As I write this, the price of Bitcoin is approximately $50,000, meaning $50,000 per bitcoin. I have no idea where it goes from here, just like I knew nothing about where it would go years ago.

In March 2020 when stocks started to get rocked, the price of Bitcoin also went down.  I thought it might be the end of Bitcoin’s run.  But when the Fed stepped in with trillions of dollars, stocks came roaring back, and Bitcoin has done the same.

I have known about Bitcoin for a long time.  I wish I had bought some back when I could have easily bought several bitcoins for not a lot of money.  It was a speculation then, and it is a speculation now.

I basically thought back then that Bitcoin is a sham.  My opinion hasn’t changed much except I with I had taken part in the upside of the sham.

Don’t get me wrong here.  I don’t necessarily think there is anything dishonest going on with Bitcoin.  As long as it is voluntary, then I have no problem with people buying and selling and trading it.  The price is whatever the marketplace determines it is.  It has value because consumers demand it.

I am also sympathetic to Bitcoin because it is seen as competition for the dollar.  Even though Bitcoin and other crypto currencies are really fiat currencies, at least they provide some competition in a market that desperately needs competition.  It also helps that the crypto community tends to be somewhat familiar with the Federal Reserve and how it destroys our purchasing power.

Money

Bitcoin is not money. The Bitcoin advocates can say it is money, but it is not.  Sure, a few places accept it as a form of payment, and Tesla may be the newest big player in town.  But you can’t walk into Walmart or your local grocery store and pay with Bitcoin. They would look at you like you’re nuts.

Of course, you could try paying with gold or silver and most cashiers probably wouldn’t accept it. You might get the occasional smart one who would take your silver coin and pay the cash necessary into the register, assuming that the silver coin is worth more than the amount owed.

Sure, Walmart could decide to start accepting Bitcoin as a form of payment.  My guess is that it would charge a slight premium, and the Bitcoin price would fluctuate wildly based on the current exchange value. In other words, the products on the shelves wouldn’t have Bitcoin prices on them.  They would still be priced in dollars.  You would just be able to pay in Bitcoin based on the exchange rate.  It is also likely that Walmart and other retailers would convert bitcoins received back into dollars rather quickly.

For this same reason, gold and silver aren’t really money either, or at least not in our current world.  However, they have a history of being used as money for thousands of years.  Plus, gold is still stored by central banks even though the currencies aren’t officially backed by gold.  Having gold in the vault provides some artificial backing and a form of reserves.  Gold could easily return as a form of money, whether it is with physical gold (and silver) or electronic forms.

The Problems

One of the reasons given by Bitcoin advocates for widespread use of Bitcoin is that it provides privacy.  First, not everyone wants privacy.  If I make a payment with a credit card and something happens such as receiving a faulty product, I can challenge the charge with my credit card company.  In this case, I actually want a trail.

Second, as with everything, the government could outlaw Bitcoin at any time.  I’m not saying they could get away with it if sentiment is strong against it, but in emergency economic times, when people are willing to give up their liberty (see the last 12 months), then the government might be able to get away with it.  I know some will say that people can continue using Bitcoin, but it doesn’t work that way.  If the government decrees that you will get 10 years in prison if you are found trading with Bitcoin, then you can be assured that most people will stop.

Aside from those things and other flaws, there is one other major problem with Bitcoin, and it will be a problem forever.  It is something that was made up on a computer.

I understand that the blockchain technology can and will be useful.  But Bitcoin itself is really just a bunch of digits in outer space.  There is only value right now because people are giving it value.  Sure, you could say that about anything, but anything that has been used as a form of money in history had some kind of value to it before being used as money.  That is even true of most speculative bubbles.  Even tulip bulbs in the Tulip mania had some kind of value.

Gold has all of the qualities of a good form of money.  It is divisible.  It is portable.  It is durable.  It is limited in its quantity.  It has a high value content for a small amount.

There are many things throughout history that have been used as money, but they typically fell short in one or more areas.  Eggs and cigarettes are not durable.  A living cow is not divisible (to keep it living).  It is also rather burdensome to take your cow to the store to pay for some clothing.  Milk could be used as money, but it doesn’t retain its store of value, as it will go bad in a couple of weeks.  This is why salt has been used as money to some extent in the past, as it doesn’t go bad.  But try paying for a new car in today’s world with hundreds of pounds of salt.

No matter what it is, it always goes back to gold and, to a lesser extent, silver.  This is why they became the primary forms of money for thousands of years.  The only way that governments and central banks were able to issue fiat currencies was to first issue the currencies backed by silver or gold and then to remove that backing over time.

When you compare gold to Bitcoin, there is one really major difference, and it isn’t just that gold has a physical presence.  It is that gold has value outside of being used as money or speculation. It had value before it became money.  It is used in industry, and it is used aesthetically, particularly for jewelry.

This is why gold will likely continue to have value no matter what.  Bitcoin is nothing.  It is a novel idea that someone made up on a computer screen. There have been thousands of more cryptos made up on a computer screen.  They provide no material value or information except what the next person is willing to pay for it.  And Bitcoin is only more valuable right now because it was the first player.

It is pure speculation, and it will continue to be pure speculation.  I don’t know if its next stop will be below $10,000 or above $100,000.  Either way, it could happen in the matter of days.  It could happen in hours.

If you are feeling lucky, you can speculate on it.  You may make a lot of money (i.e., be able to convert it back into U.S. dollars).  You may lose your money.  It is just a question of how many more people are coming up behind you to try to do the same thing. It is also a question of whether you know when to take your greed off the table.  Or as Kenny Rogers said, know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.

I don’t think Bitcoin is going to survive in the long run.  I’ll place my bets on the metals that have been around for thousands of years.  When Bitcoin eventually crashes, it is going to be hard.  A lot of people are going to be left holding digital versions of cow manure.

“If something cannot go on forever, it will stop.”  ~Herbert Stein

We are in the midst of an unprecedented stock bubble.  After almost a full year of various lockdowns and business restrictions, along with multi-trillion dollar deficits and higher unemployment, stocks are booming.

The stock boom would be almost ridiculous during a time of prosperity.  Given what has happened in the last year, it is beyond ridiculous.

