Atlanta, GA

March 28, 2026

Nobody knows how to make a pencil. But many probably think they could.

Just wrap wood around some lead, add a rubber eraser, a touch of metal, and a coat of lacquer…and voila!…you’re ready to take a standardized test or tackle The New York Times crossword puzzle.

But building a pencil is impossible for any one person to do. Even (or especially) the most ardent busybody has no idea how to make this superficially simplest of things.

Amazing Matrix

Creating a single pencil requires a complex lattice of financing, digging, drilling, growing, picking, pulling, packaging, shipping, trucking, buying, selling, and marketing among millions of people across every continent. Almost none of those engaged in these activities will ever meet one another or know each other’s names, and few are even aware of the thing they’re unwittingly helping to create.

This amazing matrix of seemingly uncoordinated activity was brilliantly described in the 1958 “autobiography” I, Pencil: My Family Tree, as Told to Leonard E. Read.

I first read this insightful essay in 1990, not long after I’d moved to San Francisco. The parable changed my life. It provided a valuable glimpse into how the world works, which is what economics (when done correctly) is supposed to do.

The origins of the commonplace pencil are extraordinarily complex, with components that are remarkably diverse. Were it applying to an Ivy League college, administrators could find ample grounds to admit or exclude it based on a wide array of assorted ancestry.

One of its fathers, as we all might guess, is a tree. But by what other parents was it conceived? What collection of saws, trucks, rope, and rubber were needed to commence the courtship, and plant the seed? And what mineral or material antecedents were conscripted and combined to create these essential ingredients?

As “the Pencil” put it, think of all the mining and metallurgy that went into making steel for the saws, how much growing and weaving was needed to make the rope, and what level of agricultural output was required to feed men in the logging camps when each day ended, and to wake them with coffee when the next one began.

Even the simple eraser is a marvel. It requires rapeseed oil from Indonesia, that it be reacted with sulfur chloride, and then combined with several vulcanizing and accelerating agents from around the world. Pumice from Italy enters the mix. Rubber is added for binding purposes, and cadmium sulfide provides the color.

No single manager, politician, or department secretary has any idea how to coordinate this complicated process for creating this one small part of a humble pencil.

But their presumptions go well beyond a mere eraser. To paraphrase Oscar Wilde, you’d have to have a heart of stone to hear their pretensions and not laugh.

Iron must be mined and smelted to build the ships that carry the requisite commodities. Oil needs to be drilled, extracted, and refined to fuel the vessels and trucks that haul those raw materials to far-away ports, or to take the pencil’s ancestral logs to distant mills.

And who builds and runs the millworks? What processes, materials, and manpower are brought to bear to construct any one of these indispensable facilities?

Then there’s the “lead”, which includes graphite mined in Sri Lanka, and that is placed in paper sacks and steel ships guided by harbor pilots and sophisticated navigation systems that are themselves the product of half a billion inputs from every corner of the world (and a few outside of it).

To bring these ingredients together so they can be formed into a pencil and brought to market, trucks and trains made of infinite inputs from countless countries must ride roads and rail that themselves derived from an inordinate web of engineering, financing, manpower, mining, and materials to eventually connect distant countries, great oceans, and domestic cities, towns, and villages where a vast array of intricate interactions combine to create a plain pencil.

The Least of Our Problems

You get the idea. A properly functioning economy and the supply chains that enable it are undeniable marvels. Yet they are incomprehensibly elaborate, and resist central control, political planning, and military misadventure.

It wouldn’t take much sand in the gears to shackle the whole shebang. How much of a Sahara could be caused by corking Hormuz? Dust storms are already swirling, impeding intricate systems on which markets rely.

From Asia to Australia, fuel and food are running low, and rationing has begun. Europe receives about a third of its jet fuel and a fifth of its diesel from the Persian Gulf. How long before trucks sit and planes stay parked? In America, moving vehicles are also paying more:

Manufacturing may also idle. Helium is byproduct of natural gas processing, and is essential for cooling silicon to make chips. If a pencil is complicated, how complex is anything containing semiconductors? We may find out.

Qatar accounted for a third of global helium production. This was erased when the strait was shuttered, specialized containers were stranded, and the Ras Laffan gas complex was disabled by Iranian retaliation for US attacks. This supply can take years to replenish.

Up to half the urea, ammonia, nitrogen, phosphate, and sulfur for fertilizer come from the Middle East. North American farmers are running short, and are reluctant to plant. If they don’t soon, they won’t at all.

As too few asked in 1914, “how long can this continue, and how far could it spread?” The US is sending more Marines to the Middle East, and asking soldiers to get affairs in order.

Russia will ban gasoline exports as of April. What happens if aquatic arteries at Malacca, Panama, Denmark, Bab el-Mandeb, or Suez are suddenly sealed? When routes and resources are strangled, transit stops, the world chokes… and people starve.

Under the circumstances, ignorance of how pencils are made seems like the least of our problems. But indifference to it is how they’re caused.

JD

Atlanta, GA

November 25, 2025

We’re inundated with “information”, most of which doesn’t matter or is deliberately misleading.

But occasionally, like a glistening diamond in a municipal dump, an article shines. As we approach Thanksgiving, we’re grateful to Michael Green for shedding some light.

This week Americans gather to give thanks. Rising numbers wonder why they should bother.

It’s easy to be oblivious to their plight, especially when “economic indicators” assure us everything is great. Indifference comes particularly easy to those who’ve not tried to start a family, buy a house, pay for college, or meet a medical emergency in the last twenty years.

The government offers ample data that disguise these challenges. Yet “official” statistics are often issued as propaganda to convince constituents their rulers are wonderful.

GDP says little about lived well-being. Debt-levels are low-balled. Inflation and unemployment reports are notoriously understated.

Housing subsidies, student loans, and compulsory healthcare “coverage” further camouflage the cost-of-living squeeze by artificially boosting demand, constraining supply, and increasing expenses to pump profits at connected corporations.

But there’s a statistical scam that usually escapes notice. I didn’t see it till this morning, when I read an eye-opening essay by Michael Green, Chief Strategist and Portfolio Manager at Simplify Asset Management.

Line of Inadequacy

Americans (rightfully) lament a declining middle class. What they don’t realize is that much of that core is already gone. What remains is mostly a mirage.

The “poverty line” was established in 1963. At the time, food was assumed to be about a third of an average family budget.

Other major expenses—housing, education, healthcare, childcare—were either modest or marginal. In that context, the formula seemed reasonable.

To determine income necessary to escape poverty, the cost of subsistence food was estimated. Then that figure was tripled.

It’s important to recognize, as Green emphasizes, that this level reflects a line of inadequacy, not a floor of sufficiency. Being above it doesn’t imply comfort. It means barely escaping starvation.

Worse, the formula is based on food costs which… unlike other household expenses… have closely approximated the (official) rate of inflation. Over time, this has made the poverty line increasingly meaningless as a measure of privation.

