This episode is a great summation as to why you probably lack hope for the future. But rather than dwelling on the negative, I’m going to lay out the Why and What you can do to change it. This is an important episode to reset our thinking about our freedom & money in the western world.
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1. Reading The Creature from Jekyll Island - you should too!
- Challenging my own (mis)understanding about money
- Supporting this is the George Gammon series on (BRRRR) money on YouTube
2. Thinking top down about money rather to strategize a bottom up approach
- What exactly is the master plan here?
- US is the #1 empire surrounding the definition of money
- Money is not a physically backed asset, but a govt backed liability
- The constant govt increase of debt
- We consume more than we make
- We import more than we export
- The cartel relationship between govt & bankers
- The bankers are in this for the interest money
- The govt are in this to create a highly productive labor force
- Your freedom is the last thing on either of their minds
- Money is made when debt is issued
- Money is lost when debt is paid off
- The incentives have to be around creating money - not losing it
- Why is this able to exist and thrive?
- The politicians that enact laws to support this have no interest in more than a 4-6 year time horizon
- Your future is only relevant to them if they remain in power
- Most of them are > 50 yrs old, so they only see 20-30 time horizons anyway
3. The global acceptance of this
- Any country that consumes more than it produces needs this magic
- They look to the USA as the master illusionists and want to play that game
- So they tether their currencies against the USA
- Inter-country transfers settled in $USD in 80% of all cases
- Exceptions are China, Russia, Iran, North Korea, etc.
- Their growth in power is a threat to the $USD
- To counter this, the “North American Region” will have to become the global super power, just like the Eurozone integrated assets & risks
- No country tethered to the $USD can afford a $USD collapse
- The US will bolster them (send them money) in order to retain sup-port
- “Fight them there so we don’t have to fight them here” applies to economics as much as traditional warfare
- The IMF was a US creation from Bretton Woods agreement in 1944
4. How is money created?
- Debt
- If you have no debt, or companies have no debt, or govt has no debt, there is no money
- US Govt creates “treasury bonds” - they are meaningless other than a prom-ise to pay
- Requires the maintenance (and management) of trust in the USA
- Countries that buy these to bolster their assets sign up to a faith based initiative with the USA
- The other alternative would be Gold, but that is rarely done now
- Banks buy those treasuries from the US govt
- The bank now owes the US govt on these fictitious promises
- Under their rules, they can now produce currency when you borrow against these fictitious assets
- You promise to pay the bank money, they promise to pay the govt money, and the govt is liable to fulfill on those promises (ultimately)
- Everyone is promising each other something
- But your govt is not promising you anything other than an attempt at civil stability
- In return, they expect (bank on) you working and being productive
- How do they “enforce” this?
- Enslave you to the debt system as early as possible (student loans)
- Incentivize you to expand your reliance on debt (mortgages, cc, etc)
- Retain you in debt slavery for as long as possible (false promises of retirement, etc.)
- Employ levels of hypnosis that your loyalty to employment is good
- The banks go along with this because they make “interest” (fees) on the pro-cess
5. Your dis-engagement with this system becomes hard, if not impossible
- You can’t meet your physiological needs without debt (food, shelter, clothing)
- Shelter is the ultimate and largest embracement of debt (mortgage)
- You are not rewarded by holding liquid assets (no interest on savings)
- You are rewarded by deploying assets into their system (stock market)
- You help capitalize this very system with your equities, etc.
6. This is a true house of cards, relying on everyone to embrace each other
- But what happens is there are issues between the players?
- Meanwhile the debt load keeps going up
- Recent stimulus money has to come from somewhere
- The truth is that increasing debt load is never going to be paid back
- There’s a math trick here
- Example of buying a home in 2000
- You paid $250K for the home with a 30 yr mortgage
- Home will be paid off in 2030
- In 2020, the home is now worth $500K
- You think you are worth the asset value less what is owed
- But that is a game because if you sell the asset you have to get another one, and that is at the current price
- So you don’t sell, keep paying it off, and maintain it
- Same is true of govt debt
- If you borrowed money in 2000 for $5T, then the concept of in-flation means that the same $ value in 2020 is probably worth $10T. But it is the same debt - the money just is worth 50% as much
- Therefore inflation benefits the debtor
- But inflation is the enemy of the saver
- So the actions of the govt to borrow is then pushed down to the citizenry as an “example” of what is accepted, and the bankers just ring their hands together
- Lifetime money supply of interest is the creation of wealth from nothing
- Best game ever for the banks - worst game for your govt & you
7. Can you fight the 10 ton elephant?
- No
- Again, No
- So what do you do?
