joegalt, Author at Zenconomics

Real Money

submitted by jwithrow.

Journal of a Wayward Philosopher
Real Money

December 4, 2014
Hot Springs, VA

The S&P is buzzing around $2,069, gold is back up over $1,210, oil is checking in just under $67 after OPEC announced that they would not cut production, bitcoin is hanging around $373, and the 10-year Treasury rate is checking in at 2.29% today.

How about those prices at the pump, huh? Some resource analysts think that oil won’t remain this low for long. They point to the fact that several OPEC nations are dependent upon high oil prices to run their social welfare states and suggest that, coupled with increased demand over the coming winter, oil will be forced to climb back up the ladder. Other analysts suggest there are numerous oil companies still profitable at current price levels thus supply will remain strong and oil will hang around current prices for longer than expected.

We can’t know which analysts are right and which are wrong but we do know that numerous well-run resource companies have seen their stock price hammered as a result of oil’s decline while the S&P has continued to escalate up its stairway to heaven. Speculators may see this as the best opportunity to get into resource stocks since 2009. Natural resource prices are especially cyclical – low prices drive marginal producers out of business which reduces supply and leads to higher prices which attract marginal producers back to the industry. Booms lead to busts which lead back to booms. Those disciplined enough to buy the bust and sell the boom tend to do well in the resource sector.

Speaking of natural resources, it is the rejection of real money backed by precious metals that, more than anything, has led to the disturbing macroeconomic trends we have been analyzing recently.

In October we examined fiat money and realized that it has always been a major drain on society when implemented throughout history. We agreed fiat money is any currency that derives its value from government law and regulation and we noted that legal tender laws are what force the public to use the government’s money rather than the market’s money.

The academic economists would have you believe we have a complex and sophisticated monetary system. They would suggest that you cannot possibly understand it so you may as well leave it to the experts. The economists will use strange terminology when discussing the economy in newspapers and on television in order to confuse and bore you. Want to know their little secret?

Our economy operates mostly on fake money.

I know, it sounds ridiculous. How is it fake money if you can spend it? That’s exactly what makes the fake money so insidious – you can’t tell that it’s counterfeit.

I will attempt to explain myself by asking a simple question: where does our money come from?

Take your time, I will wait…

If you said “from thin air” then you are the winner! For the last forty years or so our money has been loaned into existence. The Federal Reserve loans new money to its member banks and to the U.S. Treasury and the new money then eventually finds its way into the general economy. Where did the Fed get this money to lend? It created it! From nothing. Ex nihilo nihil fit.

But wait, it gets better. This same process takes place every single time a bank originates a new loan. Say you go get a mortgage to purchase a new home. The bank supposedly lends its deposits to you at interest to finance your home. But this isn’t entirely true. First, the bank is only required to have a fraction of the loan in reserve – roughly 10%. So if your mortgage is $100,000 the bank is required to have at least $10,000 in deposits to support the loan. But does the bank actually take that $10,000 and give it to you? Of course not! That $10,000 in deposits stays right where it is. It could be spent tomorrow if the depositors took a trip to Vegas. So where does the money come from to finance your home?

Hint: it’s the same answer as above.

So you get $100,000 in fresh new money and give it to the seller in exchange for the house. The seller uses your new money to pay off his mortgage and often there is a little bit leftover. The seller calls this profit and puts it in his account and the economy’s money pool gets a little bit bigger: there is now more money in the system then there was before you financed your house.

The economists use terms like ‘M1’, ‘M2’, and ‘money multiplier’ to make this seem like a complicated system but as you can see it’s pretty simple. It’s just a journal entry and a few clicks of the mouse and… PRESTO!

No one noticed a little extra money sneaking into the system here and there at first. But the rate at which new money entered the system increased dramatically as the money supply grew. Forty years later we are starting to see the ill-effects of exponentially expanding credit-based money. This credit expansion has distorted all aspects of the economy because money is half of every transaction. Financial planning and analysis is extremely difficult if no one knows what one unit of money will be worth from one year to the next. It’s always apples to oranges.

