jwithrow, Author at The Phoenician League

Destroying What’s Left of Capitalism

“The competitive market process promotes the efficient allocation of resources, leading to the highest possible standard of living for consumers.” -Ludwig von Mises

That’s Austrian economist Ludwig von Mises writing about the true benefit of a market-based system – the efficient allocation of resources. Mises went on to suggest that the market process is the only method of economic calculation that can be used in a world of scarcity and uncertainty.

The fact is, we must allow competitive markets to allocate resources if we want to enjoy a high standard of living. Anyone who doubts this can simply look at the difference between life in the United States and life in Sub-Saharan Africa.

In the US we enjoy comforts that the richest person alive 150 years ago could never fathom.

We live in homes that are the perfect temperature year-round. Weather is now just a talking point.

We take running water and indoor plumbing for granted. We have supermarkets overflowing with food just down the street. And we have all kinds of screens that offer us endless entertainment.

In Sub-Saharan Africa, nearly half of the population lives without electricity and running water. The local markets offer only a small amount of goods from the capital city. And many families still live as subsistence farmers.

I know this first-hand. Our foundation just drilled a new solar-powered well in rural Uganda. Previously the villagers were walking up to a mile twice a day to collect clean water from a natural spring.

It’s not about money. It all comes down to the allocation of resources.

There’s more to the CBDC story…

A central bank digital currency (CBDC) is a digital form of a country\’s fiat currency, regulated by its central bank. It is a liability of the central bank and is widely available to the general public.

This is the definition of a central bank digital currency according to Perplexity.ai. And it spells out exactly why the Federal Reserve (the Fed) has a direct incentive to oppose the CBDC push.

We’ve been diving into the macro talk this week.

On Monday we explored the idea that the “Great Taking” already happened. And yesterday we talked about how Keynesian economics has been dead-wrong on pretty much everything – including its view that recessions are bad.

As we explored, there’s a school of thought that says the Fed raised rates aggressively to cause a financial collapse and usher in a CBDC. I think the opposite is true…

The Fed’s rate-hiking campaign was about defending the dollar and slowing capital-flight out of the US financial markets. The Fed’s incentive is to save the commercial banking system as it currently exists.

This seems ironic on the surface. If the Fed would be in charge of the American CBDC, wouldn’t that mean it gets more power and control? And wouldn’t the Fed want that power?

The Recession is Part of the Cure

Yesterday we talked about how the “Great Taking” isn’t in the future… it already happened.

I’m referring here to a popular book and documentary making the rounds in the alternative finance space. It posits that the global bankers are going to set off a great depression and legally steal everyone’s wealth. Afterwards, they will force a central bank digital currency (CBDC) on us.

The book seems to suggest that the Federal Reserve’s (the Fed’s) aggressive rate-hiking campaign was part of that plan. Higher interest rates are what will trigger the crash.

I don’t see it that way.

For one, I don’t see the incentive for bankers to execute such a plan. With the fractional reserve banking system and fiat money, they control and influence the vast majority of the world’s wealth already.

What’s more, I believe the powerful New York banks are actively opposed to a retail CBDC. They have a very big incentive to do so. We can talk about that more tomorrow.

The idea I’d like to explore today is that recessions are healthy. They are necessary.

Keynesian economists have dominated Academia and American politics since the 1960s. They conditioned us to believe recessions were bad. And in their arrogance, they told us that their policies could stop them from happening.

The Great Taking already happened…

One of the books making waves in the finance space right now is David Webb’s The Great Taking. It posits that the global elite have reworked the legal system such that they are now the secured creditors for all financial assets and all the underlying property held by publicly-traded corporations.

According to Webb, the global banking cabal plans to set off another great depression – similar to what happened in the 1930s. This will cause a financial collapse and allow the elites to legally transfer all wealth to themselves.

Afterwards, we’ll wake up to find that we don’t actually own the stocks and funds held in our retirement and brokerage accounts. The middle class will be wiped out. Then, if we want to get back into the new financial system, we’ll have to consent to using a programmable central bank digital currency (CBDC).

The book suggests that the Federal Reserve’s (the Fed’s) aggressive rate-hiking campaign of 2022 was part of this plan. It was the trigger. Higher interest rates are what will cause the collapse and set the plan into motion.

It’s an entertaining story. But I don’t think it correctly identifies the incentives.

If we look at the numbers, the great taking already happened.

The Fractures in Global Shipping and What It Means

Global shipping is fracturing and the new year is off to a chaotic start.

On New Year’s Eve a rebel group from Yemen known as the Houthis attacked a Maersk container ship in the Red Sea. In response, the US destroyer USS Gravely intervened and engaged several Houthi small boats in naval combat.

This event was an escalation of previous skirmishes in the Red Sea. The Houthis have been attacking ships they believe to be in route to Israel since last November. They made it clear that any cargo ships traversing the sea are at risk.

