The Myth of Libertarianism

As she sipped her latté, the woman announced with pride that while she was conservative, she was certainly not a Republican. Perhaps hoping that nobody would call her out, she confidently proclaimed, "I'm a Libertarian."

I can't help it. Sometimes I'm just in a mood, and sensing her millimeter's depth of political knowledge, I couldn't resist asking her exactly what being a Libertarian entailed. To be candid, half of me really wanted to know, but to be completely candid, I really sniffed an incoming crock of bat dung coming my way. I was not disappointed.

"And what," I inquired, "makes you a Libertarian?"

She took a thoughtful drag on her cigarette and striking her most intellectual pose, began her treatise. "I'm just not aligned with any political party. After all, they're both really the same. I'm of the view that people should be able to act independently as long as they don't hurt anyone else."

Well, that sounded simple enough. She prattled on a bit more, tossing her word salad with phrases such as laissez-faire and anti-statism. Before long, it was clear this woman was the human equivalent of a poorly trained myna bird, with almost no understanding of any topic at all. "I think people should be left alone, without any government interference," seemed to be her favorite platitude.

That's when I stopped her in order to ask a question: "What about abortion?" I figured I'd start with the toughest example and ease up from there.

"What do you mean?" she asked. "Well," I began, "Seems to me that if you're pro-life, you'd be against abortion." She disagreed with that. She insisted that preserving a woman's right to an abortion was consistent with the Libertarian rejection of authoritarianism. "Interesting," I responded. "If you were truly LIbertarian, wouldn't you leave the decision up to the baby, rather than inflict your authority over another person?" She didn't like that.

"Another thing puzzles me," I continued. "Legally, if a woman chooses to have the baby, the father is on the hook for child support. He has no say as to whether to abort or not, correct?"

"Correct," she replied. "Okay," I replied. "But if that's the case, if she makes the decision against the father's will, is she not imposing her will on him? And wouldn't that fly in the face of Libertarianism?" She had no response to that one, but it didn't matter. I was just getting started.

"Further," I queried, "Libertarians believe taxation is theft. But they also believe a minimal government is obligated to defend its country. How is a government supposed to pay for the military and law enforcement if it doesn't levy taxes?" She answered that one with another, long, silent drag on her cigarette.

"And that's the fallacy of Libertarianism, "I lectured. "It's purely selfish and completely amoral. It kicks fiscal realities down the road and leaves moral and ethical questions unanswered. Whether you like it or not, the question of one's liberalism or conservatism isn't one of politics; it's a question of ethics and morality. That's why conservative people tend to be religious and theist, while liberals and Libertarians tend to be areligious and atheistic. Libertarians reject all forms of authority in favor of self-centered individualism. But a society of individuals is not a society at all. A society, especially a free one, is glued together by common values, ethics and morals. And that's why Libertarianism is myth. No society or country can survive as such."

I stepped off my soapbox feeling pretty good about myself. "So which are you -- liberal or conservative?" "I don't know," she mused. "I'll have to think about it."

"And that," I smiled sincerely, "is the wisest thing you've ever said."

Sound as a Dollar

At the time of this writing, if you listen to any media, you're convinced that the world is about to end and that the United States -- as we once knew it -- will cease to exist.  Pundits the world over are selling clicks and ads as they conflate a myriad of events that in reality, seem to suggest that everything is inextricably tied together through cause, correlation or both.  Front and center is the usual conclusion that "this means the end of the dollar as the world's reserve currency."

But is really? As I've mentioned so many times previously, I'm just a brand strategy guy, but throughout my career, I've managed to untangle some of the worst commercial spaghetti in order to get a clear view of what's happening and more importantly, what's not happening.  So how about we take a giant step back and look at the situation from the 100,000 foot level, high above the media spin of manufactured crises?

At the time of this writing, we've seen a bunch of really stupid banks make really stupid decisions, resulting in their being dissolved and their assets being sold off at bargain prices.  Bad news for them, good news for the buying banks, who are buying healthy, performing assets for as little as 20¢ on the dollar.  Believe me, if I could walk through life doing that, I'd be building houses out of gold bars.  Another result of the Biden incompetence is that the previously artificially inflated Fed rates have dropped like a brick, so while not as low as they once were, at least some home and car loans are more affordable.

