Tuesday, August 30, 2016

A Modest Proposal

In 1729 Jonathan Swift floated A Modest Proposal for solving Irish poverty under English rule: allow Irish parents to sell their children to the English as food. The Irish would no longer be poor, and the English would have enough to eat.

I have my own Modest Proposal: billionaires must run the country for the duration of their lives, and upon their death, the responsibility will pass to their children for their lives, ad seriatim. If they or anybody in the line of succession refuses the responsibility, then their wealth will be confiscated by the government.

Governance used to be by the most physically imposing or charismatic, who seized lands and charged rents from the inhabitants. Then it was by the monarchs who inherited these kingdoms from their physically imposing, charismatic ancestors, and doled subordinate fees out to lesser lords who willed these estates to their children in turn. The merchant class did not rule.

Then we decided that “the people” would rule. "The people" seized the right to rents from the monarchy in the usual way: by superior violence, for which the people subsequently substituted ballot boxes. In other words, instead of firing the rifles, we just count up who has the most of them and agree to go home instead.

Due to various court rulings, billionaires are effectively able to buy legislators who tell the voter class what they want to hear, and who then proceed to do the donor class’s bidding. (In a bit of ancient history, I remind readers that the ballyhooed campaign finance reform sponsored by Sens. McCain and Feingold is a largely toothless bit of legislation which accomplished nothing in the way of actual reform.)

The best example of this distortion of the democratic process is Eric Cantor, who got tossed out on his ear by voters repulsed by his support for Open Borders. Upon being fired by the voters, Cantor promptly landed a $3 million dollar a year job.

In sum, the prospect of being voted out of office is no longer a threat to the ruling class, who receive substantial back-loaded bribes in the form of speaking fees, "foundations," and other sinecures. We live in an oligarchy dressed up in democratic trappings. This is of great benefit to the oligarch puppetmasters, who might otherwise find their own necks on the line for the destructive policy choices they bribe legislators and executive branch officials to follow.

Therefore, get government aligned back with ownership incentives. Since the current metric is wealth rather than physical prowess and charisma, then we’ll just stick the wealthy with running the place, or their wealth will be confiscated so it can’t subvert the people.

Friday, August 26, 2016

Hierarch of "Eastern America"

Who are "Serbians?" Presumably, they are an ancestral group with sufficiently high rates of in-group marriage to warrant the ethnic label.

Where is this "Eastern America?" It's actually a heavily populated area which has been settled since the 1600's, whose inhabitants generally consider themselves an integral part of the sovereign and cultural entity called the United States of America. Ninety nine percent of them are not Serbian.

Serbians, like other immigrants, think the USA is terra nova with this common language and legal and other infrastructure just lying around for the rest of the world to pick up when they get here. The fact that there is a distinctive Anglo-America which actually built the place and supplied this social and physical framework is unknown to the new arrivals, thanks in no small part to Anglo-Americans telling them there's never been any such thing as Anglo-America.

The Serbians, the Levantines, the Meso-Americans, the Afghans, and on and on, are not coming here to be here; they are coming here to have a better there. God bless us all, and thanks for the Orthodoxy, but this doesn't end well.

I refer readers back to this post from October 29, 2015, where an Anglo-Saxon Fr. Patrick Allen was tasked with explaining why we're sticking with our Syro-Lebanese, Arabic-speaking fathers in the faith.

We are all in uncharted territory. America, an Anglo-Celt republic, has become a multicultural empire and nobody knows what do now.

Thursday, August 18, 2016

Everything is a pyramid scheme

What is Steemit?

Launched in March and gaining prominence in July, Steemit, a self-described "blockchain-based social media platform", has seen this level of notoriety in just its first few months of operation. To date, it has polarized blockchain experts while winning scores of newcomers to the technology.

The brain-child of Daniel Larimer, founder of BitShares, and Ned Scott, a former financial analyst, Steemit aims to provide a place for individuals to create content, promote the content they believe is good and comment on stories — all while earning money.

But Steemit is more than just a website for earning spare change.

It’s an actual blockchain built on a piece of technology developed by Larimer called Graphene, which allows for the deployment of application-specific blockchains.

Scott, in interview with CoinDesk, explained that the team only had the idea for Steemit back in January and, because of the Graphene framework, they were able to quickly roll the project out.

The rest, like most things in the blockchain space, is a bit difficult to explain...

Translation: It's a pyramid scheme.

Crypto-currencies are pure fiat, just like government legal tender, except they don't have an armed government with a legal market to back them up. They will be exchangeable for real goods and services, until they won't be. The subtext to all this: if you can't explain what you're about in one declarative sentence, you're probably a pyramid scheme.

The Twitter thread above got me thinking about this old post titled, "Storing Paco" [reminder - it's all been said on here already]:
Tyler's metaphor, his pet dog Paco, refers to the fact that savers now have to pay the banks to store their money (Paco) instead of having their money run around and play (generate positive returns). Negative interest on deposits basically transforms cash into gold, implying huge, zombie-army levels of risk, like a survivalist who incurs storage and opportunity costs in order to hoard canned beans and ammo. But the risk doesn't seem to be out there, with healthy profits and positive consumer confidence. So this implies, to Tyler, that there is some barrier to new investment. (He loses me at this point--economic stagnation? wealthy entrepeneurs cashing in their chips?)

Tyler continues: "I liked Paco (more importantly Paco liked me), but I do not enjoy living in a Paco economy. I think of the calm before the storm and wonder how to reconcile the observed calm and the potential for the storm. I do not like the most obvious attempts at reconciliation."

In other words, something really obvious should be happening to explain negative interest rates (which, as a practical matter, are economically impossible) but darned if anybody can find it.

So what is "it?" And I think I've found "it." Every person I talk to is seeing their margins squeezed. Competition is pretty brutal on an inter-connected planet of 7 billion people. This doesn't mean we're all going to die; it just means our profits are going to be ever lower. Add in a constant stream of new money, and quality trends downward and more and more people see their living standards fall, thus driving high-IQ people who want to make a lot of money into value-transference activities like Steemit instead of, say, discovering how to repair damaged neural tissue.

Thus the conundrum for the rich: there really isn't any "next big thing" left out there, and bank deposits are only insured up to $250,000, so they're storing their money in cash equivalent: government bonds. There are a lot of externalities in play as well which I won't go into. But what this also means is there is a lot of over-valued trash and the rich know it, which is why they're stockpiling cash. Note too that they are counting on the current bond issuers (the EU, the US government et al.) still being around to honor their debt obligations. Of course, the issuers are going to do this by pure money-printing but productivity and markets seem to be growing just enough that this is not a problem for the debt holders. Yet.

The system is fragile in that the over-valued trash (like Steemit) must eventually reflect the underlying fundamentals, and the government is borrowing too much. I suspect the situation will flip and the flight to real assets (land, gold, ammo, vodka) will come when it's obvious that the future mean-90 IQ peoples of the US and Europe will not and cannot repay the obligations incurred by mean-100 IQ Americans and Europeans. So good news for my fellow 52-year olds: the system has about 30 more years left in the tank.

Finally, apologies for the delayed posting. I am going to try and follow my friend the Rat-Faced Man's advice and post weekly, even if (when) the quality suffers.