This has already impacted global shipping tremendously. To understand why, we have to look at the geography:

The Red Sea is that narrow strip of water separating Africa from the Middle East. It also connects to the Suez Canal, which provides direct access to the Mediterranean Sea.

So the Red Sea is critically important when it comes to global trade. Roughly 15% of all trade moves through it. And around 10% of the world’s oil and liquefied natural gas (LNG) moved by ship flows through the Red Sea – most of that heading for Europe.

At least it did previously.

With the Houthis disrupting shipping routes in the Red Sea, Maersk suspended all cargo movements through the Suez Canal until further notice. And 262 container ships have already rerouted around the Cape of Good Hope, which is located at the southern tip of Africa.

So all those shipments into Europe that previously entered the Mediterranean through the Suez Canal must now sail all the way around Africa to get to their final location.

That’s added enormous expense – up to $1 million in extra fuel costs for every round trip. And of course it’s causing dramatic delays as well.

No surprise, rates for shipping containers have skyrocketed. The cost to ship from China to Europe is up 80% just this week. And if the disruptions continue, we’ll almost certainly see oil prices spike as well.

But there’s a less tangible effect at work here also…

Trust is collapsing around the world. We’re seeing signs that the established order of the last several decades is splintering.

That means major changes are coming fast… and they will impact everything about money, investing, and retirement planning.

Are you positioned for what’s to come?

Get a jump on 2024 with our new financial training. We’re calling it Mistakes, Misconceptions, and Malinvestment.

You can find the broadcast right here.

-Joe Withrow

Mistakes, Misconceptions, and Malinvestment

Urgent Financial Training for 2024

I Want to bulletproof my money

The Death of Financialization

The Age of Paper Wealth is over. And that means the era of hyper-financialization is going to fade away.

I see this as good news.

Financialization refers to the increasing emphasis we’ve placed on financial markets, financial institutions, and financial activity over the last several decades.

All of these items may be important… but they should not dominate our economic activity. Especially not from within a fiat monetary system where all new currency is issued with debt attached (loaned or monetized into existence).

The growing emphasis we’ve placed on finance has come to the detriment of hands-on knowledge, skilled labor, the middle class, and traditional American values.

That is to say – nobody seems to know how to do anything anymore. Myself included. Finance is all I’ve known.

What’s Coming in 2024

Happy New Year!

I hope you and yours had a great Christmas season. It’s such a magical time of year.

Each year I take a day or two the week after Christmas just to sit in my office and reflect. I reflect on the previous year… and then I think about my goals for the year to come.

You know, this is the first time that I’m not excited about the new year. I’m uneasy about what 2024 will bring.

Don’t get me wrong – I’m an eternal optimist. But something is in the air. We can feel it.

A core theme I’ve been tracking in these pages is the covert macroeconomic battle between the New York banking cartel, the West’s globalist faction, and the expanded BRICS bloc.

These factions are each jockeying for position on the world’s stage. And their weapons of choice are politics, media, and global finance.

The New Rules of Money for the 2020s and Beyond – Part 2

The world as we know it ended in 2022.

Yet, as we discussed yesterday, our entire approach to retirement planning is based on the world that ended. This new world we’ve entered into comes with new rules of money… and these new rules require a new approach.

I submit to you that we should scrap the nest egg model completely. Because it forces us to choose between assets and income. That’s the core premise within my book Beyond the Nest Egg.

Instead, we should start thinking in terms of “financial security” and then “financial independence”.

Financial security comes first. This is how we make our savings bulletproof.

To achieve financial security, we must assess our current needs and lifestyle relative to our career, income, and family situation.

Based on these things, how much money do we need to save to provide ourselves with reasonable continuity should we lose our job, our income, or suffer a major emergency?

This number is going to be different for each of us.

If we’re young and just getting started, maybe $25,000 is enough. If we’re middle age with a family, maybe we need to accumulate $50,000 or $100,000. And if we’re in or approaching retirement age, we may want our financial security number to be even higher.

But here’s the thing – we don’t simply stuff this money into a savings account or some kind of fund. We build a strategic asset portfolio across a range of asset classes. Each asset serves a different purpose for us.

The New Rules of Money for the 2020s and Beyond

I have one more image of winter’s first snowfall for you today:

This one truly captures the majesty of the Virginia highlands. But now it’s time for a serious discussion…

The Age of Paper Wealth is over.

That’s the conclusion my research led me to last year. And it’s the core theme I’ve presented in these pages over and over again.

It all comes down to the Federal Reserve (the Fed), interest rates, and the US dollar.

The market has been trained to see the Fed as a reactionary institution. When consumer price inflation rises, the Fed is supposed to raise interest rates to get it back down. Then when inflation slows, the Fed is supposed to cut interest rates to stimulate economic growth.

That’s the Keynesian view. It’s been the dominant economic school of thought in academia and American politics ever since the 1960s. President Nixon even went on television in 1971 and proclaimed, “We’re all Keynesians now”.

Keynesian theory created the Age of Paper Wealth. It lasted from 1982 to 2022.