So where did our money come from before the fiat money explosion? Money has taken on many different shapes and sizes throughout history but if you go back just a little bit in modern history, say to the mid-19th century, you will probably find yourself using the market’s choice for real money – gold and silver. A little bit later – the late 19th century or so – governments muscled their way into the money business and, instead of just minting gold and silver coins, they created national currencies but they fully backed these currencies with gold or silver. While fully convertible, the currencies operated much like real money but it didn’t take long for governments to reduce the real money backing. They found this so pleasant, they eventually got rid of all currency ties to real money altogether!

One of the big advantages to using real money is that it tends to maintain purchasing power over long periods of time. You can expect real money today to be roughly as valuable as real money ten years from today. You could actually save this real money if you wanted to! Saving leads to capital formation which can drive steady economic activity without the need for massive credit expansion which always results in booms and busts.

There are numerous other advantages to using real money but wife Rachel will fuss at me for making this post long and boring as it is so we will have to come back to them in a later entry.

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on monetary history and real money please read “The Individual is Rising” which is available at http://www.theindividualisrising.com. The book is also available on Amazon in both paperback and Kindle editions.

The First American Socialists

submitted by jwithrow.

Journal of a Wayward Philosopher
The First American Socialists

November 25, 2014
Hot Springs, VA

The S&P is hanging around $2,070 today. Gold is checking in at $1,196. Oil is floating around $76 per barrel in anticipation of OPEC’s big meeting on Thursday. Bitcoin is still at $380 per BTC, and the 10-year Treasury rate is 2.30% today.

All remains quiet in the financial markets as we turn our attention to the wonderful holiday season upcoming. Thanksgiving is a day of family, food, and fellowship in honor of the legendary first American Thanksgiving celebrated back in the 17th century.

Most Americans are familiar with this story of the Pilgrims and the Indians sitting down together for the first Thanksgiving, but did you know the Pilgrims were the first American socialists? The Pilgrims’ original financing contract stated that all colonists would get their food, clothing, and provisions from the colony’s “common stock and goods” and any profits would go into the “common stock” for the first seven years. The agreement required each person to submit his production to the common stock and the governor was to distribute provisions out to each family according to need. There was to be no private property for at least seven years.

The Pilgrims landed in America on December 21, 1620 and the first winter wiped out half of the population. The following harvests of 1621 and 1622 were miniscule. Governor William Bradford documented the problems stating that the hardest working men found it unjust that they received no more food than the weakest workers, the young men resented working without compensation, and the wives resented doing household chores for other men who were not their husband. How dare them!

The Pilgrims wised up in 1623 and abandoned the socialist model. Governor Bradford documented the transition stating that families became very industrious once they were required to grow their own food with women and children taking on significantly more responsibilities for the family unit. Three times the amount of corn was planted once socialism was abandoned and the colonists actually exported a substantial surplus in 1624. The Pilgrims thereafter purchased back all of the colony’s stock and completed the transition to private property and free markets.

How fortunate we are that the Pilgrim’s experiment with socialism was largely forgotten over time!

What if Woodrow Wilson understood the Pilgrim’s story? There would be no Federal Reserve System, no
income tax, and no centrally planned war-time economy!

Imagine if Franklin Delano Roosevelt had been familiar with the story. Why, Americans would have gotten no New Deal! There would be no Public Works Administration, Resettlement Administration, Rural Electrification Administration, National Youth Administration, Forest Service and Civilian Conservation Corps, Tennessee Valley Authority, Agriculture Adjustment Administration, Federal Crop Insurance Corporation, Farm Security Administration, Federal Housing Administration, Homeowners Loan Corporation, Federal Deposit Insurance Corporation, or Works Progress Administration. There would be no food stamps, no Social Security, and probably no labor unions. Americans would have to settle for the old deal where they had to work hard, make their own decisions, provide for their own financial security, and save with gold coins instead of paper bills. Who wants to do that?

Of course there is a big difference in scale between the first American socialists and the newer variety. The Pilgrims’ experiment was limited to a small colony so when the model failed the damage was limited to the tiny colonial economy. The ill-effects of the newer forays into socialism modeled after Wilson and FDR’s examples are not contained within a tiny economy – they run rampant through a massive modern economy consisting of hundreds of millions of people.

We never seem to learn the lesson today, either. The Pilgrims abandoned the socialist model when the results clearly indicated failure. Today we implement a new public policy when the results indicate failure. We are always just one public policy fix away.

As we discussed last week in our journal entry examining macroeconomic trends, the sustainability of Pax Americana based on socialist programs is likely coming to an end. Will a transition back to free markets and private property be the solution?

