Some Thoughts About Future Technologies

The play was a great success, but the audience was a disaster. (Oscar Wilde)

As the S&P 500 closes at another record high, the celebration of wealth and intelligence become the new religion of America. Apple and Chipotle report yet another quarter of blowout earnings. Facebook earnings due tomorrow, which will also be blowout. The left is still waiting in vain for record wealth inequality to hurt the economy, yet it simply refuses to happen as everything keeps being better than expected. Liberals are like dinosaurs; they don’t yet know they are going to be extinct. Consumer spending not slowing down.

Facebook and Google will be the first trillion dollar companies, and eventually, within the next 60-100 years, complete construction of a ‘Matrix’ that will coincide with the transition to a type 1 civilization. It won’t just be these two companies; Tesla and Amazon, having both become immensely powerful, will lend a hand in the construction – with a handful of people being appointed the overseers or information overlords.

A hypothetical technology is the implantation of false memories and the ability to erase bad ones, although care must be taken to make sure the recipient of memory modification doesn’t become aware of the inconsistencies between his new memories and real life. For example, if someone’s house burns down you can run a memory implant to make the person forget that his house burned down, but then you have to implant a new memory to account for the house being missing. Super computers can run simulations to try to come up with the best ‘chain of events’ to create a memory that optimizes the happiness of the recipient, with the fewest possible logical inconsistencies.

Eugenics also hold promise to slowly phase out less economically useful people and promote the reproduction of individuals with desirable traits, but not surprisingly, political and ethical hurdles make even considering, let alone applying eugenics, a long shot. When you mention Eugenics to republicans they tend to invoke the tired argument that the liberals like Sanger pioneered eugenics which inspired the Nazis, but even if this is true, the argument is irrelevant. The libs of today have completely renounced their earlier ties to eugenics and want nothing to do with it, or anything to do with heritability as it applies to things like crime, intelligence, education, or income. Eugenics could be marketed to republicans as a way to curtail crime and entitlement spending. Second, eugenics doesn’t have to be inhumane. It could as harmless as offering monetary incentives for low quality individuals to not procreate, or making welfare benefits contingent upon birth control. The first step would be an educational campaign to make the concept of eugenics palatable to the public, and then offering various proposals.

It’s inevitable America will adopt a eugenics program within the next fifty years to address the growing entitlement problem. Don’t believe me? People didn’t believe me when I said stocks would keep going up, that there would be no hyperinflation, or that Facebook would recover from its overblown IPO blunder to eventually double in value.

Bill Ackman and Herbalife

Cockroaches Bill Ackman and James Cramer are attacking Herbalife again.

Hedge fund manager Bill Ackman said on CNBC today that he would give the “most important” presentation of his career on Tuesday when he unveils an investigation into Herbalife’s nutrition clubs.

In December 2012, Ackman, who runs Pershing Square Capital, gave a 342-slide presentation publicly declaring that he’s shorting Herbalife — a multilevel marketing company that sells weight-loss shakes and nutritional supplements.

But didn’t he have two years to make his case, and he’s still underwater on his position. Odds are, he’s played his hand and he has nothing but smoke and mirrors.

Affiliate and MLM marketing is not illegal – many companies use recruiting to increase sales. Liberals like Ackman and Cramer are just attacking another great American success story. Their political party cannot create wealth, it can only spread or destroy it.

The worst that will happen is Herbalife will get a slap on the wrist, possibly by having to make some subtle changes to their marketing techniques and paying a small fine. Most likely, the SEC and FTC will give the ‘all clear’ and the stock could possibly surge 40% or more. Even with a fine, the stock will still respond favorably, because the worst is over. The major tobacco companies, for example, survived and thrived after years of litigation and fines. Again, MLM is not illegal, with the FTC only going so far as recommending that people avoid such schemes. Furthermore, there is no law that prohibits a company from profiting from the infinite resource that is human stupidity.

As Herbalife fights these charges, Ackman and his accomplices will continue to twist and squirm like the injured cockroaches that they are, until they are finally put out of their misery.

Some Ideas to Reform Education

The left sorrowfully clings to their cheese in the wake of tectonic economic changes. Incapable of adapting, they complain that they cannot keep their old, economically inefficient way of life, that there is too much debt, that stocks are a bubble, interest rates are not high enough, or not enough good paying jobs are being created.

