Category: Wealth

When It Comes To Economics, Karl Missed The Marx

“It was a Russian ship. They taught me all about you imperialist swine. I was exposed to the works of great thinkers - Karl Marx, Lenin, L. Ron Hubbard, Freddie Laker.” – Top Secret

Pa Wilder wouldn’t let me date girls who ran in track.  He didn’t want me hanging around with fast women.

One of the advantages of writing these posts are the times when my family will ask me what I’m writing about.  They’re not reading it, of course, but it’s always a good conversation starter and it gets me off of the topics of “Why isn’t the trash out?” and “Who is going clean the lint from between Dad’s toes?”  Tonight Pugsley was the one who took one for the team was interested.

“What are you typing about tonight, Dad?”  He knows that as a writer I’m a fair typist.

“Well, it’s about economics and bad ideas.  Probably one of the worst ideas ever.”

“What was it, Cheetos-flavored Chapstick®?  Crystal Pepsi™?”

I gave The Mrs. Gorilla Glue® Lip Balm.  That left her speechless.

“Well, one economist in particular had some pretty bad ideas.  He had the idea that the things we made were only worth the labor that went into making them – nothing more, and nothing less.”

“So what about the $200 sneakers that toddlers make in Pakistan and only cost $2 to produce?”

“Well, that’s another idea that we’ll get to, but we can use that example.  In this economist’s mind, the toddlers who made the sneaker should have made most of that $200.  He would have argued that the $198 profit in the sneakers was exploiting the worker.”

Of course we were talking about Karl Marx.  Although he wasn’t the first one to embrace the “Labor Theory of Value”, this horrible idea was used to make more people miserable than the Kardashians ever have.

The biggest flaw inherent in the Labor Theory of Value in Marxism was the destruction of the price system.  In this case, if we had the same labor component in our sneakers and in, say, a polished piece of poo (don’t laugh, they did it on Mythbusters®) then they should cost the same.

Whoever stole my furniture polish, I will find you.  That’s my Pledge®.

Yes, shiny polished poo and fashion sneakers should cost the same to a Marxist – heck, if it took more time to make it really shiny, that would be worth more than the sneakers.  This sounds like nonsense, but the commies sold it to the revolting masses in Russia.  Why should other people make money?  The idea that they’re making a profit means you’re being cheated!

While this might have been a good strategy for children playing “store” in kindergarten or Hollywood™ stars protesting for (insert weekly cause here) it didn’t work out so well in practice.  The Labor Theory of Value caused all sorts of problems in the Soviet Union.  One of the first stories I ever heard about this is one I’ve related before – the Great Soviet Nail Failure.

The story goes like this:

A Soviet factory is told by Moscow to increase nail tonnage.  The solution?  Very large nails – one pound railroad spikes.

Obviously, the commissar in Moscow got in trouble.  The next commissar (after the first one got, umm, fired) gave a new order to the factory:  “Make lots of nails.”  So, they made thousands of tiny finish nails.  They were sad that the whole “invading Finland thing didn’t work out, or else they could have made Finnish nails.

Looks like they’re gonna need a new commissar.

I got a job at the chess factory.  I took a knight off.

While the nail story can’t be corroborated, what can be proven is that one Soviet factory produced exclusively shoes for young children with the leather they were sent.  Why?  They got a production bonus for making more pairs of shoes, regardless of if there was a need for them.

What they were missing, of course, was price.  No one sent a signal back that they made too many tiny shoes.

The entire reason for this nonsense is that profit simply didn’t exist.  You can’t have fully automated luxury communism if there aren’t prices for the things we use based on supply and demand.  Price tells factories what to make without requiring armies of bureaucrats to decide.  Failure means you lose your factory and someone smarter (or, luckier) gets it.

This is, of course, the reason that 21 year old girls are getting college degrees in Medieval Rap Lyrics.  Their labor is as good as anyone else, right?  So why don’t they get a job paying $235,000 a year with a company car and an apartment in New York and a clutch of sassy rich trampy friends?

Economics.  The highest value of labor of a 21 year old girl getting a college degree in Medieval Rap Lyrics is worth exactly as much as she can get in tips at Hooters®.  But they honestly believe that they deserve that cool job because . . . they work as hard as anyone else.

Marx would be proud.

I tried to pay for my dinner at Hooters® with an energy drink.  I guess Red Bull™ doesn’t always give you wings.

While we were talking about economics, Pugsley started getting the idea.

It turns out that Pugsley loves computers, and is really irritated.  The nice graphics cards he likes are in short supply.  First, the ‘Rona ruined the supply chain, so there are shortages up and down the line in the computer manufacturing world.

Second, high-end graphics processing cards (so they can watch the Pac-Man® in High Definition™) for computers are in really short supply.  It turns those graphics cards are they’re great for mining for cryptocurrency.  One video card with a manufacturer’s list price of $700 was going for $1,500.  The high-end graphics card is going for $3,000.  Pugsley figured that the higher-end card could pay for itself in crypto (at current prices and mining rates) in about nine months to a year.

So, yeah, it makes sense that these things cost $3,000.  Heck, at $3,000 they’re still a bargain, assuming crypto doesn’t disappear down a black hole to zero.  Which it could, because crypto is the ultimate expression of the opposite of Labor Value – every bit of crypto value is based on subjective value – it only has value because we agree it does.

So why doesn’t the manufacturer raise the price so that they can keep more of the value of their video cards?

I went to a topless Amish bar the other night.  No bonnets.

Well, in this case, their core audience is gamers, who can be very, very loyal.  Crypto mining might go away in a year or two.  But if the video card users/fans feel they’ve been robbed?  Gamers will go to the number two manufacturer.  But they still won’t have girlfriends.

The manufacturer is playing the long game.

The high prices irritate Pugsley.  Pugsley would dearly love to have a nicer graphics card, but can’t afford them at these inflated prices.  His (minor) revenge is that his graphics card is whirring away right now mining itsy-bitsy amounts of crypto.  In a small way, he’s benefiting from the whole process.

In a free market you get people who take advantage of price-mismatches like that.  Scalpers fill this role, too.  As long as they don’t cheat the system (which they often do) it’s an honest living.  Me?  I had season tickets to an NFL© team for a time.  They were doing well, and I generally doubled my money (on the games I didn’t go to) every year.  Heck, I even reported the income to the IRS.

The beauty of a transaction in a free economy is that both people win.  If I want a burger and it costs $2, well, it’s because Dairy Queen® wants the $2 more than it wants the burger.  Me?  I want the burger more than I want the $2.

Which is also what they pay for their corn.

In a free exchange, both parties win.  And if I think $2 is too much for the chewy hockey-puck burgers our Dairy Queen™ makes in Modern Mayberry?  Well, they get a signal that people aren’t buying their burgers.

Or Cheetos®-flavored Chapstick™.

Read This Post Because You Want To See Why Efficiency Can Suck

“Nobody expects the Spanish Inquisition!  Amongst our weaponry are such diverse elements as fear, surprise, ruthless efficiency, an almost fanatical devotion to the Pope, and nice red uniforms – oh damn!” – Python, Monty

I’m scared that German sausage might be dangerous – but I guess that’s a wurst-case scenario.

