Celebrate being a control freak

I’m not a fan of the Tim Ferris book, “The 4 Hour Work Week”. It is a flawed method for achieving what people aspire to - a life of abundance with little effort. It celebrates the concept of little work and big rewards, and is no magic formula for life. The fact is the more you give up and outsource the more constrained you are. Let’s discuss.

I had lunch with my accountant the other day.  He has a small practice, employs a handful of people and does tax accounting and investments for various clients.  For years he operated his small office with a handful of computers and a server.  He paid a local IT guy to take care of it.  Recently the trend seems to be to give up control of anything to do with computers and hand it over to a hosted service.  This trend to outsource everything sounds attractive, but as people do more of it, do they realize that they are giving away their entire business to the outsourced provider?  In some cases, that might make sense.  But does it make sense for you and your business?  It certainly isn’t if you are unconstrained.

I use the term “business” here loosely because as I said in Episode 2 of the Unconstrained Podcast, in Capitalism we are all Businesses.  That means that many of our listeners are either operators of businesses, or operate their personal lives and investments like a business.  That’s really healthy because it helps to take advantage of business systems to help you manage your accounting, etc.

But I suspect we’ve all been faced with the choice of whether we give up control of something to a third party or not.  There used to be a running philosophy that in business you need to focus on your core operations - what makes you unique - your mission, so to speak.  And that anything that wasn’t a part of that core should be outsourced to someone else.  Hell, over the past 10 years or so the popular author and podcaster, Tim Ferris, wrote the book “The 4 Hour work week” evangelizing that you should send all the work to cheaper operators in the Phillippines or India or wherever and then you wouldn’t have to do any work.  Well, I’m not a believer in that.  Sure you can get cheaper labor for some tasks in foreign countries and in some cases, I do that, but to rely solely on them doing your core operations really means you don’t have anything that is really special that you do.  And that typically means that what you do won’t last because someone else will come along and do it better, faster and cheaper.

However there probably should be a happy middle ground somewhere in here.  Many of us are self-confessed control freaks.  We won’t give up control to anything.  That comes with a huge burden because you run the risk of over working yourself to just keep control of what you already have.  You get to a point where growing it becomes difficult and you never really transcend what you do - you just keep doing it.  

My old commercial landlord

Many years ago, I rented an office for a company I was running from a guy who was from Greece.  When it was time to pay the rent, on the 1st of every month, he would literally walk to the commercial properties that he owned, and physically pick up the check for the rent.  He had a lot of properties but this is what he did.  It was his “thing”.  I always thought it was something to do with the way that business was done in Greece.  Very old school - almost medieval.  But it didn’t matter - I had to pay the rent, so when he would come into the office, I’d cut him a check and offer him a cup of coffee.  Worked out great.

I can relate to his approach.  I mean if the goal is to collect the rent on the 1st of the month, I guess this is one way to do it.  But for me, I prefer my tenants to pay me with a credit card online.  Or some auto-pay system so that they can’t forget.  These days, with banks offering anyone a credit or debit card, it is easier for them to pay rent that way than for me to walk down to my properties and knock on the doors of each of them.  I mean there would be a 90% chance they aren’t there as they are at work, or wherever.  

But to give up that comes at a cost.  I have to pay the banks 2.5% merchant fees on the rents collected.  Is that worth it?  For me it is, because I like the freedom to travel and I don’t like being constrained to have to be in one place all the time.  Doing things electronically like that works for me.  But what works for you? 

To a bank, you are a liability

If we take this conversation out of pure business and back to personal life, giving up control is something that we are actively doing and most of the time we don’t realize it.  First, you use a bank for your money.   Just to be clear, putting your money in a bank is not safe.  Your bank probably has some fine print somewhere on the account agreement you signed when you opened the account that says that in the case of specific circumstances, like the bank going bankrupt, or the reserve rate of the $USD reaching some low number, or some other financial catastrophe, the bank will do a “bail in” meaning that they will raid the savings of their customers in order to pay their debts.  Yes, check this out.  You probably signed something allowing them to do that.  Remember the country of Cyprus, only a few years back?  That’s exactly what happened.  The government was going bankrupt, so they did a “bail in” meaning that anyone who had deposits in that country lost them.

