Cat boxing...big dog goes down!
The first pot friendly hotel...
Mark Twain and his words of wisdom...
What you don't know about raw milk...
It's OK to eat raw meat...
Sneaky department store tactics...
Taking a leap of faith...over a catcher that is...
Bank failures, false recovery, the fight for your life...oh my!
Take the world religions quiz...
Goldman Sachs...financial terrorism at its finest!
Candied bacon!
The 10 greatest 80s TV show theme songs...
WWIII is on the horizon...
WTC7 bombshell...Silverstein wanted it demolished!
Need more proof...here's a 9/11 coincidence...
Hitchhiker's Requiem...
Ridiculous headphones...
Get a Grip...
The future material of today...
What to do during a rain delay...
Today's timewaster...Rotato...
Dinosaurs with guns...
How the elite control the politicians...
Jazzamatazz...
HAARP/MK ULTRA...
We know who you are...
Before the music dies...
Today's Message
SEVEN HABITS REVISITED: SEVEN UNIQUE HUMAN ENDOWMENTS
by Stephen R. Covey
I see seven unique human endowments or capabilities associated with The Seven Habits of Highly Effective People. One way to revisit The Seven Habits of Highly Effective People is to identify the unique human capability or endowment associated with each habit.
The primary human endowments are 1) self-awareness or self-knowledge; 2) imagination and conscience; and 3) volition or will power. The secondary endowments are 4) an abundance mentality; 5) courage and consideration; and 6) creativity. The seventh endowment is self-renewal. These are all unique human endowments; animals don’t possess any of them. But, they are all on a continuum of low to high levels.
Associated with Habit 1:
Be Proactive is the endowment of self-knowledge or self-awareness, an ability to choose your response (response-ability). At the low end of the continuum are the ineffective people who transfer responsibility by blaming themselves or others or their environment—anything or anybody “out there”—so that they are not responsible for results. At the upper end of the continuum toward increasing effectiveness is self-awareness: “I know my tendencies; I know the scripts or programs that are in me; but I am not those scripts. I can rewrite my scripts.” You are aware that you are the creative force of your life. You are not the victim of conditions or conditioning. You can choose your response to any situation, to any person. So on the continuum; you go from being a victim to self-determining creative power through self-awareness of the power to choose your response to any condition or conditioning.
Associated with Habit 2:
Begin With the End in Mind is the endowment of imagination and conscience. If you are the programmer, write the program. Decide what you’re going to do with the time, talent, and tools you have to work with: “Within my small circle of influence, I’m going to decide.” At the low end of the continuum is the sense of futility about goals, purposes, and improvement efforts. After all, if you are totally a victim, if you are a product of what has happened to you, then what can you realistically do about anything? So you wander through life hoping things will turn out well, that the environment may be positive, so you can have your daily bread and maybe some positive fruits. At the other end is a sense of hope and purpose: “I have created the future in my mind. I can see it, and I can imagine what it will be like.” Only people have the capability to imagine a new course of action and pursue it conscientiously.
Associated with Habit 3:
Put First Things First is the endowment of willpower. At the low end of the continuum is the ineffective, flaky life of floating and coasting, avoiding responsibility and taking the easy way out, exercising little initiative or willpower. And at the top end is a highly disciplined life that focuses heavily on the highly important but not necessarily urgent activities of life. It’s a life of leverage and influence. On the continuum, you go from being driven by crises and having can’t and won’t power to being focused on the important but not necessarily urgent matters of your life and having the will power to realize them.
The exercise of primary human endowments empowers you to use the secondary endowments more effectively. We will now move from Primary to Secondary Endowments.
Associated with Habit 4:
Think Win-Win is the endowment of an abundance mentality. Why? Because your security comes from principles. Everything is seen through principles. When your wife makes a mistake, you’re not accusatory. Why? Your security does not come from your wife living up to your expectations. Your security comes from within yourself. You’re principle-centered. As people become increasingly principle-centered, they love to share recognition and power. Why? It’s not a limited pie. It’s an ever-enlarging pie. The basic paradigm and assumption about limited resources is flawed. The great capabilities of people are hardly even tapped. The abundance mentality produces more profit, power, and recognition for everybody. On the continuum, you go from a scarcity to an abundance mentality through feelings of intrinsic self-worth and a benevolent desire for mutual benefit.
