There is a famous statement that an optimist will see a glass half that is full, while a pessimist will see a glass that is half empty.  The basis behind these distinctions is that people who possess a more optimistic worldview tend to focus on what is there, what is present, what is available.  Conversely, people who possess a more pessimistic worldview tend to focus on what is missing, what is gone, what cannot be attained.

To many people, the color of reality is closer to the view of the pessimist than the optimist.  After all, life isn’t fair.  The nice guy always seems to finish last.  Vast inequality exists between people and between countries that defy many people’s imagination.  How can somebody possibly be an optimist?  Optimism seems to be the province of a foolish Pollyanna type worldview that fails to comprehend reality.

The Truth of Reality

In order to objectively examine the quality and power of our worldview, it is important to gain an understanding of the true and full nature of reality.  Simply put, reality is what is.  Reality is and only can be what exists, what is here, what is present.  Reality must be something … it must contain a form.  Reality must be defined by substance, it cannot be defined by a vacuous and subjective notion of what is missing.

Understanding this fundamental truth focuses the context of our experience, and allows us to live in the world of what is.  By focusing our attention on what is, instead of allowing ourselves to be distracted by wants and wishes, it creates a much more solid basis upon which to act.  Accepting what is does not mean that we cannot create change … it means that we understand how change works within the context of our present reality.  We must influence our reality in order to change it.

The Power of the Optimist

The power of seeing a half full glass comes from the focus on objective reality that can only spring from what is.  The reason for this is because our only point of influence on reality comes when we change the nature of what is.  This requires us to focus on the things we can influence, and only the things we can influence.  Most people waste their creative power by obsessing on what they feel to be missing, , what they feel to be wrong, or what they feel to be unfair.

The power of the optimist flows from their focus on what is available and what is present.  Most people possess far more power to influence their life than they are able to understand.  Our futures can be definitively shaped by the decisions that we make.  As the quality of these decisions increase, and as the proximity of these decisions converge on the segments of our life that we can influence and change, our control on the future increases.

Possibility Exists Beyond the Reach of Blame

A principal problem in the interactions between most people, companies, and governments is that too much discussion revolves around blame.  A prevalent destructive assumption is that anything which goes wrong must be somebody’s fault.  This creates a fire storm of blame shifting and blame deflecting.  To the person who seeks to influence the course of their future, they must learn to look beyond whose fault the problem is, and focus on what can be done to improve the future.

To the extent that mistakes are or have been made, it is important to learn from them so that they are not repeated.  However, excessively focusing on who is to blame for mistakes all but guarantees a lack of future achievement.  Even when bad things happen to us that we do absolutely nothing to cause, we must understand that our lives exist in a reality of random events that are largely beyond our control.  Railing out against the person who caused our hardship does absolutely nothing to improve our situation.

When understood and applied properly, these principals create a tremendous base of power for us to influence our personal, professional, and financial lives.  Many of our personal relationships encounter difficulties when we blame one another for problems or mistakes.  Many of our workplace problems revolve around assigning blame, shifting blame, and attempting to avoid blame.  Many of the financial problems that people work themselves into evolve from an unwillingness to admit past mistakes and learn.

In the end, each of us possesses the power to influence the course of our personal, professional, and financial future.  Unfortunately, there are startlingly few who choose to use this power.  Too many people allow their pride, politics, and emotions to block the actions and decisions that can shape the course of their future.  Too many people cannot let go of their conceptions about the problems and unfairness of life, and fail to create the changes in their own life and the lives of people about them that can help to bring about the changes they desire.  Each of us must make our own choices, must decide how we will view the glass, and mus take ownership over the future direction of our life.

 

In the midst of persistent economic turmoil, there is a growing sentiment that somebody should do something about all of these problems.  This is a natural reaction to what feels like an opaque and impersonal market.  The actions of Washington and Wall Street show no semblance of connection with that of the regular people who drive the economy forward.  In light of this clear lack of interest to do anything that is not oriented toward special interests, there is a persistent feeling that ‘somebody’ should do something.  Unfortunately, nobody seems to really know who that person is, since the governing institutions are pervasively corrupt.