Tripling subsistence grocery prices as a barometer for poverty today puts the line at about $32,000 for a family of four. Depending on the source, the average family income is between $60,000 and $80,000. No wonder politicians insist we’re living large!

Michael Green begs to differ:

“Housing now consumes 35 to 45 percent [of household spending]. Healthcare takes 15 to 25 percent. Childcare, for families with young children, can eat 20 to 40 percent.”

Unfortunately, because of the explosion of these costs, “food-at-home is no longer 33%. For most families, it’s 5 to 7 percent.” Yet the poverty calculation remains unchanged.

Green elaborates on what this implies:

“[If we] maintain the principle that poverty could be defined by the inverse of food’s budget share—but update the food share to reflect today’s reality, the multiplier is no longer three.

“It becomes sixteen.

“… [and] the threshold for a family of four wouldn’t be $31,200. It would be somewhere between $130,000 and $150,000.”

In other words, income necessary for a family of four to escape poverty is almost five times what is officially assumed. When we recall that this level is a survival line, the “disconnect” between authentic struggle and abstract statistics makes sense.

Closed Loop

Like most government measurements, the “poverty line” is an understatement that flatters public officials while making millions of Americans wonder what they’re doing wrong.

How can families earning twice the average income feel so poor? Because they are.

Two incomes are usually needed to make ends meet - or even for the ends to make eye contact. But additional earners add more expenses. They entail (among other things) childcare, a second car, and bigger tax bills. The water line rises while the swimmers sink.

This is what Green calls the “Valley of Death”, a “closed loop” that traps anyone who tries to escape.

Being above the “poverty line”, the “working class” isn’t indigent enough to receive government benefits. SNAP, childcare assistance, ACA credits, and Medicaid are reserved for those earning less than a subsistence pittance. This nudges the “middle class” to exchange the effort of the plow for the security of the safety net.

As Green puts it:

“We have created a system where the only way to survive is to be destitute enough to qualify for aid, or rich enough to ignore the cost. Everyone in the middle is being cannibalized.”

It’d be understandable if there were more grievance than gratitude this Thanksgiving. As any turkey can attest, it’s tough to appreciate a feast when you’re the meal.

But even with mounting challenges cloaked in made-up numbers, Americans continue to count their blessings. Ninety-one percent of Americans say they are thankful this year, including 97 percent of Republicans and 85 percent of Democrats.

It’s comforting that under societal strains and financial stress, so many remain attuned to what matters most.

JD

Athens, GA

August 28, 2025

Labor Day weekend is upon us. When markets open Tuesday, they’ll welcome what historically is the most tumultuous time of year.

September, as Mark Twain allegedly observed, is the most dangerous month to speculate in stocks… “along with July, January, April, November, May, March, October, June, December, August – and February.”

Si…

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Huntsville, AL

July 31, 2025

We’ve noted the tendency of government busybodies to make, magnify, or invent messes… and then “solve” those problems by making them worse.

In doing so, the do-gooders enhance their status, inflate their finances, and divert attention from more serious shenanigans happening off-stage. Today we retract the curtain, and shine a l…

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Atlanta, GA

July 18, 2025

Imagine buying futures on the number of inches in a foot, hedging how many quarts are in a gallon, or speculating whether the number of degrees needed to boil water will vary from one day to the next.

Suppose you were building a house. On the day…

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Atlanta, GA

May 6, 2025

Inspired by reading a wonderful book, my friend Matt Smith has written an eye-opening essay.

I read David McCullough’s Path Between the Seas several years ago, while sailing thru the Panama Canal. As a civil engineer reading about what I was watching out my window, the account was fascinating. As an economist and historian, it was illuminating.

But Matt shed light where I hadn’t looked. McCullough was a terrific storyteller who could lavish intricate details without encumbering a tale. Matt found one that I’d somehow missed despite it being so shocking:

“In The Path Between the Seas, David McCullough describes life in the Panama Canal Zone around 1910. He notes that a junior civil engineer—just 2 or 3 years into his career—was paid $250 a month, or $3,000 a year.”

To modern ears, this sounds like a pittance. But that’s because fiat money has distorted our sense of scale and notion of value.

Thick Fog

The canal opened on August 15, 1914… six months after imposition of the income tax, eight months after the Federal Reserve opened its doors, and fifty-seven years to the day before Nixon cut the dollar’s last link to gold.

But in 1910, as Smith reminds us, the dollar was gold. Each one represented a twentieth of an ounce. And none were taxed as income. Our engineer on the isthmus kept everything he earned.

Eighty years later, I was a civil engineer working on another iconic landmark, albeit with more concern for thick fog and salt air than oppressive heat and endemic malaria. While my predecessor in Panama was paid his quaint salary to carve a canal, I received about twelve times as much to help retrofit the Golden Gate Bridge.

Or did I? Matt discovered that maybe the fog is even thicker than we thought.

Unlike my counterpart on the canal, the government took about a third of my earnings. But direct taxes were the least of the larceny. The real robbery came thru inflation.

In gold terms, the dollar had already deteriorated by 95% from the advent of the Fed to the day I received my engineering license. It’s lost another 90% since. Half its value vanished in the five years since Tony Fauci became a household name! That last nugget seems impossible, but isn’t a shocker to anyone who shops.

But why? What’s going on?

The Real Schmuck

I was initially paid about $35K to be a civil engineer in one of the most expensive cities in the country. For that, I could afford a decent apartment (no roommates) in a nice area. I kept a car with its associated costs, could afford to eat out regularly, travel occasionally, and to save a portion of every check.

Not bad. Surely I was making more than some turn-of-the century schmuck on the canal?

As Matt details, at $20/oz the canal engineer’s $3,000 salary represented 150 ounces of gold. I arrived at the Golden Gate Bridge two decades after the last vestige of gold was stripped from the dollar. During that time, the dollar declined about 90% relative to gold.

After taxes (which the canal engineer didn’t pay), my nominal salary was about eight times what I would’ve made helping design the passage thru Panama. But my real pay (about 60 ounces of gold) was only a third as much.

I’d have needed to almost triple my gross salary to match the real take-home income of my Panama counterpart. Sound money reveals the real schmucks. Which is why issuers of phony currency want to keep the curtains drawn and the vault sealed.

But Matt continued to pick the lock, and what he found was truly startling. Today’s entry-level civil engineer receives only about a third the real pay that I did! At today’s average starting salary of $80K, he retains about $56K after taxes. This represents fewer than 19 ounces of gold.

By contrast, the 150 ounces the canal engineer took home would equate to $450,000 in 2025. This implies almost a 90% cut in real pay for entry-level civil engineers since 1910, despite a nominal gross salary that’s grown more than 25 times.

As Matt reminds us, those currently earning more than $407,000 comprise the top 1% of US earners. That would include a junior civil engineer from 1910, who was 10% above this threshold. Today’s junior civil engineer is 80% under it.

