Financial topics

Investments, gold, currencies, surviving after a financial meltdown
Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Higgenbotham wrote:
Mon Feb 10, 2014 1:54 am
Ayn Rand: No it isn't. This country was made not by robber barons. But by independent men, by industrialists, who succeeded on sheer ability. By ability, I mean without political force, help, or compulsion. But at the same time there were men, industrialists who did use government power, as a club, to help them against competitors. They were the original collectivists. Today, the liberals believe that the same compulsion should be used against the industrialists for the sake of workers, but the basic principle there is, "Should there be any compulsion?" And the regulations are creating robber barons, they are creating capitalists with government help, which is the worst of all economic phenomenon.
I'd like to break Rand's statement down into its component parts and comment on them using the concepts and semantics I've used in other contexts.

"This country was made not by robber barons. But by independent men, by industrialists, who succeeded on sheer ability. By ability, I mean without political force, help, or compulsion."

I've discussed the ability of certain categories of people in terms of percentiles. So here, Rand is discussing the lone "independent" industrialist who has created something of value to sell to the world based on sheer ability alone "without political force, help, or compulsion." This type of person is rare. These types of people may exist at a frequency of 1 in several tens of thousands, depending on the industry and the level of success. Luck is involved to a great extent, but there's nothing we can do to mitigate that factor. So it may be that some with rare ability succeed and some don't. But, at the same time, those with rare ability who do succeed don't need to form gangs to maintain their success, and their success normally leads them to become a positive force in society.

"But at the same time there were men, industrialists who did use government power, as a club, to help them against competitors. They were the original collectivists."

This is The 97th Percentile. These people are common. There is one in every room of 30. Despite being common, they normally don't see themselves that way, but rather see themselves as the smartest person in the room. For example, if Dick Cheney happened to be the smartest kid in his first grade class, he will think he is the smartest person in the Roosevelt Room when he tells the rest of the room that Ronald Reagan proved that debt doesn't matter. These people generally aren't smart enough to know how stupid and dangerous they are. They are like monkeys flying 747s. The 97th Percentile fears those independent individuals of rare ability that Rand describes in her books. Since those in The 97th Percentile are common, they can find each other and form gangs to cast individuals of rare ability off to the side. That is what has happened in America today and it is the principal reason why the American economy is failing.

"The basic principle there is, "Should there be any compulsion?" And the regulations are creating robber barons, they are creating capitalists with government help, which is the worst of all economic phenomenon."

It is indeed the worst of all economic phenomenon. Absolutely without any doubt in my mind. I've watched it happen, I've lived it, and it is awful. I've come to the same conclusion before reading Rand's comment and she was spot on.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Cool Breeze
Posts: 2935
Joined: Sun Jul 26, 2020 10:19 pm

Re: Financial topics

Post by Cool Breeze »

I agree, but I only take exception to Higgy's idea on how smart the above average intelligence people are. I think you'd agree there isn't much more to intelligence beyond 120. The truly exceptional, except for Christopher Langan, usually devolve in age to foolishness and political commentary that borders on things outside their specialty (Hawking a near perfect example of this). They are also socially or otherwise retarded (physically as in Hawking's case) which makes them more prone to being important as they age. Sorta like a good looking woman who is washed up by age 40.

Anyway, my point is that once you have requisite (Eurasian typically) intelligence, it's all social factors and social movements. That's what the Dick Cheney's conform to and promote and get egos about. And it's the ego, the spiritual disease, that's the problem. Not the intelligence, per se, Higster

John
Posts: 11478
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Re: Financial topics

Post by John »

** 03-Jan-2021 World View: Percentages

What I've discovered is that almost nobody today is capable of
understanding percentages, and in fact almost nobody can do math
beyond the 2nd grade level.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Cool Breeze wrote:
Sun Jan 03, 2021 5:23 pm
I agree, but I only take exception to Higgy's idea on how smart the above average intelligence people are. I think you'd agree there isn't much more to intelligence beyond 120. The truly exceptional, except for Christopher Langan, usually devolve in age to foolishness and political commentary that borders on things outside their specialty (Hawking a near perfect example of this). They are also socially or otherwise retarded (physically as in Hawking's case) which makes them more prone to being important as they age. Sorta like a good looking woman who is washed up by age 40.

Anyway, my point is that once you have requisite (Eurasian typically) intelligence, it's all social factors and social movements. That's what the Dick Cheney's conform to and promote and get egos about. And it's the ego, the spiritual disease, that's the problem. Not the intelligence, per se, Higster
Glad you mentioned this because when I use the word ability, some of what I say implies that intelligence is the sole determinant of ability. There's a lot more to ability than academics and IQ, though academics and IQ are certainly part of it.

In the Randian sense (caveat: I don't subscribe to the entirety of Rand's philosophy), an individual who has ability is one who can use what is available in their environment (but not the political apparatus) to produce something that has a positive impact on the world. The greater the ability, the greater the positive impact. It doesn't mean they gambled and got lucky. Luck may be a factor, but ability is a necessary factor.

When I think of people who have great demonstrated ability, Henry Ford comes to mind. Not only did he produce something that had a positive impact on the world, he did so in a novel way, and had a positive impact on his workers by paying $5 per day, which was unheard of at the time. I have no idea what Henry Ford's IQ or academic ability was. It would be interesting to know, but it would just be a curiosity.

