Zenconomics

Raising Children in the Modern World

submitted by jwithrow.

Journal of a Wayward Philosopher
Raising Children in the Modern World

December 17, 2014
Hot Springs, VA

The S&P opened at $1,972 today. Gold is back down to $1,198 per ounce. Oil is down to $56 per barrel. Bitcoin is down to $322 per BTC, and the 10-year Treasury rate opened at 2.08% today.

Both oil and the 10-year rate are closing out 2014 at price levels much lower than most analysts anticipated which sets up for an interesting 2015. Will crude prices remain at current levels and put the squeeze on the U.S. Shale revolution? Will interest rates remain low and complicit in enabling the Treasury to service the $18 trillion national debt without much fuss? We shall see.

As for the S&P, it has been 6 and a half years since it experienced a correction of 10% or more. But markets cannot go in one direction forever – that 10% correction is coming. I have seen some predictions of a major 10%-plus correction sometime in the spring of 2015. It may be more like 50% if the correction is coupled with the fiat monetary crisis that is on the horizon but I think we may still be a few years away from that one. Instead, it is more likely that a major stock market correction will spur the Fed into QE4. Either way, it is advisable to be very vigilant if you have money in the equity markets.

Shifting gears, I have been thinking quite a bit about child-rearing given the arrival of Maddie Lynn eight weeks ago. I have come to the conclusion that our culture today has become much too rigid and regimented when it comes to raising children in our fast-paced modern world.

School days have gotten longer, homework loads have increased tremendously, grades are now emphasized heavily, standardized testing has been implemented and enforced across the board, the number of adult-organized activities for kids have exploded and, as a result, childhood stress, worry, and fear have increased dramatically.

Studies conducted by Jean M. Twenge at San Diego State University suggest that youth anxiety and depression have been trending higher rather sharply over the last fifty years. Perhaps more troubling, Twenge’s research suggests a shift in motivation amongst kids from intrinsic to extrinsic values; kids now tend to be more motivated by popularity and money than self-acceptance, moral character, and community.

The reason for this shift is rather clear to me: American childhood is now more about meeting adult expectations and less about personal growth and development. Observe the parents at a youth sporting event and see if this statement isn’t true. Now the parents mean well, don’t get me wrong. But too often they think their child’s future depends exclusively upon performance in school, performance in athletics, performance in extra-curricular activities, or some other external measurement of performance so these things are all pushed on kids to the point where their own interests and talents are subordinated.

Studies by Peter Gray show that childhood free time has been declining steadily since the 1950’s including a decrease in free play as well as time spent talking to others at home. Meanwhile, time spent on homework has increased 145%.

The government school system equates more homework with more learning. In reality, homework serves only to replace students’ individual interests with the Department of Education’s mandated curriculum. At best students memorize the mandated curriculum long enough to pass the standardized test and then they let it go. At worst they think the curriculum is useful and they retain it at the expense of pursuing their own passion. The truth is memorization is not learning; it is a waste of time and energy.

Real learning can only occur when the individual has an interest in the topic and is free to explore that topic in his or her own way. Children need to be free to make mistakes, analyze those mistakes, and then attempt to correct the mistakes. Instead, the current model of education teaches children that they will be judged and punished if they make a mistake so students learn to fear mistakes above all else. This mentality has the potential to set them up for a very restricted adulthood in which they shy away from opportunities for fear of making a mistake.

Ultimately we need to ask ourselves what is truly important for our children. This will be different for each family and that should be embraced, not ridiculed. There is no reason to think everyone must adopt the same parenting style or that every child must receive the same education. In fact, a free society requires diversity and the sharing of unique ideas in order to thrive.

So what’s really important for our children?

Good grades and getting into a good college? This looks like an outdated model to me – it is exclusively designed to produce good employees. But we are moving away from a ‘jobs’ based economy and the availability of traditional full time employment with comprehensive benefit packages will continue to diminish over the coming years and decades.

Becoming a superior athlete? My observations suggest that youth athletics are much more important to the adults – school employees, coaches, parents – than they are to the kids. Too often youth sports are a chore rather than a joy.

Participating in as many extra-curricular activities as possible? Again, these are often more important to the adults than the kids. Children should certainly be free to participate in whatever groups or activities interest them but too often they are pushed in the adult’s favored direction instead of their own.

I am convinced that a childhood free to grow and develop in a unique way is the most important gift parents can give their children. I think children need more guidance and less teaching; they should be encouraged to discover and pursue their own passions and interests without the pressure of forceful expectations. Pair this method with sound financial education and an IBC insurance policy that has been capitalized for 18 years and I think you have the makings of a creative, self-driven adult capable of thriving in a rapidly changing world.

Of course these are just this philosopher’s humble opinions.

More to come,

Joe Withrow
Wayward Philosopher

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

Debt as Far as the Eye Can See

submitted by jwithrow.

Journal of a Wayward Philosopher
Debt as Far as the Eye Can See

December 9, 2014
Hot Springs, VA

The S&P opened at $2,056 today. Gold is up around $1,218. Oil is still floating around $64 per barrel. Bitcoin is down to $347 per BTC, and the 10-year Treasury rate is 2.21% today.

In other news, U.S. national debt has now eclipsed $18 trillion. That’s: $18,000,000,000,000.00. Debt to GDP is now around 99%. To put this in perspective, U.S. national debt stood at $398 billion back in 1971 – 34% of GDP – when Tricky Dick put the “Out to Lunch” sign up in front of the international gold window.

Even more startling, total credit market debt now checks in at 330% of GDP. Mr. Market has been trying to wind down the credit market bubble for some time now, but the Federal Reserve has been fighting tooth and nail against him. The Fed’s weapon of choice: funny money! The Fed has purchased more than $4.3 trillion worth of bonds since 2008 in an effort to prop up asset prices and strangle interest rates.

