Tag: The Greater Recession

A Change in Direction

This is going to be a rather long post. I’ll preface it with some demographic trends among my generation, then tie that in with my situation and how I got here. From there, we’ll see where it goes.

I was born in the early 80s, which technically makes me a Millennial, though it doesn’t always feel that way. Millennials get maligned for a lot of things, which is pretty typical of all generations as they rise, from what I can tell. Civilization is constantly under attack by barbarians, most of whom we call “children,” which is really just another way of saying this:

So how is my generation currently reinventing the world?

Thus far, not very well. The Great Recession hit us just as we were coming of age, and it shows. We were much more likely to move back in with our parents than previous generations. We’re putting off marriage and home ownership, some because we’re more focused on our careers, others because we just can’t seem to launch.

At the same time, not all of this is bad. In spite of the fact that most of us were never taught home economics or personal finance in high school (thanks, Baby Boomers, for all the participation trophies), we are rapidly learning more responsibility than our parents. Where six out of ten Americans would have to beg, borrow, or steal to cover a $500 emergency expense, nearly half of us Millennials have $15,000 or more in savings.

And yet, the problems we’ve inherited are truly daunting. Our national debt is $21 trillion and counting, and without facing a recession, war, or other emergency event, our deficit is still set to exceed $1 trillion per year for the forseeable future. Just this month, we learned that Medicare is set to run out of money in eight years, and Social Security is not far behind that. And don’t even get me started on the house of cards that is our national pension system.

Up until the 60s, previous generations saved and invested so that their children could be better off than they were. The Baby Boomers not only squandered this wealth, but they stole their children’s and grandchildren’s inheritance as well. History teaches us that there will be a terrible price to be paid for all of this. Our parents have proven themselves incapable of doing anything other than kicking the can down the road to oblivion.

That probably sounds more bitter than I intended it to be. Unfortunately, it’s the truth. Our parents just don’t understand the world that we’re living in. We’ve come of age in a world with far less opportunity than they did.

I had a conversation with my mother last year that demonstrates this. My mother likes to make cascarones for special events, like Easter or birthdays. To make them, however, you need a hollowed-out eggshell, which requires removing the yolk and whites in a very particular way. If you’re accumulating shells through normal consumption, it can get to be rather tedious.

One day, I came into the kitchen to find my mother blowing out eggshells and dumping the whites and yolks down the sink. She’d bought a whole bunch of them for 35¢ a dozen, and decided to just make the cascarones all at once instead of accumulating the shells over time. When I saw this, I was horrified.

“How could you waste all those eggs?” I asked.

“It’s not a waste,” she said. “They were 35¢ a dozen.”

“Yes, but we could have eaten them. That’s perfectly good food you’re dumping down the drain.”

She shrugged, as if it didn’t really matter. But I pressed her a bit further, until I came to a disturbing realization:

My mother has never been as poor as I am.

When I pointed this out to her, her answer was even more disturbing. With anger in her voice, she snapped “that’s because you choose to be poor.”

Is that true? Am I, a Millennial, poor because I choose to be poor? Perhaps. I’m not so irresponsible that I won’t own up to my life decisions, which have brought me to this place. But I think there’s this perception in the minds of our parents and grandparents that Millennials are generally like the person who wrote this postsecret above. Drowning in debt, living at home, so afraid to fail that we’ve utterly failed to launch, and yet blissfully oblivious to all of it. Perhaps that’s true for some of us, but not for those who will reinvent the world after our parents are gone.

To be clear, I love my mother and father. I don’t hold any of this against them personally, or anyone else of my parents’ generation (except the politicians who sold our Constitutional birthright, but that’s another rant altogether). Unfortunately, hard truths do not become softer because we choose to ignore them. And hard truth is this:

Hard men make good times.

Good times make soft men.

Soft men make bad times.

Bad times make hard men.

I graduated college in 2010. Through a combination of scholarship money, campus jobs, and (yes) generous parents, I was fortunate enough to graduate without any student debt. At the same time, it was the height of the Great Recession, and jobs were nearly impossible to come by. I can’t tell you how many of my writing friends put their dreams on hold, or abandoned them altogether. Almost all of them.

