submitted by jwithrow.
Journal of a Wayward Philosopher
The Great Opportunity
August 26, 2015
Hot Springs, VA
The S&P closed out Tuesday at $1,873. Gold closed at $1,138 per ounce. Oil closed out at $39.31 per barrel, and the 10-year Treasury rate closed at 2.00%. Bitcoin is trading around $229 per BTC today.
Dear Journal,
My last entry suggested that the centralized nation-state model looks to have peaked in the 20th century. I speculated that troubling macroeconomic trends related to government interventions will lead to a “Great Reset” sooner or later – probably sooner – as these massive nation-states are forced to ramp up the printing presses in attempts to service all of their debt and unfunded liabilities.
Today I would like to point out that we are approaching a crossroads and there is a tremendous opportunity for the growth of free markets and prosperity if we can shed the 20th century paradigm of centralization. A great golden age for civilization is staring us right in the face, but few have noticed. Why? Because we have placed too much emphasis on politicians, presidents, elections, and democracy and too little emphasis on individual self-empowerment.
For starters, consider the following advancements: indoor plumbing and electricity, refrigeration, cooking appliances, heating & air systems, local and long-distance transportation, local and long-distance communication, and access to information. Each of these items were non-existent, scarce, or unreliable just one hundred short years ago. Additionally, roughly 40% of the U.S. population was involved in agriculture in the year 1900 in order to produce enough food to meet demand. Today that number is around 2% and food is more available than ever. Fresh fruits and vegetables are available at the grocery store year-round. Also, thanks to technological development, oil and gas are now more abundant and cheaper than ever. This has reduced the costs of production and distribution significantly, and it has created competition for the oil cartels and monopolies that have had a strangle-hold on the industry for decades.
As a result of this drastic reduction in scarcity, the average person today is far wealthier than the wealthiest people alive one hundred years ago. Having said that, the average person is not nearly as wealthy as they should be under these circumstances for two reasons: the massive growth of governments and the debt-based monetary system.
Simultaneous to scarcity diminishing and prosperity rising, governments all over the world grew much larger, thus extracting greater amounts of wealth from the population. Factoring in all taxes levied by all levels of government today, the average person in the U.S. likely pays 50% of their income out in taxes. That is astounding! Too add insult to injury and unbeknownst to most, the central banks of the world maintain a government-enforced monopoly over the money supply. The primary role of most central banks today, including the Federal Reserve, is to monetize government debt by printing money to buy sovereign bonds. This effectively steals purchasing power from individuals as the money they have worked to earn loses value over time. I go into this in much more detail in my book: The Individual is Rising.
The U.S. federal government confiscated $3 trillion in taxes in 2014. State governments extracted another $1.7 trillion and local governments took $1.1 trillion. That is $5,800,000,000,000 extracted from the general economy in 2014. That $5.8 trillion was filtered through layer upon layer of bureaucracy and very little of it was used to provide useful services. The vast majority of it was wasted on welfare, militarism, unsustainable public works projects, government expansion, the enforcement of arbitrary mandates and regulations, and crony payoffs.
This has been going on for the better part of one hundred years now on a constantly expanding scale. In addition to removing a huge amount of private capital from the economy, this practice has created a dynamic in which economic incentives are terribly skewed. This system incentives private corporations to grow large enough to fund powerful lobbies so that they can use the power of government to shield themselves from competition by influencing and often writing their own industry regulations. These regulations require the companies to employ a legion of attorneys full-time to ensure compliance which drives the cost of business up significantly. This effectively establishes pseudo-monopolies in major industries as smaller competitors without lobbies simply do not have the resources or capacity to comply with all of the crony regulations.
Once these state-corporate monopolies are established the incentive is to stay put. Research, development, and innovation are much less necessary when a company is largely shielded from competition in its industry. The population is largely apathetic to this rampant cronyism because government does funnel some of the loot down to individuals via massive social welfare programs.
Now imagine what your world would look like if that $5.8 trillion was left in the economy and if your money did not devalue over time.
There would instantly be a huge boom in economic activity and free markets as incomes would effectively double and smaller businesses would be free to compete with the large corporations. Individuals would be able to exit the rat-race and pursue meaningful employment in fields that interest them once again. Self-regulating industry associations would form, and R&D would ramp up tremendously leading to new technologies and better systems. Marginal businesses would become viable once again and maximization would no longer be necessary. This would bring about the return of craftsmanship and main street shoppes throughout small-town U.S.A. Private charities would form for any cause imaginable and these charities would be much more transparent and accountable than they are today. The multi-national corporations currently spending huge amounts of money on lobbyists and attorneys would be forced to redirect that money towards useful purposes to be competitive. Those MNC’s able to compete and provide value to society would thrive and those unable to compete without government cronyism would disappear.
That brief picture is what a free market economy would look like. None of this is utopian; there would still be plenty of problems. But individuals and communities would have far more resources with which to solve these problems for themselves.
We already have the technology and infrastructure necessary for such decentralization to occur. As we examined earlier this month, the gatekeepers in most fields have fallen. The peer-to-peer economy is enabling individuals to work on their own terms and cryptocurrencies like Bitcoin are enabling individuals and businesses to bypass the financial system entirely. Companies like Hard Assets Alliance allow individuals to store their wealth in precious metals secured in allocated vaults outside of their political jurisdiction with a few clicks of a button. Additive manufacturing (3-d printing) is decentralizing manufacturing and placing the keys in the hands of individuals. Social media and video-conferencing technology are enabling individuals to network with one another and communicate instantaneously regardless of physical location. The massive open online course (MOOC) movement and sites like Khan Academy, Code Academy, and Udemy are decentralizing education with increasing quantity and quality while decreasing costs.
As you can see, the tools for free markets and a golden age of civilization are already in place. Government cronyism and the fiat monetary system are the primary roadblocks preventing this golden age from blossoming.
Of course the enemies of civilization will not reform themselves or go away on their own accord, and they are far too powerful for anyone to forcefully change or remove them. But they are already bankrupt and only the ability to create money out of thin air is keeping them afloat. This is significant – governments all over the world must continue to print more and more money to service their debt, make their social welfare payments, and prop up all of the cronies and special interests. Eventually this behavior will destroy the fiat currencies completely. We have seen this happen in isolation – France during the late 1700’s, Weimar Germany in the 1920’s, Hungary in the 1940’s, Yugoslavia in the 1990’s, Zimbabwe in 2008 – but we have never seen this take place on a global scale before. The Great Reset is coming.
That will be our great opportunity. The powers-that-be will present scapegoats and push for more centralization, and indeed the people dependent upon government for sustenance will buy their talk. But more and more people are waking up every day to the fact that these problems are caused by governments and central banks. Once people learn this, they discover strategies to insulate themselves from the major risks inherent in the system, and they become much more self-reliant as a result.
Perhaps the golden age of free markets and individual self-empowerment can arise from the ashes of the Great Reset as awareness grows. We shall see.
More to come,
Joe Withrow
Wayward Philosopher
For more of Joe’s thoughts on the “Great Reset” and individual solutions to collective problems please read “The Individual is Rising: 2nd edition” which will be available later this year. Please sign up for the notifications mailing list at http://www.theindividualisrising.com/.