The story of China is far from black and white.  It is a giant mix of a lot of good things and bad things.  China remains a communist country, at least in name.  In reality, it is some kind of mix of capitalism, mercantilism, and authoritarian.

It is not completely unlike the United States.  The U.S. is a mix of all of these things as well, but to a lesser degree. The U.S. government is more bureaucratic, which can be good or bad.  The Chinese economy is far more centrally planned, but they also don’t have as much red tape to go along with it.

The U.S. is obviously less authoritarian.  You can find horror stories and government abuses everywhere.  But the reality is that, in general, Americans still have freedom of speech, freedom of press, and gun ownership rights.  The same cannot be said for the average Chinese citizen/ resident.

It was recently reported that Jack Ma, the founder of Alibaba, has been a long-time member of the Communist Party. While the story is mildly interesting, it is not that big of a deal.  Again, he is a communist in name only.  He may have become a “communist” just for purely self-defense reasons.

Alibaba is a giant company that is comparable to Amazon.  In fact, many sellers on Amazon source their products from suppliers they find on Alibaba.  Alibaba is really a symbol of capitalism.  It is a demonstration of how millions of people voluntarily trade with each other to become better off.

China was once a truly communist country.  That is to say, it was a brutal totalitarian society.  Tens of millions of people were killed at the hands of the communists.  In 1979, Deng Xiaoping allowed markets to somewhat open up, particularly in agriculture.  China has since become a huge economic powerhouse with relatively freer markets.  It is centrally planned to a high degree, but this is a dramatic improvement from the socialist system it once was.  The relatively freer market has helped hundreds of millions of people escape extreme poverty.

With that said, economic growth in China seems to be struggling as compared to what it was in the previous couple of decades.  I am surprised the Chinese boom has been able to go on as long as it has. Some of the boom is artificial, and some of it is real.

The Chinese have never experienced a hardcore recession.  Prior to 1980, the entire country was in one big permanent recession.  It was an economic basket case with extreme poverty.  But since it began to experience exceptional economic growth, there has never been a large-scale economic decline, at least according to the statistics (which granted, aren’t probably that accurate).

The stock market has struggled in recent years in China.  You could say that the stock bubble has burst.  The Chinese government has continually tried to prop up that bubble, or at least prevent it from a further fall.

There is obviously a massive real estate bubble in China that is propped up by the Chinese central bank and the central planners.  It is incredible that prices have not fallen over a cliff at this point, but again, there is massive manipulation.  They are trying hard to prevent real estate prices from crashing.

As much as the U.S. economy is controlled by government, there is still far more room for corrections in the U.S. than what we see in China.

Some Malinvestments are Worse than Others

I have read or heard some people’s stories about visiting China.  They say that some of the infrastructure is incredible.  The main airports are modern, the highways are impressive, and the bullet trains are incredible to ride.

This isn’t a compliment to the central planners of China.  It is still malinvestment to a large degree.  But some misallocations are worse than others. At least when the Chinese bubble collapses, they will still have high-speed trains and some great infrastructure.

In the U.S., the government spends trillions of dollars, and for what?  The worst are the wars and the money spent to maintain an empire overseas.  It is completely wasteful, if not destructive.  There are massive entitlement programs (and other welfare) that serve to make people more dependent on government.  There is also other domestic spending that lines the pockets of the lobbyists and their industries.

Even in terms of debt, it is the Chinese buying U.S. government debt.  This is a malinvestment in itself, but from the Chinese point of view, at least they are collecting interest, while the U.S. government (the taxpayer) is paying out interest.  It is a short-term subsidy for American consumers to some degree, but it is a long-term liability, unless the government is actually going to default on the debt.

To be clear, I am much happier being in the United States than I would be China, at least by judging from what I know.  And I ultimately think the U.S. will be more resilient, especially when a hard recession comes.  Americans have been through hard recessions before.  In China, there are going to be violent revolts.

I think the general trajectory for China is up.  The people there have had a taste of a middle class lifestyle, and they aren’t going to easily give that up.  This should be beneficial for everyone.

Still, the U.S. has its advantages.  I already mentioned the liberties that Americans have that the Chinese do not. Most of the rest of the world does not have the same degree of liberty when it comes to speech, press, and gun ownership.  In addition, Americans are still very entrepreneurial.  This is good for economic growth.

The problem with the U.S. is the administrative state and all of the red tape.  It’s possible this may be a bigger problem than the unfunded liabilities.

I have said that we actually need a recession in a certain sense. We need the correction, which is the reallocation of resources.  It will help to make things more affordable for middle class America.

But even in the longer term, we need a recession to drastically scale back the government. It is going to be difficult when the government cannot fulfill all of its promises, particularly to senior citizens.  There will be pain involved.  The good news is that it will be an opportunity to correct some of the past mistakes.  Best of all, it will be an opportunity to dramatically scale back the U.S. empire overseas.

The hardest part will be repealing some of the red tape from the administrative state.  That will not likely come crashing down. Luckily, entrepreneurs are creative and resilient.  And with technology, we will find ways to go around the red tape and hopefully make some of it irrelevant.

I am still optimistic for both China and the U.S. in the long run.  But the paths to prosperity will not look the same. There will be short-term pains for both though.

I have heard people refer to the current state of the economy as the “everything bubble”. In other words, they are saying that virtually everything is in a bubble.  This could include real estate, stocks, bonds, crypto currencies, and commodities.  I would also say that government is a massive bubble, and that is what needs to be popped the most.

Of course, not everything can be in a bubble, unless we are facing the complete collapse of society and the division of labor.  There is always something that goes up, or at least doesn’t go down.  That is why I advocate a permanent portfolio. It is rare that all four asset classes go down in tandem.  And when it does happen, it is short lived.