So what does that mean for the good old U.S. dollar?  If you listen to the media, they'd have you believe that China, Russia, the Middle East and just about every other not-so-friendly region is taking advantage of the situation to destabilize the dollar as the world's reserve currency.  Really?

For the those unfamiliar, the phrase world reserve currency means that  no other country on the planet trusts the value or stability of any other country on the planet. So when France does business with Zmibabwe, they both agree to conduct the transaction in U.S. dollars.  There's more than one reason for that, but among the top few are:

1. The United States of America is the most politically stable country in the world.

2.  The United States is the most physically secure country in the world.

3.  The United States is the most economically powerful country in the world. 

If you find those hard to believe, ask yourself why virtually all the gold reserves owned by virtually every other country is stored in the United States, either in the New York gold depository or Fort Knox. Transferring hard assets like gold is not like breaking up with your girlfriend -- you don't just show up with a pick up truck to move your gold back home.

And if you haven't been paying attention, the sworn mortal enemy of the United States, the Chinese Communist party, has been dumping their ill-gotten gains into American real estate for years. And they're not doing it to have a nice summer home.  They're actually overpaying for the opportunity because they know their currency is an unstable as a propped-up currency gets.  That's why they buy dollars and then dump them into real, tangible performing American assets like real estate.

Additionally, let's add in the notion that the United States is really, really difficult to invade.  It's bordered by two expansive oceans and two "friendly" weak nations who depend on us for their existence. Every other non-North American country is bordered by at least one other country of whom they're suspicious, if not downright hostile toward.

So where does this leave us? Well, this is the brand strategist talking again, and here's the long play as I see it:

In the short term, China, Russia, the Saudis, North Korea, the entire continents of Asia, sub-Asia and Africa will rattle their sabers as they mock the Biden impotence. But if history is any indication, that won't last long. OPEC has been brought to its knees more than once. Embargoes usually fail. Alliances get undercut by backroom chicanery. And through it all, the United States remains the land of plenty.  Plenty of energy, food, and natural resources for a self-sustaining economy.

So after the kids are finished and the adults take the wheel, everyone will come running back to the dollar as the world's reserve currency.  And old Uncle Sam, if he's smart, will re-establish domestic industries and programs, and will have learned the simple lesson that even Dorothy had to learn from experience:

There's no place like home.

Messy Hair & Busted Banks

As is so often the case, I found myself in a political conversation.  This time with someone who was expressing her dislike for former British Prime Minster Boris Johnson. "Ugh," she grimaced, "I would never support him.  He's awful."

I found that intriguing. "And which of his policies, "I queried, " do you find so objectionable?" My question was followed by stunned silence. I waited.  And waited. After a minute or so, I couldn't resist:

"You have no idea of ANY of his policies, do you? You just don't like that he's fat and his hair is a mess."

Her sheepish grin indicated I was right on the money. She's an American. She doesn't follow British foreign or domestic affairs. But she does watch American mainstream news, which displays large, bright publicity photos which constantly confirm that Boris Johnson truly is one unpleasant-looking man. But no matter how disheveled he appears, can it be that people really form their opinions on such little, irrelevant information?

Sadly, the answer seems to be yes. Too many people don't take the time to understand what's happening or why it's happening. They simply eat what the mainstream news serves up -- which is often painfully misguided.  And nowhere is this more true than the latest (March, 2023) banking turmoil afflicting the United States (and echoing around the planet). 

Allow me to explain, because no doubt, you're going to find yourself in a similar situation, where you have to educate and explain about banks and their failures:

The first thing people need to know is how the American banking system works, which is unlike anything you and I practice as private citizens. American banks make profits by lending out money. They lend the money their customers (depositors) entrust with their savings. The banks pay the depositors, say 2% interest on those deposits and they charge 6% to borrowers for loans.  That's a 4% profit margin, right? 

Wrong.