One particular afternoon (decades ago) my ex-wife (She Who Will Not Be Named – SWWNBN) moved out.  It was one of those things where we were both immediately happier, though the process of getting a divorce was rough – the judge finally had to sit me down and tell me I couldn’t get the engagement annulled, too.

I kid.  SWWNBN and I were awful for each other.  One of the major disagreements in our life was money.  I was cheap – when SWWNBN wanted to get out of the house for dinner and I fed her Hamburger Helper® in the garage, well, SWWNBN wasn’t pleased.

So on that particular afternoon, SWWNBN moved out she handed me a plastic grocery sack.  It was filled to the brim with papers.  “Here,” she grunted as the heavy sack thudded on the dinner table, causing the legs to audibly groan, “are the bills.  And here is the checkbook.  I have no idea how much money is in it.”

SWWNBN then turned and walked out the door.  For good.

There’s a dentist office in the Vatican – it’s in the Listerine Chapel.

Let me explain how I got into this situation:  stupidity.

I had the brilliant idea when SWWNBN and I argued about money to give her control of the bills.  I figured that if she was responsible for paying them, she’d make sure that they were paid, and help economize around the house, keep the thermostat lower, turn off the lights, and understand that our income versus our bills was a constant fight to avoid trying to find the choice real estate under the overpass – but you have to remember location is everything.

SWWNBN had managed the bills for a few years.  Surely she had been competent.  I picked up the bill on top.

It was a gasoline company credit card.  It hadn’t been paid in two months.  The balance was (from memory) $780.

For gasoline.

SWWNBN had been paying the minimum balance and juggling the payments so it looked like the Titanic was doing swell, thank you very much, until the alarm went up and the crew jumped ship.

The movies The Sixth Sense and Titanic are about the same thing:  icy dead people.

The show of horrors went on as I went through the stack and started sorting them into piles:

  • Paid and up to date (one account, the mortgage was in this stack).
  • Only one or two months late.
  • Late and building a ludicrous balance.
  • Company threatening to send people named Vito and Chico to break my legs.

I then went to my computer and opened Excel®.  I started making a spreadsheet.  The bills were enormous.  In order to not have to “donate” a kidney to someone from the United Arab Emirates, my one option was to take an immediate loan against my 401K.

The next 24 months of my life were an exercise in extreme budget management.  Every single expense was an exercise in nearly zero choices:  every cent had a home before my company direct-deposited it into my account.  How close was I budgeting things?  By the time I was through with a five-dollar bill, Abe was clean-shaven.

My pay had become exactly coupled to my expenses.

Did you hear about that movie role Nic Cage turned down?  Neither did he.

When people think of efficiency, they describe, for instance, a manufacturing facility where all of the equipment is used at maximum capacity, all the time.  Whatever is being made flows from one process to the next and there’s no lag.  All of the processes are coupled.  There is no slack in the system.

This is, of course, a recipe for disaster.

Just like my income being exactly tied to the seemingly endless stack of bills that I had to pay, that kind of factory would bring nothing but chaos.  Whenever any part of it had to slow down or stop unless there was a place to put the “in progress” work, the entire factory would have to shut down or Lucy would have to eat a lot more chocolates.

My life was just like that factory.  If the dollar didn’t come in, I couldn’t pay my bills.  If I had been out of work for even a few months, I would have been bankrupt.  At least if I was bankrupt in summer, I might get some prime real estate in the stormwater culvert.

The example factory isn’t something I’ve made up.  If you look at the outages of natural gas and electricity during the February storm, you’ll see a system where all of the excess capacity had been used.  In colder climates, the systems are built for the cold.  In Texas?

Not so much.  The excess capacity for electrical generation (in some cases) was down for maintenance as pointed out by Nick Flandrey (his website) in the comments section here.

And it would be difficult to convince a business executive to build a lot of excess capacity for the coldest winter storm to hit Texas in over 120 years.  If there’s excess capacity, that executive will try to figure out a way to use it.  His career and BMW® payments require it, although I still feel sorry for that poor German that installs turn signals on BMWs™.

Excess isn’t tolerated – it’s not efficient.  Not a lot of polar bears use sunblock.

But don’t worry about teddy bears.  They’re already stuffed.

But in resilient systems, the excess isn’t just tolerated – it’s required.  There is a conscious decoupling from one operation to the next.  These are systems that are built to be reliable.  Part of our jobs as adults is to scan the horizon as hard as Joe Biden works when he tries to form a complete sentence to see where those breakdowns might occur.

Decoupling is required for many things – the very idea of prepping, for instance, is a conscious act to decouple from a fragile, efficient system.  Building up excess capacity (food, ammo, water purification, heat, shelter) is that very act of creating slack.  It’s building up space between your car and the idiot in front of you in case they hit the brakes on a wet road and you rear-end them and realize you’re underinsured and then they complain about neck pains and then say just kidding and this just got far too specific.

So, back to me, decades ago, sitting in a chair at a dining room table staring at a pile of bills.  Knowing that a truck had pulled into my life and as the bed went up, it had covered me up so deep that only a farmer could pull me out, since he knew that I wouldn’t make the soil richer.

And I dug out of debt, bit by bit, bill by bill.  When I retired a bill was a time of great joy.  And, the first one I paid off was that gasoline credit card that had been at the top of the stack.  Each time I turned a balance to zero?

Why did Angela Merkel cross the road?  Because she wanted to go that way and the pedestrian crossing sign indicated it was safe to do so.

I smiled.  I had decoupled a bit from my debt.  It took six years to get out, and four of those I was married to The Mrs.  I still recall paying a final bill on my final credit card on a crisp January morning.  I had no debt, not even car debt at that point.  Heck, I even paid the exorcist so my house wouldn’t be repossessed.

In my case, decoupling my bills from my paycheck was one of the greatest days of my life – knowing that, regardless of what happened next week was safe.  Then that savings stretched out to a month.  Then six months.  Then a year.

Decoupling gives you time and space, often those things in an emergency that you can’t buy with any amount of money.  Remember the Great Toilet Paper Shortage of 2020?  Sure it was rough, but that’s just how Americans roll.

But one of the biggest lessons is, according to Henny Youngman:

“Why are divorces expensive?  They’re worth it.”

Money Is A Meme

“The Mandela Effect has been an Internet meme for almost a decade. It’s always been called that.” – The X-Files

Where does the Federal Reserve keep inflation?  In debasement.

What is a meme?  In general, a meme is like a bit of cultural information.  It’s an idea that spreads virally.  What are some examples?

  • “All men are created equal.” It’s an idea that no one believes in literally, because it’s not true.  But it does carry the idea that we should all have the same rights, citizen and elected official alike.  Even though we know that’s not true, either.
  • “Taco Tuesday.”
  • “One man, one vote.” Again, another idea that is so deeply bored itself into most minds that we don’t even question if there are some people that shouldn’t
  • “Never deduct a loss carryforward in a tax year when the alternative minimum tax applies.” Well, everyone knows that, right?
  • “Violence never solves anything.” Ahh, World War II was won with Nerf® rifles?

