We live in an inflationary world.  Prices have inflated almost every year in the United States since the end of World War 2.  There may have been one year in the 1950s where price inflation was very slightly negative.

Since Richard Nixon ended the last ties of the U.S. dollar to gold in 1971, inflation has been the default position.  We are accustomed to 2% price inflation or higher.

When it comes to personal finance, there is a general consensus that taking on certain types of debt – particularly mortgages – makes sense during times of high inflation.

As I write this, the government’s CPI numbers show that price inflation is running at 8.5% annually.  Many people are buying hard assets, and a house is the biggest hard asset most people can buy.  Therefore, even with mortgage rates going higher, housing prices continue to go up, at least for now.

It seems to make some financial sense to buy a hard asset like a house to pay back the mortgage in depreciating dollars.  And money used for a down payment won’t be sitting in a bank account losing purchasing power.

While most people won’t buy a house and cite the Federal Reserve’s policies of depreciating the currency as a reason for buying, they intuitively know that their money is being depreciated and that buying a house is something of a hedge against this.  They also see rising prices and want to get in before things go even higher.

Don’t Fall for the Mania

This is my cautionary commentary on being careful about taking on debt during an inflationary environment.  This includes buying a house.

The primary reason that it might be a bad idea to take on a big mortgage or other debt in an inflationary environment is that the inflationary environment may not last.  The Fed is talking about aggressive rate hikes (relatively speaking) and reducing its balance sheet.  Things could change quickly.  We could see a recession where price inflation quickly recedes.

But even if we could be certain that price inflation would remain elevated for a while, it still doesn’t necessarily make sense to accumulate debt.

As I like to say, you don’t become wealthy by paying interest.  You get wealthy by collecting interest.

This doesn’t change in an inflationary environment.  Even if you have a low mortgage rate at 3%, you are still paying 3% interest to a bank or some other financial institution.  It is money leaving your bank account.

So even if housing prices stay up, the only thing where you might make money is on the appreciation value of the house you buy.  Of course, this is no guarantee.  But even if this does happen, you can only make money if you sell and don’t buy something as expensive again.

Taking on a mortgage might be a good idea in lieu of paying rent.  When you pay on a mortgage, you are at least paying down the principal balance, even if it is small at first.  I find the problem is that people buy more house with more expensive features than what they can really reasonably afford.  The debt allows them to do this.

It goes without saying that you certainly shouldn’t take on bad debt unless absolutely necessary, even in a high inflationary environment.  You shouldn’t be accumulating credit card debt unless you absolutely have to for survival.

Student loan debt can go both ways, but it is unfortunate that many young people take on huge loans for a degree that may not be necessary.  Or, the degree may be available at another institution that is just as good.

Paying Down the Mortgage

You should really be trying to pay down any debt that you have outside of your mortgage.  This goes particularly for credit card debt.  It may be less important for a car loan if the interest rate is really low.

But what about a mortgage?

Let’s say you have a mortgage rate of just 3%.  (Mortgage rates have since gone higher.)  Why would anyone in his or her right mind pay down a mortgage with a 3% interest rate when price inflation is raging at 8.5%?

The question of paying down your mortgage or other debt isn’t about inflation.  It’s whether you can get a better rate of return elsewhere and the comparative risk.

Sure, the price inflation rate is 5.5% greater than the 3% mortgage interest rate.  But this doesn’t answer whether you should take additional funds that you don’t need in the near future and put them towards the mortgage.  The question is whether you can get a better return on that money elsewhere.

I know many will say to put the money to work for you.  You can invest in the stock market.  But the stock market carries high risk, especially right now.  You might just as easily lose money.  The 3% “return” on the mortgage pay down is a guarantee.

The bond market is not returning 3% for any short-term instruments.  You might be able to get close to 3% for a 10-year or 30-year bond.  And then you will pay taxes on the little bit of interest you do get.  If you are going to lock up your money for this long, why not just put it towards your mortgage?

This isn’t saying that I recommend that everyone pay down their mortgage faster.  You certainly don’t want to do this if you have any kind of liquidity problems.

The only money that should be used to pay down your mortgage faster is money that you don’t need any time soon.  When it is used to pay down your mortgage, you are locking it up until you sell or refinance.

When the mortgage is paid off, then you will derive the benefit of no longer having to make that monthly payment.

In conclusion, it may or may not make sense to pay down your mortgage faster.  It depends on your situation.

But the current high price inflation is not a good reason to avoid paying down mortgage debt or any other debt.  It would be relevant if interest rates were a lot higher to reflect the high inflation.  If you could buy a bond that pays 6% annual interest, then it might make sense to buy this as opposed to paying down a mortgage with a 3% interest.

At this time, interest rates are incredibly low.  There are almost no risk-free returns that are of any significance.  For some people, paying down the mortgage may be the highest risk-free return that they can find.

Ukraine is to the Biden family what the Clinton Foundation is to the Clinton family.

I haven’t devoted a lot of time to the story of Hunter Biden’s laptop.  In 2020, before the election, I knew that the general basis of the story of the Hunter Biden laptop was true.  I knew that the media talking point about it being Russian disinformation was a lie, just like all of the previous lies about Russia, including the lie that Trump somehow colluded with Russia to steal the 2016 election.

I actually had a friend on Facebook who calls himself a libertarian deny the story in 2020.  He was implying or outright saying that those pushing the Hunter Biden laptop story were crackpot conspiracy theorists.  Yet, the claims of Russian disinformation somehow seemed credible to him?