Your deposit to a bank is a liability to the bank.  They really don’t want it.  It used to be that fractional reserve banking meant that banks had to encourage people to make deposits with them because they could leverage those deposits to make profitable loans on money.  But that all went away as Federal Reserves made vast amounts of money available at near 0% interest rates for the banks, which then made its way into the credit supply.  Your money costs them some interest rate, which is so low it is pretty pointless, but it reflects that the banks don’t need your money when they can obtain capital from other sources without the obligation to keep it in vaults, etc.  You are relying on some Federal insurance plan that will protect up to $250K of your capital in the case of some run on the banks or whatever, but even that comes with all the caveats of insurance - will they actually pay?  Ask someone living in California about fire insurance these days.  Magic 8 ball says “No”.

If you are not getting any decent interest rate, and you are exposed to the risk of loss by bail ins, it probably makes more sense to dig a hole in the backyard and bury a shoebox full of cash.  As funny as that is, I’d have a hard time criticizing it in today’s economy.  

But then we run the risk of the devaluation of the $USD which is probably more of a concern on this control freak’s mind right now.  As the Federal Reserve push more money into the money supply, they are naturally devaluing the value of a $USD.  Normally this would be referred to as “inflation”.  They will tell you that there is little inflation right now.  I call BS on that.  If you go out to eat at a restaurant for lunch, look at what the average cost is per day.   Take, for example, a Subway foot long sandwich.  In December of 2017, they offered the “$5 footlong” deal.  But they eventually dropped that because of rising costs (https://www.latimes.com/business/la-fi-subway-foot-long-promotion-20171229-story.html).   I just checked the current prices of footlong sandwiches at Subway, and they start at $5.50 each, going to around $7.75 each.  So in less than 2 years, the prices have gone up between 10%-30%.  Now I don’t know about you but it is hard to get out of Subway for lunch for less than $10, however even if we just look at this base level price increase, it is more than 5x higher than the Federal Reserve will tell you inflation is at.

Add to this the rising costs of health insurance premiums, other restaurants, power bills, etc. and the reality on the ground shows that the purchasing power of $1 USD is WAY lower than the 1-2% inflation rate here.  And if I can’t offset that with some basic interest rate on savings, my $1 is worth less and less and less.  If you look at the chart of the value of the USD over time, it is pretty depressing.

https://howmuch.net/articles/rise-and-fall-dollar

Bottomline:  $100 in 1913 would be worth $3.87 today.   To add to this, did you know that Henry Ford paid his workers over 100 years ago, 52 ounces in gold, tax free?  In today’s money, that would be worth $78,000 a year.  Not bad at all.  Today 50% of American workers earn less than $33,000 per year (taxable).

Do you see my point?  Giving up control of your money & life doesn’t end well.  If you just succumb to banks and salaries, you are screwed.  If you take a far more active approach in this, you might have a chance but you have to pick the counter party that you choose very carefully or you could end up like depositors in the Bank of Cyprus did.

Finding a balance

So how do you make decisions on what you should give up control to, and what you shouldn’t?   This is going to be a personal decision only you can make.  I’ll tell you what this unconstrained person does and maybe you can eek out something from it.

First, I am willing to risk money on the $USD up to $250K.  This is simply because my holdings have insurance and I should be able to see most catastrophic financial events coming fast enough to cover myself.  But if I don’t, I’ll fall back to insurance.  Sure, it isn’t perfect, but I need some liquidity to perform daily transactions and until the rest of society gets wise as to what is going on, I have to go partially down the rabbit hole with them.  But for anything larger, I need better guarantees than that.

Next I would look at precious metals, particularly Gold.  I hold gold as an asset for deposits because of what I’ve seen in my travels.  Gold is uniformly worth something.  It underpins many national currencies out there, and it is in demand.  Mining it is expensive and requires a lot of energy, so it definitely would be a scarce commodity.  I bought gold back in the days when it was $1100 or so an ounce.  On today’s price of $1520, that’s about a 38% ROI.  But I’m not selling it.  I believe that as the $USD devalues due to what I can only see as crazy economic policy, and the debt load of the USA continues the upward spiral, either the default on national debt will occur or an agressive inflation rate will ensure that the future value of $USD is so low that paying back that debt will be achieved.  That basically means anyone who holds $USD will be effectively forced to pay that debt load off.  Those of us that hold assets in other forms will see a massive gain in value when this occurs.  

