Libera Voce

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” Phillip Fisher

This quote by one of America’s famous investors is actually an adaptation of Oscar Wilde’s definition of a cynic, spun in economic terms. In economics the simple definition of price is the amount of money people are prepared to pay for goods and services and therefore represents a measure of value. While everyone values things according to what they decide is in their own best interests, the aggregate of those decisions represents the price mechanism in markets.

What Fisher was lamenting in the above quote is that investors had gotten used to artificially low interest rates which in turn caused unsustainable price-to-earnings ratios and were ignoring fundamentals such as value. The principal cause of the recent stock market declines is the now artificially high interest rates. The one positive effect, at least for the moment, is that stock evaluations will more depend on company merit. The truth is that the bull markets of the recent past were dependent more on the Federal Reserve’s generosity than sound fundamental investing.

While price mechanism is simple in concept, it is also sorely misunderstood, not only by many in Wall Street, the Federal Reserve, the US Government and our society in general, but throughout history. One of the principal reasons for the failure of socialist regimes was the absence of the price mechanism. When you substitute the free market with a controlled one, you eliminate the functions created by it. Even tampering and regulating it distorts price mechanism functionality.

It’s price mechanism that determines what goods are to be produced, in what quantities, how they are produced and who gets them; this is an existential economic mechanism by which goods and services are distributed, indicating the strength of demand and enabling producers to respond accordingly. Further, only by allowing prices to move freely will the supply of any given commodity match demand. When supply is excessive, prices will fall and production will be reduced until prices begin to rise. Likewise if supply is inadequate, prices will rise, production will increase until prices begin to fall. This is the price mechanism providing equilibrium in the market.

The problem arises when prices are artificially controlled. The monetary mismanagement by the Federal Reserve, feeding into and coupled with the fiscal mismanagement by the US Government has created artificial and dangerous inflationary pressures on prices. Adding to the problem recently was the government’s pandemic lockdowns coupled with the various stimulus programs. The net results are inadequate supply and excessive demand, but unhinged from the market’s price mechanism. All this produced too much money going after too little goods and services fueling an inflationary spiral.

This problem actually started more than a century ago. Since the creation of the Federal Reserve, the US Dollar has lost about 95% of its purchasing power. There were two primary reasons for this, one being the boom and bust cycle created by the Fed’s interest rate manipulation and money printing, the other the slow death of the dollar itself as it went from commodity money to fiat money.  Both fed into an inflationary spiral, all due to failed monetary policies. Despite what Modern Monetary Theory believers tell us, there’s only one thing we need to understand, best expressed by Milton Friedman when he said that “Inflation is always a monetary issue.” The really bad news globally is that the dollar is so strong now compared to other major currencies because they’re in even worse condition.

There are some economists who blame Supply-Side Economic Theory for our current inflation and price dilemma. That theory is a modern but inaccurate interpretation of Say’s Law, which states that the production of a product creates demand for another product by providing something of value which can be exchanged for that or any other product. In the absence of distorting government behavior, Say’s law should hold true. However, if the government causes credit booms and busts through artificially changing interest rates, this can cause disequilibrium.

Interest is that word so much in the news today as the Fed seeks to control inflation by stunting growth with high rates. In economics, the rate of interest is the price of credit, and as Benjamin Franklin famously cautioned “Remember that credit is money.” So we have yet another case of causing disequilibrium by artificially increasing interest rates; it’s artificial because the price mechanism by which the market would determine the time preference for money is substituted with another fiat. Among other negative effects this has an unfortunate impact on bonds, including USTs. As the interest rate on bonds increases, the prices of bonds fall.  With USTs, this means not only does the US get less money for the debt issued but at a higher cost of servicing that debt.  About a month ago the US national debt went over $31T, the highest of any nation in the history of the world.

In his famous 1949 book “Human Action” Mises presciently stated that “The misinformed observers blame the bust rather than the boom for economic misfortune. The average person does not blame the authorities for having fostered the boom. He reviles them for the necessary collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils that inflation and credit expansion have brought about.” 

The price we pay for not allowing the free market function of the price mechanism is that the U.S. national debt is so high that it’s now greater than the annual economic output of the entire country, in effect making the US incapable of ever paying down that debt without a huge increase in economic output. The question is can Americans get informed and motivated to change the viscous cycle that our government created or are we doomed to remain those misinformed that Mises describes?

“Humor is the good natured side of a truth.” Mark Twain

When we’re in a good mood, most of us love a good joke, even if it’s on us. When we’re in a bad mood, but open minded, it will change our outlook for the better. When we are full of ourselves, we react badly because the truth hurts. Humor is difficult to explain, especially to those that take themselves too seriously. For this reason comics and satirist are either loved or reviled, we either laugh or rage.