- Whenever you encounter an adversary that is stronger than you, you don’t engage it by direct fight
- You look to escape it
- You look to avoid it
- You look to be invisible to it
- Your freedom from it comes at the risk of being discovered by it
- You have to find solace with this relationship
- You don’t have to accept it, but you have to learn to deal with it
- How we all do this is a personal thing
- Some are 100% patriotic to it, using emotion as a means of embracement to avoid being a victim to it
- Some are antagonistic of it, usually leading to their enslave-ment by force
- Some are strategic and wary, looking to use the weight of the adversary against them and to their advantage
8. Different strategies - the Pros & Cons
- Total embracement of the “system”
- UBI
- Don’t fight it - just go with it - personal debt load, then bankruptcy discharge
- Trust based to the elephant
- Pros
- Much easier to go with the flow
- Never have to engage in a fight
- Take no responsibility conforms with generational failures
- There’s no “fight” here - great for those that don’t like conflict
- Cons
- Your success = the elephant’s success
- But you get a very small portion of that success
- If the elephant fails, you lose it all
- Requires a lifetime embracement of labor & work
- You become part of the 78% pay check to pay check crowd
- You become part of the 80% of those that can’t afford to retire
- You succumb only to govt assistance (soc security, disability)
- You have 0 control of anything here - total submissive
- Business entrepreneur
- Attempt to make enormous wealth in shortest period of time
- Requires high energy
- Work massively hard, then exit strategy
- Celebrated by MSM, banks & govt as you are a “job creator”
- Pros
- You could be a billionaire
- You could have more money than you can spend
- Never have to work again afterwards
- Cons
- You embrace entirely the current financial system
- You are taxed beyond reasonable levels
- The stress levels are massive
- The chance of failure is about 90%
- Often those that do this become addicted to it
- Hard to maintain relationships with this level of stress
- FIRE movement (and traditional retirement)
- Save up lots of money from labor participation
- 70%+ savings rate
- Reduce spending to a low burn rate (frugality)
- Invest money with counter-parties (ie. Index funds)
- Live off the proceeds of those investments to meet burn rate
- Pros
- Doesn’t require an economics degree to do this
- Others have done it successfully
- There’s a cult movement around this to support your effort
- No labor required once you reach “FI”
- Cons
- Doesn’t factor in the risk of inflation
- Requires accepting counter-party risk
- Draw down rates based on being counter to banking/govt de-sires
- You still embrace the $USD and the US system here, incl. counter-party risk by both banks & govt
- Really never been tested outside of a bull economy
- Financial Sustainability
- Buy assets that create wealth
- Real Estate
- Automation & systems
- Dividend producing assets only
- Live off the dividends of those assets
- In effect, you become your own bank
- Where possible, you get what you need by not using $USD
- Pros
- 100% self-control
- Detachment from the current system, strategically
- No labor required - free to do what you want
- Kinda a financial “off grid” approach
- A more global approach
- Suits those that want freedom with responsibility
- More traditional, from a historical perspective
- Decentralized, more “village like” approach - cooperation vs. submissive
- Cons
- Things are often harder when you go upstream from the sys-tem
- Requires a total re-think of what you have been told
- Requires you to be 100% self-reliant and responsible
- You can’t stop “attending” to things
- You have to live in a world with others that don’t do this
9. Pick a side
- It’s a war out there
- Your future and your kid’s future is at stake here
- Your sanity and your stress levels are at stake
- Do nothing and you lose
- To me, it comes down to a FS vs. FIRE choice
- FS has greater upside, but more responsibility
- FIRE has more connection with traditional debt based economics
- Either option will be FAR better than the alternative
- We can debate FS vs FIRE forever - in my mind, anything that is a change from traditional norms is good
- The most important thing is that you make choices that are right for you
- Debt has to be expunged, but in the case of FS it can be used strategically for short periods of time
In previous articles, I have stated that the concept of FI (Financial Independence) is flawed. Although the pursuit of it is admirable, the fact is that few FI followers have been able to do this through bear markets. Consequently putting yourself on that path has some dangers. I prefer to concept of "financial sustainability" and this article gives you tangible steps to take to achieve that.
The surveillance state. Like the tale of the frog in a pot of boiling water, we have been exposed to a gradual increase of this as a blatant misuse of technology. There is a role for safety & security, but when it gets out of control, it is time to rethink where you live. If you feel the upcoming election cycle will drive your stress level up and your sanity challenged, this article might help you get some awareness of what is going on and your options.
It can be a frightening thing - choosing to go to a foreign country to get major surgery. The vast majority of us find that a bridge too far to cross. I took the leap of faith, and I have begun the journey. This article (and hopefully the one that will follow it after my surgery is completed) will give a totally fact based account of the experience so you can see if something like this makes sense for you.