Associated with Habit 5:
Seek First to Understand, Then to Be Understood is the endowment of courage balanced with consideration. Does it take courage and consideration to not be understood first? Think about it. Think about the problems you face. You tend to think, “You need to understand me, but you don’t understand. I understand you, but you don’t understand me. So let me tell you my story first, and then you can say what you want.” And the other person says, “Okay, I’ll try to understand.” But the whole time they’re “listening,” they’re preparing their reply. They are just pretending to listen, selective listening. When you show your home movies or tell some chapter of your autobiography “let me tell you my experience” the other person is tuned out unless he feels understood.
But what happens when you truly listen to another person? The whole relationship is transformed: “Someone started listening to me and they seemed to savor my words. They didn’t agree or disagree, they just were listening and I felt as if they were seeing how I saw the world. And in that process, I found myself listening to myself. I started to feel a worth in myself.”
The root cause of almost all people problems is the basic communication problem people do not listen with empathy. They listen from within their autobiography. They lack the skill and attitude of empathy. They need approval; they lack courage. The ability to listen first requires restraint, respect, and reverence. And the ability to make yourself understood requires courage and consideration. On the continuum, you go from fight and flight instincts to mature two-way communication where courage is balanced with consideration.
Associated with Habit 6:
Synergy is the endowment of creativity, the creation of something. How? By yourself? No, through two respectful minds communicating, producing solutions that are far better than what either originally proposed. Most negotiation is positional bargaining and results, at best, in compromise. But when you get into synergistic communication, you leave position. You understand basic underlying needs and interests and find solutions to satisfy them both. You get people thinking. And if you get the spirit of teamwork, you start to build a very powerful bond, an emotional bank account, and people are willing to subordinate their immediate wants for long-term relationships. With courage and consideration, communicate openly with each other and try to create win-win solutions. On the continuum, you go from defensive communication to compromise transactions to synergistic and creative alternatives and transformations.
Associated with Habit 7:
Sharpen the Saw is the unique endowment of continuous improvement or self-renewal to overcome entropy. If you don’t constantly improve and renew yourself, you’ll fall into entropy, closed systems and styles. At one end of the continuum is entropy (everything breaks down), and the other end is continuous improvement, innovation, and refinement. On the continuum, you go from a condition of entropy to a condition of continuous renewal, improvement, innovation, and refinement.
My hope in revisiting the Seven Habits is that you will use the seven unique human endowments associated with them to bless and benefit the lives of many other people.
by Stephen R. Covey
I see seven unique human endowments or capabilities associated with The Seven Habits of Highly Effective People. One way to revisit The Seven Habits of Highly Effective People is to identify the unique human capability or endowment associated with each habit.
The primary human endowments are 1) self-awareness or self-knowledge; 2) imagination and conscience; and 3) volition or will power. The secondary endowments are 4) an abundance mentality; 5) courage and consideration; and 6) creativity. The seventh endowment is self-renewal. These are all unique human endowments; animals don’t possess any of them. But, they are all on a continuum of low to high levels.
Associated with Habit 1:
Be Proactive is the endowment of self-knowledge or self-awareness, an ability to choose your response (response-ability). At the low end of the continuum are the ineffective people who transfer responsibility by blaming themselves or others or their environment—anything or anybody “out there”—so that they are not responsible for results. At the upper end of the continuum toward increasing effectiveness is self-awareness: “I know my tendencies; I know the scripts or programs that are in me; but I am not those scripts. I can rewrite my scripts.” You are aware that you are the creative force of your life. You are not the victim of conditions or conditioning. You can choose your response to any situation, to any person. So on the continuum; you go from being a victim to self-determining creative power through self-awareness of the power to choose your response to any condition or conditioning.
Associated with Habit 2:
Begin With the End in Mind is the endowment of imagination and conscience. If you are the programmer, write the program. Decide what you’re going to do with the time, talent, and tools you have to work with: “Within my small circle of influence, I’m going to decide.” At the low end of the continuum is the sense of futility about goals, purposes, and improvement efforts. After all, if you are totally a victim, if you are a product of what has happened to you, then what can you realistically do about anything? So you wander through life hoping things will turn out well, that the environment may be positive, so you can have your daily bread and maybe some positive fruits. At the other end is a sense of hope and purpose: “I have created the future in my mind. I can see it, and I can imagine what it will be like.” Only people have the capability to imagine a new course of action and pursue it conscientiously.