I don’t necessarily think the U.S. dollar is in a bubble as compared to the other major currencies (the yuan, yen, and euro).  That is only because the Federal Reserve has been less bad in terms of monetary policy, especially over the last 4 years.

As long as these major currencies exist, at least one of them has to go up as compared to the others.  And even in terms of purchasing power, if price inflation gets out of control, then gold and silver will likely go up.

My point is that there are always going to be exceptions, even in an “everything bubble”. There will always be certain asset classes or investments that perform well.

Still, I think the idea of an “everything bubble” has some merit.  Maybe we can call it the “most everything bubble”.  One area where I tend to disagree with the idea of a bubble is in the realm of government bonds.  I continue to say that U.S. government bonds will do well in a recession (yields will fall), as long as price inflation stays relatively low.  There probably is a bubble in U.S. government debt, but it is going to take a lot longer to pop.

Gold is a little less predictable, but we know that gold will tend to do well when significant inflation becomes a concern.

I do believe that the “most everything bubble” is beginning to pop.  It has already started, and I am not referring to the recent decline in stocks, although that could also be the beginning of something.

So what is the first asset class to pop?

The Bitcoin Bubble

The price of one bitcoin recently dropped below $4,000.  It peaked in December 2017 at about $18,000.  Other crypto currencies have also fallen dramatically, but I point to Bitcoin because it started the trend and is still the most popular of the crypto currencies.

I have no idea if Bitcoin will have another run up from here or just continue to go down.  I am not making day-to-day predictions. But I do know that it could easily keep going down to $1,000 or $500 or $10.  It probably won’t hit zero any time soon because you can almost always find someone to pay something.  This is especially true with Bitcoin, since there are libertarian-leaning tech nerds who spend every waking hour of their lives researching and thinking about Bitcoin.

Bitcoin is nothing to me.  As with everything, it has subjective value.  But it is completely useless for anything other than the fact that others are willing to accept bitcoins or buy them.  Bitcoin is not much different from a government currency.  But with a government currency, you are essentially compelled to use it, and you have to pay taxes in it.

I see parallels between the Bitcoin/ crypto currency bubble and the tech bubble of the late 1990s. Bitcoins will fall like many dot com companies did.  It may do the equivalent of going bankrupt.  But just as the crash in tech stocks did not spell the end for the Internet, neither will the crash in cryptos spell the end for the blockchain. The technology behind Bitcoin will be used in many ways in the future for other things.

A few years ago, I wouldn’t have cared much if Bitcoin and other cryptos crashed.  I would have said it was mostly irrelevant to the overall economy.  Today, I see things a little different, only because Bitcoin has become so popular and talked about.  There is at least one show on CNBC that seems to devote a lot of their time talking about Bitcoin.  If you go around and ask people, there is now a large percentage of the population who are at least familiar with Bitcoin.

It does not surprise me that this was the first major bubble to pop.  Real estate takes time for prices to adjust.  Stocks can obviously crash quickly, but there is more support there, at least for the time being.  With Bitcoin, it is still a somewhat thin market, and it is easy for the price to fall quickly.  It is also pure speculation as far as I’m concerned.

I really do believe that the bursting of the Bitcoin bubble is the beginning of the bursting of the “most everything bubble”.  I just don’t know how long everything else is going to take to follow suit.

I’m still looking for the inverted yield curve.  Bitcoin didn’t need an inverted yield curve to collapse. But I don’t think we will see an official recession until the yield curve goes flat or inverted.  We are getting close, but we’re not quite there yet.

You’ve heard the saying about being penny wise and pound foolish.  In the U.S., it is being penny wise and dollar foolish.

I see this all the time, and I often even recognize it in my own life.  I’ll spend two hours shopping around for something to save 10 dollars, while I could have spent 10 minutes on something else in order to save 30 dollars (or more).

I have known people to have a lot of money sitting in the bank earning close to zero percent interest.  Meanwhile, they have a small mortgage or a car loan that could easily be paid off.  But they keep the loans with a ton of money sitting in the bank.  As I have said several times, you don’t get rich paying interest to others. You get rich by collecting interest.

I know that taking on a mortgage (and paying interest) can make sense in many cases, whether it is for purchasing a primary residence or purchasing investment properties. But at some point, you have to actually earn the equivalent of dividends or reduce your monthly expenditures in order to get ahead.  Otherwise, if you are always paying interest to a bank for your mortgage, then your house is (in the words of Robert Kiyosaki) more of a liability than an asset.

I have seen people with terrible investment strategies on both ends of the spectrum.  I’ve seen people with large sums of cash in the bank doing nothing for long periods of time, and I’ve seen people 100% invested in stocks with no emergency fund.

Speaking of being penny wise and dollar foolish, we just got through with Black Friday.  Now, I don’t begrudge people for going out shopping.  Some people actually enjoy it.  But some people were rushing to stores to buy something when they could have just bought it on line with the same discount.  There are also people who go on a spending spree just because they see a “sale” or a “doorbuster deal”, while they go deeper into credit card debt for things they don’t need.

I see all kinds of mistakes.  Some are far bigger than others.  I sometimes see my own mistakes in retrospect.  Sometimes it is good to have a neutral party looking at things.

This is where my offer comes in.  I am an affiliate for Tom Woods’ program called Liberty Classroom.  I am an affiliate, and he is offering great deals on this Black Friday weekend.  It looks like he is extending this discount into Cyber Monday.

If you purchase any one of his membership programs through my affiliate link, then you will get a round of email conversation with me regarding your own personal finances.  Except for specific legal or tax questions, you can ask me anything about personal finance (or other life advice).  If you want suggestions on whether to pay down certain debt, or how to allocate your investment portfolio, or how to buy gold coins, etc., go ahead and ask.