As a side note, I agree with Mike Rowe that “follow your passion” is bullshit advice. It ranks right up there with “be yourself,” and “you can be anything if you put your mind to it.” Don’t follow your passion. Follow opportunity, and take your passion with you.

But in 2010, I had an opportunity. Without any debt, and without any dependents or other obligations, I decided to pursue a writing career. And unbeknownst to me at the time, the industry was undergoing a revolution that would open the doors to make that possible.

I indie published my first short story, Memoirs of a Snowflake, in March 2011 and never looked back. Since then, I’ve published dozens of novels, novellas, short stories, and other works. It’s been an exhilarating journey. At the same time, it’s been the most difficult struggle of my life. And that is why I must now confront one of my most crippling fears.

Unlike the girl in the postsecret, I am not crippled by the fear of failure. If I were, I would never have published that first story, let alone all the others that followed. Instead, I have a fear of admitting failure, both publicly and to myself. It feels too much like an admission of defeat.

It’s an important distinction to make, though. The Romans admitted failure often and early—it’s how they learned from their defeats, ultimately going on to build one of the most powerful militaries in the ancient world. But they never admitted defeat. Even after Cannae, when Hannibal threatened the republic with utter extinction, the Romans refused to be defeated. And so, while Carthage fell into decline and decadence, the Romans endured until Scipio finally gave them victory at Zama, paving the way for the rise of Western Civilization.

I haven’t had a personal Cannae moment yet, but I do feel like I’ve been fighting a war of attrition. In 2014, the market shifted with the launch of Kindle Unlimited, and I failed to adapt. At that point, I was just on the cusp of going full-time with my writing, though looking back I can see that I didn’t yet have the foundation for a lasting career. Still, to have that dream snatched away when I was just on the verge of catching it, you can understand why I kept plugging along, believing that I was just a month or two from turning things around.

That’s basically what I’ve been doing for the last four years: writing full-time even though the writing doesn’t pay full-time wages. Maybe my mother is right. Maybe I have chosen to be poor.

And yet, while I now believe that I do have the foundation for a lasting career, I need to confront the fact that it may be ten years or more before I achieve it. Should I continue, like so many of my peers, to delay major life decisions until my career reaches that point? Is it worth it to put off marriage, family, and home ownership until my forties or fifties, if that’s what it takes? Or is it time to admit failure so that I can leave this dead end and find another way?

Back in 2010, I had no plan B. It was the Great Recession. I didn’t have a day job because I couldn’t find one—hardly anyone could. And from 2013 to 2014, writing paid well enough that I didn’t need one. Things were looking up, and I was just a couple months away from a sustainable long-term career.

Well, it’s time to admit that that line of thinking has turned out to be a trap. I’m approaching my mid-thirties and I’m still single and poor. I need some kind of long-term backup, because I can’t count on the writing career to take off like I need it to, at least not anytime soon.

So I’ve moved my writing onto a part-time footing. I’m limiting the number of words I write each day, leaving time for other pursuits. And I’m looking for a day job, preferably one that teaches me something useful and pays well enough to make ends meet.

I haven’t been defeated yet, though. Failure is not final until you decide to give up. I have not given up, and will continue to write, even if only on a part-time basis. And when I am making enough to go full-time, I have the foundations in place to do so.

In the meantime, though, I’m not going to put my life on hold for a dream.

This guy hits the nail on the head

Financialization is what happens when the people-in-charge “create” colossal sums of “money” out of nothing — by issuing loans, a.k.a. debt — and then cream off stupendous profits from the asset bubbles, interest rate arbitrages, and other opportunities for swindling that the artificial wealth presents. It was a kind of magic trick that produced monuments of concentrated personal wealth for a few and left the rest of the population drowning in obligations from a stolen future. The future is now upon us.

