It has surprised me in 2020 how easily Americans surrendered personal liberty because of a virus. From this time forward, any time politicians or bureaucrats want greater control over the populace, should we expect to hear about a new deadly disease to scare the people into giving up more liberty?

There tend to be two camps with regard to the coronavirus.  There is one camp of people who think the virus is incredibly serious and much more dangerous than anything we have dealt with in the last hundred years.  They tend to believe most of what the establishment media tells them. This group also tends to favor government lockdowns and mask mandates.

The other camp thinks the hype over the virus is vastly overblown.  They don’t believe everything the so-called mainstream media tells them.  There are widely varying opinions on the seriousness of the coronavirus, but this camp generally thinks it is not as serious as what is being told to them by the establishment media.  This group tends to oppose government lockdowns and mask mandates.

As with most things, there are nuances.  I know of a few people who thought the virus was incredibly serious and far more dangerous than a typical flu.  Yet, they opposed all government lockdowns or any other infringements on liberty in the name of fighting the virus.

I don’t know of anyone who thinks the coronavirus isn’t a big deal but favors government lockdowns and mask mandates.  I’m sure there are politicians and bureaucrats who fit in this category because they just want more power and control, but they are lying.  They are not publicly saying that the virus isn’t a big deal. They are saying it is a big deal so that they can implement their controls over people.

Trusting the Establishment Media

I believe the number one reason I have withstood much of the propaganda is because I don’t trust the establishment media.  Actually, it goes beyond that.  I tend to believe the opposite of what is said until I can verify otherwise.

These are the same people who said that Iraq had weapons of mass destruction.  These are the same people who said that our houses would be underwater due to climate change.  These are the same people who said that Assad used chemical weapons against his own people.  These are the same people who said that Trump colluded with Russia and that Russia hacked the DNC email server.  These are the same people who are now telling us that the Russians paid the Taliban to kill U.S. soldiers.

The establishment media continually lies.  Perhaps even worse, they often present facts without telling the whole story and presenting the whole picture.  They will also cite each other as sources after the original source is based on “an anonymous member of an intelligence agency” or something to that effect.  They also like to cite “studies” that favor their agenda while ignoring others that do not.

When the media started hyping up the virus in late February and early March, I knew not to believe anything said unless I could verify it otherwise.

Back in February, Trump said that the virus in China wasn’t that big of a deal and that Americans should go about their lives.  As soon as he said that, I think it was over.  The establishment that so dearly hates Trump was going to make sure to have him eat his words.  At that point, they were determined to make the coronavirus as bad as possible.

This was the first trick against Trump that really worked.  It took Trump down a few notches.  It also destroyed the economy, which was the main issue that Trump was going to promote in the 2020 election.  The coronavirus and the media’s hype of it did to Trump what Russiagate, Ukrainegate, and everything else failed to accomplish.

Statistics

There was another reason that I never bought into the propaganda about the coronavirus. I can read statistics.

I never believed the modeling.  The models were as reliable as the models used to tell us rising sea levels will put a large chunk of the U.S. underwater in the next few decades.  I don’t care about some hack who says that 2 million people in the U.S. could die of coronavirus based on his phony modeling.

But the statistics were faulty from the beginning.  They were saying that the mortality rate was probably between 2 and 4 percent.  I knew this was bogus. This isn’t how they measure the mortality rate of the flu each year.  With the flu, they make a projection of how many people had the flu.  It isn’t based on positive results.  You can’t just take the number of people who died with the coronavirus divided by the number of people who tested positive for it.

When the 2 to 4 percent mortality rate was being cited, it was based on what was happening in China. Aside from that, it is faulty statistics.  The people testing positive were the people who tended to be the most ill.  So of course the death rate will look high when the total sample of the population is very sick to begin with.

In a typical flu season in the U.S., you might only have a couple hundred thousand people actually test positive for the flu.  But they may project that, say, 30 million Americans actually had it because most people with the flu just stay home and never get tested.  That is how the mortality rate is calculated. In the case of the coronavirus, they were just taking the total deaths divided by those who tested positive.

I figured this out from the beginning.  Why were no other media outlets reporting it this way?  It doesn’t take a mathematician to figure this out.

What to Believe

It is hard to know what is true any longer.  We have been sold so many lies; I can’t even discount some of the seemingly more far-fetched theories out there.

I am quite certain that the death counts have been vastly overstated.  Just because you test positive for coronavirus and you die, it doesn’t mean you died due to the coronavirus.

I don’t trust the case numbers.  They are not counted consistently, and you don’t necessarily have to test positive for the virus to be considered a “case”.

There are theories out there that this virus was made in a lab.  It could have even come from the U.S. government.  I have even read people claiming the whole virus is fake.  In the case of some New York City hospitals, it looks like some people would feel sick and test positive for the virus, or even not test positive.  They would go into the hospital with a panic attack, and the doctors would drug them up and throw them on ventilators to die.  I strongly believe that regardless of the details, people were essentially being murdered in New York City, and likely elsewhere.

There are major questions surrounding testing.  How accurate are the tests for coronavirus?  What about the reliability of anti-body tests?

There are doctors who say that hydroxychloroquine has been very beneficial for coronavirus patients, while others say it is ineffective or even dangerous, especially since Trump has advocated its use.