The list makes it quite clear:  memes don’t have to be true to spread and no one should ever take tax advice from me.  What memes do have to be is simple and compelling.  This is why this particular meme was so popular back in 2014:

So that’s what an elected lord and chief of state in several Italian city-states, notably Venice and Genoa looks like!

Doge was and is funny.  It’s simple.  It’s stupid.  Almost anyone gets it.  The idea stays with you, and, in 2014 Doge was the rage.  Sure, in 2020 there were plenty of memes about quarantine, but those were all inside jokes.

Back to 2014:  Bitcoin was still in the early stage, and numerous people used the same idea to come up with a huge variety of alternative crypto offerings, most of which are worth zero now.  One alternative was the Dogecoin, a cryptocurrency based on the Doge meme.  It was done as a joke.  Recently, though, Dogecoin spiked up in value.  The current market value of all existing Dogecoin?

Over $7 billion.  I’m not making that up.  Dogecoin, a crypto based on a joke, is worth more than Uzbekistan.  It had a huge jump recently.  Why?  Elon Musk made a joke about it.

Elon is like Superman® – but every Monday evening he trades Bitcoin.  That’s his crypto-night.

So, that’s one data point.  Here’s another.  This is from the Wall Street Journal®:

Michael Levy was scrolling Twitter last September when he noticed someone mention something that he wanted to know more about. What is NBA Top Shot? He wondered.

This platform to buy, sell and collect officially licensed video highlights was months from becoming a market that would captivate and mystify basketball fans, cryptocurrency enthusiasts, sneakerheads, pandemic day traders and thousands of people stuck at home. But it wasn’t long before Levy texted his friends: “This could be big.”

He [Levy] was so convinced that he decided to spend $175,000 over the next six months on digital trading cards. They are now worth $20 million.  Levy is one of the biggest winners of a manic new market that true believers say is the future of collecting and skeptics call a slightly absurd form of speculation.

That second data point was clear to me.  Unless Levy is money laundering for the mob, there is only one logical conclusion:   Money is a meme.  There is no other logical reason for a video clip to be worth $20 million unless it shows Jesus and Jimmy Hoffa riding the Ark of the Covenant.

I had been playing with the idea that money is a meme recently.  Historically gold and silver were the currencies of choice, possibly because when the Hittites traded with the Aztecs there weren’t enough computer servers to validate a blockchain, and the Hittites weren’t big fans of Michael Jordan, so they couldn’t trade NBA® clips, either.

Little known fact:  the Aztecs worshiped a salted baked bread god called Pretzalcoatl.

Nope.  They had to settle for the original meme, which is a little bit heavier than the data.

It was a lot, lot later that the Romans invented their own particular meme:  they took the silver out of their money and started making it out of Chinesium – you know, that mystery metal you get with cheap stuff from China?  To substitute for making crappy coins, they had to make a lot of coins, thus creating the meme of inflation.

Why I’m concerned about inflation is this:  collectively, we as a nation believe inflation into existence just like a cartoon version of Santa Claus.  Right now, money is sitting in huge pots everywhere.  As soon as people start believing in inflation?

They’ll buy stuff.  Any stuff.  They’ll want to turn their cheap money into something that isn’t losing value day after day and it will flow like quicksilver through the economy.  One story from Weimar Germany during their inflation mentioned a person who bought bedpans.

Why bedpans?  It was better than hanging on to the German Mark.  At least it was worth something.

Apple® is doing a great job to help the economy – they’ve already adjusted their prices for the next 15 years of inflation.

Inflation isn’t a big thing, until it is, until we collectively believe it’s a problem – as soon as the meme takes hold?

Wow.  Much moneys.  Much smalle.  Sad.

Disclaimer:  John Wilder is an Internet humorist who is much better at writing dank memes than predicting the economy and is not a registered financial advisor.  Be responsible for your choices.      

Consequences Of The Broken Balance

“Ummm, I’m gonna need you to go ahead come in tomorrow.  So if you could be here around nine that would be great, ummm kay. Ahh, I almost forgot ahh, I’m also gonna need you to go ahead and come in on Sunday too, kay. We ahh lost some people this week and ahh, we sorta need to play catch up.” – Office Space

Would John Henry have upgraded to the iPhone® 12?

There have been some pretty significant trends of dehumanization of the workforce.  It might seem like dehumanization is a story right out of 2021, but this trend isn’t new.  The legend of John Henry, that steel drivin’ man that raced a steam drill shows that the fear of machines replacing people and changing the way they work dates back at least as far as the 1800s.  At least John Henry’s performance review only ended with his heart exploding.

I blame Materialism, but more on that in a bit.

There are more and more jobs where each second of employee performance is analyzed and optimized and timed.  I’ve written (some) about this previously (How To Beat Any Computer At Chess*).

There are more people today working under deep surveillance at work than ever before:

  • Don’t perform as well as the computer metric says you should in customer satisfaction surveys?
  • Bosses that are upset that people get sick on Wednesday and never on Saturday or Sunday? And employees blame their weekend immune system.
  • Don’t move in the optimum path from one place to another to pick an item off of a shelf?
  • Bosses firing people with the worst posture? Well, we all have a hunch who that is.
  • Take too long per item to ring out a customer?
  • Not enough keystrokes per minute on the company computer?

These are jobs that are created that use humans as interchangeable parts – ones that wear out or are defective and that can be replaced.  Of course, jobs like this have existed since, well, jobs existed.  Mining comes to mind.  Building railroads probably wasn’t a ball of fun, either.  But in both of those, at least, the job had room for innovation, thought, and human ability.

These children actually worked in a coal seam.  Child labor laws back then weren’t a miner issue.

I think the biggest problem is that people have forgotten that businesses exist for the benefit of society – society doesn’t exist for the benefit of businesses.  In my younger, more libertarian days, I missed that point.  Even though I love freedom (still!) I was always skeptical of the power of big business.

Also, I was always concerned about businesses that produced nothing.  I didn’t have the framework to explain it then, but I do now.

Businesses exist for three reasons:

To benefit society by creating value.

A business can easily fall short of this if it’s an abusive monopoly or makes its profits based on political pull and persuasion – an example would be solar scams during Obama, and military scams, well, any time.  What’s an invulnerable weapon system?  One that has parts made in every Congressional district.  Even if the military doesn’t want it.

No, creating value isn’t the same thing as government forcing money at a company.  Creating value is a much deeper concept – it’s where someone makes something and society gets better.  It doesn’t even have to be a physical thing, the words written by an author aren’t physical, but they create value when enjoyed by an audience.

Of course, physical items are awesome, too.  PEZ®, anyone?

Z3d looks like “Zed.”  Thank you for attending my Zed Talk.

To benefit employees by providing meaningful, necessary work.