This has become a key point of concern for an increasing population of citizens.  These ‘regular people’ are working hard to build a life for themselves and a legacy for their posterity.  As election cycles come and go with repeated broken promises of reform devolving into ever greater levels of corruption, there seems to be nobody that is going to ‘do something’ about the current situation.

At this point of apparent hopelessness, there is a fundamental insight that has the power to set you free from the shackles of dependence and create a life of power and prosperity.  This insight is that the key question is not one of what ‘they’ need to do; it is one of what ‘you’ need to do.  The future of each individual person is the aggregated total of the decisions that they make over an extended period of time.  While the actions of others (or lack thereof) may be eternally frustrating, they are not the determinant of our future.  It is what we decide to do and decide not to do that creates our future wellbeing.

This is the fundamental reason why it is so important to build a personal portfolio of success.  This can take the form of passive investments such as income properties, a small business, multi-level marketing opportunities, or any of the many ways that are available to earn income and create wealth.  By taking personal control of your financial future, it will create the freedom to pursue your dreams and live your priorities.  Many people will have their future dictated by the actions of Washington and the machinations of Wall Street, but you have the power to write your own destiny.  Using this power wisely is one of the greatest legacies that you can create for posterity.

 

Knowledge and power are both deep and influential topics.  There is a popular sentiment that knowledge is power.  This sentiment stems from the fact that people who are educated and skilled have much greater opportunities to influence the shape and direction of their lives.  As time has moved forward, knowledge has become increasingly specialized and increasingly dispersed among a larger number of people.  In short, the power of knowledge comes from specialization and that specialization is no longer concentrated in a handful of metropolitan areas.

This is where the impact of politics creates problems.  Political solutions are frequently created and implemented by a central authority.  This can be a city council, county agency, state, or the federal government.  In each case, a council of experts are gathered by the political authority to study the situation and make recommendations.  In some cases, public agencies become hotbeds for corruption and influence by corporate interests or unions.  These circumstances make for popular news stories and special reports. However, there is a deeper problem that is largely unknown and frequently unreported.  With the world becoming increasingly complex, knowledge becoming more specialized and the people possessing that knowledge becoming more dispersed, it is literally impossible for any central agency to possess enough knowledge to create an optimal solution.

Over time, this problem has grown in scope and impact since the number of government representatives has stayed the same while the population and size of government has grown.  Consider that the the US legislature currently has 100 Senators and 435 Representatives.  This total has not changed for a very long time, so with each passing year the number of people represented by each person in congress increases.  Similarly, the political power of each person in congress increases.  With this trend of more power becoming concentrated in the hands of government, the impact of mistakes becomes increasingly stark.

It is important to consider that when the number of people represented by an individual increases, it becomes impossible to individually know a significant number of the people you represent.  This means that elections become an exercise in marketing and messaging instead of campaigning to people whom you personally know.  This means that large amounts of money are required to spread a message to many people whom you need to influence in order to win the next election.  This phenomenon results in shifting influence away from individuals, toward large contributors such as special interest groups, corporations, and unions.  Even in an environment that is absent of overt corruption, the influence of large organizations will necessarily trump that of individuals.  In most elections, there is a small field of candidates and none of the candidates completely represents the interests of any voter … people simply vote in favor of the person who they believe are likely represent their interests the most closely.  Even then, most elections result in between 1/3 and 1/2 of the electorate (i.e. people who voted for the opposing candidate) are unrepresented.

Thus, the question becomes one of the best way to create results in a world where knowledge is specialized, that specialization is widely dispersed, and decision power is becoming concentrated.  The current situation is one where people in power have far too much power, and create initiatives that are (supposedly) well intentioned, but fail to produce results.  One way to address this issue is to increase the number of representatives in government.  Another option is to decrease the size and scope of government so that market-based solutions emerge.

The notion of increased representation in government is appealing to many, due to the intellectual appeal of legislators who are members of our community.  This is most certainly preferable to the current situation, but still carries the implicit problem of trying to make centralized decisions in a world where knowledge is specialized and dispersed.  It is possible that this these centralized decisions will be incrementally beneficial to those who are currently under-represented, but will not address the fundamental problem of centrally planned solutions.