These are difficult times for comedians because everything is subject to a new code of acceptable speech, which changes daily like fashion, with no reason other than what someone, seemingly anyone, finds offensive. I can’t imagine George Carlin being successful in our current cultural environment.  This hypersensitivity has become so pervasive that we need to understand where it comes from.  It is said that humor is the window to the soul. If true, then the lack of humor closes that window and the soul becomes isolated. I am talking about the human spirit, that intangible element that defines personality. We know a positive personality when we meet them, and we surely have experienced the negative personality that brings us down.

There are some telling indicators where this negativity is generated, principally in education; if children are constantly taught that the world is on the verge of extinction, that nothing should lie in the way of their demanded gratification, that there is no value in free expression, that their race determines them to be either a victim or oppressor, that they need not take responsibility for themselves, that motivation is selfishness, then why would we be surprised that they have a negative view of the world and their future in it? Such an environment breeds narcissism, and you will seldom find a narcissist with a sense of humor. You have to have empathy to understand and appreciate humor because without it you can’t understand anything about the human condition of anyone else but yourself. One of the objectives of true humor is to do what Mark Twain said in the quote above, to expose the truth. Narcissists lack responsibility and will always deflect blame on to others due to their sense of entitlement; truth is harsh and to be avoided.

Couple this with the social isolation imposed during the pandemic, which caused so much damage to the psychological wellbeing of our youth. According to the CDC, social isolation is linked to poor outcomes with about a 50% increased risk of dementia, a 29% increased risk of heart disease and a 32% increased risk of stroke. There was a 22.3% spike in ER trips for potential suicides by children aged 12 to 17 in summer 2020 compared to 2019. In 2021, emergency rooms in 38 children’s hospitals saw a 47% increase in the number of suicide and self-injury cases in the first nine months of the year among children 5 to 8, and a 182% jump among kids ages 9 to 12, compared to 2016.

We first see real comedic theatre in ancient Greece; in fact Greek tragedies and comedies were similar as they both emphasized observation and logic for understanding. In other words, in order to get the message you have to have perspective, experience and above all else empathy or the joke will likely go way over your head. You will not have the ability to understand humor if you lack any of these things.  The context alone will be beyond your grasp unless you’re alive in the moment, the here and now, or you’re left with someone trying to explain the humor to you, and we all know how that goes. A good comedian gets an immediate feedback from his audience, or it becomes embarrassingly obvious that his joke flopped, failing to communicate the immediate essence of the issue he brought to the audience, and that after all is what good humor is all about.

Take for example a humorous definition of inflation I heard recently that it’s being broke with a lot of money in your pocket. This kind of humor is irony or a paradox in that the statement is seemingly contradictory but in the context of its time and place immediately understood and a clear insight as to the true nature of inflation. We’ve all been there lately, so what can you do but laugh. While I’m not much of a fan of rap music, there is this guy who goes by the name Zuby who says some very insightful stuff, and relevant to this post, “This is a brutal time to be a human without a good sense of humor.” So be of good cheer, throw off the myopic views of our time, seek understanding of what’s really going on, but be courageous and learn to laugh at it all because nothing changes until we open our minds to the truth, and humor is the window through which it can come.

“My way of joking is to tell the truth. It’s the funniest joke in the world.” George Bernard Shaw

“Men argue. Nature acts.” Voltaire

Ian, like so many phenomena over the last few decades, did not bring out the best from what passes for leadership lately. The major difference though is that war, famine, disease, economic failure, etc. are for the most part either created or made worse by human stupidity. Hurricanes don’t fit anyone’s narratives as to either their cause or effect; they’re simply a force of nature and they just don’t care what we say about them. We can learn from what has been said about Ian over the past few days regarding our lack of intelligent and caring leadership.

The partisan virtue signaling has been anything but inspiring, filled more with venom than virtue. There’s the lambasting that Governor DeSantis was subjected to as if he invited Ian to visit Florida. Regardless of what anyone thinks about the Honorable Ronald, he appears to be handling the event well.  He was accused of convenient fiscal tolerance for Federal funds contrary to his criticism of the administration’s spending frenzy; however, FEMA funds are a routine budget appropriation since the agency was founded in 1979. He was also accused of climate change denial, which is not true; he has consistently recognized its reality but does not agree with those that favor the “Green New Deal” as a way to address it, which in the immediate situation is an irrelevant political issue. Unfortunately, the DeSantis bashing is the least of the grotesque statements we hear.

Social media is full of some rather viscous comments, one in particular from a truly twisted individual stating that “Florida is getting what it deserves.” Another malicious individual claimed that apparently this is karma, a way for Mother Nature to punish all those he considers evil for living in a state having a majority of people he considers deserving of death and destruction. Regrettably, there were many sympathetic voices to these sentiments; while it would be wrong for the platforms on which such things were posted to censor them, it was curious given their inclination to do so that they did not.

While President Biden was slow to reach out to Governor DeSantis to pledge assistance, the two eventually spoke and pledged cooperation in the interest of the people affected; that would have been a good sign except for the fact that Biden then went on a press binge about all that he’s doing to address the disaster as if he were the governor and not DeSantis. The primary role of the President in such disasters is to get FEMA to act, but the actual emergency management is by the Governor of the state affected. All that though is relatively benign; what was truly malevolent came from Vice President Kamala Harris when she announced that the administration will be giving hurricane resources “based on equity” by directing funds to “communities of color.” Not only is such an action unconstitutional, it is blatantly racist, proving again that racism is not dependent on one’s race.