Also I’m not a fan of using any third party for my gold.  I far prefer to hold the physical asset.  Basically if I’m going to bury anything in a shoebox in the backyard, it will be gold bars.  At least the worms won’t eat them.  As crazy as that may sound, there are thousands of years of history of this being done.  Consider all those documentaries on the History channel of people searching for buried treasure.  It has been done this way for years, and I see no reason to change that.  Of course my holdings are not buried (I use that only as an analogy) but clearly it is better to spread the risks of this around the globe and be careful who the counterparty that you choose is here.

I love real estate because I see it as a “triple whammy investment”.  What I mean by this is that you get a dividend for holding a title to real estate - rent.  That’s regular money each month you can live on.  You invest in properties in areas where the law gives you strong control over evictions as to not interrupt the rental cashflow.  That’s just prudent.  But in addition, the equity value of your real estate will typically go up.  Sure, there have been periods in time when this didn’t happen, but if you consider the times that this occurred vs. the drops in stock market values due to recessions, crashes, etc., real estate is a far more attractive proposition to me.  Then the third advantage is tax deductions.  The ability to depreciate property down is a great way to offset your tax burden.  

But the most important thing is that I can go and touch my assets.  I can see them, I can fix them, I can improve them, etc. and I get the benefit.  We manage our own properties so I don’t use a third party property manager here.  We build up good relationships with our tenants and we actively work with them to improve the areas, often re-investing money back into building and property improvements.  The result is that in the last nine years, I’ve seen a 6x price increase in my real estate investments.  Yes, 6 times!  I can’t get that in many other investments that at least I know that if the SHTF, people still need a roof over their heads and my investment in real estate supports a physiological need of humans.

I’m also a big fan of cryptocurrency.  Being someone who won big time on the rise of Bitcoin since buying it back in 2011, I can attest that this is a great investment, even though I never bought it as an investment.  I saw it as a way that people can transact instantly with NO counterparty.  Of course until any general vendor can accept BTC for buying a cup of coffee (and yes, this is coming), there will always be exchanges wanting to make money as you onboard and offboard from crypto-currencies back to Fiat money (ie. $USD), but I see this changing over time.  What will drive this?  The rapid devaluation of the $USD for one.  Sure, gold is great but I can’t buy my lunch with it.  But with the advancements in technologies such as the Lightning Network and sidechains with Bitcoin, we will soon see more signs of “Bitcoin accepted here” on the windows of the average small business in the western world.  I know this was the promise back 10 years ago, but things like this take a long time to happen.  So I’m sitting patiently investing back into the market and still watching my investments gain and gain.  I like the idea of having a “Savings” and “Checking” account with crypto so that I can benefit in valuation gain, but also have some liquidity to transact with it, and consequently I will choose vendors who choose to accept BTC over those that don’t.

But the biggest thing here is that I’m in control of my crypto.  I don’t use any 3rd party exchange (like Coinbase) other than to onboard to crypto.  Once I get the crypto, I get it off those exchanges.  They get hacked.  But I use a Ledger Nano-S wallet and store my holdings on that, and keep that safe.  I can store this where I want and I know that I can get to the private keys at anytime.  It is absolutely true - you don’t own Bitcoin unless you hold the keys.  And that’s important to me.  That’s part of my control freak attitude.

Outside of investments, I’m a control freak when it comes to privacy.  I fundamentally hate the fact that the technology industry that I was a part of the founding of has consolidated into the “F.A.A.N.G” business where a handful of powerful industry borgs define technology for us.  Even this week, Google agreed to buy FitBit out.  Yet another consolidation.  It is not healthy.  My main business these days is data centers - I invested in server hosting as early back as the year 2000, and I’ve amassed hundreds of servers located in data centers all over the world.  I run and manage infrastructures for clients from government departments to medical organizations to school districts.  I built that business to be as self-managed and robotic as possible, and yet every day the value of that business diminishes due to the consolidation of this.  Amazon AWS is killing off the local, decentralized server hosting business as they attempt to have everyone fit into their “one size fits all” model of hosting.  Today they host the vast majority of websites on the Internet.  Although the entire backbone of the Internet was built on open source and free software.  I still am 100% aligned with that model, so I won’t change doing what I do.  But making a buck out of it is much harder these days and I’m not sure what the future is.