The idea of market based solutions is appealing to many in the business community, because it allows them more freedom to create products and services that can profitably benefit their customers.  The unique power of markets is that the dynamic process of trial and error allows for ideas and solutions to emerge from the specialized knowledge people possess, and is not constrained to a particular geographic area.  The aspect of markets that many people find unappealing is that the outcomes they create are not always the same ones that they personally desire.  Competition necessarily means that some people will be more successful than others.  Relying on voluntary charitable donations necessarily means less funding than would be available through a government agency that is financed with tax revenues.

The fundamental question that individuals must answer is not one of whether markets are ‘good’ or ‘bad’ … those descriptions are highly subjective, and lack intellectual depth.  The question is whether we prefer to pursue centrally planned solutions that we know to be sub-optimally effective, but are able to be directed.  In contrast to this is markets, where more products, services, and solutions emerge but results are produced that many people do not find desirable.  Fundamentally, the choice is between a sub-optimal solution that we can direct and a more optimal solution that we must allow to emerge.  The question of knowledge, power, and politics ultimately comes down to whether you value the ability to direct outcomes over the generation of greater output and opportunity.  The result of this choice is ultimately less important that the understanding that a choice must be made.

The great fallacy of utopia is quickly becoming revealed.  There is no perfection … only varying degrees of trade-off decisions.  We make these trade-off decisions as individuals, and as an electorate.  As each of us go throughout our lives, it is important to understand these decisions, and their extended implications on our personal, professional, financial (and political) lives.

 

One of the logical fallacies that is becoming increasingly prevalent in the contemporary world is that of the false dichotomy.  This is also referred to as the either-or fallacy, fallacy of false choice, black and white thinking or the fallacy of exhaustive hypotheses) is a type of logical fallacy that involves a situation in which only two alternatives are considered, when in fact there are additional options.  Unfortunately, the false dichotomy has become a dangerous tool for pushing public policies that are not necessarily in the public interests by presenting them as the only alternative to prevent a catastrophic scenario.

The reason why this logical fallacy has become so problematic is that it is frequently used as a means of creating artificial emergencies and rushing decisions that are typically optimal for connected parties and sub-optimal for everybody else.  By and large, the harder somebody pushes for a decision right now, and the more they try to get you to act out of fear, the worse off you will be from the deal.  As we go throughout business and life, it is very important to avoid falling into the trap of these false dichotomies, as they frequently lead to very bad decisions.  Some of the more famous false dichotomy’s in the contemporary world:

We need to do a bailout now or the whole economy will collapse

This was the (in)famous plea from Hank Paulson when he was Treasury Secretary during the financial crisis of 2008 when an unprecedented level of power was shifted to the Treasury and Federal Reserve.  What was left unsaid in his dire plea for “emergency powers” is what would happen if the firms in trouble simply went bankrupt and were sold off at a discount to other players in the marketplace.  As it turns out, the financial markets still froze up after the so-called “solution” to the financial crisis, since nobody wanted to trade in the impaired debt instruments due to uncertainty about whether the value(s) would be supported by the government.

With all of the players waiting to see if they could get a better deal from Uncle Sam, nobody had any incentives to play by the (normal) rules.  What ultimately resulted was an unbelievable concentration of power in the hands of the Federal Reserve and Treasury without much (if any) real discernible benefit to the greater economy.  The justification typically cited is that if the actions weren’t taken, the economy would have collapse.  Of course, this is another logical fallacy since it is impossible to prove a negative.  Naturally the people making these claims are aware of this fallacy, but still persist with using it to justify destructive policies and further concentration of power.

If you’re not with us, you’re against us

This was the famous phrase uttered by President George W Bush in response to the terrorist attacks of September 11th, 2001.  It drew great ire from the media, and is another example of a clear logical fallacy.  It is most certainly true that the United States has an interest in stopping terrorism.  However, it does not necessarily follow that you should target people who do not act against terrorism with the same aggressiveness as yourself.  It is quite possible that a group (or nation) could be quite opposed to terrorism, but unable to commit resources for the purposes of actively fighting against it.  Of course, this rhetoric is not only used by George W Bush.  Politicians of all stripes and colors regularly depict any opposition to their policies as “extremism” or paints any opponents as the enemy.  When attempting to curry public favor for his stimulus project, President Obama regularly stated that the spending was absolutely necessary to create jobs and avoid an economic catastrophe.  It turns out that the expected job growth didn’t occur, and the only sector to significantly benefit was government.  Of course, (as usual) “Things would have been catastrophic if the measure hadn’t been approved.”

