Barely anything changes, yet everything changes overnight.  This is what it felt like watching the financial media on Tuesday, December 4, 2018.  Out of nowhere, it seemed like everyone in the financial world was talking about interest rates, or more specifically, the yield curve.

Why now?

I have been writing about the yield curve quite a bit over the past 6 months or so.  The reason is that the yield curve has been flattening, and this is a classic (i.e., reliable) indicator of a coming recession.

The Fed has been gradually raising its target federal funds rate.  Long-term yields have gone up, but short-term yields have gone up faster.  Short-term yields were near zero for quite a while, so it isn’t surprising they have gone up.

The 10-year yield went above the 3% mark over the last couple of months.  It seemed it was going to stay above 3% with the likelihood it would rise more.  The 10-year yield is closely tied to mortgage rates, so refinancing has slowed considerably.  Some people may have felt some urgency in buying a house because they thought mortgage rates would continue to rise.  That narrative is now being questioned.

As I write this, the 10-year yield is once again below 3%.  But the short-term yields have not retreated and are continuing the rise, meaning that the spread between long rates and short rates has narrowed.

On Tuesday, the markets were spooked.  The 2-year yield and the 5-year yield narrowly inverted.  Everything seemed to happen at once.  Stocks plummeted, while longer-term rates also plummeted.  This means that long-term bond prices rose.

It isn’t clear if stocks sold off because of the flattening yield curve, or if the yield curve flattened because of falling stocks.  They seemed to feed off of each other.

The U.S. markets got a break on Wednesday because the state had to pay homage to one of its own. Perhaps there is some irony in the Bush family closing down the trading markets.  It seems a fitting legacy for the man who believed in voodoo economics.

We obviously don’t know for sure where the yield curve will go from here, but it seems more likely that it will invert in the somewhat near future.  I don’t count it has having inverted yet.  I look at the 3-month yield versus the 10-year yield.  There is still a spread of about 50 basis points (0.5%).

Perhaps the yield curve made headlines because the intermediate-term yields slightly inverted.  It also helped that the Dow fell 800 points, although I was already seeing the yield curve headlines at the opening of the day.

Is Recession Closer This Time?

In the past, the inverted yield curve has signaled recession, but there has typically been a lag.  If you wanted to short stocks, it was better to wait 6 months or a year until after the inversion.  The yield curve actually inverted in 2006, but we didn’t see the worst of the financial crisis until September 2008, although the official recession did start long before that.

The bond investors have tended to be ahead of the game.  That is why the yield curve is such a great indicator.  There aren’t many trends in the financial markets that act as predictors this reliably.

In our day of the internet, news travels a lot faster.  It is also seen by a lot more eyes.  In the past, the only people who knew about an inverted yield curve were those watching CNBC and reading the Wall Street Journal, and even they may not have known.  I’m exaggerating a little, but I hope you get the point.  Today, there are many casual investors, or even just people with a 401k who are curious about the markets, who will see the headlines on their favorite financial website.  I don’t know for sure, but I don’t think there was this much awareness about the yield curve and its implications in the past.

Of course, as with anything, there are a few people who are saying, “This time is different.” That is a classic line, which usually means things won’t be much different.  They are never exactly the same, but history tends to rhyme often enough.  Why would an inverted yield curve be any different this time?  Why would bond investors all of a sudden get it wrong as compared to everyone else?  Why would people be locking in long-term rates if they expected a booming economy ahead?

If anything, I could see a quicker onset of a recession.  More people, especially investors, are aware of the dangers of an inverted yield curve.  Some people will see the inverted curve and still not sell their stocks. There are always people who just won’t take action, even though they know they should.  But on the margin, we have to believe that some investors are going to start selling to at least get to a more conservative portfolio.

The problem with indicators is that even if they are true, they cease to be true once they are common knowledge.  Let’s say there is a company that sells winter-related things, such as snow boots and jackets. Once the beginning of February hits, sales start to fall off.  The stock price of the company starts falling too.  This starts happening every year around the first of February. Then investors become aware of this trend, so they start selling the stock in mid-January.  This becomes the new trend.  Eventually, the trend just ends.  Investors know that sales will fall off in February and start back up again around September.  The stock price becomes less volatile as market information becomes better known.

The question is, why this hasn’t happened with the yield curve?  We don’t see recessions that often, but there have been enough of them in our post Great Depression country.  At what point do investors start figuring out that an inverted yield curve means a likely coming recession and a likely fall in stocks? Instead of a one-year delay, why doesn’t this speed up due to learning from the past?

I don’t have a good answer for this, but I am just offering the possibility that maybe things are speeding up.  Maybe investors are wising up to the past with regards to the yield curve.  When the curve does invert this time, maybe the major selloff will being right away.  Or maybe we will already be part way through it.  After all, stocks have taken a big hit over the last couple of months, but the yield curve has not yet fully flattened.

My conclusion is that I have no idea what will happen this time, but that it is good to be prepared for a quicker onset of a recession.  We may not get 6 months or a year warning from an inverted yield curve until a recession begins.  When the yield curve inverts, we may already be in a recession.  It would be wise to prepare for this possibility.

