Evidence of Economic Growth

GDP is a terrible way to measure wealth. If someone was to invent a simple method to increase and improve food supply while at the same time reducing the need for oil and machines, everyone would be better off. Food would be better and more plentiful. However, this would send the GDP numbers down. Politicians and their economists would conclude that something bad had happened. Wasteful activity, on the other hand, is seen as good. People spending their entire lives at an office desk is seen as wealth, while people enjoying a low consumption lifestyle is seen as poverty. Clearly, the GDP numbers are meaningless as a measure of wealth. It captures economic activity. It doesn't capture to what extent the activity is meaningful.

True wealth is leisure, well being and security. A society in which people live long and well is a wealthy society. A good measure of overall wealth in a society is therefore the measure of life expectancy. This happens to be greater in Europe and Canada than in the US. One of the richest countries of them all is Portugal. The fact that Portugal has the lowest GDP number in the western world doesn't accurately reflect the overall well being of its population.

Another measure we can use is the general look and feel of an area. This gives a much more reliable indication as to the local conditions than any GDP numbers can give us. Taking a walk in our neighbourhood, we quickly get a sense of how things are going. If the streets and houses are improving over time, we have economic growth, if things are falling apart or being abandoned all together, we have economic contraction. Walking the streets of Porto, especially down town, we see everywhere signs of economic growth. Immigrants from all over the world are moving to Porto to escape deteriorating conditions in their own countries. They buy properties which they refurbish and improve. They go out and spend. Porto has truly come alive over the 12 years I've lived here.

Some locals complain that the immigrants are pushing up prices. However, many of the houses they have refurbished were uninhabitable before they came. They can hardly be blamed for pushing up prices when the alternative would have been no houses at all. The same can be said for the fancy restaurants. They were simply not there in the past. Cheap housing and food can still be found outside the town centre. The centre has to a certain extent been taken over by foreigners. But was it any better when the centre of town was dilapidated and empty? The improved look and feel of down town Porto is a sure sign of economic growth.

Finally, we can look at our own personal situation. Do we feel better off ourselves? Are we surrounded by people who are doing well? Wealth is after all a subjective matter. It is of no use to know that the politicians are happy with the GDP numbers if we ourselves are feeling increasingly miserable. If we feel healthy and better off, and we see our nearest friends and relatives prosper, if we see our town and neighbourhood improve and feel more prosperous and secure, if we sense an optimism about the future, then we have economic growth.

We live longer and better lives now than we did half a century ago. Some towns and countries are seeing continued improvements in the standard of living. This is evidence of economic growth. Unfortunately, other places are seeing a fall in life expectancy, a general decay of the standard of living, and a sense of deteriorating personal security. Not all areas of the world is experiencing economic growth. While there are pockets of growth, there are also pockets of decay.

View of Gaia from Porto

Evidence of Economic Contraction

Economic growth is conventionally measured as an increase in economic activity. The aggregate number for this activity is the GDP, closely watched by investors and politicians alike. However, the GDP is a terrible measure. All it tells us is how busy people are. When it goes up, there is more activity. When it goes down, there is less activity. But when did activity in itself equate to wealth?

What about people who value leisure? Such people will feel wealthier when their economic activity goes down. I feel personally much richer today than I did ten years ago. I have retired. My contribution to the GDP has gone down.

Very few people love their work so much that they prefer work to leisure. Most people dream of an early retirement. Yet, the age at which we can retire keeps creeping up. We are in other words becoming less wealthy. All the while, the GDP is going up.

Things have gotten so bad that most families no longer can afford to have only one bread winner. Children are locked away in schools while both parents work. The children of today are clearly less wealthy than they were a few decades back. Women who would prefer to be at home rather than work long hours at the office are also less well off today.

The only people who are better off are the few who love to work long hours and the politicians and their cronies who are able to extract more taxes through the higher GDP rate.

Politicians are paid through the taxation of their fellow men. The more their fellow men interact in the economy, the more opportunity there is for taxation. This is why politicians are so obsessed with GDP numbers. Their pay checks depend on a high level of economic activity.

Propaganda is constantly pushed onto people to ensure GDP growth. Consumption is promoted. The increased participation of women in the labour force is seen as somehow liberating for those who are forced out of their homes and away from their children in order to make ends meet.

However, the truth is finally starting to dawn on people. No longer able to make ends meet, people are coming out in the streets to protest. They don't seem to know what they want as an alternative. But they know one thing for sure. The political class has screwed them good and hard for decades. Life isn't as good as it used to be. The economy hasn't grown. It has contracted.