As private citizens, you and I can't lend out more money than we have. But thanks to government reserve requirements, Federally chartered banks can lend out up to five times the amount of money they possess.  That's right, banks need only 20% of the money on hand to lend out five times that amount in loans.  Multiply the aforementioned 4% by five and now you can see why banking is such a great business. The reasons why this system is in place are as follows: 

First, the system relies on creditworthiness of borrowers to pay back loans, so nobody really is taking real cash out of any accounts.  They're making promises to pay the loans back and they usually do -- or suffer harsh consequences.  Second, as long as the creditworthiness holds out, lending five times as much money as you have accelerates economic growth:  more loans to more businesses means more people do more business -- generating more taxable revenue. Third, the Federal government tries to assuage depositors' fears by insuring each account's total deposits up to US$250,000.

As precarious as it may sound, most of that works just fine -- most of the time.  Every so often, however, bankers may be greedy or just plain stupid -- or both.  And that's when things go south very quickly.  This aptly describes the geniuses at Silicon Valley Bank (SVB), the piggy bank of some of the most reckless tech investors in the world.  Here's what happened:

If you didn't know, SVB is centered in the heart of the most woke, left-leaning, well-monied community in the country. These are people who, like my friend above, donate and support political candidates pretty much based on what little they know politically.  They're the same with their investments. And most of the time, it works for them.  

Remember that 20% reserve requirement? Well, like so many other bankers, the masterminds at SVB decided that simply holding that 20% in cash seemed awfully tempting.  After all, that 20% represented billions of dollars and it seemed a shame not to invest it.  So like other banks, when interest rates of Federal Treasury notes (bonds) started inching up from zero to 1.9%, SVB scooped up as many as they could find, telling depositors that these were safe, low-risk, government bonds.  To anyone not paying attention, that probably sounded like a smart move after so many years of interest rates being near zero.  

And that's where the problems started.  It sounded like a smart move. Because nobody knew enough to question it. The big secret about "safe" bonds is that nobody holds them to maturity. They buy bonds hoping future rates will go down, making their bonds more valuable to sell at a profit.

But this time, it didn't:  Because within a few months, all those bonds paying 1.9% were eclipsed by bonds paying well over 3%, which rendered those 1.9% jobs practically worthless.  SVB couldn't unload those bonds to anyone, because everyone was busy buying higher rate bonds.  Pretty soon, when SVB customers tried to withdraw cash from their accounts, there was no cash was available. Not for bills, payroll, or anything else.

Some people were told not to worry, because the Federal Deposit Insurance Corporation (FDIC) insured their accounts up to US$250,000.  That was all well and good until the bank revealed that only 2.5% of deposit accounts were valued at US$250,000 or less.  The rest of the depositors' accounts -- some 97.5% --  far exceeded that amount, ranging into the millions and even multi-millions.

Poof.  Gone. And that's when the state and the Feds closed down the bank.

At the time of this writing, nobody knows for sure how or when SVB will be bailed out. If recent history is any indication, ignorance, mediocrity and stupidity will create a program that will funnel your tax dollars into a program designed to save a severely corrupted system.  Nobody will be held accountable. And the people and politicians who knowingly allowed it to happen will likely suffer no consequences.

But at least now you know what happened and why.  Maybe that will teach people that when making really important decisions, there are many more important issues to consider than, say, messy hair.

The Speakeasy

"You may remove your blindfolds now," said the man in a calm, gentle voice.  "Once again, my apologies for the drama, but I think you'll understand their necessity as the evening progresses."  We removed our blindfolds and found ourselves standing together in a group before a maitre d' impeccably dressed in a black tuxedo with a red rose bud tacked neatly to his lapel. "Please," he smiled as he gathered up our blindfolds, "follow me to your table.  I think you'll find we have a lovely spot for you, right in front of the picture window."

The first thing I noticed was how amazingly tranquil the place was. Not completely silent, but other than the low murmur of distant conversations at the other tables and the occasional clinking of glasses, the place was remarkably quiet.  Very relaxing. Even the lighting was soft and warm. We followed the maitre d' as he glided across the lush carpeting to our table, which was exactly as he promised: Six upholstered dinner chairs surrounding a linen cloth covered table, at the center of which was a small crystal bowl arranged with a small bouquet of freshly cut flowers.

"Your host will be here directly," he intoned as we took our seats. "In the meantime, may I offer you a drink?" We were halfway through our order when our host greeted us with a smile. "Well," he grinned as he took his seat, "what do you think?"