The Real Culprit

For several decades… and certainly in recent years… most of us have sensed something is wrong, even if we can’t put a finger on it. Matt Smith does so in his essay, and what he reveals takes us aback.

The proliferation of fake money hasn’t simply made things more expensive. As I’ve detailed elsewhere, it’s made us poorer… culturally, materially, physically, and spiritually. And it’s done so thru the insidious grift of a disorienting dilution.

A corrupt currency robs us not only of our wealth and well-being, but of the ability to recognize the weapon being wielded. Aspersions are cast on “greedy” corporations, “selfish” consumers, perfidious foreigners, and other convenient scapegoats that divert attention from the real culprit.

For more than a century, we’ve measured “wealth” thru the opaque prism of fiat money. As with any flexible gauge, it’s a flawed metric that warps our idea of what things are worth. It’s like reducing the number of inches in a foot to convince ourselves we’re getting taller.

Without a reliable anchor to moor its money, society drifts, until it sinks. Thanks to Matt Smith, we have a better sense why we’ve been taking on water.

JD

Atlanta, GA

April 16, 2025

"I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain."

- John Adams

Civilization grows as time preference shrinks.

Paleolithic man foraged and hunted for his daily provision. Planning didn’t extend beyond the time required to consume his catch. Once satiated, he started seeking his next meal.

Tomorrow is irrelevant if we can’t feed ourselves today. The history of civilization is the story of how man made tomorrow matter.

Free Market Money

We’ve frequently fingered funny money as the cause of modern maladies. It depresses purchasing power, distorts the economy, diverts resources, queers investments, and encourages conflict.

But that’s the surface damage that’s easiest to see. The rot goes deeper, corroding the foundation and fabric of functioning society.

Sound money abets delayed desire. If people are confident their money will retain value, they are less inclined to rid themselves of it today, and more willing to invest it for tomorrow. Doing so cultivates capital, which nourishes production and multiplies wealth.

This is how civilization develops, grows, and prospers. It’s how and why it thrived under the nineteenth century gold standard…roughly between the Congress of Vienna and the Guns of August…when industry bloomed, innovation blossomed, prices fell, quality-of-life rose, and poverty plummeted.

By the late nineteenth century, the United States were essentially on a classic gold standard. During this period output flourished as prices fell.

Modern economists would have us think that’s impossible. They assume declining prices cause depressions.

But that’s only because in their fake money system, falling prices are result of popped bubbles inflation caused. Deflation is the cure, not the disease.

When you have a money that can’t be reproduced on a whim, people can be sure it will retain its value over time. This makes them comfortable saving it and investing it, which expands the capital base and increases production. Doing so with stable money means prices fall.

This is what should happen in a free market, sound money environment. And it did.

Until the Fed was founded.

Worse Money, Worst Wars

At that point, the US took a detour from sound money road. Since 1879, dollars had been backed 100% by gold. But Federal Reserve notes replicated the Bank of England’s 40% gold backing.

This number rapidly declined.

By 1933, no Americans could own any gold. In 1971 international gold redeemability was eliminated. Twice in four decades, the US government defaulted on its debt.

Since then, the world has drifted on a floating abstraction. These are the counterfeit currencies we’re all commanded to accept. They depresses purchasing power, distort the economy, divert resources, and encourage conflict… starting with the First World War.

In fairness, that disaster would’ve occurred without the Fed. But it wouldn’t have been as catastrophic.

The Fed allowed the US to fund the Allies and enter the war. This tipped the scales toward a Carthaginian Peace. Rather than salt the soil, Versailles poured manure… which allowed subsequent catastrophes to take root.

It’s no coincidence that since 1913, calamitous wars have been commonplace. But the fiat curse was true before the Fed too.

The Bank of England was founded to fights wars against Louis XIV. A century later, Napoleon established the Bank of France to fund his own conquests.

The War Between the States was as horrific as it was because both sides printed paper to keep it going. Same with the War for Independence, which bankrupted the nascent states and Bourbon France… helping ignite a revolution there.

The Fed was following a cleared path. But where else did it lead?

Ceiling Drop

There’s a natural rate of interest on the market, reflecting an aggregation of individual time preference. When capital is abundant, time horizons (and interest rates) fall. When the capital stock is low, time preference rises, bringing interest rates with it.

This discourages consumption and entices investment, erecting the scaffolding by which civilization’s structure stays sturdy. Free market interest rates are the joists and beams of the economic edifice.

When central banks artificially lower them, society’s ceiling drops. People are enticed to consume when their natural tendency is to replenish.

Rather than replace the wiring and restore the walls, society is encouraged to strip the copper and steal the stones. Over time, as the metal rusts and the mortar cracks, centuries of construction begin to collapse. Eventually, the roof caves in, burying society under the rubble.

Bad Striptease

Slowly and subtly, amid the compiling debris and ongoing decay, attitudes shift. The culture seeks quick fixes rather that root causes. Short-cuts are more acceptable when long-runs seem less relevant. When their money dissipates fast enough, today is all people think they have.

Under Keynesian influence, like a bad striptease, the dollar spent six decades slowly shedding the chastening garment of constrictive gold. On August 15, 1971, the last tassel was tossed aside. In terms of gold, the dollar has lost 98% of its purchasing power since.

Modern money is a melting ice cube and a hot potato. It rewards borrowing, punishes thrift, and makes suckers of savers. Whereas hard money encourages thrift, capital investment, and reduced time preference, fiat money promotes short-term thinking and perpetual debt.

That’s because fiat money is debt. It comes from commercial banks extending credit and making loans. It disappears when those loans are called in, repaid, or go bad.

As in any counterfeiting ring, those who are nearest the tap get the most to drink. Everyone else simply gets soaked.

The fiat racket is a funhouse mirror that makes cash a liability, pretends opportunity costs don’t exist, and assumes time preference (which free markets reflect thru interest rates) works in reverse. Success in this system entails borrowing money to accumulate assets, or issuing credit to get others in debt.

The pseudo-economic “rationale” for this scheme is that a diluted, debt-addled currency will discourage saving and stimulate risk to promote “investment.”

But this conflates credit with capital. Investment requires (but is not synonymous with) savings, which can only accumulate by deferring consumption. Extending loans at arbitrary interest creates no new capital. It merely reallocates the existing pool to less desirable projects.

But the funny money pox does much more than raise prices, enable wars, cause mal-investments, punish savers, and create boom-and-bust cycles (bad as those are). It also has cultural consequences. The planks of fiat currency sustain (and spread) infestations that rot every aspect of life.

Deadbeat Dad

Money may be the mother of commerce. But it can also be a deadbeat dad. When it goes, everything goes.

It leaves behind a dilapidated, disposable world that looks a lot like the one we endure today…a present-oriented orgy of debt, debauchery, mass consumption, increased crime, broken families, destructive fads, endemic corruption, and capital decay.

