Reals vs Virtuals

Back in 2022, I came across this article that detailed the difference between what the author called Reals and Virtuals. It struck me a something profound, ubiquitous, and incredibly dangerous. The author basically classified people into two general camps, based on their way of viewing and working in the world. To explain this, I’ll use the table below that compares and contrasts the two styles.

Reals	Virtuals
Get their feedback from the real world. If a plumber turns on the water after a job, and the water sprays all over the house, there’s no chance to say “Well, that’s a great job!” If an electrician burns down the house, no one calls him a great electrician.	Get their feedback from what other people (can be made to) think. After a corporate merger, the CEO will always declare victory, no matter what the financial or business results are. If a politician signs the “Revitalize America” bill, it’s completely beside the point if America gets revitalized or not.
Look for real-world, objective results.	Look for buy-in and concensus, spin.
Judge actions by their real-world results. It doesn’t matter what your intentions were, if you caused damage it’s a failure.	Judge actions by their intentions. As long as you meant well, it doesn’t matter how much damage you did.
Implement Thomas Sowell’s “Constrained Vision” (see his book “A Conflict of Visions”) – there are no solutions, only tradeoffs. Some problems are beyond our ability to solve.	Implements Sowell’s “Unconstrained Vision.” Believe that we can solve any and all problems, if we just have “political will.”
Sowell’s “Benighted”. Ridiculed and reviled by the Virtuals.	Sowell’s “Annointed”. Self-appointed to solve all problems (if only everyone would fall in line!). Seen as irrelevant clowns by Reals.
Depend on actual skill to be effective.	Depend on rhetorical flair.
Produce real things – cars, furniture, software, houses, etc.	Produce words: reports, speeches, books, lectures.
Manage reality.	Manage perception.
Electricians, mechanics, gardeners, plumbers, truckers, farmers, etc.	Politicians, professors, journalists, middle managers, etc.
Seek their own approval in the quality of what they produce.	Seek the approval of, and power over, others.
Implicitly believe complex systems theory and ecology. Realize that some things are beyond our understanding and control.	Explicitly believe in Newtonian mechanics and machines. Society can be improved if we just have a big enough spreadsheet and “political will” (aka enough force to compel everyone).
In the novel “A Wrinkle in Time”, the three witches.	In the same novel, the Planet of It.
Organic growth, life.	Top-down control, organization.
Embrace serendipity, faith.	Afraid of unpredictability, seek control
In industrial process theory, Empirical Process.	Defined Process.
Permiculture.	Industrial Agriculture.

Once I learned this concept, I saw it everywhere. For example, I once worked in a hi-tech company that redesigned their website. Upon launching the new site, one-third of our traffic disappeared. To a Real, this was a disaster – customers hated our new site. To the Product Development department, the new site was “better” – because they said it was. You see this in government as well. Everyone is proud to sign the “Save the Children Act”, but few could even tell you what is in the law, and absolutely none of them will come back a year later to find out whether the children actually were saved, or whether the Act made their lives worse. You might say they don’t care about actual children, but in a larger sense I’m not sure they even understand that the children exist in a reality outside their own minds.

At another job, we took a test to see what Enneagram type we are (a personality classification system). Although all people are concerned with the truth to some degree, I was stunned to see that for many types, truth was far subordinate to being liked, fitting in, being in charge, being helpful, being recognized…it’s not that those people don’t care about they truth, but they’d happily ignore it (otherwise known as “lying”) for those other values.

Most university graduates are Virtuals, whereas most people who work in the crafts or with their hands are Reals. Therefore, most goverment and academic officials are Virtuals, living in some artificial construct of common consent, often with contempt for reality and the one-the-ground consequences of their actions. Have you ever noticed how politicians can act with real anger if you point out that the laws they passed are actually making things worse? Virtuals see to despise the Real world, and resent it if you try to make them think of it.

There’s a scene in Ayn Rand’s “Atlas Shrugged” where a passenger train’s engineer declines to take the train into a long tunnel, due to the decrepit state of the engine. A powerful politician bullies the railroad into taking the train into the tunnel. Everyone on board ends up dying. The politician was a Virtual; the engineer was a Real.