I have said since the COVID hysteria that the break in society is between those who believe what the establishment narrative says and those who question it (or generally believe the opposite on important issues).

I don’t understand how someone can call themselves a libertarian yet believe the talking points of CNN and NBC Nightly News.

For anyone who paid attention, it was obviously Hunter Biden’s laptop, and the email exchanges were obviously true.  First, Joe Biden himself didn’t deny that it was Hunter’s laptop.  Second, one of Hunter Biden’s ex-associates, Tony Bobulinski, actually appeared on Tucker Carlson and corroborated it in 2020 before the election.  It would have been almost impossible for him to make the whole thing up.

Now that the election is well past the rearview mirror, the establishment is admitting that it probably really was Hunter Biden’s laptop.  Now the talking point is that it isn’t a big deal and that it is Joe Biden who is president, not his son.

The problem is not just that Hunter Biden was making money off of his father’s position of power and that there are no criminal charges going against him.  The bigger problem is that Joe Biden was part of the whole thing and was taking a cut of the money.

That is a major bombshell.  Joe Biden shouldn’t just be impeached.  If there were equality in the justice system, he would be behind bars.

Yet, that still isn’t the biggest aspect of the story.  The biggest aspect of the story is that there was a widespread suppression of the story before the election by almost every major news outlet and social media company because they didn’t want to take any chance on Donald Trump being reelected in 2020.

We are somehow supposed to believe that the Russians conspired to overturn the election of 2016, yet the establishment media conspired to keep secrets from the American people and to outright lie so as to make sure that Trump would not stay in the White House.

Ukraine Impeachment

Many people forget – if they ever knew – that the first time Trump was impeached was supposedly due to a phone call with the Ukrainian president.  This is the same Ukrainian president – Volodymyr Zelenskyy – who is supposed to be a hero to the West as he fights the evil Russians.  Zelenskyy looks up to tyrants like Justin Trudeau, so I’m pretty sure Trump went barking up the wrong tree on this one.

Trump essentially asked Zelenskyy in a phone call to investigate the Bidens and their dealings.  Trump knew that Ukraine was a big center of corruption that the Biden family used for the sake of their own power and money.

What Trump was supposedly impeached for, Joe Biden actually did before he was elected president.  Joe Biden bragged in front of an audience at a CFR conference that he threatened to withhold a billion dollars in foreign aid (when he was vice president) if they didn’t fire the prosecutor who was investigating the company paying his son.

I don’t know all of the details surrounding Ukraine and the Bidens.  Here is what I do know.

The U.S. government helped to fund and execute a coup against the Ukrainian president in 2012 who was friendly towards the Russians.  The Obama/ Biden regime used Ukraine as a playground for their bribes and corruption.

What Biden did as vice president was to send U.S. foreign aid (your tax money) to the Ukrainian government where he and his family would get a cut in return.  Of course, some of this was done by using a Ukrainian energy company employing Hunter Biden at a ridiculous salary.  Hunter Biden’s only real job was to manage the politics of the whole situation to make sure money and favors changed hands.  Even here, I’m not sure how much of a role he played other than having the checks made out to him.

It isn’t unlike how other politicians play ball.  It really does remind me of the Clinton family.  Bill and Hillary set up foundations and third-party companies where they can funnel the money through.  A Saudi prince will never write a check directly to the Clinton family.  It will always be done through a third party.

In the case of the Biden family, the country of Ukraine – a hotbed of corruption – was their foundation.  It was their third party that they used as cover.

Trump threatened to blow this whole thing up.  He probably had some sense of what was going on.  He never should have trusted Zelenskyy, but you could say that about a lot of people that Trump dealt with for four or more years.

Virtually all governments are corrupt, but Ukraine is definitely one of the top places for corruption.  Ukraine is a poor country, yet billions of dollars are funneled through there.  The Ukrainian people mostly don’t see it.

Americans are getting ripped off to be sure, but Americans are far wealthier than most other people around the world.  It is easy for Obama/ Biden (and many others) to throw around billions of dollars which they can use as bribes and vehicles of power.

With a war going on in Ukraine with Russia, I’m sure the power elite are worried that more will be exposed.  We have already seen admissions that there are bioweapons labs in Ukraine.  Does this have any ties to coronavirus?  Maybe these are the weapons of mass destruction that George W. Bush and Colin Powell were looking for.

Before the 2020 election, Trump should have been running ads showing Biden bragging about threatening to withhold a billion dollars in foreign aid from Ukraine.

Trump is not often a friend for liberty, but he sure has a knack for blowing up the system.  He finds a way to expose the deep state whether on purpose or inadvertently.

Now that Biden has served his purpose and is expendable, more and more about the Biden family and Ukraine is coming out.  The establishment will turn on him if they see it as necessary.

I listened to the latest episode of the ChooseFI podcast, which is about financial independence (FI).  The focus of this episode was on filing taxes, but there was a really interesting (and horrifying) story.

They told the story of someone who made massive profits in 2021 in the seven figures.  I am assuming this isn’t including the numbers after the decimal place, which means he had gains of over one million dollars in 2021.  I am also assuming it was a man, although I don’t know for sure.

But there’s a big problem.  It sounds like he made this money trading options and now owes taxes on these realized gains. If he had done this in a retirement account, there wouldn’t be a tax issue.  If he had made massive gains in stocks, he wouldn’t owe any taxes on anything that hadn’t yet been sold.  But in this case, it sounds like he owes taxes on the million-dollar plus gains that he made.