How does shady money cause such a calamity?

Free market, hard money prices aren’t merely numbers or amounts. They’re information, and a communication mechanism.

Dodgy currency jams the signal. The static enables the State to meddle in every aspect of life, accruing benefits not to those who provide productive services in a thriving society, but to connected connivers who are experts at playing political games.

Delusions overflow like parking lot dumpsters. Sketchy money disguises the natural necessities of giving to get, rendering to receive, and working for reward. Being phony cash conjured from thin air, it provides the tempting illusion that trade-offs are irrelevant and opportunity costs don’t exist.

When consequences are camouflaged, the present moment is all that matters. So people borrow and spend like there’s no tomorrow. And they treat their health, relationships, morals, and manners the same way.

Funny money society comes to believe it can have the bender without the hangover, the fling without the divorce, the harvest without the planting, and that we can all go to Heaven without anyone having to die.

Yet death comes to us all, and to every fiat system that’s ever existed. But while it survives, it provides plenty of pavement for the road to Hell.

Family and Faith

The manners, morals, and decency that sustain civilization wither away as time preferences are buoyed on an inflationary flood. Amid the torrent, family and Faith are prone to drown.

These pillars of society are natural enemies of the predatory State. Healthy communities place kin before government, and God above it. But these are instincts ruling regimes can’t abide.

Forming a family and adhering to religion require long time horizons… from many generations to all eternity. The Faithful resist temptation in order to honor God. Parents sacrifice present pleasures to facilitate a future for their children. But also for themselves, for whom their grateful kids provide elder care.

An inflated currency inhibits families from sustaining themselves. Phony money enables the State to assume responsibilities relatives historically shouldered.

As it does, the rationale for couples to marry, stay together, and bear the burden of raising kids or to care for their elders is significantly reduced. Families separate, disperse, shrink, and subside in the shadow of fake money subjugation.

As ersatz money causes societal disruption, it provides its suppliers with excuses and diversions to cover it up. Its detrimental consequences become their own rationale to blame others for its effects, and to promote self-serving policies that the Fiat Regime wants to impose.

Drop of Sewage

Without the heavy anchor of hard money, society drifts…until it drops. It rides unpredictable swells into heavy storms, till it’s eventually dashed on the rocks of depravity, distress, and despair.

Sound money serves as a reliable benchmark, a way to preserve, measure, and appreciate value across time. Bad money, like a drop of sewage in a magnum of Margaux, corrodes civilization in imperceptible, yet undeniable, ways.

In a debt-addled fake money society, time preferences shrink, and short-term thinking prevails. By forcing rates below natural levels…like pressing a beach ball under water…central banks finagle the currency to fight the tide. But they can do this only so long before the ball shoots up, and everyone gets soaked.

Under sound money, gratification is deferred to not deprive our future selves. We increase savings, suppress primal instincts, and prepare for days yet to come.

When time preference rises, the present takes precedence. We’re more inclined to down the shot, have the affair, and roll the dice.

The Cheapest

This is reflected in our surroundings, in the places we go and way we look. Several decades ago, people dressed up to board a plane. Now they couldn’t care less how they look going anywhere. Sweats and shorts seem almost de rigueur.

Photos from the 50’s show women dressed going shopping then than they do going to weddings today. At many “formal” galas, half the men don’t even bother to wear ties.

Compare this to how (not too long ago) people dressed when invited for dinner with friends:

This reflects respect not only for others around them, but for their own reputation. Our reputation is what other people think about us. We’d only care about it in a society that looked further ahead than the next few years.

But it’s not just what we wear. It’s where we go.

Take a look around any major city in the western world. We all recognize the architectural atrocities that rose in the wake of the fake money system. Few of us admire the Brutalist affronts and insipid banalities that litter the landscape.

Banks are an obvious example. Gold standard banks were big, sturdy, and stately. Today’s bank buildings could be a renovated Wendy’s. Some probably are.

Churches used to be instantly recognizable as holy places giving glory to God. Many now look like abandoned Moose Lodges. Most schools resemble prisons, which is probably appropriate.

Aside from disorienting the public, contemporary architecture is concerned with constraining current cost. But, as with most things that matter, the best is ultimately the cheapest.

Rather than raise buildings to last for centuries, modernity erects eyesores to be (mercifully) razed within decades. The ultimate price to repeatedly renovate and replace these degraded piles far exceed that of sturdy structures built to last.

In hard-money eras like the Florentine Renaissance, Neoclassical France, or the Victorian Age, the present was ceded to honor the future. Many edifices were designed and constructed by men who’d never see (and knew they’d never see) the end result.

That’s why many of these gems are still around. They were built to last, and to ennoble. Their flimsy faux money successors are designed to deteriorate, and most serve as people-repellents while they’re here. They’re structures indicative of (and conducive to) high time-preference society.

Done to Ourselves

But it’s not just aesthetics that depreciate under a funny money regime. Other essentials decline too. By reducing purchasing power, unsound money forces people to prioritize the present. It’s better to spend now than save for later.

Over time, the inability to delay desire infects society. Why not commit crime if time is limited? What’s the point of preserving beauty if tomorrow is tenuous? Hedonism is happiness if the eternal is ephemeral.

For the first time in history, life expectancy is declining. Religious observance… an obvious deference to a redemptive future… is falling. As in ancient Rome, when the money erodes, the rest goes with it.

Yet the Romans were lucky. They had Christianity to save them. We’ve ditched that too.

Doing so may have seemed like a good idea at the time, and fun while it lasted. But now the gold is gone, and so is God.

We evicted both, and did this to ourselves.

JD

April 9, 2025

“We now know where the Trump put is.”

- Anna Wong, Chief Economist for Bloomberg

“I need to write what I think. Often, that relates to the ongoing asylum of our contemporary scene.”

- Me, this morning.

I rarely send two essays in one day. But as I noted this morning, when events warrant, I need to write.

Well… we finally got the “rel…

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Atlanta, GA

April 2, 2025

Happy Liberation Day!

Aside from our senses, what are we being freed from?

A properly functioning market? The greatest quality and quantity of goods sold at competitive rates? Producers having to innovate to excel? The ability to buy what we want without giving government a bigger cut?

Whatever deliverance we’re promised was post…

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February 22, 2025

Among the key insights of Austrian economics are that humans act and value is subjective. These observations seem obvious and uncontroversial…essentially truisms. But they’re often forgotten, neglected, or misunderstood.

Each person’s perspective is informed by innumerable variables that influence his values. An Englishman thinks a hundred miles is a long way. An American believes a hundred years is a long time. Is either, neither, or each of them right? Who’s to say?

Would a woman rather receive a diamond ring or a gallon of water? It depends. Is the lady sitting with her boyfriend on a beach, or stranded alone in the Sahara?