You can get my opinion on Bitcoin, which I have already offered and will be offering again soon. You can ask me about your family budget or about how to allocate your time more efficiently.  You will have me as a neutral party, offering ideas and suggestions.

If you could just get one actionable piece of advice that could save you (or make you) thousands of dollars, wouldn’t that be worth the small price tag here?  And on top of it, you are giving yourself (or to someone else) a great education in liberty.

Again, all you have to do is order one of the membership programs for Liberty Classroom via my affiliate link.  The Master Membership is currently the most discounted, but you just have to order any level through my affiliate link to get my bonus of a personal finance consultation.

All you have to do is forward me your receipt (geoff@libertarianinvestments.com) that you purchased Liberty Classroom through my affiliate link.  Then send me your bio (as much or as little as you want) and ask away.  If you want to wait to ask me your questions, you have up to a year from purchase to do so.  And to get this bonus, you just have to buy any one of the levels offered in Tom’s Liberty Classroom.

My offer of giving personal financial (or other) advice is good beyond this weekend.  But I know that Tom heavily discounts his program on Black Friday weekend, so I encourage you to take advantage of it now and save money.  You just have hours left before Tom’s big discount disappears.  This is the one time of year that Tom can be counted on to offer a very substantial discount.  It makes a great gift for yourself or for another liberty lover in your life.

ORDER NOW and invest in yourself. Become smarter and set yourself on a path to greater wealth.

When people criticize the public (government) school system, they tend to focus on things like reading, writing, and math.  They focus on test scores.  In the case of the United States, it is common to hear that American kids are falling behind foreigners.

These are not the main things I worry about when it comes to the government school system in the United States (or anywhere else for that matter).  Sure, it is a bit disturbing to read grammatically incorrect writing, or to encounter someone who doesn’t know basic math.

However, my main concern with any government education system is that it is teaching children too well – in this case, to be obedient little citizens.  The government, through the threat of force, extracts money from the citizenry and then uses that system to indoctrinate children in loving the state.  As with most government spending, it is a double whammy to libertarians. We would rather you just take our money and burn it instead of using it against us.

Whether it is intentional or not, kids are generally taught in school to respect, if not love, the government (i.e., the state).  They are taught that the government rescued us from the Great Depression through Keynesian economics.  They are taught that the U.S. government does good throughout the world (except maybe in the case of Trump or certain other exceptions).  They are taught that we need the government to provide basic services and a safety net so that poor people are not dying in the streets.

It is sad that I am sometimes actually encouraged when a kid does poorly in school and doesn’t really respect his teachers.  I don’t want children to be disrespectful in general to others, but it is healthy when there is skepticism and a little rebelliousness against the system.  It is good when children see the system as a joke, because it really should be viewed as a joke.

I am more concerned for the child who grows up believing everything he learned from his government schools.  This is the person who will not question authority (just following orders) and will be an obedient citizen to the state.  Those are the people the government wants to produce.

The good news is that we don’t have to remain in a state of obedience.  We don’t have to enslave ourselves.  With communication more open than ever, we can break free from the chains of government.  We can think for ourselves.  Even if you were “educated” in a government school, you still have a brain and free will.  You can think for yourself.

Education is extremely important.  That’s why you shouldn’t leave it up to the government schools.  And it is never too late to expand your knowledge.

This Black Friday weekend, there is a great deal on Liberty Classroom, which is put together by Tom Woods.  You can learn the history and economics (from a libertarian standpoint) that you didn’t get in school.

With today’s technology, I love taking advantage of listening to things while doing other things.  I wear my headphones and listen when I am driving, cutting the grass, or doing chores around the house.  I actually look forward to doing these otherwise mundane tasks because I get to listen to things that educate me and entertain me.

This weekend, Tom is significantly discounting his Liberty Classroom program.  If you order his Master Membership program this weekend through my affiliate link, then you will get a signed copy of his book The Politically Incorrect Guide to American History.

But here is the biggest bonus of all.  If you order through my affiliate link, then you will get a round of email conversation with me regarding your own personal finances.  Except for specific legal or tax questions, you can ask me anything about personal finance (or other life advice).  If you want suggestions on whether to pay down certain debt, or how to allocate your investment portfolio, or how to buy gold coins, etc., go ahead and ask.

All you have to do is forward me your receipt (geoff@libertarianinvestments.com) that you purchased Liberty Classroom through my affiliate link.  Then send me your bio (as much or as little as you want) and ask away.  If you want to wait to ask me your questions, you have up to a year from purchase to do so.  And to get this bonus, you just have to buy any one of the levels offered in Tom’s Liberty Classroom.

If you want Tom’s signed book, you have to order his Master Membership program through my link. But I realize that money is tight for some people, so you just have to order any one of his membership programs (a one-time purchase) and you will get my personal finance advice.

My offer of giving personal financial (or other) advice is good beyond this weekend.  But I know that Tom heavily discounts his program on Black Friday weekend, so I encourage you to take advantage of it now and save money.  You just have hours left before Tom’s big discount disappears.  This is the one time of year that Tom can be counted on to offer a very substantial discount.  It makes a great gift for yourself or for another liberty lover in your life.

ORDER NOW and invest in yourself. Become smarter and set yourself on a path to greater wealth.

This is my Black Friday blowout deal for you.  I rarely sell things through my blog.  I am usually putting out a lot of free content.  When I actually sell something, it has to be a sweet deal.

This Black Friday weekend, there is a great deal on Liberty Classroom, which is put together by Tom Woods.  You can learn the history and economics (from a libertarian standpoint) that you didn’t get in school.

With today’s technology, I love taking advantage of listening to things while doing other things.  I wear my headphones and listen when I am driving, cutting the grass, or doing chores around the house.  I actually look forward to doing these otherwise mundane tasks because I get to listen to things that educate me and entertain me.