But there is an even bigger problem.  He says he lost these gains in 2022.  So he now owes a massive tax bill of nearly half a million dollars, but he has since lost all of that money.  And since the losses came in the subsequent calendar year, he can’t offset the gains with his losses.  He will be able to claim just $3,000 (which in his case, is essentially nothing) for his 2022 taxes.

This is a nightmare scenario.  He said in his post that he has a job with a decent salary, but this is still a massive blow.

It is almost as if he owes hundreds of thousands of dollars on a student loan, except in this case he didn’t even get a diploma to go with it.

This is an unusual example, especially with the high dollar amounts, but it is reality.  I have no idea if the story is true, but it is still illustrative.  It shows how absurd the tax code really is, and it also shows that you need to navigate it very carefully, especially when you have seeming success.

Interestingly, I played the options market at one time.  Similar to the person in this story I just described, I did really well at the beginning.  But my “doing well” was in a different league.  I might have made enough paper gains to buy a new car (at prices from almost two decades ago) if I had sold at the perfect time.  But I never realized the gains and lost most of the profit before the option expired.  I ended up losing money in options overall.

Just like this guy, I mistook some lucky timing at the beginning for skill and didn’t take my money and run.  The good news for me is that I didn’t have a tax bill to go with it, or not much of one.  I remember it was a bit challenging doing my taxes with buying and selling options, but that’s it.  I probably wouldn’t have minded paying significantly higher taxes if I had actually made massive gains and held them.

I’m not sure what the biggest moral of this story is.  You definitely need to take a portion of realized gains and set them aside to pay your taxes on those gains.  But beyond that, it is a good life lesson that you shouldn’t get greedy and to take a portion of your winnings off the table, so to speak.

A Bird in the Hand

I’m not sure why anyone would want to catch a bird, but the saying is still a good one.  A bird in the hand is better than two in the bush.

I can’t imagine being this guy who made over a million dollars in gains and then lost it all in such a short period of time.  Assuming the story is accurate, he knows it was a big mistake, but it is an expensive lesson to learn.  Worse, he now owes the IRS a huge amount of money.

I understand the urge to let a good thing ride.  I think the biggest mistake that most investors make is that they think of it as an all or nothing game.

Let’s say you bought 100 bitcoins back when Bitcoin was trading at $10 per bitcoin.  So you “invest” $1,000 in bitcoins, and now it has skyrocketed in price.  If you had sold when it was at $65,000 near its all-time high, you would have made $6.5 million (less the initial $1,000).

What if you had sold when Bitcoin hit $1,000?  That would have been a huge gain where the investment went up 100 fold.  You would have pocketed $100,000 (less the initial $1,000).  And yet, you would have been mad at yourself because you could have sold it at $10,000 per bitcoin or $40,000 per bitcoin.

You don’t want to give up your opportunity to hit a homerun on a speculation, but you also don’t want to be stupid and risk it all.

I have had similar circumstances.  I have owned both Apple stock and Amazon stock in the past.  I made gains on both.  If I had held them both longer, I would have made massive gains.  I think the Amazon stock would be worth something around $100,000 now for a pretty small investment back then.

The obvious solution is to take profits off the table while letting some of it ride.  The guy who lost all of his profits (and now owes taxes) trading options probably should have taken at least half off of the table at some point.  That would have paid for his taxes and left some money in the bank.

I should have sold off half of my Amazon and Apple stock and let the rest ride for a while.

I don’t know anybody personally (that I know of) who has become really wealthy due primarily to investing.  There are many “millionaire next door” stories of people who saved money for 30 years and became quite wealthy by investing the savings, but the savings were early and significant.  It’s not like someone turned $1,000 into $2 million.

I have heard stories about people who have struck it rich almost overnight through speculating.  The problem is that these stories tend to not end well.  Just like the speculator referred to on the podcast, they mistake luck for talent.  They get greedy.  They think if they turned $5,000 into a million dollars so easily, then they can turn a million dollars into 10 million dollars.  They don’t take some of their profits off the table.

Given that I know of nobody who has become wealthy quickly through investing or speculating, I tend to focus more on protecting wealth and growing rich slowly.  If you want to become rich in a short period of time, you have a better chance with starting a business.

For investing, I recommend a substantial portion of one’s financial investments to go into a permanent portfolio, or something similar.  It is the safety money.  I think it is fine for people who want to speculate to take a portion of their wealth and allocate it to speculation.  But their speculative play money should be strictly limited to this.  It is money you can afford to lose.

I have done all kinds of investing.  As mentioned, I have traded options and individual stocks.  I have bought my share of mutual funds.  I have shorted the market and I have bought trendy stocks.  I have bought penny stocks.

Of everything I’ve done outside of the permanent portfolio, the two best financial investments I’ve made are buying gold investments around 2001 and paying extra towards the principal on a mortgage with a 4.25% rate.

Sure, I’ve had individual stocks that have done well, but I have to look at the totality of things.  I can’t count the gains from Amazon and Apple stock and not include the losses from other individual stocks.  I can’t count the gains in trading options without counting the losses that ended up exceeding the gains.

I’ll still occasionally speculate, but not to the degree I once did.  And even the speculations are usually providing some diversity for my overall portfolio.

The point is that conservative investing is underrated.  I think it is always good to have a good portion allocated to slowly growing wealth.  You will likely find that getting rich slowly is a better bet than getting rich quickly when it comes to investing.