Some of us are willing to jump from a plane. Others can’t bring ourselves to board one. Fear of flying forces many people to drive, which puts them at greater statistical risk of ending up dead.

But they don’t care, even if they know the odds. People making such “illogical” choices are less concerned with probabilities of death than with easing their mind however long they’re alive.

Fair enough. To these people…as with those who toss salt over their shoulders or avoid sidewalk cracks to spare their mother’s back…peace of mind, even if analytically dubious, is worth looking superstitious or silly.

The “Greater Good”

Their choices may seem irrational, but they’re not necessarily unreasonable. Our basket of preferences are a blend of desires and aversions composing the unique recipe for each individual.

This is why a “greater good” is impossible to impose. This elusive concept exists only as an evolving compilation of personal preferences. No one (nor any group of people) can decree what it is, because it can only be known after each person makes uncoerced decisions he thinks will enhance his happiness.

The “greater good” is merely an amalgamation of each individual’s unique desires, which are revealed only thru action, and are otherwise impossible for even their closest friends or nearest relatives to surmise.

Much of the time, we don’t even know them ourselves! That a few elected or appointed officials could know what’s best for millions (or billions!) of people they’ll never meet is preposterous.

Passing laws prohibiting or requiring that everyone conform to an arbitrary “common interest” will require people give up something they value more than whatever edict elected or appointed officials decree.

This doesn’t improve society. It reduces standards of living (except for that of anointed authorities enforcing their own preferences).

The only way to reveal what everyone wants is to leave them free to make choices for themselves. Popular desire is revealed only thru individual decisions reflected in voluntary actions.

No one engages in activities he thinks will make him worse off, regardless whether anyone else would make the same decision.

We only do things because we think they’ll improve our circumstances…sooner or later. Each person’s preferences are relative, unique, and fluid over time. If they weren’t, exchange would be impossible.

If everyone valued everything equally, trade could only benefit one party by harming another. But since valuation varies, markets materialize…because participants believe what they give is worth less than what they get. Otherwise, they wouldn’t swap.

An Essential Insight

This is an essential economic insight, and the key theme of a terrific little book. The Secret of Selling Anything is a compilation of a couple unpublished manuscripts investor, philosopher, and two-time presidential candidate Harry Browne wrote in the late 1960s. The lessons are timeless and his message endures.

Browne asserts successful selling isn’t about being slick, manipulative, or smooth. The best salesmen needn’t be (and usually aren’t) overly enthusiastic or naturally extroverted.

Nor must they “motivate” their prospects. They merely need to discover what already motivates them. This is done by asking some questions, and understanding a few basic laws of human nature.

Foremost among these is that all humans seek happiness. Everything they do is intended to increase what Browne calls their “mental feeling of well-being”. Individuals take no action without thinking it’ll make them better off.

People are always seeking “profit”, which Browne defines as an increase in happiness by replacing one situation with another. Yet happiness is relative, and resources scarce.

Each person has different desires he thinks will improve his condition, yet no one has infinite time, property, energy, or knowledge to bring endless demand to ultimate fruition.

For unforced exchange to occur, all parties must believe they will profit. In a free market, no one will intentionally sacrifice his happiness to satisfy someone else. He may forgo physical comfort or monetary reward, but only if ceding those pleasures increases his overall contentment.

We must serve others to sustain our lives. Very little of what we need to survive is the exclusive product of our own efforts. For most Americans, none of it is.

In a higher order civilization dependent on division of labor, exchange is essential. We serve others to receive what we want. The more efficiently we do so, the greater profit (be it financial or psychic) we realize and higher success we attain.

What matters is the value other parties place on the services we provide. How much our offerings are desired is reflected in prices people are willing to pay. And that is part of what salesmen need to sell.

As a corporate pricing professional for a couple decades, I consistently tried to make this point. Regardless how beneficial we think our offering is…or how much effort we expend providing it…if potential customers find it irrelevant or objectionable, they won’t accept it for whatever compensation we seek.

How to Sell Anything

Each person’s happiness depends on the value ultimate consumers place on his services. Whatever any particular production, distribution, sales, or marketing process is worth ultimately derives from the subjective benefit end users receive.

No one buys a product. He buys the solution the product provides. Customers don’t care about a vendor’s lawnmower; they’re concerned about their own lawn.

This is one of the essential insights of sound economics, and of Browne’s book. Another is that most people ignore this point, and install their personal preferences in place of what other people want.

Too many entrepreneurs start businesses because they crave status or want wealth. But that doesn’t matter. Nobody cares.

What matters is how well businessmen can decipher pain points of potential buyers, and how many people they can assist by supplying superior solutions with quality service at reasonable prices.

If they do so, all parties will profit by the exchange. To make a sale, we must know what’s in it for the other guy, and why he should want to pay what we want to charge.

Relationships and commerce are based on mutual advantage. In a free market, no one can get without giving.

Those who understand that can sell anything.

JD

Atlanta, GA

February 15, 2025

“Sweeping tariffs and a shift away from strong dollar policy can have some of the broadest ramifications of any policies in decades, fundamentally reshaping the global trade and financial systems.”

- Stephen Miran, nominee: CEA Chairman

“We’re going to monetize the asset side of the US balance sheet, for the American people.”

- Scott Bessent, US Treasury Secretary

“Buckle Up.”

- Matt Smith, entrepreneur and rancher

Henry George observed that tariffs are nations doing to themselves in peacetime what enemies inflict during wars.

Donald Trump disagrees.

Last week, the president issued…then postponed…hefty tariffs on Canada and Mexico. He also intimated he’d apply import duties on the EU, and imposed a 10% levy on products from China.

This week, he announced a 25% impost on foreign aluminum and steel, which appears to impact Canadians the most (or the Chinese, to the extent they reputedly ship steel to Canada and Mexico for laundering to the U.S.).

More tariffs are reflexively threatened based on how countries behave.

Dresden and Detroit

What’s going on here? Is this more “Art of the Deal” 4D Chess?

Or are these tariffs unforced errors, revivals of ideas so imbecilic even most credentialed economists can see the stupidity?

This administration assumes (or wants us to believe) that other governments have been ripping us off. But China, Canada, and Mexico are mere scapegoats. The real enemy is within… mostly in Washington, DC, northern Virginia, and southern Manhattan.

Corporate boardrooms, in conjunction with their purchased politicians, the Fed, and Wall Street are the real source of America’s woes. These are the entities that hollowed Cleveland, St Louis, and Baltimore, and shipped American manufacturing overseas.

If we look at Dresden and Detroit in 1945, then take a glance at each today, we know something went terribly wrong. It started with corporate boondoggles like the Marshall Plan, but continued with Cold War escapades like the Korean “conflict” and a catalogue of coups.

But, as always, to connect the dots we must follow the dollars. And especially what backs them… or doesn’t.

Monetary Resets

During the late 19th century, the U.S. prospered under a genuine gold standard. This lasted till the advent of the Fed in 1913.