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and regaining individual sovereignty please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

Shedding the Institutional Mindset

submitted by jwithrow.

Journal of a Wayward Philosopher
Shedding the Institutional Mindset

November 19, 2014
Hot Springs, VA

The S&P opened the day at $2,047. Gold is up to $1,197. Oil bounced back above $75. Bitcoin is still hanging around $379, and the 10-year Treasury rate is 2.36% today.

Yesterday we examined some of the prominent macroeconomic trends and we reasoned that, from the American perspective, the world will be a much different place eighteen years from now. We pondered: how can we help prepare a child growing up today for adulthood in a world that will not resemble the one that currently exists?

To answer this question we must first examine the script as it exists for the average American child coming up today. For this I will defer to one of my favorite analysts, Paul Rosenberg over at Casey Research, who summed it up rather succinctly:

Do well in school (an institution).

Rebel with music from the entertainment corps (institutions).

Wear the new shoes/jeans/etc. with the best corporate logos (institutions).

Get a university degree (from an institution).

Take student loans to do so (from an institution).

Take a job at a big firm with great benefits (interacting institutions).

Get a home loan (from an institution).

Build a 401(k) (more institutions).

Believe in democracy (a multilayered institution).

Be a good citizen and vote (same as above).

Send your children to daycare, then school (institutions).

Buy brand-named goods (from other mega-corp institutions).

Watch the best in entertainment (corporate institutions).

Conduct your relationships on Facebook (a vampire institution).

Trust in Social Security and Medicare (Ponzi institutions).

I read this list and have to nod my head in agreement – this is pretty much the script that has been sold to every individual in American society for quite some time now. The script has worked out fairly well for people over the past seventy years but I must ask the question: is it still viable? After all, past success is not indicative of future results.

I am skeptical. To be frank, I am not so sure this script will even work out well for the Baby Boomer generation (though it has up to this point). Time will tell.

So, getting back to the original question from yesterday, how best to prepare Madison for a changing world? Logically the first step would be to change the script. Maybe even set fire to it.

But to change the script first requires a change in mindset.

The current script represents the institutional model which operates under the assumption that individuals are inferior, weak, and ignorant; that they are objects to be molded and formed in the institutionalized image. The institutional model suggests that each individual should spend most of their time working as a “productive” member of the institution. While rarely stated explicitly, the institutional model implies that each individual is subordinate to the institution. Those who subscribe to the institutional model tend to develop the mindset that everyone must participate. Everyone must play.

To walk away from this institutional mindset requires courage but a beautiful thing happens when you do – the world opens up and becomes more free. Then you discover your boundless potential and begin to trust yourself implicitly. And then you can start to envision a better way to prepare little Maddie for adulthood.

Instead of treating birth as an emergency and rushing off to the hospital you can do a homebirth. Instead of rushing her off to school to have indoctrination forced on her by the collectivists and bureaucrats you can develop a comprehensive, practical, and liberating homeschool curriculum. Instead of exposing her to mindless entertainment you can find wholesome hobbies that the entire family can do together. Instead of pushing her to mindlessly rush off to college you can capitalize an IBC insurance policy for her and, when the time comes, tell her to follow her passion. Instead of telling her she must get a corporate job with good benefits to be successful you can help her devise a plan to build a career pursuing her own interests. Instead of telling her she must be a good citizen and vote within a corrupt system you can tell her to “be the change you would like to see”. Instead of ignoring financial education and hoping Social Security will be there for her in the year 2079 you can teach her the merits of asset allocation so she will be financially independent forever. Instead of instilling within her the institutional mindset you can help her remember that she is a sacred individual and nothing less than an eternal spirit of humanity.

The possibilities are endless!

Then it doesn’t matter what the world looks like in the future because she will be prepared to thrive physically, financially, emotionally, and spiritually no matter what.

More to come,

Joe Withrow
Wayward Philosopher

Macroeconomic Trends

submitted by jwithrow.

Journal of a Wayward Philosopher
Macroeconomic Trends

November 18, 2014
Hot Springs, VA

The S&P opened the day at $2,040. Gold is up to $1,193. Oil dipped just below $75. Bitcoin fell slightly to $379, and the 10-year Treasury rate is 2.32% today. All seems to be calm in the financial world for the moment…

In other news: little Madison is one month old this week!