The social contract

Dinosaurs in Ancient Art

There is a Mesopotamian cylinder seal on display in a museum in Paris with a clear depiction of dinosaurs on it. There are brontosauruses with inter-winding necks and tails. Their depictions are so accurate that they rival dinosaur depictions made in modern times.

Some Bible enthusiasts have concluded from this that someone back in ancient times must have seen a dinosaur. How else could they make such an accurate depiction of one? Furthermore, the cylinder seal is not the only dinosaur depiction. There are depictions of other dinosaur species as well. There are at least a handful of very accurate dinosaur depictions found in ancient art.

While the depiction of a single dinosaur species could be considered a coincidence, a handful of them do suggest that the artists had accurate information related to the dinosaurs. Someone must indeed have seen a dinosaur. However, it does not follow from this that anyone had seen one alive. The most likely explanation for these depictions, as well as the many stories about dragons and other monsters, is that people from time to time uncover dinosaur skeletons.

Ancient artists could make accurate depictions of dinosaurs for the same reason we do so today. They had sufficient skeleton remains to make complete pictures of what they must have looked like when they were alive.

By Gryffindor - Own work, Public Domain, Link

The Art of Doing Nothing

A year ago, the internet was overflowing with ads related to crypto-currencies. Had I acted on any of them, I would have been down at least 80 percent on my investment today.

Lately, I've been bombarded by ads related to options trading. Apparently, the way to retire rich these days is to sleep, eat and trade, non-stop.

Needless to say, I'm not much interested in spending my time doing nothing but sleeping, eating and trading. It sounds horrible, and it's a sure fired way to losses.

The secret to successful investing is not to constantly act, but to do close to nothing. How do I know? Well, that's how I managed to retire at age 47. I was lucky enough to inherit a small fortune at age 30. It was sufficiently large to grow into a decent fortune, and it grew to this size by virtue of my inactivity. I did absolutely nothing until two years ago when I sent the inheritance on to my children.

I was also lucky with a hose in Norway that I bought back in 2004. I sold it at the very top of the housing bubble that popped in 2016. The proceeds were enough to cover my retirement.

The trick to successful investing is inactivity coupled with an understanding of when to act, and what to do. It's that simple. The assets we can choose from are either stocks, bonds, real estate or gold. There are other assets of course, but they are on closer inspection only variations on these four assets. Silver and crypto are for instance variations on gold. Options are variations on stocks, etc.

The right time to act is when an asset class becomes expensive relative to another. This happens once in so many years or decades. Trading every day is therefore a meaningless activity. I made a trade every decade or so. That's how I grew my small fortune into a sizable one. However, no-one needs a small fortune to get in on this. Anyone with any savings can do it, and the exact details of what to look for is available in my free book on the subject.

By Jessie Eastland - Own work, CC BY-SA 4.0, Link

No Need for Rebalancing

It's almost two years since I sold my house in Asker. From the proceeds, I paid down all debt on the apartment my wife owns here in Porto, I bought some gold and put the rest into a savings account. The allocations were as follows: 2 parts to pay down debt, 4 parts gold and 1 part cash. No part was allocated to stocks which I found too expensive at the time.

As things stand at the moment, the current distribution is: 3 parts apartment, 4 parts gold and 1 part cash. Very little has changed since the original allocation. There has been little price inflation in consumer goods, so the cash is what it was. The gold price has not moved. Only the apartment has appreciated in price. Stocks have not gone up during this period, so I have lost nothing by staying out of the stock market.

Looking forward one year, I expect the apartment to stay at the current elevated price level. This is due to continued immigration from France, Belgium, Brazil, England and Germany. I expect gold to go up due to global unrest and the fact that the Dow/Gold ratio is above 20. I expect cash to retain its current purchasing power. I expect stocks to go down for the same reason I expect gold to go up.

In short, there's no need for any rebalancing of my portfolio.

British gold sovereign

By Benedetto Pistrucci - Own work, Public Domain, Link

Ice Age Equator

The equator during an ice age is unlikely to be where the equator is located during mild periods, such as the one we are currently experiencing. This is especially true if our planet is hollow. However, we do not have to accept the hollow Earth hypothesis to come to the conclusion that the location of true north, and hence the location of the equator is different during ice ages than when Earth is relatively ice free.

The physics for this is simple. A spinning body must have a balanced distribution of mass, otherwise it will wobble catastrophically until a balanced distribution is found. Either way, it will always seek to find a balanced distribution. The orientation of true north and the location of the equator today are therefore reflections of a balanced distribution of mass.