Associated with Habit 3:
Put First Things First is the endowment of willpower. At the low end of the continuum is the ineffective, flaky life of floating and coasting, avoiding responsibility and taking the easy way out, exercising little initiative or willpower. And at the top end is a highly disciplined life that focuses heavily on the highly important but not necessarily urgent activities of life. It’s a life of leverage and influence. On the continuum, you go from being driven by crises and having can’t and won’t power to being focused on the important but not necessarily urgent matters of your life and having the will power to realize them.
The exercise of primary human endowments empowers you to use the secondary endowments more effectively. We will now move from Primary to Secondary Endowments.
Associated with Habit 4:
Think Win-Win is the endowment of an abundance mentality. Why? Because your security comes from principles. Everything is seen through principles. When your wife makes a mistake, you’re not accusatory. Why? Your security does not come from your wife living up to your expectations. Your security comes from within yourself. You’re principle-centered. As people become increasingly principle-centered, they love to share recognition and power. Why? It’s not a limited pie. It’s an ever-enlarging pie. The basic paradigm and assumption about limited resources is flawed. The great capabilities of people are hardly even tapped. The abundance mentality produces more profit, power, and recognition for everybody. On the continuum, you go from a scarcity to an abundance mentality through feelings of intrinsic self-worth and a benevolent desire for mutual benefit.
Associated with Habit 5:
Seek First to Understand, Then to Be Understood is the endowment of courage balanced with consideration. Does it take courage and consideration to not be understood first? Think about it. Think about the problems you face. You tend to think, “You need to understand me, but you don’t understand. I understand you, but you don’t understand me. So let me tell you my story first, and then you can say what you want.” And the other person says, “Okay, I’ll try to understand.” But the whole time they’re “listening,” they’re preparing their reply. They are just pretending to listen, selective listening. When you show your home movies or tell some chapter of your autobiography “let me tell you my experience” the other person is tuned out unless he feels understood.
But what happens when you truly listen to another person? The whole relationship is transformed: “Someone started listening to me and they seemed to savor my words. They didn’t agree or disagree, they just were listening and I felt as if they were seeing how I saw the world. And in that process, I found myself listening to myself. I started to feel a worth in myself.”
The root cause of almost all people problems is the basic communication problem people do not listen with empathy. They listen from within their autobiography. They lack the skill and attitude of empathy. They need approval; they lack courage. The ability to listen first requires restraint, respect, and reverence. And the ability to make yourself understood requires courage and consideration. On the continuum, you go from fight and flight instincts to mature two-way communication where courage is balanced with consideration.
Associated with Habit 6:
Synergy is the endowment of creativity, the creation of something. How? By yourself? No, through two respectful minds communicating, producing solutions that are far better than what either originally proposed. Most negotiation is positional bargaining and results, at best, in compromise. But when you get into synergistic communication, you leave position. You understand basic underlying needs and interests and find solutions to satisfy them both. You get people thinking. And if you get the spirit of teamwork, you start to build a very powerful bond, an emotional bank account, and people are willing to subordinate their immediate wants for long-term relationships. With courage and consideration, communicate openly with each other and try to create win-win solutions. On the continuum, you go from defensive communication to compromise transactions to synergistic and creative alternatives and transformations.
Associated with Habit 7:
Sharpen the Saw is the unique endowment of continuous improvement or self-renewal to overcome entropy. If you don’t constantly improve and renew yourself, you’ll fall into entropy, closed systems and styles. At one end of the continuum is entropy (everything breaks down), and the other end is continuous improvement, innovation, and refinement. On the continuum, you go from a condition of entropy to a condition of continuous renewal, improvement, innovation, and refinement.
My hope in revisiting the Seven Habits is that you will use the seven unique human endowments associated with them to bless and benefit the lives of many other people.