It is ironic that my accountant had that lunch with me and asked about giving up his office IT to a managed services provider.  Unfortunately I can’t help him with our servers, but he asked me to review other provider offerings and I was pretty disappointed in what I saw.  Few had anything in their contracts that respected my accountant’s business model, particularly the need to protect his client’s financial privacy.  If the upstream provider gets hacked, my data is out in the wild west.  That’s not good.  Nor did they give him any exit clause that allowed him to retain his own data.  Imagine if you don’t have the skills to manage the technology of your own business so you give that up to run your operations through a remote desktop connection to a managed servcies provider.  Then you (or the provider) elects to cancel the contract.  How do you get your systems back?  In what form?  What about your data?  How can you continue to operate?  Surely these things should be on the minds of anyone willing to give up control to a third party.

Your data privacy

The same is true of your personal data privacy.  Do you have the power to hold the Silicon Valley mega corporations to account for your data privacy?  Clearly not because the likes of Facebook swindled everyone into giving that up - preferring to be their product rather than pay for their service.  When people are all up in arms about Facebook selling their data to the highest bidder, I laugh because they are the very same people who agreed to this model.  You can’t expect to get something for nothing here.  The same is with LinkedIn or other services like that.  You give them your personal data and you are their product.  You agreed to this.  

Most seem to have just given up the fight for control here.  Google give you a free & popular web browser, so they can install tracking cookies and know everywhere you go.  Just as they do with mobile phones.  Although privacy based browsers and search engines exist (ie. Brave and Duck Duck Go), few use them.  Habits are hard to break and you continue to trust a third party with your life.  But I must admit it can be hard sometimes when you are not on Facebook.  If you go into foreign countries, you will routinely see vendors advertising their WhatsApp phone number.  WhatsApp is owned by Facebook.  People only choose the communicate with each other on Facebook Messenger.  You feel like you are missing out on participating in society if you don’t have a Facebook account.  Yet with all of these downsides, I still choose not to use Facebook at all.

There are some limits for me here.  And my control freak nature kicks in.  Recently my wife was telling me that the local neighborhood watch group wanted to know if we would give access to our security cameras to the local police department to help with their security of the area.  It was this hypnotized masses trying to tell each other that it would be safer for all of us if we just give up our privacy to the local police.  Holy cow, how on earth did we deteriorate to this level?  I mean do you know who’s watching you if you give up that control?  I sure as hell won’t be participating in that.  Yet this is what the brainwashed herd in my local neighborhood are doing.  Again, they give up control to a third party assuming they can trust them.  Yet on the nightly news they see police shootings, unconstitutional warrantless surveilance and intrusion and yet when they think they need the police to protect them, they are not there.  At least not in time and half the time the victim gets arrested.   Nope, I’m not participating in that.

It is hard to live a life of self-control without appearing like some consipiratorial nutcase.  But I’m not.  I see things with my own eyes and I trust what I see.  I see the erosion of social culture based on hypnotisized masses just going with the herd.  What do they get?  Well debt enslavement, they get used as a data node for making the big Tech firms richer and richer, they lose their rights and freedoms with warrantless surveilance but they gave that up by giving third parties access to their private data, their real-time camera footage, etc.   Banking has devolved into a KYC/AML contract to give up your assets to them in case of some disaster that our very own governments are perpetuating with their inability to write half-decent laws to protect us.  Yet we give up our personal sovereignty to them.

There are times when you just want to leave and go live on an island somewhere.  But I’m still a social animal so I want to participate in society.  But just not the society I see on the horizon.  Until we all realize the downhill road we are on to total enslavement, we can never create a society that we want to be a part of.

Which then brings me to politics

If you believe polling, a recent CNN poll showed that only 20% of Americans approve of the job congress is doing, and 75% disapprove.  Pretty bad numbers really.  Yet the majority of Americans will find themselves glued to the TV channels following their “team” as they fight it out like a WWE match against the other team.  Yet, 75% of the population don’t approve of congress.  How messed up is that?