In addition to all this, we are told to listen to the epidemiologists.  But really, they just want you to listen to the epidemiologists who will tell you the establishment-approved opinion. There are epidemiologists who don’t think the coronavirus is more serious than a regular flu.  There are epidemiologists who don’t think there should be government lockdowns.  But you don’t hear from these people, unless you search them out on your own.

“Expert” doctors give us conflicting information all the time.  That is the case in many fields.  So how is anyone supposed to know what is true?

Knowing Principles Without Knowing Facts

Although we can’t rely on “experts”, we can rely on a foundation of principles.  In this case, I refer to the non-aggression principle (the NAP).  Most libertarians should be familiar with it.

I have my own nuances with the NAP.  This is why I actually favor the Libertarian Party pledge.  Unfortunately, many members of the Libertarian Party don’t seem to follow it.

I believe there may be some rare circumstances where you could conceivably use aggression at least somewhat justifiably.  It isn’t to say it is moral or immoral.  I have used an example of where you are stuck in the middle of a desert and dying of thirst.  There is one person who has hundreds of bottles of water, but he won’t let you have any.  I would probably violate the non-aggression principle and take enough water to survive and be willing to face the consequences of violating someone else’s property rights.

Again, this is an extraordinary example that isn’t likely to ever happen.  In almost all cases, it is safe to stick by the NAP.

What has happened in 2020 is a good example of why it is important to have a foundation of principles – in this case, the NAP.

You don’t have to figure out which experts to trust.  You don’t have to figure out the seriousness of the virus and whether the testing is accurate.  You don’t have to figure out whether the death count is vastly overstated. You just have to understand the NAP.  From there, it is obvious that there should be no government lockdowns, or government mask mandates, or any other government orders.

Notice that the people who oppose lockdowns are almost never imposing their view on others.  I haven’t heard anybody say that a sick or elderly person has to go out shopping.  I haven’t heard anybody say that you are forbidden from wearing a mask (although this used to be the policy of most banks).  Anyone who thinks the virus is incredibly dangerous is free to self-quarantine and take any other measures necessary that don’t violate the rights of others.

To be sure, you still have to make assessments for yourself and your family.  You have to decide if you want to wear a mask. You have to decide if you want to socially distance from others.  You have to decide if you want to eat at a restaurant.  It would also be up to business owners to decide on any policies for their customers.  I may elect not to shop at a business that mandates a mask, but it would be the business’s right to implement such a policy for its customers.

If we had a free market without government interference with voluntary decisions, things would work so much better.  Even if I thought most people were paranoid for nothing, it would tend to resolve itself quickly.

Again, anyone who wants to stay at home is free to continue to do so.  In the meantime, allow people who are willing to bear more risk to go out and do what they want on a voluntary basis.  If anything, this would build up herd immunity faster, and it would be the people willing to take the risk who would lead the way.

The NAP is not a magic bullet that cures all problems in society.  We still have to make personal judgments.  We have to decide which “experts” we are going to listen to.  But with the NAP, it vastly reduces conflict, and it allows society to voluntarily find solutions to problems without imposing on everyone else.

Happy Independence Day!  I am celebrating my freedom by sheltering at home while wearing a mask and spending my government stimulus check.  I sure am glad that I’m not ruled by the British Crown.

When the American colonists seceded from the British, taxes were in the neighborhood of 1 percent. Now, the U.S. government is spending almost 1% of annual GDP every week.  It’s for our safety and security of course.

Just in 2020, we have had state and local governments shutting down private businesses. Perhaps we should be celebrating how our great federalist system has held up.

The Democrats have been concerned throughout Trump’s presidency that he is acting like a dictator.  But when the coronavirus panic hit, the Democrats chastised Trump for not imposing lockdowns. Biden recently said that he wants the federal government to mandate mask wearing.

When the lockdowns were in full swing in April, Trump threatened to use his power to open up the economy.  Then the political left all of a sudden found states’ rights.  Momentarily, states’ rights no longer meant slavery to the left.  It gets really confusing.

Then the protests broke out at the end of May.  All of a sudden, mass gatherings no longer mattered.  Social distancing didn’t matter.  We were originally told the coronavirus was racist because there were a disproportionate percentage of black people dying from it. But as soon as the protests broke out, Black Lives Matter was immune to it, at least according to the media. If you are gathering in mass crowds for social justice, then the coronavirus stays away and you are safe.

With the protests came calls to defund the police.  So the radical leftists favor strict gun control, which means only the military and police would own guns.  But then they want to defund the police.

Are you getting all of this?

Now the protests and the rioting and the looting are slowly settling down.  But we are in “a second wave” of the coronavirus as the number of cases has gone up.  More young people are testing positive, but it is reason enough to impose mask wearing and even re-imposing lockdowns.

This is America 2020.

Meanwhile, the Federal Reserve has increased its balance sheet by approximately $3 trillion over the last four months.  The Fed can now buy almost anything, including stocks and corporate bonds. Stocks are back up as a result. Higher stock prices means capitalism and freedom, right?

The federal government has run up several trillions of dollars in debt over the course of just a few months.  It gets expensive handing out free money to most adult Americans.  It gets expensive paying the majority of unemployed people more than what they were making while working.  It gets expensive to bail out major corporations. Whoever said freedom is free?

That $1,200 check from Uncle Sam will sure buy you some nice fireworks for July 4^th. Don’t worry about paying your rent or mortgage.  You don’t have to for now.  Don’t worry about the rising price of food.  I’m sure it will come back down.  After all, we have freedom.