If cap and trade isn’t adopted, global warming will destroy the planet

The full extent to which mankind has the ability to create or stop global warming is still a matter of considerable disagreement and doubt.  There is convincing evidence in favor of the conclusion that our contributions to total global greenhouse gases are not sufficient to change whatever climactic events are in motion.  Nevertheless, a consistent drumbeat of fear-based rhetoric over the environment and global warming has steered a large amount of public policy over the past few decades.  This is not to say that the environment should be ignored … simply that positioning anybody who opposes a policy or initiative as being against clean air or clean water is intellectually bankrupt.  Logical fallacies such as this are typically the province of those who either lack the mental capacity for rational discussion or seek to shut down the process of rational discussion for the purpose of passing rules that are favorable to their political allies.

Ultimately, the false dichotomy serves as a highly dangerous rhetorical tool that has been used to influence many destructive decisions.  By using fear to force a quick decision with incomplete information, the people in power can acquire favorable decisions that would not otherwise be possible under the full scrutiny of a logical examination.  As individuals, we cannot stop this tide of destructive decisions in the public arena, but we can ensure that our own decisions do not fall prey to this fallacious reasoning.

 

Robin Hood is a popular figure in contemporary culture.  In the story of Robin Hood, the King of England had left the country to fight in a war and his brother Prince John usurped the throne in his absence.  During this time, Prince John increased taxes prodigiously and used his power to seize the property of many people in England.  As the jails began to fill up with people who failed to pay their taxes, a cadre of outlaws exiled themselves to the Sherwood Forest.  From there, “Robin Hood and his band of merry men” staged ambushes and raids to take back the money that had been looted by the government and returned it to the people whom it had been extorted from.

To many people, Robin Hood is much more then a story or a legend.  The actions of Robin Hood are frequently described by the phrase: “He robbed from the rich to feed the poor”.  Unfortunately, this understanding misses a small, but critically important point.  Robin Hood did not rob the rich because they were rich . . . he robbed the rich because the sole source of their wealth was looting the legitimate efforts of others.  Furthermore, Robin Hood did not distribute these funds to the poor because they were poor.  He gave the proceeds of his raids back to the people from whom it was originally extorted.

The difference between these two paradigms is both subtle and epic.  The former advocates taking that which people have rightfully earned for the express purpose of distributing it to people who have earned less.  The latter advocates a belief that every person has a right to what they have produced and that no other person possesses the right to tell them how their resources should be used.  Thus, in the contemporary context, Robin Hood could rightly be understood to have delivered a tax rebate to those whose resources were plundered by the government to finance the desires of the people who were in power.

In our current world, there are all too many people in power who profess to take the supposed mantle of Robin Hood onto themselves as self-proclaimed arbiters of how much should be taken from the “rich” and how much should be distributed to the “poor”.  In this capacity, the power of government is used to pursue the same ends as Prince John in the Robin Hood Story.  The resources of people who produce are looted by the government to serve their own ends.  In the case of Prince John, the resources went to finance castles, banquets and foreign wars.  In the case of our current government, the resources go to finance additional public employees, pensions, and social programs that support the re-election of politicians that depend on popular favor to perpetuate their base of power.

In the end, we must re-visit the idea of Robin Hood and understand that the essence of virtue is not to plunder the resources of others for the purpose of distribution to those deemed needy by a government committee, but to produce things that are of value to others.  The focus on “need” is subjective and nebulous.  If the needs of today are satisfied, more needs can be generated tomorrow as a pretext for seizing the resources of others.  If a product or service of value is produced today, it will improve the life of another person tomorrow.  A focus on “value” promotes the virtue that serves both self and others.

