Here. Hope for the best while preparing for the worst. Temper optimism with prudence. And do what you can to drive the fiscally irresponsible from office.
Category: Money Matters
The Measure of Seriousness
Money is the measure of seriousness. And for most the only measure and the only seriousness. I tell myself to avoid misanthropy, but it is a moral challenge.
(I tend to alliterate even when I am not trying to: money, measure, most, myself, misanthropy, moral.)
When We Have Gold We are in Fear . . .
. . . when we have none we are in danger. (English proverb)
A proverb whose pertinence is proven by recent developments.
Skeptical and Credulous
By turns we are too much the one or the other. We find it difficult to balance doubting and believing.
Properly deployed, doubt is the engine of inquiry, but it can also become a brake on commitment and thus on living. One cannot live well without belief and trust — but not when they become gullibility and credulousness.
Whistle blowers such as Harry Markopolos have a hard time getting through to people who want to believe. Their intellects suborned by greed, otherwise intelligent people who were warned by Markopolos were taken to the cleaners by the avuncular Bernie Madoff despite the improbability of a legitimate 1% per month return in a market that safely permitted half of that.
They were skeptical of Markopolos while credulous of Madoff. A clear proof of not only the difficulty of balancing skepticism and credulousness, but also of the weakness of the intellect in the face of the torrent of the passions.
By the way, Markopolos' book, No One Would Listen, held my interest from the first page to the last. It lives up to its subtitle, "A Financial Thriller." A central lesson is that we should be deeply skeptical of federal regulatory agencies such as the Securities and Exchange Commission. It failed utterly to uncover the Madoff Ponzi scheme and dismissed the repeatedly-made Markopolos warnings. Liberals, with their tendency to believe in the salutary effects of an omni-intrusive and purportedly omnicompetent government, should heed this lesson.
Gray Flannel and the Matter of Money
Sloan Wilson's The Man in the Gray Flannel Suit appeared in 1955 two years before Jack Kerouac's On the Road. I never finished Gray Flannel, getting only 80 or so pages into it. It's a book as staid as the '50s, a tad boring, conventional, and forgettable in comparison to the hyperromantic and heart-felt rush of the unforgettable On the Road. Since how 'beat' one is in part has to do with one's attitude towards money, which is not the same as one's possession or nonpossession of it, I'll for now just pull some quotations from Horace and Sloan Wilson. The Horace quotations seem not to comport well with each other, but we can worry that bone on another occasion.
Quaerenda pecunia primum est; virtus post nummos. (Horace, Epistles I, 1, 53) Money is to be sought first of all; virtue after wealth. Or, loosely translated, cash before conscience.
Vilius argentum est auro virtutibus aurum. (Horace, Epistles I, 1, 52). Silver is less valuable than gold, gold less valuable than virtue.
The next morning, Tom put on his best suit, a freshly cleaned and pressed gray flannel. On his way to work he stopped in Grand Central Station to buy a clean white handkerchief and to have his shoes shined. During his luncheon hour he set out to visit the United Broadcasting Corporation. As he walked across Rockefeller Plaza, he thought wryly of the days when he and Betsy had assured each other that money didn't matter. They had told each other that when they were married, before the war, and during the war they had repeated it in long letters. "The important thing is to find a kind of work you really like, and something that is useful," Betsy had written him. "The money doesn't matter."
The hell with that, he thought. The real trouble is that up to now we've been kidding ourselves. We might as well admit that what we want is a big house and a new car and trips to Florida in the winter, and plenty of life insurance. When you come right down to it, a man with three children has no damn right to say that money doesn't matter. (The Man in the Gray Flannel Suit, Simon and Shuster, 1955, pp. 9-10)
The Politics of Gold
The price of gold has topped $1300 an ounce. And this while inflation is low. The upswing is driven mainly by the fear of inflation. In order to handle otherwise unsustainable levels of debt, the government will resort to 'monetizing' it, i.e., printing money and causing inflation. By counterfeiting its own currency, a government steals real wealth from its citizens. Is this acceptable to you? If not, you may wish to register your disapprobation come November 2nd.