This weekend, Tom is significantly discounting his Liberty Classroom program.  If you order his Master Membership program this weekend through my affiliate link, then you will get a signed copy of his book The Politically Incorrect Guide to American History.

But here is the biggest bonus of all.  If you order through my affiliate link, then you will get a round of email conversation with me regarding your own personal finances.  Except for specific legal or tax questions, you can ask me anything about personal finance (or other life advice).  If you want suggestions on whether to pay down certain debt, or how to allocate your investment portfolio, or how to buy gold coins, etc., go ahead and ask.

All you have to do is forward me your receipt (geoff@libertarianinvestments.com) that you purchased Liberty Classroom through my affiliate link.  Then send me your bio (as much or as little as you want) and ask away.  If you want to wait to ask me your questions, you have up to a year from purchase to do so.  And to get this bonus, you just have to buy any one of the levels offered in Tom’s Liberty Classroom.

If you want Tom’s signed book, you have to order his Master Membership program through my link. But I realize that money is tight for some people, so you just have to order any one of his membership programs (a one-time purchase) and you will get my personal finance advice.

My offer of giving personal financial (or other) advice is good beyond this weekend.  But I know that Tom heavily discounts his program on Black Friday weekend, so I encourage you to take advantage of it now and save money.  This is the one time of year that Tom can be counted on to offer a very substantial discount.  It makes a great gift for yourself or for another liberty lover in your life.

ORDER NOW and invest in yourself. Become smarter and set yourself on a path to greater wealth.

Happy Thanksgiving 2018!  As an adult, I really came to appreciate Thanksgiving.  As a kid, Christmas is the best (for those who celebrate).  Kids like getting gifts.  But even beyond that, there is a certain ambience about it all.  I still love Christmas, but it is more stressful than it once was.

I like Thanksgiving because I find there is a little less stress associated with it.  It can be stressful if you are traveling, and it can be a little stressful cooking for a large number of people.  But to me, I find it is a more low-key version of Christmas, regardless of whether you celebrate the religious aspect of Christmas.

I do believe it is important to acknowledge thanks for things in our lives.  Life is difficult for almost anyone.  Even people with a lot of money can’t buy a guarantee to health and happiness.  Money can help in some ways in those aspects, but only if used wisely. And there are still no guarantees.

Despite life being hard, we live in the best time ever in history, and it is good to acknowledge that.  It is said that someone living 200 years ago had far more in common with someone living 2,000 years ago than they would have in common with someone today.  This is absolutely true.  If you want to look at a true hockey stick graph, look at a graph that applies to our history of living standards.  It was close to flat for thousands of years.  Then, in the matter of less than 200 years, we get cars, airplanes, electricity, refrigeration, air conditioning, televisions, computers, and the Internet.

Aside from our material wealth, we really should be grateful for the things we have.  Most people have somebody in their life whom they love and receive love back.  Most people have at least one person whom they can call a friend.

I would like to start something in my own family called a Grateful Board.  I haven’t worked out the details yet, but I would like for each family member to write something on the board that they are thankful for. This could be done on a daily basis, although maybe that is too often.  It should be at least on a weekly basis.  You would erase your previous answer, but that doesn’t mean you aren’t still grateful for that previous answer.

My last word of advice regarding Thanksgiving is to not get involved in political arguments at the dinner table, and perhaps not at all on that day.  If politics does come up, don’t be argumentative.  You can state your point of view in a calm manner without resorting to any attacks.  You probably aren’t going to change anybody’s mind, so you might as well keep the peace.

Watching Television and Being Productive

When I give advice in writing here, sometimes I am giving myself advice, or at least a reminder to follow my own advice.  So I was thinking about something the other day, and I just want to share it with others (and again, for my own benefit).

I don’t watch a lot of television, but I still probably end up watching over an hour a day on most days.  I find it is a time to decompress at night, so I think it is ok in this respect.

I don’t have many regular shows that I watch, and the few that I do watch on a regular basis, I can watch “on demand”.  One thing I do watch is sports.  Even here, I have cut back on watching football to probably just a couple of hours per week.  Maybe I will watch a whole game if I am particularly interested.

I was thinking the other day about golf.  I typically just watch the major tournaments.  But I can’t even remember who won the last four majors. I remember that Tiger Woods was in the hunt a couple of times, but I can’t match up all four of the past winners with each tournament, which would have all been within the past 8 months. Yet, I watch all four majors. I don’t watch every single day of a tournament, but I typically watch a couple of hours on Saturday and at least a couple of hours on Sunday.

Even in football, I can tell you who won the last Superbowl, but I have trouble going back beyond this.  I know all of the good teams over the last decade or two, and I can remember when my team won. But it is amazing that you can follow an entire season, watching perhaps a total of 50 or more hours, yet you completely forget who won about two years later.  I can always look it up and say “oh, yeah” to myself, but I hope you get my point.

I don’t know if I will watch any less sports because of this revelation.  I am sure I will be watching the Masters golf tournament next spring, and I will continue to follow football and other sports.  But maybe I will cut back on the margin because of this.

The key here is intentionality.  This is the case with a lot of things in life.  If you are going to waste time on something, or waste money on something, then at least be intentional about it.

If you say to yourself that you’ve had a long week and just need an hour to unwind, then it is fine to channel surf and find something that interests you.  You are being productive in the sense that you are de-stressing.

Again, the intentionality is the important thing.  If you find yourself bored, so you just watch television, it probably isn’t a good formula in life.  Time is a precious resource, and we should treat it as such.  You don’t always have to be productive, and being productive doesn’t always mean making money.  But I believe it is worthwhile to live for something. Part of leading a good life is finding fulfillment, and you probably aren’t going to find that watching television on a consistent basis.