This is a question that libertarians themselves need to answer.  If you were asked, “What is a libertarian?”, how would you answer?

By libertarian, I am referring to a small “l” libertarian, as opposed to a large “L” libertarian, which would be a member of the Libertarian Party.

Of course, there are many people who call themselves libertarians who are not really libertarians.  It’s not that I or anybody else owns the definition of libertarian, but we can be certain that someone like Bill Weld is most certainly not one.  There are some who have libertarian leanings, but it would be hard to identify them as true libertarians.

If you want an interesting experiment, ask some of your friends or family to define what a libertarian is.  You may be surprised to hear some of the answers.  Some may struggle quite a bit giving you an answer.

The most common response you will hear is a list of some defining characteristics.  For example, you will get a list of things that libertarians are against: gun control, taxation, regulations, etc.

One answer you might get is that a libertarian is against government.  This is technically not correct without clarification. Libertarians, including anarchists, are not (or should not be) against all government.  We are against government in its current form – i.e. involuntary government.  There is nothing wrong with voluntary governing bodies, as long as people are free to associate or not to associate.  A principled libertarian is only against involuntary government, which is the state.  We use the term government because essentially all political entities that call themselves governments are involuntary in our current world.

When you ask the question of what a libertarian is, you could get the response that it is someone who advocates liberty.  This is a correct response.  The only problem is that it is so general as to almost be meaningless. Technically though, this really is the correct definition.  A libertarian is an advocate of liberty.

The problem here is that there are many people who will say they favor liberty, yet they are not libertarians.  When you dig deeper, they don’t really favor full liberty.  Then you get down to a proper definition of liberty. There are many people who advocate entitlement programs and an interventionist foreign policy who will say that favor liberty.

The Libertarian Party Pledge

The pledge to join the Libertarian Party (LP) is actually one of the best definitions of being a libertarian that I have seen.  It reads as follows:

“I hereby certify that I do not believe in or advocate the initiation of force as a means of achieving political or social goals.”

This really gets to the heart of what it means to be a libertarian.  If you think deeply about that pledge, it was crafted carefully.

You may wonder why it doesn’t just say that you should never advocate the initiation of force. But I have an unusual example to answer this.

Let’s say one of my children called me up saying they were stuck in the middle of the desert. It is 100 degrees outside, and they are about to die of thirst before anyone can rescue them.  There is someone there in the middle of the desert who has 500 bottles of drinking water, but he refuses to give (or sell) one bottle to my child dying of thirst.  My child asks me what to do.  If my child can steal the other person’s property (one bottle of water), I say to do it.  It is an encroachment on the other person and his property.  In a sense, you could say that I am advocating the use of force (although not to actually physically harm the other person).

I think the qualifier “as a means of achieving political or social goals” is there for such a crazy example or others of similar nature.

If someone calls your wife ugly and you punch him in the face, I’m not sure that this disqualifies you from being a libertarian.  You shouldn’t have done it, and you will face the consequences of having done so, but it doesn’t mean you are advocating force for political or social change.

Aside from the nuances of the definition, I think it is important for libertarians to remember why they are libertarians.  It is easy to get sucked in to debates about cultural and other issues that really aren’t dealing with the initiation of force.

It is also important to use this as a defense or argument in favor of libertarianism.  It is easy to get wrapped up in debates over all of these details on issues.  But you can often silence, or at least confuse, someone by pointing out that he is advocating the use of violence to solve the problem that he seeks to solve.

Many people just simply don’t understand what it means to be a libertarian.  Libertarians can do a much better job or describing the political viewpoints of others.  Critics of libertarians will often make things up.  They will say such things as: libertarians don’t believe in helping people.  And if you don’t believe in government-funded education, then they will say you are against education, and so on.

Some people are being dishonest.  Some really just don’t understand libertarianism.  Sometimes it is a combination of those things.  They often don’t understand, but they don’t give any effort in trying to understand.

I was recently talking about property taxes.  My daughter asked about why we have to pay property taxes.  I said that we have to pay for the schools that she doesn’t use.  She asked what happens if I just don’t pay them.  I don’t know if I should have been this blunt, but I told her that they would fine me more money.  And if I still don’t pay, then they will put a lien on my property, and eventually, policemen may show up at the door to take me to jail or shoot me.

That is the hardcore fact that non-libertarians constantly try to avoid.  They never want to talk about the guys with guns who will show up at your door to enforce the policies they are advocating.  The men with guns will kidnap you and lock you up, and if you resist, they will kill you.  This is politics.

This is what people need to be reminded of (or taught) whenever a political discussion occurs.

Someone may have a wonderful government proposal that is intended to help a lot of people in need. But the question is whether I am free to disagree.  If I don’t go along with it, will men show up to shoot me?  That is the ultimate end of every government program. Most people obey so that the men with guns don’t show up.  But we should always be reminded that this is the ultimate end if we choose to disagree and disobey.

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

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

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

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

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

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

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

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

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

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

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

Some Malinvestments are Worse than Others

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So what is the first asset class to pop?

The Bitcoin Bubble

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

Watching Television and Being Productive

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Americans Only Favor Government Violence

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Give Me Deflation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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