…

Quite a bit of that wealth was extracted from asset-stripping the rest of America where financialization was absent, kind of a national distress sale of the fly-over places and the people in them. That dynamic, of course, produced the phenomenon of President Donald Trump, the distilled essence of all the economic distress “out there” and the rage it entailed. The people of Ohio, Indiana, and Wisconsin were left holding a big bag of nothing and they certainly noticed what had been done to them, though they had no idea what to do about it, except maybe try to escape the moment-by-moment pain of their ruined lives with powerful drugs.

And then, a champion presented himself, and promised to bring back the dimly remembered wonder years of post-war well-being — even though the world had changed utterly — and the poor suckers fell for it. Not to mention the fact that his opponent — the avaricious Hillary, with her hundreds of millions in ill-gotten wealth — was a very avatar of the financialization that had turned their lives to shit. And then the woman called them “a basket of deplorables” for noticing what had happened to them.

…

The accumulated monstrous debts of persons, corporations, and sovereign societies, will be suddenly, shockingly, absolutely, and self-evidently unpayable, and the securities represented by them will be sucked into the kind of vortices of time/space depicted in movies about mummies and astronauts. And all of a sudden the avatars of that wealth will see their lives turn to shit just like moiling, Budweiser-gulping, oxycontin-addled deplorables in the flat, boring, parking lot wastelands of our ruined drive-in Utopia saw their lives rendered into a brown-and-yellow slurry draining clockwise down the toilet of history.

I especially got a kick out of that last part.

Seriously, though, this guy hits the nail squarely on the head. We’re headed toward a massive economic reset, which is going to transform the world as we know it. I was in high school when the 9/11 terrorist attacks happened, and the Great Recession had a much bigger impact on my life. When the Greater Recession hits, it’s going to be a lot worse.

That said, I disagree that the only thing we can do is to sit back and watch the world burn. Every problem is also an opportunity. The bigger the disaster, the more opportunities that open up after it.

Without a doubt, though, now is the time to prepare.

The end of politics in America, part 2

How did Trump become the leader of the most powerful nation on Earth?

A lot of people are asking that question, while a lot of other people already know (hint: it wasn’t the Russians). But I want to get beyond the circus that is Washington DC, and answer that question by asking another:

Can politics solve our nation’s greatest problems?

I think there is a dawning realization among Americans that it doesn’t really matter who lives on 1600 Pennsylvania Avenue. Republican or Democrat, the outcome is pretty much the same.

Never at any point in living memory have we been so politically divided, but the party distinctions have become increasingly meaningless. Trump campaigned on providing universal healthcare. Clinton campaigned on escalating our military involvement in Syria. Which one was the Republican, and which one was the Democrat?

In the previous post, I said:

I am convinced that the grand key to understanding United States history in the 20th century—and by extension, current events in the 21st—is a deep knowledge of monetary policy and the financial system.

What is that system?

It is a system of debt. Pure and simple. We have turned our debt into money, and made every other form of money illegal. And the rest of the world has followed us gleefully off the cliff.

Washington is bankrupt. Literally bankrupt. Every year, the Treasury runs an internal audit, and every year, that audit fails. The government’s single biggest asset on their balance sheets is… $1 trillion in student loan debt. Social Security is insolvent and, according to the government’s own reports, will completely run out of money in less than twenty years.

So if Washington is bankrupt, why haven’t they declared bankruptcy? Because they can just keep printing money through the Federal Reserve.

Because of this, the US dollar has lost about 97% of its value since the Federal Reserve system was established in 1913. A time traveler from the new Wonder Woman movie couldn’t buy $5 worth of stuff with $100 of our dollars today. And to keep up this Ponzi scheme we call “money,” Washington has gone nearly $20 trillion in debt.

How much longer can we keep that up?

If we could grow our economy fast enough, and never stop growing, we could keep up the Ponzi scheme for a very long time. But growth is no longer a solution, because the debt is bigger than the economy. The debt is the reason we can’t grow.

If we could innovate fast enough, we could lower the cost of living so much that the poor don’t realize that they’re poor. To some extent, we’ve already done that. But the effects are too uneven: startphones and computers are super cheap, but houses and health care are practically unaffordable.