Regardless of anyone’s views on climate change, maintaining as some have that Ian is proof that hurricanes are now worse than ever before as a result of that is historically inaccurate. Looking at the North Atlantic/Gulf-Caribbean region only, in terms of loss of life, we have the “Great Hurricane of 1780” with 22-27K deaths; there was no “carbon footprint” to speak of then.  More recently we have Flora in 1963 with over 7K deaths, and Mitch in 1998 with more than 11K deaths. While Katrina and Sandy come to current memory more readily, they were not as deadly. As far as property damage is concerned, we can rebuild but we can’t bring back the dead. Comparable storms in other parts of the world, particularly around the Indian Ocean in the 18C through early 20C, were far more horrific, often tallying over 200K deaths.

True, the economic loss to Floridians, and to a lesser extent some other areas hit by Ian, is devastating; but why do so many people insist on living in areas prone to such repetitive natural catastrophic events?  While I was surprised to learn that this area on the West Coast of Florida has not been hit by a significant hurricane in over a century, look at all the issues with flooding in the Mississippi River states, the fires in California, and the droughts there and the Southwest. The latter is definitely more a manmade issue as that area has been prone to drought way before the population explosion of the Post War Era which literally drained the scarce water resources of the region. In the case of flood prone areas like Florida, the huge population explosion was facilitated by the National Flood Insurance Program (NFIP). Not only do taxpayers get saddled with the cost of such subsidies, but then again with the claims on top of the FEMA relief. While there will always be those who will insist on living in such areas regardless of the risks, providing the means to insure such decisions only exacerbates the problem.

While Ian doesn’t care about any of this, we really should. While it’s inevitable that we need to harness alternative means of energy, we can and should immediately end such programs as NFIP that only direct population growth where nature shows people are at the greatest risk. While we can’t really control Mother Nature, we should be able to control ourselves and avoid partisan bias in the face of such disasters as that is irrelevant. To seek some level of political gain, or evaluate human suffering based on race is an evil we can live without. 

As far as Ian is concerned, we can’t bring back the dead, but we can help the living, even if they live in Florida and regardless of their race or politics. “Nature knows no indecencies; man invents them” Mark Twain

“Inflation is always and everywhere a monetary phenomenon.” Milton Friedman

When Milton Friedman said this in 1963, most Keynesian economists, and they were the majority then as they are now, criticized him as being illogical. But Friedman was not proposing an economic theory, although such a thesis had already been proposed by many “classical economists”; he was speaking empirically, meaning from observation. Over the next few decades Friedman’s observation won out, even convincing many of those that initially criticized him that he was ultimately correct.

Friedman, and his associate Edmund Phelps, had observed that no central bank and its government could maintain higher inflation for lower unemployment for very long without risking prolonged inflationary periods, and when higher interest rates were imposed to combat inflation without a recession and higher unemployment. They demonstrated this phenomenon with what became known as the Phelps curve; again, this was not a thesis, but an observation. Obviously, the dual mandate for the Federal Reserve to do the opposite was shown to be problematic, but that was a political mandate, not one based on empirical facts.

Fed Chairman Jerome Powell has been criticized for calling the onset of inflation “transitory”, but he was simply joining the progressive economic narrative along with Treasury Secretary Janet Yellen and a host of other economic experts in the administration and academia. Now he’s being cautioned that the Fed’s aggressive moves on interest rates may push the economy into a recession. A free market should be dictating interest rates, but we don’t have that; what we have is a central bank with a political mandate. So given where inflation is at the consequences of not raising rates would be worse; besides, we are already in a recession despite the political attempts to redefine what that is.

The Fed says they will continue to raise rates until inflation is brought under control and they reach their target rate of 2%. Putting aside the bewildering concept that any inflation is a good thing, consider that with today’s increase of another 75BP the Fed Fund rate will be around 3.25%, and real, or “headline” inflation is at 9.1%, the gap between target and inflation is about 7%.  There is speculation that when and if inflation falls to 5%, the Fed will ease off the rate of rise in rates to effect a “Soft Landing”, the definition of which is a bit sketchy; the concept is that eventually the higher interest rates and the inflation rate will meet at a point without the need to raise rates further and cause a recession, or at least avoid a deep one. That sounds more like a hope than a policy, and historically has seldom been achieved; as F.A. Hayek called such ideas, it’s more like a “fatal conceit”.

The correct policy, given the still relatively low interest rates and the increasing inflation rates, is for the Fed to continue rate hikes for some time, likely well into 2023; it is true that will make the recession we have already begun more apparent, deeper and prolonged. However, that assumes that the Fed has the perseverance to follow their stated goal on the face of what will likely be strong political opposition. The administration has shown no common sense and restraint in its disastrous fiscal policies, which has led to a U.S. national debt over $30 trillion as of January 2022; that debt is now greater than our GDP, the annual economic output of the US, which has only happened once before in our history, and that was during WWII.

