Make Your Choice: Change by Pain or Insight

Most experienced investors know the four most dangerous words are: This time is different.

It never is.

And yet one of my key predictions here at Peak Prosperity is that The next twenty years will be completely unlike the last twenty years.

So am I saying that things really will be different this time?

Yes, I am. But to understand why, you have to look closely at the unprecedented moment in history in which we live, as well as how the Three E's – the Economy, Energy and Environment – all tie together now in a way they never have before.

For those who prefer their conclusions right up front, the simplest summary I can provide is that everything we think we know about "how things work" is just plain wrong.

This explains why, among many other grotesque distortions, the stock and bond markets are spectacularly overpriced and overvalued right now.

This danger is important to be aware of because when things correct, as they inevitably must, the next crash will be incredibly damaging. It could be as profound as that which dethroned Spain as a world power, permanently.

Peak Prosperity user Gyurash put this risk in context within his comment to our recent podcast on Economics for Independent Thinkers:

The mention of Paul Volker was interesting. I remember listening to a lecture given by Mr. Volker played on public radio in the mid 80s. He talked about the Spanish empire in the 16th century and the easy money train they had coming from South American gold and silver. He said that although it seemed to create great wealth it also made for a false economy in Spain. In addition to creating price bubbles, the Spanish did not use it to build much of anything other than big villas, built by itinerant foreign labor by the way, so when the gold and silver flow slowed when the biggest mines were effectively depleted, their economy crashed so hard that it never recovered, even up to today. (Source)

Delusional Thinking

What's worse than wishful thinking? Delusional thinking.

The sort of ideas that harm rather than help those who hold them.

Of the many current policy delusions I could rail about, perhaps the greatest of them all is the quite-impossible belief that we can have infinite growth on a finite planet.

I know, I know, refuting this is so brain-dead easy to debunk that it seems pedestrian, if not childishly so, to raise it here again. It's quite an impossible proposition.

Even the most cursory of reviews of mining data (just one of many possible examples), show that many critical ores and minerals are vastly more difficult and expensive to extract and bring to market than they were just a few decades ago. And the trendlines keep getting worse.

But let's go through this once again, because it's such an important point. For those of you already on my side of the boat, please bear with me. Perhaps something new will emerge for you on this next go around.

The Harsh Math

Exponential expansion requires not just some new minerals coming to market, but exponentially more.

It works out like this. Suppose that 100 units of copper were produced in year 1, and output (as demanded by economic growth) was expanding at a 3% rate. How long would it take for production to double? The answer is that after 24 years we'd find that 203 units were being produced. So a 3% growth rate means that it takes only 24 years to fully double production.

However, the more interesting fact is that over that same 24-year stretch, if we add up each year's production into a cumulative total we discover that 3,546 units of copper had been produced. How much copper would you guess was produced over the prior 24-year stretch (the one that got us to 100 units in the first place)?

The answer is just 1775 units. In other words, half the amount produced during the next doubling. Going back further and adding up all of the doublings of copper production throughout all of history we'd discover that each new doubling produced (and consumed) as much as the sum total of all the prior doubling periods combined.

You can prove this to yourself by looking at a doubling sequence such as 0.25, 0.5, 1, 2, 4, 8, 16, 32 etc. Note that 4 is larger than (0.25 + 0.5 + 1 + 2) and that 8 is larger than (0.25 + 0.5 + 1 + 2 + 4) and that 16 is larger than (0.25 + 0.5 + 1 + 2 + 4 + 8) and so on -- into infinity.

Again, each new doubling involves an increase that is larger than the combined values of all the prior doublings in history.

For the visually-minded, here's that same idea expressed in an image:

How Many More Doublings Can We Possibly Have From Here?

Only the most delusional would argue that we can dependably double our extraction of key natural resources forever.

Every two decades (or so), will we always be able to use twice as much farmland, twice as much fish in the sea, twice as much oil in the ground, as has been used before throughout all of human history?

Of course not. Planet Earth is a finite system.

This is why I claim that everything we think we know about "how things work" is wrong. Our entire economic and financial systems, their associated monetary models and their current financial asset prices, are predicated on the principle of continuous growth. And not just any sort of growth: Exponential growth. Predictable doubling -- forever.

Look, it's ridiculously easy to prove that there won't always be twice as much copper (or nearly any other key natural resource) as has been extracted throughout all of prior human history. Things run out. They deplete. They become more dilute as the high grades are exploited first.

At some point, doubling becomes impossible. That's when you're past the point where half has been extracted and half still remains in the ground. After that, there are exactly zero doubling periods remaining! That's just elementary math.

Why care?