If you do speculate and happen to hit a homerun, take some profits, and not just because you have to pay your taxes.

The consumer price index (CPI) numbers came out for the month of March 2022.  Price inflation rose a staggering 1.2% from the previous month.  The year-over-year shows an increase of 8.5%, which is slightly higher than expected.

The less volatile median CPI had a monthly increase of 0.5%, while the year-over-year median CPI now stands at 4.9%.

The rate of annual price inflation has not been this high for over 40 years since Paul Volcker was head of the Fed.  That was when there was double-digit price inflation and double-digit interest rates.  Volcker slammed on the monetary brakes and allowed interest rates to rise dramatically, which put a stop to the high price inflation and gave us recessionary conditions in the early 1980s.

If you just look at the one-month increase of 1.2%, that will translate into an annualized inflation rate of something close to 15%.  We are entering something resembling the 1970s now except interest rates are still ultra low and the national debt is a staggering $30 trillion (not including unfunded liabilities).

The CPI less food and energy stands at 6.5% year-over-year.  This is fine as long as you don’t eat and fill up your car.  It wouldn’t surprise me to hear something like this suggested out of the Biden administration.

Of course, this isn’t all Biden’s fault.  The ballooning debt started a long time ago.  The heavy money creation started in 2008.  The direct stimulus checks started in 2020.  Biden has just continued the disastrous policies and upped the ante on the spending.  But if the Fed didn’t provide the easy money and low interest rates, Congress would be more limited in its ability to spend so much money.

Jerome Powell and company were telling us that the inflation was transitory about a year ago.  Apparently they were correct in a sense.  The 4 or 5 percent price inflation they were looking at was only temporary.  Unfortunately, instead of going back to 2 percent or less, now we are over 8 percent and climbing.

The Fed is closer to its 2% target on a month-over-month basis than on an annual basis.

I wonder how many people are getting an annual salary increase at their job of 8.5%.  You have to pay taxes on the additional income, so you would actually need a salary increase of at least 10% just to break even with inflation.  So if you aren’t getting an annual raise of at least 10% at your job at this point, then your wages are going down.

It is also incredible to consider just how low interest rates are.  They have ticked up in the last few weeks, but they are still historically low.  In real terms, interest rates are deep in negative territory.

The 3-month yield is still well under 1% and the 10-year yield is below 3%.  An investment in regular government bonds is going to give you a real return of negative 5.5% or worse.  Of course, that’s better than the negative 8.5% it will get sitting in a checking account.

Just to get real interest rates to zero, the Fed would have to drive them up to 8.5%.  Imagine how much bigger the interest payments on the $30 trillion national debt will be when the Fed starts rolling over debt into securities with an interest rate of 8.5%.

This is bad news for the Fed and the U.S. dollar.  The Fed is going to be forced to deal with the high price inflation by raising its target federal funds rate and by selling off assets on its balance sheet, which reached nearly $9 trillion.

The next FOMC meeting will conclude on May 4.  That is Star Wars day (May the Fourth be with you).  The Fed isn’t going to get any help from the force on this one.  They have run into a brick wall, which is the laws of economics.

If the Fed is really aggressive in trying to get price inflation under control, it will crash the markets.  The Everything Bubble will get popped good and hard.  We are likely to see many trillions of dollars in assets wiped out.  It was mostly an illusion as the result of easy money.  We will likely see a major downturn in stocks and housing prices.  Even more speculative assets like cryptocurrencies will be mostly wiped out.  At that point, your checking account that is losing 8.5% per year may end up being your best investment.

The yield on the 10-year Treasury has risen above 2.7%.  Mortgage rates are highly correlated with the 10-year yield, even though most mortgages are for a 30-year length.

If you want to purchase a house using a mortgage or refinance your existing mortgage, it is going to cost you more now than it did just a short while ago.  For a 15-year fixed rate, it will likely be above 4%, unless you are going to pay down the rate.

For a 30-year fixed, it will cost you close to a 5% interest rate.  It will likely be at or above 5% now for a refinance.

I was very fortunate to have refinanced a little over a year ago.  (Maybe a little bit of wisdom played into it, but a lot of it was just fortunate timing.)  I was going to refinance into a 20-year loan, but the rates were about the same as a 30-year loan.  I decided to shorten the length of the loan instead and went with a 15-year fixed mortgage at 2%.  It knocked off about 4 to 5 years from what I would have had if I hadn’t done anything.

My loan payment is actually slightly higher than what it was previously.  But I will have almost 5 years less of payments in the future.  If inflation keeps roaring, it may have been a mistake.  If inflation gets worse, I probably would have been better off refinancing into another 30-year loan.  In fact, it probably would have been better to do a cash-out refinance.  30 years down the line, the final payment may be the equivalent of the price of an average lunch.

But I don’t regret what I did.  The reason is because there is no guarantee that the high inflation (monetary and price) will continue.  Working towards a paid off mortgage is a form of diversification.  I have other investments that are geared towards hedging against inflation.

I am paying very little in interest costs.  Most of my payment for principal and interest is going towards the principal (i.e., paying down the loan amount).  It is a form of forced savings, and it is a form of wealth accumulation in a sense, even though housing is a consumer good.

If you are looking to buy a house right now, I recommend being extra careful.  I live in a hot housing market, and the prices are rising at an almost parabolic rate.  It is not that unlike 2005/ 2006 right now.