People are getting richer and smarter than ever. America is becoming Richistan. Smart, high-IQ people have and will continue to reap most of the economic gains. Get a STEM degree, learn to code apps, buy stocks, buy real estate in good areas like the Bay Area, Washington DC, Aspen, Orange County, Long Island, Seattle, and Manhattan. Become a technology or a defense lobbyist.

We, the American people, need to come to terms with the reality that in our super-competitive economy where productivity is paramount, not everyone who wants a job will be able to obtain one, even among the educated. The problem is our education system is setting unrealistically high expectations for the millions of dull students that are churned through the high school diploma mill. Upon graduating, they forget most of what they have learned, and because they aren’t that smart, they don’t complete college, nor do they have the capability of self-learning programming or some other high-paying skill. So unless these millions of dull young adults find low paying service sector work, they will probably be unemployed most of their life and a drag on society.

George W. Bush infamously asked, “Is our children learning?” Now the question is, is our children learning the right stuff? To answer this, we propose overhauling the k-12 curriculum by splitting it into two groups: the dullards and everyone else, with special classes for the former and regular classes for the later. Of course, schools already have various special ed and gifted programs, but the difference is that after a certain grade level, we stop teaching the dullards a normal education and instead focus on teaching them how to create economic value. Second, to raise revenue and teach these value-centric skills, the public schools partner with various private companies.

For example, schools should partner with Fox News to broadcast all day, every day, year round patriotic, pro-growth messages. For the dullards, Facebook and Snapchat could offer classes on how to take selfies and upload them (although everyone is encouraged to join).

Maybe Hasbro and Mattel can offer a ‘class’ to teach kids persuasion techniques to get their parents to buy the latest toys.

For low-scoring girls, make Keeping up with the Kardashians required viewing. Same for the popular Kim Kardashian app. While lacking in educational value, these activities create more economic value than a typical overpaid job, and for low-IQ students, it’s the best they can aspire to.

Challenging economic times call for unorthodox solutions. Another idea is that the unemployed could partner with Google to click Google ads. At the end of every month, an audit is done to see if the ads are being clicked, and if so, the unemployed are given a small amount of money.

Thee are just some rough ideas, but it’s better to teach good consumer spending habits and pro-growth values than waste time and money teaching subjects that will be of no use and will go in one ear and out the other.

Some Thoughts on Investing, Investor Exceptionalism, Emerging Markets, Bubbles, and Debt

Theodore Dalrymple of Taki Magazine wrote an interesting article about investing. A passage that stood out:

In this life I entrust my savings, such as they are, to advisers, in the hope that they are not of the Bernie Madoff school of finance and investment; but for all I know, or can be bothered to find out, they may be.

I suppose the only way to eliminate that risk is to manage it yourself. It’s pretty easy to do. Also, after taking into account the fees, it’s unlikely the manager can beat the S&P 500, but I also don’t know what your financial objective is, either. However, pretty much any investment strategy- from conservative to aggressive – can be replicated with a retail brokerage account using stocks, options, futures, and ETFs. The advantage is no one will run off with your money and much less fees. For example, the founder of the Grey Enlightenment makes roughly 50% a year selling volatility hedged with Russell 2000 puts and does it all from a retail brokerage account.

For the foreseeable future, the market will keep going relentlessly higher, with only brief pauses along the way. With the exception of moral decay, we’re living the greatest of times, at least as measured by wealth creation and prosperity, even if relatively few can participate in the gains.

If you haven’t already seen it, this tedx talk on the validity of standardized tests should restore your faith in the markets and America. The market keeps going up because of the economic value created by smart people and to reward the smart people for the value they create. Economic policy is designed to make the successful more so, to advance technology, as well as America’s global economic hegemony. Do you really want to bet against the high-test-scoring geniuses and the policy makers that are subservient to them? Or bet against the U.S. consumer? I sure as hell don’t. Those who did in 2009 lost their shirt, as I recall.