I have spent many of the past twenty-nine evenings contemplating the intricacies of the infant experience. Maddie’s infant mind is as mysterious to me as this crazy world must be to her.

What does she see as she gazes out from those blue-grey eyes? Why does her attention seem to be drawn to the top corner of the room? How does she interpret all of the data received by her sensory organs? What can she possibly be dreaming of while in the throes of R.E.M. sleep? How can she tolerate her mother’s off-tune singing all day long?

Some evenings, when especially sleep-deprived, I can imagine an older Madison filling her father in on all the details. “I tried to tell mom to stop singing those ridiculous songs to me but I just couldn’t find the words”, future Madison would say. But then I come-to and accept that I will never have the definitive answers to my reckonings.

Not one to be discouraged, I then focus my reckonings on slightly more concrete topics.

What will the world look like eighteen years from now when Maddie is ready to go her own way?

Fortunately I don’t need to rely on future Madison to answer this question; I can make an educated guess by projecting current macroeconomic trends out to their logical conclusion. I have been tailing macroeconomic trends for several years now and no matter how close I follow behind, they always seem to lead me to one inevitable conclusion: the debt-fueled, fiat-driven, consumption-oriented, entitlement-laden, militarily-enforced Pax Americana is coming to an end.

Not a very popular thing to say in today’s hyper-sensitive politically correct world, I know. But I say this as a cold observation with no emotion attached. Just look at the prominent trends:

The U.S. government took more than 200 years to run up $1 trillion in debt. The national debt has since exploded to nearly $18 trillion in less than 30 years with $9 trillion of that coming from 2005-present.
The U.S. monetary base was relatively stable from 1781-1971. It has since exploded to the point where the U.S. dollar has lost 98% of its purchasing power.
Consumer debt has skyrocketed right along side public debt since 1971.
When calculated according to GAAP, the U.S. debt is actually north of $200 trillion and growing. This figure is predominantly made up of Social Security and Medicare unfunded liabilities.
Demographics show that roughly 10,000 people with celebrate their 65th birthday every single day for the next ten years. One can safely assume they will all be interested in signing up for Medicare and Social Security benefits.
The 10-year Treasury rate has been steadily declining since the late 1980’s with the help of the Federal Reserve. Despite record-low interest rates, the U.S. government paid out more than $420 billion in interest payments in 2013. Even a slight uptick in interest rates will dramatically impede the Treasury’s ability to service the national debt.
America was founded upon the principle of non-intervention. “Peace, commerce and honest friendship with all nations; entangling alliances with none”, said Jefferson. The United States has systematically morphed into a military empire with more than 300 military bases in over 170 countries. Militarism puts a measurable strain on the budget and a less measurable strain on the morality of society.

It doesn’t take much analytical skill to see that current macroeconomic trends are not slowing: they are growing exponentially. One only needs to utilize a sliver of common sense to understand that exponentially expanding trends are not sustainable. The trends don’t tell me what the world looks like in eighteen years but they do clue me in on what it doesn’t look like. And what it doesn’t look like is the world of the past seventy years.

Hmm. So, how best to to help Maddie prepare for adult life in a world that does not yet exist?

That’s the problem with philosophical contemplations: rather than answers they tend to lead only to more questions. Fortunately, questioning is the philosopher’s strong suit.

Until the morrow,

Joe Withrow
Wayward Philosopher

Preventative Care

submitted by jwithrow.

Journal of a Wayward Philosopher
Preventative Care

November 12, 2014
Hot Springs, VA

The S&P opened at $2,028. Gold, starting to recover from its recent mugging, is up to $1,165. Oil is down to $77.25 and contemplating testing its support level. Bitcoin is up to $396 per BTC, and the 10-year Treasury rate opened at 2.34%.

Precious metals are still the asset class that most warrants your attention in the financial markets today. The U.S. mint sold 5.8 million ounces of silver in October which was a 40% increase from September sales. The Mint then started the month of November off by selling another 1.3 million ounces.

Then it ran out of silver to sell.

But guess what happened to the price of silver? It dropped from $19.50 per ounce on September 1 to $15.72 per ounce as the closing bell rang yesterday. Concurrently, the gold forward rate has just gone negative for the sixth time in fourteen years which suggests the market is pricing for a physical gold shortage. Despite this, the price of gold has been systematically beaten down in 2014 as well. What was that old saying about supply and demand?