With every election, it becomes more and more evident that America is extremely divided.  It isn’t just about those who love Donald Trump and those who hate Donald Trump.  Maybe the level of vitriol wouldn’t be quite as high without Trump’s personality in the mix, but there were deep divisions before Trump ran for president in 2015/ 2016, and there will be deep divisions after he leaves office.

In fact, it is important to realize that the election of Trump was more a result of this division than a cause of it.  A certain segment of Republican voters, along with a few previously apathetic voters, gave Trump the nomination because he showed he would fight.  They were tired of Republicans rolling over.

I don’t think the media has ever attacked a president with so much vitriol.  The media certainly went after Bush in 2000 and 2001, especially with the extremely close vote count in Florida.  But once 9/11/2001 happened, the media mostly went along with Bush and his wars.  Even in regards to Iraq, the media did a lot of cheerleading for the establishment.

The media certainly did not like Reagan, but they likely realized rather quickly that his bark was bigger than his bite (which isn’t completely unlike Trump).  Reagan spoke in favor of liberty on many things, but he still kept an establishment line in regards to many of his policies. While the establishment media certainly had criticism for Reagan, I don’t think it was on the same level as Trump.

The media hatred for Trump just further divides everybody.  Those who hate Trump will just continue to hate him more because almost everything they hear confirms their beliefs.  Meanwhile, the pro Trump crowd just hates the media that much more because they obsess, and often distort or lie, about Trump on every little thing.

There is really a small percentage on each side that is extremely passionate and vocal about the situation.  So we shouldn’t fool ourselves that these minorities represent a large swath of the population.  However, at the same time, there are many people who take a side without necessarily obsessing over it.  I know of people who are pro Trump and I know of people who are anti Trump, but they are just not really outspoken about it.  They aren’t announcing their views on Facebook.

There is a deep division with everything, and it just gets deeper and deeper.  While I love the Internet for the open communication, there is an element to it that does add to the division.  People go to websites and read and watch things that confirm their already-held beliefs.  They seek out what they want to hear.

As a libertarian, I could be accused of doing the same thing.  There is no question that I go to mostly libertarian websites, with a few others mixed in with certain libertarian leanings.  But I am also exposed to the establishment media. I don’t sit there and watch “news” on television on any consistent basis, but I still catch 5 or 10 minutes here or there.  And I see the headlines of what pops up on my newsfeed.  It is mostly anti Trump stuff.  And when it isn’t about Trump, it is mostly touting the pro establishment line.  Therefore, despite the libertarian websites I visit, I am well aware of the information that others are getting on a regular basis.

I have little trouble in explaining the views of conservatives or modern-day liberals (who aren’t really liberals).  I don’t agree with their views, but I can at least explain them, even if I do have to go down to a 2^ndgrade level to do so.  I understand that people on the left support a higher minimum wage because they think it will raise wages for low-income people. It is childish, but I can explain it from their point of view.  I don’t think that many conservatives, and most on the left, would be able to explain libertarianism, other than some caricature version of it from their imagination.

With this deep division, we hear that we need more unity, at least from some.  We also hear that we may end up with another civil war in this country.

Americans Only Favor Government Violence

In terms of unity, this call is coming more from the left than the right.  But it is really common to hear this phrase from all sides.  The problem here is that their definition of unity is that others should just comply with their dictates.

You could say there was unity in the Soviet Union, as nobody openly criticized the government. If they did criticize the government in public, then you could be assured that it wouldn’t last very long.

The problem is that we are talking about violence.  That is what virtually all of government rests on today. Something is considered a law and not a suggestion because it is backed up by the use of force.  If you don’t follow a suggestion, then people with guns don’t hunt you down.  If you don’t follow a law and you ignore commands to start following it, then you will eventually find a gun pointed at you.

It’s hard to have unity when someone is sticking a gun in your face.

Almost all Americans are willing to allow the government to initiate violence in order to enforce their dictates.  The few people who don’t advocate such a thing are called libertarians.  Maybe some of them call themselves some variant, such as a classical liberal or an anarcho-capitalist, but they really all fall into the libertarian category.

This is the one unique thing that makes a libertarian a libertarian.  A libertarian does not believe in the initiation of force to achieve their political or social goals.

Although most Americans are willing to let the government point guns at people for things other than violating other people’s rights, they themselves would never use force outside of self-defense.  The actual criminals in our society, other than government officials, who use initiatory force, are a relatively small number.

I don’t expect this to change.  This is why I don’t think there is going to be a civil war that is violent in any significant way. We are not going to see a repeat of the 1860s, where both sides stupidly fought.

It wasn’t technically a civil war because the South just wanted to secede.  They were not seeking to gain power over the national government.  Because of that, the war was more the fault of the North and Lincoln.  But both sides were aggressive and stupid.  Just the fact that they stood there in lines and fired at each other is stupid.  It’s possible the South could have used guerilla tactics and other forms of resistance to avoid the mass casualties.

It is especially absurd to think that there were actually brothers (they had the same parents) who fought on opposite sides.

I don’t think Americans today have the stomach for war.  They have the stomach for war when it is fought thousands of miles away. But I don’t think there will be war on American soil.  There may be little skirmishes between the hardcore factions, but they will not be widespread.

Even if we get another version of the Great Depression, I think too many Americans live comfortable lives.

The other thing is that there are no clear dividing lines.  Sure, California is on the left, and Alabama is on the right, but there are still no clear lines.  Even in a statewide election in California, there are still at least a quarter of the people who are voting Republican.

If you go in to the suburbs of most places, there is a total mix of politics.  They probably lean slightly more Republican, as the urban areas are more heavily Democratic.  But you could easily have a neighbor on one side who is a Republican, and a neighbor on the other side who is a Democrat.  Meanwhile, your neighbor across the street considers himself to be an independent.