Judging by some of the comments in the Taki article, it seems many don’t have much faith in the financial services sector. Not much different than NYT or Huffingtonpost ‘they are all crooks’ or ‘the market is rigged’ type comments. When people say the markets cannot be predicted, that long-term superior returns are not possible, or that prognosticators are useless, I say ‘bullshit’. To be dismiss all forecasting as voodoo is just the lazy, anti-intellectual approach that appeals to the likes of Taleb or Gladwell, who assume investors are irrational and cannot beat the market. In the same way ‘blank slate’ liberals deny individual biological exceptionalism or America’s exceptionalism, they deny that exceptional investors can exist, or that some people can consistently beat the market on skill, not luck. The left attributes exceptional returns to insider trading, crony capitalism, some unfair environmental advantage, or just plain luck – never innate skill. There are many instances of funds that have beaten the market over the long run – two notable examples being the Soros Quantum Fund and the Renaissance Technologies Medallion Fund. There are many people who trade options and post consistent gains. On stocktwits there two people I follow that have made a killing trading options in the various high-growth stocks like Tesla and Priceline, and they keep doing it over and over. Just like some people have an innate, biological knack for math and science, some people are better able to read and time the markets.

Some things are easier to predict than others. For example, predicting the direction of the market is not that hard. Plot the past 50 years of the S&P 500. It mostly goes up, with some hiccups along the way.

It’s generally accepted stocks tend to rise on fundamentals, and since the U.S. has better fundamentals than emerging markets, then we can infer that buying U.S. equities would be a better bet than buying foreign equities. It’s like putting your money on the horse that always wins. The ROI, obviously, will not be as great as the underdog, but the risk-adjusted odds of simply making money are better.

Furthermore, a lot of investors make the process needlessly complicated by taking on too much idiosyncratic risk. They want to beat the market, so they speculate in small cap stuff that has high beta. The problem is, these small companies carry idiosyncratic risk (company risk) that can result in major under-performance, even in a bull market. If you’re gonna buy individual stocks, buy companies that have impassable moats, scant competition, huge growth, and very large market caps – my favorite stocks that meet this criteria are Google and Facebook. If you want greater returns, use some leverage in the S&P 500, because you are still following the market and there is no idiosyncratic risk.

Another common theme in the comments as well on other sites such as Captain Capitalism is that the U.S. economy is in a monetary bubble that is on the verge of collapse. The system won’t explode because it’s blessed by the smartest minds in the world. Also, America is a safe haven, so if things start to get rocky, money will inflow into treasuries, which eliminates the fear of hyperinflation so many fear. Ironically, the fear of hyperinflation will be deflationary, although this only works for large economies with reserve currency status such as Japan and the U.S. There really is no crisis since the treasury can roll over its maturing debt indefinitely. As shown below, the good news is interest payments as a percentage of GDP is very low:

More GDP growth would make it worse because it would increase borrowing costs, due to rising rates. It’s better to have cheap money to fuel M&A and buybacks than too much employment and economic growth.

Also, the U.S. dollar has outperformed most currencies since 2009 and, over the past 100 years, is one of the few currencies to not be completely destroyed by hyperinflation. The dollar technically may have ‘lost’ 90% of its value since the 1900′s, but a dollar has much more utility as well. Realfactbias.blogspot.com does a good job debunking this myth:

Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

All of south America, most of the Middle East, Africa, Russia – all have political instability and or lots of inflation. Turkey had to cancel its old currency in 2005 because its Lira become toilet paper. Another example, Russia, like many developing economies, has a long history of hyperinflation and political upheaval, which creates a lot of risk, that in my opinion, even a very low PE ratio is insufficient to overcome. In 2008, Argentina nationalized savings accounts. Now they are defaulting again. Last year, Cyprus gave bank depositors a 10% haircut. The Venezuelan Bolívar is in the toilet, having lost some 97% of its value relative to the U.S. dollar:

Predicting bubbles has become the new pastime of the commentariat. Liberals said the Facebook IPO was for suckers at $38, now, just 2 years later, the stock is at $68. So much for that ‘obvious’ bubble. How about twitter, which they said was a bubble in 2008 and now is worth over $25 billion. Same for Snapchat, Uber, Instragram, and many more. Even if the valuations are overextended, they have risen so much since being labeled a bubble, the term has no predictive value and, for all intent and purpose, is meaningless. It’s become the reflexive explanation for any asset that is rapidly rising.