A Potemkin version emerged after the First World War. But gold exchange rates in Britain were unsustainable, prompting the Fed to print money to help prop up the pound. This amplified the Roaring ‘20s boom, which collapsed when the hot air inevitably left the balloon.

Under the post-war Bretton Woods system, the US dollar was tied to gold, with other currencies tethered to the dollar. But “Guns and Butter” became scissor blades that cut the ropes.

As deficits mounted during the Great Society and Vietnam War, U.S. gold reserves dwindled. Other countries… notably France… feared their portion wasn’t there. On August 15, 1971, Richard Nixon proved them right.

It wasn’t the first time the U.S. government defaulted. FDR did so on April 5, 1933, when he devalued the dollar by 60%, and confiscated gold from American citizens.

Now Nixon took it from the foreigners. The “gold window” was officially closed, converting the dollar into what Doug Casey calls a “floating abstraction”.

The same day, to coerce cooperation from other countries, Nixon imposed 10% tariffs on all “dutiable articles” entering the US. Almost a decade and a half later, tariffs were again a lever that compelled US trading partners to help weaken the dollar.

On each occasion, the imposition or prospect of tariffs preceded a monetary reset. Is that what Trump’s tariffs portend now? Or perhaps the process is already underway?

Bread Crumbs

Most of what follows is based on digging my friend Matt Smith has done. He didn’t need to delve too deep. The components of the plan are out in the open, proudly proclaimed by the people implementing them.

But Matt brought them to my attention, and I think he’s on to something. He asserts that “the biggest economic shift in fifty years is happening right now”.

His X feed and this podcast reveal in detail why he thinks so. In essence, it’s because Trump’s team is telling us it is.

After several weeks following the bread crumbs, Matt found them to be as much a radar as a reminder. They suggest where we’re going, and that we’ve been there before.

Donald Trump is known for shooting from the hip and flying by the seat of his pants. But because he’s known for that doesn’t mean that’s always what he’s doing. In this case, he appears to be following carefully choreographed footsteps along a well-worn path.

Smithsonian to the Louvre

In a paper published several months ago, Stephen Miran, Trump’s nominee as Chairman of the Council of Economic Advisors, noted that international monetary systems can change unilaterally or multi-laterally. The latter is more desirable, yet more difficult.

Tariffs can be a crowbar to pry compliance. Miran reminds us of Nixon’s in 1971, and the ones Reagan threatened in 1985. In his assessment, each prompted significant revisions in foreign exchange regimes. In both instances, US administrations convinced reluctant countries to help pull the dollar lower.

A few months after Nixon imposed his tariffs, the Smithsonian Agreement amended the dollar pegs under Bretton Woods. This devalued the dollar… but not enough. Markets kept driving it down. Within fifteen months, it was set adrift.

A decade later, after Volcker’s exorbitant interest rates of the early 80s, capital flowed into the US and the dollar regained strength against its rivals.

At the time, Japan was considered the commercial challenger China is perceived to be today. To suppress the yen, Deutsch mark, and other currencies, Congress threatened “protective” tariffs.

Not wanting a trade war, Ronald Reagan sought a deal. In 1985, at the Plaza Hotel in New York, he got one. The U.S. and its major trading partners agreed to push the dollar lower.

They did. For two years the dollar weakened. At the Louvre eighteen months later, the parties met again, and the decline was halted at mutually agreeable levels.

Like his predecessors, Trump wants a weaker dollar. He also wants it to remain the world reserve currency, and has intimated he’d take action against countries choosing other options.

Triffin Dilemma

Valéry Giscard d'Estaing once referred to the dollar’s exalted status as America’s “exorbitant privilege”. It allows the country to avoid balance of payments crises because it can purchase imports with its own currency (which its central bank can “print” at will).

US dollars are the medium of exchange for almost every country’s cross-border purchases. This creates an inherent demand for dollars that lowers borrowing costs for Americans, and allows them to buy from abroad without commensurate production at home. As such, they needn’t manufacture enough exports to pay for their imports.

So they haven’t.

The US economy has been financialized, addicted to debt, and sustained by “services”. Tho’ some goods are assembled in the states, most of what Americans buy is made elsewhere. This forces foreigners to recycle their piles of dollars into US debt, which has been America’s primary export the last five decades.

The “twin deficits” exemplify the “Triffin Dilemma” Miran describes in his paper. According to Belgian economist Robert Triffin, a reserve currency requires a current account deficit, by which it is recycled into Treasury bonds that become base money in foreign central banks.

As domestic manufacturing declines, global confidence in the currency begins to wane. Conversely, inadequate deficits deprive the world of currency, which strengthens the dollar and incentivizes corporations to move manufacturing offshore.

This is the dilemma Trump faces, and that his team will use drastic tactics to try to resolve.

Gold Rush

The gold market seems to sense this. Despite an abundance of “big” money shorts and dearth of of retail demand, the price of gold keeps climbing.

An ounce fetches 40% more dollars than it did a year ago… and 11% more than at the start of this year. In this morning’s Wall Street Journal, beside the article discussing Trump’s reciprocal tariffs, is a piece describing the recent rush to ship gold to the States.

As we noted regarding silver earlier this week, the LBMA is having trouble fulfilling obligations to US buyers trying to take delivery. Who are these eager customers?

There’s obviously a large buyer in the U.S. Whoever it is is indifferent to rising price or higher margin requirements, and has been purchasing huge quantities representing more than ten percent (30M oz) of total US holdings (260M oz).

Matt speculates either the Fed or Treasury (or both) is accumulating the metal, perhaps in anticipation of a gold audit, and to ultimately use the stash to back the buck. We don’t know. But the size of the purchases substantiates this supposition.

As does what the Trump team has been saying. Their plan is to revive US manufacturing, boost American exports… and reset the monetary order.

Mar-a-Lago Accord

As with everything else Trump is doing, he wants this to occur relatively quickly. Gold is signaling the process is already underway: it’s price isn’t rising; that of the dollar is going down.

Based on current quantities of dollars and ounces, it has a long way to go. Miran suggests this could happen at a new agreement he calls the “Mar-a-Lago Accord”, reminiscent of the Bretton Woods and Plaza agreements.

At about the same time, Scott Bessent (now Trump’s Treasury Secretary) supported this assessment. Matt Smith provides the audio evidence:

https://x.com/mattpheus/status/1890363210303221948

A price of $20K/oz would be needed for the current quantity of dollars to be backed by gold. This ~85% weakening of the dollar (from current gold prices) would be extraordinarily inflationary. Even a debasement to (say) $10K/oz would be enormously disruptive.

As part of the plan, to retain U.S. security guarantees, foreign governments would be required to invest in new long duration zero-yielding Treasury bonds. This would reduce both the cost of borrowing for the U.S. government and the value of the dollar. This would support exports and help wash away debt that infests the system.