I have to admit, we were impressed. The view out the picture window overlooked a vast, green valley that swept down to the bay. On the horizon, miles away, city lights twinkled through the twilight as the sun set behind them.  In just a few moments, the entire sky was a gradation of blues.  We could feel how special this was going to be."Romantic, isn't it?" asked our host. "You know, there was a time when all the good places were like this. Super classy. Not so much anymore, am I right? Just a wonderful place to be...and wait until you taste the food. Incredible." 

We tried to remain polite, but it didn't take long until one of us had to inquire: "What's this placed called?" I asked.  Our host smiled and looked at each of us intently.  "It has no name," he quietly answered. "It has no address and it doesn't take credit cards. Very few people even know about it.  You should be honored to be here."

I immediately began questioning things in my mind.  How can a place this large and luxurious maintain any kind of secrecy?  There were staff, waiters, bartenders, bellhops, concierges -- a veritable army of employees.  Finally, I broke the silence and asked what everyone else was thinking.  "How can something like this remain hidden?"

Our host leaned back and took a sip of his 30 year old scotch. "It's a product of, shall we say, natural selection.  Look around this room. What do you see?  Men in jackets and ties.  Women in dresses.  Children sitting attentively, having conversations with their parents."  He leaned forward in his chair. "You won't hear someone else's loud music blaring in your ears and you won't see people shoplifting napkin rings from their tables. Everyone here wears sensible shoes. They dress respectfully and act appropriately toward one another. Everyone here actually appreciates this place and realizes that if its existence ever became public knowledge, the government would open it up to the public, which would close it down immediately."

In that moment, we all knew why we'd been blindfolded. We all knew that we must have been screened and judged worthy of membership.

"This is why," he continued, "nobody knows anyone else's name and nobody can pay their tab with credit cards.  The entire operation is 100% undetectable -- as it should be."  He waited a beat, raised his glass and smiled once more. "Welcome," he toasted, "to the last vestige of civilization."

I'm pretty sure we were all taken aback by his revelation, but in fact, the entire meal was less about the food than it was about a lost dimension of reality.  The more we looked about, the more we noticed that nobody was on his phone.  In fact, there were no screens of any kind to be found anywhere. It was almost as if the evening has been suspended in time, where every word of conversation could be considered and every drop of wine could be savored. There was no place we had to be; no reason for interruption.  It was, in a word, glorious.

Our host looked at us.  "There was a time when places like this flourished out in the open. Anyone who could afford the experience was welcomed. Of course, that was before anything and everything was attacked as being exclusionary.  The forces that govern us determined those places had to open their doors to anyone at any time. It didn't take too long for all of them to deteriorate into the kinds of places where people steal, shout over their loud music and engage in fist fights.  Not too long after, all of those places closed down."

He smiled thoughtfully and looked down at his drink.  "Oddly, the very people who demanded access are the very ones who destroyed it.  A shame, really. In any event, now you know the reason for all the drama and the secrecy. In time, we may approve you as members and you may visit us again. For now, think of us like the speakeasies during Prohibition. That lasted about ten years and then the country came back to its senses. So for now, we're here, but we're not here -- at least not until the climate improves."

The rest of the dinner was just as remarkable.  The conversations was good, the desserts even better.  As we rose from the table to leave, the maitre d' appeared and handed each of us our blindfolds. Donning them securely as we entered the limousine, we all knew we'd experienced a visit to long-forgotten civilization. We'd taken a trip back through time, when life was a series of honor and challenges, respect and rewards.

We'd been to the mountain top and liked what we saw. We knew we'd come back. Until then, we'd vigilantly guard the secret and work for a better day -- knowing that millions more like us had already made their reservations.

You Can Stop Apologizing Now

At the time of this writing, it's Labor Day in the United States.  To the uneducated, the day marks the end of summer vacations and backyard barbecues; yet another day off as guaranteed by the Federal government. To the more respectful, the day celebrates the hard, often anguishing efforts of the men and women who, with their bare hands, keen minds and powerful machinery, built this country into the most powerful and prosperous nation this planet has ever known.

No doubt you've heard the litanies of praise lavished on labor. I won't bore you with sophomoric glorifications.  Just take a look at everything from Hoover Dam to the moon landing to highways, bridges and nuclear medicine therapies.  In fact, look anywhere and everywhere and you'll find that American labor has touched and improved every single aspect of your life.

