Hi everyone—I’m so glad to have you here. What a week.
I care deeply about the humanities—the subjects and studies centered around human society and culture. Things like history, anthropology, languages, philosophy, religion, literature, art, and rhetoric.
This is a big part of why I keep studying, thinking about, and writing about the subjects of finance and money. They aren’t normally considered to be part of the humanities, but they are so intrinsically bound up in shaping the contours and qualities of a culture that I think they should be.
Morgen Rochard: “Now we’re at a point where this is just what we do whenever we come up against some sort of crisis. And everyone can say what they want about the pandemic or whatever they want to call it, but right when it did hit the first thing that we did was we printed money and handed out free money. And I think that that’s not going to stop. And whether or not the crisis is brewing now or it’s brewing in the next crisis from now, if our only answer is to continually print money then yeah, at some point nobody will want to hold US dollars. And that’s when the house of cards comes tumbling down.”
Preston Pysh: “Is it a cultural rot? […] It almost seems like it’s becoming indoctrinated into the culture...”
Morgen Rochard: “In a way, yes.”
Morgen Rochard is a Certified Financial Planner and Chartered Financial Analyst who previously managed portfolios at UBS Financial Services for high net worth investors, and spent time at Merrill Lynch providing financial analysis for a large private wealth team. She now runs an “independent, fee-only practice dedicated to helping young families and professionals align their finances with their life goals” and also wrote a really great guide to personal finance that I recommend.
I’ve been a fan of her thinking and approach for awhile now, but her recent conversation on the Investors Network Podcast delved into some of the cultural consequences of central bank irresponsibility and the moral hazard of printing money out of thin air, along with the long-lasting ripple effects it creates in a society.
What begins as something propagandized as a necessary intervention quickly devolves into ongoing expectation and dependency.
Our Treasury Secretary herself says “large negative shocks” are now inevitable and that it’s imperative to exit economic downturns “as quickly as possible.”
Translation: expect more massive interventions. (I’m not just guessing. She told us her plan in 2016.)
Part of the reason she’s saying large shocks are inevitable is because the US economy “unexpectedly” (😂) declined at 1.4% annual pace in the first 3 months of this year. The NASDAQ, the tech-heavy stock index that ballooned in 2020 while the laptop class worked from home, was down -4% on Friday, -13% on the month, and -21% YTD, making it the worst start of the year on record. >45% of its stocks are down 50%, >22% are down 75%, and >5% are down 90%.
Not only that, the Japanese yen is in absolute freefall and that is a very bad thing. Why would Japan’s money matter so much for the US economy?:
Japan basically invented QE (Quantitative Easing, i.e. having the central bank step in and artificially prop up markets by buying government bonds, i.e. debts, regardless of the price).
This has made Japan the most indebted country in the world as measured by debt-to-GDP. As of last year that ratio was a record 257%, as the government added more than $192,000,000,000 of sovereign debt in that year alone. (“The country is a case study in modern macroeconomic policy and exemplifies why governments and central banks cannot control the economy in the way that many textbooks suggest.”)
This has historically made the Japanese yen something referred to as a “funding currency” for the rest of the world. Nations could confidently borrow yen at very close to 0% and invest that money into something that earns a few percentage points, which in large quantities over a few years compounds significantly. Japan has basically been the de facto bank for world governments, providing capital for all sorts of things that other nations couldn’t have otherwise afforded.
So if the yen truly, legitimately collapses… I mean… 😬
Morgen Rochard: “To bring it back to personal finance because that’s what I know really well: imagine you’re a person who took on a bunch of student loan debt, and you also have credit card debt, and it doesn’t really mean anything to you after awhile. Maybe the first $10k you sort of felt like this isn’t really the right thing, and then the next thing you know you end up $60k in debt, and you’re like, “Okay well that’s going to be really hard to get out of. It doesn’t really matter if I spend an extra $100 that I don’t have.” And you do that a hundred times and the next thing you know you’ve got the $60k plus the $100k and then the interest is accumulating and you don’t know what to do about it.
And I think that our government is really there. There hasn’t really been any need to say no, we can’t spend that money we need to balance our budget…”
Let’s see how close our government is to being there. Here’s a headline from this past week: Biden Eyes Student-Loan Forgiveness Starting at $10,000.