For more insight, see Thomas Sowell's Politics Versus Gold.
On Budgets
I have never made a budget in my life. Never having made one, I have never had to adhere to one. The budgeter is involved in a negative enterprise: he essays to control and curtail spending. He allocates so much money for this, and so much for that, and strives to stick to his limits. But positive methods are often superior to negative ones. If you want to lose weight, for example, it is better to exercise and burn more calories, while holding your caloric intake constant, than to eat less while holding steady on caloric expenditure. (Aside from the optimal course which is to do both at the same time.) Part of the reason for this is that it is harder to break an old habit than to begin a new one.
Similarly with budgeting. To budget is to approach your personal finances negatively when a positive approach is superior. Instead of setting limits to spending in various categories, specify target savings and investing amounts, and aim high. The Wealthy Barber has a chapter entitled "The Ten Percent Solution." As I recall, the author recommends investing 10% of gross income for long-term growth. That's chickenfeed to my conservative mind. We save and invest far more than this. The best way to do this, of course, is by automatic payroll deduction. You arrange for your employer to direct deposit some percentage of your income into the account of your choice. You then live on what is left over.
Why do you need a budget? If you are self-disciplined you will naturally watch your spending, and of course you will never ever use a credit card for its credit feature. You will use it only for its float, record-keeping, rebate, and convenience features. Allow me to brag so as to make a point that is very important for everyone. I have never paid a cent of credit card interest in my life, and in the last several years, each year I have received $300- $400 cash in rebates for the use of a couple of cards which charge me no fee for their use. The credit lines are huge but I go nowhere near them, and the interest rates I could not care less about. Not only that, but the 'float' makes me even more money. Let's say I have the use of $2,000 for six weeks. During that period the goods are in my possession but the money is at my disposal in a cash reserve account earning interest.
Suppose you are a leftie who hates 'corporate America.' What better way to stick it to the credit card companies than by becoming a free-rider?
So I ask again, why do you need a budget? If you are self-disciplined you will naturally watch your spending, and if you are not self-disciplined then you will lack the discipline to adhere to your budget. Or is this a false alternative?
When I was a graduate student, 'back in the day,' I lived on 2-3 K per annum. And then I got a job which paid for starters the princely sum of 12 K per annum. I said to myself: "Surely, I can save and invest half of that!" But attitude is everthing. Attitude and will and good judgment. For example, if you are inclined to become financially independent, then you would be a fool to marry someone whose idea of Nirvana is a wallet full of charge cards with unlimited credit lines.
The moral side of the economic problem is paramount to a conservative like me. Those who can deny themselves and defer gratification can become financially well-off in a stable political and economic
environment such as we enjoy in these United States. But of course people will not deny themselves and defer gratification. So they must suffer the consequences. The problem is akrasia, weakness of the will. The fundamental problem is not predatory credit card companies, subprime mortgage scammers, and the payday loan sharks. For if you are self-disciplined, cautious, and diligent, they will not be able to get a handle on you.
The Bitch Impecunia
Many are the goddesses that tempt the young, the romantic, the idealistic. Time's alchemy will cause the masks of some to slip and reveal the bitch Impecunia. Cirmcumstances straitened by devotion to one's art or one's cause are better tolerated in the days of youth. I do not advise that you abandon your high aspirations: they may be what is best in you. Just realize that you have to pay your dues if you want to play the blues. It don't come easy.
Sans Souci
The renter builds no equity
In exchange his abode is sans souci.
Me I'd rather own something real
And leave it to my stoicism to adjust how I feel.