It’s the reactions to the perceived bubble that has political connotations. To free market capitalists such as myself and others, a rapid rise in asset prices is a function some sort of supply and demand and should be let alone. The left, on the other hand, sees it as unsustainable and wants to take preemptive action to stop it, so that people don’t get ‘burned’. From years of observation, I’ve noticed a tendency among leftist types to call everything either a bubble or a crisis, and to dismiss the people who invest in these appreciating assets as ‘irrational’. The perfect investment for liberals is collecting pennies in water jugs because, after 100 years, you still have the name amount of money, precluding the possibility of any bubbles or irrationality. It’s rumored the liberals have so many pennies stockpiled – dating as far back as the 1800′s – that if they were all spent today, the fed would have to raise rates tomorrow. Liberal babyboomers will bequeath trillions of pennies to their children, possibly spurning the greatest economic boom, the likes of which have never been seen before.

Grey Enlightenment vs. Dark Enlightenment

The ‘Grey Enlightenment’ is similar to the ‘Dark Enlightenment’ in terms of its belief in biological determinism and the social hierarchy or caste system that arises from it, which goes against the welfare liberal ideal of egalitarianism. We differ in that our approach is more descriptive (positive) than prescriptive (normative), as well as taking a more pragmatic approach that maximizes utility and economic flouring for the top 1%, or what we call the smarties or cognitive elite. The society we envisage though these posts is inevitable or already occurring; we’re merely bearing witness to the unfolding of events, or the world as it is – with some suggestions on how to make it better such as adoption of eugenics. However, we believe America will adopt a eugenics program within the next fifty years to address the growing entitlement problem, without the need for a revolution – although implementing such a program now would be better than waiting.

The Dark Enlightenment generally opposes the mixed economy and democracy and wants to upend the entire thing, to be replaced with a ‘neo autocracy/monarchy’. To some extent, that’s where society is headed; no revolution or ‘end times’ is necessary, and only the naive believe America is or was ever a democracy, so there is no need to expunge something that only exists as a figment of the imagination. The ‘cathedral’ of liberalism and moral decay, while possibly irksome, doesn’t hinder the ambitions of the cognitive elite. The Dark Enlightenment would lump social media such as Facebook, Instagram, and Twitter and most TV programs in with the ‘cathedral’ and should be purged. We argue there are benefits to placating large portions of the low-IQ population with easily digestible entertainment – most notably, a lessened likelihood of revolt.

Essentially, the major difference between the two ideologies is that the Dark Enlightenment seeks revolution to change the fundamental institutions of society, whereas we want to keep the status quo, albeit with gradual changes along the way. Being a ‘member’ of the Grey Enlightenment doesn’t require much commitment or undertaking a large ideological leap of faith because it’s very similar to the society we have today, and most of our ‘beliefs’ are self-evident.

As an example of the differences, the fed and most forms of centralized government are anathema to the ‘reactionary right’; however, from a pragmatic/utilitarian perspective, we (Grey Enlightenment) argue that the 2008 bank bailouts and the various QE programs that followed were a success and a necessity, by creating an environment conducive to the creation of wealth and the flourishing of the cognitive elite. In a technocratic form of manifest destiny, in behooves policy makers to create policy that enables the best and the brightest to fulfill their full biological potential or destiny; the bank bailouts accomplish this – in addition to deregulation, low taxes, low interest rates, and QE. Six years later and stocks keep going up; no doubt the bailouts helped. Silicon Valley is the center of the universe. Home prices in the Bay Area keep going up. TARP was fully repaid as early as 2011, and the treasury turned a profit. As measured by subsequent gains in the stock market, real state, and overall economic activity – both and the US and abroad, one could argue that the bailouts had the best ROI of any government program.

Stock Market Surge a Victory for Biological Determinism

Yesterday, an airplane blew up. Today, it’s the accounts of anyone that shorted the market thinking this was anything but a blip. I wrote that the sell-off would be a good buying opportunity, and sure enough it was. All the major indexes recovered yesterday’s losses. Wealth spreading liberals lose again. It must suck to be poor and stupid. Dow 18,000 end of year minimum. S&P 500 going to 2,000. Major pain at the pump going to get worse. Obama’s polls will keep falling, and the dems will lose many seats in the midterms.

The market keeps going up because of the economic value created by smart people and to reward the smart people for the value they create – a virtuous cycle. The tireless consumer -both in the U.S. and abroad – also plays a major role. Despite the best efforts by the liberal media to scare people into not spending, the consumer refuses to roll over. Outside of the doom and gloom media, no one cares about the airplane or Putin. Smart people will keep making money and innovating. Rich people will keep buying Bay Area homes.