Both gold and silver will probably flop around a bit for a while longer but ten years from now you will look quite wise if you allocate some of your capital to precious metals at the current prices.

Shifting gears to continue with our recent health care theme…

Last week we pondered a new model for health care based on cash payments for personalized service in order to opt out of the big-government/big-insurance/big-pharma cartel. We reckoned such a model would be similar to the free market model of a bygone era where family doctors had the freedom to offer personalized service to patients without having to worry about an avalanche of insurance paperwork needing to be complied with or a legion of attorneys hiding in the bushes outside looking for a malpractice lawsuit. We also reckoned there will be a small but growing number of health care professionals willing to offer personalized service for cash as the health insurance industry in the U.S. continues to spiral down into a sinkhole of bureaucracy.

What we didn’t ponder last week was how to afford a cash-based model and keep the insurance company in the waiting room unless an emergency occurs. The answer is simple: preventative care.

No, not the preventative care where you run to the specialist and sign up for the latest and greatest test or screening every time you think you might have sniffled in your sleep the night before. We mean the preventative care where you actually take responsibility for your own health and wellness.

The general guidelines are really pretty intuitive: get a good night’s sleep, stay active during the day even if you work behind a desk, walk as much as possible, eat real food and avoid the fake food that comes packaged in boxes and bags, drink plenty of water and not much soda, consider natural supplements and stay away from pharmaceutical drugs, reject stress and negativity, and maintain a positive state of mind.

Do these things consistently and you probably won’t ever get sick. And if you don’t get sick you won’t feel the need to go to the doctor – not even for checkups if you trust yourself implicitly. Then you could take the money you would have spent on doctor visits and prescription drugs and work on your asset allocation model.

Of course it is still advisable to maintain a wellness network. There are plenty of people and groups out there in cyberspace discussing natural health topics and answering each other’s questions at any given time of day. Though I gave it up years ago, I understand there are plenty of active Facebook groups in this space also.

Wife Rachel and I are big fans of routine chiropractic care as well. Instead of pushing a pill for every ill, chiropractors embrace a more holistic approach to wellness by focusing on musculoskeltal health to ensure optimal functionality of the nervous system. We found chiropractic care to be an especially important part of Rachel’s prenatal and postpartum wellness and it is an excellent tool to monitor the development of little Madison’s nervous system. You know how the pediatrician taps infants on the knee with the little hammer tool? Chiropractors do that too along with numerous other more advanced bio-mechanical and reactionary measurements.

Fortunately for the sake of this journal entry, many chiropractors operate on a cash-only basis. That is, they do not deal with insurance companies (they will accept credit cards). This eliminates the extra costs associated with insurance paperwork and compliance which means lower prices for clients. Some insurance policies may cover chiropractic care but it would be up to the client to file for reimbursement in that case. Ask the chiropractor whether or not his services are covered by insurance and he will probably say “I don’t know” and explain that your insurance policy is a private contract between you and the insurance company and has nothing to do with him (or her). How refreshing to know there is still a sliver of honesty and respectability left in the health care field!

With the proper mindset, preventative care is really quite easy so why do most people ignore it? One cannot know for certain but I suspect propagated fear has a lot to do with it. We’ll save that for a later entry…

More to come,

Joe Withrow
Wayward Philosopher

A New Healthcare Model?

submitted by jwithrow.

Journal of a Wayward Philosopher
A New Healthcare Model?

November 5, 2014
Hot Springs, VA

The S&P opened higher at $2,019 this morning, gold has been hammered down to $1,143, oil is hanging around $77, bitcoin is up to $341, and the 10-year Treasury rate is coming in at 2.36% today.

Gold continues its decline despite this philosopher’s staunch support. Nothing has changed with gold’s fundamental role within the financial system; gold’s price decline is directly due to the U.S. dollar temporarily rising in strength. In fact, thinking of gold in terms of its dollar price tends to be misleading – the dollar fluctuates up and down depending on which way the breeze is blowing while the yellow metal continues to plug steadily along much like the fabled tortoise against the hare. Slow and steady wins the race.

Last week I shared with you wife Rachel and my childbirth experience. The focus of my previous entry was on the actual birth experience itself and I described the fantastic healthcare service we received from our midwife and doula.

