My blog is Libertarian Investments. I discuss politics, economics, libertarian philosophy, investments, money management, and other related topics. Sometimes I try to tie some of the different areas together.
I attempt to use my knowledge of libertarianism and Austrian school economics for the slightest advantage in investing, as well as living a more fulfilling life.
If you are sympathetic to socialism, or one of its many variants, I don’t see how you can be rich, unless you are just putting on a show.
As an advocate of the free market, I understand that the way to become wealthy in a free market is by providing value to others. It is only in a non-free market where people get ahead by cheating and colluding with big government, or just by understanding and playing the rigged game.
If you are not using big government for special favors (or at least not advocating for such favors), and if you are not defrauding or stealing from anyone, then you can only gain wealth by providing for others. Therefore, the more money you make, the more it is a symbol that you are helping others. You are making a wealthier society, and your money represents that. Instead of feeling guilty for the money you have, you should feel proud of it.
Unfortunately, we don’t live in a free market environment. Still, there is some semblance of a free market, so the above still generally holds true if you are not advocating for government favors.
Since we do have much interference from the government and central bank, I believe it actually provides a slight opportunity for an advantage for those who understand the system.
Don’t get me wrong here. Almost all of us would be better off if we lived in a free market system with little or no interference from the state. But since that is not reality, we can still find the advantages that are out there based on our knowledge.
Just understanding the workings of the Federal Reserve can help. That is why most financial advisors won’t recommend gold, or at least any significant portion of it, for a portfolio. They just don’t really understand or care to understand the real threat of a depreciating currency over time. They say that stocks act as an inflation hedge and leave it at that.
I also find that a little knowledge can hurt people more than not having any. I see many libertarians make mistakes with investing and money management. They will go to the other extreme and invest everything in gold. Or worse, they might stock up on bullets and other items in preparation for an apocalypse that may never come.
I have even seen a few libertarians justify going into high debt because they think the debts will just be inflated away. I hate to break it to them that they are still going to be poor if they are paying debt back to a bank in depreciating currency, unless they used that debt to buy something with a really high return.
I won’t go into all of the ways I use my knowledge of economics to invest and manage my money. It is not a get-rich-quick scheme. It is more for wealth preservation if anything. If you want to get rich quick, find a good business that will get you a high income. Almost nobody gets rich just from investing itself.
As a student of Austrian school economics, I understand that human action is unpredictable in many ways. We cannot predict the future with any certainty. We may be able to guess at how humans will react to certain policies. Taking these guesses and making good interpretations can give us an advantage at times.
Still, I would like to make the point that this is just part of my strategy. Some other libertarians try to use their knowledge for an advantage too. There are many non-libertarians who try to beat the market.
If I am wrong about my guesses, or if other libertarians are wrong about their predictions in the financial markets, don’t blame Austrian economics or free market ideas.
Some Austrian school economists may predict high gold prices. Some may predict high interest rates in the near future. Some already have and have been wrong so far. But this isn’t an indictment of Austrian school economics. It just means that some people got their guesses wrong.
Austrian school economics and other free market theories aren’t there to tell you how to invest. It is the choice of some of us to attempt to use it that way at times. Instead, it is there to tell us to have a free and voluntary market if we wish to have higher living standards.
If someone makes a prediction that is wrong, it doesn’t mean Austrian school economics is wrong unless we see a scenario where government gets dramatically smaller and our living standards decline over a significant period of time with it. If we don’t see high price inflation or gold doesn’t go to $5,000 per ounce, it says nothing about Austrian school economics. At most, it may tell us that someone is not using it correctly or is misinterpreting some data.
I will keep using my knowledge of free markets for any advantage I can get in terms of making money. But this is a separate issue from advocating free markets for a more moral and prosperous society.