Coming Soon: “Capital Offence – How Some Benefit At Your Expense”

The world is becoming increasingly divided on many fronts and I believe that one of the root-causes of this is well-intended policymakers who have drunk the something-from-nothing Kool-Aid which they believe leads to economic prosperity.  The direct result of these policies is growing wealth disparity where people are able to extract more from our economic system than they contribute.  What my book explains is that this is not a result of the free-market system.  Rather, it is due to fallacious economic doctrine that justifies making popular decisions that quickly paper over short-term symptoms as opposed to the unpopular painful decisions that deal with the fundamental issues at hand.

Of course, the public will always applaud the popular decisions that seem to benefit them in the short-term, and policymakers will always attempt to deflect blame from the longer-term consequences that inevitably result.  The success of policymakers in escaping blame is due to a structural misunderstanding, by many policymakers and the public, of how an economy actually works as well as the related topic of the concept of money.

As a professional investor managing over $10 billion in assets for over 20 years, I’ve had a front-row seat observing those in charge steering the economy down a treacherous path.  This is not about conspiracy theories, nor is it about incompetence: extremely capable and well-meaning people are the ones steering the ship.  Instead, it’s a sad story of arrogance and intellectual dishonesty for which literally millions of people are paying a stiff price.  And it’s going to get worse.

For the last few hundred years, the next generation has always been better off than the one that preceded it.  However, this is the first time that the opposite will be true.  And this is happening not because the previous generation is more productive than the one following it, but because we are actually benefiting at the expense of our children.  Not only is it immoral, but it’s not sustainable i.e. the math simply doesn’t work.  And as the saying goes, if something’s not sustainable, eventually it will end.

The key question of course, is how it ends.  Do we carry on our current course and convince ourselves that our ill-gotten gains are really due to our efforts and ability, or do we take a real hard look at what has happened and take steps to rectify the situation.  The first way results in an out-of-control explosion which could result in significant social upheaval and permanent economic malaise.  The second would be a carefully controlled implosion with shared pain for all which would then set us on the right path.  The pain that will result from either decision is unavoidable, but that associated with the former will be significantly worse than the latter.

My experience as an investor taught me that it’s not enough to generate good investment performance.  You must also be able to clearly communicate how you generated those returns in order to give people confidence that your past performance should be somewhat reflective of what to expect in the future.  Therefore, over the years I have continuously honed my communication skills with the goal of educating rather than “selling” or impressing.  This approach was always appreciated by my clients because it then empowered them to make the best portfolio decisions for their clients.

For far too long we have collectively encouraged policymakers to make decisions that benefit us in the short-term.  I have written this book for anyone who wants a better understanding of what’s really going on with the goal of getting more people to demand that policymakers start doing what’s in all of our best long-term interest.  In particular, this will benefit our children. 

The empowering process in this book starts where it must, with the concept of money.  Only with a good understanding of that and by being able to differentiate between money and capital will the subjects of interest rates, inflation and government etc. be appreciated and understood.  I use many analogies to help people understand the concepts at hand.  The story builds to show how the wealth confiscation has been happening for many years, but in earnest for the last two decades.

At the end of the book, I offer steps we can take that I believe will once again set us on the right course, but it won’t be easy.  And policymakers will only make the right and difficult decisions once people demand it.  I have great faith in people with respect to their ability and desire to do the right thing.  On the other hand, we’re all susceptible to delusionary thinking that justifies actions that benefit us in the short-term while closing our minds to the longer-term consequences, especially if those consequences only impact other people.   It has sometimes been said that the public always gets the government that it deserves.  However, that can only be true if the public truly understands what’s going on and today, that is decidedly not the case.  This book is a humble attempt to change that.

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