Proposal: Gold Bank

The benefits of cryptocurrency without all the nonsense

Here's what we do.  Let's start a bank where all deposits and withdrawals are made in gold bullion.  Each depositor's balance will be listed as gold weight on deposit.  And let us place our depository someplace safe, like Switzerland.

Before we start pondering the logistical nightmare of such an arrangement, what with delivery, assaying (verification), acceptance, etc., let us consider one other simple possibility.  How about this?  Deposits can be made in any major currency, and that currency will, immediately on deposit, be used to purchase gold at the then current market price.  So for example, if you deposit one thousand dollars, your account will then reflect not the one thousand dollars, but rather that amount in gold bullion.

The bank will issue each account holder checkbooks and debit cards, which will allow customers to spend their funds as with any bank.  Spend ten dollars at Walmart, and your account will reflect a ten-dollar reduction in your deposited gold weight.  Need cash to pay your babysitter?  Debit cards will work in the ATM.

The bank will purchase and sell gold daily on the open market to facilitate deposits and withdrawals.  Since the bank is buying and selling based on the collective needs of all depositors, the bank would receive the best possible commissions and spreads on these transactions.  Then of course, these expenses would be shared among deposit holders based on their respective transactions.  It is worth noting that to the extent that deposits and withdrawals match, the only cost to the bank would be the bookkeeping charge of moving funds from one account to another.

The bank will maintain a high percentage of gold in its depository.  Maybe 85%.  The remaining gold deposits would be holdings of various gold instruments like ETFs.  This is to insure quick and inexpensive purchases and sales.

The benefit of such an arrangement is that funds are maintained in bullion and not dollars or any other currency.  These deposits are therefore immune to the irresponsibility of modern governments and the fragility of their respective currencies.

Start your own gold bank

Individuals can limit their exposure to the dollar in a similar fashion.  Invest in gold ETFs and move investment income into these ETFs, and keep funds there, rather than in dollars.  It is the same if you get a paycheck; roll your dollars into gold ETFs.

First Bank of Blockchain

This model is deposit/withdraw/spend in dollars (or any government-sponsored currency) and store in gold.  But clearly, and perhaps more easily, this could also be done with cryptocurrency.  Why has no one has thought to do this?  If the crypto folks want to be taken seriously, they need to get rid of the Sam Bankman-Fried type grifters, and bring in some serious players.

One certain takeaway from the Trump-Musk split and the Big Beautiful Bill is that relative to the US dollar, gold is the safer store of long term value.  Sure there may be some minor fluctuations here and there.  But for now this is a political certainty:  There is zero will among US politicians to control dollar-denominated US government debt.  At this point I think it is safe to say:  The US national debt will never be paid off.  Never.  Even if, magically, the politicians develop the will, at this point they lack the ability.

What does this mean?  Three possibilities.  One, the politicians will devalue the dollar.  Think one new dollar for ten old dollars.  Two, the politicians will attempt to monetize the debt by a long term policy of increasing and sustaining inflation.  Basically it is devaluing the dollar in slow motion.  Three, at some point the bond and currency markets will force a dollar devaluation.  Since the politicians are not going to address the debt in any meaningful way, one of these three, or some combination, is inevitable.

One thing US politicians will not abide is default.  At least not in name.  But devaluation, however it comes, is a form of default.  So yes, sooner or later, the US government will default on its obligations.

Individuals can prepare for this by:  Not owning debt.  Especially not government debt, but I would add, do not own any dollar-denominated debt.  If you own dollar-denominated bonds, get rid of them.  If the state of New York owes you one thousand dollars, in the form of a bond, they will be delighted to pay you back in devalued dollars.  And this is true for any and every bond issuer.

So no bonds and no dollars.  Do own real estate, gold, common stocks.  Although I would avoid equities of businesses that own a lot of debt, that is banks and other lenders.  If you are not a believer in gold, fine.  But keep your rents and dividends in gold short term until you are able to reinvest.  In terms of which common stocks to own, I would focus on companies with an economic franchise as defined by Warren Buffett.

Speaking of Mr. Buffett, he is sitting on all this cash ($350 billion) and is, famously, no fan of gold.  Surely you are not disagreeing with the oracle of Omaha?

But how much better is cash than gold?  Cash suffers the same basic problem as gold:  A store of value without income.  Gold provides no income and cash only offers slightly more than none.  The reason Buffett maintains cash is in order to move quickly into the market at a time of his choosing.  Also this:  One might remember that the only reason cash offers any income at all is the fact that almost all cash is stored in, invested in, some form of debt.

Mr. Buffett was born in 1930.  His life has spanned the length of US hegemony.  And surely that affects how he sees the world.  Buffett may be old, but the man is not stupid.  My guess is that he will attempt to relieve himself of all that cash (into some hard, income-producing assets) before the coming monetary collapse (whether fast or slow).  He is betting that the stock market will collapse before the dollar.  The history of American hegemony tells him this is a good bet.