The young adults who have taken their stimulus checks and started a Robinhood account are going to learn a hard lesson about bear markets, at least for the many who do not cash out while the going is good.

The stock bubble is built on Federal Reserve inflation.  The Fed’s balance sheet continues to explode. By the time March gets here, it will have close to doubled.

There is a disconnect between price inflation and the Fed’s balance sheet.  Likewise, there is a disconnect between price inflation and stocks.

The latest CPI numbers show the CPI in January 2021 rose at 0.3% over the previous month, and it rose 1.4% year-over-year. The more stable median CPI rose 2.1% year-over-year.

Perhaps these numbers are understated.  But they aren’t so understated as to not recognize a disconnect.  Stocks are going to the moon.  Real estate, especially in the suburbs, is mostly going up fast.  Consumer prices on everyday goods are not going up fast.

In the short time it took the Nasdaq to go from 10,000 to 14,000, I can tell you that my grocery bill did not go up by 40%.

Uneven Inflation

When the Fed creates money out of thin air, prices tend to go up.  In some cases, especially in today’s technological world, some prices go down.  Given the Fed’s inflation, they go down less than they otherwise would have.

There are other factors, particularly the velocity of money.  If people are not spending a lot (i.e., not bidding up prices), then this will tend to push prices down, or at least keep them from going up as fast as they would have.

When there is monetary inflation, it takes time to go through the economy.  A good analogy I read once was comparing it to pouring pitchers of molasses into a bathtub.  I believe it was Richard Maybury who wrote this.  He said that there are cones of molasses in certain spots that are much higher.  It takes time for it to flatten out.

So it is with price inflation.  Prices don’t rise simultaneously.  Over time, it tends to even out.  Some periods take longer than others.

Right now, there is a giant glob of molasses that represents stocks and real estate.  If the Fed keeps pouring massive amounts of molasses in the bathtub, then maybe the stocks and real estate won’t go down.  But the most likely scenario is that the Fed won’t be able to pour enough in fast enough to stop it from sinking to other areas.

Therefore, depending on how fast the Fed can pour its molasses (create money out of thin air), either stocks and real estate are likely to come down, or other consumer prices, especially necessities like food, are likely to go up in price.

This is why we have to diversify.  We don’t know which way this is going to go in the short run or the long run.  Will we see stocks crash?  Will we see other prices spike higher?  Will we see both and then a reversal of one or the other?

At some point, something has to give.  We are either going to get significantly higher price inflation, or we are going to get a major crash in stocks.  It is amazing that things have gone on this long.

However, I will keep in mind what Keynes supposedly said.  The market can stay irrational longer than you can stay solvent.

The market is already irrational.  Is the Nasdaq going to double over the course of a year, in one of the worst economic years ever in modern times?

I remember the exuberance of 1999 and 2007.  I remember the downfalls in 2000 and 2008.  2020 and 2021 will be memorable too.

I don’t know when the crash will happen, but it is going to be swift and hard when it does. And if the Fed starts pouring buckets of molasses to stop the deflating stock bubble, then we are likely going to see massive price inflation at some point.

The reason there is no flu this winter is because everyone is wearing masks.  The reason that there are so many cases of COVID is because there are too many irresponsible people not wearing masks.

When someone dies after testing positive for COVID, it is a COVID death.  If someone dies after getting vaccinated, it is a coincidence because they were already old or sick.

When BLM and Antifa protesters burn buildings and loot stores, it is social justice.  When Trump supporters enter the Capitol building, it is insurrection and a coup attempt.

When the U.S. government overthrows a foreign leader, it is spreading democracy.  If a foreign leader is overthrown who was loyal to the U.S. government, then it is subverting democracy.

When Google, Facebook, and Twitter censor people for their political views, they are private companies and can do whatever they want.  When a baker refuses to bake a cake for a gay couple’s wedding, it is a public business that must not discriminate.

If you are a big corporation, then you are deemed essential.  If you are a small business, then you may be deemed non-essential and forced to shut down or obey other government orders, even when they aren’t laws.

If you question the integrity of the 2020 election, then you are a conspiracy theorist and possibly inciting insurrection.  If you question the integrity of the 2016 election citing anonymous sources and a dossier from a Clinton associate, then you are a patriotic American and a strong advocate of keeping Russia out of our elections.

If you support Trump in any way, or if you question certain government directives, then you may be a domestic terrorist.  If you dutifully obey all of the commands handed down by Biden and the establishment, then you support unity.

If Dr. Fauci says something, then you should listen to him because he is a doctor and an expert. If any doctor, including an epidemiologist, suggests something contrary to establishment opinion, then the person is a quack and must be censored.

If you go out to eat or do anything fun in public, you want to kill grandma.  If you attend a BLM rally, then you strive for social justice, and the virus cannot be spread.

If you repeat something you heard from the establishment media, then you have the right to free speech.  If you say something contrary to the establishment media, then you are dangerous and must be censored.

Part of the “COVID relief” plan being pushed by the Biden team and the Democrats includes a provision to increase the federal minimum wage over the next several years. It would eventually hit $15 and then increase by the rate of inflation (as calculated by the government) after that.

If you follow free market economics, I don’t need to tell you that this is a bad thing.  All else being equal, a higher minimum wage will increase unemployment, particularly for those with fewer skills. This is assuming that the minimum wage is high enough to mean something.  A minimum wage of $2 per hour in the United States would have virtually no impact.

Having a minimum wage job doesn’t mean that an employer has to give a job to an employee.  It only means that the employer has to pay at least a certain amount in order to abide by the law ifthe employer hires someone.  In other words, a minimum wage doesn’t guarantee anyone a job.  It just guarantees a minimum wage if you can get a job.

It’s also interesting that a minimum wage can sometimes lead to worse working conditions.  An employer has to account for all costs, including benefits and working conditions.  If an employer is forced to pay more for someone than the market demands, then the employer may reduce other benefits or not provide as good of working conditions.

This is easier to see in third-world countries.  Think of a group of people working in a factory.  The employer can get air conditioning installed to make it cooler, but it would mean lower pay.  Most employees will not choose the lower pay, especially when they are barely able to afford food and clothes for their children.

