Journal of a Wayward Philosopher
December 14, 2015
Hot Springs, VA
The S&P closed out Friday at $2,012. Gold closed at $1,074 per ounce. Oil closed at $35.35 per barrel, and the 10-year Treasury rate closed at 2.14%. Bitcoin is trading around $443 per BTC today.
The U.S. equity markets plummeted by nearly 2% on Friday. Searching for a specific explanation, the financial press blamed the big drop in the equity markets on oil falling in price to multi-year lows. Of course just a few months ago the financial press was hailing falling oil prices as a great economic stimulus. So which is it?
The truth is markets are a confluence of many individual actors, each operating in his or her perceived best interests. Markets go up and markets go down according to individual human action. There can never be a single simple explanation for market activity because there can never be a single explanation for the actions of millions of people.
With similar hubris, the financial pundits are trumpeting this week's FOMC meeting as the Fed's most important meeting ever. The Fed is expected to finally "raise interest rates", signaling economic strength for the first time since 2008.
If you pay attention to the press coverage, the Fed is an omnipotent institution leading the U.S. economy forward. In reality, the Fed cannot "raise interest rates"; it can only raise the federal funds rate which is the rate at which banks borrow funds overnight through the Federal Reserve System.
The Fed is expected to hike this overnight lending rate from 0.25% to 0.50%. Such a move will have a negligible effect on yields in the markets. In fact, it is possible we will see the 10-year Treasury rate actually decline as a result of Fed "rate hikes". The point is, as I discussed in my previous journal entry, the spontaneous order of the market system cannot be conquered, no matter how many economists try to do so.
On a slightly related note, I have spent much of my time recently thinking about a concept I call individualist capitalism. Individualist capitalism is the practical application of capitalist principles on the individual level. This is a concept that Paul Rosenberg over at The Freeman's Perspective has done a great job of fleshing out in his newsletters as well.
Forget Wall Street. Forget multi-national corporations. Forget the cronies and the lobbyists. Forget all of the political shenanigans. Forget the Federal Reserve. Forget the fiat monetary system. None of these things have anything at all to do with capitalism. Capitalism is simply a system of free enterprise and independent markets completely free from political control.
Obviously, we do not have a true system of free enterprise and free markets at the macro level. Corruption and cronyism run rampant, but there is very little a concerned citizen can do about this. So individualist capitalism seeks to cut through much of the insanity and focus on individual applications.
Individualist capitalism must begin with an intuitive understanding of the individual's primacy over the State and other coercive institutions. Modernity does a very poor job of emphasizing this concept, but I think it is universal.
I see this concept manifested naturally as I watch my daughter laugh and play all day, every day. She intuitively understands that her life has supreme value and she seeks to enjoy every second of it. I've used this passage numerous times because it really resonates with me, but I am reminded of what Jesus of Nazareth said many years ago: ”Truly I tell you, unless you change and become like little children, you will never enter the kingdom of heaven.”
From this base understanding, one can become self-referential. That is to say: one can cease seeking status and approval from external sources, and he can begin to seek approval from the spirit within. It is only once you shed the need to please everyone that you can truly begin to walk your own path.
Though we didn’t fully understand the depth of what we were doing at the time, wife Rachel and I started down this path several years ago when we walked away from our corporate banking jobs, sold our metropolitan home, and moved to a five-acre property at the end of a gravel road way up in the mountains of Virginia.
At the time of our move, few friends could understand why in the world we wanted to do such a thing. Truth-be-told, we didn’t really have a definitive answer ourselves. We just felt like it was the right move. Though there are many things we miss from our old life, especially dear friends, I now understand why the urge to make the move was so compelling.
When I was stuck in corporate America, my Fridays were generally loaded with unnecessary meetings in conference rooms named after dead bureaucrats. I spent nine hours sitting under fluorescent lights and in front of a computer every single day. This provided me with a steady paycheck, but my work provided absolutely no meaningful value to anyone whatsoever. In fact, I suspect much of my work in corporate banking was a net negative to civilization.
Now I try to spend at least an hour of my time on Fridays sitting in quiet contemplation on the side of a mountain that overlooks our property. Looking down at the river slashing through the valley below and then up at the bare cliffs towering in the distance gives me a sense of scale. The conifers clinging to the rocky soil of the mountain side could care less about where interest rates are going. The birds of prey gliding through the clear blue sky above are not the least bit concerned about who wins the 2016 presidential election in the U.S. These things are just irrelevant in the big scheme of the cosmos. The natural order will carry on regardless of what happens in Washington D.C.
True capitalism (not the crony variety) is so effective specifically because it mirrors the natural order. It is also a moral system in the sense that people tend to get what they deserve. They reap only what they have sown. Good decisions typically lead the good outcomes and bad decisions typically lead to bad outcomes. Governments and central banks completely distort the capitalist system by employing aggressive intervention every step of the way. While this has caused a giant mess at the macro level, the individual can still more or less sidestep most of the associated headaches with strategic planning and a round-about approach.
The beauty of individualist capitalism is that it aligns the interests of the individual with the interests of the community, and ultimately with civilization itself in a natural way. The power positions in government and in corporate America monopolize the individual’s time and effectively shield him from accountability thus enabling the individual to hide behind the institutional veil should he so choose. Individualist capitalism provides for freedom of time and action, but it also provides no such moral veil. Instead, your reputation is your lifeblood. Your word is your bond, as the Italians say.
In the free market, the only way to earn a living is to provide value to your fellow man in some capacity. The market does not care about what you want. Instead, it is composed of countless individuals who are each seeking to satisfy constantly changing needs, problems, and desires. The only way to be successful in the marketplace is to figure out how you can help those individuals to meet their needs, problems, and desires in some capacity.
Individualist capitalism empowers you to employ your skills, your knowledge, and your experience to do just that. Textbooks and degrees do not solve problems and satisfy needs; people do. Dependability, Responsiveness, Accountability, Honesty, Integrity, Humility, and Persistence are the requisite skills of the individualist capitalist. They are the requisite skills of the budding Information Age.
I am convinced that decentralization is an inevitable trend that will assert itself over the coming decades. As I have touched on in recent journal entries and in my newly published finance course, I expect the result of decentralization to be a reduction in traditional employment paired with an explosion of entrepreneurial opportunity.
Employing the tenets of individualist capitalism will enable you break free from the rat race and capitalize on the budding entrepreneurial opportunities of the Information Age. Thanks to the internet, instantaneous communication, the peer-to-peer revolution, and human ingenuity, the world can become both your office and your customer.
We are living in a fascinating time period from a historical standpoint. The history books will record this as a period of major change on a massive scale. The transition is already underway, and though it is difficult to see because we are immersed in it, most people can feel it.
For many, this is very uncomfortable. Modernity seeks to stomp out randomness and uncertainty, and many of our established institutions embody that attitude. But the Universe is unequivocally characterized by change and paradox; nothing can stay the same for very long.
The status-quo forcefully strives to prevent the future from happening. Individualist capitalism strives to foresee and accommodate the coming future.
More to come,
For more of Joe's thoughts on the "Great Reset" and individual solutions, please read The Individual is Rising: 2nd Edition. The Individual is Rising is available through Amazon and at http://www.theindividualisrising.com/. Please sign up for the mailing list to be notified of other projects as they come to fruition.