Where did the Fed get this $4.3 trillion? As we pointed out in last week’s journal entry, the Fed got this $4.3 trillion from the same place it always gets money… it conjured every dime of it from thin air!

Still, the economists pretend like this is all normal. Some of them say that the Fed should have bought fewer bonds; $4.3 trillion worth was too much. Other economists say the Fed didn’t buy enough! So they write their articles and conduct their interviews and everyone sleeps sound at night. I can’t help but wonder – do they think this can go on forever? Do they think the Fed can reverse course whenever they darn well please? Do they think at all?

I don’t know if mainstream U.S. finance really is arrogant enough to think there are no consequences to all of this financial chicanery or if they are just playing a big sleight-of-hand game, but the world seems to slowly be waking up to the fiat monetary system that has allowed debt to pile up faster than 5:00 Beltway traffic.

Though the Swiss Gold Referendum didn’t pass last month, it does suggest a change in the financial wind. The initiative would have prevented the Swiss National Bank from selling any of Switzerland’s gold reserves and it would have required a 20% gold backing to the Swiss Franc. The fact that this initiative made it to a vote indicates a growing apprehensiveness towards the international monetary system.

This apprehensiveness is not limited to Switzerland. Germany, France, Belgium, and the Netherlands have each expressed interest in repatriating their gold reserves held in foreign central banks. Additionally, both China and Russia have been buying gold hand over fist. The Russian Central Bank bought nearly 20 tons of gold in October alone. We don’t know exactly how much gold China has been buying – they haven’t reported their full reserve numbers in several years. China and Russia aren’t alone; global gold demand now eats up more supply than miners can produce at current prices.

2013 was a record setting year for precious metals purchases from the U.S. Mint and 2014 sales are on pace to surpass that record. The U.S. Mint sold 3,426,000 ounces of silver in November alone. Perth Mint sold 851,836 ounces of silver in November. India imported 169 million ounces of silver through the first ten months of 2014. The precious metals are clearly being viewed as a life-boat in a sea of rising debt.

In addition to the precious metal rush, several major U.S. financial firms have been using depressed interest rates to gobble up real assets recently as well. The Blackstone Group has been buying domestic real estate like it was last call and Berkshire Hathaway acquired Burlington Northern Santa Fe Corp (BNSF) – a railroad company. Shrewd analysts suggest Berkshire’s purchase of BNSF was a hard asset play to mitigate expected inflation; railroads are nothing but hard assets hauling other hard assets around the country.

Are all of the precious metal purchases and hard asset acquisitions just a coincidence?

Maybe deficits really aren’t that big of a deal. Maybe the Fed really can navigate through the uncharted waters of debt and derivatives. Maybe the fiat monetary system really has supplanted Mr. Market’s choice for good. Maybe financial asset prices really can go to the moon and never come back down.

But I wouldn’t bet on it.

More to come,

Joe Withrow
Wayward Philosopher

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

Image Source: WilliamBanzai7 – Zero Hedge

Real Money

submitted by jwithrow.

Journal of a Wayward Philosopher
Real Money

December 4, 2014
Hot Springs, VA

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

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

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

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

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

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

Our economy operates mostly on fake money.

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

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

Take your time, I will wait…

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

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

Hint: it’s the same answer as above.

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

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

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

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

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

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

More to come,

Joe Withrow
Wayward Philosopher

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

The First American Socialists

submitted by jwithrow.

Journal of a Wayward Philosopher
The First American Socialists

November 25, 2014
Hot Springs, VA

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

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

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

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

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

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

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

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

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

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

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

More to come,

Joe Withrow
Wayward Philosopher

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

Shedding the Institutional Mindset

submitted by jwithrow.

Journal of a Wayward Philosopher
Shedding the Institutional Mindset

November 19, 2014
Hot Springs, VA

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

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

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

Do well in school (an institution).

Rebel with music from the entertainment corps (institutions).

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

Get a university degree (from an institution).

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

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

Get a home loan (from an institution).

Build a 401(k) (more institutions).

Believe in democracy (a multilayered institution).

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

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

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

Watch the best in entertainment (corporate institutions).

Conduct your relationships on Facebook (a vampire institution).

Trust in Social Security and Medicare (Ponzi institutions).

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

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

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

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

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

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

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

The possibilities are endless!

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

More to come,

Joe Withrow
Wayward Philosopher

Macroeconomic Trends

submitted by jwithrow.

Journal of a Wayward Philosopher
Macroeconomic Trends

November 18, 2014
Hot Springs, VA

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

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

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

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

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

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

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

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

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

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

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

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

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

Until the morrow,

Joe Withrow
Wayward Philosopher

Preventative Care

submitted by jwithrow.

Journal of a Wayward Philosopher
Preventative Care

November 12, 2014
Hot Springs, VA

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

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

Then it ran out of silver to sell.

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

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

Shifting gears to continue with our recent health care theme…

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

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

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

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

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

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

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

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

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

More to come,

Joe Withrow
Wayward Philosopher

A New Healthcare Model?

submitted by jwithrow.

Journal of a Wayward Philosopher
A New Healthcare Model?

November 5, 2014
Hot Springs, VA

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

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

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

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

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

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

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

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

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

More to come,

Joe Withrow
Wayward Philosopher

Election Day

submitted by jwithrow.

Journal of a Wayward Philosopher
Election Day

November 4, 2014
Hot Springs, VA

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

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

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

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

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

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

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

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

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

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

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

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

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

Hmmm.

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

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

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

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

More to come,

Joe Withrow
Wayward Philosopher

Asset Allocation

submitted by jwithrow.

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

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

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

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

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

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

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