Here’s how a control freak (me) sees it.    Govt is a reality TV show that is pure fiction.  They can affect my life as much as I give them the control to do that.  But I don’t see them as qualified or trustworthy for me to give them control.  Consequently I’d prefer to opt out and not participate.  I’m a citizen of the USA, so I have some duty as I swore a voluntary oath to support the consitution.  I’m happy to do that - I agreed to it, in front of a judge, with my hand on heart.  But I didn’t agree to the dog & pony show that has become the US government.  Until that very government starts to do its duty to support that same constitution, I won’t participate.

I find myself constantly watching media on YouTube that is more aligned with my way of thinking, and then see that very media getting shadowbanned, de-monetized or just plain blacklisted.  I think I’ve become an anarcho-capitalist over time where I believe that people have the innate ability to manage themselves and having seen how just plain dysfunctional government is and how innept they are at actually managing anything, I’d prefer to privatize most things.  I’d only stop short of that with healthcare because I believe that this would be better managed outside of capitalism, but given the way I’ve seen it done in my home country of Australia, I can’t support that quazi-socialist approach at all.  The free market is really the answer here, as I saw that with my recent successful major surgery work done in Mexico.  Paying the actual surgical team directly to do the job incentivized them to do a brilliant job and I’m forever greatful for that.  I got value for money.  Meanwhile I was forced to pay $1,000 a month in insurance premiums in the USA that I have never had any value from.  And the day that I might need them, I expect to be kicked from coverage for some obscure reason.  Hence some government supported system for adverse, chronic and emergency requirements work, but let the free market take care of the rest.

If you consider yourself to be a control freak, and know that this requires more work to take care of your own treasure and privacy, how could you support the current government in the USA, let alone the promise of more socialism and government involvement?  Do you believe that the current government supported tertiary education system is working for the majority of debt laden students that are in it?  Are they getting jobs and being able to keep their money, or is it that the few that gain employment lose most of what they make anyway in taxes, insurance premiums and interest on debt?  How could this make any sense?

Do you feel that the lack of laws on data privacy has meant that you are now a product of a handful of mega-corporations who will push the products & services of their clients (advertisers) in your face at any moment?  Do you feel that your personal soveriengty is being sold to the highest bidder without your consent?

Do you feel that you can’t compete with some new invention, product or service in the marketplace because your very government has already chosen the winners & losers based on campaign finance contributions and lobbyists?   That the free market that the USA was founded on is a lost cause, or a dying swan?  That we are more of a US Corporation Inc. than the United States of America?

It sounds pretty depressing when you look at things this way.  But I feel optimistic that my life is getting better mainly because I become more willing to opt-out of these mainstream trends and become more of a contrarian.  This seems to be aligned with being a control freak.  By taking more personal responsibility in my stuff, I find I’m doing less and less what the majority are doing and as a result when the masses go over the cliff, I seem to be always in a better position to pick up their treasure for pennies on the dollar.

This is where contrarian thinking works.  They say “Invest in the stock market”, so I buy gold.  What happens?  After a year or so, gold goes up and the stock market is still fluctuating at around the same levels it was 2 years ago.

They say “Put your faith & trust in the USD” but I buy Bitcoin, only to see more returns than I’ve ever had in any investment ever in my past.

They said (in 2010), “Real estate is crashing, get out now”, and I amassed what money I could and bought in, often at pennies on the dollar, only to find that nine years later, my investments had a six fold increase in value.

Who made these decisions?  Me.  Who took control?  Me.  Today I live unconstrained and I look for more opportunities to take more control, and to be the agent of change in my own life.  Not to give that control up to a third party because I’m lazy or I’m thinking that this is what the smart people do.  They don’t.  Please never think that the teachings of the 4 Hour Work Week are real.  They are not.  How many people do you know that followed those teachings and are working 4 hours a week?  They don’t exist.  See that reality with your own eyes.  

You can be free, but you must own and control assets.  And in order to do that, you have to be a bit of a control freak.  It comes with the territory.  But the gains of being that control freak are huge.  

Live like a control freak, and live unconstrained.