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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

Watching Television and Being Productive

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Americans Only Favor Government Violence

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Give Me Deflation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Less Anxiety

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

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

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

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

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

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

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

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

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

There is an equation in all of this:

Liquidity = Less Anxiety

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

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

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

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

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

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

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

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

The Trump Referendum

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

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

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

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

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

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

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

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

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

Libertarian Hope

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

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

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

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

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

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

In the United States, we hear frequently enough about the top 1%, especially from those who call themselves social democrats or progressives.  The implication is usually that we have to help the bottom 99% by hurting the top 1%, usually through higher taxation.

This ignores several points.  The most important is that, in a free market, one person’s gain does not have to be at the expense of someone else.  Wealth can be created.  In order for the poor to get more, it doesn’t have to be through redistribution.  In fact, redistribution ultimately undermines property rights and wealth creation, which can actually hurt the poor more in the long run.

Another point is that, instead of trying to tax the top 1% or harm these people in some other way, why not just stop subsidizing them first?  There are many ways that government helps subsidize the rich at the expense of the poor.  Regulations are often put in place to keep out competition for those already established, which ends up hurting the little guy more.

There are other protective measures enforced by government to keep out lower wage competition. The central bank creates an environment of easy money and artificially low interest rates that often benefit the big players at the expense of the little guy, especially when it creates asset price inflation.

There are also outright subsidies for companies.  Look at Elon Musk and Tesla where the government heavily subsidizes electric cars.  They are toys for the rich, while Musk gets richer because of the subsidies.  And to top it all off, there are direct bailouts for the rich and connected as we saw in 2008 and 2009.

One last point for now is that it seems silly to criticize the top 1% just because they are the top 1%.  Maybe these people didn’t take any math classes, but there always has to be a top 1%.  If you have 300 million people, there will always be 3 million people who make the most money or have the most money. It is just a question of how they make/ made their money.

In a free market, those who get rich will generally be those who have served the most people or provided the greatest service.  In a free market, it is quite difficult to get rich by using fraud.  It is far easier to make money by providing value to others.

Unfortunately, some of the people who complain about the top 1% are egalitarians because of envy. The problem is that their main concern isn’t to help the poor, but rather for everyone to be more equal. These are the most dangerous people.  Of course, they are also hypocrites too, because they probably live far better than the average person on the planet.

The Top 10% Isn’t That Wealthy

There was a recent article describing what it takes to be in the top 1% and top 10% in the world in terms of net worth.  In other words, this is a study based on wealth and not income.  There are some people who have a relatively high income without having a high net worth. Although the article is harping on wealth inequality, it is still useful.

In order to be considered in the top 1%, you have to have a net worth of at least $871,320.  In order to be considered in the top 10%, you have to have a net worth of at least $93,170.

According to this article, the equity in your primary residence counts towards your net worth in this calculation.  So if you own a house currently worth $300,000, and you have just $200,000 left on the mortgage, then that alone puts you in the top 10% of the world.

This means that quite a large percentage of Americans are qualified as being in the top 10%. This may not be a completely fair comparison with the rest of the world, as some things may be more expensive in the U.S. than the average in other countries.

At the same time, I recently heard someone point out that the U.S. isn’t really that expensive of a place to live in comparison to much of the rest of the world.  It’s just that Americans expect a high standard of living with all of the materialistic things that have become so common.

Let’s say someone moves to Thailand and lives in a 600 square foot house and shops at the market every day for meals.  This person lives on a U.S. pension of some sort.  He might say that his dollars go really far in Thailand.  But here is the problem.  If this person lived in a low cost of living area in the United States and lived in a 600 square foot apartment and never ate out at restaurants, then he would probably find that his dollars go pretty far in the U.S. too.

Regardless, there is no question that Americans have a higher standard of living than the large majority of the rest of the people on the planet.  But the redistributionists living in the U.S. do not talk about giving up their lifestyle to help poor people in places such as Africa and Latin America.  They aren’t sending 90% of their money off to some family living in a hut on the side of a dirt road in India.

I think Americans should be grateful for what they have.  It really is a blessing to be able to live in an area with opportunity.  At the same time, we could be so much better off than we are in terms of living standards if only we would see a dramatic reduction in the size and scope of government.