However, during the last ice age, the enormous ice sheet covering the northern regions of our planets were not distributed equally across what we have as true north today. The center of the ice mass was located at Hudson Bay in Canada. True north must therefore have been somewhere between current true north and Hudson Bay. The equator must for the same reason have been skewed farther up in places like Siberia, and farther down in places like Peru.

As it happens, we have some evidence in support of this. The magnetic north pole has been located close to Hudson Bay for most of modern history, suggesting that this may have been true north at some point. Siberia was ice free during the last ice age, suggesting that it may have been located closer to the equator.

Another striking observation is that the biggest, most sophisticated megalithic sites are located close to a great circle that cuts through both Egypt and Peru. This great circle may very well have been the equator at the time. With ice covering large parts of the globe, it is natural to expect human settlements at the time to have been clustered around the equator. It is therefore very telling that these settlements clustered around a great circle that is askew from the equator we have today.

What's more, some of the most ancient monuments known to us are oriented along this same line. The people building these monuments were very much aware of it, much like we are aware of the east-west axis we have today. We like to orient monuments like churches along the east-west axis. The same was almost certainly true for early humans.

This again gives us a way of dating ancient monuments. Those that are clearly oriented along the current east-west axis are post ice age. Those that have a clear orientation parallel to the ice age equator are from the ice age.

Hudson Bay and associated drainage basin

By No machine-readable author provided. Joseph B~commonswiki assumed (based on copyright claims). - No machine-readable source provided. Own work assumed (based on copyright claims)., Public Domain, Link

The Aether as a Fluid

In my book on physics, I come to the early conclusion that there has to be an aether with a ready supply of low energy photons and neutrinos. This is needed in order to explain the sudden appearance and disappearance of detectable photons and neutrinos. Alternatively, we have to conclude that such particles can come into existence from nothing but "pure energy", an idea that I dismiss as nonsensical.

I further conclude that the aether has to be very dense. The electric, magnetic and gravitational force can then in turn be explained as high and low pressure areas in the aether. The constant movement of the low energy photons and neutrinos making up the aether explains why particles vibrate. It is not the particles that possess wavelengths, it is the aether that constantly push them about. The double slit experiment can thus be explained.

Pilot wave theory explaining the double slit experiment

Towards the end of my book, I show that the existence of an aether can explain such phenomena as time and the Mercury anomaly. Empty space is reduced to a void without properties. Time and space are properties of matter interacting with the aether. The Mercury anomaly is due to a high density of low energy photons. Subatomic particles are smaller close to massive bodies. The aether is correspondingly denser.

This in turn leads to the final conclusion of my book. There is no need for two separate physics to explain the universe. Quantum physics and relativity can be joined together, provided we accept the existence of an aether.

A criticism of my work has from the start been that I do not include sufficient math to support my claims scientifically. My work remains an outline for a theory without the required math to support it. However, now it appears that there is in fact some math already in existence in support of much that is deduced logically in my book. Stefan Dorman, a Facebook friend of mine, was kind enough to point out that a certain Dr Franck Delplace has come to very much the same conclusion as I have, but through a different line of thoughts.

Dr Franck Delplace has written a paper in which he uses fluid dynamics to join relativity with quantum physics. He concludes that a very high density and highly fluid aether can account for the observed universe, both at the subatomic and the astronomic level. With a fluid model of the aether, we no longer have to curve space-time. All that is required is for the aether to be denser close to massive bodies than farther away. This is pretty much identical to my own conclusion, and now, thanks to Dr Franck Delplace's paper, we have mathematical formulas to back up this claim.

Robbed

The classic liberal era lasted a hundred years up until 1913 when progressives took over with the introduction of central banking. During the liberal era money was sound. This means that there was no debasement of the money. Prices did not rise, they fell.

The mechanism behind this can be illustrated with an example such as a fine coffee table. If someone has an extra coffee table, he can sell it and put the saving sin a bank account. During the liberal era, that money would earn interest above the rate of inflation. At some later time, the money can be withdrawn, a coffee table of equal quality can be bought back, and there will be some extra money to spare.

The reason this was possible was that the money in the bank was invested sensibly. Among people who borrowed money, there might have been a carpenter borrowing the amount equivalent to the coffee table. This money was used to buy tools and materials. He produced perhaps three fine coffee tables from the money borrowed. One table was then sold in order to pay for the loan and the interest to the bank. Another was sold so that he and his family had food and a place to live for a month or two, and the third may have been sold for money to save.

Not only did the original coffee table provide its original owner with some capital gains, it enriched the carpenter and the society at large. One coffee table was turned into four coffee tables.

