Schrodinger's Slave
You put your savings in a box, the Fed flips a switch
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Table of Contents
The Civilizational Cycle
Taco Bell has Fallen
Paradise Lost
Schrodinger’s Slave
Conclusion
1. The Civilizational Cycle
What has been will be again, what has been done will be done again; there is nothing new under the sun.
Is there anything of which one can say, "Look! This is something new"? It was here already, long ago; it was here before our time.
Take a second to listen to Graham Hancock as he reads from The Hermetica. I want to set a tone for this post and my outlook for the end of the year and Q1 of 2023. Take the time to listen all the way through, or at least long enough for you to catch the vibe.
It’s quite likely that some more fuck shit will be coming down upon the markets this week, and just as Hermes lamented the fall of Egypt and the kingdom he had known, so too am I here to lament a failure.
But first I must say something. Greek mythology is an amalgamation of an oral history that was passed down from older civilizations. The stories they tell are not fiction, but instead are embellishments of real people and real events from a time whose writing’s were lost. As these stories were retold details were changed to make the stories relevant to the people listening. Hercules, Achilles, Apollo, Hermes, even Zeus himself, all real people. So it should not be surprising then that there are texts and books purported to be of conversations Hermes had with his students in the ancient Mediterranean world.
As Hermes lamented that Egypt would one day be nothing but misunderstood images carved into graven stone, so too do I lament that the western financial sphere is likely about to take its final step into what will become endless QE. Those alive in the years to come will scarcely remember just what it was that we lost.
2. Taco Bell has Fallen
You might look at this and laugh. But Flirt, are you seriously lamenting the loss of a cheap Taco Bell? I can already hear the criticism. Many see, but do not see. The petro-dollar and the lingering work of Paul Volcker bought an affordable life for the working class. $3.50 for a meal. In 1999, minimum wage was $5.65. A meal and a drink in exchange for ~40 minutes of labor at the absolute bottom of the labor pool. What does the menu look like now?
That’s a total of $11.06 before taxes, or $11.87 after taxes if we use the same tax rate as the receipt. Meanwhile the minimum wage is $7.25. That same meal 23 years later now costs ~100 minutes of labor at the bottom of the labor pool. You might say that we should raise minimum wage, but that misses the point entirely. You will remember that when I spoke of deflation and used the example from the late 1800’s, none of those men were being paid minimum wage as it was not invented until 1938. A few years working part time as a bookkeeper’s assistant could afford to buy an entire oil refinery. Labor was more valuable because the money itself had intrinsic value. And as the eunuchs, bureaucrats and administrative cowards we’ve put in charge of our money have plundered it’s value, they have simultaneously plundered the value of an hour of labor. Taco Bell is a microcosm of your entire fiscal existence within the west.
The inflation calculator says that this meal in 2022 should only cost $6.33. Obviously CPI is broken, you know that, we know that, everybody knows that, and yet they use it to lie to us still.
3. Paradise Lost
When I speak of my lament, yes it’s about Taco Bell, but it’s about a lot more than just Taco Bell. In a healthy economy, a person should be able to get by at even the absolute lowest rung of the labor force. We had that in spades in the second half of the 1800’s. And to a lesser extent we had it in the 90’s. And now we haven’t just lost it, but we are finding that there is still so much further that we can fall in terms of our quality of life. Thoth (Hermes) laments that one day Egypt will simply be stone tablets and a granite graveyard with no memory of what was there before (as it is now). So too, as every generation loses quality of life, the next generation that is born without it doesn’t even know what they’ve lost. The human being is extremely adaptable. As an example, in the 1950’s it was not uncommon for a middle class family to not only have just 1 person in the workforce, own their own home (outright), have 2 cars, 5 or 6 kids, but it was also not uncommon for them to own a private plane.
Take note of how much this plane cost. $3,250 before tax. The median income in 1947 was $3,000. The median income today is $44,225. Most of the middle class today are driving cars that cost more in terms of hours worked, than a plane would have cost in the 40’s and 50’s. Not to mention, after WW2, the private plane market grew rapidly as many ex air force servicemen returned to the states and wanted to keep flying. There were more makes and models of private planes back then than cars today. Stinson, Ryan, Cessna, Swift, Piper, Aero Commander, Beechcraft, and the list goes on.
