Tuesday, September 29, 2020 |
9:00 – 10:30 pm EDT |
Case Western Reserve University
Moderator: Chris Wallace of FoxNews
Link: Transcript Frame Source
President Trump made news recently for declining to agree to a “peaceful transfer of power.“
Mr. President, real quickly: Win, lose, or draw in this election, will you commit here, today, for a peaceful transferal of power after the election? And there has been rioting in Louisville. There’s been rioting in many cities across this country — red and — your so-called red and blue states. Will you commit to making sure that there is a peaceful transferal of power after the election?
THE PRESIDENT: Well, we’re going to have to see what happens. You know that. I’ve been complaining very strongly about the ballots. And the ballots are a disaster. And — and —
Q I understand that, but people are rioting. Do you commit to making sure that —
THE PRESIDENT: Oh, I know. I know. Yeah, no, we want —
Q — there’s a peaceful transferal of power?
THE PRESIDENT: We want to have — get rid of the ballots and you’ll have a very trans- — we’ll have a very peaceful — there won’t be a transfer, frankly; there’ll be a continuation.
The ballots are out of control. You know it. And you know who knows it better than —
Q No, sir. I don’t know that.
THE PRESIDENT: — anybody else? The Democrats know it better than anybody else.
The President’s sympathizers explain away his words by imagining a situation comparable to Saddam Hussein’s bluff with Weapons of Mass Destruction: Whereas Saddam Hussein could never admit he didn’t possess Weapons of Mass Destruction, out of need to project an image of strength, President Trump must never entertain the possibility of losing.
Here’s a description of UN Weapons Inspector Hans Blix’s assessment:
Blix provides a number of potential answers, ranging from Saddam’s pride, to the argument this essay advances—that he hoped to retain the threat of WMD in his weakened state. Only with the perception that he possessed unconventional weaponry could he be protected from his enemies such as Iranian Shi’a, Israel, and the Kurd
We all know what disaster resulted from Saddam’s miscalculation and his need to maintain his pride..
In addition to his pride, Trump needs narcissist supply and the fears post-Presidency lawsuits. As a narcissist, he will provoke chaos without limit, seeing chaos as a bargaining chip in his bid to secure himself either:
Any post-presidency scenario that does not provide him with sufficient attention and a cushion to his ego will be seen by the President as unacceptable.
Like former Illinois Governor, Rod Blagojevich, the President is a transactional man who expects to get something in exchange for the power he’s been entrusted with.
Its a well know that one should not joke about bombs while you’re at the airport. Likewise, you shouldn’t bluff about the peaceful transfer power in an election season. The risk of this sort of brinkmanship is that it spirals beyond anyone’s control.
There is also a possibility that all this talk about fraud could provide cover for state legislatures to overrule the popular vote in their state, prompting Congress at a national level to cast votes on a 1 voter per state basis, which favors Republicans and would lead to a Trump second term.
As a history major and creator of a contextual citation system, I’ve come to the realization how many famous quotations are passed down without access to the surrounding context.
He’s a quote from FDR that we do have the context for: (click blue arrows)
the only thing we have to fear is fear itself
For lack of a better term, I call these “naked quotations“.
These show up in journalism and on Wikipedia where we frequently have to settle for the citation of a naked quote.
As part of an effort to build the trust of our readers, I encourage authors to
live to a higher standard by fully citing sources and providing their readers with context.
Ted Nelson’s original vision for hypertext kept quotes connected to their sources with two-way links.
My CiteIt.net project is a rather hackish way of getting back what was lost with the web, towards Ted’s original vision.
I think many people underestimate how quickly a digital currency could become a reality in the US (and possibly Canada). Some of the following stories are a few months old but taken together, they present a strong case that a digital currency could become a reality much more quickly than people are aware of.