One unfortunate thing about the coronavirus lockdowns is that schools have been closed.  Now little children may not be taught that they should thank the government for making the world safe for democracy. They may not know that the government saved us from the Great Depression and is there to stimulate the economy when it needs a boost.  I’m sure these children will tune into the reliable news media and get the right facts.  After all, unlike China and Russia, the U.S. media is free and independent from the government and will give you the unbiased facts.

I can’t take much more of this freedom.  You should see the excitement on my face underneath this mask.

Happy Independence Day!

I saw someone on Facebook post an article about how people were resistant to seatbelt laws when they first came about.  Now, most people accept seatbelt laws and think they are good.

The reason for the article is to compare it to the resistance of some today to wear face masks in public.  I use the word “public”, but in many cases it is actually on private property (i.e., businesses).

The posting of an article on seatbelts just makes me more adamant about opposing face mask requirements, especially requirements coming from the state.

First, I am opposed to seatbelt laws.  I won’t get into the issue of children, but for adults, there is no question from a libertarian standpoint that there should be no seatbelt laws.  Unlike masks, I am an advocate of almost always wearing a seatbelt when driving, but I don’t think it should be mandated by the state.  I advocate that some drugs are very harmful too, but I don’t think governments should be dictating what grown adults put into their bodies.

Second, and worst of all, by using seatbelt laws as an analogy to wearing a mask, this means that the people who are criticizing the mask wearing are right to be concerned. If people are citing seatbelt laws as an analogy, it means we might be faced with wearing a mask for the rest of our lives.  Seatbelt laws are still with us after many decades.

One of the arguments I have used against mask wearing (and the government lockdowns) is by asking whether this should become the norm.  After all, there is always some kind of virus out there.  You could unknowingly have it and unintentionally spread it to someone else who is vulnerable due to poor health, and this person could conceivably die from it.  At the very least, there is always some kind of flu bug in the wintertime that is prevalent, so do we always need to wear a mask in public during the winter months?

I have asked these questions to show the absurdity of all of this, expecting people to at least admit that we can’t live like this forever.  But now there are people who are basically saying this is the new normal.  I am starting to think that there will be people who fully expect everyone else to wear a mask forever when they are out in public; otherwise they are putting others in danger.  This is the point we have come to in just a few months.

Liberty Works

The U.S. was already divided politically before the coronavirus.  I think it may be divided even more now.  I think many people view it as Trump supporters not wanting to wear masks, while the anti-Trumpers want to be responsible and respectful to others and wear masks.  That is the anti-Trump perspective anyway.  Many pro-Trumpers would say that the left is trying to shove mask wearing down our throats.  If this were true, I would fall in line with the pro-Trumpers on this.  But it isn’t as clean as this.

As I’ve pointed out before, there is a mix of ideologies.  Sure, the pro liberty people are obviously going to oppose mandates to wearing a mask.  It is hard to call Trump pro liberty, but I guess everything is relative.

Still, I see many people who would not be natural Trump supporters who are ignoring the government and the establishment media in lecturing people about social distancing. There are many young people who want to be able to live their lives, and who can blame them?  When you see people partying on spring break, I don’t think a majority of these people would call themselves Trump supporters.

Anyway, we have a massive divide now between those who are ultra paranoid about the virus and those who are not.  But most of the people who are really paranoid are not content in just staying isolated. They want everyone else to be forced to be isolated.

(By the way, if you were really concerned about the virus, wouldn’t you want young and healthy people willing to take the risk to go out and get the virus and build herd immunity?)

I know of a few people who are really paranoid about the virus who adamantly oppose government lockdowns.  So maybe the divide isn’t the ultra paranoid vs. the non-paranoid.  The bigger divide is between the people who favor government lockdowns vs. those who oppose government lockdowns.

The people who are not really paranoid about the virus are not trying to impose their ways on others in most cases.  I don’t know of anyone who says that people concerned about the virus should be forced to leave their homes to eat at a restaurant or do anything else.

The wearing of masks gets a little more nuanced, so that’s why I think the pro lockdown people have grabbed a hold of this issue.  They will say that anyone not wearing a mask is violating everyone else’s rights because they could be spreading the virus.

From a libertarian standpoint, the solution as always is voluntarism and property rights.  I personally don’t want to wear a face mask, and I think there are valid arguments that they are even detrimental to people’s health.  They are certainly detrimental to people’s mental health when you feel like you are in a hospital everywhere you go now.

A business is private property.  Just because it is open to the public to shop there, it doesn’t make the ownership any less so. It should be up to each business whether they want to require masks, require not wearing masks, or leave it up to each individual entering the property.

I can accept this. In fact, I think it is the only solution here that is a peaceful one.  If a store requires a face mask, I can make my own decision on whether to wear one or just not shop at that place.  This is the case now with some businesses, but there is an issue that some businesses feel compelled based on government guidelines or in anticipation of government edicts.

The problem is that people long ago gave up freedom of association.  Businesses are prohibited by law to discriminate for certain reasons.  Businesses are prohibited in doing many things.  They can’t hire workers at certain wages.  They are also required to get a business license.

Yet, this voluntarism is the obvious solution.  I shouldn’t have to convince everyone on Facebook and everywhere else to view it my way in order to keep the state out of it.  The state shouldn’t be in it in the first place.  If you want to argue in favor of wearing masks, then let business owners know your preference.  If a business doesn’t require masks, then people can choose not to shop there, or they can take advantage of this great technology of picking up orders or getting them delivered.

