Tuesday, December 31, 2019

Grab-Bag Resolutions 2020

A grab-bag of resolutions from the occasionally-controlled chaos of life.
Since "We are what we repeatedly do" (attributed to Aristotle), i.e. we are what we do every day, resolutions have little consequence until they become daily habits. With that in mind, here's a grab-bag of resolutions I want to manifest in 2020:
1. Mourn what is lost but celebrate what remains.
2. Learn from the past but look to the future.
3. Get rid of something every week that I no longer use/am unlikely to use.
4. Don't wait for someone else to clean up a mess; clean it up myself.
5. Make my own five-year plan; lay out what I need to learn and invest to reach these goals.
6. Forgive others, and myself.
7. Get stronger, not meaner.
8. Create more, ask for less.
9. Grow more food/lavish more care on my gardens and fruit trees.
10. Try new recipes.
11. Build more stuff.
12. Promote scale-invariant localized / global solutions, i.e. the CLIME (Community Labor Integrated Money Economy) system.
13. Seek out and nurture beauty in all its manifestations.
14. Go camping.
15. Don't let the (homemade) desserts on the Titanic go by.
16. Ponder Rumi.
Lagniappe resolution: "He who will not risk cannot win." (John Paul Jones)
Thank you to everyone who contributed to my work in 2019!


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
 
Thank you, Jeffrey N. ($50), for your monstrously generous contribution to this site-- I am greatly honored by your steadfast support and readership.

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Sunday, December 29, 2019

The Hour Is Getting Late

After 11 years of "the Fed is the market" expansion, the Fed has now reduced its bloated balance sheet by 6.7%. This is normal, right?
So here we are in Year 11 of the longest economic expansion/ stock market bubble in recent history, and by any measure, the hour is getting late, to quote Mr. Dylan:
So let us not talk falsely now
the hour is getting late
Bob Dylan, "All Along the Watchtower"
The question is: what would happen if we stop talking falsely? What would happen if we started talking about end-of-cycle rumblings, extreme disconnects between stocks and the real economy, the fact that "the Fed is the market" for 11 years running, that diminishing returns are setting in, as the Fed had to panic-print $400 billion in a few weeks to keep this sucker from going down, and that trees don't grow to the troposphere, no matter how much the Fed fertilizes them?
When do we stop talking falsely about expansions that never end, and stock melt-ups that never end? Just as there is a beginning, there is always an ending, and yet here we are in Year Eleven, talking as if the expansion and the stock market bubble can keep going another eleven years because "the Fed has our backs."
Take a quick glance at the chart below of the Fed balance sheet and tell me this is just the usual plain-vanilla, ho-hum, nothing out of the ordinary Year 11 of a "recovery" that will run to 15 years and then 20 years and then 50 years--as long as the Fed panic-prints, there's no end in sight.
So after 9 years of "recovery," the Fed finally starts reducing its balance sheet, peeling off about $700 billion over the course of 18 months.
Nice--only $3 trillion more to dump to return to the pre-crisis asset levels of less than $800 billion. In other words, the Fed's "normalization" was a travesty of a mockery of a sham, a pathetically modest reduction that barely made a dent in its bloated balance sheet.
Knock a couple trillion off and we'll be impressed with your "normalization."
But wait--what's this panic-printing expansion of $400 billion practically overnight? Is this just your typical "mid-cycle adjustment" in Year 11 of a 25-year expansion / stock market bubble? Or is it an "early cycle adjustment" because the Bull Market Bubble will run 50 or 100 years without any pesky recessions or crashes?
After 11 years of "the Fed is the market" expansion, the Fed has now reduced its bloated balance sheet by 6.7%. This is normal, right? Just your typical "mid-course adjustment," right?
Clearly, we can't stop talking falsely now because acknowledging the precarious state of the expansion and bubble is too dangerous: merely acknowledging reality might trigger a collapse.
But really: if everything is nominal, why did the Fed respond to an unannounced financial crisis with such panic? Why panic-print over $400 billion in a few weeks if everything is running hot and true?
Do your own analysis of this chart, but please stop talking falsely about how much longer this can run on Fed panic-printing: the hour is getting late.



My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
 
Thank you, John H. ($50), for your phenomenally generous contribution to this site-- I am greatly honored by your steadfast support and readership.
 

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Friday, December 27, 2019

Is Social Media the New Tobacco?