At this time in history, the human race faces existential challenges – possible peak energy, the failure and collapse of the fiat currency system, environmental collapse, all-consuming debt levels, the threat of nuclear war, etc. We need decision-makers with their heads firmly rooted in reality – like the train in the tunnel, this could all go south very quickly. Instead, we have a bunch of Virtuals so far divorced from reality that the phrase “Clown World” is now common (much like “Who is John Galt?” was comming in Rand’s novel).

Economist Thomas Sowell said “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” Imagine how much worse if they don’t even believe in their heart that the price to be paid for bad decisions is easily avoided through spin and propaganda!

Cooperation vs Competition

Sometimes I wonder what world people live in, because it sure doesn’t seem to be the same one that I live in. The aspect I’m thinking about today is that of competition vs cooperation.

I often hear people talk about the “cut-throat competition” of the economy and the “dog-eat-dog” nature of business. While it is true that some businesses compete, this really seems to miss the big picture.

Every company that I’ve ever worked for cooperates with far more businesses than it competes with. For example, we might have 4 or 5 businesses that we compete with, and you might describe that competition and fierce. But we probably cooperate with a hundred times as many businesses: starting with the businesses that built the buildings we use, the businesses that run the water and electrical services, the businesses that do our payroll and taxes, the businesses that built our computers and run our internet, platforms that help us with online commerce (like Amazon), the companies that made all the software we use, the companies that deliver our email, run our ad campaigns, and help us market to our customers. There are companies that build our phones and run the cell networks, there are the companies that bring us gas to put in our cars so we can actually get to work, companies that cook and bring us our lunches, the companies that made our furniture. I could go on and on and on.

Where other people see “dog-eat-dog competition,” I see an incredible web of cooperation – there are probably a hundred companies with tens of thousands of employees that support us directly, and that’s not counting the companies that support those companies and their employees! When you get down to it, there might be a hundred thousand people in the business of helping us (and others) run our company. It’s a truly remarkable, incredibly beautiful, and almost unnoticed phenomenon. It is, in fact, the basis of our civilization.

So the next time you hear someone talking about the cut-throat competition in the economy and whining that “if only we could learn to cooperate”, remind them that they are focusing on 1% of the picture and ignoring the 99%. Open your eyes to the amazing beauty of cooperation!

The Chart No One Talks About

In this era of Uncharted Financial Conditions, there’s one indicator that no one seems to talk about, but it sure seems important to me. That’s the Fed’s Excess Reserves in the Banking System chart.

So what are excess reserves? Banks have to keep a reserve of about 10% on the loans they have outstanding. That is, if they have $10 billion in loans out to customers, they need $1 billion in their account at the Fed. If they have $2 billion on deposit in the Fed for those $10 billion in loans, that means that $1 billion of it is “excess reserves”.

As you can see in the chart above, for decades banks kept as little excess reserves as possible. That’s because they didn’t make any money on excess reserves; only when they lend out the money did they actually earn any interest. Until the financial crisis of 2008, excess reserves were consistently at $1-2 billion; practically zero for the financial system.

When QE and ZIRP and all that nonsense started, excess reserves rose to higher than $2.5 trillion! This is astounding in light of the fact that the Fed’s balance sheet only expanded by about $4 trillion – $2.5 trillion our of a total of $4 trillion went into the banks’ account at the Fed and just sat there, never entering the economy. This, I believe, is one of the factors that kept us from experiencing price inflation when the money supply base was expanded so recklessly.

But wait, you might say – if the banks don’t make any money off excess reserves, why don’t they lend them out and make some money? The answer is that in 2008 the Fed started paying interest on the excess reserves of banks.

Ok, so think about that. The Fed creates “funny money” out of thin air, and gives it to the banks. The banks deposit the money at the Fed and the Fed starts paying them interest! I just want to say, that I would be very happy to park a trillion dollars in my own bank account if I can keep the interest on it. Please send me a check. This has to be the most bizarre racket for making money that I’ve ever heard of. When the banks need taxpayer money, the Fed has so many ways of funneling it to them. And they wonder why the 0.1% get richer – it’s easy to get rich if the Fed wills it so.