Once again, as with so many issues, it comes down to coercion.  I think the hype about the coronavirus has been way overblown. The state, particularly the U.S. federal government, has played no small role in spreading hysteria.  But even if a majority of people were paranoid as now but without any state interference, we would be so much better off.  People would be able to freely associate as they desire.  If a restaurant wants to stay open at full capacity, that would be its choice.  It would also be the choice of individual consumers on whether to go there.

So if you think that the virus is really horrible and believe everything that the establishment says, that is fine, but it doesn’t mean you have to use state violence to impose your beliefs on others.  This is really the dividing line of our society now.

Do you want to use state violence to implement your political or social goals?

It’s hard to know where things are headed.  We have a continuation of fear sweeping the planet over the coronavirus. In the United States, most things deemed “non-essential” were shut down by state and local governments. There has been a partial reopening with numerous regulations for businesses to follow (as if they didn’t have enough to follow already).

The federal government (in this case, the Trump administration) has largely taken a federalist position with regard to the lockdowns.  Trump mostly left it up to governors and mayors to impose lockdowns or not impose them.  But, of course, the federal government has done massive damage.  It has helped with the propaganda, and the FDA and CDC have had great impacts on disseminating information (or disinformation) on the virus and in dictating how it should be treated.

Beyond this, the response by the federal government and the central bank (the Federal Reserve) has been monumental in terms of the economy.  The U.S. government was already running an annual deficit in the neighborhood of one trillion dollars.  It has now piled on trillions of more in the matter of a few months.

Meanwhile, the Federal Reserve (the Fed) is monetizing most of this new debt.  Its balance sheet has swelled by about $3 trillion in a few months.  This is unprecedented.

Inflation or Deflation?

There are counteracting forces taking place.  On the one hand, people are generally fearful and trying to save money instead of spending it on unnecessary consumer goods and services.  Money is exchanging hands at a slower pace. This is price deflationary.

On the other hand, you have the government handing out checks with the Fed creating new money like crazy.  This is price inflationary.

The question is, which one will win out.  I don’t have an easy answer because it depends on the actions of millions of people.  Actually, it largely depends on the actions of a handful of people with the Federal Reserve.

We are likely to get a combination of both.  For example, the price of a nice vacation may go down in the next few years to come.  The price of certain luxury goods might come down.  The price for a new car will likely fall in the near term.  Even the price of oil may stay down.  The price of food will likely go up. It is a necessity.

Who knows where real estate will go.  It will probably be mixed.  Commercial real estate is likely to take a major hit and go down.  I would imagine the price for an apartment in Manhattan will go lower.  Housing in the suburbs of major cities could go up.

Even though price changes will vary dramatically for different goods and services, we should expect something (inflation or deflation) to dominate.  Overall prices will go up or down.  I tend to lean in the direction of eventually seeing higher price inflation, but I really don’t know.  Maybe the Fed can continue to inflate to some degree while being stuck in a recession without rising prices.  Japan has had massive deficits and monetary inflation over the last several years without seeing an explosion in price inflation.

I don’t want to bet against the Fed.  At this point, it looks like the Fed will do whatever it takes to create some positive inflation, which it sees as a good thing.  But I can’t completely discount a massive depression where people are fearful of spending anything beyond necessities even in the face of massive monetary inflation.

For this reason, I am hedging my bets.  It is difficult to prepare for both scenarios.  The best you can do is to diversify.

Diversification

I recommend a permanent portfolio, which I partially follow myself.  But I have gone beyond this, as I don’t want to have a lot in stocks these days.  Even with bonds, I don’t see a lot of upside because rates are so low.  They could go negative, but I actually don’t think that would last for a long time if they do.

I like two things that are seemingly contradictory: gold investments and getting rid of debt. On the latter, I like the idea of having liquid money, but if you have debt, then it may be better to get rid of debt that costs interest instead of holding cash that pays virtually no interest.

I had someone ask me why someone should pay down debt if the dollar is going to depreciate. After all, you can pay back the debt later with currency that has lost some of its value.

My first response is that we don’t know for sure if we will see massive price inflation.  We don’t know that the U.S. dollar is going to rapidly depreciate.  It is not a sure thing.

But even if you did know that you would be losing, say, 5 to 10 percent per year in the value of your dollars, it still might make sense to pay off debt.  This would be especially true if your interest rate is high enough.

Even if you have a mortgage or car loan at 4%, why not pay it off?  It is always a good idea to have some money in the bank.  It isn’t a good idea to be living on the edge or have everything tied up in investments.

So if you are going to have money sitting in the bank earning almost zero interest, why not take some of this money and pay down or pay off a loan?  You don’t want to drain all of your money so that you can’t cover an unexpected emergency, but if you can gain cash flow by paying off a loan, this is especially beneficial.

Just to be clear, I am somewhat following my own advice here.  I recently paid a little extra towards my home mortgage, which has a rate just below 4%.  I am thinking about refinancing in the near future, so I can always pull this money back out anyway.  But I do caution putting money into a mortgage and leaving yourself short on liquid funds.  You can’t pull that money back out of the mortgage unless you sell your house or refinance.

On the other hand, I am considering some additional investments to protect against inflation. I think gold mining stocks are going to explode upwards at some point, but I admit this is very speculative. If I buy any more stocks at this point outside of a permanent portfolio, they will be in specific sectors.