The answer to higher living standards is not more redistribution and more forced equality. The answer is secure property rights and free markets.  We don’t want to make the top 1% or top 10% poorer.  We want to make everyone richer and more prosperous.

The other day, I was on Facebook trying not to waste too much time, and I saw a particular post I want to discuss.

I have several friends who could be considered politically leftist.  Some would use the term liberal, but that isn’t really accurate, unless you use the term only in its modern-day usage of meaning a leftist. Likewise, the term progressive isn’t really accurate.  They may be making progress in their own view, but pushing for big government and central planning is not my idea of progress.

Anyway, one of my Facebook friends, whom I haven’t seen in person for probably 20 years or more, is a far leftist to say the least.  He is a self-identified socialist, as the term socialist has become acceptable again in some circles.  It was abandoned for environmentalism when the Soviet Union fell, but now they call it democratic socialism or some variant.

My Facebook friend has major Trump Derangement Syndrome (TDS), and I would also consider him to be a cultural Marxist.  I’m not even sure how to define that term, but if I had to describe it, that would be this one Facebook friend.  As hard as it is, I do find some common ground with him on foreign policy. To his credit, he has been critical of Barack Obama and Hillary Clinton for their wars and bomb droppings.

At the same time, perhaps my biggest frustration with him isn’t his socialist views, but the fact that he will tend to place more emphasis on special rights for transgender people than he does on innocent people being killed in foreign countries from U.S. bombs.  In fact, he would probably place a higher priority on reining in corporate greed (by having more government, of course) than on stopping U.S. wars.

The other day, he posted a picture of Donald Trump’s approval ratings.  It showed that Trump’s job approval stands at 47%.  My Facebook friend said, “One of the hardest things about being smarter than most people is not acting like it.  But man, I live in a country of f***ing morons.  Of course I’d be one too if I placed absolute faith in polls after 2016.”

It was something in line with Hillary’s comments on the deplorables, except this was perhaps even more arrogant because he was explicitly stating how smart and enlightened he is.  He tried to add both a little skepticism and humility with the last sentence.

I did not make a comment on the post, as I didn’t feel like getting into an argument, but the thought crossed my mind that I should post a picture of the percentage of people who favor socialism – because to me, favoring socialism is completely moronic.

Give Me the Shirt on Your Back

Those who preach socialism generally have no clue about economics.  They probably can’t properly define socialism, which is the state’s ownership of the means of production.  I am willing to accept some variations, but you can’t just flippantly say that we should have socialism because the Scandinavian countries have socialism and they seem like nice places to live.  Countries such as Sweden and Norway are not socialist countries.  They are welfare states and certainly have many government interventionist measures in their economies.  But at the same time, they do have a system that still uses English common law as a basis, which means that property rights are still respected to a large degree, absent the somewhat high taxation.

If you really want to see socialism, then Venezuela is a clear-cut example, where the government really is nationalizing industries and controlling virtually all aspects of the economy that it is able to.

Even for the self-identified socialists who just want redistribution and equality, they are still mostly hypocrites.  If we live in a society with no property rights, then that means I can just walk up to you and rip the shirt off of your back.  Why should you be able to wear a shirt that I want? You don’t really own anything, so it is really up for grabs.

It is also noteworthy that my Facebook friend, along with most other leftists in the United States, probably lives better than 95% of the world’s population.  If they want equality, they should start donating most of their stuff to Africa and South America.

Socialism, as it is advocated, is a system of violence.  If you don’t actually see the violence, it is only because one party is obeying the dictates of the other.  If someone robs a bank and walks out with a bunch of money without shots being fired, would you say there was no violence just because the bank employees and customers obeyed the dictates of the robber?

Humble Pie

When my Facebook friend made this comment, I don’t think he understood how foolish he was making himself look.  He certainly surrounds himself with a disproportionate percentage of other leftists.  The world he lives in confirms his world-view for the most part.  He can’t fathom that someone would vote for Donald Trump, even though he does see some of the faults of Hillary Clinton.