I’ve been watching this graph for years, and wondering if we’ll actually have the recession while the amount of reserves is falling. My understanding is that the banks are lending it out, which increases the amount of money in the system. In fact, one dollar of reserves can back ten dollars of loans in our fraudulent fractional reserve system, so as the reserves are drawn down the amount of money in the system keeps expanding rapidly. Once excess reserves are back down to normal, historical levels of $1-2 billion, that’s when I think a real financial shock will happen. In order to keep the money supply inflating at that point, the Fed will have to go back to some sort of QE or other money-printing operation. At some point, people are going to lose faith in the dollar and flock to gold, crypto, or some gold-backed offering from China or Russia. That will be a very dangerous time in many ways.

At the time of this writing (June 2019) the Fed (and other central banks) are actively plotting flooding the system with more funny money. It’s as if they are actively plotting the complete destruction of the world’s financial systems. For the next QE, I think it would be totally cool, and much more in line with reality, if they just declared that actual Monopoly money is to be taken as legal tender. Everyone who had the foresight to own a Monopoly game would get a huge windfall, and that would “stimulate the economy” (as any good central banker can tell you, printing more pieces of green paper makes everyone richer – it’s what makes the food grow and the timber for houses grow and harvest itself!).

Why We May Never Be Free

The history of humanity is that of ruler and ruled, oppressed and oppressor, the dominant and the dominated, etc. I long for a better system, where individuals are free to live as they choose without coercion.

However, sometimes I worry that human beings will never be free. There are a lot of factors that lead to the dominance hierarchy.

• First, humans are primates, and primates have hierarchically organized social systems. We are hard-wired to either follow the alpha, or be the alpha if we can.
• For many people, freedom is too much work. They are quite happy to give up their freedom and essentially become slaves, so long as they have a nice TV and enough money to buy beer for the weekend. Maybe go to Hawaii every year or two.
• Decision fatigue. It’s hard to run your own life; you have to make decisions that are difficult and could have adverse consequences. Rather than take that reponsibility, many people are content to let the government or their company make the decision for them.
• Humans are easily propagandized and influenced. For a century, the powerful have studied the science of propaganda and influence and have really made it powerful, subtle, and irresistable. You can be sure they are not using that power to make you a free-thinking and noble individual.
• Power corrupts. People in power end up wanting more power, and power corrupts them. The phrase “drunk with power” is not a metaphor; individuals’ judgement is severely affected by power, and they become bad actors.

With all these factors acting against us, I sometimes despair that we’ll ever throw off the yoke of the tyrant. Maybe someday…

Don’t Worry About Climate Change

So many people are worried about climate change or global warming as the biggest threat for humans. I disagree with that, and actually I think it’s pretty far down on the list. Here are several things that scare the bejesus out of me a lot more than climate change.

Weaponized Virus – These days, gene editing and other biotech is readily available, as is the knowledge of how to weaponize a deadly virus. It’s safe to say that someone with biological training and a vendetta could create such a virus for under $10,000. Given the number of innocent people that the US government has tortured and murdered around the world in the last 20 years, it’s hard to believe there’s not a biologist somewhere who has a grudge against America. In fact, it’s somewhat surprising to me that no one has unleashed such a horrible thing on the world yet. I think “12 Monkeys” is a reasonable scenario for the future, unfortunately.

Environmental Degradation – I do believe the degradation of the environment is a serious problem, but not from fossil fuel emissions. Our modern agricultural systems use poison as a primary input, killing all organisms that aren’t the cash crop. Factory farming of both plants and animals is incredibly destructive of the environment. Already scientists around the world are reporting a 70% drop in the number of insects in many places. Human sperm counts are down 50% globally. There’s practically an epidemic of children with the A-diseases (allery, asthma, autism, auto-immune disease, etc). The food system is centralizing around half-a-dozen or so nutritionless commodity crops. If we don’t kill off our own species with this behavior, we may end up collapsing the ecosystem (which is, after all, a complex nonlinear dynamic system, so the collapse could be catastrophic).