Again, I tend to think price inflation will win out over price deflation, but I don’t think you will go wrong by paying off some debt if you have any.  If there is anything you can actually pay off (and not just pay down), then you should especially consider it.  Even if your dollars depreciate by 10% over the next year, it is better to save 4% interest than have it sit in the bank.

If this is unclear, then think about this: You will only get wealthy by collecting interest, not paying interest.  This is one of my favorite lines.  It is so simple, yet so easily forgotten or ignored.

Sure, people have gotten wealthy by taking out massive loans to buy real estate or start a business. But even here, they get wealthy because they collect more in interest, or rent, or dividends, or profits than they pay on the loans.

At this time, I am a strong advocate of saving cash, paying down debt, and hedging against inflation, particularly with gold investments.  If you have savings and are not sure what to do with it, take half of your money and buy gold and take the other half and save it or pay down debt.  I don’t think you will regret this strategy down the line.

I have been reading headlines about an imminent decline of the U.S. dollar.  A few of these have come from websites selling gold, so that isn’t surprising.  But there have been some similar pieces from more establishment outlets.

These articles are not talking about the dollar declining 5% against other major currencies. They are talking about a massive fall.  They sometimes use the word “collapse”.  Or they say that the dollar will no longer exist in a few years.

There was one article posted on MarketWatch and linked to by the Drudge Report.  The link was titled, “Decline of dollar could happen at ‘warp speed’”. While the article was about a senior fellow at Yale University, it is still significant that MarketWatch is posting articles like this.

In the case of the MarketWatch article, it cites Stephen Roach as calling “for the dollar to soon decline 35% against its major rivals”.  This was one of the more mild predictions in terms of predicting a massive decline in the dollar.

I think this is unlikely to happen.  The U.S. dollar is still seen as something of a safe haven.  U.S. Treasury bills are still seen as a safe haven.  I realize this can change quite quickly, and we really are in unprecedented times, especially when it comes to the Fed’s balance sheet and the size of the deficit.

Here is the problem. The predicted decline is mostly coming in the form of comparing the U.S. dollar to the other major currencies. All of the other major central banks are also engaging in massive monetary inflation.  It doesn’t matter if you look at the Bank of Japan or the People’s Bank of China or the European Central Bank.  They are all inflating.

If someone predicts that the U.S. dollar may decline by 35% against the Swiss franc or the Canadian dollar or the Singapore dollar, then maybe I am open to the suggestion. But this wouldn’t be that significant because these are all coming from relatively small countries.  Even with that, I don’t see the dollar declining by 35% against these smaller currencies within the near future.

The World’s Reserve Currency

I think the big thing that separates the U.S. dollar from the other major currencies is that the dollar is still considered the world’s reserve currency.  There is a reason that foreign central banks, particularly Japan and China, buy so much U.S. government debt.

If this status reverses, then it is possible the dollar could decline significantly.  But I certainly don’t see that happening right now.

I have said for a while now that if the dollar is going to lose its status as the world’s reserve currency, then I don’t think any other fiat currency is going to replace it. The euro or yen is not going to become the next reserve currency of the world.  People, businesses, and governments will just trade using the currency of their country or the currency of the country with whom they are trading. If China wants to buy oil from Russia, there is no need to convert their currency into U.S. dollars to make the transaction.

If the U.S. dollar loses its status as the world’s reserve currency quickly, then maybe we’ll see something of a significant decline of the dollar.  But if this happens, maybe the Fed will tighten its policy. I don’t see the other major central banks having any intention of having a tight monetary policy any time soon.

There is one thing where the dollar will likely decline by 35%.

Gold

Gold is now close to hitting its all-time high.  Unless the Fed slams on the monetary brakes and allows a massive depression in the near future, then I don’t see gold slowing down.  There will certainly be pullbacks, but the general trend is likely to stay up.

The dollar doesn’t have to decline at all against the other major currencies, yet we could still see gold go up by 35%; or more accurately, see the dollar go down by 35%.  The rise in the price of gold may end up being higher in terms of euros.

This is really the key indicator.  Of course, the dollar will decline 35% or more against a lot of things over the next few years. This could include food and water and electricity.  Maybe it will include housing.  Maybe the dollar will decline a lot against fine art.

While I think it is important for individuals to have some liquidity, I highly recommend some diversification outside of the dollar.  This doesn’t mean investing in other fiat currencies.  It means investing in hard assets that can’t be devalued by a printing press or the digital equivalent used by central banks.

If the dollar is going to collapse against anything, it will be hard assets.  Gold, and likely silver, will be especially high in demand.  These are historically forms of money.  Gold is still held by central banks.

Gold is going up now even with stocks booming once again and with U.S. Treasury bills and bonds staying high in demand.  Imagine if stocks fall out of favor and interest rates shoot higher.  Gold is going to be an obvious place for investors to turn to.  And the gold market is much smaller than stocks and bonds right now, so it won’t take a huge percentage of people jumping into gold to make it move in price.

In conclusion, I don’t think the U.S. dollar is going to decline significantly against other major currencies.  But even if I’m wrong, I don’t really care much.  All of the major fiat currencies are especially bad these days.

The major decline will come against hard assets, but particularly gold.  I will be surprised if the dollar doesn’t decline against gold by at least 35% in the next couple of years.

In the monstrosity labeled the CARES Act, there is an ounce of good news for some people.  If you need to withdraw money from your 401k retirement account, you may be able to do so this year without paying an early-withdrawal penalty.