The problem is that people are going to run out of money to spend on housing.  I know that price inflation is raging, and it seems that people are flush with money.  But when you spend $70 to fill up your SUV and a dinner out with the kids costs you $100, it doesn’t leave you as much to pay for your housing costs.

The higher rates have made housing more expensive for most people without even factoring in the higher prices.

If you take out a 30-year fixed mortgage for $300,000, it will cost you $1,265 per month (principal and interest only) at a 3% rate.  At a 5% rate, that same loan amount will cost you $1,610.  (Of course, there are many other housing costs such as property taxes, insurance, repairs, maintenance, association fees, etc.)

Now imagine someone taking out a $600,000 loan, which something near that amount isn’t uncommon these days.  The recent increase in interest rates could mean a difference of $700 per month (every single month for the length of the loan).

Meanwhile, you have the Fed saying that it will continue to raise its target rate, and they are also talking about balance sheet reduction.  In other words, they are talking about deflating the money supply in order to get price inflation under control.

Now maybe it won’t last long.  But if the Fed’s tighter money stance doesn’t last long, it will be because we hit a recession.

In the short run, I think a bursting of the housing bubble is not unlikely.  I wasn’t saying this 4 years ago.  I think housing is part of the Everything Bubble that we are in.

If you are old enough, remember how fast things dried up in 2007 and 2008.  The housing bubble popped slowly at first, and then suddenly.  We are in a similar situation today where a lot of people have taken on higher debt payments than they should have.

For some people, it could actually be a good time to sell and rent.  It is an opportunity for many to put a good chunk of cash in the bank.  If we continue down a high inflation road, then this would be bad, but you can take your money and invest in other assets that will help protect you against inflation.

Rent is also high in many areas.  But if you can pocket a few hundred thousand dollars (if you purchased your house a while back), then this can pay for a lot of rent until things cool down.

There is no guarantee that the housing bubble will implode and provide a great opportunity for buyers.  But there is also no guarantee that prices will continue to go up, especially in the short run.

Higher mortgage rates and a tighter monetary policy from the Fed are major factors.  The Fed gave us the bubbles, and the Fed can take them away.  It is a very vulnerable market at this time.

“When goods don’t cross borders, soldiers will”

There has been no shortage of dramatic events over the last couple of years.  The COVID hysteria led to governments all over the world getting dictatorial powers to close “non-essential” businesses and force people to stay in their homes.  We are dealing with a war in Ukraine and two nuclear powers (the U.S. and Russia) exchanging jabs.

Now we are seeing the weaponization of financial assets, whether it is between governments or governments using it against non-compliant people.

The U.S. is currently imposing heavy sanctions against the Russians, which also happens to hurt the American consumer.  Some of these sanctions are personal against Russian officials, while some of them apply broadly to the Russian people.

Of course, the U.S. government is forcing the Russians to trade without using the dollar as a middleman.  This is why the Russians have started to demand payment from some countries in either rubles or gold.  This spells trouble for the dollar as the world’s reserve currency, but we will get into that in future posts.

Here, I want to focus on financial assets (or assets in general) being seized by governments against individuals.

With regard to Russia, I was surprised when I read a story a few weeks ago about the yachts of Russian oligarchs being seized in Italy.  They are called Russian oligarchs, but I don’t know what that means.  Are they high-level government officials, or do they just happen to be rich?

What if Nancy Pelosi or Dr. Fauci had their assets confiscated by the U.S. government or some foreign government?  I don’t like these people and think they are corrupt and criminal, but they should still have their day in court.  How did we get to a point of just seizing assets without any due process?

In Canada, a very bad precedent has been set where Dictator Trudeau claimed emergency powers due to the protest of the truckers.  Now there are stories of people who donated a small sum of money to the trucker convoy who have had their bank accounts frozen.

So if you were against vaccine mandates and supported the statement of the truckers protesting and decided to chip in a few bucks, now you aren’t allowed to access “your” money in order to pay the rent and buy food for your family.

Property Rights

It’s easy to get wrapped up in terminology and see digital technology as detrimental at times for our liberty.  At the same time, it is important to recognize what this is all about.  It isn’t just a problem of digitalization and the banking system.  At the core, this comes down to a lack of respect for property rights.

There has been an issue in the U.S. for decades of asset forfeiture, which is really just asset seizure.  Someone can be accused of a crime and have assets stolen from them by the state.  In many cases, the person isn’t actually convicted of a crime but then has to prove their innocence to get back their assets from the state.

This is an injustice and a clear violation of property rights.

It doesn’t matter whether the police take your car from you or your money is taken from a bank account.  They are all a violation of property rights whether it involves digital financial assets or a hard asset.

I suppose the main difference with digital financial assets is that it is easier than ever before for governments to seize assets.  They don’t have to take out their guns and show them.  They don’t need to cause a scene.  The police don’t have to be used to impound your car.  You can just make a call to the bank and give the orders and make it happen.

Getting out of the System

Even though technology makes asset seizures easier for governments, it still comes down to property rights.  The good news in the United States is that there are a lot of lawyers.  You can’t live with them, and you can’t live without them.

We still do have something of a justice system here.  While the same thing could happen in the United States as what happened in Canada, it is less likely to happen.  If the U.S. government starts confiscating bank accounts because of political protests, there will be lawsuits everywhere.  This doesn’t mean it won’t be tried, but it does add a layer of protection.

We can only control what we can control as individuals.  So the question comes up on what individuals can do to protect themselves from these property rights violations.

First off, don’t park your yacht in Italy.