So how exactly would this fighting take place?  Are you going to shoot it out with your neighbor because you have different political views.

Interestingly, you probably don’t have that many differences with your neighbors when it comes to local issues.  Or if you do, then there isn’t enough power to be had to make things so serious.  If somebody really hates the left, then he probably isn’t going to live in San Francisco.  If somebody really hates the political right, then he probably isn’t going to live in the suburbs in Alabama.

But even here, there are exceptions.  There are people who live in Montana who consider themselves to be on the left. Yet, then don’t want to move to New York City or San Francisco.  Even though they may hate Trump, they have more in common with their Republican neighbor than the Democrat in New York City.  These people aren’t going to shoot at each other because they disagree on which party should control Washington DC.  If they did, what would it accomplish anyway?  The country is split down the middle.

This is why, ultimately, I think there will be more decentralization, which is really what most libertarians have been calling for all this time.  There is no need for 320 million people to argue about marijuana, abortion, education, or a long list of other issues.  There is no need to have one president who has so much power, with half the people feeling alienated.  There is no reason for 5 out of 9 Supreme Court justices deciding on law for 320 million people.

If we don’t get decentralization, then we are just going to keep getting more of the same of what we have now.  It is a struggle for the reins of power.  I wish I could say that Trump supporters just want to remove the power used against them, but most of them are not playing purely defense. While they say they want to drain the swamp, some of their rhetoric and policies indicate otherwise.

There will be no violent civil war in America.  We will keep getting the status quo of rhetorical fighting, or we will get decentralization.  If and when we get decentralization, then things will calm down significantly.

In my house, we have an upstairs bonus room with a separate central air conditioning unit.  We use the upstairs room as a guest room and for some storage in the closets.  The air conditioning unit stopped working over the summer, and it started getting pretty hot up there.  Admittedly, this is a first-world problem.

I eventually had to remedy the situation because we had guests coming to visit.  We received an estimate to repair the unit at $800.  But the unit is about 13 years old, so I don’t really want to fix it at that price because something else could go wrong with it.  Therefore, I asked for an estimate on a new unit.  For a 1.5-ton unit (which is relatively small), the price would be $6,000 (including labor).

I ended up shopping around and got the lowest quote at just above $4,000.  Again, this is for a relatively small unit that cools and heats just a bonus room.  I can’t imagine what the price is for a new unit that has to work to cool or heat an entire house.

I think Trump’s tariffs play a little role in this, particularly on steel and aluminum. When the input costs go up, the price of the product will tend to go up.  Even if the Trump tariffs added $500 to the overall cost of the unit, it is still a lot of money.

(The increased prices from Trump’s tariffs are perhaps offset by his tax cuts.  The problem is that the tax cuts were not really tax cuts because the government keeps increasing its spending.)

We ended up buying a portable unit for our upstairs guest room.  It probably isn’t going to cut it in the heat of the summer when it is 95 degrees outside.  It did put off our decision on whether to get a new unit or to fix the existing one until at least March or April of next year.

I also recently brought my car in, and I need a new air compressor because there is a small leak in my current one.  I have been quoted in the neighborhood of $1,000, but I am still shopping around.  Again, this just seems obscenely high to me.  How long ago was it that, for $1,000, you could practically put a new engine in your car?

I feel fortunate that I have some reserves, so it isn’t a situation of panic on my part.  I hate paying the high prices, but it isn’t life shattering.

For most of the poor in America, and even for much of middle class America, these are devastating expenses.  Many middle class families (at least as defined by income and lifestyle) do not have even have a few thousand dollars in liquid money.

Give Me Deflation

Despite signs of a falling stock market, currently we are supposedly in a boom period.  The unemployment statistics are low, but it seems that life is expensive for almost everybody.  In the U.S., health insurance and medical care are particularly ridiculous, but really almost everything seems expensive.  Electronics may be the major exception to this, as they keep getting better and better with relatively lower prices.

I have this running joke that nothing costs less than $100.  If there is anything wrong with your house or your car, it is going to cost you close to $100 just to diagnose the problem.  If you can escape anything with paying less than $200, you feel fortunate.  If you have a really simple plumbing problem that requires no parts and only takes 15 minutes to fix, then maybe you can get it done for about $95 (just under my $100 threshold).

Life is expensive. It is a theme I constantly harp on.

When the federal government alone is spending well over $4 trillion per year, it is consuming/ misallocating these resources.  It is costing tens of thousands of dollars for most middle class families every year.  When you add in state and local spending, it becomes even more absurd.  Many middle class families are paying $50,000 per year to fund the government, even if they don’t know it.

It isn’t just the taxes taken out of your paycheck.  It is all of the taxes you pay in one form or another.  This includes all government spending, which is funded through taxation or debt or inflation.  Whether it is through direct taxation, or lower wages, or higher price, it is coming out of your pocket somehow.

We need massive price deflation.  I think the only way we are going to get that is by having a good hard recession.  When that happens, the best thing the Fed can do is to not repeat its performance in 2008 through 2014.  It should not expand its balance sheet.

Recessions are painful, as business activity drops.  People are forced to curtail spending, and unemployment rises as resources are reallocated to more efficient uses (as dictated by consumer demand).

If you don’t lose your job, and you don’t take too big of a hit in declining assets (such as stocks and housing), then you will likely benefit from a recession.  Middle class America needs declining prices, and it is a recession that will bring that.

I feel like a patient who has a tumor and is awaiting surgery.  I am not excited about having surgery and the recovery time that goes with it.  But in some ways, I want to get it over with.  I want to get on with my life.  I want to get the surgery done so that I can start my road to recovery.  And I especially don’t want the tumor to grow any more and make for a more complicated and painful surgery in the future.