Because once the doubling periods are over, every single economic model and financial asset that is predicated on continuous expansion breaks. Our systems stop steadily growing; and instead start increasingly shrinking.

This not a hard concept to grasp, intellectually, for most people with an open mind. But in practice, because it challenges our comfortable understanding of the world, because it collides with an entire Disney World of incompatible social belief systems, it's pretty much impossible for the many people to even begin to wrestle with. Forget about a mainstream economist or central banker, whose salary requires them to adhere to the status quo.

The warning here is that we our deluding ourselves as a society. We are herding ourselves, lemming-like, straight towards the cliff ledge.

Think Critically!

Our mission here at PeakProsperity.com is to Create a World Worth Inheriting. While we help people make informed decisions to imbue their lives with greater abundance and satisfaction today, it's our dedication to the long-term picture that shapes everything we do.

Very few voices are standing about waving their arms in the air like we are, warning of the approaching cliff. We're aware that the point of no return might still be several decades out into the future, but we also realize that it could already be behind us. It's nearly impossible to know right now given the complex system that is our planet -- but given the existential risks involved, our opinion is that everyone should be mobilizing in response to this arriving (arrived?) crisis.

We often get labeled as narrow-minded “Malthusians". Or accused of failing to account for human ingenuity. (Neither is accurate, we think.)

But in reality, we're simply data driven. The facts are what they are. Logic is what it is.

And we get it. It's both a factual and a logical nightmare for the infinite growth crowd that the earth is finite.

But as Einstein famously quipped:

And as you wrap your brain around the limits to growth, remember that you're subject to the same comprehensive programming that envelops us all. The messaging that constantly reinforces the idea that endless growth is what we need, and what we can expect.

This programming is subtle, reassuring and ubiquitous; which makes it hard to resist. Here's a prime example:

(Source)

To an economist like Bernanke, there are only virtuous expansions. Of course, the sort of expansion he refers to is exponential growth. Which is absolutely destined to fail in the long run (and now, maybe, the short).

And when that happens, the fallout will be spectacular and highly destructive to the hopes and dreams of literally billions of people.

Make Your Choice: Change By Pain Or Insight

What's unclear to me is if there can be any meaningful recovery from this next crash, whenever it happens and however long it takes.

To return to the opening piece of this article, while I know that this time is different are dangerous words for investors to believe, the impending collision between delusional infinite growth thinking and resource limits and other realities will appear to the average observer like a gigantic change. But, in fact, it simply will mean that humans are subject to the same limits as any other life form on earth.

In other words, it really won't be different this time.

In boy-meets-girl story form, the plot line of the natural process for all forms of life is:

  1. organism finds tasty energy source
  2. organism expands exponentially into that energy source
  3. energy source dwindles even as organism continues into population overshoot, and then
  4. happy times turn into tough times, and organism population plummets

Given that literally everything we hold dear and take for granted, such as well-stocked supermarkets, 24/7 electricity, and an appreciating retirement portfolio are all themselves dependent on an economic model that requires perpetual exponential expansion, several questions emerge.

How can I protect myself, my family and those I care about? How can I secure a prosperous future? What do I need to do to develop the right mental models and belief system to deal effectively with the coming challenges?

You can either address these questions head-on now, while the world still works the way we're accustomed to. Or later, under crisis conditions.

We've learned that there are two ways that people change their beliefs and then their actions: by pain or by insight.

Most people go the pain route. And in the process, they waste a lot of valuable time that could have been spent constructively. It's only after the heart attack, the divorce, the backing over the family dog while drunk—moments of extreme pain—that most people will begin to actively face the idea that they need to make different decisions in life.

But it doesn't have to be that way. Part of the beauty of being human is that we can learn from observation, reflection and experience, and can adapt. Critical thinkers have this ability to change by insight. They use new information to put new behaviors into practice until those practices become new habits. And with better habits, we achieve better destinies.

So which route will you choose? Pain or insight?

The story told by the Three Es is loaded with the potential for plenty of painful moments over the next few decades. Sadly, a lot of people will not take precautionary steps far enough in advance to matter. They're just not focusing on the risks right now. As a result, much of the world will be forced to change its behavior via the pain route.

Use this awareness as a sense of urgency to prepare now. To secure your future prosperity, as well as to help those regretting that they didn't follow your lead.

In Part 2: Steps For Changing By Insight, we lay out our prescriptive guidance what what to do now, in a world saddled with record debts, and a debt-based system of money that itself is utterly and completely dependent on infinite expansion, where something's got to give

If you believe in eternal infinite growth, then sure, stay invested in stocks and bonds and go ahead and buy the dips.