To really grasp what was lost in terms of quality of life, you have to really dig into the details of just what it was people could do with their disposable income. When the government is not printing money, but is instead managing debt responsibly or running a surplus, all of the benefit goes to the citizen using that currency. So 1 person working ~40 hours a week could support 7 or 8 people in the family who weren’t in the labor force. This was an economy that was a golden goose, and those who sought to run the economy squandered it. Keynes himself in the 1930’s presumed that his grandkids would only be working a 15 hour week. And that might have been the case if he hadn’t exacerbated the Depression and turned it into a decades long malaise with his theories of economic interventionism. The survivorship bias of a post WW2 economy had unfortunately convinced most academics that Keynes theories were right and that increasing intervention could shorten the business cycle (despite the exact opposite occurring in the Great Depression). We printed ourselves out of a single income family. We printed ourselves out of owning private planes. We printed ourselves out of owning multiple cars on a high school diploma doing shift work at a factory. We printed ourselves out of the hopeful prosperity that allows a bartender to live comfortably in the heart of downtown Los Angeles. And no one even seems to remember that it was like this.
This is my lament. I lament that even as I say this, I know it will be worse for the generation following me. You think there is nothing left that can be taken from you, you’re wrong. Your kids might not know that houses used to come with yards and green spaces. Their kids might not know that cars were a thing that even poor people could own. Their kids might not know that a kitchen used to have appliances and not just built in vending machines you had to pay for each meal from. They will likely not have children at all as that becomes a luxury, some people even dare to say that children are a luxury today.
4. Schrodinger’s Slave
Why am I choosing now to lament? Because many people will be cheering soon, but they don’t know just what it is they will be cheering for. The Bank of England has rolled over. Their temporary intervention will be permanent and long lasting. The ECB is on a ticking clock, at some point they will roll over and go back to easing. And even the Federal Reserve will roll over and show it’s belly too. Many investors will cheer. Assets will go back up. You’ll see memes as traders congratulate themselves for surviving a (short) bear market.
But we’ll be entering a much different bear market. One that’s invisible to most Keynesian economists. And even people who are aware of what this market is still will let the details of it slip by. We can only really catalogue what has been lost, by cataloguing the details of life that are no longer as available. But who will be left to care about the details? Already, it takes a certain kind of person to care about why being able to afford a plane on the median income is important. Most say “So what? I don’t want a plane anyways.”
For them a response is offered, “You will own nothing. And you will be happy.”
But what about the rest of us? For the rest of us, I have nothing to offer but a lament, and an escape hatch to a slim, but hopeful future. A future where crypto is the primary means of exchange. When I say that I’m not selling, I really mean that. The higher the price goes, the more worthless the dollars you are exchanging crypto for are. I am holding for the future where I can live, earn, spend, sell, buy, trade, and rent any asset I want on-chain with crypto. My future is too valuable to be trusting my savings to these ghouls. What are savings except past hours worked that we are attempting to store? If they can steal from my past, then I am schrodinger’s slave. Was I enslaved in my past or a free man? I only find out when I attempt to spend my money and see how much of my time has been eroded. A country where your time can be stolen from you like this by intergenerational vampires will not last. I’ll hold the door open for you friend, as best as I can.
5. Conclusion
Why am I writing this now? Because I can feel the tone shifting among market participants. Everybody is expecting a return to risk and to money printing. Increased talks of a melt-up, or calls for “Uptober,” are starting to spread.
Some, like the tweet above, have the correct tone and PoV about this being a financial tragedy. While others who I suspect are more junior or are not thinking about the long term detrimental impacts to the world around us are cheering. Having your assets appreciate is good, but when the question becomes would I rather be working class in Switzerland, or wealthy in Argentina, I choose Switzerland. Yes, your personal life as a wealthy individual in Argentina will probably be better than the personal life of a working class individual in Switzerland. But there is quite a lot of value in not being surrounded by abject financial suffering when you go out into the world. In Switzerland, you aren’t worried about being kidnapped and ransomed, while in Argentina, that is a regular problem to solve even for those who are not wealthy. In Argentina, you do not know if one day the government will lock down your ability to travel or withdraw money from the bank. Being king of the ashes is not something to cheer for.
This post exists to remind you of what is at stake, and what we will be losing when central bankers in the west return to money printing. We very well may have our own lost decade before any such hopeful future of crypto as a separation of finance and state can occur.
Be mindful of how much pain can and will occur in the fiat sphere when the central banks return to money printing. Consider that having a nominal gain in portfolio value can sometimes be a net loss, and we are likely approaching that point in time.
Plug in those Latin quotes....wild stuff. Is that image really from The Fed? Found something about “the emerald tablet of Hermes Trismegistus” when goofling, which seems like it’s own fork on this rabbit hole
Hermes Trismegistus was a famous magician and sorcerer of ancient times in Egypt. He is sometimes considered to be the god Thoth-Hermes, but also sometimes supposed to have been just a powerful sorcerer. Bizarrely, the first time I heard of him was in a Batman comic book when someone mentions the name to Batman in the middle of a fight and of course Batman knows all about him off the top of his head..
PS - I knew one factory job could support a family of four and own a house and live in comfort 50 years ago, but the stuff about private planes is astonishing. Your own private plane only cost about a year's median salary? That's crazy. How much is the cheapest private plane now? $10 million? $20?