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ObjectivismOnline ForumFor the last month or so, I’ve been posting a “thought of the day” to my facebook profile as a “quickie” form of activism. Some of the “thoughts” refer to current events, while others are more philosophical. I’ve decided to collect the more quotable ones on my wiki. I’m going to try to continue posting my thoughts on a daily basis.
… In economic matters, most people, including most politicians, mainstream economists, and investors unconsciously follow Dewey’s philosophical principles: reality is ultimately driven by social consensus, and the success or failure of markets depends only on the optimism or pessimism of consumers and investors. This is more than the belief that wishes and prayers affect reality – this is a belief that one’s wishes are reality – if only enough people share the delusion.
(From What you need to know about the economic “crisis”)
Two more examples:
“As long as no one knows about it, the counterfeit money we print doesn’t really exist:”
“The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy.”
“As long as we ignore the problems in your economy, they won’t really affect us:”
“South Korea set a rare and controversial example over the weekend by arresting a popular blogger who was accused of undermining the financial markets [by correctly predicting economic downturns] but worshipped by many Koreans as an online guru.”
Despite an “impartial” and “transparent” process, it turns out that there is a high correlation between Congressional power and science grants. Must be a “a case of correlation but not causation” one commentator writes. There’s no way that politics could corrupt the scientific process (as long as Democrats are in power, at least.)
Full report. From: The New Clarion.
I just sent my family the following email:
Hi folks,
If you’ve been following the news, you may have heard that:
- The Federal Reserve just cut the overnight loan rate to .25 percent. Gold prices immediately jumped to $847/oz. (Last week, I bought gold at $775). We haven’t seen rates this low for over 50 years.
- The government has given away over 8,000,000,000,000 dollars of “free” money in the last three months.
- In the last 5 years, the dollar has lost more than half its value relative to gold.
All evidence points towards the fact that the U.S. government is rapidly devaluing your savings, and a currency collapse followed by hyperinflation like we recently saw in Iceland is all but inevitable. If you don’t want to lose your savings and investments in the coming economic collapse, you need to take action NOW.
Here is what you should be doing:
- Buy some gold and keep it in a safe place. I suggest http://www.kitco.com/ or eBay – you can get a good deal on 1oz gold bars. (Buy plain gold bullion, not the “collectible” stuff.)
- Don’t pay anything above the minimum payment on any loans or mortgages you have.
- It’s a good time to get a new loan. I would not suggest taking on new mortgages, as I expect housing prices to collapse further.
- The stock market may lose up to 50% of its value in the next year. Still, investing in the S&P 500 is a good hedge against inflation. You can also invest in metal & mining index funds.
- Stock up on supplies, especially durable goods.
- Minimize your holdings of inflation-prone assets, like cash, bonds, and government securities.
When you’re done, you should have a minimum of cash and cash-like investments, and plenty of material assets you can sell or barter in an emergency. Also, consider getting a firearm for self-defense – expect crime to rise dramatically when the economy collapses.
You’ve been warned.
The conventional view of economic growth now being discussed in the news prescribes higher consumer spending as the solution to the current economic recession. The idea is that if people buy more big screen TV’s for Christmas, manufacturers will increase production, hire more workers, raise wages, and we’ll all live happily ever after. As practiced in government policies, this mistaken belief is highly dangerous, and will lead to the exact opposite of its intended effects. To explain why, I will apply my earlier principle that “same principles that apply to your personal finances… apply equally to the world at large, at all levels of economy activity” and that “political success requires advocating policies which violate these basic economic principles – and then evading the consequences of their own policies.”
First, we have to question the premise that maximizing economic growth is inherently good. Consider the nature of a young person saving money for his future. If all he cares only about is his income and net worth, he must spend every waking hour of his life working, advancing his career and investing everything but the bare essentials of survival. Such a strategy will maximize present and future income at the cost of sacrificing the actual purpose of that income – to enjoy the values that his labor makes possible, including both consumer goods and time to relax and enjoy life with friends and loved ones. If everyone employed such a strategy, our society would experience rapid economic growth – until we all dropped dead from exhaustion or depression. In fact, social and economic progress requires that we devote some resources to long-term investments such as hobbies, art, and philosophy to develop our careers, values, and other opportunities to improve our lives.
Second, the lack of a consumer culture is not an impediment to economic growth, as resources that are not consumed are invested into new markets and improving the capital resources needed to expand future production. If our workaholic forfeits a new car now to buy a better car at some point in the future, his savings are not lost. Instead of being directed into present consumption, his savings become the investment capital for new factories and R&D into cheaper and better cars. Thus is why such high economic growth is possible in “Asian tigers” such as Japan and China – high rates of savings support rapid technological progress and investment into industry at the cost of a much more frugal lifestyle than in the West. In fact, there is a tradeoff between current consumption and the savings available to invest in future production and increased economic growth. There is no single right answer to this tradeoff – every individual must choose for himself how to balance present spending with investing in his future. In a free market, the sum of individual savings rates becomes the real interest rate.