 

When life becomes difficult, it can become very easy to believe that we are the victims of circumstance.  It is comforting to blame the economy, or whichever political party happens to be in power.  (Ironically, the political party in power typically blames the people that were in power beforehand as a way to try and absolve themselves of responsibility)

However, as individuals there is only a narrow scope of things that we can really control.  I do not have the ability to directly influence the political system since my one vote is easily dissipated.  Thus, the only area of my life that I can ‘really’ influence is what I choose to do and how I choose to react to my environment.

The importance of this insight lies in the fact that many people do not actively choose how they will act . . . instead, they react to their environment emotionally.  Therefore, in a very real way their environment shapes them instead of them shaping their environment.  Conversely, if we wish to exercise influence over our circumstances it requires that each action be a conscious choice.  James Allen described this phenomenon in his book: “As A Man Thinketh.”

The composition of the human mind is such that the thoughts we hold in our mind will manifest themselves in action by means of influencing our perceptions.  When our minds are fixed on blame and failure, then all that we will see is failure.  This focus on failure will naturally result in actions that take us in the direction of our thoughts.  When we consciously fix our minds on thoughts of improvement and achievement, we will remain open to opportunities.  Once we become open to opportunity, they seem to live everywhere that we look.

In the end, it is our thoughts that determine what we perceive.  This perception influences our actions and slowly molds the composition of our character.  Thus, it is figuratively and literally true that we are who we choose to be.

 

One of the concepts that can emerge from irresponsible fiscal and monetary policy on the part of the government is what Dan Amerman refers to as the financial “reset” button.  Practically speaking, this is the phenomenon that occurs when a government floats away its debt by inflating the currency and reducing the purchasing power of the dollars already in circulation.

The danger posed by this “reset” button is that it will destroy the purchasing power of all people who have dollar-denominated assets, and dollar-denominated payments from annuities, pensions, or government programs.  In addition to this, inflation will increase the nominal value of an asset without increasing its underlying purchasing power.  However, the government will recognize this increase in nominal value as a taxable gain and the investor will be left with less purchasing power than he or she had before the inflation occurred in the first place.

The reason why governments use the “reset” button is to clear out excessive amounts of debt by diminishing its value through inflation.  This seems all but inevitable, given the current government debt of $13.7 Trillion, and the unfunded entitlement Liability of $76.4 Trillion in 2010 dollars.  When this eventually happens, it will result in many people of low to moderate income being ‘pushed off the edge’ into desperate poverty.  This is likely to be accelerated by the relatively large pool of people who have become dependent on government subsidies and have not developed marketable skills that can be used to earn income at inflating rates.

The other group of people who will be adversely affected is senior citizens that are dependent on social security and pension payments.  As the purchasing power of these payments is destroyed through inflation, it will push many of the retired population to lower levels of prosperity and possibly into poverty.

This “reset” button will need to be invoked because of the spending liabilities that have been undertaken by government agencies in an attempt to buy votes with government policy and taxpayer money.  The hitch is that taxes can no longer be raised high enough to fund the spending, so the only answer left is to destroy the purchasing power of the currency.  In this case, the people who will be damaged the most are the ones who have become dependent on government entitlements . . . meaning that the policy of spending to win elections will inevitably impoverish the people whose votes are being purchased with the spending.  Not quite the warm and fuzzy compassion that you see in political campaigns.

Escaping the Inflation Trap

Once people fully understand the specter of inflation, and its likely impact on their financial wellbeing, the natural reaction is frequently to despair.  This does not have to be you, since there is a historically proven way to escape the inflation trap.  This trick is accomplished by understanding that inflation destroys all dollar-denominated paper assets . . . including debt.

Thus, if you have a real asset such as an income property that is financed with fixed rate debt, the inevitable inflation will increase the dollar-value of your property, but your loan balance and payment will remain flat.  Furthermore, your rents are likely to increase with the inflation, as the cost of new housing increases in nominal dollars.  By building a portfolio of income producing assets that are financed with long-term, fixed-rate debt you can actually benefit from inflation.  The advantage of this strategy is that you can leverage the expertise of local market specialists to select high quality properties in strategic micro-markets with excellent property management.