Someone working in the United States may not realize that their pay is impacted based on better working conditions.  Employees in an office automatically assume they will be working at a comfortable temperature in a comfortable chair with reasonably pleasant surroundings. If some employer offered a dumpy office for a workplace but paid a little more, most people wouldn’t accept it.  They would work somewhere else.  An extra couple of dollars per day in pay wouldn’t be worth it because most Americans with a job can put food on the table and more.

One Size Fits All

A federal minimum wage is particularly bad, as it does not take into account differences between regions.  We live in a country of about 330 million people.  Does a $15 minimum wage mean the same thing in Silicon Valley as it does in rural Alabama?

Perhaps this is the Democrats way of thumbing their nose at the red states.  Maybe it is payback for Trump eliminating deductions for people living in high-cost and high-tax blue states.  It certainly would seem that a higher federal minimum wage will disproportionately hurt red states more than blue states.

Many people really do support this measure just because they are ignorant in economics.  They think wages can magically be raised through the law (i.e., government force).  Wages, as a whole, can only be raised through productivity.

A similar minimum wage measure was recently passed in Florida in the 2020 election.  The minimum wage will eventually be raised to 15 dollars per hour.

The interesting thing is that, in order for the amendment to pass, it needed at least 60% voter approval.  In 2020, Trump won the state of Florida.  This means that at least 20% of the people who voted for Trump also voted to massively hike the minimum wage, and this is based on the assumption that everyone who didn’t vote for Trump voted to hike the minimum wage.

Good News, Bad News

At this point, I don’t think that a $15 minimum wage will pass Congress.  The Senate is split 50-50.  They would probably need every Democrat to support it. There are a handful of senators from conservative states (not to be confused with conservative senators), who have to show some restraint to their constituents.  They would more likely support some kind of middle ground.  Maybe we’ll end up seeing something like a $12 minimum wage phased in over several years.

Even if a $15 federal minimum wage is passed, I have some good news, although it is probably very bad news in other ways.

I said that increasing the minimum wage will increase unemployment, all else being equal. Well, fortunately or unfortunately, not all else is equal.

The Federal Reserve has exploded its balance sheet by over $3 trillion in less than 12 months, and its stated goal is to continue to create new money by at least $120 billion per month for the foreseeable future.

While this is very bad economic policy, one bad policy may end up negating another bad policy. If monetary inflation continues to explode, and price inflation eventually follows to some degree, then the dollar will massively depreciate.

If prices double over the next five years, then the whole increase in the minimum wage is effectively nullified by Fed policy.

Even more, if a built-in cost of living increase is included once the minimum wage hits $15, then it will be reliant on the government’s statistics.  The government has a habit of understating price inflation figures, especially when they have to pay out Social Security checks based on this. So if price inflation is at 5% and the government says it’s at 3%, then the minimum wage will increase by 3%, which will actually be a reduction in real terms.

And the government will have difficulty coming in and saying their inflation numbers have been wrong, because it will just make Social Security recipients mad that they’ve been cheated.  When was the last time you heard a government official with any power say that the inflation rate is understated?

Congress could set the minimum wage to a cost-of-living adjustment right now, and I would see that as positive.  It makes it harder for them to come back in the future and change it while the minimum wage is slowly going down in real terms.

So while the Fed is wrecking the economy and making most everyone poorer in the long run, at least they are negating one bad policy coming out of Washington DC.  The minimum wage will become the depreciated wage.

The big story last week happened when a group of seemingly amateur investors (i.e., not part of the elite) bought up shares of GameStop (GME) and delivered huge losses for those shorting the stock.  It nearly bankrupted a big hedge fund (ironically named, since they didn’t hedge).

In the past, short sellers were often vilified.  I have been a defender of short sellers, or at least a defender of the process.  Short selling is a valid market mechanism that helps in price discovery.  If a stock, or anything else, is overvalued, it is better to have short sellers around to more correctly price it.

This time around, the establishment (i.e., the ruling class) had a conniption fit, but it wasn’t about the short sellers.  “How dare these young punks on Reddit try to manipulate the market and profit off of short sellers, including a major hedge fund?”

The statists of this world continually talk about the need for government regulation.  In this case, the market did a pretty good job of regulation.

I’m not saying these short sellers deserved to suffer huge losses, but they set themselves up for it.  There were supposedly more shorts than shares available.  Regardless, they were obviously over leveraged in their positions and a group of people pooled their money and corrected the situation.

Maybe this whole thing served as a good lesson for hedge fund managers, or really any investors. You need to be careful in overexposing yourself, especially in any one position.

Of course, big tech and all of the statists are outraged by what happened, while many libertarians, some conservatives, and even some hardcore leftists rejoice.  It is just another dividing line between the populists and the elitists.  In this case, the populists are coming down mostly in favor of the free market.

It is absurd for platforms like Robinhood (also ironically named, it seems) to ban trading of the stock just because some rich guys are suffering heavy losses due to their stupidity.  It is even more absurd for social media platforms to attempt to censor discussing these types of actions.

I don’t know what kind of regulations will come out of this whole thing, but at least for now, it seems like a victory for the little guy.  But we know that the establishment seeks revenge and then some.

The Silver Squeeze

On Friday, January 29, I heard rumors of a similar situation possibly taking place with silver. Some people in investor groups were advocating buying silver.  As they say, you buy the rumor and sell on the news.  Well, I should have bought on the rumor.

By Monday morning, February 1, the news hit the mainstream media and silver spiked even higher in price, along with some mining stocks.  The price retracted on Tuesday.  Where it goes from here, nobody knows.

It is interesting to contrast the difference between what happened to GameStop (a stock) and what could potentially happen to silver (a commodity).

I have been hearing forever that the silver market is manipulated.  It is typically silver perma-bulls saying this. They always say that it is a manipulated market and the price is going to skyrocket any day now because it is severely undervalued.  But it never seems to happen.  Silver is incredibly volatile.  It tends to move in tandem with gold, but with wilder swings.

Maybe there is manipulation (whatever that means) in the silver market.  But unless it is going to be corrected, then it isn’t much of an argument for buying.

The thing with silver, as with any commodity, is that you can actually buy the physical version. You can actually buy silver bars or coins.  When you buy a stock, you don’t take home a piece of the building where the company resides.