I am not so sure.

Current US national debt is $273,500 per household.  Household net worth is around $176,500.  A figure which of course does not include national debt.  You can do your own math.

Here's Grok:

As of December 2024, the U.S. national debt as a percentage of GDP is approximately 124%.  This is based on data indicating the national debt reached $36.22 trillion, with a nominal GDP of around $29.2 trillion.  At the end of World War II in 1946, the debt-to-GDP ratio was about 106%, with a public debt of $241.86 billion against a smaller GDP.

The current ratio of 124% is notably higher than the post-WWII peak of 106%.  The increase reflects significant government spending during recent events like the COVID-19 pandemic, which drove debt levels up, compared to the post-WWII period where economic growth, primary budget surpluses, and inflation helped reduce the ratio over time.

In other words, we have the highest government debt level in modern history, no political will to reduce it, and actually no will to reduce its continued growth.  For all the left-wing hate of Donald Trump, one might note that he is not, and has never been, a fiscal conservative.

Maybe Mr. Buffett is correct.  But if the stock market does collapse with this level of national debt, what are the odds that the dollar will collapse along with the stock market?

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The Path Out of Poverty

Maybe this path will not work for everyone.  But if you are reasonably intelligent and ambitious, this is the way.

• Get as much education as you can.
  
  
• At a minimum, you must learn and use proper English.  This is true no matter where you are.  If you are rich in Malaysia or Guatemala or Kenya, fine, you don't need English.  But if you are poor, master English.
  
  
• Get a job.  If there are no jobs, then you must make your own; find a need and fill it.  Do what needs done; haul water for your neighbors, plant the rice, whatever.  Do not wait for the work to come to you; you must go find the work.
  
  
• Do not have children.
  
  
• Find a partner doing likewise.  Do not look for a partner to raise your children.  Instead look for a life partner.  This is a subtle but important distinction.  Yes, children are a part of life; for many the most important part.  And no, it is not fair, but if you are poor, you simply cannot afford children.  And they will keep you poor.  So make your choice.
  
  
• Also regarding children, you must break from the mindset that only your children can and will care for you in your old age.  Once you breakout of the jail of the poverty-minded, you will discover that you can and should take care of yourself in your old age.  This view of children as retirement is a big part of what keeps people poor; because this mindset encourages people to have children they cannot afford.
  
  
• Get married.  But don't be in a rush.  Only get married if and when you find the right one.
  
  
• Still do not have children.
  
  
• Focus on your (two) careers; make something of yourselves.
  
  
• Never lie, never look for shortcuts.  These are popular strategies of the poverty-minded.  Be honest or stay poor.
  
  
• Along the way, read everything you can, both fiction and nonfiction.  You must learn to learn and learn to think.  These are skills that most poor people just never develop.
  
  
• Also learn to be considerate, grateful, friendly, respectful, and quiet.  Yes, be quiet.  If you think these attributes are beneath you, okay fine, stay poor.
  
  
• Do not surround yourself with poverty-minded people.  Leave them behind.  Leaving poverty most often involves leaving your community.
  
  
• Be faithful to your spouse.
  
  
• Only then should the two of you even consider children.

Yes, it is this simple.  If anyone tells you otherwise, they are lying to you – To serve their own interests, not yours.  The primary key to this path is to have children only when and if you can afford it.  If you cannot manage this, again okay fine, stay poor.  I realize this advice may run counter to the teachings of your faith and/or the desires of your family.  You simply must put these influences aside until you, and you alone, are ready.

And yes, of course this applies in the United States as well.  I have written on that specifically here.

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The Parasite Vote

Who would vote for Kamala Harris?

According to the latest numbers, Kamala Harris received almost 75 million votes, just shy of Trump's slightly more than 77 million votes.

According to Google, 22.45 million people work for the various levels of government in the United States.

Also according to Google, roughly 12.3 million people work in various non-governmental, non-profit agencies.

So here's a couple of questions:  What percentage of government workers and non-profit workers are Democrats and what percentage of them vote?

I would be willing to bet that both numbers are extraordinarily high.

This count does not include retirees.  How many would that add?  Google can't say.  Also, this is before, private sector union workers, lawyers, media types, etc.  Also not included are private sector government contractors, like Lockheed Martin.  I mean, given their product line, they really have only one client.  All of these people feed at the government trough.

I would love to include Hollywood types, but whatever you think of them, they do create tremendous wealth.

My point is this.  That 75 million people who voted for Kamala, over half of them are parasites.  Too harsh?  Okay fine, government dependents.  Because regardless of how beneficial they may or may not be as civil servants and government contractors, they are net wealth consumers.  And whatever you call them, they are not net wealth creators.  They don't work for us; we work for them.