Financial Collapse – Inept government intervention in the economy and financial markets has brought us massive imbalances never before seen in history. Public and private debt, wealth concentration, zombie companies, inflated currencies, negative interest rates and a host of other problems are the order of the day. A total, global collapse is not out of the picture. If global supply chains and financial systems break down, we may not be able to restart the economy, given the level of complexity we have now. This could bring on a humanitarian disaster.

Surveillance State – If we do manage to survive all the systemic risks, we may end up living in an Orwellian dystopia where every purchase, post, and communication is recorded and monitored, and deviation from “proper” behavior is punished. Even now in China, if you have posted anything critical of the government on social media, you might find yourself unable to obtain a mortgage, or even rent an apartment. Since the ruling elites always assume they are enlightened and us plebes are ignorant, they delight in this sort of control. At this point, what is the meaning of being a human being?

Nuclear War – Finally, the oldie but goodie. These days with Trump Haters and Neocons gleefully pushing the US government into ever escalting confrontations with Russia and China, the risk of nuclear war grows larger. We have tanks and missiles rolled up around Russia’s entire western border, and we sail warships through Chinese waters, playing a game of chicken where the lives of billions are at stake. One small mistake could lead to a huge calamity.

Humanity would have to safely navigate all of these threats to even get to the spot where climate change is the biggest threat. And by that time, we have a much better chance of having advanced technologies that could help to solve the problem. Who in 1920 could have predicted today’s technologies?

If Only They Taught Math in School

Sometimes the level of stupidity in the public debate is simply mind boggling. If you can think for yourself, and add and subtract, this discussion might be interesting.

First, we hear that the top one percent need to pay their fair share of tax. So before you read any further, what would you consider a “fair share” for the richest 1% of people? How much of the total tax burden should they pay for?

Ok, let’s get on with our facts:

• the top 1% pay 45% of total taxes.
• the total assets of all the billionaires in the country is about $2.5 trillion.
• the federal government spends about $4.5 trillion per year.

So let’s Play With Numbers a bit. There’s a big push these days (early 2019) to “eat the rich”; take all the money from the billionaires and make a Better Society. So let’s go with that. Suppose we take all their money. Wait, let’s do this typical left-wing-revolution style: let’s bust down their doors in the middle of the night, drag them out into the street in their pajamas, and put a bullet in the back of their head. Mao, Stalin, Lenin, Pol Pot, Castro, Guevarra and all the Legends of Socialism will be smiling down on us. Ok, so now we have their $2.5 trillion. First question: how long can we run the federal government with that money? That’s right: almost a whole 7 months!!

Ok, so by July 15th we are out of money again. And now that we’ve decimated the top 1% (not precisely correct, but still), what has happened to our tax revenue? Oh, my, it’s dropped by 45%! So we can still make it through this year, but next year we need to cut government spending by almost half. And there ain’t no more rich people to go after. Darn.

And actually, let’s go back to our first point. How do you think billionaires hold their money? Do you think there’s a billion dollar bills under their beds? Actually, it’s all invested in companies, houses, cars, yachts, artwork, lent out to the government, etc. So when we take all the billionaire’s wealth, the government will have a bunch of Van Gogh’s, treasury bonds, and gated mansions. How exactly are they going to use this to help society? And don’t say “sell them and use the money” – once all the rich people are dead, who will pay $200 million for a Van Gogh? I suppose we could give it to a poor family, and they could use it to start their fireplace. That would certainly improve society. And all the homeless people could go live on George Clooney’s yachts.

Lots of companies need investment to start up and create jobs and innovative goods and services. Where does investment come from? You guessed it, it comes from rich people. But now they are all gone. How are new companies going to start up now? The goverment can’t give any money – their revenues are down 45% (not to mention they almost never invest in anything worthwhile – how many solar panels did Soladyne manufacture?).

I showed these simple numbers to my high schoolers – they got it immediately. Which doesn’t say too much about the blithering idiots in Congress, who are signing up for the Green New Deal, which is expected to cost $100 trillion. I’m not sure how we are going to survive with some of the biggest morons in the country in leadership positions. Maybe we can get Jim Carey’s “Dumb and Dumber” character to run for office.