If we set out to design a highly addictive platform that optimized the most toxic, destructive aspects of human nature, we'd eventually come up with social media.
Social problems arise when initially harmless addictions explode in popularity, and economic problems arise when the long-term costs of the addictions start adding up. Political problems arise when the addictions are so immensely profitable that the companies skimming the profits can buy political influence to protect their toxic products from scrutiny and regulation.
That describes both the tobacco industry before its political protection was stripped away and social media today, as the social media giants hasten to buy political influence to protect their immensely profitable monopolies from scrutiny and regulation.
It's difficult to measure the full costs of addictions because our system focuses on price discovery at the point of purchase, meaning that absent any regulatory measuring of long-term consequences, the cost of a pack of cigarettes is based not on the long-term costs but solely on the cost of producing and packaging the tobacco into cigarettes, and the enterprise side: marketing, overhead and profit.
(I address the consequences of what we don't measure in my latest book, Will You Be Richer or Poorer?)
To take tobacco as an example, the full costs of smoking two packs of cigarettes a day for 20 years is not limited to the cost of the cigarettes: 365 days/year X 20 years X 2 packs (14,600) X cost per pack ($5 each) $73,000.
The full costs might total over $1 million in treatments for lung cancer and heart disease, and the reduction in life span and productivity of the smoker. (The emotional losses of those who lose a loved one to a painful early death is difficult to assign an economic value but it is very real.)
If the full costs of the nicotine addiction were included at the point of purchase, each pack of cigarettes would cost about $70 ($1,000,000 / 14,600). Very few people could afford a habit that costs $140 per day ($51,000 per year).
What are the full costs of the current addiction to social media? These costs are even more difficult to measure than the consequences of widespread addiction to nicotine, but they exist regardless of our unwillingness or inability to measure the costs.
Consider the devastating consequences of social media on teen suicides. Here is one such story: Tragedy.
Then there's all the lost productivity as social media addicts check their phones 150+ times a day, interrupting not just work or school but intimacy, up to and including sex.
The psychological attraction of smoking is the core of tobacco marketing, of course; no tobacco company sells cigarettes on the benefits of nicotine addiction. The pitch is that smoking cigarettes is glamorous and attractive because it's "adult" and forbidden.
Anything that has the double allure of the forbidden and the glamorous is extremely compelling to social animals such as humans, who seek to "stand out" via glamour and risk-taking to heighten our social status, which plays such a life-changing role in the selection of mates and our position in the pecking-order hierarchy.
Social media shares certain aspects of these dynamics. While it's not exactly glamorous, social media enables otherwise average individuals the golden opportunity to "stand out" and raise their social status by attracting more "likes" and positive feedback than other consumers of social media.
In effect, social media offers an extremely compelling megaphone to individuals whose social status in the real world is modest (due to the "long-tail" distribution of opportunities to become socially prominent or wealthy, which are increasingly concentrated in the very tip-top of the social hierarchy) to increase their social status in the digital realm via social media.
Compare the ease of social media to the traditional paths to social prominence: building a business or career to attain wealth, community service via leadership roles in organizations, gaining high visibility in conventional media via extraordinary good looks, athletic or artistic talent, etc. Each of these is an extremely demanding path, one that few people attain, and hence the relatively few at the top of the heap.
As my friend GFB once remarked, in the real world you have to actually earn the money to buy the Mercedes to show off to your friends, but in social media, you only need to post photos of yourself in a Mercedes in a well-chosen setting, and then relentlessly promote yourself on social media platforms.
In other words, social media holds out the promise that an average person can become larger than they are in real life with relatively modest tools (an Internet connection and a camera).
This is reinforced when we look at many of the individuals who have built huge social media audiences and find that they're not any better looking or more talented than the rest of us.
This promise of attaining higher social status without having to work incredibly hard at difficult accomplishments is very compelling.
With the rise of social media influencers as key marketing assets, the most successful social media mavens can earn extraordinary incomes by selling products to their social media audience.
Alas, the long-tail distribution of real-world social status (the few at the top garner the vast majority of the wealth and status) also applies to social media, where a relative few gain audiences in the millions and the vast majority of participants must make do with a relative handful of followers and "likes."
This leaves the majority of users extremely vulnerable to slight changes in their social media visibility and status; someone with 15 followers is devastated by the loss of 5 followers, where the individual with 6 million followers would have to lose 2 million followers to suffer the same erosion.
Toxic critics have limited opportunities in the real world. The person driving by in the Mercedes or addressing a community organization won't even hear the snarky comments of the envious in the audience.
But social media gives pride of place to the most toxic critics, providing a global platform for anyone who wants to tear someone else down.
If we set out to design a highly addictive platform that optimized the most toxic, destructive aspects of human nature, we'd eventually come up with social media.
It's not clear that there is any way to regulate social media to quantify or reduce its addictiveness or toxicity, and so the only solution appears to be cold-turkey: don't get addicted in the first place, and if you are addicted, then abandon social media entirely (cold-turkey).