Biological determinism means those who are cognitively unfit to thrive in this economic boom and hyper-meritocracy will fall between the cracks. This morning, watching this TED talk about the predictive value of standardized tests reassured me that the markets would surge, because smart people rule the world and they won’t let the market fall for very long. When taken to its logical extreme, the implication of the video is that below a certain threshold, you are unworthy of life – except for consumer spending and some forms of menial labor.

The left wishes this weren’t so, but the evidence presented in this talk is insurmountable.

The good news is that even these low IQ poor test-takers can contribute to the economy. In today’s economy, economic value is created in many ways – some not so obvious. Uploading pictures to Facebook, tweeting, taking selfies with snapchat, racking up points on Candycrush – these activities do create economic value, and millions of Americans, including the unemployed of mostly low IQ, use these services to consume, communicate and whittle away the time. The companies of these aforementioned activities are worth billions, so there is a lot of economic value being created through social media engagement, even though many people dismiss it as a useless waste of time.

Buy the Dip on Ukraine Fears

Stocks tumble 1.2% and volatility surges 40%! as another Malaysian airplane goes down, allegedly by Ukrainian Rebels. While this turn of events could technically mean I was wrong about Russia not being a big deal, there would have been no way for anyone to have made a profit had they bet against the market or went long volatility following Putin’s invasion of Crimea on February 27th, 2014. So while you can say ‘I told you so’, you have no money to show for it. The S&P 500, for example, is 125 points higher since the invasion. A fund that goes long volatility is still 25% lower than on Feb. 27th, even after the huge spike today. To understand why this is, when you go long volatility you are are essentially buying an insurance policy in the anticipation something bad will happen. This can be replicated with funds that allow you to be the insurer or the insuree. Due to exponential decay, after many months, you will lose a lot of money if nothing happens. The fund that sells insurance or what traders call volatility has done very well – up over 400% in four years. You can buy and sell long, short and medium term volatility or ‘insurance’. Longer term volatility is less sensitive to market events, because of the tendency of volatility to revert to it’s mean over the long term. Let’s pretend the spot or instantaneous volatility (called the VIX) is at 12, which is low relative to the historical average. Because 12 is so low, many people think that volatility will rise in the next month to maybe 13 or so. Because you cannot go long the VIX itself, you can go long the 30-day volatility fund (also known as the short-term fund or VXX), but at the end of the month if the spot volatility stays at 12, you will lose 12/13 or 8%. This is called the contango. The fund that replicates the selling of this insurance benefits from contango and is up 8%.

To lean more about trading volatility, I recommend these sites:

sixfigureinvesting.com A lot of good content here that explains contango, volatility funds, and various strategies.

http://vixcentral.com/ To see the contango of the different contracts

http://en.wikipedia.org/wiki/Volatility_%28finance%29

Here is the performance of a fund that sells medium-term volatility:

Up about 300% since 2011 versus 60% for the S&P 500

On the other hand, the fund that goes ‘long’ medium-term volatility has lost about 75% of its value.

Anyway, the sell-off wrought by this downed airliner is just anther buying opportunity. Going back as far as WW1, there is not a single instance where military and foreign policy conflict resulted in a deep, prolonged slump in stock prices, including and not limited to: two world wars, Vietnam, Mogadishu, 911, Iraq civil war, Iraq–Kuwait war, the Cold War, Cuban Missile Crisis, and many more… Google just reported another great quarter. You think the people in the Googleplex care about Russia, besides as a conversation piece? How about Facebook and Spanchat. No one losing sleep over there, either. As Obama the empty suit threatens sanctions, Putin will laugh it off. Same for Wall St.. In a few weeks no one will care anymore. No matter what happens between Russia and Ukraine, people will still be clicking Google ads and posting pics on Facebook. They will be taking selfies with Snapchat and playing Candycrush. They, the consumers of social media, are the heroes of the economy and America, not the liberals who fan the flames of crisis to make the market fall.

Blogging and Value

If the market is open, there’s a strong likelihood it will be positive – and indeed it was, with the S&P 500 up another seven points. That may not seem like much, but yesterday Janet dog-faced ‘Yeller’ Yellen, stepping aside from her assigned duties of regulating the money supply, suggested that social media and biotech companies were overvalued. The market fell, only to recover completely as of today’s close. Just anther buying opportunity, because let’s be honest, the left has been calling web 2.0 and stocks a bubble forever and they keep being wrong. Their credibility is shot, so Yellen, for all her fame, only got the S&P 500 to fall all of three points yesterday. Rich, smart people rule the world. This is is the state of America today and for all of eternity. Those who suffer the misfortune of betting against America, which includes shorting the stock market and treasuries, will be doused and lit ablaze – or at least they will lose a lot of money.

