Federal Reserve Notes are Risk Free?

In finance, one of the earlier ideas you will learn is the idea of a risk free rate of return.  This is the amount of return you can expect on an investment by making that investment in a vehicle that has 0% risk of default.  You will get the return for sure, every single time - hence, risk free.

The risk free rate used in finance models is the return on long term government bonds.  Often, US federal reserve notes are the returns used, though in other countries, practitioners sometimes use foreign government bond returns.

This is at odds with the facts.

First, through printing money, some governments may continue to make payments on debt even when they don't have the money to do so.  This may result in the nominal return being as advertised but the real return by definition will be lower due to the inflation eating away at some returns. Obviously, financieers take inflation into account these days but government debt being risk free is still at odds with the facts for the following reason...

Governments default on debt all the time!  Essentially every government that has ever existed has defaulted on its debt at some point.  Sure, they can go centuries without defaulting, but eventually they do and will default.  This makes them no longer risk free.

I have yet to see a strong push back on this idea but believe it to be worthwhile to consider should you work in finance and need to understand what type of rate is truly risk free.

This is yet another example of people giving a pass to the government.  They can borrow more than they otherwise would be able to at a lower rate than they would otherwise get.  They can steal money when average citizens can't.  They can tell you what you can and can't do, eat or consume when average citizens can't. 

This is part and parcel of the larger problem of average people being lulled to sleep and giving a pass to the government.  We should always and everywhere people critical and skeptical of the government and the risk free rate is just another example.

Privatize the VA

Former Secretary of Veteran Affairs David Shulkin was recently fired from his post.  Supposedly Shulkin was fired due to scandals as well as his opposition to the privatization of the VA. 

Mr. Shulkin wrote an op-ed in the NY times recently where he said “I believe strongly in the mission of the Department of Veternas Affairs, and nothing about my political experience in Washington could ever change that.  I also believe that maintaining a strong VA is an essential piece of the puzzle that is the United States’ national security system: We can only expect our sons and daughters to risk their lives and fight for our freedom if we can keep our promise to care for them when they return home broken, injured or traumatized.  There is no excuse for not holding up our end of the bargain.”

What a load of bunk!

This is an embarrassment that a man of that high office could have such limited knowledge.  Later in the piece Shulkin states “As many of you know, I am a physician, not a politician.”  No kidding! Mr. Shulkin has immense more knowledge than me in medicine but clearly knows nothing of economics, politics or even national defense.  Good riddance, David.

Shulkin states a VA is an essential piece of the national security of the US.  Perhaps if we stop sending young and full of life young men to foreign countries where they can’t tell the difference between civilian and enemy where they end up taking innocent lives for some unknown end goal we may have slightly less need for medical services back home. 

Shulkin states that we can only expect our sons and daughters to risk lives when we promise to care for them when they return home.  Tell this to those who were conscripted into fighting in Vietnam.  They were forced to fight regardless of the care situation back home.

Shulkin implies that by privatizing the VA we would fail to provide care for veterans when they return home.  Does Shulkin have the slightest idea how either markets or charity works? 

When Mr. Shulkin provided care in his physician practice, did he only do so because the government forced him to?  Or did he maybe provide care because he made a living from providing value to his patients and he felt fulfilled in aiding his patients to recovery?

In his opposition to the privatization of the VA, Mr. Shulkin embodies some of the worst and most disheartening ignorance in politics.

Does Mr. Shulkin realize that veterans would love to choose regular hospitals for access to care because the VA is slow, ineffective and is constantly on the defensive from latest scandals. 

Privitizing the VA is:

1.       The most moral thing to do

2.       Irrelevant for national security (though we could be more secure by not starting wars all over the world)

3.       An easy way to save the government money

4.       The best way to ensure veterans actually get high quality healthcare back home when in need.

Mr. Shulkin ought to be ashamed of himself. 

I don’t have much hope for Trump actually privatizing the VA but he deserves credit for floating the idea and should be urged at every moment to follow through.  I will be doing my best to convince him!

The Voluntarist Messaging Problem

Why do we voluntarists struggle to convince people of the fruits of our vision?  Why do people look at us crazy when we say we don’t need a government to do anything?  Is it because kids have been indoctrinated in government schools for generations?  Perhaps, but I don’t think this is the majority or even a large minority of the cause. 