Much of the precious metals market, particularly in gold and silver, happens electronically. Most of the trading doesn’t actually involve silver and gold changing hands.  It is largely done in the futures market.

If there is a group effort to buy up physical silver, this could really disrupt the futures market and electronic trading.

Right now, when people trade futures, they don’t actually demand delivery of the good.  I’m not sure what happens if they do. Instead, they get the money for the value of the commodity.

It makes a little sense to go after the silver market.  It is obviously cheaper than gold.  And as far as I know, most central banks don’t hold silver, so it would be difficult for central banks to react to such a move.  If it were gold, the Fed could actually sell some gold into the open market (assuming they have some) and quickly shut down some relatively poor investors.

With silver, if a large enough group of people decide to start buying up silver, it really could cause a shortage, which means the price would rise quickly.

The one problem I see with this strategy is that many of these people are young and just want to buy with a push of a button on Robinhood or some other app.  Most of them probably aren’t going to pay a visit to their local coin dealer to buy some junk silver (which isn’t really junk).

It will be interesting to see if this run on silver has any legs.  And if it does, will gold follow?

I am a little concerned that it will call attention to the regulators (the busy bodies) and give them an excuse for government regulation.  I obviously don’t want to see higher taxes, trading restrictions, or an outright ban on precious metals.  If silver is going to go up in price, I would rather it be obvious that it is due to currency depreciation.

Of course, maybe the amateur traders will just expose that silver has been undervalued, especially when you see how much stocks have spiked from the Fed’s ultra easy money. But right now, the focus is on these investment groups pooling their money together to supposedly manipulate the market.

I am tired of the government and central bank manipulating the money supply and interest rates, but this is a core value for the ruling class.  I wonder if a group of investors on social media will start discussing how to expose the federal government and the Fed with their massive distortions and spending and debt.

If you think the ruling class is upset now with a nearly bankrupted hedge fund, wait until people start selling dollars en masse and dumping government bonds.

On Wednesday, January 27, 2021, the FOMC released its latest statement on monetary policy.  It came as no surprise that the Fed is holding its target federal funds rate near zero.

The statement says: “The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world.”

No.  The government lockdowns and restrictions, along with previous monetary policy, are causing tremendous human and economic hardship.

It wasn’t COVID-19 that shut down hundreds of thousands of small businesses across the country in 2020.

The statement also says: “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”

I also heard Powell refer to this in his press conference.  The Fed no longer just wants to get to 2 percent inflation (by their measure).  The Fed wants to go above 2 percent inflation to make up for previous inflation (by their measure) that ran below 2 percent.

This makes absolutely no logical sense except that the Fed wants to be able to run higher inflation numbers than its original stated goal.  Why would you have to make up for inflation that didn’t happen several years ago?  I mean, there was double-digit inflation in the 1970s, so maybe we should have some deflation now to make up for that.

The only reason for this newly stated goal is to provide cover when inflation (by their measure) exceeds the 2 percent target but they still need to help fund deficits and bailouts.  It is hard to send stimulus checks and bail out the whole country while having to keep inflation at just 2 percent.

There isn’t going to be any slowdown in spending by Biden and the Democrat-run Congress, or at least not if they can help it.  There are a lot of special interests and lobbyists in Washington DC to take care of.

The Fed’s Balance Sheet

The Federal Reserve’s balance sheet continues to grow.  It has slowed down from its unprecedented rise in March, April, and May of 2020.  But it’s hard to go up a trillion dollars per month every single month.

The FOMC statement says: “In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”

I’m not sure if we are on QE4 or what number we’re on now.  It’s hard to keep count.

Even after the unprecedented rise last year, the Fed is still continuing to add at least $120 billion in new money every month.  This is so unbelievable, it almost makes it sound rational that stocks and real estate have boomed in the face of a massive recession.

Interest rates, while ticking up a little, still remain near historical lows.  I believe this will continue until we see stronger signs of consumer price inflation.

Based on the political madness and the monetary policy madness, I am still a strong advocate of owning gold and gold-related investments.  I think owning actual gold, gold certificates, and gold ETFs are the safer play.  I think mining stocks will continue to be volatile, but there is potential for extraordinary returns there.

Even if we see the stock bubble finally collapse, I don’t think gold will go down that much. And any down moves will be temporary, as the Fed’s only solution is to create even more money out of thin air.

If confidence in the U.S. dollar starts to erode, then gold will rise quickly.  I expect we will eventually see a gold bubble too, but that is likely years away.

In percentage terms, the price of gold in dollars has gone up less over the last year than the Fed’s balance sheet.  Think about that.  And the Fed is going to continue to expand by at least $120 billion per month.

Financially speaking, there are two major events to prepare for right now: a popping of the stock market bubble and massive inflation.

We already have massive inflation in monetary terms.  But I expect we will eventually see massive price inflation.  Before that happens, I expect we will see a major drop in stock prices.

As the Fed said, there is “tremendous human and economic hardship across the United States and around the world.”  Unfortunately, the Fed is only contributing to this hardship, and things are going to get worse before they get better.

Ignorance is bliss in certain situations.  There are times in my life where I have felt that being ignorant would have been easier emotionally.  Sometimes being aware of something can cause more stress and anxiety than the problem itself would have caused without knowing.

I think ignorance is bliss for some people when it comes to politics.  If watching or reading the news causes you stress and anxiety, it is probably better to not watch it, especially when you have no control over what is happening.  Of course, in our world of fake news, you might be less ignorant by not watching the news anyway.

It is harmful to closely follow politics if you are going to use it as an excuse to not better your life.  “I can’t get a higher paying job with all of these immigrants coming in and stealing jobs.”  “I can’t start a business with all of these government regulations.”  I’m not going to save for retirement when the government is doing it for me.” “I’m not going to work on that side hustle of mine tonight because I have to see what all of my Facebook friends are saying about Trump.”

I’m sure you can think of your own examples.

With that said, I do think it is important to be aware of what is happening around you, and it is important to be knowledgeable and ethical.  I can’t imagine my life without a libertarian education.  I really don’t think I would trade it for 10 million dollars.