At the current Fed rate, interest on that debt is about $500B, clearly a debt service way beyond the ability of this country and its economy to bear, especially given the levels of expenditure the administration’s policies call for; something has to give, and assuming that the administration will not now practice the economic good sense to cut expenditures, things will get ugly. The Fed and the Federal government are caught in the exact dilemma that Freidman and Phelps forewarned of back in 1963, forced into an economic paradox of their own creation. The last time the Fed waivered was back in 2019 when they began to raise rates; Trump went bonkers, as he was want to do, and Powell and the Fed caved, cutting rates under intense political pressure. The likelihood on that happening again is extremely high as we have entered the era of perpetual political campaigning; the result, should that happen, will be as it was prior to Paul Volker, with ever higher inflation coupled with a deep recession. The word we boomers remember all too well is “stagflation”.

We seem to have entered another of those points in history where it repeats itself, but it often does so with ever increasing tenacity and ferocity when its lessons are so egregiously ignored. “The Fatal Conceit” that F.A. Hayek spoke about in his book by the same name had to do with the lessons we should have learned; “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

“Happiness is not a reward, it is a consequence. Suffering is not a punishment, it is a result.” Robert Green Ingersoll

The word “pursuit” is commonly understood to mean following someone, or something like a career or activity. It can also mean a search as in that for knowledge. In all respects action is required usually on a consistent basis, which then makes “in pursuit” a state of being. The definition of “happiness” depends on who you are. Definitions like “The state of being happy.” and “A state of emotional well-being.” are somewhat ambiguous because that’s not the same thing for everyone.

Ingersoll defines happiness as a consequence, meaning what you get if you do the right thing, and conversely a result such as suffering if you don’t; he was not moralizing religiously as he was called “The Great Agnostic” for a reason.  Besides being a lawyer, writer, and orator, he was also a scholar, so he knew what Locke and Jefferson meant by “…the pursuit of happiness”.

In the Declaration of Independence, Thomas Jefferson borrowed the phrase from John Locke’s An Essay Concerning Human Understanding. However, unlike Locke, he did not explain what that meant, other than calling it an unalienable right. Locke wrote extensively about natural law, and the rights it embodied; much of his work is informed from that of Aristotle, Epicurus and Aquinas. Locke made clear that this basic human right is foundational to liberty, but was not the same as satisfying desires. By “pursuit”, Locke meant making decisions that produced the greatest good in life; every individual needs the freedom to determine what’s in their own self-interest, and as long as they don’t violate the rights of others, can achieve happiness as a consequence their actions.

While the Declaration of Independence is not a part of the Constitution, it was the document that informed it, meaning it was constructed not as a body of rules to govern the people, but to govern those who are elected to represent the people; it defined the limits of power in order to preserve liberty. This is a critical concept that has been diluted and even corrupted, especially regarding the pursuit of happiness. What constitutes “happiness” is now whatever invented rights can provide, a collection of desires with no source of legitimacy.

Many Americans do not understand this concept, or in general what rights even are, and therefore lack the rational political basis for what they support. With each election cycle they seem to swing like a pendulum from one ideological position to another, influenced more by the media and partisan marketing of what government can give them, as if the choices were akin to fashion and style. This is not what Locke, and therefore Jefferson, meant at all; it is not a zero sum game of what you can get from others that gives you happiness.

This failure to understand that happiness is not something to be doled out, but a consequence of actions freely taken, with no compulsion imposed on others as if someone owes you anything, is the source of much suffering. If you find that you are not happy, it’s not as if others have deprived you of happiness, unless you are a victim of crime or a miscarriage of justice; otherwise it’s a result of your not knowing what makes you happy or not taking action to achieve it.

Understanding what the pursuit of happiness means is an essential part of a child’s education. The correct understanding creates a positive mindset to find opportunities, whereas an incorrect understanding creates a negative mindset, often leading to frustration and anger, hardly ingredients for happiness. That can result in narcissistic rage against what the pursuit of happiness actually means. Everything becomes a cause for blame, like the outcome of an election, financial failure, job loss, low income or lack of education; just name the problem, blame someone else and demand whatever entitlement you feel you are owed. This phenomenon is an existential threat to American society as it’s rooted in the failed educational development of our youth.

Knowing what will make you happy requires wisdom, and to achieve wisdom requires knowledge, and to gain knowledge you have to get the facts. This inter-relationship of wisdom, knowledge and facts with happiness was a common theme with Aristotle, Epicurus and Aquinas. The only place desire has in all of this is the desire to achieve these things in order to attain happiness. This is why Locke makes it part of the trinity of the natural rights of life, liberty and the pursuit of happiness.  They are inseparable, and as Jefferson said, unalienable.