What I failed to emphasize was that our healthcare team provided so much more value than simply helping us through the birth process. They provided sound counseling, education, support, and wellness monitoring throughout the entire nine month period leading up to the birth. They offer these same comprehensive services for an entire six week period post-birth as well. Additionally, our midwife has been a reliable resource for us at all hours of the day – wife Rachel has sent her many questions via text message both before and after birth to which she received a prompt answer. Further, our midwife has offered to answer any questions we may have at any time going forward, even beyond the six weeks of post-partum services we paid for.

And speaking of payment – we paid for these services in cash without having to deal with any insurance companies. The entire experience harkens me back to a by-gone era of relative freedom in which small-town family doctors made house calls and actually cared more about their patients than their pharmaceutical sales rep.

What seems to be forgotten is that health insurance was designed to mitigate major catastrophes; it was not designed to pay for every dime of medical care and every new drug that rolls off the production line. Of course the entire health insurance industry has been corrupted, twisted, convoluted, and mangled into some form of a socio-fascist system that seeks to govern and dictate all manners of health care to individuals. Oh, and in exchange for such a tyrannical system individuals get to pay skyrocketing prices for their insurance policies. I read that employer open-enrollment periods were pushed back this year until after the midterm elections – presumably so voters wouldn’t know how high their premiums were planning to jump prior to the election.

The only possible result of the cartelization of the healthcare industry by the big-government/big-insurance/big-pharma alliance is a drastic reduction in the quality of care available and a drastic increase in the price of this care. I don’t know what the solution is for the poor Baby Boomer generation that will see their healthcare costs skyrocket at the exact point in time they need care most. I suppose they can continue trying to vote the system away and I wish them the best of luck in that endeavor. But I don’t think there are political solutions to political problems.

There may be a little more hope for the younger generations: they may be able to “opt” out of the system as it gets worse by avoiding insurance and paying cash for medical care. I suspect we will see certain doctors offer contractual services similar to how our midwife runs her practice. Instead of going through the insurance company, people could pay monthly installments to their doctor in exchange for personalized service. This service could include an open line for phone calls and text messages, house visits as needed, or maybe even after-hour office visits with no waiting room to sit in.

To my knowledge (and I am certainly no expert) there is nothing illegal about such a model at the current time – the Obamacare mandates apply specifically to insurance-related care. Of course this model would become obsolete if the gun-toting health enforcers start kicking in doors and hauling people off to jail for taking charge of their own healthcare. Until then, why not regain individual sovereignty and opt out of the system to the greatest extent possible?

More to come,

Joe Withrow
Wayward Philosopher

Election Day

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Journal of a Wayward Philosopher
Election Day

November 4, 2014
Hot Springs, VA

The S&P has risen to $2,009, gold has dropped to $1,167, oil is down around $77, bitcoin is at $328, and the 10-year Treasury rate is checking in at 2.33% today.

Looks like gold is still sitting on the clearance rack begging to be purchased. Gold jewelry would be a great Christmas gift this year! Just be sure to negotiate the price down significantly from whatever the price tag says. Did you know there are still cultures out there that store their wealth in gold jewelry? People in places like India and China must not have gotten their central bank’s memo: gold is barbaric, government paper currency is civilized. (Pay no attention to all of those pointless wars that were financed by government paper currency.)

Speaking of civilization, it is Election Day! Election Day affords every American the opportunity to honor that great tradition known as voting by rushing off to their local polls to support whichever Joe, Bob, or Dick (or Hillary) has promised to fix all that ails us and to move us forward. I am not sure exactly why all of us need to be moved forward but this apparently isn’t open to inquiries. It is every American’s right and responsibility to participate in our fine electoral process else be called a “commie”.

But you know… not everyone is quite so enthusiastic about voting. Let’s give some of the dissenting voices a hearing for a minute:

“Democracy is two wolves and a lamb voting on what to have for lunch.” – Benjamin Franklin

“If voting made any difference they wouldn’t let us do it.” – Mark Twain

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

“It makes no difference whom you vote for – the two parties are really one party representing four percent of the people.” – Gore Vidal

“It’s not the voting that’s democracy, it’s the counting.” – Tom Stoppard

“No matter who you vote for, the government always gets in.” – Neil Innes

“The difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later; in a dictatorship you don’t have to waste your time voting.” – Charles Bukowski

“Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one’s government is not necessarily to secure freedom.” – Friedrich Hayek

“In politics we face the choice between warmongering, nation-state loving, big-business agents on one hand; and risk-blind, top-down, epistemic arrogant big servants of large employers on the other. But we have a choice.” – Nassim Nicholas Taleb

Hmmm.