I also like to say that you may want to ignore politics, but politics isn’t going to ignore you. I think this was made quite evident in 2020.  In fact, I think it was hard for some people because they were almost forced to take a political position when they were previously able to remain politically silent for their whole life.

I suppose it is still possible to remain silent and refuse to answer people’s questions.  You don’t have to offer your opinion on mask mandates and lockdowns.  But your actions are going to tell everyone where you stand to some degree.

If you are staying at home and only going out for “essentials” while wearing a mask at all times, then it is pretty clear where you come down.  If you are prohibiting your children from doing activities, it is really clear.  On the other hand, if you are socializing up close with others and going to eat out at restaurants, it is also pretty clear where you come down.

Sure, it is possible that you may stay at home and believe the coronavirus is really dangerous without favoring lockdowns and other government mandates.  But these people are very few.  Most of the hysterics hang on to every word of the establishment and its corporate media, and they likely favor the government interventions that are touted by this same group.

Living Life

I never changed the way I was living since March 2020 except for what was forced upon me by government and society at large.  I haven’t “socially distanced” on purpose, except I have seen a lot fewer people because they are distancing.  Sometimes I am forced to wear a mask if I want to shop somewhere or attend something.

I live in Florida, which is open for business.  There are a lot of localities that have mask mandates, and a lot of businesses require them.  But businesses are open that want to be open, which is most of them.  Life is close to normal in Florida except you still feel like you’re in a hospital when going to the store, and activities in government-owned or government-controlled buildings are quite different.

In 2020, ignorance wasn’t bliss.  To me, ignorance meant listening and hanging on to every word spoken by the so-called experts. It meant following the establishment media and worrying non-stop about the “pandemic”.

I knew the establishment media was lying from the beginning for several reasons.  First and foremost, they lie.  If they’ll lie about things to get us into a war overseas, then surely they’ll lie about the severity of a virus.

I also knew that the mortality statistics they were quoting were fake.  The government-approved “experts” were saying that the virus had a 3 to 4 percent mortality rate.  This was coming out of China where they were mostly testing people who were really sick.  This is faulty statistical analysis.

If you tested people for the flu entering a hospital in the United States, you would probably get a 3 to 4 percent mortality rate there too.  People who are going to the hospital tend to be in bad shape. I’m sure there were many people in early 2020 in China who had the coronavirus or some other flu who didn’t get tested and recovered just fine at home.

I have always viewed this as something akin to the flu.  The hysterics love to quote the number of dead, now over 400,000, but they are again falling for propaganda and faulty statistics.  Early on, the federal government issued guidelines, along with monetary incentives, to code anyone who tested positive for COVID as a COVID death if that person dies.

If you said that anyone who has had the common cold in the last few weeks and dies gets marked as a death from the common cold, then you would have a pandemic of the common cold.

I am glad that I have seen through this whole thing from day one.  While it is frustrating to watch the world around me destroy itself, at least I am not in a state of panic, or at least not from the virus. My children, likewise, have no fear over the virus, just as it should be.

I watch these people who are nervous wrecks.  I see parents pulling activities away from their children.  I see two-year old kids in stores wearing masks.  I see people who are afraid to see any friends or extended family members up close.  They are living a life of panic and loneliness. I am not sure sometimes whether to laugh at them or to feel sorry for them.  Sometimes it is both.

These people are ignorant.  The thing about being ignorant is that you usually don’t know that you are ignorant.  These people got suckered, but they have no idea that they got suckered.  If someone tries to tell them they have been suckered, even in a polite way, they shut that person out.  “Don’t deny the science.”

Intelligent Ignoramuses

The problem is that the hysterics are largely intelligent people.  Many of them are well read.  Many of them have college degrees or advanced degrees.  Many of them make a good living.  Many of them are articulate.

Unfortunately, this hurts them.  They think that because they are basically intelligent people, that they can’t get duped. They think their intelligence applies to every facet of life.  They are blinded by their own intelligence.

 They will gladly listen to Dr Fauci and the other experts that are paraded before them by the politicians and the corporate media. If anyone questions the wisdom of these experts, then that person must be the ignorant one.  They aren’t following the experts.  They aren’t following the science.  They are deniers.  They are conspiracy theorists.  They are lower class rednecks.

This is why conversations with the other side are mostly hopeless.  You will sometimes find someone with an open mind who is willing to consider other viewpoints.  Sometimes you will find someone who just hasn’t given things much thought. Other than that, it is almost impossible to change people’s minds, especially when it challenges their whole worldview.  They were suckers, and they will never want to admit they were suckers.  The only way out is for the same people (the establishment) to tell them that it is ok to start resuming life again.  They need to hear from the same “experts” that things are safer now, whether it is because of a vaccine, or the wise policies of Biden, or whatever the “reason” may be.

I think the only other way to convert some people is to be an example.  Live your life to its fullest, given the choices around you. In 2020, I went to a wedding. I went to a large party inside a house.  We had neighborhood kids running through our house.  We go out to eat as much as we did prior to March 2020.  It has to bother some people who are living in fear inside their house.

You may not move people to our side, but maybe you can demonstrate that you can continue to live life without fear of the plague.  Maybe you can convince them, with your actions, that they can set foot outside of their house and survive.

It isn’t all or nothing.  There is a wide spectrum of people with varying degrees of fear.  The immediate goal isn’t to move everyone to not being fearful at all.  The goal is to move them one step closer to being less fearful.  Or maybe you can convince someone who isn’t fearful to be a little bolder in not always wearing a mask or speaking out more.

The hardest people to convince of anything are the intellectuals who believe they know it all.  They are the biggest suckers of them all.  Either that, or they are playing along and virtue signaling for the sake of their own career and reputation.  I’m not sure which is worse.

Joe Biden has become president.  I accepted this fate long before many Trump supporters did.  I knew it would be difficult to prove extensive election fraud, let alone actually get a fair hearing of it from an establishment that was determined to get rid of Trump.

I don’t think Congress or the U.S. Supreme Court should have tried to overturn the results.  It was fine for some members of Congress to challenge the certification process, if nothing else to draw attention to the likely fraud that took place.  But I don’t want the federal government overturning the Electors sent by each state.  It would set a very bad precedent for the future.

