This week: USG burning $10B a day; you have eight months

Michael Flynn endorses Myanmar-style coup

At the “For God and Country Patriot Roundup” (lol), Trump’s former National Security Adviser said there’s “no reason” we can’t have a military coup as in Myanmar, and that “it should happen here”.

Which illustrates the problem with clamoring for a Red Caesar — if a prospective neoreactionary CEO strongman were actually smart enough to save the country, ordinary people like you and me wouldn’t hear about it until it was over.

Stuff like this just raises the stakes of the power struggle. This is the first American election in which a significant number of people on both sides have a reasonable expectation of dying in jail if their party loses.

So yeah it’s fun to hear politicians say Based and Redpilled things, but political violence is horrendous. The main thing to take away from General Flynn’s remarks is that every member of your family needs a passport (they are becoming harder to get) and your financial planning for the next eight months should be optimized for mobility and liquidity. Speaking of which:

The US government is burning $10B a day.

Back in the 80s, the GOP pitched the public on Starving the Beast.

The thinking went that if you slashed taxes hard enough, there wouldn’t be any Money 4 Dem Programz; the Programz would “run out” of money, and then there wouldn’t be any more money, and then there wouldn’t be any more Programz.

Now, after three massive WWII-scale spending binges totally unmoored from tax income (two of which were presided over by Republicans), it’s hard to believe that anyone ever took this idea seriously.

The government can’t run out of money directly, but it’s running out of something. The national debt is on track to equal the market cap of all US stocks by 2035. The US government now officially spends more servicing its debt than it does on national defense.

Of course, if a thing can’t go on forever, it won’t — but none of the mechanisms that might arrest this process are pretty.

Basically, there are three options:

1. Default (on debts owed mostly to American citizens & companies, setting off a cascade of bankruptcy and ruin)

2. Hyperinflation (which amounts to the same thing)

3. A decades-long tightrope act of massive austerity & controlled inflation

Option three might be the only way to avoid a global humanitarian catastrophe (in exchange for a generation of poverty and peonage) — but no government that has to win elections every four years could possibly sell it to the American people.

Since no one is in charge, the most likely outcome is the one with maximum deferral and diffusion of accountability — which is hyperinflation.

This option has the added benefit of allowing the people in charge of the government to buy real assets out from under their enemies, using funny money that gets funnier every day, thanks to the Cantillon Effect.

Since price information doesn’t propagate through the economy instantaneously, the people and businesses closest to the money printer (essentially Blue America — banks, federal contractors, universities, any institution that lives on inflation-adjusted government contracts, subsidies, or welfare) get to spend their newly printed dollars at or near the old price.

The dollars depreciate as they flow through the system — anyone who won’t or can’t quickly update their prices is left holding the bag.

In particular, wages update very slowly relative to other prices.

Under conditions of hyperinflation, time is of the essence — the grocery haul your paycheck will buy might meaningfully decline within an hour, so people rush home from work to spend it the moment it comes in.

This further intensifies the Cantillon effect, since Chase Bank and Lockheed can convert their dollars into hard assets in a matter of microseconds, and you can’t.

If you are a W-2 employee, your wage is at best determined by the value of the dollar as of your last raise (how many months ago?)

Realistically, your salary is benchmarked against your starting salary — so if you’ve been at the same megacorp for ten years, you’ve been earning programmatic percentage increases on a 2014 dollar — which is worth about $0.77 today. (Woman wages!)

(Companies do make some allowances for inflation, of course, but they know that search costs are high, especially in uncertain economic conditions — they’ll pay you the minimum necessary to hang on to you, which won’t be anywhere near real inflation.)

So what can you do?

There are no safe plays. Crypto or precious metals may insulate you from seizure via inflation, but they’re no protection against straight-up violent seizure, either by the government or a third party. Which is increasingly on the table, especially if you’ve made powerful enemies.

Fantasy scenarios where BTC moons and you get to retire on your 0.1BTC rarely contemplate the collapse in the regular economy that that such a change would generate. State and criminal violence will be a very real threat.

And unless you’re a true Bitcoin gorillionaire who can afford private security, all you can really do about it is to stay mobile and maintain good opsec. Never tell anybody what you’re holding, don’t spend extravagantly, and stay out of dangerous jurisdictions.

The reasonable, predictable protection of law and reputable institutions was actually a pretty cool deal, and life without them will be much harder.

And saving in crypto will only take you so far, unless you plan on living off your savings until America gets its act together. You need a way to earn in real terms.

Even a modest business can be a powerful hedge against inflation, if you sell something that people need. The faster you can provide real value for dollars and convert them into real assets, the less you have to worry about inflation — even rapid inflation.

We are building for what comes after all this.

We are all passing through a financial, political, and demographic bottleneck that our institutions are powerless to address, or even acknowledge. There is no internal mechanism for these institution to slow down or avert what is coming; there is no one at the wheel.

Our task is to respond for ourselves and our families — to preserve, as much as possible, the fruits of these good times, so that we can pass through to the other side of these straits — so that we have something to build with when we get there.

It starts with personal sovereignty — owning income streams, knowledge, assets, and social capital that are not dependent on collapsing and hostile institutions. We believe that, as every other asset class fails, the smartest investment we can make is in smart, capable people.

Join us at exitgroup.us.

EXIT News

• Utah Valley meetup was a success. We spent the day at an Airbnb in Springville, had a little cookout, then met at a bar and shot pool for the cocktail hour. It was a powerful room. Topics from the unconference:

  • What it takes to build a private subdivision

  • Basic principles of UX design

  • How to make your own kefir

  • Land aggregation and commercial real estate

  • Why Tommy Boy is actually a tragedy

  • Earning $15,000 bug bounties for smart contracts

  • Why we are going to Texas, and what we intend to build there

• File leaders have received their list of members to contact. If you’re a member and you haven’t heard from yours yet, reach out.

• I am packing up for a little scouting expedition to Austin this month. Will be looking for locations and communities where we can make a good start, without having to do everything from scratch — close enough to get to the airport, but far enough to get away from the homeless people and needles and Millennials with pirate tattoos and waxed mustaches. If you know a place, hit me up.

• We will be hosting another speed networking event Wednesday night (3/6), this time in combination with our big ideas call that we inaugurated last week. Get together with the boys for a casual virtual mixer, featuring breakouts and a ‘Big Ideas’ topic to facilitate conversation. As always, meetings are featured on the Google calendar and video links will be posted in the #announcements channel on the chat.

Subscribe now for access to the Seattle Meetup (3/29), Austin Meetup (4/26), and Boston Meetup (5/24), below the fold.