The Balance Sheet

In this scenario, consumer prices would soar. But the administration expects wages would rise with them, as wealth flows from American assets into Americans’ pockets.

How?

To find out, let’s look at the other side of the ledger, and how Trump plans to deal with the debt. It can be dispatched in one (or a combination) of three ways: it can be paid, it can be repudiated, or it can be inflated away.

The first two alternatives are moral, in that they either compensate creditors… or teach them a lesson for making bad loads to the government. Yet each is unlikely. The last option (inflationary theft) is what’ll probably happen, and appears to be what’s planned.

But that doesn’t mean there won’t be efforts to buttress the balance sheet by balancing the budget. Matt refers us to an interview with Howard Lutnik, former Chairman and CEO of Cantor Fitzgerald, and Trump’s outspoken nominee to be Commerce Secretary.

After acknowledging the $2T annual deficit… and a $29T GDP supporting $36T in debt… Lutnik estimates America’s assets to exceed $500T. Making a mere quarter percent on those resources provides $1.25T against the $2T shortfall.

The rest would come from reduced “waste” and improved efficiency. Throughout the years, such promises have conditioned us to laugh. But this is where DOGE comes in.

Removing “waste” from the government is a song budget hawks have shrieked for decades. Like “immigration” or “abortion”, “waste, fraud, and abuse” is a mantra politicians chant to get elected, then promptly goes mute when they get into office.

No one disputes that billions are lost to ineptitude. But much of the loot flows to entrenched monopolists, embedded bureaucracies, and other vested interests (and the elected officials who feed them) who get fat off the pork. There’s no incentive for the waste to go away.

So it doesn’t. Because the benefits are concentrated and the pain dispersed, both persist.

Sovereign Wealth Fund

But the hysterical reaction to Elon Musk and what he’s doing with DOGE suggests this time is different. A few months ago, Howard Lutnik (then a member of Trump’s transition team) said this was coming.

He also suggested ways the government could raise revenue without direct taxation. Part of that plan is a potential Sovereign Wealth Fund, which Trump has tasked Lutnik and Bessent to explore.

What would go in it? In this revealing interview, Lutnik provided some clues:

He (jokingly?) recommends rechristening the Department of Interior as the “Department of All the Land and Mineral Rights of the United States of America.” Merely realizing reasonable return on these resources would put a significant dent the deficit.

Lutnik reminds us that (for example) the Arctic National Wildlife Reserve (ANWR) alone has about as much oil as Saudi Arabia. This could be extracted and sold to American allies to boost the balance sheet. The same could be said of countless other mineral deposits throughout the US.

In essence, the Department of Interior could become America’s Sovereign Wealth Fund. Lutnik suggests the revenue from these resources (and tariffs) could replace the income tax.

That would be wonderful. But is it realistic?

Lutnik correctly notes that (excepting an income tax under Lincoln) tariffs and excises funded the government from the ratification of the Constitution till the 16th Amendment.

The U.S. prospered during the latter part of this period, under the gold standard and a relatively feeble federal government. Today’s behemoth could be financed by tariffs only if most of it ceased to exist.

That’d be great. But as many schemes and scams as DOGE has identified, it has a ways to go (particularly within entitlements and “Defense”) to make this feasible.

Implications

Suppose, as Matt Smith believes, that a “monetary reset” is already underway. If the US re-accumulates gold, imposes tariffs as a tool to devalue the dollar, reduces expenses by cutting waste, and leverages American assets to increase revenue while reducing taxes, what are the implications?

Higher inflation would be inevitable. That’s what dollar devaluation means, and what the gold price is already predicting.

But won’t holders of dollars anticipate this, and try to dump the currency? Almost certainly.

This is where capital controls kick in. The US could emulate the China by having two currencies under strict controls. As Matt says, we should

“expect major capital controls to keep money from fleeing the US. Foreign holders of US debt & perhaps even stocks could get hit with restrictions or fees. A two-tier dollar system may emerge (internal & external dollar). Believe it or not, the US will be copying some of the Chinese economic model.”

In the presumed two-tier system, capital must be contained so, as Smith puts it, “it doesn’t flee to places where it won’t get inflated away.” Usually capital controls are to prop a currency. These would be imposed to drag it down.

As the dollar weakens, the debt is wiped away… which seems the only way it could ever be paid. In this scenario, bonds get crushed.

What about stocks? There are cross-currents. The devaluation should push them up. But forty percent of the US equity market is foreign dollars. There’d need to mechanisms to dissuade them from selling.

Those of us who’ve long wanted to end the Fed would get their wish. Matt continues:

“Trump’s advisors want to kill the Fed….What replaces it is likely to be a private stablecoin-backed system (like Tether). A gold-backed digital dollar (CBDC) is coming. The entire monetary order is being reset.”

In a Fourth Turning, people are open to novel ideas. The corruption and grift DOGE is exposing could convince Americans a change must be made. The rapidity with which the Trump team is addressing these scams helps people believe this administration is up to the task.

Smith expects this transition to happen fast, with a “Mar-a-Lago Accord” within two years. This is partly because Trump doesn’t have much time. But also because the debt doesn’t. There’s a necessary sense of urgency. Almost $9T of Treasuries mature this year:

This is a vast restructuring requiring a delicate operation. But, as Smith says, something must be done.

And it will be. The only question is whether it’s by controlled demolition and careful reconstruction… or by waiting for the system to implode and then sifting the rubble.

Either way, however much gold you own… it probably isn’t enough.

JD

Atlanta, GA

January 26, 2025

Nobody knows how to make a pencil. But many people probably think they could.

Just wrap some wood around some lead, add a rubber eraser, a touch of metal, and a coat of lacquer…and voila!…you’re ready to take a standardized test or tackle The New York Times crossword puzzle.

But building a pencil is impossible for any one person…or any small group of people…to do. Even (or especially) the most ardent busybody has no idea how to make this superficially simplest of things.

Amazing Matrix

Creating a single pencil requires a complex lattice of financing, digging, drilling, growing, picking, pulling, packaging, shipping, trucking, buying, selling, and marketing among millions of people across every continent. Almost none of those engaged in these activities will ever meet one another or know each other’s names, and few are even aware of the thing they’re unwittingly helping to create.

This amazing matrix of seemingly uncoordinated activity was brilliantly described in the 1958 “autobiography” I, Pencil: My Family Tree, as Told to Leonard E. Read.

I first read this great story in 1990, not long after I’d moved to San Francisco. It was one of several essays that changed my life. It provided a valuable glimpse into how the world works, which is what economics (when done correctly) is supposed to do.

The origins of the commonplace pencil are extraordinarily complex, with components that are remarkably diverse. Were it applying to an Ivy League college, administrators could find ample grounds to admit or exclude it based on a wide array of assorted ancestry.