When mass business first started, Henry Ford did an amazing thing:  he doubled the wages he paid his employees.  Why?  First, to get a good, stable workforce.  Second, to increase the productivity of that workforce.  Assembly lines were new, and getting a good workforce was crucial.

The experiment was successful, and helped Ford increase production while lowering overall costs.

Today, when you’ve got a good job, you know it.  You’re working on tough things that are right at the limit of your capability.  You’re engaged.  You’ve got support so you don’t sink.  You know what you’re supposed to be working on.  And you’re part of a team.

That sort of work is fun.

To allocate profits to shareholders and owners.

This is also required.  Winners make profits and get more opportunity to manage bigger businesses.  Losers don’t, and their businesses fold.  In a well-functioning society, those profits accrue to those who are creating value, which in turn allows them to create even more value.  I don’t know about you, but I’ve never gotten a job (in business) from a company that had less money than I did.

The most profitable part of the lemonade stand I had when I was growing up?  Selling the antidote.

These three things are a delicate balance.  Too much emphasis on any one of the three is poison to the system:

  • Collective farms in the Soviet Union attempted to “create value” in society by creating awful jobs for people who had no real incentive to do a good job. Result?  Tens of millions dead, followed (much later) by the collapse of an entire country.  But the Soviets did develop an impressive system to stand in line all day.
  • Government, where often it’s set up for the benefit of the employees. What business would you go to where the customer (you and I) has to park farther away than the employee?  That wouldn’t happen at almost any business looking to make a profit.  But does your local police department save the best spaces for citizens?  Does your local DMV?  If so, you’re not the customer.  They are.
  • Hedge funds, high-frequency traders are an example of a business that does, in many cases, literally nothing to help the economy outside of extracting wealth. That’s it.  It’s a casino view of the world, where vampires that produce no value game the system for profit.

Why don’t hedge fund managers ever have problems with ticks or mosquitos?  Professional courtesy.

Imbalance in any of these features leads us to a dystopia.  Our current dystopia in the United States comes from the employee-centric Federal government.  Call it The Swamp or call it the Deep State, it’s all the same.

Even now, the function of some government agencies is so impaired as to be comical –  we have a Securities and Exchange Commission (SEC) that wants to put Internet traders in jail and a Bureau of Alcohol, Tobacco and Firearms that sells none of those things.  Also?  It’s nearly impossible to fire a Federal government employee.

Unless they’re on the Right.

Hedge funds and other Wall Street hangers-on don’t care about creating value for society.  They don’t care about employees of the firms they buy and gut.  They just want profits, and want them now, please.  Thankfully the SEC will regulate them.  What?  Oh, sorry, the SEC will protect them.  My bad.

Almost all of the horrors of the world are an imbalance between these forces, and each produces its own, unique dysfunctional society.

My friend told me that Biden was going to build a monument to George Orwell.  “Where??”  “Well, pretty much everywhere.”

The root cause for this imbalance is Materialism, the idea that only physical things matter, and a loss of the idea that there is a higher purpose.  Materialism is the very foundation of both Marxism and Libertarianism, and, when applied strictly, is the separation of morality from culture.

I can even prove that Materialism is in complete control in 2021:  Is there a higher crime in society than standing up against something that is morally wrong?  Well, in a world where the rule is “do as thou wilt” saying something is wrong is the highest crime.

I’d call that Materialist.  In fact, I’d bet $10 on it.

The Funniest Article You’ve Ever Read About Bon Jovi And The Everything Bubble

“Yeah, it was like, even though Bubbles was Bubbles, he was two people at the same time as bein’ Bubbles. He was trying to be this other person that wasn’t Bubbles, but he was still Bubbles.” – Trailer Park Boys

What was Schrödinger’s favorite Bon Jovi song? Wanted Dead or Alive.

Euphoria. The name even sounds good. It comes from the Greek “Eu” meaning “quite slippery and frictionless” and the Greek “phoros” which means “wet”. A direct translation is “Slippery When Wet,” as noted by the great Italian philosopher, Giovanni Bongiovi.

If you’ve ever been to a college party you’ve seen the application of euphoria over common sense, especially in the hours between 11 P.M. and 1 A.M. It’s at that time that the liquor has hit several partygoers like a Canadian baboon on a yak crotch. They have ambition. They have a limitless lack of common sense.

There is no tomorrow! Party on!

And euphoria has had several pleasant outcomes: more than one happy accident of a child has turned up nine months after the euphoria ended. Let’s face it – if every child was planned, there’d be six or so people living in the United States.

Justin Trudeau’s parents decided they don’t want kids anymore. Who is going to tell Justin?

Euphoria has even allowed people to exceed what they themselves ever thought possible. When throwing common sense to the wind, sometimes the outer limits of human performance are defined – we find out what it is that we can really do.

More often than not? We end up flat on our faces. That can be its own victory, but it’s often part of a longer story.

The real interesting part is when euphoria meets money. That’s when we get stupid, and we start convincing ourselves of crazy things.

The biggest crazy thing of my life was the Dotcom Bubble. That was amazing. Companies were formed in days and then ended up being “worth” ten million dollars a week later, without ever producing a product. Heck, it wasn’t just producing a product – they didn’t even know what product they were going to produce.

Spanish coders like to use Si++.

Several of my friends were caught up in the front end of one Dotcom venture. They were flown to a kickoff party. The band at the kickoff party? Hall and Oates®. Sure, Hall and Oates™ were 20 years past their prime, but, still, the kickoff was for the idea of installing some fiber optic cables.

It wasn’t even that large of a project. I’m not sure if they ever built any fiber optics. But when I asked if I could be at the party my boss said, “I can’t go for that.” (Sorry jokes aside, they really did hire Hall and Oates© for the party.)

How much oat could Hall and Oates haul if Hall and Oates hauled oats?

Another friend sold his website for a total of $50,000,000. The website was making a profit – about $1,000 a month. Of course, the kicker was that he sold his website for $50,000,000 in Alta-Vista® stock that he couldn’t sell for a year.

Oops.

Don’t cry for him – he didn’t have enough money to retire, but he had enough that he took three years off to hike and relax.

Euphoria makes people do crazy things.

The second crazy thing that happened in my life was the Housing Bubble. When I was looking for one loan, I was told that I qualified to borrow ten times my annual income.

“Why would you offer me that kind of money? I could never pay it back.”

The Loan Officer responded, “Yeah, I know, but you qualify for it. So the computer tells me I have to offer it to you.”

We all know how well that ended.

Thankfully they allowed me to finish the “Alan Parsons Project” I was working on.

Through this, Citigroup® has maintained a panic/euphoria model. The idea is that there is a way to measure what investors think about the market. Are they panicked? Or are they as giddy as drunken freshmen at their first college kegger.

If investors are skittish, the idea is that stocks are a bargain. People are afraid of stocks and would be happy to sell them to you. It’s the idea of buying when blood is in the street.

But if investors are euphoric, then the prices for things are too high. How high? Double-digit high.

Looks like party central!