Unhappy people are fearful because they carry the burden of not knowing. Fear creates ignorance and superstition, which in turn leads to cruelty, envy, and a desire to oppress those that are seen as a threat, like happy people. You don’t see happy people wanting to oppress others, or use violence or other means of force to get what makes them happy; they have no need to do so because they already have happiness.

“Let no one be slow to seek wisdom when he is young nor weary in the search of it when he has grown old. For no age is too early or too late for the health of the soul.” Epicurus

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.” Groucho Marx

Recently we have had various speeches by Biden and a cast of the usual purveyors of grandiloquence telling us what a wonderful job they have done to address problems they themselves helped to create. History shows us that the inevitable behavior of government leads to problems that they at first deny; when reality forces them to acknowledge the problem they blame others, and then proceed to pass laws that make things worse; such behavior goes so far as to claim credit for at least doing something. As Sigmund Freud once observed “No one who shares a delusion ever recognizes it as such.”

The media has not been very critical about this, but there is a growing chorus of those that have, often with a common phrase that much of what these politicians say shows a certain tone deaf behavior regarding what’s really happening. The definition of tone deaf is “Having or showing an obtuse insensitivity or lack of perception particularly in matters of public sentiment, opinion, or taste; unable to appreciate or understand the concerns or difficulties of others; out-of-touch.”

A conspicuous example of this was Joe Biden’s “The Battle for the Soul of the Nation” speech at Independence Hall in Philadelphia on September first. The staging was awful, but the words were even worse; according to most polls a majority of Americans viewed it as not only divisive, but more a campaign speech than a presidential address, a continuation of his anti-MAGA comments, some of which characterized Republicans as “semi-fascists”. This not only ignored his pledge to be a unifier, a president for all Americans, but it insulted about 48% of the electorate. Name calling shows weakness, a tactic deflection of failures you refuse to admit to.

Then there was the Biden speech in Boston a couple of days ago taking a victory lap for his success in reducing inflation and improving the economy, followed by Pelosi’s speech praising him and congress for doing so. Unfortunately it was the same day that the CPI data showed a substantial rise in inflation and fall in the markets. It was as if these speeches were written for the previous month’s data and someone forgot to update them. While bear markets are usually temporary, inflation is money lost forever. Promoting spending bills as anti-inflationary ignores the lessons of history, like failing an open book test.

The reality of where the economy is seems to be an ongoing debate since April of 2021 when the Fed called inflation “transitory”; at that time the more intelligent economists like Mohamed A. El-Erian, and the former Treasury Secretary and Director of the National Economic Council, Lawrence Summers, cautioned the Fed that they were already late in raising rates and reducing their balance sheet.  The Fed finally started raising rates in March 2022, after persisting for nearly a year with “accommodating” rates; it also stopped with the transitory narrative as inflation not only persisted, but accelerated.  

It’s also obvious given the recent CPI and PPI data, declining GDP, persistent yield curve inversion, and market volatility to the downside that we are in a recession. Some cite the low unemployment rate as an indication of a strong economy, but ignore the all more important low participation rate.  Further, the economic impact to jobs historically lags behind the onset of a recession by about 6 months. This boom-and-bust cycle is a by-product of Fed monetary and government fiscal policies, both of which politicians are blaming depending on their partisan bias. The fact is the two are related making both the cause. However, given that the Fed has a mandate to first assure price stability and second employment, it can’t do both, and in fact has historically done a bad job with either.

It is true that the government’s pandemic and energy policies have exacerbated the current boom-and-bust cycle by creating supply problems adding to the extreme price instability. Markets hate uncertainty, and all this instability has the added effect of creating high volatility, especially in the energy sector, which affects just about everything in an economy.

According to the latest BLS, whose reported data many economists find understated, approximately 50M households, nearly 40% of American families, will have expenses higher than their incomes, despite the fact that wages have increased by about 3.4%; however, after deducting for CPI core inflation of 8.3%, wages actually declined 4.9%. But the CPI core inflation excludes food and energy, which when included gives actual inflation at 9.1%, and real wages that declined 5.7%.  This does not provide for a victory lap, and in fact the trend indicates even further problems.

Obvious political campaigning deprecating political opposition and taking victory laps for failed policies adds to an already extreme partisan derangement; a locked-down economy, medical mandates, high crime, rampant illegal immigration, proxy wars and crushing debt only adds to the frustrating tone deafness. Politicians that think they can employ totalitarian methods while denouncing totalitarian ideology fail to understand that they are one and the same thing; doing so while ignoring the immediate concerns of Americans in a recession that has all the makings of stagflation is not only tone deaf, but a threat to our future. We better not be so easily fooled as our future depends on it; if we continue as we have, then as the great Yogi Berra once said “The future ain’t what it used to be.”

“Belief can be manipulated. Only knowledge is dangerous.” Frank Herbert

In his bestselling book series “Dune”, the great science fiction writer Frank Herbert hit upon this thought about beliefs that essentially speaks more to the nature of facts, which is the essence of knowledge, and why that can be dangerous. Those that base their beliefs on what they are told to believe can be manipulated. While it is true that those who would manipulate people’s beliefs would attempt to do the same with facts, eventually the facts will become known, and while some may forgive them or overlook the lie, some will no longer believe them, or at least doubt them.