I think it is Americans laziness and complacency.  It is easier and more comfortable to rely on the government’s coercive taxing ability to fund the roads, for example.  Never mind the immorality of this theft, it’s just easier and it works relatively fine so why bother. 

This could properly called complacency. 

When people start to really think about it, they come up with a few things they need the government to do.  National defense, courts and roads are three common ones.  I grant, these are somewhat trickier than welfare, healthcare for senior citizens, and funding for the national endowment for the arts, but the same question remains: Do we really need a government to do this?

Because we have these items (ie. Funding for the NEA, Medicare, food stamps) as low hanging fruit, people do not look beyond to the proper question.  People argue all day and night about the size of government but the proper question is really government or no government. 

We are complacent arguing about how much we should tax, should we spend more or less on the military or health care for senior citizens etc..  This is a combination of we have easier problems to answer and people are too complacent to think about anything but the easy problems.  Unfortunately, while I support any and all efforts to reduce the size and scope of government, this takes our eyes off the ball.  We need to be fighting every day about if we need government.  Discussing the size of government cedes ground in the sense of implicitly affirming the need for government.

Because people tend to take the easiest possible answer to all problems, government is often used as an easy solution.  We would benefit by always encouraging people to think critically about the need for government at all. 

My opinion is we don’t need a war mongering military and courts that throw people in jail for crimes in which nobody has been harmed.  This is the debate we should be having rather than the size of the military or its accompanying policies. 

As voluntarists, the evidence and not to mention morality are always on our side.  We should use that as a calling card to constantly fight the implicit assumption of the need for government.  We need to change the messaging to fighting the idea of government rather than which policies or what size of government we want. In doing so, we may finally gain back some ground in public opinion.

Who Will Build the Roads

When people ask, ‘who will build the roads?’ my usual response is, ‘the same people that currently build them, it’ll just be financed differently.’  Then I go on to give a few quick ideas. ‘Tolls are an obvious choice but so are trade associations that want you to visit malls and stores.  Perhaps non-profit organizations pop up to facilitate the easier movement of people and build the roads?  Maybe we will all start riding on drones or using other technology. Maybe unions or employee associations charge fees or payroll deductions from your paycheck in order to maintain the roads needed to access your job?  Point is, I don’t know the solution, I do know a solution exists and would become a reality.  What won't happen is the government stops funding the roads and then the world descends into chaos, no business gets done and people live solitary lives and never leave their home other than maybe walking to a neighbors.  This, I am confident, would not happen. 

Self Regulation Should be a Higher Value

Most libertarians are focusing on the recent developments on North Korea and the seeming positive developments in regards to diplomatic relations with the South and the US (maybe).  I fully support this but have nothing substantive to add. 

Another topic I have been thinking about recently however is, protestors are demanding the likes of Apple and Facebook make their products and services less enjoyable/provide less value.  These protestors claim that Apple holds them captive or Facebook is too addictive and hurting social cohesion.  I don’t disagree with this view but I don’t see this as a reason we need to protest. 

On the one hand, whatever the consumer wants, the consumer gets.  (For the record, I am 100% against the government forcing in anyway any company to provide any type of service or product.) If the consumer realizes he doesn’t have the self-control to cut off Facebook or put down the phone, perhaps it is rational to demand products and services from the private market that help them regain control of their lives.  On the other, this seems to be a very dis-empowering and “I can’t control anything” attitude that hurts society generally and more important the specific individuals involved. 

It seems to me, that as libertarians, we promote the view that you can take care of yourself.  You don’t need a nanny state to tell you what you can and can’t do or where you can and can’t go.  On the other hand, in a totally free society plenty of self-regulation and private regulation agencies and/or companies would exist. 

So how should we view this?

I don’t claim to have the answer but my gut is telling me this is something we should encourage people to regulate internally.  People will need to be able to regulate themselves in a totally voluntary society so I would think this should be a view we should encourage and promote.

I see this argument overlapping with a similar idea in the gun regulation debate.  The idea being, you can’t regulate a civilized society.  True, the private market would do a better job than the government but a truly civil and voluntary society likely requires significant self-regulation.