But that's not what I'm focused on today.  Here's what fascinates me:

Take a nice, long look at that map of the world. That's a lot of people living on the entire land mass of the planet:  roughly 200 million square miles. Of that, western civilization -- the stuff and culture that's made your life so wonderful -- covers a minor fraction of that. And on that minor fraction, a minor fraction of the planet's population, specifically Western Europe and the continental United States (marked in red, above), are responsible for virtually all of the philosophical, practical and scientific advancements that have driven world prosperity up and world poverty levels down.

Now look at the other 90% of the planet.  The parts that aren't in red. Larger continents.  Greater populations. Varying climates.  Immense stores of natural resources. From the 100,000 foot level, you have to ask yourself why would the vast majority of human advances -- what we refer to as western civilization -- emerge from such a small fraction of the planet?

You can analyze this question from almost any angle, but chances are that fear is going to prevent you from accepting the only actual, rationally based answer:  Western culture is simply structured differently and not everyone gets it. 

Let me be blunt: The key to the success of western civilization has nothing to with race, although there are lots of ignorant people who would like to think so. No, the key to the success of western civilization is its core cultural values: productivity, efficiency, betterment and industry.  The culture, being as successful as it is, may have been founded in a region populated by white people, but those people never excluded anyone from participating in its success. In fact, their systems of capitalism actually welcomed them, because the watchwords for western civilization are "the more, the merrier."  Western civilization just gets better for everyone in direct proportion to the number of people who embrace it.  Capitalists call this "growth," and for the most part, growth delivers more benefits at lower prices, making it more accessible to those regions who couldn't come up with this stuff themselves.

And yet, there are morons who seem to think that prosperity is a function of racism.  Nope.

Holding hands, singing Cumbaya and handing out participation trophies may be popular in universities and children's soccer leagues, but it has no place in western societies. Don't believe me? Fine.  Do your own research.  See who's invented what and how they changed the entire world, not just their own.  

Are the majority of them white? Oh well, that just how it goes and has been going for centuries with virtually no barrier to entry for anyone choosing to get in the game. And if you doubt that, learn some history.  Find out about the non-white successes who embraced the system instead of sitting on the side of the road with their hands out.

Those are the facts. It's just not politically correct to say so.

So if you're a product of western civilization, for God's sake, stop apologizing for being a part of a system that's made the world a better place for everyone, for hundreds of years.  It's a proud, industrious and accomplished heritage; one whose detractors consist of little more than jealous, lazy whiners.

Happy Labor Day.

The Pony in the Room

There's an old joke about a man who offers two kids a free pony, the only condition being that they have to get the pony out of a room where it's behind a closed door.  The kids open the door to find the room is filled with horse shit six feet high.  The first kid frowns and says, "I knew it was a trick," while the second kid plunges forth, burrowing through the manure. The first watches his friend and asks,, "Are you crazy? What are you doing?" to which the second kid answers, "There's got to be a pony in here somewhere!"

Believe me, my crystal ball is probably no more accurate than yours, but back in November, 2020, I wrote a lot about how things in the United States were going to slide from good to bad to horrible in a short amount of time. A lot of people made that call, because judging from the people who took office, it wasn't a particularly tough call to make.  Citizens moaned and people cried.  But that's where most them stopped.

I didn't.

Being an eternal optimist, I immediately started looking for the pony. Yes, the economy was going to get wrecked, so to avoid getting dragged down into the abyss, the first thing I did was sell off non-performing assets, while keeping the dividend-paying equities. The second thing I did was to start hoarding cash. Not just to mitigate the effects of any upcoming crash (which actually occurred in June 2022), but also to prepare for the moment when anything and everything would be selling at fire sale prices.

It's called a "buying opportunity," and my wait wasn't very long.

If you've been living under a rock since 2008, you may not know that the American economy has been kept afloat by the Federal Reserve keeping money cheap and easy to get. They did that by keeping interest rates low. As a result, buying stuff became super affordable, so people kept buying stuff and the economy boomed. And then November, 2020, happened.  All of a sudden, every wrong decision that could deliberately be made about the American economy was indeed made, and the downward spiral began. The party was over. There wasn't enough product to buy, so prices on product that was out there -- fuel, housing, and food shortages -- starting going up.