“The White House is considering forgiving at least $10,000 in student loans per borrower through executive action, according to people familiar with the matter, with momentum increasing as President Joe Biden seeks ways to bolster voter enthusiasm ahead of the November midterms.”
It’s so blatantly irresponsible that it’s almost hard to believe, but elections are this year so no price is too high even if you and your kids and your grandkids have to pay the bill.
All this as food supply problems continue to expand in a seemingly deliberate and coordinated fashion. The country’s largest egg supplier brutally killed 5 million chickens as a fearful precaution (they culled their workers too, firing almost everyone), and 22,000,000 birds have been killed on farms across 28 other states. Timing is strange considering all the other food processing plants being destroyed for mysterious non-avian-flu-related reasons.
I don’t know why this is happening, but I know it’s happening and that it provides a good excuse to print more money.
Morgen Rochard: “It’s really hard for someone who’s a couple hundred thousand dollars in debt to all of a sudden say, 'Okay, you know what? I’m not gonna go out to dinner so much as I used to, and maybe I will sell some of my stuff, and maybe I will not get a dog and a pool and all of the other things I thought I was gonna have in my life.’ That’s really hard for people to do, especially when you’ve already been doing that and you’re on some sort of hamster wheel cycle about it.”
Bitcoin has held up quite well considering, and just this week Fidelity—the largest 401(k) provider—has also become the first major retirement plan provider to add bitcoin as an option for 401(k) plans. I recommend watching this 9-minute clip of Microstrategy CEO Michael Saylor speaking with CNBC about his decision to be the first company to offer this plan to its employees, as well as provide perspective on other bitcoin-related market dynamics.
In a hilarious reaction from the Nobody-Asked-You section, the US Labor Department said they "have grave concerns with what Fidelity has done." I guess this government agency would rather you lose 70% of your money in 4 months in Netflix instead.
The establishment with a monopoly on violence and coercion, who has the luxury of printing their own money, does not understand, like, or recommend anyone use the money that cannot be printed. Shocker.
And the dystopian cherry on top of this chaotic week was learning that the very government that has been caught repeatedly lying to you has decided to go full 1984 and create its own Ministry of Truth, to make sure you in your stupidity don’t go thinking The Wrong Thing™. We now have a department of propaganda. Lovely.
The US government + Federal Reserve have become the saggy, sneering incumbent who, by repeatedly corrupting and distorting the money for decades, created a culture of non-savers (personal savings rate fell to 6.2% in March, lowest since 2013) and have developed a taste for seeing it as their duty to intervene in every aspect of your life and unwittingly make it worse.
It’s important to remember this: that those with the keys to the money printer don’t trust you to make your own decisions or live your own life, and they certainly don’t like you. You are a nuisance, a drain on their resources. It’s like being in an abusive relationship and told you’re being beaten “for your own good.” We’re printing all this money! Why aren’t you grateful for this debasement?? I’m doing this because I care about you!
But those who don’t have the keys to their own money printer and can make their own choices are increasingly choosing bitcoin.
The Central African Republic (CAR) has officially become the second nation (behind El Salvador) to adopt bitcoin as legal currency, announcing Wednesday that they have made it legal tender. The government said they hope it will push forward economic development.
Panama also just passed a law giving bitcoin legal status, as well as zero capital gains tax.
Fort Worth, Texas just became the first US city to mine bitcoin, doing it directly from city hall no less.
There appears to be a pattern developing in this world of foreign currency dependence and fiat expropriation through chronic inflationary debasement. Cries of “What if they ban it?” have become the awkward silence of “…What if they don’t?” 🤔
The culture is changing, and hands are being forced. There is no alternative.
Morgen Rochard: “…And because our government is there, the people who live there are there as well.
They keep seeing us printing money in order to pay for things, so of course somebody’s going to say, "‘Why does this missile matter but my student debt doesn’t matter? Why doesn’t my home not matter but Ukraine matters?” There’s a disconnect within the population as to why the government is spending on what they’re specifically spending on and where it should go, and as a taxpayer that I’m owed something as well.”
When things feel hopeless and you feel like you’ll never get out of a hole you’ve been dug into, you’ll just give up. That’s the culture that’s spawning right now.
This is why money is important. Not because it buys you things, but because it’s the tool you use to communicate value. To exchange with others and signal what is important to you as an individual. To express what matters to you. Break the money, break the culture.
Fix the money, fix the world.
Until next time 🤙,
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