt they couldn’t afford.

None of it was true.

Now, with their backs to the euro wall, they can’t “print their way out” of their predicament. Their creditors expect them to pay up. The Germans, in particular, see it as a moral responsibility.

“That’s the difference between beer drinkers and wine drinkers,” says a friend. “The beer drinkers pay.”

 

The Beer Theory of Credit Quality

Bond investors believed the euro promised stability and security. It was backed not by the wine drinkers, but by the beer drinkers.

We’re not sure how Ireland – a big beer-drinking country – fits into this story. But our friend notes that the countries of Northern Europe – where they also drink mostly beer – tend to repay their debts. Southern Europe – Spain, Italy, and Greece – are bad credit risks.

On the streets of London at this time of year, people stand on the sidewalks with barrels of beer in their hands. And on the Fourth of July holiday, more Americans will raise glasses of beer than wine.

Still, we doubt the “Beer Theory of Credit Quality” will hold up under the pressure of a generalized credit contraction.

In Europe, the beer drinkers of the north sold automobiles, for example, to the wine drinkers of the south. Then, when the winos couldn’t pay, the beer swillers gave them more credit.

Now, when the Greeks still can’t pay, the Germans are getting huffy about it.

And everybody is nervous. If the Germans put the screws to the Greeks, they invite problems with the rest of the wine drinkers.

What the Greeks owe is peanuts compared to what the Italians and Spanish owe. And if the credit stops, who’s going to buy the Germans’ BMWs, Audis, and Mercedes?

Nobody wants the credit to stop.

 

Star-Crossed Debtors

That is also true of another pair of star-crossed debtors – the Chinese and the Americans.

Like the Greeks and Germans, the Chinese lent, and the Americans spent.

And now, what a surprise… it’s the Chinese who seem to be in trouble.

Wait, what do the Chinese drink?

We don’t know. But the Shanghai index fell 17% in the last 18 days. And it dropped another 5% yesterday. (More on that below in today’s Market Insight.)

According to the McKinsey Global Institute:

China’s debt has quadrupled since 2007. Fueled by real estate and shadow banking, China’s total debt has nearly quadrupled, rising to $28 trillion by mid-2014, from $7 trillion in 2007.
Three developments are potentially worrisome: half of all loans are linked, directly or indirectly, to China’s overheated real-estate market; unregulated shadow banking accounts for nearly half of new lending; and the debt of many local governments is probably unsustainable.”

McKinsey says total world debt is now more than three times global GDP.

That is a “macro obstacle” about as big as they get. It is a steamroller.

And it is headed for us all… no matter what we drink.

Article originally posted at Bonner and Partners.com

A Look at the Modern Credit System

submitted by jwithrow.credit system

Journal of a Wayward Philosopher
A Look at the Modern Credit System

June 22, 2015
Emerald Isle, NC

The S&P closed out Friday at $2,110. Gold closed at $1,202 per ounce. Oil checked out at $60 per barrel. The 10-year Treasury rate closed at 2.27%, and bitcoin is trading around $247 per BTC.

Dear Journal,

I am writing this entry from North Carolina’s glorious Crystal Coast. My family has been making a week-long trip to Emerald Isle every summer since the 1970’s. Back then the island consisted of a small convenience store, Clyde’s Shrimp Shack, and a few dinky cottages by the beach.

The Withrow clan still rents a couple beach-front cottages each summer but the cottages have magically transformed. In the early days, the luxury cottages had a spiral staircase leading up to a second floor with an extra bedroom. The average cottages offered a few bedrooms on the ground level with no spiral staircase. You now find three story luxury homes towering over the beach where the dinky cottages or empty lots once stood.

To most eyes this looks like progress. Maybe it is. However, my eyes only see evidence of the exponential credit expansion that has been taking place for more than forty years now. I feel slightly hypocritical as I enjoy a cold beverage from the the third story balcony watching the waves crash down upon the beach below. You see, I know how this all got here. I know how this went from a dinky little cottage to a three-story luxury home with a balcony overlooking the sea. Continue reading “A Look at the Modern Credit System”