Right now, Citigroup’s® panic/euphoria model is flashing “Slippery When Wet and Three Tequila Shooters.” It’s higher than the Dotcom® Bubble. It’s much higher than the excesses of the Housing Bubble.

It’s the Everything Bubble. And investors are still three sheets to the wind, knee-walking, too-loud singing, drunk.

This makes sense, too. Presidents love to pop the bubble in the first year of their first term. It’s not like people will remember the pain three years from now, if they’re able to manage growth and restart the economy. Besides, you can blame the pain on the last guy.

I guess he swallowed a few on that “steel horse” he rides.

There is ample incentive for Biden to crater the market. There is ample incentive for him to crater employment, too. In both of those things, he can restart the clock and claim growth from worst that 2021 or 2022 brings to us.

If we’re lucky, all we get is a hangover. I don’t think anyone wants this baby.

GameStop: The Tip Of The Corruption Iceberg

“And pruned the hedges of many small villages.” – Three Amigos

Amazing what happens when you find the world is corrupt . . . .

GameStop®.

In a world filled with COVID-19 shutdowns and Internet sites where you can download nearly any game ever made for low prices, it seemed like a sure thing that GameStop™ would fail. Except . . . people liked going. The profits weren’t through the roof, and the business model was older. Heck, the last time I was in a GameStop™ was over eight years ago, and about half the shelf space was pop-culture memorabilia and nerd toys, not games.

Never mess with weaponized autism.

Seeing this, the Wizards of Wall Street® decided to “short” GameStop™. I’ll explain what that is, and I promise you my analogy will be far funnier than what CNN© does unintentionally – and that’s a high bar.

Let’s pretend that you and I are friends. You brought the latest Pac-Man© cartridge game. Since you trust me, you lend it to me.

Addled on Monster™ Energy Drink© and chicken tendies, I waddle down to the local GameStop©. Since there is a relative shortage of Pac-Man™, GameStop™ offers me $50 for the cartridge. I pocket it and go home.

Two months later, you sober up and remember I borrowed your vidya game, and ask for it back. I waddle my greasy fingers down to GameStop© and buy a used cartridge. It’s not the original one that you lent me, sure, but you’ll never know the difference, not with your hygiene.

Since Atari© has made a metric buttload of additional Pac-Man© cartridges, the price to buy a used version is now $30. I buy it. I give it back to you. I pocket the $20, and no one is the wiser.

Last week was like no other . . .

That’s a short sale. I borrowed a commodity – one Pac-Man© video game cartridge (minor wear and tear excluded) is functionally exactly the same as any other Pac-Man™ cartridge.

That’s (sort of) what the hedge funds were trying to do with the shares of GameStop©, but with one crucial difference: the price went up. And they sold more shares of GameStop™ than exist.

That can happen in two ways. The first is legal. If I owned 100 shares of GameStop©, my broker could loan them to someone going short. They’re selling legal, actual shares. I might really, really, like GameStop™, so maybe I buy 100 more.

My account says that I have 200 shares of GameStop© now. I think I have 200 shares of GameStop™, but in reality, my broker only has 100. The same thing happens in a fractional reserve bank (like your bank) in that if you put $100 in, the bank might loan it all out. You think you have $100, but that $100 was loaned to someone. Just like shorting a stock, it sounds illegal, but it’s not.

So how does that work with my previous analogy?

Ahh, in a perfect world.

It’s exactly the same. If the price of Pac-Man© goes from $50 to $30, then I make $20. But if there’s a fire at the Pac-Man© cartridge plant in Roswell, New Mexico (because they use alien slave-labor from Arcturus to make them), and the price goes up to $100?

I’m out $50. But how often do the Arcturans revolt? Not often.

So, we’ve seen how my little deal could go wrong. But how wrong could it get? Infinitely wrong. Let’s say that I do this with 1000 Pac-Man© games, since it’s a sure thing. So, GameStop© gives me $50,000. Now I just sit and wait.

Yup, the hedgies lost billions.

But the fire thing happens. And since everyone else sold all of their friend’s Pac-Man© games before the factory caught fire, the price goes up. Way up. Like up twenty times in price. Let’s see, 20 times $50 is . . . $1,000 a copy. So now, since I borrowed that $50,000 in hopes of making $20,000 when the price went down, I’m actually in really bad shape.

I owe 1000 games times $1,000 dollars. I owe my friends, collectively, $1,000,000.

Ooops.

Musk is no fan of short sellers since they tried to destroy Tesla® a few years ago.

This is what the hedge funds did. And since (I believe) some of them are what is known as a “market-maker” they have 21 days to come up with those games (shares). 21 days is forever, so don’t worry about those billionaires – most of them are still billionaires – they just will have to wait until next month to buy that second volcano island death lair.

This is the situation that the Reddit© group r/wallstreetbets found – GameStop© was horribly oversold by hedge funds, and just a few people buying could start pushing the price up.

At one point, one of the r/wallstreetbets early investors in the short squeeze was up $48,000,000. That’s not a typo.

With a short, there’s a lot of power as the price goes up. The Hedge Fund Leech that runs the hedge fund starts to get nervous, and adds to the buying pressure as he tries to buy stocks to “cover his short.” This actually increases the price, sometimes causing it to go upward. A lot upward.

If that was all that happened, it would have been an amusing story. Wall Street Leeches get one-upped by message-board posters. Ha ha!

Something wonderful about that, right?

But that’s not all that happened. Immediately, the news media, (some) trading houses (most notably Robinhood©) and the talking heads began talking about how this was bad. The people who normally distort the economy and screw over the middle class don’t really like it when the weapons that they use are used against them.

Google®? Not on your side.

Well, actually none of them are on your side.

Huh. And they invest big dollars for that privilege. How much money have they given Janet Yellen, Secretary of the Treasury? A lot.

Whose side is Joltin’ Janet on? Not yours.

Last week on Thursday and Friday the powers that be told the markets to “shut down” the Internet Freedom Party raid on the financial leaches. In fact, several articles extolled how the Hedge Fund Leeches were the real heroes.

I’m feeling so sorry for him!

It’s a big game, but you and I are not supposed to play. You’re supposed to buy shares in your 401K so the Hedge Fund Leeches can take your money and collude with each other to own the economy. The free market is, in principle, a great thing. People buy and sell. The market allows the prices to be shared by all.

Well, I used to be the guy in front.

But Monday? Someone spent a quarter billion dollars to depress GameStop©. It’s analyzed here (thanks to r/wallstreetbets):

Also, people forget this: there were Hedge Funds on the other side of the deal. Vampires don’t need prices to go down, they can also make money when prices are going up.

Who knew that Karen ran the SEC?

No. Big players distort prices, they sell and buy options to make money on stocks that they intend to dump for short term profits after manipulating the markets. That this financial vampirism actually destroys companies, jobs, and communities?

And they will call you anything to make a buck.

Who cares? Not the Wall Street Hedge Leeches. Here’s Tucker Carlson with a discussion about one Wall Street Hedge Leach destroying an entire town in Nebraska. For a few million bucks. They would do that to you, your family, and everyone you know for a 2% return.