Traditionally, the antidote to inflation is for the Federal Reserve to raise interest rates, which would have slowed the economy and lowered prices.  Unfortunately, the folks in charge didn't realize that tactic only works in a free economy, not in a system where arbitrary policies counter every market behavior known to man. Apparently, over 65% of the current administration has never run a business or held a job outside government, so there's no mystery there.

Which brings us to the moment I've been waiting for.

As interest rates rise, employment drops and money tightens, one of the biggest fire sales you've ever seen is going to open for business.  Just watch as people who thought they could afford that house or that car face up to the reality that there's no way they can afford either.  They'll be forced to sell, and not at any kind of profit, because there will be lots of houses and cars and big ticket items on the market, all being sold by owners who no longer have the means to pay for them -- because they're no longer employed. In fact, there will be tons of stuff marked way, way down, only to be scooped up by those who have the cash for a sweet, quick, below-market deal.

Remember all those people whining about housing not being affordable? All those complainers moaning about stock prices being too high? All those miscreants who figured they were one diversity program away from prosperity?  Well, you can tell them their time is coming, too.  Everything is about to go on sale. America is going on sale.  The inclusive buying opportunity is almost upon us, where everyone gets to scoop up the bargains.

Get ready.  It's time to pony up.

My Trip to the Voting Booth

At the time of this writing, it's election time in California. So on the advice from one of my friends, I decided to junk the mail-in ballot and vote in person at the local polling station. It was the first time in decades that I didn't vote by absentee ballot. 

After locating my local polling place, I walked into the cafeteria at Valley College to do my part for American democracy. I was greeted by at least 20 signs in 30 different languages, each one attempting to direct voters of every race, color and creed on how and what to do next.  It was early in the voting period, and while there must have been close to 50 voting machines, there were just a few people actually voting. 

I took a long look around. "Boy, a lot has changed since I last voted in a booth," I thought to myself. And from what I could tell, these were not changes for the better. 

Not that I'm by any means an expert, but I spent a lot of my career nurturing information technology clients in Silicon Valley, so I have just enough knowledge about this stuff to be dangerous. Nevertheless, I can tell you without reservation that everything I observed pretty much confirmed the viability of every theory of voting fraud I've ever heard. 

Stick with me, because this is not what you think.

To begin with, it's clear the voting machines were designed to foster the notion that we're still using "printed ballots." We're not. Oh, you're handed a paper ballot, but that hardly matters, because all your voting is done by touch screen.  By touching the screen, you're sending a digital signal that can be stored, transmitted, read, altered or eliminated by anyone, anywhere along the way from vote cast to vote count. The "printed ballot" is nothing but a prop. The real data is encoded when you select your choices and hit the "Submit your ballot" button on the screen. 

The digital stuff not only manages and records your votes' values, but also draws your votes really beautifully on the paper. The fact that it looks as good as it does confirms that your choices were digitally translated and designed according to the voting machine's layout program.  So no matter what the polling people tell you, your votes were digitally encoded the second you cast them.

After you vote, the machine lets you inspect the printed piece of paper to confirm your choices, but then it insists that you feed it back into the machine, ostensibly so it can be tallied. I say ostensibly, because the digital information has already been trapped by the machine and could be anywhere on the internet.  Which led me to the following question:

Why even bother with a printed ballot, unless you want people to believe they're really voting with a paper ballot?  

There's no way anyone other than a highly-trained techno-professional could tell what's being transmitted where, but I can tell you this much: Throughout the entire experience, people's phones were going off all over the place, which means the facility was not RF protected, and that any digital device from cell phones to bluetooth modems could have been sending anything, anywhere, at any given time. 

Not exactly high security. Especially when you consider that most courthouses block RF frequencies in order to keep their proceedings secure. That's why you can't use your phone in a lot of trials. Heck, even music concerts have wireless blocking technology to keep audiences from streaming the shows to their friends in real time on Facebook or Instagram. 

But your local polling place has nothing. It's wide open for anyone to intercept anything. 

Overall, my visit didn't do much to instill much trust in the system. In fact, it only increased my concerns about the integrity of our election systems.  I don't know if the game is rigged, but I do know that Josef Stalin was on to something when he mused how getting votes isn't nearly as important as counting them.