If you still work for your employer that sponsors your 401k plan, then you likely have not been able to take out a withdrawal in the past.  There are hardship withdrawals in some cases, but you have to provide extensive documentation and meet very specific requirements.

There are typically options for taking out a loan, and I don’t think people should discount this as a viable option.  But in the case of a loan, it will hurt your future cash flow, as you have to pay back the loan.  Sure, you are paying it back into your own retirement account, but it does become an expense at that point.

Many Americans have little in the way of savings.  If you look at middle class America, a good portion have the bulk of their net worth in two things: equity in their home and money in their retirement account.  In other words, a large portion of the population has a majority of their net worth tied up.

You can refinance your mortgage and take money out, but that is not always easy.  Plus, it means that if you keep doing that every time you need some liquid funds, you may never go without a mortgage.

For a 401k retirement account, you don’t have much for choices.  As mentioned above, a few select people can take out a hardship withdrawal, and some can take out a loan.  In most cases, the only way to actually withdraw “your” money is to quit your job, and that doesn’t seem like a good solution.  Even in that case, you will owe a 10% penalty if you are younger than the government-designated retirement age. Plus, you will owe income taxes on top of that for a traditional 401k.

Until Now…

There is a provision in the CARES Act that allows you to withdraw money from your 401k account up to $100,000.  You can choose to pay it back (like a loan) or you can keep it as a withdrawal and just pay income taxes.  You can even spread those taxes over three years.  But you don’t owe an early-withdrawal penalty.

This is good for calendar year 2020.  If you have a 401k account, check to see if your employer has allowed for such a withdrawal.

The law states that it is for people who have contracted COVID-19 or have had some kind of adverse financial consequences due to the impacts of COVID-19, including being quarantined (read specifications here).  In other words, it is a quite broad definition, and most people have been impacted in some way, if not by the virus, then by the lockdowns in response to the virus.

There are no documentation requirements as far as I can tell, although you should check with your employer or your plan to verify.  It is not like a normal hardship withdrawal where you have to provide documentation and specifically identify how the funds will be used.  With this provision of the CARES Act, you do not have to demonstrate how the funds will be used.

I am certainly not suggesting that everyone with a 401k plan should go ahead and take a withdrawal. It is there for your retirement. You will have to pay income taxes in most cases, assuming it is not a ROTH 401k and assuming you have some kind of income tax liability.

However, it is important to know that this option is there for you.  Most everyone I know has been impacted by the events of 2020. Some of these are financial impacts.

This is a one-time opportunity for people living on the edge to possibly get off the edge and get a little cushion in life.

If this is an option you are considering, you should be self-disciplined.  It shouldn’t be done so you can buy a new car that you don’t need.  It shouldn’t be done so that you can take a lavish vacation.  If it is an option you are considering, it should be done to get your financial house in order.  It is an opportunity to pay off debt and/ or build up an emergency fund.

I don’t think a lot of people are self-disciplined, so I don’t think they should touch their retirement account.  But that isn’t everyone.  There are people who may have hundreds of thousands of dollars in a retirement account from contributing over many years, yet they don’t have much for liquid funds.  Even withdrawing 5 to 10 percent out of the retirement account could alleviate a lot of stress on some people.  Again, this is with the caveat that they handle the money properly.

Is this an option you are considering?

The Federal Reserve announced on Monday that it will start buying individual corporate bonds.

The Fed has made a lot of unprecedented statements since March 2020.  You can add this to the list of insanity coming in the form of monetary policy.

Of course, stock investors loved this news.  This means that the Fed can create even more money out of thin air while also helping to prop up companies by buying their debt.

This is wrong on so many levels.  It is wrong ethically. It is a further subversion of property rights.  It is the central bank interfering with private business and deciding winners and losers.  It subverts contract law.  It encourages more lobbying and cronyism. It will massively misallocate resources, as companies that should go bankrupt will essentially be bailed out. In addition, it further distorts interest rates and our money.

The political left likes to complain about inequality and a lack of justice, yet where are they to be found in all of this?  The answer is that they are mostly silent.  It wouldn’t be a divisive enough issue for Americans.  It doesn’t fit their narrative.  The victim group is most Americans, which doesn’t serve their purpose.

The radical left will stay mostly quiet on this subject, while the more establishment left (and right) will quietly cheer this.  They like being able to pick the winners and losers.

How will Jerome Powell and company pick which companies get their debt bought at generous rates? Will it just be companies that are failing and can’t find buyers of their bad debt at low interest rates? Will it include major corporations like Amazon and Apple?  Will it include certain industries more than others?

Perhaps Powell and company at the Fed can look at a company’s corporate culture and determine who will get a bailout in the form of government loans.  Perhaps if the corporate executives are willing to take a knee and set up a diversity committee, then they can be eligible for the Fed to buy their corporate debt.

This should really be a boon to lobbyists in Washington DC.  I don’t know if the lobbyists will show up directly in front of the Fed or if they will just do their lobbying to other insiders who will pass along the messages to the Fed members of which companies get the bailouts.

This is more economic fascism.  But the people who insist on calling themselves anti-fascist are not against this kind of fascism. I don’t even know that they are actually against the authoritarian fascism they have in mind except that they want different people in control of it.

As we continue to hear the media narratives about protests, riots, and the coronavirus, there is great damage being done to the American economy.  There is great damage being done to the American middle class while they are distracted with culture wars.