Third, the consequences of artificially manipulating interest rates are disastrous. By expanding the money supply through manipulation of interest rates or (as is happening now) sending money directly from the printing presses to banks and other corporations, the government is devaluing savings and redirecting them into increased consumer spending. This improves the economic statistics in the short run at the cost of wiping out the resources set aside for long-term capital improvements. For the last few decades, America’s spending binge has been funded by foreign investment and rapid technological innovation, but ultimately, unless we drastically cut our consumption, and direct our income into savings and repaying our debts, we will find our money increasingly worthless both here and internationally. If you are wondering how bad hyperinflation could get, just look at Zimbawbe, were life expectancy has declined from 60 to 37/34, unemployment is at 80%, and as much as half the surviving population has left the country.
Yesterday I read Clay Shirky’s essay “A Group Is Its Own Worst Enemy” from Joel Spolsky’s book “The Best Software Writing I.” Clay makes some great observations on group dynamics, but that’s not my point.
What struck me is how utterly useless the leadership training seminars I’ve attended were. I learned more from a single essay than a lifetime of worthless and sometimes counter-productive seminars. From the Boy Scouts to assorted honor societies, to leadership training events in college, nowhere did I learn the basics of conflict resolution, group psychology, rule-making heuristics, and project management. Typical leadership training usually consists of variations of “trust” exercises – as if trusting people actually makes them trustworthy. (Teaching people to trust others blindly actually results in leaders too jaded by failure to trust others or to train them to rise to the occasion.)
I think the problem may be that that leadership is treated as an intuitive/emotional process that must be learned by repetition and inspiration rather than a scientific analysis of the principles of group dynamics. The worst school is the one that views talent as genetic, as it conspires to actively prevent improvement through study and hard work.
I’ve never thought of myself as a great leader, but I’ve learned some basic principles of leadership and group dynamics through trial and error:
My employer, Match.com, offers a $3,000 referral bonus for salaried employees. It also offers a 100% matching program for gifts to charitable organizations.
If anyone gets a job at match.com through me, I will use the referral bonus with the matching gifts program to give the Ayn Rand Institute $6,000.
So, if you are interested in a job in a great environment in north-central Dallas, here is the list open positions.
If you’re interested, please with your contact info, and I’ll do the rest.
If you get an interview, be sure to mention me, so I can put in a word for you. They offer a $1000 bonus for hourly positions – I will donate $2,000 in that case.
Feel free to let anyone else who may be interested know about my offer too.
(Certain conditions and limits apply, but I promise to contribute 100% of the “free” money I do get.)
When Argentina moved to nationalize pension funds, the media correctly identified it as a “grab” and people took to the streets in protest. I think Americans might just roll over, however.
read more | digg story
When arguing against the Genetic Information Nondiscrimination Act last year, I wrote
If discrimination based on comprehensive genetic screening is legal, we can expect health providers to tailor plans according to our individual risk factors. That might be to the disadvantage of a minority of high-risk individuals, but greater information about risk factors will lower uncertainty, and thus lower rates overall. Furthermore, insurers will offer incentives to people who take proactive steps to discover health risks and take steps to alleviate them. Expensive procedures such as frequent biopsies or preemptive removal of organs might be fully covered for individuals whose genetic profiles uncover a high cancer risk.
Unfortunately, Congress did not heed my arguments, and banned genetic discrimination anyway. It is now illegal for health insurers to take genetic factors into consideration when setting premiums. What effect do you think the law had on the incentive of insurance companies to pay for their customer’s genetic screening?
If the goal of the law was to encourage genetic screening, it clearly had the opposite effect. In response, celebrities are now “fighting for women to have access to MRIs and genetic testing.” Having forced insurance companies to ignore the results of genetic testing, people now want to force them to pay for it.
Do you think that people who find out that they have a higher probability of having an illness with genetic factors would be more likely to purchase more health insurance than individuals with a low probability of genetic illness? As I wrote last year,
It does not take an economist to predict that rates would immediately rise, as healthy people, refusing to pay for their neighbor’s health risks, stopped using insurance altogether. As the young and healthy jump ship, insurance companies would have to increase rates, accelerating the trend. Without further government interference, the health insurance business would disappear completely, shortly after millionaires on their deathbeds became the only people able to afford policies.
Are you still wondering why healthcare is so expensive in the U.S.?
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