Today, this is no longer how things work. Interest is below inflation. No coffee table of equal quality can be bought back later with money saved in the bank. The reason for this is that money put into a bank seldom goes to productive use. Central banks and fractional reserve banking encourages consumption and big government. It is not the carpenter that gets the money, its some well connected bureaucrat with access to cheep credit. This drives up the prices of everything. Once sold, a coffee table is forever lost. The same is the case for other things, such as houses. Very rarely can a person expect to buy back a house that he has sold.

What makes it even harder to buy back the coffee table or house that was sold is that the meager interest that is earned is taxed. The state does not only push up prices by redirecting resources from carpenters to bureaucrats, it imposes a penalty on savings as well, and it never hesitates to point out that this is to combat greed, as if the person who sold his coffee table is somehow greedy for wishing to buy back a similar table at some future point.

The rational way to act in such a system is to buy and never sell. It is better to keep the coffee table than to sell it. However, this is not an optimal way to organize ones affairs. Only the rich can do this. The middle class sell stuff every now and again, and they loose purchasing power every time. What used to make us richer now makes us poorer. The parasitic activities of government and banks siphon wealth away from the middle class and into the hands of self important busybodies, collectively known as the elite.

By U.S. Government - Extracted from PDF version of the Federal Reserve's Purposes & Functions document (direct PDF URL [1])., Public Domain, Link

Clueless Elite

In light of what's going on in Paris these days, with people protesting the increasing cost of living and the fact that it is getting impossible for the lower middle class to make ends meet, it is interesting to see where the political elite chooses to focus. Yesterday, immediately after reports from Paris, a TV interview was dedicated to the opinions of two environmentalists. Privileged, and paid by generous government grants, no doubt, they lamented the fact that things were too cheep! The cost of living for the poor and downtrodden was simply not high enough.

"Imagine," one said to the other, "It is possible to get a T shirt for the cost of a sandwich." The other shook her head in disgust. "This is clearly not sustainable," she said. "Something has to be done."

What they were clearly unable to imagine was the effect such musings would have on the TV viewers. Imagine for a minute being in the situation that a sandwich out of doors is simply too expensive to pay for, and the only clothing within reach are the cheapest items. Now suddenly, you are deemed not only poor, but vulgar as well. Is it any wonder that people in Paris are rioting?

The problem is not cheap clothing, but expensive bureaucrats. If we could get rid of them, prices of all goods would go down, and the poor and down trodden would no longer be poor. But this is of course impossible to see for those in the privileged position of a state grant or other government sponsored program. We will never hear the elite propose that they abolish themselves. They will come up with all sorts of schemes. What they won't do is to get off of people's back.

Unrest in Paris

Paris has been rocked by protests lately. It started with transportation workers protesting a fuel tax, but has since grown to include other grievances. The lower middle class is revolting against the current system. However, there does not seem to be any clear vision among the protesters as to what is at the heart of their problems.

Commenting from the sideline, several libertarians have vented their opinion. Ron Paul has pointed to the problem of direct and indirect taxation. He sees the problem from the point of view of the French government. The Euro is not being sufficiently debased by the European Central Bank, so the French government has to introduce direct taxes to cover their expenses. This has to be targeted directly towards the productive side of the economy, and transportation workers with their need to burn fuels in order to make a living were a convenient group for this purpose. Despised by the green movement, these outcasts of society could be targeted without much political backlash. So was the theory. However, as we now see, the despised and down trodden have now had enough. They have finally started to protest.

Egon von Greyerz takes a similar view. Purchasing power has been steadily eroded through debasement of the currency to the point where the lower middle class no longer manages to make ends meet. The fuel tax was the visible spark that made everyone realize that their problems come from government. They may not as of yet realize the role of the central bank in creating their hardships. However, they are starting to realize that their problems are being foist upon them by the busy bodies micromanaging their lives. Seeing transportation workers demonstrating in the streets, other members of the lower middle class have also come to realize what has been made blatantly clear to transportation workers. Government is at the heart of their problems.

Finally, I find it interesting that the protests are happening in Paris and Brussels. These are places close to the heart of the current system. The bad money issued by the European Central Bank is finding its way into these cities first. This creates all sorts of hardships for the average worker. The unproductive but well paid functionaries of the system drive up prices, making it increasingly difficult for the productive underclass to make ends meet. This problem is far less pronounced in peripheral areas. Unrest starts at the center because that's where the bad money created by central banks make the most damage.

However, as long as the protesters are clueless to the role of central banks and the bureaucracy that it enables, the protests will come to nothing. Populist politicians will not solve the problem. They may rip the EU project to shreds. But they will not abandon central banking. Any respite coming from an EU exit will be fleeting and short lived.