Knowledge
Historical Anatomies on the Web
The U. S. National Library of Medicine has posted this site featuring Historical Anatomies on the Web. This project is 'designed to give Internet users access to high quality images from important anatomical atlases in the Library's collection.' Emphasis is on the 'images and not the texts,' making the project an artistic experience for everyone. In fact, the 'atlases and images are selected primarily for their historical and artistic significance, with priority placed upon the earliest and/or the best edition of a work in NLM's possession.' Come browse the best of the National Library of Medicine's material!
 |  | Share: Eat.ly
Founded on the principle that ‘data + pictures = positive change’, Eat.ly invites users to publicly track your meals with photos, comment on other users' dining habits, and rate the nutritiousness of their own feasting on a ‘healthiness scale’, which like the one in your bathroom, probably doesn't go high enough. Share your grub habits with Eat.ly |
 | | Guess: Whose Voice Is That?
Started by a self-described “voice recognizer” who got tired of not impressing his friends with celebrity voiceover trivia, WViT is a blog chronicling the famous folks who sold their pipes to hawk merch, from posts on “stories and (hopefully) little known facts”, to a one-stop alphabetical rundown unveiling pairings like Burt Reynolds for Denny’s, Will Arnett for GMC, and Queen Latifah for Put a name to the ads at WhoseVoice.org |
The Most Awesomest Thing Ever
A no-holds-barred battle to determine the best...of everything
Awesomeness knows no bounds, except maybe Outward Bound, which just strands you in the wilderness and tells you you can drink your own urine three times before it becomes toxic. Actually...damn, that is kind of awesome. See? Officially deciding the best thing ever from a staggeringly open-ended list,The Most Awesomest Thing Ever.
From a BK-based digital creative agency who decided it was time for the internet to determine the thing that is indeed the most awesome, MATE only restricts what can enter the fray on the grounds that it is, indeed, potentially awesome, and endeavors to accomplish its goal by "endlessly pitting two things against each other...creating a stage set for destruction", assuming what's being destroyed is your productivity. Immediately loading up two contestants (complete with a photo of each and link to wikipedia page), randomly generated battles include Chocolate vs Friendship (chocolate wins nearly 4 out of 5 times), Dear John Letters vs Scooby-Dum (cowardly breakups edge out Scooby's coz), The Pencil vs Hiroshima (Hiroshima drops the bomb on writing), and Saved By The Bell: College Years vs Flatulence, where no matter the winner you're dangerously close to a piece of crap. MATE also tracks every item's individual W-L record and ranks each one accordingly, maintaining a list of the top 100 most awesome things (#1 Internet, #7 A Nap, #30 Tyrannosaurus, #67 Profanity), and "93 Inadequatest" things, which counts among its ranks Parade magazine, the WNBA, and Glitter, about which it's really irrelevant if they're referring to the decorative substance or the decorative Mariah Carey vehicle.
Users can even submit items for battle so long as they provide a wikipedia link and a photo, but they have to be PG, because while awesomeness knows no bounds, apparently the Internet's tolerance of it does.
Bill's Games
Summer is right around the corner and with it the summer boredom that has you and your family looking for entertainment. Look no farther than the Internet. Bill's Games is billed as 'free, award-winning web-based games for the whole family.' You'll find card games, solitaire and the like, puzzles, word games, board games, mazes, just about any type of game to tickle your fancy. It's nice to be prepared for these summer doldrums, but please beware, this site will keep you and the family occupied for hours if you're not careful!
Today's Quotes
FINANCIAL INDEPENDENCE
“Make a decision to be successful right now. Most people never decide to be wealthy and that is why they retire poor.” —Brian Tracy
“A tragic irony of life is that we so often achieve success or financial independence after the chief reason for which we sought it has passed away.” —Ellen Glasgow
“I remember saying to my mentor, ‘If I had more money, I would have a better plan.’ He quickly responded, ‘I would suggest that if you had a better plan, you would have more money.’ You see, it’s not the amount that counts; it’s the plan that counts.” —Jim Rohn
“Depending upon the government for your future financial security is like hiring an accountant who is a compulsive gambler!” —Denis Waitley
Fun
Designated Driver
I turned to my father one night and said, "It's amazing—50 years and you never once had an affair. How do you account for that?" He replied, "I can't drive."
Idiot Sightings...
IDIOT SIGHTING: My husband and I had to have the garage door repaired. The Sears repairman told us that one of our problems was that we did not have a "large" enough motor on the opener. I thought for a minute, and said that we had the largest one Sears made at that time, a 1/2 horsepower. He shook his head and said, "Lady, you need a 1/4 horsepower." I responded that 1/2 was larger than 1/4. He said, "NO, it's not. Four is larger than two." We haven't used Sears repair since.
