Category: Daily Insights

I went off the digital grid last week.

As I mentioned earlier this month, I’ve been exploring alternative smart phone operating systems recently. But up to this point I’ve conducted my research using a spare phone running on Wi-Fi. I kept my iPhone as my primary device.

Until last week. I ditched the iPhone and went all in GrapheneOS. Now I’m fully off the digital grid.

The transition process was a tad inconvenient. Like all Apple products, the iPhone is elegant, yet easy to use. The iOS interface becomes second nature very quickly.

But now that I’m fully acclimated to Graphene, my only regret is not taking the plunge sooner.

As a reminder, 99% of the world’s smart phones run either Apple iOS or Google’s Android. And those systems send data back to Apple and Google every four and a half minutes on average.

In other words, the operating systems report back to headquarters with information about what we’re doing on our phone. There’s no way to stop this.

Meanwhile, neither Apple’s App Store nor the Google Play marketplace provide transparency around an app’s tracking capabilities. And they require us to give each application we download a host of permissions.

GrapheneOS flips the script.

First, it provides access to several open source app stores. Each gives us a report on every app’s tracking abilities.

It probably comes as no surprise that every app I had on my iPhone came with third-party trackers attached. That means every app I had was sending data on me back to various third-party companies. And who knows what they were doing with my data from there.

Some apps only had one or two trackers attached to them. Others were even more egregious. For example, the Weather Channel app came packaged with 14 different trackers. Have a look:

Continue reading “Notes from off the Digital Grid”

Federal Reserve Chairman Jerome Powell spoke to the House Financial Services Committee last week.

Later in the discussions, the Basel III endgame proposal came up. The proposal pertains to bank reserve requirements for both lending and trading activities.

Interest rates get all the attention when it comes to the Federal Reserve’s (the Fed’s) monetary policy. But bank reserve requirements are just as important.

Bank reserves are simply the money that banks keep on hand to back any loans or investments they make. Greater reserves equate to less risk.

Central banks set reserve requirements as a percentage of a bank’s deposits. There are some nuances to this calculation, but since 1982 the base reserve requirement has been 10% for banks here in the United States.

That means US banks have been free to lend or invest $90 for every $100 they receive in customer deposits. They must hold the other 10% in reserves.

We call this a fractional reserve system. Because the bank’s only need to hold a fraction of their customers’ deposits in reserve.

But that changed on March 26, 2020.

Continue reading “Bank reserves and the future…”

We’re talking macroeconomics this week – with a focus on the Federal Reserve (the Fed).

Yesterday I put forth the idea that Fed Chairman Jerome Powell is making monetary policy decisions with fiscal responsibility in mind. This is just a theory… and probably not a popular one.

But thus far the theory has held.

Powell clearly recognizes the need for normalized interest rates. He’s been as direct about this as a Fed Chair can be.

The fact is, an economy cannot survive on a permanent diet of cheap money and the malinvestment it fuels. We need real interest rates to help us make informed calculations about which projects we undertake and which we don’t.

This is how the market economy allocates resources effectively – as Adam Smith pointed out in his The Wealth of Nations.

Smith observed that firms and investors make decisions based on their own profits. Yet an invisible hand seems to promote efficient economic growth from their independent actions.

Continue reading “Interest Rate Signals and a Fork in the Path”

“The danger of moving too soon is that the job’s not quite done”, Federal Reserve (Fed) Chairman Jerome Powell told 60-Minutes last month. He then advised that the Fed would not cut interest rates in March.

Powell followed that up with testimony before Congress last week. He reiterated his position that it’s too soon to talk about cutting rates… and he refused to commit to a timetable for doing so.

This matches up with what I suggested in these pages back in December – the market’s expectations of aggressive rate cuts in 2024 were misguided.

It all stemmed from a misunderstanding around the Federal Open Market Committee’s (FOMC’s) Q4 2023 “dot plot” – which showed that FOMC members projected three rate cuts this year with the first in March.

The FOMC is composed of 12 members. It includes the Fed Chair, the Board of Governors, President of the New York Fed, and four of the other regional Fed presidents.

The FOMC is technically the Fed’s inner sanctum. It meets eight times a year to discuss monetary policy.

And the dot plot is a chart that summarizes the FOMC’s collective expectations for interest rates over time. The market sees it as representative of the Fed’s insider discussions. But that’s not necessarily the case…

Continue reading “On Jerome Powell, rate cuts, and a show worth watching…”

We’re talking rugged independence and personal sovereignty this week. And when we left off yesterday, we talked about what not to do if we want to maintain full control over our money and investments.

Today we’re going to talk about a better approach. And it starts with this – the entire idea of “retirement planning” is flawed.

As we discussed yesterday, the traditional retirement planning model is all about keeping us locked into investment accounts (401(k)s/IRAs) in which we provide all the money and take all the risks – yet we have no control.

Even worse, these accounts force a range of arbitrary requirements and restrictions upon us… and the rules could change at any time. We have no input whatsoever. Yet, we will be penalized if we do not comply with the rules as they are written.

Why would we agree to such a one-sided arrangement? And for that matter – what’s the goal here?

A basic rule of success in any endeavor is to figure out exactly what outcome you want before committing to any course of action. “Begin with the end in mind”, as famed author Stephen Covey put it.