My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
 
Thank you, Sanjay K. ($5/month), for your massively generous subscription to this site-- I am greatly honored by your support and readership.
 

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Thursday, December 26, 2019

A "Market" Crash Is Baked In--Here's Why

Anyone looking at the hollowed-out, fragile shell of a Fed-managed "market" as a system realizes a crash that runs away from central planning control is already baked in.
The last thing punters and pundits expect is a stock "market" crash, yet a "market" crash is already baked in and here's why: real markets have internal resilience (they're anti-fragile, to use Nassim Taleb's phrase), and central-planning manipulated "markets" don't.
Few look at markets as obeying systems-level dynamics that have little to do with "news" or conventional metrics. The media makes money by reporting every tiny change in mood, metrics, rumors, etc., as if these drive markets. But we all know that the reality is much simpler: The Federal Reserve is the "market."
In other words, the "market" is no longer a functioning (real) market; it is a central-planning signaling utility of the Fed and other central banks. This hollowing-out of the real market in favor of a central-planning, top-down controlled "market" destroys the system-level functions of markets.
If you want a refresher on the legitimate functions of a market, please read The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good, which explains why all the hundreds of billions of dollars of top-down, central-planning "aid" to impoverished nations has failed, enriching kleptocrats and autocratic regimes while assuaging the guilt of the poverty-pimps in the IMF, UN, and all the philanthro-capitalist foundations.
The only programs that actually improve the lives of the impoverished are those that enable small-scale markets in which participants make their own decisions rather than suffer the consequences of decisions made by central-planners who not only know nothing of local conditions, they're uninterested in local conditions because we know best.
This is the core of central-planning: a handful of those with power make decisions that cripple markets' ability to respond to reality by allocating goods, services, capital and credit as participants see fit.
Centrally planned markets enrich the few at the expense of the many. This is as true of "markets" in developed nations as it is in kleptocratic developing economies. The Fed is akin to Soviet-era central planners, and the net result is the same: capital is grossly misallocated, distortions are optimized to enrich the few at the top, and the market's functionality is destroyed because it doesn't align with the goals of the central planners.
Central planning hollows out systems and increases fragility and vulnerability. Once a market has been gutted and turned into a centrally planned "market," it can no longer perform the key functions of markets: communicate information to all participants, discount flows of capital, goods and services, allocate capital, etc. These functions are what enable markets to alleviate poverty by increasing the wealth created by the free flow of information, goods, services, credit and capital.
Just as the collapse of the Soviet Union was baked in by the systemic fragilities of central planning, the Fed's commandeering of the stock market bakes in a crash. In systems-speak, central planning manifests as non-linear effects, i.e. the consequences are not proportional to the triggering events.
Just as a light snow seems to have no effect on the snowpack piled on a mountain slope, central planning-manipulation seems to have no ill effects on "markets." The signaling utility keeps signaling that all is well because "markets" keep rising until the snowpack gives way in an avalanche.
Central planning is all about creating the illusion of permanence and the illusion of beneficial control: central planners are careful to present themselves as all-powerful beings whose actions are beneficial to all. But like Soviet-era planners or top-down poverty pimps, their actions are not beneficial to all, and so they must labor mightily to create an illusion of permanence and absolute control, lest the systemic fragility they've unleashed become visible.
The Fed's phony "market" only signals "all is well" when it's rising, but this masks the reality that crashing markets are just as profitable as rising markets. The idea that rising markets are "good" and declining markets are "bad" is reserved for rubes and chumps, as traders and algos don't care whether "markets" are going up or down, the only thing that matters is profiting from the trend.
Central planning optimizes a disconnect from reality that erodes trust in the market's signals. Now that the Fed has commandeered the "market" as a signaling utility, it no longer reflects the real economy. Trust in its "signals" is as thin as liquidity: both are an inch deep and a mile wide, the ideal set-up for a crash that takes almost everyone by surprise.
Anyone looking at the hollowed-out, fragile shell of a Fed-managed "market" as a system realizes a crash that runs away from central planning control is already baked in. The timing is unknown, but the greater the confidence that the central planners are god-like, the closer we are to an "out of the blue" crash that takes the punditry and punters by surprise.
That this now seems completely and utterly "impossible" is an interesting signal in itself.



My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
 
Thank you, Bob S. ($5/month), for your splendidly generous pledge to this site-- I am greatly honored by your steadfast support and readership.
 

Read more...

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