Sheila Bair, former chairman of the U.S. Federal Deposit Insurance Corp
I’ve been a big big advocate of digital currency central bank-backed or issued digital currency that actually could be distributed directly to households in times of stress
Give them cash you know don’t give them more debt and find what technology will allow you today to have a transmission mechanism that goes directly into households and obviously congress needs to authorize that there need to be very tight controls around it
but nonetheless in a situation like that we’ve seen how the government and the IRS on the fiscal side has struggled to get EIP funds to households those payments notwithstanding some of the problems and transmitting the payments have done a lot of good for the economy
and so but having some type of automatic stabilizer where cash could actually be distributed through digital wallets which are fairly easy to set up right now right into households that would be so much more efficient than pumping all this money into financial markets and seeing this giant chasm right between you know what’s going on the stock and bond markets and what’s going on with main street
Sheila, the digital currency idea is super interesting because there’s a real concern that the US is behind especially compared with other countries notably china are you concerned about that race to create a digital currency
Well I am I think you know we are privileged to have the world’s global reserve currency I don’t see that changing anytime soon but I do think one of the undercurrents of what china is doing at least especially in developed countries that have unstable currencies is to uh default to the renminbi you know as the currency of choice that they’re using their own countries through their central bank’s digital currency
So yeah I think that’s exactly what’s going on I think we need to wake up to it we shouldn’t be too complacent about our leadership position I think you know or the strength of our system the strength of our fed and its independence and its integrity I think will always give us the edge but we need to effectively use this technology domestically I think it’s insurgently needed but we should also think about how the dollar is used throughout the world.
The other thing nice about digital currency if it’s cryptocurrency if it’s traded on a distributed ledger you have a much better audit trail of transactions so from a law enforcement perspective kind of there’s an urban legend that somehow it’s it makes uh illicit transactions easier actually makes it harder because with the central bank issued or back digital currency you can actually trace the transactions where that that digital money is going through the distributed ledger so from a law enforcement perspective it also has huge advantages
But we do need to be very aware of what’s going on in other countries and the real risk of that is posed to us if we don’t effectively
leverage what you know what is is happening now I mean
I think between in 12 and 18 months we could probably have a system of digital currency if people really put their mind to it and again it needs to be authorized by congress uh but the fed I know has been looking at it for a while and I think we need to accelerate that.
(Tim’s speculative prediction)
From their stock prices, it appears that investors are not optimistic about the prospects of many small and regional banks. Warren Buffett’s company sold stakes in Bank of America, Goldman Sachs, and Wells Fargo. Simultaneously, Warren Buffet, or likely someone who works for him, paid $500 million for a stake in Barak Gold Mining.
If the small and regional banks start to fail, will the Federal Reserve follow the same bailout approach as 2008?
If you purchase a ticket to a business like Hershey Park and later, for some reason, ask for a refund, the Amusement Park will likely not give you cash.
Most likely, they will give you a coupon to visit one of the company’s businesses at a later date.
Digital dollars would likely also be programmable in and of themselves, allowing for instant tax payments at the point of sale. Tax refunds and rebates could be instant, too.
And attempts to purchase a restricted item — like, say, a firearm without proper background clearance — could be automatically denied.
In many ways, programmable digital money would be a fantasy come true for economists. This is because economists believe economies are driven by human behavior, and human behavior is driven by incentives, and all kinds of incentives could be built into digital money.
Imagine, for example, a maximum limit on the loan-to-value (LTV) ratio of home mortgages, designed to prevent future housing bubbles.
If such limits were programmed into the digital currency, as a form of “smart contract,” the transaction would not go through for a loan amount deemed too large.
Economists, political leaders, and central bank officials could then use the “smart contract” feature of digital dollars to tweak or massage incentives in all sorts of ways.
For example, fossil fuel use might be embedded with a higher VAT (value-added tax) surcharge than green energy use. Buying sugary cereal might create a small debit, whereas buying broccoli creates a small credit. And so on.
In addition to the above, all transactions would be instantly available for review, or easily aggregated into “big data” analysis patterns. This would give the Federal Reserve unprecedented new levels of visibility into the current state of the economy.
(filmed Feb 7, 2020)
Chris Cole of Artimis Capital (the person being interviewed) argues that most investors and pension funds are historically illiterate and use portfolios based on models of the last 40-years of market data, rather than longer-term market conditions going back to the 1920s.
Most people would be surprised to learn that most of the stock market growth of a 60/40 fund in the last 90 years occurred in the 1983-2007 era of Secular Boom.
90% of the returns of a 60-40 stock-bond portfolio came from the 22 years between ’84 and 2007.Just 22 years drove 90% of the gains of that portfolio over 90 years.
Cole argues that approaches we think of as “traditional” have done well in the recent Secular Boom, but would not have done as well in other market environments:
In bear-markets, one doesn’t know whether to expect inflation or deflation, so Cole advises that investors carry exposure to each possibility.
Although Cole is selling a proprietary asset class he calls “Long Volatility” (beware of how Cole is making his money), one does not to purchase his services to learn from his thesis.
Three of the 4 asset classes can be purchased through generic mutual funds or ETFs:
An asset class doesn’t have to generate a long-term appreciation to be beneficial if it is negatively or less-correlated with other assets. In fact, the example Cole uses actually loses money overall individually but is beneficial in counter-balancing the portfolio.