IDIOT SIGHTING: I live in a semi rural area. We recently had a new neighbor call the local township administrative office to request the removal of the Deer Crossing sign on our road. The reason: "Too many deer are being hit by cars out here! I don't think this is a good place for them to be crossing anymore."
IDIOTS IN FOOD SERVICE: My daughter went to a local Taco Bell and ordered a taco. She asked the person behind the counter for "minimal lettuce." He said he was sorry, but they only had iceberg.
IDIOT SIGHTING: I was at the airport, checking in at the gate when an airport employee asked, "Has anyone put anything in your baggage without your knowledge?" To which I replied, "If it was without my knowledge, how would I know?" He smiled knowingly and nodded, "That's why we ask."
IDIOT SIGHTING: The stoplight on the corner buzzes when its safe to cross the street. I was crossing with an intellectually challenged coworker of mine. She asked if I knew what the buzzer was for. I explained that it signals blind people when the light is red. Appalled, she responded, "What on earth are blind people doing driving?!"
IDIOT SIGHTING: At a good-bye luncheon for an old and dear coworker: She was leaving the company due to "downsizing." Our manager commented cheerfully, "This is fun. We should do this more often." Not another word was spoken. We all just looked at each other with that deer-in-the-headlights stare. This was a bunch at Texas Instruments.
IDIOT SIGHTING: I work with an individual who plugged her power strip back into itself, and for the sake of her own life, couldn't understand why her system would not turn on. A deputy with the Dallas County Sheriffs office no less.
IDIOT SIGHTING: When my husband and I arrived at an automobile dealer-ship to pick up our car, we were told the keys had been locked in it. We went to the service department and found a mechanic working feverishly to unlock the drivers side door. As I watched from the passenger side, I instinctively tried the door handle and discovered that it was unlocked. "Hey," I announced to the technician, "Its open!" His reply, "I know - I already got that side.
What’s the difference between a modern democracy and an ancient tyrant? Not much if you ask David Galland...
Whiskey & Gunpowder
By David Galland
April 21, 2010
Stowe, Vermont, U.S.A.
In the Shadow of the Castle
These days it takes very little to set me off on yet another rant against the American political class – a proxy for governments the world over.
On occasion, I’m tempted to apologize for these rants. Not so much for the message, but for the frequency.
Unfortunately, when surveying the landscape on which our hovels rest, the king’s castle looms large in the foreground.
I am not an envious person by nature and so wouldn’t begrudge the king his fine trappings, provided they were honestly earned.
But therein lies Ye Olde Rub.
Ever more frequently these days, the drawbridge comes down and a troop of the king’s finest sallies forth to extort from me more than half of my crops, and to read new royal proclamations whose net result is to add to the daily burden of trying to provide sustenance for family and jobs for workers.
Should I protest, say, by grabbing a pitchfork and telling the soldiers to clear off my land, or refuse to fill their wagons with the best of my crops – each leaf of which represents time and investment on my part – they would grab me by the shoulders, drag me to the king’s dungeon, and confiscate my property.
In fact, all that has changed since the days of yore is that the king’s knights tend to no longer rape, as well as pillage.
To be fair, the annals of history contain rare instances of kind and intelligent monarchs, the sort who understand that overburdening the peasants ultimately reduces crop production, leading to unnecessary and unproductive hardship and, in time, even revolt. Though, by temperament, I resist authority of any description, I suppose I could live comfortably under the rule of a fair and benign monarch.
The problem with that notion, of course, is that the corruptive nature of power leads to the near certainty that Baldash the Not So Bad will be followed by Norbit the Nasty.
And all of a sudden, instead of politely requesting I kick in some reasonable percentage of my crops to help maintain a constabulary, courts, and maybe the highways, Norbit’s men are kicking in my doors and we’re back to ox carts full of my produce being confiscated to provide a new set of gold plates and to pay the cost of invading neighboring lands.
While some among you will protest, there is, I would contend, little difference between a degraded monarch and a degraded democracy. In the monarchy, a single leader directs his minions in their ruinous acts; in a democracy, the directions come from professional politicians, as well versed in gaining and keeping power as any royalty of a bygone era. (Sir Robert Byrd held high office in this nation for 57 years.)