Matt Forney of mattforney.com celebrated his 5th blogging anniversary. From what I gleaned from some of his posts, he has a measured, soothing writing style. Instead of WRiTInG likE ThIs!, he releases the torrent of ideas swirling in his head in trickle, instead of like an uncapped fire hydrant. The one thing that struck out is how one of his 2013 posts, The Case Against Female Self-Esteem, went super-viral a few months ago, and yet his blog, for whatever reason, doesn’t get many comments for his latest posts. He writes:

This year was also the one in which my writing exploded into the mainstream, when “The Case Against Female Self-Esteem” went viral on Tumblr, Twitter, Facebook and a million other sites. On October 8, I busted my previous single-day traffic record by getting over 80,000 hits, then broke that record the next day when I got just under 170,000 hits. In fact, I got so much traffic that my web host shut my site down for nearly a full day due to all the havoc the whiners were causing. My article also inspired countless death threats, tear-filled responses and impassioned YouTube rants.

I estimate he probably got up to a million hits from that post alone, but his most recent post got only got five comments. An earlier time he want viral, he got 2,000 comments. Another time, as recently as April 2014, he got over 200 comments for a post about the ‘manosphere’ being dead and how we all killed it, but where did everyone go? The problem is viral content seldom seems to translate into a return readers. Out of peer pressure and curiosity, they click and skim, but don’t stick around. While Matt does seem to think of himself as a minor celebrity, for comparison, earlier versions of this almost unknown, insignificant blog got around 1-5 comments per post.

Many blog gurus pride themselves on good writing, captivating titles and pretty pictures, thinking it will make a difference or believing that this is what readers want. Maybe it does a little, but perhaps all that stuff is overrated. Jon Morrow of boostblogtraffic.com wrote two notable posts, one about the importance of being smart when blogging and the second about the necessity of good writing. I don’t doubt these help, but it doesn’t explain the the success of celebrity and recreational blogs, which usually lack those attributes.

As a thought experiment, imagine someone has ‘rain man’ like abilities to predict the day-to-day direction of commodity prices, but is otherwise barely literate, can’t write beyond a 3rd grade level, and outside of his specialty of picking commodities – has the intellectual depth of a wading pool. He knows nothing about history, art, philosophy, etc. He decides to start a blog to broadcast his picks. Even though his writing is atrocious and riddled with every conceivable error that would make smart bloggers want to punch the screen, he would be a very popular blogger. Millions of people would flock to his blog to make money, including even the smart bloggers. Scientists, doctors, lawyers…everyone – because who doesn’t want effortless money, like in case you get sick, retirement, or want to add-on to your home? By providing value in the form of 100% accurate commodity predictions, he becomes popular, terrible writing notwithstanding.

Consider HBDchick. Her blog entries are a concatenation of uncapitalized ‘sentences’. The rest of the grammar is correct, but for reasons unknown, she refuses to use capitalization, and yet her blog is very popular. Maybe she has so many good ideas and is in such a hurry to post them that she cannot be bothered with capitalization, but that doesn’t explain how the rest of the grammar is correct, including dashes and a very through array of references mixed with the text. Her blog breaks all the readability rules the gurus tell you about, and yet she has a very large and devoted readership. How does this happen? Perhaps people gravitate to authority, of which she clearly is for HBD matters. Maybe people find it useful, like they are getting information that isn’t readily found elsewhere. Or they feel like the are part of a special social group.

Untimely, success at blogging boils down to creating useful value or name recognition and less about finesse and viralness. Or maybe other factors such as cultivating a movement, as the manosphere and HBD has done. A celebrity, like the savant commodity trader, doesn’t need to write well to succeed at blogging. But you don’t need to be either to create value. The question is, how will you create value?

The Greatest of Times?