Recently, I received a notice from a social media platform, which will remain nameless, that I had violated their policy by publishing something that someone found to be “harassment”; I couldn’t think what that could possibly be so I asked for more information.  The censorial gurus advised they could not provide that as it would expose the person who made the complaint. I recalled from my previous post John Clease’s description of wokeism as “…people waiting for the thrill of being offended.” That gave me the insight to two things; one, which post may have offended whom, and two, why; more important is to focus on the why.

My offending post was a rebuttal to beliefs presented as historical reality; I did so with facts that exposed those beliefs as false. Apparently this poor fearful soul lacked the understanding and fortitude to deal with the facts, and therefore dealt with it the only way they knew how. Now we’re all aware of this phenomenon where people find offense with anything contrary to their beliefs, in this case to the extent of complaining about “harassment”. But what causes this fearful reaction?

Actually, the answer to that question leads to an entire area of psychological study known as cognitive behavior. If you wish to read more about that look up Dr. Albert Ellis, an American psychologist considered the leader in that field, but in the interest of brevity we can deal with it in summary; he has identified the source of irrational beliefs as confirmation bias, where people dismiss facts that contradict their beliefs and only accept those that support them; in essence, beliefs become their identity, and anything that challenges their beliefs, challenges their identity.

Facts are not opinions or beliefs. They are realities verifiable by objective evidence, empirically acquired by experience, observation or experimentation. It is important to understand that we are not talking about theories either; we are talking about that which proves or disproves the hypothetical. As Leonardo da Vinci put it “All sciences are vain and full of errors that are not born of experience, the mother of all knowledge.” Facts provide knowledge, and that makes them dangerous, something that could undermine beliefs if those beliefs are not based on facts. So what I did to my poor fearful soul on social media constituted “harassment” because I challenged their identity.

That is what makes knowledge dangerous, especially in the current environment of identity politics where everything has become political; the definition of a woman, a fetus, gender, racism, domestic terrorism, insurrection, peaceful demonstration, fascism, crime, voter fraud, inflation, recession…the list goes on, as if the way to win an argument is to change the dictionary. If you know what the facts are, you can’t ignore them, so you react to what someone tells you that you find contrary to the facts with the facts; if the reaction to that is an accusation of “harassment”, then discussion has ended as you are now dealing with someone’s fear that their identity is under attack.

When this is not an isolated problem of an individual but a societal ill it goes beyond that as explained by Ellis as the phenomenon of cognitive dissonance becomes sociological; it becomes an issue for society when people are not taught how to think, but what to think.  This is the establishment of orthodoxy, an authorized or generally accepted theory, doctrine, or practice; it is a reliance on belief, not facts. Deviations from accepted or orthodox standards or beliefs are called heterodoxy. As George Orwell explained in 1984, “Orthodoxy means not thinking, not needing to think. Orthodoxy is unconsciousness.”

This is an issue of education, or in this case a failure of education as it devolves into indoctrination, wherein the most critical part of the population, which represents our future, i.e. our children, are not taught the essential skill of how to think for themselves. The progress of human beings was only possible through knowledge, and the only way to acquire knowledge is to learn the difference between beliefs and facts. This most precious human trait is being stunted as children are made to fear being different than others by thinking for themselves; when that happens, those that think for themselves are deemed heretics, and history has taught us what such a society does with heretics.

History is full of examples of the immense damage that a society can do to itself if it embraces orthodoxy; it spawns the most evil beliefs, absurdities that often lead to atrocities. Those with common sense look on our current cultural environment confused as to how our society has devolved to an orthodoxy of ignorance, and even worse condemnation of those who speak out against it as oppressors, as if knowledge, and the facts it is based on, are heresies to be erased. We should not be confused; we should become enlightened because by observing that this is actually happening we learn the simple fact that belief is not thinking, and therefore that beliefs are not facts.

“Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd.” Bertrand Russell

My Latin is not good, but recently in a book I was reading I came across the phrase that is the title of this post, which literally means “dare to know”, but commonly translated as “Have courage to use your own reason.” Unfortunately doing so may, as Bertrand Russell observed, make you a target for the herd.  

One of the truly evil concepts of religion is original sin, the idea that a new born baby would be held accountable for something done by others prior to their own existence; wokeism essentially does the same thing, holding people accountable for that which happened before they were born because of the color of their skin, their gender, intelligence or physical ability. Politics has become the new religion with beliefs that are the products of someone else’s thinking, usually someone in a position to be impressionable with youth; this is most apparent in education where wokeism has its genesis.