Far from being benign, the nation’s leadership, masters at appealing to the self-interest of an unprincipled voter class, have led us to a perilous situation where the fields are being left unplanted.
And an increasing percentage of the citizenry is now muttering angry curses as the king’s men ride by in their shiny black limo-horses.
For a clear understanding of just how poorly ruled this country has been, look no further than the latest budget projections. In his recent article, “America’s Impending Master Class Dictatorship,” Stewart Dougherty does just that, analyzing the government’s wanton spending and penning some notable, and quotable, words on the topic.
One stark and sobering way to frame the crisis is this: if the United States government were to nationalize (in other words, steal) every penny of private wealth accumulated by America’s citizens since the nation’s founding 235 years ago, the government would remain totally bankrupt.
Recently our stalwart CEO Olivier Garret sent over an insider doc from the Republicans’ Study Committee that provides talking points for candidates to use in the unending struggle for control of the castle. While I think the color of flag flapping over the battlements is at this point almost irrelevant, the document contains some interesting data points.
For instance…
- $13.5 Trillion of New Debt: The president’s budget proposes to increase the national debt from today’s level of $12.3 trillion to $25.8 trillion in FY 2020 – an increase of $13.5 trillion or 109.8%. The amount of new debt proposed by this budget is larger than the total amount of debt accumulated by the federal government from 1789 to today (even including the $3.6 trillion of new debt over the last three years).
- $2.8 Trillion Tax Increase: The president’s budget submission increases taxes by $2.8 trillion over ten years. This includes allowing many of the 2001 and 2003 tax cuts to expire at the end of this year, such as allowing the top rate (which is often paid by small businesses) to increase from 35% to 39.6%, and allowing the top capital gains tax rate to return to 20%. These tax increases would take effect in an economy that, according to many economists, will still have an unemployment rate around 10%.
- Mandatory Spending: Increases from last year’s level of $2.1 trillion to $3.4 trillion in 2020, an increase of $1.3 trillion or 59.4%. Within that amount: Medicare spending increases from $425 billion in 2009 to $953 billion in 2020 – an increase of $528 billion or 124.2%; Social Security spending increases from $678 billion in 2009 to $1.20 trillion in 2020 – an increase of $523 billion or 77.1%; and Medicaid spending increases from $251 billion in 2009 to $487 billion in 2020 – an increase of $236 billion or 94.0%.
- Interest Payments on the Debt: Increases from $187 billion in FY 2009 to $840 billion in FY 2020 – an increase of $653 billion or 349.2%.
As mentioned yesterday, the projection on interest costs is far too conservative. While the government’s always flawed projections don’t anticipate it, both Bud Conrad and Doug Casey see strongly rising interest rates as a certainty in the foreseeable future. At that point, the debt death spiral begins in earnest, and the whole charade begins to come apart.
But it won’t take soaring interest rates to bring the economy down. That’s just going to accelerate things. And, of course, the worse things get, the worse the monarchy will act – demanding ever higher taxes and further debasing the currency, as they now certainly must.
How can you protect yourself? It really depends on where you are from.
One obvious solution would be to move to a different kingdom, one that treats you and your money better. Or that pretty much ignores you altogether. If you are from the U.S., the king’s tax collectors will follow you wherever you go – but even so, there are modest tax advantages you can gain by expatriation. Ask your tax counsel for details.
If, on the other hand, you live in a kingdom that doesn’t tax foreign-derived income (yet), becoming a citizen of the world can offer serious advantages and is well worth considering. The situation in most of the developed kingdoms, where easy money and quick mortgages greatly exacerbated the levels of debt, is only going to get more dire as the rulers cast a wider and stronger net in the quest for more revenue.
Even if you aren’t in a position to move, however, you’ll benefit from clearly understanding one key point about the king. While he may dress well and speak in dulcet and pleasing tones, he doesn’t actually produce anything. What money he has to spend must first be taken off the productive elements of the peasantry.
But there are limits to how much he and his men can squeeze out of the citizenry. We are nearing those limits.
That means that all that is left to the monarchy is for it to issue IOUs. And given the levels of their debts and ongoing spending, lots and lots of IOUs. Those IOUs are called dollars, or pounds, or pesos, or yen, or….