In Cole’s paper — The Allegory of the Hawk and Serpent — he describes the different investment eras since the 1929 stock market crash:
Investment returns were heavily influenced by what era the investor was in:
Beginning in the early 1980s, a self-reinforcing serpent of favorable demographics (the baby boomers) and declining interest rates (falling from 19% in 1981 to nearly 0% today) drove asset prices higher and higher.
Baby boomers saving for retirement meant more money flowed into stocks, bonds, and real estate, driving up prices. At the same time, interest rates were decreasing, causing individuals and companies to take on more debt, some of which were used to buy those same assets, further increasing prices.
Today, the situation looks quite different. The first wave of boomers began retiring in 2017. Over the next decade, more boomers will sell their serpent assets (stocks, bonds and real estate) to fund their retirement. On the interest rate side, it’s anyone’s guess where rates will go from here. We do know that they are at historic lows already.
Serpent assets include those assets which perform well in periods of growth such as
- bonds and
- real estate.
As these periods go on, they can become corrupted by greed as either fiat devaluation and/or debt expansion replace fundamentals. If left unchecked, this is ouroboros, where the serpent of growth eventually devours its own tail.
Hawk assets are those which do well in periods of decline or stagnation:
- long volatility/tail risk, and (Chris Cole is selling a strategy for this to more sophisticated investors)
- commodity trend following.
A number of portfolios attempt to implement diversity between assets in a way that can better weather a variety of market conditions:
|Vanguard 500 Index Admiral Shares||VFIAX||11%||6%||4%|
|Vanguard Value Index Admiral Shares||VVIAX||11%||7%||5%|
|Vanguard Tax-Managed Small-Cap Admiral Shares||VTMSX||11%||7%||4%|
|Vanguard Small-Cap Value Index Admiral Share||VSIAX||12%||7%||5%|
|Vanguard Real Estate Index Admiral||VGSLX||5%||3%||2%|
|Vanguard Developed Markets Index Admiral Shares||VTMGX||9%||6%||3%|
|Vanguard International Value||VTRIX||18%||10%||7%|
|Vanguard FTSE All-World ex-US Small-Cap Index Admiral||VFSAX||9%||5%||4%|
|Vanguard Emerging Mkts Stock Index Admiral Shares||VEMAX||9%||6%||4%|
|Vanguard Global Ex-US Real Estate Index Admiral Shares||VGRLX||5%||3%||2%|
|Short-Term Government Bond Index Admiral Shares||VSBSX||0%||12%||18%|
|Intermediate-Term Government Bond Index Admiral Shares||VSIGX||0%||20%||30%|
|Short-Term Inflation-Protected Securities Index Admiral Shares||VTAPX||0%||8%||12%|
According to Artemis’s research, the optimal portfolio from 1929 to 2019 was:
The “Dragon” shares the commodity and gold asset classes and adds a “volatility” asset class.
Implementing the “Active Long Volatility” is more difficult than other asset classes and likely is only possible for sophisticated high-net-worth investors.
There is a conversation on the (Vanguard) Bobble Heads forum the proposes the following instead:
After Barack Obama was elected President, Illinois Governor Rod Blagojevich had the power to appoint Obama’s successor to the senate.
Being a “transactional” sort of guy, Governor Blagojevich, wanted to use what he had to maximize his own interests.
FBI agents recorded Blagojevich conversing with an adviser:
I’ve got this thing and it’s fucking golden and I’m just not giving it up for fucking nothing
After he was impeached by the Illinois Senate, he was indicted and convicted in Federal Court and sentenced to 14 years in prison.
Now it is still possible for Trump to fairly win the upcoming election. But if he doesn’t win legitimately, will he go quietly?
I assume that Trump does not intend to give up the Presidency for “nothing” if he loses and that a lot of the choices he makes are about strengthening his hand and developing a narrative.
How much will Democrats be willing to pay, in money and otherwise, to have Trump leave office? And what will be Trump’s ask? Here’s my guess:
The basic idea to keep in mind is that Trump is less concerned about the peaceful transfer of power than the Democrats are. Trump has an affinity for chaos and that he will use that as leverage.
Everyone expects that Joe Biden will concede if he loses.
But if Trump loses but not in a big way, will he readily accept defeat?
If not, what will Trump ask and what will he threaten?
P.S. Why is it that this sort of politician seems to have a thing for having a full head of hair?