I am not advocating any type of coercion or force but I do think this is the type of discussion that might prove fruitful in developing the values that might ultimately get us to a voluntary society.  I would be grateful to hear more thoughts on this topic.

Disingenuous or Unhinged - A Pessimistic View of the Future of Facts

I listen to a lot of podcasts.  I find them to be informative and diverse.  I have the flexibility of listening at work, on my commute, while working out etc.. I get a wide variety of information from this medium.  I have a steady supply of libertarian podcasts (EVC, Tom Woods, Part of the Problem, Jason Stapleton and more) but I also listen to Glenn Beck, Joe Rogan, Jocko Willink, Upfirst from NPR, Ezra Klein, and Preet Bharara.

One thing you get very good at in listening to this many diverse opinions is the framing each side makes.  Sometimes this is conscious and sometimes it is not, but rather a function of world view, input information (meaning the stories and articles this person has consumed), or laziness.  

The latter type, typically, does not bother me so much.  Obviously, if you are trying to persuade someone of your view, you use the most persuasive language possible.  The former type, does bug me.  I find it disingenuous and manipulative.  

One such example came from a recent Stay Tuned with Preet episode.  I, obviously, think Preet Bharara is a fool.  He worked for the government, he doesn't understand how the market actually works, and he enforces laws that punish victimless crimes.  Clearly, he isn't my cup of tea.  During the episode, he claimed that the recent Mueller indictment of 13 Russians is clear evidence that Mueller being appointed as special counsel is justified.  

I DO NOT UNDERSTAND THIS.

Last I checked, Mueller was appointed to see if Trump colluded with Russia and now finding out that some Russians bought Facebook ads and tried to hack the elections means the counsel is justified?  I think plain as day, Mr. Bharara is very mistaken. 

The questions is this: Is Mr. Bharara lying and manipulating his listeners by saying this or is he honestly losing his ability to think critically and skeptically at reason and evidence?  

I do not know the answer to this.  I tend to think he most likely made an honest mistake.  However, this one really bugged me.  Perhaps it is because I see thousands of reasons to be critical of Trump (dropping more bombs in one year than Obama, the budget, cracking down on weed, banning bump stocks etc...) but I found this statement to be particularly irritating.  It is a clear example of moving the goal posts. 

Mr. Bharara is relatively less unhinged than most people as far left (politically) as he is, but if someone that appears to be as thoughtful as Preet Bharara is still either lying intentionally or unable to see that his logic (or lack thereof) is completely inconsistent I do not see much hope in people agreeing on facts.

Putin's Plan for American pt 2

https://www.washingtonpost.com/world/national-security/pentagon-looks-to-adjust-missile-defense-policy-to-include-threats-from-russia-china/2018/03/01/2358ae22-1be5-11e8-8a2c-1a6665f59e95_story.html?utm_term=.756f1e27f8be

It took roughly 24 hours for panic to spread through the newspapers and talk radio all over America. The Pentagon is already using this propaganda as a reason for "expanded U.S. missile defense policy that would address certain threats from Russia and China, departing from a previous strategy that focused nearly exclusively on rogue nations such as North Korea and Iran."

Putin's plan appears to be moving even faster than he could have predicted with the war hungry elites in Washington.

Putin's Plan for America

Step 1 – Claim nuclear bomb and rockets that can reach everywhere on earth and can avoid anti-missile technology

Step 2 – Wait for US mainstream media to spread the story as well as fear and terror

Step 3 – Wait for the Pentagon to request further military budget increases to defend the great USA from the evil Russia

Step 4 – US increases budget from ~$1 trillion/year to $2 trillion/year or more

Step 5 – US debt increases

Step 6 – Lenders to the US money printing machine realize we have 0% chance of paying any of this back

Step 7 – US defaults

Step 8 – Turmoil results and the mighty US crumbles

BTW – Russia has been upping its Gold Reserves for the pending doom that will happen.  This theory doesn’t seem outrageous to me.  It’s really no different than the US tricking the Soviet Union into fighting in Afghanistan.

While it’s been said Afghanistan is the place where empires go to die – I believe more accurately, it’s the debt incurred fighting in Afghanistan (and pretty much everywhere else) that leads empires to die.

Perhaps we should just ignore the non-threat from a country that is not doing well economically and knows full well that any attack on the US would lead to complete destruction of its own country.  We need not worry.