But if you don't, take steps today to change your life by insight, secure your future prosperity, and serve as a model for others.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

As the nation soaks in the victory of the recent passing of the historic First Step Act, there are Congressmen who haven't stopped working to solve additional problems with the criminal justice system. Because while the Act was impactful, leading to the well-deserved early release of many incarcerated individuals, it didn't go far enough. That's why four Congressmen have joined forces to reintroduce the Justice Safety Valve Act—legislation that would grant judges judicial discretion when determining appropriate sentencing.

There's a real need for this legislation since it's no secret that lawmakers don't always get it right. They may pass laws with good intentions, but unintended consequences often prevail. For example, there was a time when the nation believed the best way to penalize lawbreakers was to be tough on crime, leading to sweeping mandatory minimum sentencing laws implemented both nationally and statewide.

RELATED: If Trump can support criminal justice reform, so can everyone else

Only in recent years have governments learned that these sentences aren't good policy for the defendant or even the public. Mandatory minimum sentences are often overly harsh, don't act as a public deterrent for crime, and are extremely costly to taxpayers. These laws tie judges' hands, preventing them from using their knowledge and understanding of the law to make case relevant decisions.

Because legislation surrounding criminal law is often very touchy and difficult to change (especially on the federal level, where bills can take multiple years to pass) mandatory minimum sentences are far from being done away with—despite the data-driven discoveries of their downfalls. But in order to solve the problems inherent within all of the different laws imposing sentencing lengths, Congress needs to pass the Justice Safety Valve Act now. Ensuring its passing would allow judges to use discretion while sentencing, rather than forcing them to continue issuing indiscriminate sentences no matter the unique facts of the case.

Rather than take years to go back and try to fix every single mandatory minimum law that has been federally passed, moving this single piece of legislation forward is the best way to ensure judges can apply their judgment in every appropriate case.

When someone is facing numerous charges from a single incident, mandatory minimum sentencing laws stack atop one another, resulting in an extremely lengthy sentence that may not be just. Such high sentences may even be violations of an individual's eighth amendment rights, what with the imposition of cruel and unusual punishment. It's exactly what happened with Weldon Angelos.

In Salt Lake City in 2002, Weldon sold half a pound of marijuana to federal agents on two separate occasions. Unbeknownst to Weldon, the police had targeted him because they suspected he was a part of a gang and trafficking operation. They were oh-so-wrong. Weldon had never sold marijuana before and only did this time because he was pressured by the agents to find marijuana for them. He figured a couple lowkey sales could help out his family's financial situation. But Weldon was caught and sentenced to a mandatory 55 years in prison. This massive sentence is clearly unjust for a first time, non-violent crime, and even the Judge, Paul Cassell, agreed. Judge Cassell did everything he could to reduce the sentence, but, due to federal law, it wasn't much.

The nation is facing an over-criminalization problem that costs taxpayers millions and amounts to the foolish eradication of individual liberties.

In cases like Weldon's, a safety valve for discretionary power is much needed. Judges need the ability to issue sentences below the mandatory minimums, depending on mitigating factors such as mental health, provocation, or physical illness. That's what this new bill would allow for. Critics may argue that this gives judges too much power, but under the bill, judges must first make a finding on why it's necessary to sentence below the mandatory minimum. Then, they must write a clear statement explaining their decision.

Judges are unlikely to risk their careers to allow dangerous criminals an early release. If something happens after an offender is released early, the political pressure is back on the judge who issued the shorter sentence—and no one wants that kind of negative attention. In order to avoid risky situations like this, they'd use their discretion very cautiously, upholding the oath they took to promote justice in every case.

The nation is facing an overcriminalization problem that costs taxpayers millions and amounts to the foolish eradication of individual liberties. Mandatory minimums have exacerbated this problem, and it's time for that to stop. Congresswomen and men have the opportunity to help solve this looming problem by passing the Justice Safety Valve Act to untie the hands of judges and restore justice in individual sentences.

Molly Davis is a policy analyst at Libertas Institute, a free market think tank in Utah. She's a writer for Young Voices, and her work has previously appeared in The Hill, TownHall.com, and The Washington Examiner.

New gadget for couples in 'the mood' lets a button do the talking

Photo by Matt Nelson on Unsplash

Just in time for Valentine's Day, there's a new romantic gadget for couples that is sure to make sparks fly. For those with their minds in the gutter, I'm not talking about those kinds of gadgets. I'm talking about a brilliant new device for the home called "LoveSync."

This is real — it's a simple pair of buttons for busy, modern couples who have plenty of time for social media and Netflix, but can't quite squeeze in time to talk about their... uh... special relationship.