He really thinks he is better than almost everyone else.  And when it comes down to it, this is really the view of leftists. Maybe it is the view of some libertarians too, but libertarians don’t want to control people, even if they do think that others are dumber.  Leftists think they are so smart that they should mold the world, and the people should listen and obey for their own good.  If they don’t obey, that just means they are that much stupider.

There are many things I don’t like about Trump and his policies.  But I can at least try to understand why some people would support him.

I think one problem with leftists in particular is that they translate being smart in some areas to being smart in everything.  If someone gets an advanced degree and is really good in English and history, they might start to think they know everything.  Even though they can’t have a coherent conversation about economics, they think they just know best.

When it comes to politics and economics, I really do believe that I know more than the vast majority of the population.  But in this, I recognize that people can make better decisions for themselves than I can make for them, especially at the point of a gun, which is government.

I also don’t think I am necessarily smarter than someone just because I know more about economics, or the Federal Reserve, or libertarianism.  There are many smart people who have little interest in these subjects.  I know little about fixing cars.  I am a terrible artist.  I am not a great public speaker.  I have a lot of weaknesses in areas where people are far better than me.

There are people I look up to in particular areas, and they aren’t necessarily libertarians. There are many entrepreneurs, and marketers, and even athletes, whom I admire for what they are able to do in their profession.  I think I am smarter than these people when it comes to defending liberty, but I fully recognize that they are far smarter or better than me in other areas.

And I think this is an important distinction that my Facebook friend fails to realize. He thinks that if nearly half the population approves of Donald Trump, then that whole group of people is just stupid.  He should have at least been self aware enough to say that they are stupid when it comes to politics.  Unfortunately, I believe that he really does think these people are completely stupid overall.

In today’s world, we are bombarded with experts.  We are told by the establishment that something must be true because the experts told us it is true.  They want people to conform and to not question authority.

And that leads to my last point, which is that political beliefs are not just about how smart you are.  There are other aspects.  I would say the most important is morality.  Maybe you really do think you can remake society by using government force to make a better place.  But is that the moral thing to do?

And what if someone just doesn’t want to conform to what they are being told to do?  What if they want to be free to make their own choices, even if some of those choices will be viewed later on as mistakes? Does that make someone less smart just because they want freedom to make choices?

In summary, I was able to get a good honest view from a hardcore leftist.  I don’t know if he will ever change his mind with his radical socialist views.

As Mark Twain supposedly once said, it is easier to fool people than to convince them that they have been fooled.

It has been a tough October for stock investors, unless those investors were shorting the market. As I write this, October still isn’t quite over, and we don’t know if Halloween will be a trick or treat.

October has historically been a tough month for U.S. stocks.  Crashes and recessions seem to come to fruition in October more frequently than any other month.

The S&P 500 dropped more than 10% below its record peak set in September, which officially puts it in correction territory.  But a 10% correction in stocks doesn’t necessarily mean that we are in a recession, or even that the bull market is officially over.

I can recall other bubbles such as silver in 2011 or technology stocks in late 1999 and early 2000.  When you look at a graph of these bubbles before they burst, they go parabolic.

That is why I am hesitant to say that stocks have already peaked and are now in the early stages of a bear market.  While it wouldn’t surprise me if this were the case, it also wouldn’t surprise me if we see one more grand move upward.

Things got rocky back in January 2018.  It became a roller coaster, and the higher volatility did not look promising for those holding stocks.  But then things calmed down, and stocks resumed their climb.

I have been watching the yield curve carefully.  On the big down days this week, there is no question that long-term rates went down.  Short-term rates were more mixed.  But overall, the yield curve has only slightly flattened for October.  The 10-year yield is right about where it started the month, and the 3-month yield is about .10% higher than where it started.

While the yield curve has flattened quite a bit over the last year, it is still not yet inverted.  If it inverts, I think there is little question that a recession is imminent.  The only thing is, it might already be apparent by the time it inverts. If stocks keep falling and go down another 10 to 20 percent, then things aren’t looking good for the short-term economy.

To be clear, I think we need a major correction/ recession to clear out all of the malinvestment. It is not something I am wishing for in terms of the short-term pains that go with recessions.  But the damage has already been done, and a recession is the best way to repair that damage and reallocate resources in accordance with consumer demand.  Life is too expensive, particularly for middle class America, and a correction will help alleviate that if the Fed and the federal government do not react too drastically to the inevitable correction.