I wish nobody pain, except perhaps those who are most responsible for the mess we are now in. But I do realize that whatever fix we have in store, it is going to require some pain at this point. So let’s get the pain over with. Let’s get on the road to recovery.

I am actually cheering for an inverted yield curve at this point. I know that will signal a coming recession.  It doesn’t cause a recession, but it points to one.  Whether they know it or not, I think most Americans need a recession in order to make their lives better in the long term.

The damage has already been done.  The Federal Reserve went on a digital money printing spree from 2008 to 2014.  The federal government is spending like crazy, and still running up trillion-dollar deficits, despite our supposed boom.

Let’s clean out the damage.  Let’s let the free market take hold and allow consumers to dictate the allocation of resources, instead of central bankers and politicians.

Unfortunately, even if we have a recession, it isn’t going to reverse the harmful impacts of the tariffs.  On that, we just need for Trump to learn some basic economics and do the right thing and repeal them.

And when we finally get a recession, I hope I can get $1,000 off the price of a new air conditioning unit as compared to what I was recently quoted.

I am an advocate of having a good portion of your financial investments in a permanent portfolio setup.  For conservative investors, you can really just put all of your investments in the permanent portfolio.

This may not include other portions of your net worth.  For Americans, most of their wealth is tied up in their primary residence. Most of the rest is in retirement accounts, such as a 401k plan.  You can set up part of a permanent portfolio in a 401k plan, but it is difficult to buy gold.  Sometimes it is possible to buy PRPFX, the mutual fund that somewhat mimics the permanent portfolio.

In terms of calculating your net worth, I don’t think you should include all of the junk in your life.  I think most people know what I mean by this.  In addition, something such as your smartphone isn’t an asset that should be included in your net worth, even if it is a tool for you.  In terms of money, it is most likely a liability, as you pay money every month in order to use it.

Even a car probably shouldn’t count towards your net worth, unless perhaps if you are flipping cars or buying collectibles.

It is a little trickier with houses.  As Robert Kiyosaki says, most people don’t understand that a house is a liability.  You do need somewhere to live, but most people who own a house have a lot more than what they reasonably need.  Don’t get me wrong; I am not saying that you shouldn’t have a nice house that you enjoy.  It’s just that you need to be careful in counting it towards your net worth.  In many cases, that house is a massive roadblock to achieving significant savings, let alone financial independence.

Still, there is a difference between someone who owns a $200,000 house with a $200,000 mortgage versus someone who owns a $200,000 house with a $100,000 mortgage.  The person with no mortgage and a paid off house is even better.

I think there are many advantages in paying off your mortgage.  However, the one major exception is that you shouldn’t do it for the tradeoff of having zero or little cash (or really cash equivalents).

Liquidity and Less Anxiety

There is one area in which I agree wholeheartedly with most financial advisors.  I agree that it is important to have an emergency fund.  I think 6 months of living expenses is a good start, although 9 months may be even better.

It does depend on your situation.  If you are 23 years old and living with your parents, your living expenses may be pretty low. In that sense, it should be easy to get at least 6 months of living expenses saved.  But on the other hand, you may not need to do this because your risks are low and nobody else is depending on you.  This is especially true if you have a low wage. If you have a job making $10 per hour and you get fired, then it probably won’t be that hard to find another job that pays a similar wage.

If you have a large family and you are the primary breadwinner, then you may want even more of a cushion than 6 to 9 months of living expenses.  It really is a personal situation.

But for most people, it is important to have liquidity.  You don’t have to have all cash (or digital equivalents).  You don’t have to have all of your money in a checking account of money market fund.  If you have $50,000 saved up, which covers 9 months of expenses, then it is probably ok to put some of that in a permanent portfolio, as you are unlikely to lose a large percentage due to market conditions.  Even here though, I would still keep the 25% cash portion in some kind of money market fund or some easily accessible vehicle.

I think the biggest problem for most people is that they don’t have liquidity.  Most of their net worth is in their house and their retirement plan.  Unless you are planning to sell your house or do a cash-out refinance, then your money is locked up.  And even there, it takes time to do those things to access the money.

In the case of taking money out of retirement plans, you will owe an early withdrawal penalty if you are younger than the designated retirement age, and you will owe income taxes on top of this, unless it is something like a Roth IRA or Roth 401k. Worst of all, if you have a 401k and you still work for the company that sponsors it, then you probably can’t withdraw any of “your” money at all.  In other words, there is no liquidity.

We sometimes hear that cash is king, and I believe it is true to a certain extent.  If you are worth a million dollars, I certainly don’t recommend having any more than 25% in cash and cash equivalents. But if you are worth $10,000, then I think it is probably best to have that sitting in some kind of checking account or money market fund.  The only exception might be that 23 year old, who is living with his parents, and who is using the money to fund a startup business.

It is nice to have cash, especially in a recession, when other assets are down.  You can purchase them when they are “on sale”. But I think there is a bigger benefit here, and that is your emotional state.  When you have liquidity, you feel more powerful.

If you have money set aside that is easily accessible, then it reduces money stress.  If you have an expensive car repair or you need a new air conditioning unit for your house, then having that liquidity makes it less stressful.  It’s not that you will enjoy paying for such things, but you won’t be in a panic. It won’t really impact your day-to-day life in any significant way.

There is an equation in all of this:

Liquidity = Less Anxiety

This is the real reason that cash is king.  It reduces the stress in your life.  It makes something unpleasant far more bearable.  When something unexpected pops up, you dip into your reserves, and you move on with your life.