While there will be no straight line up or down for any asset class in the unsettled times we will live through, using periods of weakness to build your exposure to tangible assets – most notably gold, whose primary and best use is as sound money – is the only way to protect yourself from the Great Debasement that’s coming.
If you don’t like discussions on liberty and the proper role of government in regulating society, you’ll want to stop here. But if you’re in for that sort of thing, read on...
Whiskey & Gunpowder
By Dan Denning
April 20, 2010
Melbourne, Australia
The Role of Government
We’re going to paint with a broad brush and say most well-meaning government interventions in public and private life are designed to promote equality of outcome, social justice, or reduce the seeming unfairness and volatility of life in market economy.
But have you ever wondered if, in the earnest attempt to eliminate risk in our society (financial, physical, emotional), we’re actually make people less safe and society more inherently risky?
Wear your seat belt. Don’t binge drink. Don’t drive too fast. Be politically correct. Be tolerant. Be diverse. Be multi-cultural. All these commandments coming down from the Nanny State on high are given to us presumably because we are too stupid or unthinking to look out for ourselves, or too unsensitive to the feelings of self-worth held by others.
We won’t eat right unless told what to eat...or invest enough to provide for our retirement unless compelled to. And the world would be better, in the words of Principal Skinner, “If nobody was better than anybody else and everybody was the best.”
But what if all this bullying, nonsense, nannying, and government coercion is eroding the very healthy and natural ability to identify and manage risk? We’d argue that in nature, the ability to identify risk promotes survival. The amygdala — that tiny part of our brain that controls the fight or flight instinct — is evolution’s way of keeping us on our toes. It reminds us that in the tens of thousands of years human history, the margin between life and death has been pretty small.
Over most of human history, people haven’t had surplus time or energy to think about what to do with surplus, quantitatively or qualitatively. You spent most of your time surviving and finding food. And this pursuit, knowing what to fear was probably your most important survival skill.
But we live in a world of profound and seemingly endless abundance and surplus today. It’s a product of the division of labour (which has been so successful most people don’t even know what it is), cheap energy, and cheap credit. We’d argue that all of these things have dangerously dulled our sense of risk and exaggerated our expectations of what to expect from life, each other, and our public institutions.
Wealth, material wealth anyway, is a product of surplus. And surplus is another way of saying profit. It means combining raw materials, labour, and your talent to make the whole worth more than the sum of the parts.
In this respect — by communicating accurate prices so people can make informed decisions about what to buy and sell — the free market delivers extraordinary outcomes. It unleashes the sheer productive capacities of millions of people who do completely unpredictable and unplannable things with their life that no central committee could possibly organise.
The trade off for such an open system that produces so much surplus, choice, and income mobility is instability and relative inequality. Unless you are in a rocking chair, you can’t really be moving and staying put at the same time. But for some reason, some people find this instability — a natural feature of a dynamic system — threatening. They want to freeze things and give up growth and change for the sake of predictability and security, which they would choose as personal goals.
To be fair, change freaks some people out. To be ideological, the people (usually in government) opposed to the instability of the free market just don’t like what other people choose to do with their economic liberty. They find prosperity morally vulgar and are offended by obvious inequality — failing to see that free markets have elevated all people everywhere to standards of living that would have been unimaginable even 100 years ago.
One possible explanation is that the meddling central planners of the world are just egomaniacs who get off on telling other people how to live. More worrying is that these people actually believe they are right and that someone should have the role of regulating, with the power of the State to coerce, how people behave in the minutest detail.
That’s not to say that you can’t have good government. But we’d say it would be much smaller and less morally ambitious than today’s institution. Today’s big government exists for the sake of perpetuating itself. It’s finding that harder and harder to do as it sucks up — and eventually kills — the lifeblood of the productive economy, taxes in the form of suplus on personal and corporate incomes.
Mind you, none of this is in defense of the predatory financial capitalism run by Washington and Wall Street oligarchs that’s been masquerading as the free market. As Ron Paul correctly pointed out last week, the current system is more accurately described as “corporatist” in which the banks, the defense contractors and corporations of size (to use a PC term) lobby, cajole, and generally purchase favourable laws from legislators (on the right and left) that are themselves bought and paid for.