Recently the great comedic writer, actor and producer John Clease, in an interview with Nick Gillespie, gave a very good humorous one liner describing wokeism as “…people waiting for the thrill of being offended.” Such individuals are so self-aware and socially conditioned that they become completely oblivious to the fact that their actions actually create more of what they are supposedly trying to change. One of the main tenents of wokeism is intersectionality which maintains that inequalities based on gender, race, ethnicity, sexual orientation, gender identity, disability, class, etc. “intersect” to create other more and unique discriminations; a never ending search for oppression and victimization.

Wokeism’s focus on such things like gender, race, etc. sets up its believers for their inevitable hysteria that arises when others don’t agree with them. Some have likened it to the 1980-90s political correctness, but it’s more like a Maoist Cultural Revolution, or the Salem Witch Trials, or McCarthyism; like all those things it’s based on fear. Fear is easy to stoke, difficult to overcome, and always leads to a bad place, in this case a very cruel and hateful ideology, at the same time engendering an adolescent sense of elitism.

Such behavior is not only a sign of immaturity, but an inability to use one’s intelligence, a condition caused by a dependency on those entrusted to provide youth the very basic tools like sound reasoning and the social skills to engage with others with a fearless attitude toward the future; what they get instead is fear of just about everything.  As an example, take humor, which is a good and effective communicating and learning tool. There is no humor in wokeism, and any comedian judged to have used a “trigger word”, i.e. one that the woke find offensive, is a target for cancel culture. The more zealous the religion, the less humor will be found. Wokeism is fear based, its followers insecure to the point where mockery must not be tolerated. Christopher Hitchens expressed this trait very succinctly when he said that “I’m very depressed how in this country you can be told ‘that’s offensive’ as though those two words constitute an argument.”

The ignorance to believe that by being racist you can end racism, by being sexist you can end sexism, by limiting the able you help the disabled, shows how beliefs can be manipulated among those whose intellectual development has been stunted. The ability to use your intelligence to acquire knowledge provides the courage to think for yourself and overcome fear; that is the antidote for wokeism, or as Bertrand Russell put it, “To conquer fear is the beginning of wisdom.”

“If you are going to bluff, make it a big one” Amarillo Slim, Famous American Gambler and Author

Mikhail Gorbachev died yesterday, eighteen years after his partner in peace, Ronald Reagan. They were strangers to each other, even though they represented opposing sides to a seemingly never ending conflict known as the Cold War. Their strange partnership led to the signing of the INF Treaty in the East Room of the White House on December 8, 1987. Unfortunately, their hard work that led to what should have been an enduring peaceful relationship was not to be, but at the time it was a huge achievement that ended the Cold War.

Ronald Reagan is considered the man who won the cold war, and liberating various countries that had been devoured by the Soviet Union after WWII, and often called “The Man Who Beat Communism.” In true Reagan fashion of graciousness, tact and self-deprecation, he used the Hollywood jargon of only being a supporting actor, saying that “Mr. Gorbachev deserves most of the credit, as the leader of this (Russia) country.” They were both simply patriots of their countries caught up in the life and death conflict of their time. However the demise of the Soviet Union shows that the main protagonist was indeed Ronald Reagan, and the real supporting actor was Mikhail Gorbachev.

When Reagan began his first term in 1981, the Soviets had invaded Afghanistan just two years earlier, ending détente and killing any chance for the SALT II agreement. As various historians who personally knew Reagan have written, he truly despised nuclear weapons as the biggest threat to humanity. He was intent on doing his best to end that threat, and he apparently had a plan to do so. What that plan was as stated herein seems the most logical, but not universally accepted; logic is often the orphan of history.

We have an historical meeting initiated by Ronald Reagan with Pope John Paul II. There was no public announcement as to the agenda. There were none present but Reagan and the Pope. The meeting took place in the Vatican on June 7, 1982. The meeting lasted almost an hour, but there’s no record of what they discussed. Odd though that the most powerful leader on earth, and the leader of the largest religion on earth, spoke that long together and there’s no record. But consider the fact that John Paul II was the first Polish Pope in history, that the Polish Solidarity movement was being crushed by the Soviet regime, coupled with the growing tensions between the two super powers, and that their opening public remarks were about such things, it can be assumed it was not a prayer meeting. Both men were clear in their disdain for communism, Soviet domination and aggression, and condemnation of the nuclear threat.

What followed does shed some light on the fact that these two very serious men embarked on a coordinated campaign against all these things; they definitely had a plan.  The Pope embarked on various visits to the Eastern Block, including Poland, espousing human rights and the morality of freedom. He was one of the most beloved Popes of all time and his mere presence in these oppressed countries had a destabilizing effect on the Soviet backed regimes.

Reagan had an equally risky role, an American style poker game of bluff. It was risky because he couldn’t pull a punch as it required him to create what could not be doubted as being real. His plan has derisively been called “Star Wars” for its fantastical concept of rendering a nuclear strike useless, making the Soviet advantage of such weapons obsolete with a satellite system of laser technology shielding the US.  It was called SDI, the Strategic Defense Initiative.