Recently a poster here who called himself Lightbulb recounted his story about how he used what was available in his environment (the Generational Dynamics website) to stock up on supplies right before the pandemic resulted in supply shortages. Lightbulb made it clear that he doesn't consider himself the smartest person on the forum. But in doing what he did, Lightbulb clearly demonstrated ability and also demonstrated the distinction between ability and intelligence. Since it's not common to use the term ability to compliment someone, I would just say that Lightbulb is a very smart guy.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

John
Posts: 11478
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Re: Financial topics

Post by John »

** 03-Jan-2021 World View: Intelligence

Another thing to keep in mind that some aspects of intelligence can
interfere with others. Speaking for myself, I have great math skills,
and great computer skills, but I'm almost completely devoid of people
skills. I believe that it's my lack of people skills that let me
accomplish some things, while failing at other things. For example,
if I had people skills, I would probably feel the need to be popular,
so I couldn't do Generational Dynamics. Instead, I might have written
a novel. Both of those accomplishments require a certain amount of
raw intelligence, but they require abilities in one area, while
forbidding abilities in another area.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Back to the present economic situation and how it fits in with the above.

In 2009 or so, there were lots of foreclosures and the Federal Reserve pumped hundreds of billions into the economy, putting it in the hands of select politically favored entities without allowing the market to clear. As a result, tens of thousands of rental properties got into the hands of entities like Blackrock.

Had the Federal Reserve not gotten involved in that way, and the market had been allowed to clear, those rental properties would have gone into the hands of many small business people. Literally thousands of those small business people would have greater ability to manage those properties than Blackrock, and those who had the greatest ability could have expanded their businesses, and by doing so benefited their tenants with lower rents than Blackrock now charges, healthier and more well maintained properties than Blackrock is capable of providing, better appearing neighborhoods, etc.

Addendum: The article linked below demonstrates that The 97th Percentile has no ability to manage rental properties.
https://www.theatlantic.com/technology/ ... et/582394/
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Back in the day, I owned a few rental properties. I was gutting a kitchen and placed an ad in the local shopping news under Wanted to Buy that said used kitchen cabinets and my phone number. Got a call from a contractor who had won a bid from HUD to replace all the kitchen cabinets in a senior citizen housing complex. He told me some of the cabinets he had taken out were never even used and since he was an out of town contractor he had put them into a storage unit and was selling them cheap before leaving town. His price was $5 for an upper and $10 for a lower. I was able to outfit an entire kitchen with what were basically brand new cabinets for under $100.

The house had birdseye maple hardwood flooring upstairs, but some of it had been damaged. I knew that the bathroom would have that flooring underneath the linoleum because at the time that house was built the bathrooms had hardwood flooring put in them. I took the underlayment and linoleum out of the bathroom and salvaged the hardwood flooring, then put new plywood and vinyl in the bathroom. I got the vinyl from ABC supply. They had a warehouse that had hundreds of vinyl scraps for $10 each. This was high quality stuff but most of it was too small to be of use. After replacing the damaged hardwood flooring, I rented a sander and sanded down the entire upstairs flooring - 3 bedrooms and hall. I worked from morning till late at night to reduce the cost of the sander rental. Probably the entire cost of that flooring project was under $300.

When I finished the house, I went down to the landlord's association and thumbed through their applications. I found an application from a woman who had a daughter about 6 years old and whose credit was ruined. She had a good job at General Motors on the assembly line (night shift). I had heard the buzz in town about why her credit was ruined. Her ex had cheated on her and run up their credit cards, etc. I rented the house to her for $350 per month (great deal) and she was a great tenant. One day she called me to say someone had been following her home and could I put an outside light up. I put it up the next day.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

The above describes how an economy is supposed to work (except for the part about HUD). The US economy no longer works that way. Over the course of a few years, I put together about 10 houses in the above manner. The total investment (purchase price and improvements) for each house was around 20K. My return on investment was over 15% and it was achieved without cheating people.

My Dad, who was a silent, watched this with amazement. When he got old and we were reminiscing about different things, I had never had this thought before, but I said to him, you know, Dad, I don't think 1 person in 100 could have done what I did with those houses. He quickly replied not 1 in 1000.

In today's economy, that 1 person in 1000 will never get that chance. And if the population is divided by 1000, there are literally tens of thousands of people who could do this.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Another ramification of all this is the area of family formation. When men are allowed to seek an area of competence and to be competent and successful, family formation and births happen naturally. Nobody has to think about it. US birthrates are now at a record low and continue to decline.

Also, when families rented from me for $350 or so per month, they got a chance to rebuild their credit and get back on their feet. Reading the link above shows that's not true today for those who rent from Blackrock, etc. Senior citizens who rented from me could comfortably live on their social security and retirement. I rented to 3 retirees.

Thank you Federal Reserve and Blackrock, etc. Great job.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Higgenbotham wrote:
Mon Jan 04, 2021 9:29 am
My return on investment was over 15% and it was achieved without cheating people.
A small anecdote about cheating people.

The article linked above discusses how some of these large rental companies are increasing their returns by stealing their tenant's deposits, trying to charge them additional money for repairs when they move out, etc. These companies probably don't even have the deposits anymore.

When I took a deposit from a tenant, the deposit was converted to cash and put into a safe. I told them that the deposit wouldn't earn interest unless they wanted it in the bank, then I would pay them interest. I never withheld a deposit from a tenant who moved out. Never had a reason to. Also, I told them that any spare keys to their house were also in the safe - that there were no keys to their house floating around with anyone, not even me. If they wanted me to enter when they weren't home, the keys came out of the safe, then back into the safe when the job was done.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

Post Reply

Who is online

Users browsing this forum: Bing [Bot], Majestic-12 [Bot] and 26 guests