This cronyism will continue to do great harm into the future.  It is eroding contract law and private property rights.  It is eroding the money we use.  It will impact Americans in the form of lower real wages and a decline in living standards.

As I keep repeating, nothing is going to stop this except for the Fed not wanting hyperinflation. The only thing that is going to stop the Fed at this point is a significantly declining dollar.  I don’t mean so much as against other currencies as I mean based on what your dollars can purchase.  I believe it will take double-digit consumer price inflation in order to stop the massive money creation by the Fed and the massive spending coming out of Congress.

I don’t think I can be surprised any more from anything that is said or done by the Fed.  But maybe I am not being imaginative enough. I have already underestimated the madness of the central bankers.

I enjoy Terence Jeffrey’s columns on government spending.  They are high level.  Sometimes he doesn’t even offer his opinions.  He let’s the facts speak for themselves.

In one of his recent columns, he announced that the federal debt just surpassed $26 trillion.  He pointed out that the national debt increased $2 trillion in just 63 days.

He shows a fascinating chart showing the time elapsed between each trillion dollars in debt. He starts at the $5 trillion mark, which happened in 1996.  It took about 6 years to hit $6 trillion in 2002.

From September 2008 to March 2009, it took just 6 months to go from $10 trillion to $11 trillion. It slowed down a little bit after that.  It was already speeding up again in 2019 (pre coronavirus lockdowns).  Now it is going parabolic.

The national debt is increasing by $1 trillion nearly every month.  This is obviously unsustainable unless we go to hyperinflation. Still, the ramifications will be great.

I always say that we should pay more attention to government spending than government taxation. This has never been more true. The Fed has increased its balance sheet by $3 trillion since February. It is still going up, although at a much slower pace.  It is mostly the Fed buying up all of this new debt.

The debt doesn’t just hurt future generations.  It hurts us here and now.  Not everyone is feeling the pain yet, but it’s important to understand that the government is consuming all of these resources.  Some of it is pure redistribution, especially when it comes to direct payments in the form of “stimulus”.

Every dollar spent by the government has to come from taxes or debt or inflation, or some combination of these things.  The government rarely sells government assets, so I am not including this as a possible way of funding.

We are going to see a significant decline in living standards.  The government is simply confiscating a massive amount of resources.  It is going to play out in the form of lower real wages.  I don’t know if nominal wages will actually go down, but the wages that people earn will buy less than before, at least for most people.

Federal government spending cannot be controlled.  It doesn’t matter who is elected president.  It doesn’t matter which party has a majority in Congress. Americans will say in opinion polls that they oppose the deficit spending, but they don’t really mean it. They only oppose it as long as it isn’t their favorite programs being cut.  And a majority of Americans seem to be in favor of stimulus checks, which are purely funded through larger deficits.

The only thing that is going to stop this is limits to the Federal Reserve’s monetary inflation. It doesn’t seem like there are any limits on the Fed, and technically there aren’t.  But if price inflation gets bad for consumers, the Fed may actually start taking some of the blame.  I don’t think Fed officials want to lose complete control. They don’t want complete destruction of the U.S. dollar.

The Fed got away with its massive money creation from 2008 to 2014.  Much of the new money went into bank reserves.  It helped keep a lid on consumer price inflation. But just because the Fed got away with it last time, we shouldn’t assume it will get away with it this time.

It is difficult to predict where prices will go in the near future.  There is obviously a lot of fear and uncertainty, which means an increased demand in dollars.  This can help to offset the major monetary inflation.

Still, you should be prepared for significant consumer price inflation.  In some ways, I am actually cheering for it because I want to see the Fed essentially forced to curtail its money creation.  I want to see Congress forced to cut spending.

I don’t want to see hyperinflation though.  That would be really bad for almost everyone.  It would likely mean a severe contraction in the division of labor.

Call me Goldilocks now.  I want enough price inflation to force the Fed’s hand, but I don’t want to see so much price inflation that food is not appearing on the shelves in grocery stores.

I don’t see any other way at this point for this madness to stop.

The latest news from the protests is that people are calling for defunding the police.  This is particularly the case in Minneapolis where the killing of George Floyd happened.

A majority of city council members in Minneapolis are supposedly in favor of defunding the police.  Assuming they haven’t turned into libertarians and assuming they don’t want all-out chaos, then they probably haven’t thought it through.  Maybe I shouldn’t make the latter assumption, as they do thrive on some chaos, but even that has its limits.  Some of the politicians and the elites thrive on chaos until it hits their own backyard.

This has many people asking about the implications of getting rid of the police.  Are they really going to not have police officers in Minneapolis?  I highly doubt it.  If that is what is being proposed, then that would certainly affirm people’s right to own guns and hire private security companies, even though that should be the case anyway.

The most obvious question is what happens if there is a criminal trying to commit a crime. Who are you going to call? Ghostbusters?

Libertarians who consider themselves anarcho-capitalists have been trying to answer this question for a long while.  The answer would lie somewhere with insurance companies and private security firms.

As an aside, this is the one issue that holds me back from being a complete anarcho-capitalist. I have not been able to satisfactorily answer in my own mind what happens to someone who uses aggression against someone else.  Can a private security firm arrest the person?  What does the private security firm do with the person? Is it just certain private security companies that can arrest criminals, and what gives them the authority to do this?  These are questions I have not been able to completely answer.