If you’re not mad, you’re not paying attention.

None of this is financial advice, you hosers. So, take off, eh. All of the memes are “as found” on the Internet.

Pyramids, Captain Kirk, And Skills

“Seven days ago one of my satellites over Antarctica discovered a pyramid.” – Alien vs. Predator

A friend tried to rope me into a pyramid scam.  “Don’t you want to be your own boss,” he asked me.  “No, I hate working for jerks.”

When I graduated from college, I graduated at the same time as one of my close friends.  The employment market was only so-so, but we both managed to grab jobs in a town near the college.  Whereas my job was, um, more rough and tumble (I was a rodeo clown at for chubby people at the Golden Corral® – my worst day was when Megan McCain and Oprah showed up together), my friend’s job ended up being at a suit and tie kind of place.  Thankfully, we still were working in the same city, and we got together frequently.

One night he asked a question over Buffalo wings and too many beers:  “Where did they go?”

“What?  Where did who go?”

“All the old guys.  I mean, I go to work, and I see that there are dozens of people less than thirty.  Then, maybe twenty percent are between thirty and forty.  After forty?  It’s a wasteland.  Hardly anyone but upper management is over forty.”

I thought about his question.  Where did they go?  The company I was working at (and most of the companies I’ve worked at since then) had a similar pyramid shape.  Some have been steeper, and some shallower, but all have had that shape.

I have a good construction joke, but I’m still working on it.

So, where did they go?

Well, they didn’t retire – not from the company they were at – they didn’t make nearly enough to retire at 27 and live on the island with Jim Morrison, Janis Joplin, Kurt Cobain and Robert Johnson.

Nope.  The vanished people were gone.  Where?  Somewhere else.  Some other industry, some other career.  It was uno, dos, and then they vanished without a tres.

Probably the biggest reason for that pyramid shape is that younger people cost less.  Do they know less?  Sure, but inexpensive is an attribute all of its own.

But any hierarchical organization has fewer slots for leaders than for followers.  The armed forces are a similar example.  I once made the acquaintance of a (no kidding) Captain Kirk.  Now, this Captain Kirk wasn’t in Starfleet®, he was in the United States Army.  And he was sweating for promotion.

Captain Kirk was denied promotion.  I’m thinking that someone the Pentagon saw that Captain Kirk was trying to be promoted to Major Kirk, and that there was no way that the Army would ever give up the numerical superiority they had over the Navy in their number of Captain Kirks.

No, not this Kirk.

The armed forces are a classic example of that pyramid structure:  there are fewer generals than colonels, and fewer colonels than majors.  And, if officers (in a certain range) fail to be promoted a certain number of times?

Well, there’s the door.  So, Captain Kirk soon enough was in the private sector, and I lost track of him from there.  I think he got lost somewhere in the Veridian System.

Most (but not all) companies are built upon this pyramid model.  I’ve seen high-end consulting firms where it’s a paradise for everyone born in the Eisenhower era, but those are the exception, not the rule.  Plus, they charge enough to pay for the most expensive video-streaming service ever:  college during Corona.

So, the rub is that for many, the rule is up or out.

What to do?

Invest in the one thing that can never be taken away from you:  your skills.

My poor reading skills cost me a career in sex-worker management.  On the bright side, now I own a warehouse.

In 2017 I would have given a completely different list of skills than 2021.  It would have been far more dull and predictable.  But 2021?  2021 is like a tarot card reader’s business:  unpredictable.  Part of it will come down to plain dumb luck and good timing.

I’d suggest:

  • Have general skills. General skills are widely applicable and get a job quickly in lots of different locations.    Teacher.  Tom Brady’s tooth polisher.
  • Or, have skills that are so specific that they are nearly impossible to replicate. (Specific skills require a time and a place.  I’m sure that all of the folks working on the Keystone XL pipeline had great skills.  Until those skills aren’t needed.)  If you want a great choice for the Biden year, I’d suggest a carbon-neutral way to turn cash into Democratic votes.  Oh, wait, they’ve got that figured out.
  • Protip: growth industries will be the ones that the Left loves for the next two years, at least.  If it’s green and fuzzy, the Left will fill it full of money.  I’m thinking of investing in pool tables.
  • Have skills that can’t be done remotely from a foreign country. Right now, that includes teaching.  I’m sure there are more, but I’ve been at a loss since Biden figured out how to be the president from China.
  • Have skills where a certification that a foreigner can’t get are required. Top secret clearances are nice.  I’m working on a top-secret project to ferment honey to make ethanol for cars.  The project is all on a mead-to-know basis.

To be fair, I had an addiction to stealing traffic lights.  But I could stop whenever I wanted to.

A lot of the suggestions above would have made the 2017 list.

In 2021, however, I must stress that the world might get a lot more, um, basic than we’re used to.  The reason that my Great-Great-Grandma McWilder (GGGMcW) did fine during the Great Depression was she knew how to make clothes from cloth, a needle, and thread.  And if the cloth wasn’t big enough for a dress?  It was big enough to be made into part of a hand-made quilt.  Like Jean-Luc Picard, she could make it sew.

GGGMcW also knew how to raise chickens.  And raise a garden.  Probably 30% or more of the calories they ate came from the backyard – as he added soil to the garden, I’m sure he said, “so, the plot thickens.”  But Great-Great-Grandpa McWilder was no slouch, either.  He didn’t have a great repair shop, but the man fixed every aspect of his house, by himself.  Roof leaked?

It was his job to fix.  Ants?  His to kill.  Broken suitcase handle?  His to fix.

Honestly, I don’t recall them buying anything much more than flour, sugar, bread, chicken, and hamburger and the occasional vegetable.  I don’t think the area was friendly to corn so I think they got that in cans.  They would have grown more vegetables, but they weren’t from Okra-homa.

I installed a beer tap in my house – now The Mrs. complains that she can’t take a shower.

But there was more.  The Great-Greats were also tied into their community, and had been there a decade.  The connections they had bonded them to the community.  How so?  During the Depression they raised another child from a family that couldn’t afford to feed the kid.

The pyramid is real.  In many ways opportunities may diminish over time.  But life goes on, so keep investing in the skills that you might need.

All of them.  Because you have no idea what the future might bring.

Money In 2021? (Explained With One Bikini)

“Well, Saddam owed us money.” – Arrested Development

What does Superman® dry off with?  A Tow-El.

Money.

What is it?

Really, the truth is money is anything we accept as having value that we can trade for something else.  Cigarettes have been used for money.  Cowrie shells were used in China for money nearly 4,000 years ago.  Booze has often been used for money.

I read an article back in 2013 that bottles of Tide® were being used to trade for drugs in New York City, so you know that there are plenty of insane.  Heck, I hear the Germans are even raising money online through Krautfunding.

Ideally, money has some sort of scarcity attached to it.