I don’t care that Trump continued to talk about fraud from the day after the election right up until the events of January 6.  I think he obsessed a little too much about it at the expense of other things, but I have no problem with him fighting and speaking out against a perceived injustice.

To some extent, Trump is to blame for allowing some of the election fraud to the degree that it took place.  He wasn’t ready for it.  He didn’t have the boots on the ground.  He didn’t have a ground infrastructure in places like Atlanta, Detroit, and Philadelphia to monitor these things.  Sure, it still would have been difficult.  It is difficult when the whole establishment is against you. But it still could have made a difference with more preparation.  The Trump team (if there was one) could have also challenged many of the state rulings early on that permitted changes for rules regarding mail-in ballots.

Trump went out very defeated.  The establishment had been going after him for five years, and they finally got their victory over Trump.  The second impeachment of Trump was just a victory lap.

Biden is now president.  With all of the announcements and executive orders being issued, I have seen nothing good so far. You would think that I could find one good thing out of many, but they are all bad from what I have seen so far. I’ll have much more to say about Biden/ Harris in the time ahead.  For now, I want to write about the end of Trump’s presidency.  It was unique in the fact that he was an anti establishment candidate, at least in rhetoric, who managed to get in.

2020 – A Year of Disaster

There is a lot of rhetoric when it comes to people discussing the president.  In every presidential election, we tend to hear the same line: “This is the most important presidential election of our lifetime.”  This is a rather sick joke when talking about Mitt Romney vs. Barack Obama.

In the case of Trump, there was something different.  A lot of Trump’s policies ended up not being much different, but the rhetoric was unique.  Trump also exposed the establishment/ deep state to the general public as never before. Sometimes it was inadvertent, but it became quite obvious that the ruling class despised Trump.  They also despise his supporters.

2020 was a different year.  I can’t help but think it would have been much different had Trump not been president.  Maybe we would have seen a virus scare. Maybe we would have seen riots and protests across America.  But I tend to think these things would have been much more mild without Trump.

In a sense, Trump gave us mass panic over a virus and massive rioting across the country for several months.  Trump didn’t actually give us those things, but the establishment gave us those things, probably as a way to get at Trump.  It could also be seen as a form of punishment to the under class for daring to put Trump in office and in continuing to support him.

Still, these things happened on Trump’s watch.  It was mayors and governors who locked things down starting in March 2020. But Trump was goaded into supporting these measures.  He originally came out and said that the virus isn’t a big deal and that Americans should go about their lives.  After he said this, they made him pay.  They made us all pay.  And we’re still paying.

Trump didn’t have to go along with the virus hysteria.  He was certainly better on the issue than most others in the establishment, but Trump could have been much better.  In many ways, he was a coward.  He showed weakness on this issue, so they pressed it harder.

I can’t directly blame Trump at all for the riots, even if the establishment and its media encouraged them because Trump was in office.  But when election time came around in November, it was hard for many people to say that their lives were made better by the Trump presidency.  I, myself, said that I might prefer for Biden to win if it meant that all of the lockdowns and hysteria would end. I wasn’t giving in to the demands of the Mafia.  It wasn’t my fault that people were total suckers in 2020 and went along with all of the hype of a virus to the point of accepting massive lockdowns and other mandates.

I also thought Trump showed incredible weakness by touting the vaccines.  If you remember back to 2016, there was actually talk about Trump setting up some kind of a vaccine safety committee and getting Robert Kennedy Jr. to head it up.  Of course, this never happened, and Trump ends his presidency by bragging about bringing vaccines to the populace quickly, which are largely untested. They certainly weren’t tested on the most vulnerable people in our society, who are supposedly the people who need the vaccine the most.

The Ending

Trump left office with a whimper.  He talked about his wonderful accomplishments, but I didn’t see most of what he talked about as accomplishments.  Much of it can be undone by the Biden presidency in no time.

Trump could have gone out with a bang.  He could have pardoned Julian Assange and Edward Snowden, two individuals despised by the establishment.  Instead, Trump only found the boldness within him to pardon the likes of Steve Bannon and Lil’ Wayne.

Maybe Trump was threatened.  Maybe he cut a deal with the devil.  Maybe he was assured that he wouldn’t be criminally prosecuted as long as he didn’t pull any stunts like pardoning Assange or Snowden.

I have defended Trump many times because of the idiotic accusations against him. Russiagate was a hoax.  The impeachment (number one) over Ukraine was rather ridiculous.  In fact, Trump sort of knew what he was doing in terms of investigating the Bidens.  They really were doing corrupt and criminal things.

With that said, I thought Trump left on a bad note.  It wasn’t his fault for what happened on January 6, as he did not advocate any violence.  But he didn’t necessarily handle it well afterwards.  And since he was kicked off social media, it was difficult for him to respond anyway.  He should have been prepared for the coordinated censorship.  He should have already told his followers to follow him on other platforms.  Again, it was another failure to anticipate on his part.

Trump left looking weak and broken, but we all know we haven’t heard the last from him. Whether or not he’ll run in 2024, I have no idea.  I also don’t know how much the left and the establishment will continue to obsess over him now that he is out of office.

Anyway, all of those predictions about how Trump wouldn’t leave office were never true.  I had no doubt that Trump would leave office if defeated.

Foreign Policy

Trump was completely inconsistent on foreign policy.  But as I’ve said many times, I would rather someone who is inconsistent than someone who is consistently bad.

We didn’t get any new major wars.  This is the first time in at least 4 decades for any presidency.  That was a major positive.

Of course, Trump was a disaster in many ways.  He ordered the assassination of an Iranian official and almost started a war there.  He pulled out of the agreement with Iran, which was one of the few decent things done by the Obama administration.  He dropped bombs on Syria due to allegations (likely false) that Assad was using chemical weapons on his own people.  Trump started to interfere in Venezuela, but luckily that went nowhere.  Trump continued the brutal war and sanctions against the people of Yemen.  He continued all of the wars that he inherited, and his administration continued to drop bombs in many places.