Reagan announced SDI on March 23, 1983 as a technological achievement not only for national defense but to make nuclear weapons obsolete. Some, especially the Soviets, wondered if in fact it already existed; it was Soviet doctrine back then that Americans were always methodical in their development of technology and lacked the deceptive know how for “active measures”. That doctrine was inaccurate, at least in this instance as SDI did not yet exist, and at best was only in a theoretical phase. In fact, despite huge funding, much of which was a red herring, it never came into existence. The Soviets never recognized it as a bluff, took it as an existential threat to their security, condemned it as aggression, and proceeded developing their own shield, but at a cost bankrupting an already sclerotic economy.

When Mikhail Gorbachev became Soviet General Secretary in 1985, he was not looked on as being anyone radically different from his predecessors, but following various discussions and meetings with Reagan it became increasing clear that he was a revolutionary. Reagan was not a geopolitical visionary, although he did reject the failed accommodation policies of détente; he was a pragmatist who saw in Gorbachev someone he could work with to achieve a common interest. It was not the failure of either of these men that after their tenure Russia devolved into chaos, with Putin ultimately taking control; that is more the failure of those who followed as we have not had such leadership since then.

It was strange but great that these men were able to reach out to each other to achieve what was at the time a way to peace, but it is the Reagan legacy that he so intuitively understood the dynamics of leadership in others like Pope John Paul II and Gorbachev to make that happen. The real catalyst however is what Henry Kissinger described as “A bluff taken seriously is more useful than a serious threat interpreted as a bluff.”

“Give with a free hand, but give only of your own” J.R.R. Tolkien

As most people know from the books, if not the movies, the above quote is the wise counsel by the wizard named Gandalf to the Hobbits in the trilogy “Lord of the Rings”. While the books are fantastical fiction, this counsel should be well regarded by not only those in government, but perhaps even more importantly, the American people. It is amazing that many believe that the student debt that Biden forgave simply disappears, as if he is a wizard with magical debt disappearance powers.

The reality of the student debt forgiveness is that it’s actually a transfer of the debt from those that signed the loans to those that did not. It should be obvious that in order for someone to ethically give something away it needs to be their own. The U.S. Department of Education owns the guarantees on about 92% of the 43 million student loans; so by forgiving between $10-20K per loan means an obligation of $395-791B. The lenders are not liable for this obligation as they hold the guarantees, but should this debt forgiveness actually become law, the American taxpayers are.

Constitutionally the government does not have the money to do this without the legislative action of Congress to enact both the law and appropriation required. This in turn requires a source of funding through taxation or loans, which is actually the same thing. The Biden administration seeks to justify the executive action by citing things like The Public Service Loan Forgiveness Program, the HEROES Act of 2003, and various acts related to relief during the pandemic. However, there is nothing in these legislative acts that provides the president an authorization by Congress for this debt forgiveness. Recently Jonathan Turley, a respected constitutional scholar and law professor at George Washington University, stated that “President Biden is something of a constitutional recidivist when it comes to executive overreach. He has been repeatedly found to have violated the Constitution in his unilateral use of executive powers.”

Among Trump’s egregious failures as president was his ignorance of and disregard for the constitution, the rule of law, and basic ethical conduct in general. With Biden we have similar problems but cloaked in his never ending virtue signaling of caring for the welfare of the less fortunate.  However a simple look at the statistics regarding student loans debunks such noble sentiments. Approximately 60% of student loan debt is held by the economic top 40% of households, with the lower 60% having the remaining 40% of student loans. Some of those top households represent students with loans for graduate degrees, many in professional occupations like law and medicine.

One of the largest voting blocks for the Democratic Party are college students and graduates holding these loans. Biden’s behavior is not wizardry but a wanton disregard of ethics by burdening Americans with the cost of benefits for the wealthier of his party’s electoral base. This is the very thing that he and his fellow politicians accuse Republicans doing, who also justify such actions with equally dubious reasoning. It appears that hypocrisy is indeed an occupational requirement in politics.

There is another consequence of this travesty, one that is morally corrosive; loans are freely agreed contracts which should be honored. Both sides should understand the possible consequences of their free choices. Borrowers should repay, even if that requires making sacrifices, and creditors who make bad lending decisions should suffer losses; but the conundrum here is that the borrower is being forgiven the debt, or portion thereof, while the lender is incurring risks insured by a third party through guarantees that become the obligation of those that made no such agreement.

Further reflection requires an explanation as to why this situation is called a student debt crisis to begin with? These loans were voluntarily agreed to; there was no compulsion to do so, just a desire for an education to improve one’s economic wellbeing. The “crisis” occurs if it was not worth the debt because the degree obtained did not provide the employment with an income justifying the investment in the education received. There’s actually more costs that the loan because it means a considerable amount of time in college without working for an income. However that does not mean that others owe you for the choices you made. This is especially true for some of the dubious degrees some students obtained, like Memeology, Egyptology, Sexuality Studies, Popular Culture and a host of other degrees with dubious employment opportunities.

This action by Biden is just another in a history of such actions that erode all sense of individual responsibility. FA Hayek expressed this well in “The Road to Serfdom” when he said “Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.”