Here's how it works. Each partner has their own individual LoveSync button. Whenever the mood strikes one partner, all they have to do is press their own button. That sets their button aglow for a certain period of time. If, during that time window, their partner also presses their own button, then both buttons light up in a swirling green pattern to signal that love has "synced"...and it's go time.

According to the makers of LoveSync, this device will "Take the Luck out of Getting Lucky." It brings a whole new meaning to "pushing each other's buttons." It's an ideal gift to tell your significant other "I care," without actually having to care, or talk about icky things like feelings.

If you find your significant other is already on the couch binge-watching The Bachelor, no problem! You can conveniently slink back to your button and hold it in for four seconds to cancel the desire. No harm, no foul! Live to fight another day.

Have fun explaining those buttons to inquiring children.

No word yet on whether LoveSync can also order wine, light candles or play Barry White. Maybe that's in the works for LoveSync 2.0.

Of course, LoveSync does have some pitfalls. Cats and toddlers love a good button. That'll be a fun conversation — "Honey, who keeps canceling my mood submissions?" And have fun explaining those buttons to inquiring children. "Yeah, kids, that button just controls the lawn sprinklers. No big deal."

If you've been dialing it in for years on Valentine's Day with flowers and those crappy boxes of chocolate, now you can literally dial it in. With a button.

Good luck with that.

The social power of 'Reddit' is helping teens of anti-vaxxers get vaccinated

Noam Galai/Getty Images for TechCrunch

Reddit certainly earns its motto as "the front page of the internet," with roughly 540 million visitors monthly, the third most-visited website in the U.S., sixth worldwide. Unlike Twitter and Facebook, Reddit is a largely anonymous platform. People's faces are masked, their names are disguised. Which makes their hidden humanity all the more impactful.

On Reddit, both news and serious information are threaded in among gifs of cats and posts about Call of Duty, but that doesn't make it any less important. For many people, Reddit signifies the town hall where news is passed along or stomped into obscurity.

It gives you a healthy read of our society as a whole.

RELATED: Forget Rabies, 'Woke' Hipsters in Brooklyn Skipping Vaccines to Prevent 'Dogtism'

A recent Pew Poll found that Reddit leans left politically at a rate higher than the general public. Most users are young men, whose extensive internet use gives them a gatekeeping authority over what information should be considered important. From there, it spreads through the rest of the internet and helps shape public opinion.

So, it makes a lot of sense that Reddit has become a sort of makeshift safe place for children who grew up with parents who refused to give them vaccinations. Of course, Reddit also vehemently mocks the anti-vaccination folks, for better or for worse, often the latter, but that's a subject for another day.

The Daily Dot recently published an article on this strange intersection of ideology and nerd culture. "Desperate teens of anti-vaxxers are turning to Reddit for vaccination advice."

The article follows Ethan, whose parents are staunchly against vaccinations:

But Ethan is not his parents. When he turned 18, he decided to take matters into his own hands. He wasn't sure where else to begin, so he turned to Reddit.

Where do I go to get vaccinated? Can I get vaccinated at my age?" Ethan asked his fellow redditors in December. Ethan's post flooded with over 1,000 comments from users offering their encouragement and support, along with practical advice. "Good on you for getting your vaccinations," one user responded. "It's never too late and you're not only protecting yourself but those around you who truly can't get vaccinated.

Ethan told the Daily Dot that some redditors even offered to give him money via GoFundMe or PayPal if insurance didn't cover the shots. "People were really supportive, and that was really cool," he said. "I had the blessing of Reddit. They were supporting me on a decision my mom freaked out about." Ethan is not alone. "More and more teens are turning to places like Reddit to seek out information on where and how to get vaccinated, and if it's too late."

Whatever your opinion on vaccinations, there's a positive message to all of this. A human message. Hopeful. Proof that, in an increasingly caustic world, people can turn to one another in times of need.

Whatever your opinion on vaccinations, there's a positive message to all of this. A human message. Hopeful.

Now more than ever, that is crucial.

Given the social power of Reddit, it is often characterized as a tool for politicians or political movements. Throughout the forum, various political ideologies gather and organize like factions in some ideological war. A political thread on Reddit is like a Facebook comment section at its most hostile, arrogant or confident, but with no identities attached to the attacks, rants or opinions. When you find yourself riled into a debate, it's easy to wonder who's behind the replies, especially the more vicious ones.

People often characterize it as a hive-mind message board full of circlejerk memes and jokes about SpongeBob. This description isn't entirely wrong, but it is shallow and incomplete. At its core, Reddit is humane. Its users, for the most part, are compassionate. If it were an experiment on human nature, the results would be gratifying.