Frankly, the whole thing could use a little creative destruction. And no matter how badly its defenders (like Bernanke) fight for it, the system is inherently fraudulent and wasteful of resources and capital.
And in addition to that, it’s just ethically offensive. We won’t miss it or mourn it when it’s gone. As we mentioned last week, we don’t encourage people to get involved with that political system at all. It’s like snogging with a vampire. We’d urge you to deprive that system of your time, talents, and creative energies.
The best defense of liberty begins with financial independence. And taking care of your own money and your own life is something you don’t need to go to the ballot box to do. And you don’t have to take anyone else’s money either. It also puts you in the position of helping people you really can help — your friends, family, and neighbours.
So why isn’t financial independence the highest calling in public life? Hmmn. Granted, a high material standard of living is not the same thing as a high quality of life. And we’d even say that spiritually, there are more important things. But it’s something to think about.
| Rock and a Hard Place | ||
After years of excesses, the developed world is slowly beginning to realize that you cannot continue to live beyond your means and spend your way to prosperity. Today, US national debt stands just north of $12 trillion. Its fiscal deficit for this year alone should come in around $1.6 trillion and the nation faces mind-boggling deficits for as far as the eye can see. Furthermore, demand for US government debt has begun to wane and this implies that the Federal Reserve will have to resort to creating even more money over the following years. Make no mistake; the US cannot afford higher interest rates and in order to keep a lid on the government bond yields, we are convinced that the Federal Reserve will resort to debt monetization. In other words, the central bank will create new dollars in order to fund the deficits. Needless to say, this money-creation will be extremely dilutive and end up undermining the viability of the world's reserve currency. If our assessment is correct, within the course of this decade, the interest payments on the existing government debt will become so large that the US Treasury will need to issue new debt just so that it can keep paying interest on its outstanding debt. When that happens, you can be sure that foreigners will not be eager buyers of US government debt. Therefore, the Federal Reserve will have to create additional money, just to keep the Ponzi scheme going. And when all else fails, the US will simply debase its currency, thereby repaying its creditors in significantly depreciated dollars. Although our prognosis may sound far-fetched, we want to remind you that throughout history, currency debasement has been the norm rather than the exception. Let us put it simply, the US is now left with three options:
Next, we are also sure that policymakers in the US will not swallow the bitter pill and pursue sound monetary policies. So this option is also out of the question. Finally, it is obvious to us that policymakers in the US will have no hesitation in opting for the inflation solution. By diluting the supply of money and eventually debasing their currency, policymakers in the US will create the illusion of prosperity via rising nominal asset prices. Unfortunately, severe monetary inflation and currency debasement is likely to occur in many Western nations, not just the US. Remember, a host of nations such as Ireland, Italy, Spain, Greece, Portugal and the UK are also swimming in an ocean of debt. Moreover, their populations are ageing and this trend will put further pressure on these countries' finances. So, in this 'new era', whereby most of the 'advanced' economies are on the edge of bankruptcy, various paper currencies will come under pressure. The more nations that move to debase their currencies, the more that the paper monies of the world will depreciate against hard assets such as gold. Although currency debasement and inflation are good enough reasons to hold on to some gold, the biggest bullish factor is that real (inflation-adjusted) interest-rates are now negative in most nations. Thanks to the central banks' reflationary efforts, short-term interest rates today are way below the official inflation rate. Therefore, holding cash is now a loss-making proposition and thus, forward-looking investors are turning to gold. On the supply side of the equation, it is worth noting that central- banks have now become net buyers of gold. After years of selling bullion, the public sector has done an about-face and this is very positive for the yellow metal. Currently, the creditor nations in Asia are sitting on mountains of foreign exchange reserves and in an effort to diversify out of paper, they will surely add to their gold holdings. Recently, we have seen China and India buy huge amounts of gold and you can bet your bottom dollar that they will continue to add to their tiny positions. Gold is in a secular bull-market and every investor should own some bullion as an insurance policy. At present, gold mining stocks are undervalued relative to gold bullion, so those seeking extra leverage should consider investing in dominant gold producers. Finally, in our view, the high-cost South African gold producers, who do not hedge their production, offer the maximum leverage to gold. And at current prices, these companies are being given away. |
Peace, love and happiness...until next time...
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