In all seriousness, if you do hold significant assets, it is wise to find a country that is more likely to respect your property rights.  Admittedly, this isn’t easy these days.  If you live in the United States and want to diversify, it is probably better to find a jurisdiction that doesn’t just go along with everything the U.S. government tells them to do.

For the average middle class American, diversifying outside of the country isn’t really a realistic option.  The best option is to diversify outside of the system.

If the government really wants to come after you, then you are in trouble no matter what.  Just ask the January 6^thprotesters who stepped a foot inside of the Capitol building.

Almost all of us are highly dependent on our high division of labor society.  Most people wouldn’t be able to survive very long without access to some money.  So while I think it is important to have a small amount outside of the financial system, it shouldn’t be seen as a long-term plan.

I saw someone ask about the wisdom of stockpiling gold for the coming collapse on a forum that relates to financial independence.  It is not a libertarian forum by any means.  I actually agreed with several responses that said if you think there is a coming collapse in the dollar or the economy in general, then you should be stockpiling food and bullets instead of gold.

I think this is largely true.  Instead of buying gold first, buy things that you would buy with the gold, assuming that they keep for a while.  You aren’t going to buy extra milk at the store that will go bad in a week, but you can buy extra toilet paper and soap.

This is a good strategy right now even if you don’t expect any kind of economic collapse.  With price inflation high, it makes sense to buy things in advance if they keep for a while.

In all of this, the subject of Bitcoin comes up a lot.  I have been a big critic of Bitcoin and cryptocurrencies in general.  I think they are fiat currencies that don’t have the backing of a government.  I think they are part of the massive speculative bubble that we call the Everything Bubble.

Still, I have to admit that in these times, Bitcoin may have served a short-term purpose for those in desperate situations.  This applies to Ukrainians fleeing war and Canadians who can’t access their bank account.

The problem is that this is not a long-term strategy because the value of what a bitcoin will be worth in the future is so uncertain.  Also, you can’t get any more digital than Bitcoin.  In a real apocalyptic scenario, you won’t have a smartphone or even electricity.

There are many problems with Bitcoin, but at this time in history, “owning” Bitcoin could get you out of a short-term crunch.

Diversification

The problem is that property rights have been weakened, and we have no idea where things are headed and how they will take shape.

The best recommendation I have is to diversify.  At the very least, you want to be able to buy yourself more time if you get in a pickle.

This can mean any number of things, depending on your concerns and your means to deal with those concerns.  For some, it might mean owning a little bit of a lot in various forms.

It could mean owning both physical and digital gold and silver, owning Bitcoin for emergencies, having both physical and digital cash, and even owning a small house out in the country.

It could also mean buying extra supplies and food that can be stored.  It could mean starting a small garden in your backyard.  It also means forming a good bond with friends and neighbors in your area.

I have never considered myself a prepper as a prepper is thought of today.  I think some preppers underestimate the degree to which we rely on the division of labor.  Most preppers get a lot of their stuff by walking into a store and buying it with money.  Or maybe they are ordering the stuff online.

Still, it is a good idea to be prepared.  And since we don’t always know what we are preparing for, it means we should diversify without being wasteful.  This is probably a good plan regardless of the times we are living in.

One last thought is that we have to be smart in the battles we fight.  A small percentage of the protesters on January 6^thgot suckered into believing that they were fighting for freedom by entering the Capitol building.  Now, as a result, many of them are still locked up with their lives in ruin.

We have to use good judgment when protesting government tyranny.  It is important to do so peacefully, and sometimes not at all in certain situations.  It is also important not to follow others off a cliff who aren’t thinking straight in the moment.

It is important to fight for liberty, but it is more important to protect yourself and your family.  The truckers in Canada gave a voice to what was previously a voiceless minority.  But it was still a minority unfortunately.  The majority of Canadians are all too willing to do whatever their government tells them to do.  You should keep that in mind if you are ever in a position of wanting to protest by marching in the streets.

The big story of the Oscars this year was when comedian Chris Rock told a joke about Will Smith’s wife, and Will Smith went up on stage and hit Chris Rock.

The joke could be considered tasteless, as he made a reference to Jada Pinkett Smith starring as G.I. Jane.  She had shaved her head due to a disease that causes hair loss, and she was obviously sensitive to it.

Maybe it wasn’t the best selection of jokes, but it was also relatively mild compared to the many other digs that can be heard at this awards show and others.  It is odd that Will Smith laughed at first, but then apparently saw how it disturbed his wife.  He felt the need to show his manhood by resorting to a form of violence.

It is even more awkward that Smith received an award after this incident when he probably should have been escorted out of the venue.  I am not too critical of the organizers/ producers of the show, as the whole thing probably caught them off guard and didn’t know what to do about the whole situation.

I have heard some speculate that the whole thing was staged.  It almost looked that way at first, but based on Chris Rock’s reaction after being hit, I don’t think it was staged.  It was really good acting if it was, and I don’t see why Will Smith would agree to that because he didn’t come out looking good.

Perhaps the whole thing is representative of Hollywood and the political left in general.  When someone says something that you don’t like, just resort to violence to stop the “hate speech”.

I have heard some of the “mainstream” commentary on the situation.  There has definitely been some criticism towards Will Smith saying that he overreacted or he lost his cool.  With that said, I haven’t heard any talk about him being “cancelled”.  I don’t hear any calls of boycott or that all movie producers should refuse to ever hire him for a role again.