Despite dysfunction in Washington, an empty suit in the Oval Office, and a political class that is tearing itself apart, people are still getting richer than ever in Silicon Valley and on Wall St. We’re still living in the greatest of times. As the market closes at record highs, more wealth was created in the last five years during this bull market than any earlier five year interval in the history of human civilization. The world is awash with more liquidity than ever before and with the U.S. GDP at $17 trillion dollars, what are you going to do to claim your share? Look at Snapchat. From conception to a $3 billion valuation in less time than it takes someone to graduate college. In today’s meritocracy, there are no miracles, guarantees or excuses – only decisions, actions and their consequences. Smart college graduates will join the creative class – an elite few that can be the business, technology, and economic leaders of tomorrow. In a world is ruled by dinosaur bureaucrats they are round pegs in the square holes. They can mold the economy instead of being subjugated by it. They can control the direction of the national dialogue instead of being spectators. What makes the American experiment – our constitutional republic – a success is how it rewards people that create value through the free market. But America also has a large welfare state and a growing parasitical class to draw from it.

America’s underclass are like the Zerglings in Starcraft. They are weak, but there are a lot of them and they reproduce quickly – not by the consumption of crystals like in the the computer game – but by the consumption public resources that enable their reproduction. Instead of swarming your base, they swarm the welfare offices, hospitals, and public schools. They sometimes create crime, diving down real estate and causing the rich to flee. What they lack in power, they make up for in vast numbers – millions upon millions of them, a growth rate that shows no sign of slowing. Romney alluded to this trend in his remark about half the country not paying taxes. Looking for handouts, they (the parasites) vote in droves, and, in the process, put wealth spreaders like Obama in office. This is why Jeffersonian Democracy model of making voting accessible for the masses and the separation of church and state is wrong, as opposed to the Federalists of John Adams and Alexander Hamilton that wanted only economic stakeholders to have influence in the appointment of leadership roles. If anything, we need to make voting harder, not easier.

Can America still remain exceptional with this underclass headwind? Yes, only because the top 1% – the cognitive elite – are productive enough to compensate. The cognitive elite, including the creative class, create the greatest companies in the world like Google and Facebook as well run the day-to-day affairs of the economy – making America a safe place foreigners want to invest in, which helps keep rates low when other countries struggle with high inflation and civil unrest. That’s why we need supply side economics, to give the creative class financial incentives to keep innovating. That’s why we need more STEM majors. That’s why we need more high-tech immigration, in order to counter the economic drain of the overpaid and government dependent, while benefiting shareholders. George W. Bush famously remarked that America is where families find hope, where wings take dream. It can still be that place.

Rick Santelli and the STEM Bailout

Rick Santelli loses it on-air:


Rick Santelli, like many other pundits, incorrectly predicted there would be hyperinflation as measured by bond prices, but to some extend he is right about inflation in the numerous services that aren’t tied to the treasury market such as healthcare, tuition, air travel, gasoline, food, TV & internet bundles, and so on. The bond market tells us how much demand there is for bonds, which is closely tied to inflation, but doesn’t give the full picture.

The fed does not need to raise interest rates to prevent bubbles. Treasuries keep rallying due to the huge demand by governments and institutions for safe, low yielding paper. All inflation indicators, except or food and some others, are still very low. The damage from trying to pop an alleged asset bubble is worse than letting it progress on its own.

Rick Santelli is right about the loser homeowners – people who bought more home than they could chew, bought homes in speculative areas, didn’t read the fine print before signing the mortgage or were unqualified. Mistakes were made, but it’s counterproductive to blame the fed, regulators, and congress – the very people that tried to contain the financial problem. The left’s solution is to bailout the irresponsible loser homeowners and let Wall St. fail. A while back, I had a proposal to let delinquent homeowners keep their homes under the condition that they have to be boarded up in it, like during the Black Death.

Nature-ism or biological determinism means individuals are born with original (cognitive) capacity, and while practice can help make people better at certain tasks, tasks outside of the capacity will be impossible – regardless of how much practice one does. We need polices that help winners, not bailouts and welfare for the losers that create no economic value.

Therefore, I propose a STEM bailout: graduates in STEM degrees and or individuals with an IQ above a certain threshold are eligible for a monthly government stipend. Many smart people are unable to use their full intellect because they are too busy trying to pay the bills; the stipend helps solve this by allowing smart people to focus their attention on making apps and other actives that create value, and being smart, their odds of success are greater than a typical unemployed individual. This is just a tentative idea; maybe someone else can flesh it out.