With stocks in a likely bubble, and with a possible recession on the horizon, I think having liquid funds set aside is all the more important right now.  You aren’t going to regret having some money set aside for a rainy day.  As long as price inflation isn’t running rampant, then this safety premium isn’t costing you much at all, except for possibly missing out on some gains in other investments.

The 2016 elections are over, and I think most people are thankful.  It has been hard to avoid the constant barrage of advertisements and telephone calls.  I don’t watch a lot of the establishment media, but the little I have watched in the last few weeks has been mostly political talk.

I don’t think any of it matters as much as what it is made out to be, especially at a federal level. I like to pay attention because it does somewhat gauge the mood of the country.

Personally, I voted, but it was really only because there were a bunch of state amendments on my ballot.  Of all the races, I only voted for one person in a very local seat.  I did not vote for anybody in any of the federal or statewide offices.

I was tempted to vote for Ron DeSantis for governor of Florida, but it would have only been for defensive purposes.  I am glad he won only because I didn’t want Andrew Gillum – the self-identified socialist – to be the governor.  He probably would have had trouble enacting all of his proposed social welfare programs, but even if he had succeeded with 10%, it would have been too much.  Of course, it could end up being one of those situations where the Republican comes in and does some of the bad things the Democrat said he was going to do.

The governor race was extremely tight, as was the U.S. Senate seat in Florida.  It appears that the Democrat incumbent, Bill Nelson, will lose his seat, but it is still subject to a recount.  I will not be sad to see him go.  But for those outside of Florida, I would like to point out that Rick Scott was pretty bad on the campaign trail from a libertarian perspective.  He was running ads about how he fully supports mandating health insurance companies to not discriminate based on pre-existing conditions.  It wasn’t exactly a free market-oriented position.

The most notable Libertarian (large L) running for office was Gary Johnson, the two-time Libertarian Party nominee for president.  Johnson ran for the U.S. Senate in New Mexico, where he was once governor. He received about 15% of the vote. Typically, this would be good for a Libertarian, but it isn’t all that strong considering he was once the governor there for 8 years.

The Trump Referendum

The election was largely seen as a referendum against Trump.  Because Trump is all the talk, it caused a large turnout.  I think almost everyone who voted Democrat is anti Trump.  There are always a few exceptions, but I believe this to be the case.

I don’t think everyone who voted Republican is necessarily pro Trump.  If anything, some are just anti anti Trump.  They are tired of hearing all of the smears and attacks against Trump for every stupid little thing.  They are tired of hearing the establishment in DC and the celebrities in Hollywood telling them what they are supposed to do. Voting Republican wasn’t necessarily an endorsement for Trump so much as it was a middle finger to the establishment and the establishment apologists.

The Democrats will take over control of the House of Representatives in 2019, while the Republicans will actually likely gain a couple of Senate seats.

Overall, I don’t think either side (the Republicans or Democrats) can claim a big victory. It is a divided nation, and this election just showed how divided it is.  It is close to a 50/50 split.

From a libertarian point of view, there are good points and bad points.  I think the very slim majority for the Democrats in the House is probably good.  It puts everyone back on their heels a little bit.  It’s hard to use the term gridlock, but perhaps there is a little more gridlock than before.  But with the Republicans holding the Senate, it means Trump can nominate Constitution-friendly judges to the Supreme Court (and other federal courts), should any vacancies come up.  It doesn’t mean he will, but he can.

Of course, in some ways, the American people all lost.  Despite the supposed gridlock, there is plenty of bipartisanship when it comes to an interventionist foreign policy, invasions of privacy, continual massive spending, and massive debt.  The federal budget is nowhere near balanced, and it won’t be for a long time, pending a massive economic shock.

Maybe Democrats will slow down spending in the House, meaning that the rate of increase will go down.  One can hope.

Still, nobody addresses the fiscal elephant in the room of the unfunded liabilities.  As baby boomers continue to hit retirement age, the costs for Medicare and Social Security continue to go up.  The money to pay out for these programs will have to come from somewhere, and it probably isn’t going to be higher direct taxes any time soon.  Trump’s tariffs aren’t going to fund much of this.  They mostly just make things more expensive for consumers.

There will be so-called entitlement reform, but it won’t be initiated by the politicians.  It will be initiated by the laws of economics.  It is unsustainable. At some point, we should expect an increase in the designated retirement age, but not before we hit at least one more massive recession.

Libertarian Hope

There are a lot of things to be pessimistic about from a libertarian standpoint.  However, I am still optimistic for the long run. We still have technology and open communication on our side.  As Harry Browne said, we also have human nature on our side.  When it comes down to it, most people want to be able to make their own choices in life.

There are a lot of bad things to say about Trump.  He is certainly anti liberty in many respects.  He doesn’t understand much economics, and he has largely surrounded himself by the leftover war hawks from the Bush era.  The good news with the Democrats taking control of the House is that is should dampen Trump’s authoritarian streak.

Trump is helping libertarians to a certain degree though.  He is helping to destroy the beast.  He may not be draining the swamp, but he is at least exposing the swamp for those who care to see.  Trump is helping to expose just how deep the deep state really is. It is not always intentional on his part, but he is helping to do it nonetheless.

There are going to be opportunities for libertarians to take leadership roles in the coming years, especially when the fiscal situation blows up.  In the meantime, it is important that we continue to write and speak and tell the truth.  We want to build our numbers, and we need principled libertarians who will not shy away from the truths that need to be spoken.

When the whole system implodes and is fully exposed, people will be looking for answers.  They may finally be ready to turn elsewhere than the predictable answers from career politicians in Washington DC.  At that time, a libertarian message will sell a lot better.  But it is important to realize that the groundwork has to be laid in advance.

The politics can be entertaining, but I believe it is especially important now for libertarians to help educate others, although not necessarily in an abrasive way.  It is time to set good examples and to be there telling the truth every step of the way.