How to Become Wealthy Overnight
John Blofeld, Beyond the Gods: Buddhist and Taoist Mysticism (New York: E.P. Dutton, 1974), p. 153:
For the sake of wealth, people already well above the poverty line slave all their lives, not realising that withdrawal from the rat-race would immediately increase rather than diminish their wealth. Obviously anyone who finds the full satisfaction of all his material desires well within his means can be said to be wealthy; it follows that, except by the truly poor, wealth can be achieved overnight by a change of mental attitude that will set bounds to desires. As Laotzu put it, "He who is contented always has enough."
Sophocles on the Root of All Evil
Via Mike Gilleland, we read in Sophocles, Antigone 295-301 (tr. Hugh Lloyd-Jones):
There is no institution so ruinous for men as money; money sacks cities, money drives men from their homes! Money by its teaching perverts men's good minds so that they take to evil actions! Money has shown men how to practise villainy, and taught them impiousness in every action!
Mike has the Greek for you purists and elitists.
The Sophoclean sentiment, however, is quite false. For a view with a much better chance of being true, see Radix Omnium Malorum.
Radix Omnium Malorum
One often hears that money is the root of all evil. But this cannot be true, since money is an abstract form of wealth, wealth is a good thing, and the root of all evil cannot be something good. Perhaps it is the love of money that is supposed to be the root of all evil. But this too is false. Given that money is a good thing, a certain love or desire for its acquisition and preservation is right and proper. To fail to value money would be as foolish as to fail to value physical health. Well then, is it the inordinate love of money that is the root of all evil? Not even this is true. For there are evils whose root is not the inordinate love of money. The most we can truly say is that the inordinate love of money is the root of some evils.
Liberty-Conscious Investing
It is not clear to me why liberals have proprietary rights in the phrase 'socially-conscious investing.' Someone whose investment choices reflect a concern for individual liberty is of course also interested in the nature of the society in which he lives, and is therefore also 'socially conscious.' A champion of individual liberty wants a society in which there is more individual liberty and less government interference. To this extent, such a champion is also 'socially-conscious.'
California Grabs Ten Percent More in Withholding
One of the defining characteristics of liberals and leftists is a deep-seated quasi-religious belief in the benevolence and efficacy of big government, the bigger the better, and this despite repeated demonstrations of government incompetence, inanity, mendacity, and trickery. This from the Associated Press (emphasis added):
SACRAMENTO, Calif. — California wage earners will soon notice a little less money in their paychecks. Starting Monday, employers in the cash-strapped state are required to withhold 10 percent more in state income taxes to help ease the budget problems. It's part of a plan to artificially inflate state revenue by $1.7 billion through next June.
Brenda Voet, a spokeswoman for the state Franchise Tax Board, says it's technically not a tax increase since workers will get their money back after April 15. A single wage earner making $51,000 a year with no dependents will get about $4 less a week.
So it's just an accounting trick? But it is worse than that: an arbitrary seizure of citizens' money 'justified' by the principle that might makes right, that what one can do, one is justified in doing. You've heard of 'ought' implies 'can'? This is 'can' implies 'may.'
It will be interesting to see if the California taxpayers get their money back. Where will that money come from, yet another accounting trick?
Some Principles of a Financial Conservative
(Written 11 October 2008)
A correspondent with whom I disagree pretty thoroughly on financial matters e-mails:
An interesting poll of IFP's (Independent Financial Planners) reported today on Kuldow's MSNBC programme that 85% don't believe investors over 55 should be in equities at all. AT ALL, because the 10 year recovery horizon is dubious. I agree.
Here are some thoughts of mine on matters monetary. Call it chutzpah if you will, but I think my thoughts are as good as, if not better than, those of most financial planners. My thoughts derive from reading good books, independent reflection, and experience. And I don't charge for them! Be aware that I have no credentials in this area. (Be also aware that credentials are only a rough and defeasible guide to a person's competence.) You absolutely must think for yourself, and since its inception in 2004, this site and its ancestors has been devoted to promoting independent thinking. That is part of what the 'maverick' appellation is supposed to convey.
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