One of its fathers, as we all might guess, is a tree. But by what other parents was it conceived? What collection of saws, trucks, rope, and rubber were needed to commence the courtship, and plant the seed? And what mineral or material antecedents were conscripted and combined to create these essential ingredients?

As “the Pencil” put it, think of all the mining and metallurgy that went into making steel for the saws, how much growing and weaving was needed to make the rope, and what level of agricultural output was required to feed men in the logging camps when each day ended, and to wake them with coffee when the next one began.

Even the simple eraser is a marvel. It requires rapeseed oil from Indonesia, that it be reacted with sulfur chloride, and then combined with several vulcanizing and accelerating agents from around the world. Pumice from Italy enters the mix. Rubber is added for binding purposes, and cadmium sulfide provides the color.

No single manager, politician, or department secretary has any idea how to coordinate this complicated process for creating this one small part of a humble pencil.

But their presumptions go well beyond a mere eraser. To paraphrase Oscar Wilde, you’d have to have a heart of stone to hear their pretensions and not laugh.

Iron must be mined and smelted to build the ships that carry the requisite commodities. Oil needs to be drilled, extracted, and refined to fuel the vessels and trucks that haul those raw materials to far-away ports, or to take the pencil’s ancestral logs to distant mills.

And who builds and runs the millworks? What processes, materials, and manpower are brought to bear to construct any one of these indispensable facilities?

Then there’s the “lead”, which includes graphite mined in Sri Lanka, and that is placed in paper sacks and steel ships guided by harbor pilots and sophisticated navigation systems that are themselves the product of half a billion inputs from every corner of the world (and a few outside of it).

To bring these ingredients together so they can be formed into a pencil and brought to market, trucks and trains made of infinite inputs from countless countries must ride roads and rail that themselves derived from an inordinate web of engineering, financing, manpower, mining, and materials to eventually connect distant countries, great oceans, and domestic cities, towns, and villages where a vast array of intricate interactions combine to create a plain pencil.

Overweening Arrogance

You get the point. The capitalist economy and the supply chains that enable it are undeniable marvels. But they are incomprehensibly elaborate, and incapable of being centrally coordinated or politically planned. It wouldn’t take many sticks in the spokes or much sand in the gears to shackle the whole shebang.

Yet for decades over-educated meddlers have treated “the economy” as if it were a mechanical device, like a car, or a plane. Despite not knowing what they’re doing (as the pencil taught us, it’s impossible that they would), they think they can flip switches, turn dials, adjust knobs, pull levers, push the accelerator and pump the brakes (often at the same time), to engineer a “soft landing” to avoid a crash.

Meanwhile, the engines are on fire, oxygen masks are falling in our faces, and a mountain is dead ahead.

And the people in the cockpit are the type who are certain the temperature of the planet is not what it should be, that they know precisely which reading would be best, and who have a “plan” to get bring about that precise level in a prescribed time. Such overweening arrogance makes Renaissance popes, pop star divas, and NFL wide receivers seem like humble ascetics.

Such megalomaniacal world-improvers have no trouble thinking they can control a virus or “manage” an economy. To them, it’s perfectly reasonable to flip a switch that shuts businesses, closes factories, and severs transportation networks, and then assume it can all be instantly revived by returning the switch to its original position.

The elaborate process epitomized by the pencil is dependent on the supply chain. Or, more accurately, it is the supply chain, which requires unfettered collaboration and coordination fostered by unhindered prices, free flow of goods, unimpeded labor, unconstrained capital, and innumerable other interdependent factors to efficiently and effectively allocate scarce resources across time and place to satisfy their most pressing application.

An Incomparable Wonder

Sound money, the division of labor, the free flow of goods, and an unencumbered price mechanism are prerequisites for any well-functioning economy.

But the last five years governments around the world imposed lockdowns, restricted transportation, crippled trade, hamstrung hydrocarbons, provoked wars, and suffocated small businesses. They simultaneously fired up the presses and passed out the checks, which kept people home while galvanizing demand. Then…like censuring the heat for causing the sun…they blamed “supply chain disruptions” for shortages of goods and the rise in prices.

As GK Chesterton put it, “We are perishing for want of wonder, not for want of wonders.” A free market is a modern miracle, an incomparable wonder.

But it has the fatal flaw of many sensible systems – it benefits everyone in general to the advantage of no one in particular. And most of it’s beneficiaries have been so unconsciously blessed by it that they carelessly disregard (or derisively denigrate) this unheralded source of unprecedented bounty.

The miracle is under assault. Politicians, apparatchiks, and central bankers who don’t know the first thing about making a pencil are certain they can re-make society. They can’t run an economy, but they almost reflexively ruin it.

You’d think they’d know better. But it’s amazing what people can’t see when they’re paid to be blind.

JD

November 24, 2024

Oscar Wilde defined a cynic as someone who knows the price of everything, and the value of nothing. But what if Price and Value are estranged, making it hard for either to know anything? 

Price is a child of Value, which can sometimes be a deadbeat dad. Support is seldom provided. Paternity is often denied.

Even when the relati…

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September 4, 2024

The plane disappeared, but wasn’t reported missing for almost a day. When the crash was discovered, the president’s body was surreptitiously retrieved.

His death wasn’t accidental. Omar Torrijos, who’d ruled Panama for more than a decade, was bumped off by forces connected to U.S. intelligence agencies.

A few months earlier, Ja…

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August 23, 2024

Last night, after orchestrating a coup against her erstwhile “boss”, the Vice President took the stage.

I’m sure “President” Joe and “Dr” Jill appreciated their dismissive patronization as much as they deserved to receive it.

After briefly praising the president, Harris’s speech started mostly by honoring her parents and extolli…

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August 17, 2024

I received some useful comments after my recent missives (here and here). Readers appreciated the assessments, but wondered what to do.

That’s fair. Exhilarating as it is to anticipate disaster, it means nothing if action isn’t taken.

We certainly can’t expect the government to help. That’d be like Custer hoping Sitting Bull will…

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August 16, 2024

What causes poverty? 

That seems like a good question. But it’s the wrong one to ask. 

Poverty, as Tom Woods put it, is the natural condition of mankind. Like humidity in Houston or insects in the Amazon, we needn’t do anything to bring it about. We’ll suffer the affliction unless we shield ourselves from it.

Rather than inquire i…

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August 15, 2024

Anyone with eyes to see or ears to hear senses the world is going to Hell. In recent years, the handcart picked up speed, with hoards of hands on the wheel and many feet on the accelerator.

Regardless who’s at the controls, it seems to get hotter, with flames rising all around. But I think we can finger an arsonist. On this day …

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June 2, 2024

Among the key insights of Austrian economics are that humans act and value is subjective. These observations seem obvious and uncontroversial…essentially truisms. But they’re often forgotten, n…

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April 9, 2024

As if things weren’t dark enough, even the moon decided to pull the shades. Yesterday, along a “Path of Totality” from Mexico to Maine, a veil of night covered part of the day.

For the second ti…

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