Bad Money for You, Good Money for Me

I have long since given up on the idea that anything can be achieved through political dialog. It's a waste of time to try to convince people of the virtues or evils of various systems. Besides, the vast majority of people do not actually live according to their teachings. Politics is for most people little more than an exercise in convincing others that what is good for yourself is also good for everybody else, or it is merely a mindless repetition of what others have said, with no filter or independent thinking added.

This is especially true when the topic of central banking is on the table. People will defend this evil with all sorts of fallacies, most of them appealing to some greater good or common good. It is somehow Utopian or selfish to want a system independent of central meddling. However, if someone were to talk to such a defender of central banking and offer this person the choice between a fixed annual income in gold coins or in fiat money, that person would be completely irrational to choose fiat money. Everybody knows that fiat looses value over time, and that this hurts fixed income recipients such as pensioners and people on welfare.

All of a sudden, the vague uttering about a common good or the impossibility of being paid in gold vanishes. In this person's special case, gold coins are preferred. However, for everybody else, fiat is ideal.

This, together with the less than genuine concern that many have for the climate, illustrate perfectly that what is needed is not political dialog but direct action. If we prefer gold for ourselves, then we should buy gold instead of leaving our savings in a bank account. If we are concerned about the climate, we must get out of debt and save for the rainy (or dry) day that we believe to be imminent. Talking politics is simply a waste of time.

By Pieter Breughel the Younger - Web Gallery of Art:   Image  Info about artwork, Public Domain, Link

Climate Worries

There is much evidence to suggest that our climate is currently at the cusp of a great change. The upper atmosphere has cooled dramatically and ocean currents are slowing down. This may be due to CO2 or it may be the Sun going into a grand solar minimum. Which one it is is hotly debated. Whenever climate change is mentioned, people get all excited, making all sorts of claims as to the cause. However, what we do not see is any corresponding action to suggest that any of the debaters are in fact believing that a great change is about to happen.

If people truly believed that climate change will cause considerable hardships going forward, we would not see people loading up on debt and investing heavily in speculative assets such as tech-companies and crypto-currencies. People would be busy preparing for the upcoming changes. They would get out of debt. They would sell their speculative positions and invest in liquid assets as well as companies that will be of importance during years of agricultural stress.

History tells us that famine strikes the unprepared and the indebted far harder than the well prepared and debt free.

Four Horsemen of the Apocalypse

By Viktor Mikhailovich Vasnetsov - http://lj.rossia.org/users/john_petrov/166993.html, Public Domain, https://commons.wikimedia.org/w/index.php?curid=2649874

The fact that hardly anyone appears to be worried about their personal well being, while busy bickering over political issues, tells us that we are at the moment visited by the second horseman of the apocalypse. There is strife but no worries. The king thought of man-made global warming, represented by the first horseman, has ushered in a period of political strife.

However, all over the developed world we see an increase in human misery. The number of homeless people is on the rise. Food insecurity is becoming increasingly common. Poverty and hunger is on its way. The third horseman has entered the stage, and if we get the adverse changes to the global climate that everyone is harking on about, Death will soon follow.

Mistaking the Garden for the Treasure

In the world of archetypes, there is a great distinction between the garden and the treasure. The garden is where we spend our time planting seeds and growing things. It represents the many projects we embark on through our lives. Some projects grow into profitable ventures, others don't. Mostly, they keep us occupied and with a reasonable income, but nothing more.

The treasure, on the other hand, represents our savings. We do not spend much time looking at it. It's invested in gold, real estate or financial assets, depending on what part of the business cycle we are in. A balanced portfolio will have a bit of everything with a weighting towards whatever is most likely to happen over the coming decade or so. Above all, it's invested in safe and sound things.

Compared to our garden, treasures are boring. It is therefore easy to give treasures less value than they have. A young man with an exciting project is easily tempted into staking his inherited treasure on the success of his project. He puts his treasure at way too much risk compared to the odds for a positive outcome. More often than not, such ventures fail, and whatever was invested is lost.

Another pitfall of the garden is that we may grow so fond of it that we neglect our treasures. Happy to spend our days in our garden, our treasures are slowly eroded by taxation and other expenses. We fail to protect it. We fail to see that changes in our lives have to correspond to changes to our investments. There has to be the occasional re-balancing for the treasure to grow.

By user:ozgurmulazimoglu - https://www.flickr.com/photos/mulazimoglu/with/5154611142/, CC BY 3.0, Link