I heard someone ask a rhetorical question on what everyone would be saying if Will Smith were a white guy or if some white guy had gone up and hit Chris Rock.  Perhaps that is a valid question and the results would have surely been different.

But I would like to go beyond that.  Will Smith didn’t do any permanent physical harm to Chris Rock, but he did resort to a form of violence.  I’m curious what would have happened to Will Smith had he said something offensive that goes against the official establishment narrative.

What if Will Smith had pointed out that the U.S. government helped to fund and execute a coup against the Ukrainian government in 2014?  Would the establishment media have been so kind to him?  He probably would have been called a Putin sympathizer and made to apologize at the very least.

But it could get much worse.  What if Will Smith had tackled some social issues instead?

What if Will Smith had stated that someone who is born a woman is a woman?

What if Will Smith had said that teachers shouldn’t be teaching transgenderism to young children in school?

Perhaps it could get worse still.

What if Will Smith had warned against taking the COVID vaccines because they aren’t effective and they can cause serious adverse effects, including death?

Will Smith wouldn’t have been somebody who just got caught up in the moment and lost his cool.  No.  Will Smith would be somebody who is a crackpot conspiracy theorist who better kneel before the mob and apologize if he ever wants a chance to appear in polite society ever again.

You can walk up on stage at a Hollywood awards show and hit someone in the face because you don’t like what they said, but don’t you dare go against the official standard narrative of the establishment.

Remember, these are the same elites, and this is the same media, that will be outraged by tweets by a president because he called someone a name, but they aren’t outraged when any U.S. president starts a war or drops bombs on innocent civilians.

Will Smith knows this.  He knew he could go up on stage and hit someone without ruining his career.  But you won’t catch him saying anything politically incorrect that could get him attacked by the mob.

There is an interesting poll that came out of Canada comparing the responses of people on their thoughts about the war in Ukraine depending on their vaccination status.

The poll is labeled “How Should Canada respond to the Ukraine invasion: Vaccinated vs Unvaccinated”.  I prefer the term “non-vaccinated” to “unvaccinated”.  I am also assuming that this poll was strictly referring to the COVID vaccines.

86% of people responding to the poll who had received 3 or more shots favored imposing tougher sanctions on Russia.  Only 13% of the non-vaccinated held this opinion.

When given a list of possible involvements, the Canadians who were deemed fully vaccinated and boosted favored military interventions and/ or tougher sanctions by a wide margin.

52% of the non-vaccinated chose “none of the above” when given the list of possible interventions, while only 2% from the heavily vaccinated group chose this option.

This short article by Mark Crispin Miller shows a graphic of the poll.  I believe Miller is mostly in our pro liberty camp, but I don’t agree with his conclusion from the poll.  He seems to imply that the vaccinated people have become more belligerent.

Miller states, “And then we’ve heard, and some of us have seen, a certain darkening of personality among the ‘vaccinated’, or some of them – a marked new nastiness, intolerance, explosiveness, as if those ‘vaccines’ were laced with choler, or its nanotechnological equivalent.  I for one have been attacked insanely, out of nowhere, by the recently injected; and others have reported the same thing.”

I think Miller is confusing causation and correlation.  Maybe the vaccinated have become more nasty and intolerant, but I don’t think it is because of the jabs.

They may have become nastier towards those choosing not to get the COVID vaccine because the establishment media has told them that these are selfish and uncaring people for not graciously accepting the jab.  And now that same media is telling them that they should hate Putin and Russians in general.

As I have previously pointed out, the dividing line is between those who accept everything they are told by the establishment media and those who question it (or outright defy it).

The people who got vaccinated and boosted did exactly what they were told to do by the establishment media.  They were obedient citizens.  They see the opposite side as not just being non-obedient.  They see them as stupid, or selfish, or both.

The establishment line now is that you should hate the Russians.  It isn’t clear if they should hate the Russians just as much or more as the non-vaccinated.  So it is no surprise that the people who bought the COVID narrative hook, line, and sinker will also be eager to get involved militarily to help the brave and noble Ukrainians to defeat the evil Russians.

(For the record, I’m sure there are many brave and noble Ukrainians, and there are some evil Russians.  But it goes both ways.  The media makes this caricature sketch as if Ukraine is the epitome of freedom, while the Russians are bad people.)

The fully vaccinated and boosted are generally people who buy into all of the propaganda.  They are often otherwise intelligent people, but it is easier to train a smart dog (attributed to Michael Malice).  They are people who will do what they are told by the “authorities” and the “experts”.

I understand that some people got the jab who were not fully on board with it.  They may have felt pressure from family and friends, and some of them had to choose between the jab and their job.  But generally speaking, those who got jabbed are the obedient ones.  They are the voluntary slaves who will do what they’re told.

If a similar poll were conducted in the United States, you would get similar results I suspect.  The vaccinated haven’t become more belligerent because of the vaccine itself.  They just become belligerent when they are told to do so by their masters in the establishment.

The 10-year Treasury yield briefly touched the 2.5% mark on Friday, March 25, 2022.  It was a week of rising yields for all but the really short-term ones.  The one-month yield fell slightly.

The 10-year yield is still incredibly low by historical standards.  It is even more incredible when you think that price inflation, according to the government’s own statistics, is running at 7.9% annually.

If you invest in a 10-year bond paying 2.5%, you are losing about 5.5% every year if price inflation stays where it is.  Also, don’t forget that you still have to pay taxes on that 2.5% “gain”.

It is also interesting to note that some of the yield curve is flattening, and even slightly inverted.