And these people are not going anywhere.  They will keep extracting from the creators.  At the point of a gun.  In fact, the net wealth creators are the slaves of the net wealth consumers.  The Sixteenth Amendment enshrines this servitude in our Constitution.  I have written about this dynamic before.

Look I am not saying that we do not need the net wealth consumers.  Of course we do.  Think teacher, police officer, and nurse.  But what about the big pharma toadies at the FDA and the university DEI administrators?  Twenty-two million employees?  I bet we could run the governments with only twenty.  Or eleven.

Here's a question that I have always liked to ask:  Where do you think the money comes from?

The response is always the same:  Money for what?

And my answer is also always the same:  For everything.

Since 9/11, we often hear:  Thank you for your service.  Certainly for first responder and military types.  As well we should.  But without the net wealth creators, from Elon Musk on down, there would be no military, no law enforcement, no education system, no medical system, etc.  No EPA, FDA, CDC, NIH, USAID, and my new personal favorite, no CFPB.

Without the wealth creators, the FBI would not have the ability to send armed goons to ransack a former and future president's home.  New York state would not have the ability to kill pet squirrels.  The CDC and NIH would not have the ability to screw up the Covid response, and lie about it.  The secret service would not have the ability to fail both Donald Trump and Robert Kennedy, Jr.  Teachers and university professors would not have the ability to indoctrinate our kids with their poisonous nonsense.  And our judicial system would not have the ability to conduct show trials for wrong think.

So that guy down the street struggling to run his dry cleaning business; thank him for his service.  He's paying for all this shit.

That guy probably voted for Trump.

And remember this:  If you are a Kamala Harris voting university administrator, you don't have to patronize his business.  But he has to help pay your salary...

At the point of a gun.

You worthless parasite.

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Feudalism 2030, Part Two

More on the coming Neo-Feudalism

Back in April, I wrote about what I see coming and described it as Neo-Feudalism.  Well someone else has seen it.

It's a fascinating conversation from beginning to end.  Oliver first uses the term feudalism at 58:30.  He goes on to use neo-feudalism as well.  He calls feudalism a natural state, and I do not disagree.

But afterwards he is more positive that I am on our ability to fend off the powers pushing for feudalism.  He feels duty bound to be optimistic about our fight.  But you know, people prefer a positive message, and maybe he is simply giving it to them.  In any case, it is impossible for me to share his optimism.

I believe neo-feudalism will be feudalism dressed up as some kind of progressive, technological utopia, with the trappings but not the substance of democracy.  That is, sure there will be elections.  But they will not mean anything other than providing the populace with the illusion that they are participating in a democratic system.  And most people today do not have enough capacity for critical thought to see through it.

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Feudalism 2030

The Age of Neo-Feudalism is Near

According to online statistics, there are approximately 24,000 private jets operating in the world today.  Which of course means there are twenty-four thousand private jet owners.  Of course, that is a small fraction of the billions of people who inhabit our planet.  It is however, arguably, just about the right number for a new noble class.  People with the connections to make the rules, and the wealth and freedom to ignore the rules themselves.

Sure, we can quibble about the numbers.  But even if the new nobility is one hundred thousand or one million, the results will be similar.  There will be two classes; one extraordinarily small group and the rest of us.  This is not an outrageous claim; most of human history worked on this very model.  China does to this day.

These people will be our new lords and princes.  It is important to note, this is not simply a question of the haves and the have nots.  That's a twentieth century analog perspective.  Today we have digital tracking in the broadest sense and the vast implications of that new reality.  No, I think this is more about freedom.  Those who have real freedom versus those for whom freedom is ever shrinking.  Our new overlords will do as they please.  The rest of us will do what we are allowed.

This is what the climate emergency, central bank digital currencies, automation, open borders, drug legalization, media capture and global healthcare administration capture, ubiquitous cameras and facial recognition, defund the police, etc. are really about.  Covid lockdowns and mandates offered a timely test of the new order.  Think anything you please about Covid and the way authorities dealt with it, but this was a very successful trial run of neo-feudalism.

In Asia, I have noticed a rush to digitalization, even before the technology has been perfected.  You see this often:  No you must use the app; no the app only works on the newest smartphones; if you don't have one, you can't do whatever it is you are trying to do.  Moreover, most of these apps require an active internet connection, which can be problematic if you are in a new area.  Say when you are traveling.

The authorities will tell you that this is about efficiency and convenience.  But I do not believe this for one minute.  It is about tracking and control.

My guess is it will be the so-called climate emergency, completely factitious, that drives the next escalation.  We will continue to drift in the direction of neo-feudalism, until our new lords get impatient, and use climate to accelerate the process.  They have been laying the groundwork for this for the last decade.