Come to think of it, nothing ever seems to change no matter which bobble head gets elected. No major legislation gets repealed entirely; at best it gets replaced by something equally as draconian with twice as many earmarks in it. At worst even more legislation is dumped on top of the steaming pile that already exists. There’s never a sincere effort made to reduce the size and scope of government or to even curtail spending increases. There’s never a sincere effort made to shore up the run-away welfare state that has bankrupted the government nor is any effort made to reel in the out-of-control warfare state that constantly runs amok in search of dragons to slay.

Side note: Microsoft Word suggests that I correct the previous sentence. It has underlined “has bankrupted” in green and suggests that I change the phrase to “has not bankrupted”. I guess Microsoft thinks I am over-analyzing the severity of the situation and thus will be voting its little heart out today.

As for me, I think I will side with P.J. O’Rourke on this one: “Don’t vote, it just encourages the [jerks].”

I see it as matter of personal responsibility: I am responsible for the well-being of myself and my family – government has no role to play whatsoever.

More to come,

Joe Withrow
Wayward Philosopher

Asset Allocation

submitted by jwithrow.

Asset allocation is a necessary tool for saving money and building capital within a fiat monetary system. Within a fiat system, the purchasing power of your currency is gradually inflated away and the value of various asset classes can fluctuate rapidly based on central bank monetary policy. Thus, it is important to have a principled yet flexible asset allocation model in place.

The concept of asset allocation is to allot a percentage of your capital to various asset classes and to maintain each allocation ratio until you deem it necessary to adjust your model. For example, a basic asset allocation model could consist of 25% cash, 25% precious metals, 25% real estate, and 25% stocks. You would then allocate your income to each asset class accordingly.

The beauty of this strategy is that you cannot be wiped out by any wild swings in the market and you will always have cash on hand with which to purchase assets when they go on sale (when the market tanks). Of course you can always add additional asset classes into your model such as bonds or bitcoin or cattle depending upon your outlook and you may need to adjust your percentages based on new analysis from time to time as well.

The Infinite Banking insurance strategy that we talk so much about here at Zenconomics and in our book works perfectly to house much of your cash allocation. An IBC policy serves to compound returns on your cash while it sits idle waiting to be put to use without sacrificing any liquidity whatsoever.

As for your precious metals allocation, you can purchase gold and silver bullion from any local coin shop or from reputable dealers online or you can purchase through companies like Hard Assets Alliance which will facilitate fully allocated domestic or international storage for you.

Of course to follow an asset allocation model you will need to save a large percentage of your income. I think 50% is a good benchmark. 75% savings is preferred. Very few people have the discipline to pull this off but those who do never have to worry about financial problems again.

If maintaining such an asset allocation model for your household sounds extremely tedious and time-consuming that’s because it is. This is the price we must pay for living under a fiat monetary regime. In a sound monetary system we would be able to build capital simply by saving money in a bank account because our money would maintain its purchasing power over time. Instead, saving money in a bank account is a losing strategy so we are all forced to become financial analysts or have our wealth systematically transferred away from us.

Book Excerpt: Set Money Free

submitted by jwithrow.

The following is an excerpt from Chris Rossini’s new book titled “Set Money Free: What Every American Needs to Know About the Federal Reserve”. Chris does a magnificent job of breaking down the Federal Reserve System, monetary policy, and free market economics in a way that is comprehensive yet easy to understand. Chris also had the foresight to lay the book out as a quick-reference guide which makes it a tremendous tool to have on hand. Continue reading “Book Excerpt: Set Money Free”

The Majesty of Childbirth

submitted by jwithrow.

Journal of a Wayward Philosopher
The Majesty of Childbirth

October 27, 2014
Hot Springs, VA

The S&P is checking in at $1,964, gold is at $1,228, oil has dipped down to $79, bitcoin is trading hands around $355, and the 10-year Treasury rate is at 2.25% today.