Which brings us to serfdom.

Let’s go back in time a couple thousand years. Before the days of the empire, the Roman dream was that every family would have their own plot of land, making them independently wealthy, and the head of every family would take up arms in defense of his country whenever called upon by the state. This was not all that different from the Jeffersonian ideal of the yeoman farmer.

Then the Punic wars happened, which, for the Mediterranean world, was basically the ancient WWI and WWII. As Rome became a major world power, the military-industrial complex made a few select elites fabulously wealthy, who kept the masses pacified with welfare handouts.

But the endless cycle of foreign wars came at a heavy cost. Decades of budget deficits and an unsustainable national debt forced the Romans to debase their currency, which completely collapsed. Trade halted, the middle class lost everything, and the 1% became fantastically wealthy, buying up all the real estate and forcing everyone else out. The Roman dream was dead, replaced by a form of bondage called serfdom.

Serfdom came in a number of different flavors:

  • Slaves, who had always existed in the Roman world and continued for some time in the Medieval. Landlords got tax benefits for holding slaves.
  • Villeins, who were bound to the land and worked for the landlords. In exchange, they enjoyed protection and tax relief. Theoretically.
  • Coloni, or sharecroppers, who leased land in exchange for labor and a portion of their harvest. They were eventually taxed out of existence.
  • Freemen, who technically weren’t serfs, but were only a raid or a bad harvest away from becoming one. They were basically renters.

The corvée was a tax, paid in labor, that non-landowners owed by law. Basically, for every XX days out of the year, you worked for the state. It continued even after the abolition of serfdom, until the revolutions of 1848. My Czech ancestors paid the corvée, which is probably one of the reasons they and their children emmigrated to the United States.

But wait—we pay the corvée too! It’s called the federal income tax: for XX days out of the year, you work for the state. The taxes are even higher if you’re self-employed or a small business owner.

Except… not everyone pays the income tax. In fact, nearly half of Americans pay no income tax. Why? Because the politicans know that they can use the welfare system to buy votes. If you’re on welfare, who are you going to vote for: the guy who plans to cut your handouts, or the guy who says that the wealthy should pay their “fair share”?

And sitting at the top of it all are the central bankers.

The medieval serfs were bound to the land and worked for the landlords. In contrast, modern debt-serfs are bound to their debt—national debt, student loan debt, mortgages, consumer debt—and work for the banks.

So I ask again: can politics solve this problem? Can we find a political solution to our national debt?

Unfortunately, there is only one political solution: default on the debt. If we default on entitlements like social security, there would be chaos, riots, and anarchy… and we still wouldn’t pay down hardly any of the debt. If we defaulted on our treasury bonds, it would send a ripple of financial panics across the world, destabilizing the flashpoints in Europe and Asia before returning to our shores. Stocks, mutual funds, and pensions would all be wiped out. Almost the entire savings of the Baby Boomer generation, gone.

But there is another option, though it’s hardly a “solution”: kick the can a little further down the road. Print the money, devalue the debt, and inflate the currency to oblivion.

This is the path we’ve been on since 1913. This is the reason why our dollars buy a little less each year. And this is the reason why we, as a nation, are backsliding into serfdom.

We’ve seen this happen before. Rome fell because of it. Europe came under the yoke of serfdom as a result of it. Our ancestors fled to this country to escape it. And now, we are repeating it.

This isn’t a political problem: it’s a math problem. The numbers just do not add up. The next financial crisis could very well be the “extinction level event” that puts the final nail in the coffin of the US dollar, throws the world into a global war, and sends the United States into its greatest existential crisis since the Civil War. The Republicans don’t have the solution, and neither do the Democrats, because the problem is not political.

This is what the end of politics in America looks like. We’re watching it happen in real-time. Our politicians have become the clowns in the bread-and-circuses routine. Meanwhile, the central bankers are shackling us in chains with every dollar that passes through their hands.

What are you going to do about it?