Gold has a historic role as money.  You can cut it up into very, very tiny pieces, and you have lots of tiny pieces of gold.  It hasn’t changed – you can melt it back into a single bar again, having lost nothing.  You cut up a dollar bill into very tiny pieces?  You have a pile of gerbil cage fluff.

Gold is nice.  So is silver.

But, like anything, there are problems.

I found a little gold once while prospecting – it was a minor success.

Well, generally always the same problem.  Government.

I’ve mentioned Rome before, because it’s a great illustration of what happens when government designs money.

At the beginning, Roman silver coins were, well, actually silver.  The problem with silver coins is that you can’t make silver show up out of thin air.  Oh, wait, if you’re a government, you can.  The Imperial Romans managed to maintain enough restraint that their silver coins were over 90% silver for a little over 150 years after Empire.

Proving once again I definitely deserve the Nobel Prize™ in Economics for my discovery of Bikininomics©.

After that, the percentage of silver in the coins declined rather quickly.

So did the Roman Empire.

Interestingly, where it took Rome 150 years, it took the United States 142 years for the same thing to happen:  from 1792 (when the Coinage Act was passed) to 1934 (when Roosevelt confiscated United States silver and gold).  History may not repeat, but it sure does rhyme.

Sure, there were silver coins produced after 1934, but silver coins were (largely) discontinued as United States currency in 1965.  (*There were exceptions for dollar and half dollar coins in selected years.  That ended in 1976.)

As soon as the non-silver coins were minted, the silver coins began to disappear from circulation.  Gresham’s Law states the simple fact:  bad money (non-silver coins) drives out good money (silver coins).

But it’s had an impact on people’s thought processes as well:  they have (largely) stopped thinking about gold and silver as money.  Want proof?

Yup.  When Mark Dice offered people either a King Size® Hershey’s™ chocolate bar or a 10 ounce silver bar, everyone chose the candy bar.  As bad money replaced good, people stopped even thinking about silver as money.

The money supply today is fiat money.  I’ve written about that before – it means that our money is entirely made up.  No silver backing, no gold backing, the only backing is the faith of the people who accept it.  Oh, and several thousand nuclear weapons, if you’re talking about the United States dollar.

The next step from that are the cryptocurrencies.

Those are entirely a mathematical concept, though Ricky has noted in comments that this mathematical construct can cost upwards of a million dollars in power a day.  Bitcoin is currently at $33,000.  Four days ago?  $40,257.

Used with permission.

Is Bitcoin a bubble?  Will it go to zero?  Will I go to $500,000?

Honestly, I have no idea.  I would have bet against it going to $40,000.

The scary part of today is just that uncertainty.

  • Gold has (generally) held its value over time, performing far better than the dollar since the Federal Reserve© came into being.
  • Gold hasn’t performed as well as stocks over the same period – creative people added more value than a motionless metal.
  • Stocks are today at a valuation that is (by my reckoning) insane. They can stay that way longer than I can bet against them.
  • Bitcoin? Who can say?  I think its primary role right now is to indicate bubble tops.
  • Bonds? Who wants to buy bonds at nearly zero interest rates?

This is probably one of the more difficult times to invest in my lifetime – risks are very high, but returns don’t seem to have kept up.

First role of 2021?  Don’t talk about 2020.

We seem to be, everywhere I look, near to a breaking point in our systems – economic, political, and social.  Who knows, maybe we’ll be back at cowrie shell money by 2030.

But I think I’d prefer the booze, since I don’t smoke and, well, if you have booze do you really need clean clothes?

Bikini Economics, The Money Supply, And Dinner With Gandhi

“It’s a growth economy, Gus. We’ve already made like, 500 rupee.” – Psych

The economy is so bad, Facebook® just laid off 50 Congressmen.

I was flittering across the Internet the other day and I came across a disturbing image.  I mean, who wants to even think about Barack Obama wearing just a feather boa and covered in gerbils?  See if I ever go to the New York Times® website again.

But, if I may, I think I found an even more disturbing image – a graph of M1.  What is M1?  M1 is the narrowest definition of money:  it’s the cash in your cushions, it’s the cash in your pocket.  It’s the cash in your checking account.  Nearly anything you can go out and spend right now and not owe anyone for:  that defines M1.

M1 is not, however, credit cards.  And it’s not savings accounts or the stock market or savings bonds.  It’s ready, hot cash.

And the M1 graph has spiked.  Spiked as in going up from just under $4 trillion last year at this time to nearly $6.6 trillion right at this moment – a growth of $2.6 trillion dollars – in one year.  That’s a huge change, since it took sixteen years to grow from $1.4 trillion to $4 trillion, and those sixteen years contained the biggest recession the United States had seen since the Great Depression.

So, here, take a look.  Since it’s Christmas time, I tried to get the most festive pictures I could find, even though technically one of them isn’t a bikini.  Oh, sure, you feel like complaining, but what about me?  I’m the one who has to flit through literally hundreds of bikini photos to find the best ones to properly illustrate economic principles while being festive.

This is the longer view, which shows M1 since 1975.

This is a close up of more recent M1 behavior.  I made the last little bit on the graph thicker and orange because it was hard to see.

It certainly looks scary.  The graph, not the bikini.  Look at the graph.

What’s going to happen?

I’m not certain.  I originally wrote, “I have no idea” but what has happened historically when a country prints 65% extra cash in one year?

I have an idea of what happens there, and it really is scary.  After World War I, the German economy was pretty well wrecked, plus they had to put down a communist revolution.  I’m not getting into the details (mainly because it’s boring) but the Germans just started printing money as fast as they could.

And by printing as fast as they could the printing presses were the problem.  Thankfully, they managed to double money production – by only printing on one side of the currency.

That’s AOC-level super-genius thinking.

A ewe in a swimsuit just drove up in an Italian sports car.  It was a lamb bikini.

Within six years what had cost 1 Mark cost 1 trillion Marks.  And all because they printed money.  I write on a regular basis about the world changing around us, and this is a great example.  In 1914 everyone had been happy with their new-fangled electric lights, and in 1924 you had to pay 4 trillion Marks for a newspaper, but even then the news was the wurst.

The good news is that the Germans could pay off their mortgage with cheap money, right?

No.

While their money melted away in a blizzard of banknotes, their debt was (eventually) tied back to the new currency that replaced the inflated mess.  As an example, mortgages were revalued at 25 billion (yes, billion) times their value in the inflated currency.

Surely they did the same thing with depositors, right?

Of course not.  In some cases bonds were revalued, but only at a tenth of the value of the mortgages.  As always, there were winners and losers, and, as always, most people aren’t in the club that allows them to make out like bandits while the economy collapses around them.

My crack research staff uncovered that Adams never said that even though it sometimes is attributed to him.  It took a Google® search and one result.  Arduous.

As I write this, a $2.3 trillion dollar spending plan was just passed by Congress.  Nearly a trillion dollars of that is going directly to people, many of whom badly need the cash.  Trump wants to hold out to double it, since as we’ve seen, what’s another trillion?