I used to be very interested in Chinese history. If you read about the 1960s, you can see how the Great Leap Forward led to the Cultural Revolution. They killed all the rich people and then had 15 years of unimaginable poverty. Only when Deng started to allow a market economy did things begin to improve. And by embracing market economics, in one generation China lifted over a billion people out of abject poverty. Read about the Cultural Revolution – it seems our leaders are determined to take us down that path as well.

Flight from Enlightenment

For over a decade now, I’ve been troubled at how technology appears to be leading us further from the goal of spiritual englightenment. Now it seems the culture is making a full-scale retreat from anything remotely spiritual. From the hippie days until the turn of the century, more and more people were becoming aware of spiritual traditions, and many spiritual teachers spoke of an imminent tipping point where humanity would suddenly blossom and become more mature and enlightened. From my current perch in 2019 America, let’s just say that reports of our spiritual evolution have been greatly exaggerated.

Buddists, like Shinzen Young in his Science of Enlightenment series, have often spoke about the need to avoid “monkey mind” – that tendency we all have to flit from thought to thought, our attention captive to the whims of the fickle mind. Instead of bright-shiny-object syndrome, teachers enjoin us to focus and willfully direct our attention. However, cell phones are the antithesis of this. With their constant alerts, notifications, buzzing sounds, flashing lights, etc., they are practically monkey mind training devices. Feeling too calm, peaceful, and centered in your life? Buy a cell phone!

Another principal focused on by Young, and others, is that of not attaching unnecessary meaning to sensory inputs. If someone says something mean to you, what is that really? Just some acoustic vibrations in the air that die away within milliseconds. Surely nothing to get worked up about. And yet, in attaching meaning to those vibrations, people have taken it as cause to harm others, or themselves. Note that Young does not suggest never attaching meaning to our senses (when the cop shouts “put your hands up!” it’s generally benefical to understand the meaning in those vibrations), only that we should, whenever we want, be able to enjoy the pure sensations without impugning them with meanings – meanings that are generally meant to attack us personally.

Eckhart Tolle has spoken of the tendency we have to focus on narrative, on the “story of me”. As he says, it’s a sad story, that hasn’t worked out yet, usually because of other people or circumstances beyond my control. I’m the victim, see? As soon as the universe realizes how badly it’s treated me, and amends its ways, then and only then is there a chance of my story coming out well. Tolle talks about how this habit holds us back from happiness and enlightenment and prevents us from enjoying and living in the Now. However, cultural narrative and stories of victimhood have become part-and-parcel of mainstream American discourse here in 2019, to the point that other types of thinking and communication are shouted down and suppressed with violence.

The Apostle Paul urged us to return no man evil for evil. That concept has gone out the door. It’s now considered acceptable that if someone that looked vaguely like you injured someone that looked vaguely like me, even a couple centuries ago, I now have a claim to visit violence upon you, your children and community, basically until the end of time, as far as I can tell.

This is all very sad and disturbing. Shinzen Young details how the opposite of englightenment leads to pain, suffering, violence, and war. And American culture appears at the moment to be running as fast as it possibly can away from enlightenment. I fear for the future.

The Three Types of Political Systems

I’ve come to view the world in three types of political systems.

First, there is the system that says “do not use coercion against other humans”. This is a principle-based system: there’s no complicated legal reasoning or law-making here. The only crime is bringing coercion against other people. If someone takes your wallet, you can only use reason and other voluntary, non-violent means to get it back. This type of political system is called pacifism. 

A second system states “do not use coercion against non-violent people”. This is another principle-based system. As long as people don’t use violence to coerce you, you cannot do it to them. However, if someone steals your wallet, you can punch them in the nose and take it back – they initiated the aggression, and thus they lose the protection of the principle. This political system is called libertarianism.

The final bucket comprises all other systems, and can be generally summed up as “anyone who does something that we find distasteful can be locked up in a cage”.  This is a preference-based system and can be almost anything: “I find it distasteful when people use marijuana.” “I find it distasteful when people use coke.” “I find it distasteful when people drink alcohol before age 21.” “I find it distasteful when people drink raw milk.” “I find it distasteful when people use naturopathic remedies for cancer.” “I find it distasteful when people have vegetable gardens in their front yard.” “I find it distasteful when people pay their employees too much.” “I find it distasteful when people pay their employees too little.” The list is endless; everyone has a pet peeve they would like to see stamped out. In this system, people with similar tastes band together in groups, compete (e.g. by voting or fighting) for the control of the coercive political apparatus, and when they win they start cracking skulls. These groups are called “Republicans” or “Democrats” or “Social Democrats” or “Democratic Socialists” or “Greens” or whatever.