Bonds are Safe for Now

In a post I wrote on October 10, 2018, I said that the cure for higher yields is higher yields.  When the 10-year goes up too high too fast, stock investors react negatively and we see a sell-off in stocks.  Then when stocks sell off, the 10-year yield tends to fall back.

I said that, “the fact remains that most investors view U.S. government bonds as a safe haven investment.  As long as price inflation is seen as contained, then bonds will continue to be a refuge for those seeking safety.”

That was basically confirmed to me the last couple of weeks since I wrote that.  There is no serious threat of price inflation right now, or at least very few people view it as a threat.  Therefore, when stock markets crash, people look for safety, and U.S. government debt is viewed as safe.  There is a small inflation premium and virtually no premium for risk.  The U.S. government is highly unlikely to default any time in the near future (not counting the hidden default of inflation).

Therefore, whether the bear market just started, or it starts in 6 or 12 months, we should expect investors to flock to long-term government bonds.  Yields will fall, and bond prices will rise.

This is a reason that I recommend the permanent portfolio, and it also illustrates why holding long-term government bonds is an important aspect.  Even though libertarians tend to hate holding bonds, they are there in the portfolio for a purpose.  In a recession and stock market crash, the permanent portfolio, which is made up of just 25% stocks, should fare rather well. The people who are heavy in stocks are going to pay a big price, while permanent portfolio investors may just see a slight decline.

Gold Rises

The one other interesting aspect of the last few weeks is that gold actually rose in terms of U.S. dollars.  It has been a tough market for gold investors.  There is just very little interest in gold by individual investors.  Some foreign central banks still like gold, but it hasn’t been enough to keep the price up.  After gold fell below $1,200 per ounce, it actually had a good couple of weeks in the face of the downturn in stocks.

It is interesting to look at the Dow-to-gold ratio.  There is nothing that says this ratio has to stay in any particular range or return to its long-term average.  But it is still useful in looking at what is possible.

The Dow-to-gold ratio is currently about 20 to one.  It takes about 20 ounces of gold to buy the current price of the Dow Jones Industrial Average.  In early 1980, this ratio actually was briefly close to one to one.  In other words, it took just over one ounce of gold to buy the Dow.  This was a time when stocks were down and gold was in its biggest bubble ever, so I am not saying we should necessarily expect to see this ever again.

However, if we did see a return to a one to one ratio, even if briefly, we would have to see a huge rise in gold, or a huge drop in the Dow, or some combination of the two.

If the Dow lost 50% to about 12,500, then the price of gold would have to rise from its current level just about $1,200 per ounce to $12,500.

Again, I am not predicting this, but just stating what is possible.

In the 2008/ 2009 financial crisis and downturn in stocks, gold went down for a brief period of time with stocks.  Gold does not tend to do well in recessions, unless there is a threat of high price inflation as was seen in the 1970s.

I have no idea what will happen to gold in the next recession.  But in the last couple of weeks, gold went up in the face of crashing stocks.

Again, this lack of correlation just shows the strength of the permanent portfolio, particularly in tough economic times.  It has been a boring and rather lackluster portfolio for the last several years, but you will be glad to have it when things get tough.

There was one winner in the Mega Millions lottery that gained nationwide attention.  The winning ticket was sold in South Carolina and is worth over $1.5 billion. If the winner decides to take a lump sum, it will still be worth $877.8 million.

The government – in this case, at multiple levels – will get its take.  Of course, the lottery itself is sort of like a voluntary tax, so the state makes out quite well with it.

The top income tax rate in South Carolina is at 7%.  The U.S. federal rate is 37%.  So when all is said and done, nearly half of the payout will go to government at some level.

We don’t know yet whether the winning ticket was bought by one individual person, or whether it was bought by a group of people.  It is common to have office pools.  With this jackpot, even if it were split 20 ways, the winners would be making out really well.

Or so we think.

I heard a statistic that one-third of lottery winners end up in bankruptcy.  I’m not sure what qualifies as a lottery winner. There is a big difference between winning $100,000 versus $5 million.  Also, there are many lottery winners who don’t actually file for bankruptcy, but end up near broke.