The rest of the bill is packed with nearly six thousand pages of “stuff”.  Since it’s well known that most Congresscritters can’t spell or type, who wrote those six thousand pages, filled with things like making unauthorized downloads of movies a felony, $30 million to set up the Martin Luther King, Jr./Mohandas Gandhi Scholarly Exchange Fund.

Sounds like CoronaBux for Leftists complaining about how awful the United States treats the hordes of people that keep trying to sneak in?  Probably.  I could go on and on about the rest of the money we’re shooting like water out of a Super Soaker™, but I won’t.  The point is, since we’re in a budget deficit already, this is just printing more money.

Okay, this one might have been a bit made up.  And Gandhi was notorious for being able to put back six or seven bacon cheeseburgers at a sitting.

Not all of this money will go directly into cash.  But some of it will be quickly recycled back into the United States as cash:  we lend Egypt a billion or so to buy guns and jet fighters and bombs, and that money goes, partially, to the salaries of the Americans who make the stuff.

And from there right into that M1 graph.

The one thing I know is that vast amounts of money sloshing around within our economy have consequences.  Right now, some of those consequences are being held in check – a steak today costs about the same as a steak last year.  Gasoline costs less than gasoline did last year.

Why?  Most commodity prices that I’ve tracked are still declining, and have been for nearly a decade as the Everything Bubble that followed the Housing Bubble funnels investments into ever-lower returns.

As I’ve said before – we will have inflation.  But we will have deflation first.  And when it whips back into inflation?

Well, thankfully, I’ll have a graph for that . . . .

Money In 2021: What’s Next?

“I picked a hell of a day to quit drinking.” – (Randy Quaid) Independence Day

When the aliens finally decided to invade Earth, they started with Poland – didn’t want to ignore local customs.

2020 has been . . . unexpected.

If anyone would have submitted it as a draft for a screenplay, Hollywood would have rejected it since it was too farfetched.  Unless Randy Quaid was in it, flying a biplane to attack aliens.  Then it would have made perfect sense.  Oh, wait, a high ranking Israeli says we’re already in negotiations with the aliens?

Never mind.

That being said, 2020 is (thankfully) nearly over.  That gives us a chance to look forward to 2021.  Keep in mind that no one said that 2021 would be better . . . we just seem to hope it will be better.  It certainly is time, however, to look forward.

I know that whatever things we think 2021 will bring, the actual events of 2021 will be crazier than that.  Regardless of who is inaugurated on January 20, 2021, what are some of the things that we can look forward to?

Here are some of my guesses:

Congress and whatever President we have will keep spending as fast as they can.  Taxes may or may not be raised, but they certainly won’t match the increased spending.  Obama nearly doubled the national debt – he took the United States from $11 trillion in hock to $20 trillion.  Right now, after four years of Trump, we’re at $27 trillion or so in money owed.  This is completely on track to take the national debt to at least $36 trillion in the next four years, which is a little more than I have the last time I checked around the couch cushions.  But I did find out where all the spoons were going.

And to think I’d blamed Pugsley.

The Presidents of the United States must all be Irish – during their terms the debts are Dublin.

But $36 trillion in debt?  That’s certainly gonna leave a mark.  Like Oprah’s dressmaker learned after Oprah demanded Spandex®, you can only distort an economy so far and so long before there are consequences, and I expect that this is near the breaking point for ours.  Thankfully, when Oprah’s dress finally went, the injuries to her crew were covered by worker’s comp.

Of course, I’ve been wrong before.  I would have thought this level of debt was poisonous.  If it was, it’s at least been a slow poison.  The system is so broken that interest rates are low, in some places less than zero.  For now.

Is that enough of a bright side?

The biggest consequences of the money printing will first show up in third world nations with relatively weak economies.  The big consequences of COVID-19 have shown up here already in the damage to the economy of the United States.

In a globally connected world, however, the consequences of United States monetary policy don’t show up in the United States first – they show up first in economies where people don’t make much money.  The “Arab Spring” that led to revolutions across North Africa and the Middle East were a direct consequence of the United States spending money like . . . well . . . Democrats in charge of the presidency and the legislature.  The Syrian Civil War is a direct consequence of the Federal Reserve’s® response to the Housing Bubble.

If you watch an Apple® store get robbed, does that make you an iWitness®?

Don’t tell me that bad lending habits don’t have consequences.  When you see riots in the streets of Cairo or Mumbai or Carcosa, you know that the big consequences from the money printing have hit the world.

Once that happens, be prepared for inflation showing up at home.

Poverty rates will greatly increase in the United States, at least in the first half of 2021.  Sure, there have been billions spent on COVID-19 relief.  Almost all of it has gone into the pockets of big business.  People on the streets?  Not so much.  In some places, businesses are locked down.  In others?  Businesses are going, but limping along due to the consequences of previous lockdowns.

I heard Bernie likes to fight poverty – every weekend he goes out and slugs homeless people.

When businesses can’t afford to pay people, poverty is the result.  The average American had only small amounts of savings – by one measure I found, nearly 70% of Americans have less than $1,000 in savings, which is only enough for a minor emergency.  After that, who can say?

The economy is in the process of fundamental change, and the middle class will significantly decrease in the next year.  What has been conserved after the Coronavirus Collapse®?  Big business has done great.  Mom and Pop restaurants?  Horrible.  Modern Mayberry’s main business district got hollowed out long ago by Wal-Mart® – as did most business districts across the Midwest.

All of the small businesses are struggling – imagine owning a theater that hasn’t shown a movie in nine months.  The local theater was even broken into during lockdown – thieves stole $7,000 in merchandise – two small sodas, some Mike and Ikes® and a medium popcorn.

The transfer of economic power from small business to large has been going on for years.  The space for a small business to compete is getting smaller and smaller.  One local shop did 90%+ of its business in online sales.  Amazon® made one small change to the way that affiliates were paid and deleted the business in three months.

That business is now gone, but Jeff Bezos now has a net worth of over $200 billion – which we can all agree is an expensive net.

I got my degree in kids’ medicine online, too.  You can call me a Wikipediatrician. 

And the people going into poverty?  They won’t exactly be customers of restaurants – eating out will become (if it hasn’t already for them) an easily avoided expense.  People will actually learn to cook again.  Which doesn’t help Mom and Pop.

China will be very close to surpassing the United States as the largest economy in the world in actual GDP.  China’s economy grew last year, while the United States contracted.  Even though China has a lot more people, this still translates into political power on the world stage.  Everyone has been predicting that China will collapse for, oh, 25 years.  Instead?  China has grown relentlessly.  Sure, there are structural weaknesses, but it’s hard to bet against that kind of economic inertia.

Why didn’t Chinese factories close during the pandemic?  Kids don’t catch COVID-19.

How does this impact the average person who isn’t Chinese?

Well the good news is that if you like dollars, they’ll still be useful.  But as other countries, like China, grow relatively stronger, the dollar grows relatively less powerful.  Especially if the United States mains determined to keep printing them as fast as it can.

I’ll toss it over to you, now.  Outside of Randy Quaid in destroying the alien mothership, what do you expect to see in 2021?