 

Truthfully, we’re not even close . . .

Source: BEA & Census Bureau

Recent machinations of government agencies making repeated attempts to talk up the US economy are not only another exercise in willful ignorance, but they are now failing to inspire the political supporters who were responsible for them gaining power in the first place.  A simple analysis of rudimentary (but frequently ignored) output statistics makes this trend painfully clear. Let’s begin with Gross Domestic Product.  The government has nearly broken its arm attempting to pat itself on the back over a recent proclamation that the recession “ended” in June of 2009.  However, the ‘real’ way to measure national output and affluence is not with aggregate GDP, but GDP per capita.  Put another way, what really matters is not the total level of output, but the total output per person.  When measured in this fashion, the current economic state of the United States still looks dour.  Currently, per capita GDP is 3.6% below its Q4’07 peak.  The recovery has been very slow and anemic, with the appearance of gains only emerging when compared to the depths of the financial crisis. Further analysis of the economic data shows an even more disturbing trend where real private sector output is

Source: Bureau of Economic Analysis

shrinking as the government assumes an ever increasing role in the economy.  This removes the luster from any faux gains in per capita GDP as the increased numbers are simply resultant of more government spending that is being financed with debt.  It always is and always has been true that the only real driver of economic affluence is the private sector.  By definition, the government must extract every dollar it spends from some corner of private enterprise.  When the real output of this private enterprise contracts, it simultaneously arrests any real advancement in national affluence. In many cases, government entities will attempt to conceal this erosion in national affluence with entitlement programs and stimulus projects that spend money they don’t have on things they don’t.  Namely that the ‘real’ economy is being bled out by a bloated and increasingly authoritarian government.  As astute investors, we need to become educated in strategies for financial survival that will allow us to weather this economic storm until a (hopeful) return to fiscal sanity and pro-growth policy.

Source: Federal Reserve

Analysis of yield curves for government borrowing and lending rates shows a disturbing trend that has emerged since the Financial Crisis of 2008.  Under Ben Bernanke, the Federal Reserve has reduced the Fed Funds rate for bank lending to nearly zero.  This has had the ancillary effect of pulling down rates for treasuries, as banks borrow from the government at near-zero interest rates and earn arbitrage profits by purchasing treasury notes.  This strategy is being intentionally employed by the government to prevent capital from leaving the banks in the form of loans to individuals and businesses that would create inflation, thanks to the rapid expansion of monetary reserves pushed on banks by the Fed.  The net effect of this move has been a contraction in the availability of financing for individuals and businesses, which is further concentrating financial power in the hands of government.

A counter-intuitive side effect of expansionary government can be increased corporate profits and stock valuations.  The reason for this is because large corporations hold more political power than smaller entities, and can capture benefits from political lobbying when government is very powerful.  On balance, this phenomenon is hurtful to the average citizen, because it arrests the natural process of competition and directs profits to entities with political connections instead of those with the best products and services. Thus, an era of excessive government can simultaneously produce high levels of corporate profits.  The hitch is that these profits do not result from healthy economic expansion, but originate from the political favor earned from extensive lobbying efforts on the part of major corporations.

Because of this, it is possible that a market value expansion may coincide with the trend toward more government seizure of power. In light of these trends, there may be an emergent opportunity for investment in the stock market since the current ratio of total market capitalization relative to GDP is at approximately the same level as was experienced after the before the technology bubble and after the tech crash.  It is important to note that the gains from increased government power will not be spread equally among all stocks and asset categories.  The sectors most likely to see disproportionate gains are the ones who control commodities such as oil, food and energy or who directly benefit from government contracts. In the end, our current trend of economic decay is not good news for average citizens, but can contain a sliver of opportunity for astute investors.  By concentrating your investments into assets like income properties, which will benefit from rent increases that result from reduced affluence pushing people out of the pool of buyers and into the pool of renters.  This migration of people away from home ownership will reduce vacancy, strengthen rents, and provide fantastic cash flow opportunities for astute investors that purchase this kind of investment property.

Action Item: Protect yourself from a government entitlement collapse by becoming self sufficient and investing in the businesses, products, and services that will increase in demand as more people slip into subsistence.