As another aside, I also don’t like the marketing of calling myself an anarchist even if I could resolve the above issue.  I also like to make it clear that if others wish to live under a state, they should be free to do so.  They just shouldn’t compel others to do the same.

If there is one major function the government (i.e., the state) is supposed to provide, it is to protect people and their property from aggression.  You could also argue that the state is there is to help enforce contracts, but obviously protecting people from aggression is generally more important.

People who are advocating a full defunding of the police department are being asked a simple question: Who do you call if someone is trying to physically harm you?  Who do you call if someone is trying to break into your house in the middle of the night?  I heard one councilwoman try to step around the question and say that it comes from a place of privilege.  In other words, calling the police because someone is trying to break into your house is a thing of privilege.  Somehow I don’t think most Americans are going to go for that message.

Do Statists Really Want to Get Rid of Force?

While most people discussing this issue are talking about the police in terms of protecting the public, there is something being missed outside of libertarian circles, and I find it quite fascinating.  It provides an opportunity to teach others about the nature of the state.

Most of the people saying they want to defund the police are not libertarians.  In fact, most of them are nowhere near libertarianism. They are largely authoritarians. Some of them are self-identified Marxists.

They are failing to grasp the contradiction in their own proposal.  If they get rid of the police department, then who is going to enforce all of their authoritarian edicts?

If you get rid of the police department, you are really getting rid of government, at least at the local level.  There are no police to enforce laws against drugs or prostitution.  I am good with that.  Maybe many of the protesters, who are mostly political leftists, would approve of that too.  We can find agreement in some areas.

But it also means there are no police to enforce any other government program.  It would likely mean the end of government welfare, at least at the local level.  Maybe it would go further than local laws too, unless the state government or federal government is willing to send in an enforcement agency.

If there are no local police, why pay your property taxes?  There’s nobody who can come to arrest you.  How will the city of Minneapolis collect money to fund schools and other forms of welfare?  That sounds good to me, but I don’t think the protesters are promoting any of that.

This is why I don’t think this is going to happen.  They aren’t getting rid of the police, even if the legislature tries to go against public opinion.  Maybe they will name the police something else.  Maybe there will be some restrictions on police that didn’t exist before.  But I’m pretty sure that if you don’t pay your taxes, you will get called to court eventually.  And if you don’t show up to court, eventually people with badges and guns will show up at your door to arrest you.  They can be called the police or peace officers or anything else, but the effect will be the same.  A rose by any other name, and all of that.

It’s actually nice that we can have this conversation.  I don’t think we are going to see a drastic reduction in state power because of these protests, but one can always hope.  At least it gives libertarians an opportunity to point out the nature of the state.  In order for the government’s commands to mean anything, they have to have an enforcement agency.  Otherwise, it is just a suggestion.

The Federal Reserve continues on its tear of unprecedented monetary inflation.  The only thing that compares to it is from the fall of 2008.  But I don’t see the Fed’s balance sheet expansion significantly slowing down any time soon.

The federal government is spending money as never before.  It is spending more than anything ever in the history of the world.  Of course, the United States is (or was) the wealthiest place ever, so the U.S. government has deep pockets.  It also has the Federal Reserve.

It also helps that the U.S. dollar is still considered the world’s reserve currency.  It means that foreign central banks still want U.S. Treasury bills.  It means that immigrants in the U.S. still send cash abroad to relatives. It means that there is still a lot of demand for dollars.

I have no idea what consumer price inflation will look like a year from now.  I expect it will largely be a mix.  Some things will be much more expensive.  Some things will be much cheaper.

We have this massive monetary inflation, at least when it comes to the Fed’s balance sheet.  But there is also a lot of fear and uncertainty, which means people are tending to spend less and save more where possible. The velocity of money has slowed for now.  But if massive monetary inflation seems to be the new way of life, then velocity could pick up quickly.

Even though most people don’t study economics or the Fed, they intuitively understand that they don’t want to sit on a lot of cash that is going to buy a lot less next year than it can buy today.

Maybe this is why stocks are going higher.  I find it unbelievable that they are, but nothing should surprise me any more with the stock market.  I got this wrong many years ago during the Fed’s QE.  I thought that if stocks would continue to go up with major monetary inflation, then gold and other commodities would go up too. But, at least for a while, it didn’t really work out that way.

Bubbles have a way of continuing.  They almost seem to be self-perpetuating at times.  However, it is important to recognize reality in the midst of a bubble.

I thought there was no way stocks would see highs again this year when they tanked in March.  The Nasdaq is now hitting all-time highs.  Maybe we will see 10,000 this year after all.

It is insane to me, but I don’t control the markets.  Stock investors have blown off 40 million unemployment claims.  They have blown off defaults and bankruptcies. They don’t think much about profits any longer.  They concentrate mostly on the Fed’s inflation.

I keep wondering how long stock prices can stay inflated when profits are way down or cease to exist.  The market is not Amazon and Apple.  If Amazon, Walmart, and a few other tech companies were hitting all-time highs but everything else was going down, then this would make sense.  But this isn’t what is happening.

I have no idea where this is going.  I still expect stocks to get hammered, but who can say any more?  I am mostly out except for my core permanent portfolio holdings and my speculations in certain sectors, particularly gold miners.

We’ll see if there ends up being a decoupling of the Fed’s balance sheet and stock prices. That hasn’t been much the case so far, but it doesn’t mean it won’t happen eventually.