01/03

The Year Ahead

20190103

The end of 2018 had a few surprises.

US President Donald Trump announced a withdrawal from Syria, end of US support for the Saudi war on Yemen, and a possible withdrawal from Afghanistan. He even commented on this by saying that Syria is sand and death. These are good moves. The United States is bankrupt and the markets are slowly starting to show this, as is the standing of the US dollar. The wars cannot be funded in perpetuity and must end. Beyond the financial aspects of these wars, they are simply immoral. War is a government program of mass murder. Murder is wrong, and therefore war is also wrong. Any war beyond the purely defensive cannot be morally justified.

The markets would be the second big surprise for many. I have long felt that a fiscal collapse of the USA was coming. Extremely low interest rates for over 30 years has led to large amounts of malinvestment. You see, if it costs nothing to borrow money (low interest rates) then investments that would normally be crap and yield only 1% to 3% in profit become feasible. You are not losing money, so why not? But those low profit margins signal either low demand or high cost of operation or both. A single misstep could lead to insolvency. This is malinvestment. The second interest rates tick up, the operation fails. Beyond malinvestment, the USA has seen many IPOs get billion dollar or higher valuations with no posted profit, sometimes not even a finished product of offer. Why would this happen? Again, low interest rates are the cause. If interest rates are low, and inflation is somewhat high, a person cannot sit on his/her money in a savings account. The money would lose purchasing power year over year, so the money is usually put in investments. With everyone swarming the markets, markets saw price inflation. Well, interest rates are ticking up.

I mentioned US bankruptcy. This is especially poignant as interest rates tick up. The cost of servicing the US debt has risen and the Fed has said that this cost will continue to rise. This means that USA will soon be unable to service its debt and be forced to either print or default. Accordingly, the dollar will likely fall into crisis. The government will be forced to end the wars, stop the welfare and entitlement programs, raise taxes, and domestic turmoil will ensue.

I cannot say when the the market collapse will occur. I cannot say when the dollar crisis will occur. I know only that the math spells collapse must come eventually, but the first signs came at the end of 2018 with the worst December since 1931.

Perhaps the biggest risk with a market collapse and government bankruptcy at this point in time, is that many would erroneously blame Donald Trump for a problem that was 30 years in the making. This would allow socialists like Elizabeth Warren to come into office, the Senate to turn socialist, and the country to head down a Venezuelan-like path. Of course, people will claim that it will be "different this time" as no one else got just the right amount of regulation, nationalization, and monetary manipulation. These people will, as people always do, miss the biggest lesson of recorded human history: every government fails. Keeping government as small as possible will limit the harm that a failed state can really do, but people seem to clamor for larger and larger governments until the "wrong person" takes control of said government, then they tend to freak the fuck out regardless of what the "wrong person" does. Perhaps the hope here is that the Democrat party ate itself for lunch during the last Presidential election, and maybe they won't be able to mount a good offense; of course, the Republicans are no better.

Perhaps Rand Paul could articulate the problems, explain the solutions, and get himself elected? It's a bit of a long shot, but it may be the best shot we have. Just someone talking about the real problems on a debate stage could be enough to turn things around. People aren't stupid, they've often just never heard the problems fully articulated.

Still, Trump supporters continue to claim that Trump is the best President ever, and his detractors continue to claim that he is literally Hitler. We can expect that a Democrat controlled House will try to bring charges against him, and I do not really doubt that the executive bureaucracies will continue their crusades against him either.

Technology has not stopped at all, and if news is correct ARM CPUs are starting to challenge Intel and AMD. This is awesome. Processor market competition will be amazing for all of us, and could allow more computing technology that is truly powerful to make it into more hands, more use cases, and use less power at the same time. This could go a long way to ending government censorship around the world. Of course, it can also bite back by expanding the surveillance state. Time will tell.

I hope that the continued progress that the people of our little wet ball of dirt make is positive, and I sincerely hope that 2019 is a year of wonderful advancements for my dear readers.