The lottery really is like a tax on the poor and those who tend not to be future oriented.  I think it is ok to play to dream a little, but I find that most people dream a little too much, while taking too little action in their lives.  Going to a convenience store and buying lottery tickets is not taking action. It is gambling with extremely low odds.

Before the last two drawings of this mega jackpot, I was asked if I was going to buy a lottery ticket, or if I wanted in on a group pool.  I don’t mean to be a party pooper, but I really didn’t want to play. I responded to someone that I really didn’t want to win that much money.  It really does ruin lives.  Either you hand out money to everyone who comes knocking on your door, or you keep your money really tight and probably ruin some relationships. When someone wins the lottery, you really hope that they already have a good set of friends in place.

The other thing that has puzzled me for a long time (I actually remember commenting on this when I was an older child) is why suddenly everyone feels compelled to play the lottery when the jackpot gets up so high.  What, was the $5 million jackpot last week not good enough for you?

I suppose it could make sense for a large group of people playing.  If you have 20 people in a group and you win $3 million total, that is “only” $150,000 each.

I don’t play the lottery and haven’t for quite a while.  I did participate in an office pool a long time ago for a few dollars per week. But if I did play the lottery, I would rather buy a ticket for a scratch-off or for my state’s lottery where you win at least $3 million.  The odds are far better than the Mega Millions because you don’t have to pick a powerball.  I’ll take the better odds and the lower payout.  For me, $3 million would be life changing.  Even if it were $1 million after taxes, that would still be quite significant (although not enough to retire forever, even though I wouldn’t retire anyway).

You Can’t Handle the Money

With great power comes great responsibility.  When you win, say, $500 million, that gives you great power.  You have to be quite responsible.

One of my most popular posts ever on this blog was about the television show My Lottery Dream Home.  I observed that some lottery winners were spending a good chunk of their fortune on buying a house.  It was bad decision making, at least from what I could observe.  You never know for sure if someone already had a lot of money, but it was doubtful in the cases that I saw.  If you are living in a small rundown place and then are all of a sudden buying a mansion, you probably didn’t have much money before winning the lottery.

I have continued to watch that show on several occasions, and I have seen the decision making get better.  I have seen people win multi-millions and then look for houses in a range of less than $500,000. I have seen some really conservative people even looking at houses in the $200,000 or less range.

If you ask people their number one reason for wanting to win the lottery, I think the number one answer by far is that they want to quit their job.  In other words, they want more freedom with their time, and this money could buy them their freedom.  Yet, curiously, some people go out and start buying stuff with it.

If you win $5 million and then buy a $1 million house (and all of the major expenses that come with it), then you are losing your financial freedom.  The rest of the money will likely disappear within a few years time.

This usually happens to people who were already poor, which happens to be a lot of the lottery winners.  If someone was already accustomed to making money and saving money, then that person is going to be more responsible with it and know how to handle it better.

I said that I wouldn’t want to win the jackpot that will probably be about $500 million after payout and taxes.  But if I started a business and grew it into a huge successful business that sold for $500 million, then I wouldn’t have any issue with it.  My name wouldn’t be plastered everywhere. My friends and family would have already known that was my line of work.  It isn’t like working an office job for a middle class salary and then all of a sudden quitting the next day because you struck it rich.

If you do happen to strike it rich with the lottery or some other way, such as an inheritance, my best advice is to find some continuity and grounding.  Maybe it is best not to quit your job right away. It is best not to move right away, unless you are in really miserable living conditions.  Take things slow and be methodical with where your money goes.  And don’t make any promises to anyone.  If you want to help out any friends or family members, then don’t tell them. Once you have decided you want to help and the amount you want to give after careful thought, then can just do it.

There will be a tendency to treat the money with less respect because you didn’t really earn it or have to work for it.  You just bought a lottery ticket.  This would be a mistake.  And if you can’t avoid feeling this way, then you are better off giving it all away so that it doesn’t ruin your life.

If you really can’t stand your job, then I think you should still find work that is meaningful to you.  As human beings, I think it is best when we are productive, at least to a certain extent.  It is good to have goals.  Sometimes it is good to have a routine.  This will give you grounding.