Trump talked about withdrawing troops in several places, but he could never quite seem to get it done. It is a problem when you hire a bunch of war hawks in your administration.  This was a major fault of Trump in his whole presidency. He surrounded himself by people he couldn’t trust.  Many of them despised Trump, but they put on a fake face for him and pretended to support him.  The few people who actually did support Trump ended up being prosecuted by the FBI.

I thought one shining moment of Trump’s presidency was when he met with Kim Jong Un of North Korea. Trump handled him very well and showed diplomacy.  Can you picture Hillary Clinton ever doing that?  Could you picture Biden or Harris doing that?  Trump showed that there was really nothing to fear over North Korea, and a little diplomacy can ease tensions quickly.

Economics

Trump was decent on some things and horrible on others.  He cut taxes, including the incredibly high corporate tax rates.  That was a major positive.

Trump also managed to actually roll back some regulations, which is something that is almost never done.  We live in a bureaucratic administrative state.  He didn’t come anywhere close to ending that or even reforming that.  But Trump probably did about as well as could be expected in not growing the number of regulations more.

Trump was horrible on the issue of protectionism and tariffs.  This showed his lack of understanding in economics.  It also exposed the lack of understanding of many of his supporters.

Trump was horrible on the issue of spending.  The deficit exploded on his watch in 2020.  This is just a continuation of previous administrations.  He, of course, did nothing to address the long-term problems with the debt and unfunded liabilities.

Trump was critical of the Federal Reserve and nominated a controversial figure (to the establishment) to the Fed (Judy Shelton), but he was all over the place.  When he criticized Powell, it was because he was being too tight.  Trump wanted lower interest rates and more monetary inflation.

In some ways, I think it is good for Trump to be out of office now.  The stock market is in a major bubble.  It was probably already in a bubble when he was first elected, just as he pointed out in 2016.  If that was a bubble then, I don’t know what to call now.  Biden and Harris can deal with the popping bubble.  They will try to blame Trump, but that will be a tough sell for many.

Trump did very little to improve the economic situation in this country.  The Federal Reserve and the overall spending are the biggest problems, and he just made things worse.  No politician is going to “fix” these problems.  They will fix themselves, if that’s the word you want to use, when the government can no longer keep the game going.  We will have to see higher price inflation first before that happens.

Conclusion

In conclusion, the Trump presidency was a mixed bag.  It wasn’t great for liberty except that he helped to expose the establishment. He made many Republicans realize that the Mitt Romneys of this world are not their friends.  Following in Ron Paul’s footsteps, Trump made it ok to be a Republican and not be a war hawk.

Trump was entertaining for me in many ways.  I will actually miss his pettiness to a certain extent.  Trump just about ruined stand-up comedy.  I can’t watch any of the late night shows on television any more, as they just obsess over Trump, and they aren’t funny.

I think it is time to move on.  Biden will be a disaster, but at least people will have to find someone else to blame.  They will still blame Trump and his deplorables, but it won’t be as effective.  My hope is that Trump supporters will show opposition and gain some principles in the process.  Now that Trump is out of office, they can start complaining about the debt.

Biden and the establishment are fully back in the driver’s seat.  But there are 75 million people who voted for Trump who aren’t going away.  They voted for Trump because they are dissatisfied with the system.  They feel that the system has failed them, and they are largely correct.

The worst part of a Joe Biden presidency would be another major war.  As I write this, Donald Trump has less than 48 hours left in office.  Assuming nothing really crazy happens in the next 2 days, Trump will be the first president in at least 4 decades to not start a new major war.

Trump failed to end the wars he inherited.  The military continued to drop a lot of bombs on his watch.  The war making and starvation against the people of Yemen continued.  Trump got close to an all-out war by assassinating an Iranian official.

So Trump has been bad in many ways with regard to foreign policy, but he has probably been the best over the last 4 decades.  He was definitely better than any president since Reagan.

I fear that will change under Biden.  Biden is an establishment guy.  I don’t think he is making many decisions, if any, at this point. If his handlers want another war, then another war we’ll have.

Just about every Biden cabinet pick and advisor is there for his or her diversity (not diversity of thought) or for his or her reliable history in making war.

Maybe the establishment has its hands full right now and won’t move on to yet another war. It’s possible.  If there is another war, then it will obviously impact the people of that country the most.  Americans aren’t typically directly impacted by American wars except for the occasional blowback and the hidden costs.  They obviously aren’t good for the people and their families who get deployed, but the vast majority of Americans feel no direct impact.

They are impacted financially, but they don’t really know it.  The war spending can be financed through debt and inflation. It doesn’t work like a reverse UBI where the government comes knocking on your door asking you for your share of the costs of war.  You don’t have to write out a check for $800 in order to deploy the troops and drop the bombs.  The impact is subtle through monetary inflation, which makes people’s dollars worth less over time.

Domestic Policies

So while I think another war would be the most disastrous thing, especially if it is with another country that can actually fight back, in most cases it won’t be something that impacts Americans the most.

The biggest focus in terms of the economy is on the coronavirus and the lockdowns.  Up until now, the lockdowns have been implemented at state and local levels.  Governors and mayors did what Trump didn’t do, even though the federal government was recommending and pushing for lockdowns back in March of 2020.

I have heard speculation that Biden may try to implement a nationwide lockdown for something like 6 weeks.  It would probably happen around the first of February.  I have no idea if this will happen.  I suspect that states like Florida and South Dakota will ignore it.

I think the big threat here is that it will force the hands of major companies to comply.  It isn’t that much different from Twitter and Facebook shutting down Donald Trump.  There will be a culture where it will be expected that you will shut down. Big companies and big organizations will likely comply.

Maybe this will be Biden’s excuse to say that he did something bold and effective. After the flu season ends, Biden and company can declare victory, at least in the short term, until they need another crisis to exercise more power.

It’s also possible Biden will do something much more mild, like asking everyone to wear a mask for 100 days.  Of course, that would probably lead to fewer people wearing masks, but most everyone is playing pretend these days anyway.  He can declare victory over the virus after his mask ask.

Moral Hazardous Bailouts

In the longer term, aside from a new war, I think the most disastrous thing to come out of Biden may be a massive bailout of the states.

To be sure, the lockdown states have already been getting bailed out to a large degree.  It was governors and mayors that locked things down, so why is it the federal government bailing everyone out?  This includes expanded unemployment benefits and business bailouts.  There are more failing businesses and unemployed people in the lockdown states.