It’s all about clarity of purpose. Once we have it, we simply need to do the things that will bring our desired end to fruition.

With that principle established I have to ask – what do most people who follow the traditional retirement planning model really want?

Continue reading “True Financial Security”

We’re talking rugged independence this week – thus far with an eye on reclaiming digital sovereignty. Today let’s add money and finance to the picture.

As we discussed last month, most of us have been encouraged to go about personal finance the same way.

We’re told to save for retirement by funneling our money into qualified retirement accounts. Then we can choose our investments from a range of various kinds of funds.

Modern retirement planning has its roots in the Employee Retirement Income Security Act (ERISA) of 1974. That legislation created the Individual Retirement Account (IRA). Then supplemental legislation created the 401(k) and the SEP IRA for self-employed individuals in 1978.

This thrust millions of people into the stock market for the very first time. And seeing this for the opportunity it was, Wall Street built an entire industry around herding money into cookie-cutter investment funds. Retirement, Inc. was born.

Fast forward to today and there are over 15,000 different investment funds out there to choose from. And every single one of these funds comes with its own fee structure. These fees ensure that the fund managers get paid no matter how their investments perform.

The problem is, this approach is riddled with weaknesses. And it requires us to give up nearly all control over our money. In several ways…

Continue reading “On financial sovereignty and investment partnerships…”

Cloud computing has been a hot topic over the past decade or so.

Corporate giants Amazon, Google, and Microsoft each built out massive cloud computing businesses. And today they fight with each other tooth and nail for cloud market share.

The buzz around “the cloud” took a backseat to artificial intelligence (AI) this past year. That’s thanks to generative AI like ChatGPT. Still, chances are that most of us utilize the cloud in some capacity every day.

If we store files using services like Google Drive, Microsoft OneDrive, and Dropbox then we’re using the cloud.

If we have Apple’s iCloud or Google Photos automatically store the pictures we take with our smart phone, we’re using the cloud.

If we use home security services that allow us to view videos and photos taken by our security cameras via a smart phone app, we’re also using the cloud.

I’d wager that most of us are using the cloud in at least one of these ways. And these are just the three areas on my radar today. There are all kinds of other applications.

That being the case, I think there’s an important question we should ask. What is the cloud?

And the answer is that the cloud is not at all like what it sounds…

Continue reading “Digital Sovereignty in the Modern Age”

Last week we talked about the budding localist renaissance in America.

This week let’s talk about rugged independence at the individual level. And given that we’re living fully in the Information Age now, we have to start with digital sovereignty.

It all starts with our smart phone.

If we stop to think about it – the smart phone is possibly the most amazing device ever created. Its functionality is almost endless.

In fact, actual phone calls are probably their least-used feature. I would wager that most of us use other applications on our phone far more often than we use it to make calls.

I love that the smart phone allows us to access the accumulated store of human knowledge on demand. And from most anywhere in the world.

But there is a dark side…

Continue reading “Rugged Independence and Digital Sovereignty”

Listen, my children, and you shall hear of the midnight ride of Paul Revere… One if by land, and two if by sea, and on the opposite shore I will be…

We’re all familiar with that old poem about Paul Revere, aren’t we?

I remember it being part of the grade school social studies curriculum. We learned about how Revere rode around to warn the colonists near Boston of a pending attack from the British military.

That’s all I knew about Paul Revere. Until recently.

I spent some time researching the apprenticeship model in colonial America this month. And it turns out that Revere was one of the most successful businessmen in Boston.

Paul Revere’s father Apollos Rivoire emigrated to America from France in 1715. He was thirteen years old.

We don’t know much about his early life in the colonies. But Rivoire went on to open at silversmith shop in Boston. He produced fine silverware and glassware, metal surgical tools, and ornate decorations made of gold and silver. And of course he would take customized jobs on a commission basis as well.

Rivoire then took in his son Paul as an apprentice in 1748. Paul was just fourteen years old at the time… but he flourished.

Continue reading “What we can learn from Paul Revere today…”

Wait… my amount has doubled! Why did it go up so much??

My hairdresser was very surprised when she opened her Bitcoin wallet to receive my payment yesterday. In dollar terms, her wallet balance had nearly doubled since my last visit.

I’ve been paying for my haircuts with Bitcoin for a few years now. My hairdresser treats her Bitcoin wallet as a savings account – so she only checks it when I come in for another cut.

This is the first time she’s noticed a material jump in dollar value though. That’s largely because she’s built her balance up to the point where a Bitcoin price surge can move the needle.

Naturally, she wanted to know what happened. Why did this internet money thing that only one crazy guy seems to talk about skyrocket in dollar value?

My answer: Because they are printing trillions of dollars every year now… and Bitcoin is money that can’t be printed.

Bitcoin’s value proposition runs much deeper than that, of course. But I’ve found that the simple answer is often the best answer in short conversations. It’s the one that will stick.

We talked on Monday about America’s proud localist tradition. We’ve always maintained a spirit of self-reliance and rugged independence in this country.

That spirit may have dulled over the past 100 years or so… but it’s starting to reawaken. The seeds of a localist renaissance have already been sowed.

Continue reading “The Localist Renaissance”