 

Now that the 2010 election has (mostly) concluded, there are a few decisive trends that have emerged.  The most prominent is an abrupt shift in the balance of power for the house of representatives away from the incumbent Democrats to a new class of Republican candidates.  In addition to this, there have been many governorships that have changed hands.

There is a risk that many in the Republican party will misread this in the same way that Democrats misread their electoral victories in 2006 and 2008.  Namely that the votes were not so much for the Republicans as they were against the entrenched Democrat power structure.  There is a market sentiment across the country that the size and scope of government has grown out of control.

For many decades, political power in Washington DC has been a simple function of channeling lobbying funds, pork, and payoffs to the political allies of whomever controlled the legislative houses.  Public anger over this culture of irresponsibility and corruption has reached an unprecedented level.  A part of the trend that emerged yesterday was an artifact of the fact that the US electorate is largely center-right in nature, meaning that they will ultimately reject excessive intrusion into their lives from either end of the political spectrum.  The most prominent effect that unfurled was the notion that when a particular political party does not deliver on its promises for fiscal reform, it will be summarily removed from office.

Stagnation in the Midst of Change

One of the other truths that have emerged from the election is a return to reality for the states where the entrenched power structure is too strong for real change to emerge.  In my home state of Oregon, our prior balance of four liberal congressmen, one liberal senator, and a lone republican representative held through the election with absolutely no change at all.  Furthermore, the opportunity for the state to elect its first Republican governor since the early 1980′s was also destroyed as the state opted to re-elect a former two-term governor who presided over the construction of our states current fiscal mess.  The election of change produced no meaningful change in the state where I reside.

At artifact of Oregon’s vote by mail election system is the fact that it is extremely difficult to adequately control against vote fraud, since the state does not validate citizenship for newly registered voters.  Since the secretary of state office is firmly in control of the incumbent party, it is impossible to get a fair audit of the state election system.  It is quite ironic that in a gubernatorial race that was decided by less than 10,000 votes, there were approximately 90,000 votes from (left leaning) Multnomah county that were mysteriously dropped off just before voting was closed.  In the end, there will always be some areas that resist the change that is necessary because the entrenched power structure is so strong that it cannot be overcome.

So What Happens Now?

It is my sincere hope that the election of reform minded representatives results in a return to Fiscal sanity for the United States.  However, each of us is still ultimately responsible for our own prosperity, regardless of who wins or loses elections.  It is always important to understand what is happening in the financial and political environment so that we can plan our decisions from a standpoint of knowledge.  However, it is equally important to avoid over-reacting to political trends (both positive and negative).   The person responsible for your future is and always will be you.

 

There is a popular belief that knowledge is power.  This sentiment is the motivation behind most programs of education that endeavors to create a more knowledgeable workforce.  It is certainly true that knowledge creates vast potential and opportunity.  But it is also true that there is one major piece that still needs to be added in order for opportunities to be realized.  Knowledge must be accompanied by intelligent action to produce results. This insight is extremely important for the emerging workforce of the twenty first century.  The reasons for this is because there is a growing belief that compensation should be based on what you know, instead of what you do with what you know.

The pervasive impact of this fallacy creates large masses of highly educated people that perpetually complain about the insufficiency of their wages while the creative capacity of their minds lays dormant, because of a terminal unwillingness to act. Typical manifestations of this situation occur when large amounts of people attend ‘boot camp’ seminars on subjects like real estate investing, or stock market investing and then spend large amounts of time and money learning about elaborate strategies, but fail to act on what they have learned.  Another version of this situation happens in the world of large corporations. There is an increasing population of people who focus on ‘strategic vision’ and 5, 10, 25, 50, 100, or 500 year business plans.  However, all of this ‘strategic thinking’ is ultimately useless unless it drives real, tangible action.

This is not to say that people should stumble through life without vision or strategy.  It is not to say that all thoughts of the future are useless and frivolous.  What I am saying is that strategy, vision, and all other forms of long-term thinking are only useful when they are acted upon.  Because of this, we can see that knowledge only represents potential power.  It must be accompanied by intelligent action to produce meaningful results.