October has been the most volatile month of 2014 for U.S. stocks. The Fed is supposed to end QE3 (quantitative easing) this month which has investors nervous. Does the market tank when QE3 ends as it did with the end of QE1 and QE2? Or is the economy all better and ready to resume some semblance of normalcy?

My guess: get ready for QE4.

Mr. Market tried to clean out the gutters back in 2008 by liquidating unsustainable debt but the Fed intervened. With their quantitative easing chicanery, the Feds not only prevented Mr. Market from liquidating bad debt, they also piled even more rotting debt on-top. Without QE, Mr. Market would be free to begin the healing process which requires clearing out bad debt and insolvent entities. But most of the bad debt lives on the balance sheets of the federal government and now the Federal Reserve (transferred from Wall Street) and liquidating this debt would reveal the fundamental insolvency of these entities.

How best to hide insolvency? Print money to pay the debts! Hence: QE4 coming soon – probably early 2016.

Shifting gears: Madison made her entrance last week!

She was born on October 20 at 9:59 pm right here in Hot Springs, VA.

In our dining room.

Oh don’t worry, we put the dining room table out in the garage and replaced it with an Aqua Doula pool and a queen-size mattress.

The result: a healthy 7 lbs 11 oz baby girl born completely naturally with no invasive interventions or pharmaceutical drugs necessary. Just like childbirth has been done for thousands of years!

Wife Rachel said the homebirth experience has far exceeded her expectations in every aspect.

Instead of laboring on her back underneath fluorescent lights hooked up to an I.V., monitors, pain-killers, and labor-enhancing drugs, Rachel paced back and forth from our Great Room to our kitchen while verbally telling Madison she couldn’t wait to meet her. No one was around to bother her save her husband who valiantly tried to be a breathing exercise leader while also laboring himself to fill up the 170 gallon Aqua Doula pool. Needless to say, Madison did not wait around to test her sea legs and she was born very peacefully on dry land… into her father’s waiting hands.

Upon her birth, there was no one waiting to rush her off to be weighed, measured, poked, prodded, or checked so Madison had to settle for laying in her loving mother’s arms instead. While mother and baby bonded in those first few minutes of life, our midwife and doula worked gently to make sure both parties were in good health as the birthing process neared completion. Once confident in the health of mother and baby, our health care team worked diligently to clean and sanitize the area, provide food and water, do laundry, provide advice, tips, and reassurance, and countless other things that a star-struck father couldn’t possibly pick up on in the most defining moment of his life.

Our midwife and doula monitored the situation and provided sound counsel for roughly four hours post-birth as well. “This is what real health care looks like”, I thought. Our midwife came back out to our house for a 36 hour appointment and then again for a five-day appointment. She also answered several phone calls and text messages at weird hours during the stretch in-between appointments as well.

The result of such wonderful health care service is that both mother and baby are in terrific health despite not having left the comfort of their own home. It will be more than two weeks from birth before mother and baby will need to leave their home for another appointment.

The entire experience has confirmed what we knew all along – that natural childbirth at home is a much healthier and happier alternative to hospital birth for both mother and baby.

Of course few others understood this. Some just shrugged at the eccentricity of such an endeavor. Some turned their nose up in disgust. Some thought us to be ignorant, selfish, and cheap.

What they didn’t see were the countless hours dedicated to learning, study, and research over the course of nine months. They didn’t see the pages turning in the books that were read. They didn’t see the computer screen scrolling as medical studies and articles were mentally consumed. They didn’t drive an hour and a half to natural childbirth classes every Thursday evening for six weeks after a full work-day to increase their knowledge and understanding before driving an hour and a half back home to get ready for the following work-day. They didn’t watch the videos and the documentaries or practice the comfort techniques or study the possible complications and their signs. They didn’t sit up at night discussing emergency plans and precautions. They didn’t give up coffee, tea, and soda (caffeine) or dramatically reduce their intake of processed foods for nine full months. They didn’t eliminate glucose from their diet for a full week in the final week of their pregnancy.

But someone did do all of these things.

Someone put the time, effort, and work in to make sure they were making the best decisions possible and to make sure they were fully prepared for what was to come. Someone decided that she would be responsible for educating herself first rather than being wholly dependent upon the status-quo.

Someone decided she would be Super-Mom.

To her I pledge my eternal love, respect, and service.

More to come,

Joe Withrow
Wayward Philosopher