So the lockdown states are getting rewarded for their bad policies.  It is a form of moral hazard.  They can keep going with their bad policies if a lot of the people being harmed by them are getting bailed out.

I think Biden’s bailouts will be worse and more direct.  There will be money going directly to highly corrupt governments like those in California, Illinois, and New York.  Biden is going to reward his blue states that are heavily populated. They will be rewarded with your tax money for their totalitarian policies.

It allows the bad policies to go on longer than they should.  It allows the corrupt governments to keep being corrupt and not face as severe budget woes.

I can’t predict what will come of this administration except that it will be fully run by the establishment and we will probably see more unprecedented spending.  The unprecedented policies from the Federal Reserve will also likely continue.

America will survive Joe Biden.  America will even survive Kamala Harris.  But we are likely to see some tough times ahead.  They will only be able to blame Trump for so long.

The American people need to wake up and stop accepting these lockdowns and other restrictions done in the name of science.  They are totalitarian edicts, and Biden is going to help prop up these authoritarians with direct and indirect bailouts.

You don’t get wealthy by paying interest.  You get wealthy by earning interest.

This is one of my favorite lines when it comes to personal finance.  While I am not adverse to all debt, I do think that a good path to wealth entails minimizing debt and not holding any bad debt.

While being a proponent of minimizing debt and being somewhat risk averse in terms of investing, I have great concerns regarding inflation now and in the future.

Many people who fear inflation are not adverse to debt.  They may promote various assets to hedge against inflation, or to even make money from inflation.  These assets could include stocks, real estate, gold, and other commodities. In many cases, they even find it useful to use debt in order to finance these purchases.  This is especially true when it comes to real estate.

Some have an even more flippant view of debt because they believe inflation will take care of the debt.  In other words, if the currency is depreciating by 10% per year, then you shouldn’t care about having debt at 5% interest.  After all, you are paying back the loan in a depreciating currency.  This can even be an excuse to take on more debt because it means paying it back later on when the money isn’t worth as much.

There are several problems with advocating more debt because of an expectation of inflation.

First, if you have a loan with a 4% interest rate, you are paying that 4% interest for as long as you have the loan.  It is extra money going to the lender out of your pocket.  Whether or not the money is rapidly depreciating, the money is exiting your account and going to the account of the lender.

Now, there is a counter to this that it would be better to borrow money at 4% interest and to get a return of anything higher than this (less taxes owed on the gains).  If you can borrow at 4% and get a return of 8% on this money, then it makes sense.

But that leads to problem number two with advocating more debt.  You don’t know that you will be right.  Maybe inflation (monetary or price) will stop. Maybe the currency won’t depreciate as much as you think.  Maybe the assets you buy won’t go up in value, even nominally.

There were people predicting runaway price inflation in 2009 with the Fed’s reaction to the financial crisis.  There are people still predicting runaway price inflation in Japan due to the massive government debt-to-GDP and the easy money policies from the Bank of Japan.  So far, they have been wrong.

Sure, if I knew that gold was going to go to $20,000 per ounce in the next 10 years, then I would borrow money at a low interest rate and buy as much gold as I could. But I have no idea that this will happen.

While I suspect that we will see higher price inflation in the future and that certain assets will go up in price, I really don’t know for sure.  This is why we diversify.  Diversification isn’t just about the investments that you buy. It also means diversifying your situation, which includes not overloading yourself with debt.

The best financial diversification is to have absolutely no debt and to have money left over to invest in assets that perform well in an inflationary environment.  You are protected either way with inflation or deflation.

Gold is an inflation hedge.  Paying off debt is a deflation hedge.  Paying off debt also just makes good sense.  The worst-case scenario with paying off debt is that you could have used the money for something else to get a higher return.

Mortgage Debt

I am currently refinancing my mortgage.  My current rate is just below 4%, and I have a little over 19 years left on it.

I was looking to refinance to a 20-year mortgage.  I could pay it off in about the same time while lowering my monthly payments.

However, when I was looking at rates in late 2020, the rates for a 15-year fixed mortgage were much better.  I have locked in a rate table that includes a rate as low as 2% on a 15-year loan.  This would include paying points (additional closing costs).

As of right now, I am going to refinance to a 15-year mortgage even though my payment will go up slightly (less than $100 per month, even with rolling in closing costs). I will pay off my mortgage in 15 years instead of in 19 and a half years.

I don’t know if this will turn out to be the mathematically optimal decision.  What I do know is that I think it is the right decision given what I know right now.

If I knew with absolute certainty that gold would go up 10% per year every year for the next two decades, then I would be better off doing a refinance into a 30-year loan.  I would also be better off taking out a large loan as a cash-out refinance.  The same goes if I knew that stocks or bonds would give this return in the future.

But I have no idea. I suspect that we will hit higher price inflation ahead and that gold will do well, but I am not certain.

What I am certain of is that I will pay my mortgage off in 15 years or less.  Even if we do hit much higher inflation, I will have locked in payments that I can afford.

I know there are people who are taking advantage of the low rates and refinancing into a 30-year mortgage.  There are people doing this even when they have owned their house for 5 or 10 years, or even longer. They’ll go from having, say, 20 years left on the loan, to restarting back at 30 years with a much lower payment.

While cash flow is important, I think it is shortsighted to do this in many cases.  You could keep refinancing back to a 30-year loan every 10 years and lowering your payment, but you will never actually get rid of the payment.  It is especially problematic when people do this and take cash out, thus pushing the loan balance higher again.  It is understandable for people who are really desperate and need the money, but it doesn’t make a lot of sense to do this if the money is being used for a new pool or new granite countertops in the kitchen.

There is no right answer to all of this.  Personal finance really is personal.  However, it is important to give proper thought to taking out more debt or even refinancing existing debt.

While I think everyone should prepare for higher price inflation ahead, you shouldn’t bet the farm on it.  This means not going into more debt on a possible false assumption that the currency you use will rapidly depreciate in the coming years.

If you want to become wealthy, you aren’t going to do this by continually taking on more debt. Debt can be useful in growing a business or buying real estate, but it should be used with careful thought.