Preferences vary. Preferences vary from individual to individual, from daytime to nighttime, from weekday to weekend, from youth to old age, from city to countryside, from state to state, from men to women, from rich to poor. They therefore form an arbitrary basis for a legal system, as at any moment just about anything can become illegal (or legal). It creates an unstable society where power see-saws back and forth between different gangs who can’t wait to get in there and start busting heads of the people who are living “wrong”. And “majority-rule” is a synonym for “minority-lose”, with the smallest minority being an individual.

I’m completely convinced that one day we’ll look back in shame at this system. Just as slavery used to be prevalent, just as monarchy used to be prevalent, just as constant wars used to be prevalent, but are now considered barbaric and backwards, one day we’ll look back on this political system and lament how barbaric and backwards it was. I don’t think I’ll be around to see that day. Probably not even my children. But one day, hopefully, this will all pass away.

Fool’s Errand

Every American should read this book. It documents (and I mean documents – there are probably close to a thousand links to original source documents) the incredible disaster that the US war in Afghanistan is.

Just a handful of damning facts:

• The US had Bin Laden pinned down at Tora Bora in late 2002 and easily could have killed him, but they deliberately let him go so they would have a reason to stay on.
• Even on Sept. 12, 2001, Rumsfield said “this is not about Bin Laden”, and rolled out the famous plan to destroy seven countries in the Mid East.
• Bin Laden was delighted when the US invaded Afghanistan. His entire plan was to pull the US into an overreaction and bog us down. The idea was that our presence there would be enormously expensive, would generate huge amounts of resentment in the MidEast (leading to more terrorism), and would destroy American civil society. I think we can pretty well say that Bin Laden won.

The author’s encyclopedic knowledge on the subject is nothing short of impressive. It seems that every relevant piece of information in the public domain is gathered in this book.

One of my favorite parts were the quotes sprinkled about throughout the book. The best one: “It turns out that I’m pretty good at killing people.” – Barack Obama

I can’t even describe how cynical, cruel, and pathetic the US effort in Afghanistan has been. The amount of human suffering is extraordinary, the cost staggering, and the results?  Pretty much nothing at all, except enormous profits for the military industrial complex and lots of careers for mindless government apparatchiks. So I guess we can’t call it a total loss, what a great scheme to transfer vast amounts of wealth from taxpayers to non-productive members of society. Just like any other government program.

 

Stonewalled

Investigative journalist Sharyl Attkisson really blows the lid off the media in this one. She details several stories that she got involved in (Fast and Furious, the green energy subsidies, etc). For me, however, the most powerful parts of the book were the first and last chapters.

In the first chapter, she shows how biased the mainstream media is. Stories that were critical of the Obama administration were systematically downplayed, or taken off air. Government officials routinely withheld public documents, often in defiance of Freedom of Information Act requests. Top level CBS officials repeatedly intervened to squash stories that shed bad light on their personal (left-wing) causes. For example, when the Obama administration handed out money for green energy companies, something like $2 billion went “missing”. When Attkisson tried to pursue this story of a massive waste of taxpayer money, she was asked “but don’t you believe in green energy?”

The last chapter of her book describes how the government illegally hacked her laptop and bugged her home, her cell phone, and her personal internet. They went so far as to plant classified documents on her computer just in case they had to take her out. To call it Orwellian is an insult to George Orwell.

Something that struck me about a lot of the cases was that the government didn’t really do anything horribly bad – nothing like Iran-Contra or destroying Iraq or the CIA running crack cocaine in LA to raise money for illegal operations. In general, they were just incompetent (like in Benghazi) and then viciously tried to cover it up through repeated lies, intimidation, obstruction, and undue influence in the media.

Mark Twain was known for saying “never believe anything until it is vigorously denied by a government official.”  I used to think that was a joke.