Our lords want us car-less and confined to fifteen-minute cities.  They want to limit our air travel.  Meanwhile, the princes will continue to drive their own fleet of automobiles and they will fly their own private jets as much as they like.  But we serfs will do what we're told and go where we are allowed.  Freedom of movement will be sharply curtailed in the name of saving the planet.

Sure, you can go anywhere you like.  So long as you don't have to fly or drive to get there.  You can take public transportation – But only to where they deem fit for it to go.

Government policy will interfere with how you are allowed to spend your own money.  Digital currency will include limitations on purchases.  No, no serf, you've already purchased your monthly allowance of beef.  Or you've already traveled your annual allowance of domestic air miles.  And obviously:  Your bank's credit and debit cards will decline any wayward potential purchases, like say firearms or ammunition.  Multiple attempts and you will risk debanking.  Maybe cheeseburgers will be next.

They want to buy up the farms and drive former farmers into the dystopian urban landscape that they themselves have created.  They will own the farms, or control them with regulations.  And you will eat only what they deem appropriate.

We recently traveled between two countries in Asia.  Fingerprints and photographs to exit, fingerprints and photographs to enter.  They want to know where you are and where you have been.  And of course, they're just getting started.  It was common to hear:  No sorry, we do not accept cash here.  So add, they want to know what you buy, and where and when you bought it.

And our travel required apps that, thankfully, worked on my smartphone, but not my wife's.  If you don't have the right gadget with the right apps, you don't travel.  So my advice here, to leave your smartphone at home, will not work.  It is worth noting that our founders did not envision a need to include the right to travel or freedom of movement in our Bill of Rights.  And you will certainly not find any such idea in other countries.

Now, do I expect some leviathan to be collecting and collating information?  Not initially.  But clearly, we are moving in that direction.  And god knows that would please Herr Schwab, high priest to the new nobility, to no end.  You know, it's important to keep up with what the serfs are doing.

Will social credit scores follow?  Without a doubt.  They will combine our internet usage (including social media and search history) with our purchases, and god knows what else (the correct educational indoctrination, which charities we support, what subscriptions we maintain, what books we read, etc.), to give us all a rating.  Which will then be leveraged to improve or reduce the above listed freedoms.  Want more travel miles?  Make sure to behave yourself.  Can there be any doubt that one will get extra credit for affiliating with the correct political party?

Another question:  Can we get extra points for finking on our neighbors?  Again, we've seen this before.  But this is not East Germany; this time there will be a nifty website for you to report what your neighbors are up to.

Which brings us to this:  Our overlords will not be able or even interested in the administration of our new feudalism.  So they will need to employ a class of administrators, regulators, and enforcers.  Luckily for them, government will gleefully step into this role.  And here I mean all governments at all levels.  This has already started.  Here's a question:  Is there any national government on this planet today which actually serves its citizens?  Or have we reached the point in all nations, where it is the citizenry who serve the government?

To ask the question is to answer it.

Governments today, regardless of how they are installed, serve themselves.  But the new feudal overlords are rich enough to buy off governments and powerful enough to use government to enforce the new feudal order.  If you do not believe this is true, I again refer you to the Covid trial run, where government played its new role to perfection.  Just imagine how government will act in the coming climate emergency.

Finally, I know some readers will ask, to what end?  That is, what is the incentive for the princes to act in this manner?  Well it's classic rent seeking.  Our lords need a continuous source of wealth.  And they are more than happy to use government policy and enforcement to insure the continual transfer of wealth from serf to lord.  It worked in the middle ages, and it will work today.

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Hans Rosling on Economic History

200 years that changed the world

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Hans Rosling on Global Development

From TED

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Price Signaling as a Quality Indicator

Firms often use pricing to signal product quality to potential customers. That is, people assume that if a product costs more, it must therefore have a higher quality. Firms know this, take advantage of it, and price accordingly.

Now we all know, sometimes we get what we pay for and sometimes we do not. Odds are if you buy a Lexus sedan you will get a better driving experience than if you buy a Ford. Therefore, millions of us are willing to splurge on a Lexus or a BMW.

But what happens when we pay the higher price only to find the product quality does not live up to our expectations? Well, we feel cheated. Generally, these firms, or at least these particular products, don’t stay around long.

However, what happens when the consumer has limited information or knowledge about the product by which to judge the quality? And worse, even after purchase may not be perfectly able to judge the quality of the product. This can be caused by customer inexperience or transaction complexity or even hidden factors. Economists call this Asymmetric Information.

In this case, should the consumer use price as a measure of product quality?

Regardless of how you answer that question, people do it every day. That is, even without knowing a great deal about a product or service, people will still assume that higher price means higher quality.

Over the long run this is not only bad for the consumer, it is also bad for the firm. The firm will get a reputation for offering a weak value proposition.

What's more, this state can only last as long as customers, or new customers, remain uninformed. If the market or product becomes easier for the customer to understand, the firm will have to adapt to the new reality, or die.
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