As of this writing, the 10-year yield is slightly below the 7-year, 5-year, and 3-year yields.  The 2-year yield is still slightly below the 10-year yield, which some people look at as a recession indicator.

When it comes to an inverted yield curve, I prefer to look at the 10-year yield vs. the 3-month yield.  I think that is a much stronger predictor of a recession.

Still, we can learn a lot by looking at what bond investors are doing right now.  If price inflation is near 8%, why would anyone invest in something yielding just above 2% per year?

One of the answers to that is that a safe 2% return (nominally) is better than nothing.  It is better to lose 6% than 8%.  And if you invest in other assets, you could end up losing more than the 8% in the depreciating currency if the prices of the assets go down.

Someone may also invest in bonds because they expect rates to fall, which will drive up the price of the bonds.

There is also a question of why someone would by a Treasury security for 5 years when you can get about the same rate for 3 years.  Why lock yourself in?

The answer is that someone might expect the rate to be lower 3 years from now.

The spread from the 2-year yield to the 30-year yield is less than 50 basis points (half of a percent).  In this range, the yield curve is pretty flat.  It is even slightly inverted in spots.

What this indicates to me is that bond investors are not expecting the high price inflation to be sustained.  They see a recession coming sometime in the not-too-distant future and for prices to come down, or at least to stop rising so fast.

This isn’t to say that the bond market has to be right.  I do think the bond market tends to be smarter than the stock market.  (I understand that markets themselves aren’t smart, but you know what I mean.)

If bond investors expected 7 or 8 percent price inflation to continue for several years into the future, I don’t think they would be accepting yields just above 2%.  It’s not that yields have to rise to the level of price inflation, but there would certainly be a tendency to demand higher rates of interest.

In addition, while the price of gold has been holding above $1,900 per ounce, it hasn’t exactly exploded in price.  So the gold market – or the lack of a gold market – is also indicating that price inflation is not a big worry down the line.

Again, this isn’t to say that the bond market and gold market can tell us everything we need to know.  There are certainly a lot of distortions out there.  It also complicates things that the Fed has still been buying some Treasury securities, even if at a slower pace.

I think libertarians have been vindicated just a little bit in warning about reckless government spending and Federal Reserve monetary inflation.  We are now clearly seeing some of the consequences of those bad policies.

At the same time, it doesn’t mean higher price inflation will continue.  The Fed is finally winding down its monetary inflation, at least for now.

If the bond market is right, then we shouldn’t worry too much about higher price inflation a few years from now.  As the yield curve flattens, we should worry about a severe recession, which will actually relieve the price inflation, at least in the short run.

The mayor of New York City, Eric Adams, is in quite a mess.  His vaccine rules (not laws) already didn’t make any sense, but now they really don’t make any sense.

To be fair, he inherited this mess from the disgusting and tyrannical Bill de Blasio, who initially implemented the COVID vaccine mandates in NYC.  But Adams could have just entered office and repealed all of the mandates.

Instead, he is trying to do a dance, and the dance isn’t pretty.

First, the vaccine mandates were rolled back for customers in the city.  So now you can go to a restaurant or a sporting event without showing your vaccine passport.  But the requirement to be vaccinated for work is still there.

There was an exception granted for athletes and entertainers visiting the city, but not for people residing there.

This set up the situation perfectly for Kyrie Irving, one of the star players of the Brooklyn Nets basketball team.  He has declined the pressure to be “vaccinated” against COVID.

Irving has not been allowed to play in any home games this season because of the vaccine mandates, but non-vaccinated players from other teams could play with the exemption granted to visiting athletes.

Since basketball fans could now attend games in NYC regardless of status, Kyrie showed up for a game to support his team as a fan.  But he wasn’t allowed to play.  This showed the absurdity of the whole thing.

After the game, the biggest all-star on the Nets had comments calling out Mayor Adams by name.  Kevin Durant said it was ridiculous and that he (the mayor) better figure things out.  Durant issued a semi apology the next day, but the words had already been spoken.  Here was the star player telling the mayor of New York City in front of the cameras that his policies are ridiculous.

The basketball fans care about their basketball, and they know their only realistic chance of winning a championship is by having Kyrie on the floor playing.  And then you have Durant essentially saying the mandates are stupid.

Now Adams is granting an exemption for athletes and entertainers, even if they reside in New York.  So it looks like Kyrie will be able to play in home games now with his team.  So all is good, right?

Well, it isn’t so good for Eric Adams.  Kyrie Irving can play basketball without being vaccinated, but there are teachers, police officers, firefighters, janitors, and many others who have been suspended or lost their job because they chose not to get jabbed.

So now, instead of the ridiculousness of Kyrie attending a game but not being allowed to play, you have something of a caste system set up.  The guy making millions of dollars is allowed to work now, but the middle class worker isn’t.

Adams has created a web of contradictions for himself.  His honeymoon time as mayor was rather quick, and now he is flailing about.  Again, from day one, he should have just announced a repeal of all vaccine mandates in the city.  I’m sure he could have gotten his speechwriters to cover it up with some nice sounding language to appease the masses.

Let’s hope that this leads to all vaccine mandates being repealed in New York City.  That seems to be the trend, and we need to keep it going everywhere we can.

Adams thought he solved the Kyrie problem by allowing him to play, but now he has created other problems in doing so.  His only good solution is to repeal all mandates.  He should be highly encouraged to do so.  And until it is done, it should be pointed out often that he has created a caste system that punishes the working middle class.