Looking Beyond The Headlines

Late last week, I shared some thoughts via social media on the idea that money doesn't tend to change who we are; rather, money amplifies who we already are.

I've had conversations on this idea with family and close friends over the years and have found dialogue on this topic worthwhile.

I did not expect a number of comments expressing disdain for Jeff Bezos who I mentioned in my post as a well known example of a largely self-made billionaire.

I'm grateful that some understood that my main points were:

1. If our desire is to be giving, we look to be giving regardless of how much we have.

2. I believe that just about all of us wish to preserve our right to share any resources we have rather than have others seize our assets and re-distribute as they see fit.

3. Rather than vilify those who have amassed great wealth, it's more fruitful for us to look within, identify our shortcomings, and strive to create more of what we want for ourselves and the world.

I echo the common sentiment that no one needs tens of millions or billions of dollars. Like most others, I wish for a society where everyone with significant wealth would take it upon themselves to help their communities. But to do this by coercion or overt force and threat of incarceration feels like communism, and I'm pretty sure almost all of us would choose to live outside of North Korea.

On the idea that billionaires don't pay their fair share of taxes, I think it's important to look beyond mainstream media headlines, as this contention simply isn't accurate. To summarize briefly, every person, business, and government contributes to local and global tax revenues through their production and consumption of goods and services. For those who don't see this connection, perhaps it's helpful to consider sovereign states that don't collect income tax and choose instead to generate government revenue through other means like higher import duties, value-added taxes, and fees on things like financial transactions, work permits, and tourism. The Cayman Islands would be a good example of such a place where there are no personal income, corporate, property, or capital gains taxes - in such places, even though no one pays income tax, it's natural that everyone pays their "fair share" to allow their society to function.

In the case of a multi-billion dollar corporation that chooses to invest its profits into driving more efficiencies and growth, yes, taxes owed can largely be minimized, but the total volume of their operation is ultimately responsible for generating local and global tax revenue which in turn supports government services.

In the case of an individual who is able to write off legitimate expenses, personal income taxes can be reduced, but again, every transaction for goods and services that the individual engages in generates tax revenue. Of course the average salaried worker typically has less expenses they can write off versus the average business owner, but the average business owner contributes to government tax revenues through the activity of their business while carrying the risks that come with running a business, including being unprofitable. Not to be forgotten is that outside communist countries, every person is free to choose whether they become a salaried worker or the captain of their own ship via entrepreneurship.

The bottom line is that billionaires who have created businesses that produce widely used products and services generate more than their "fair share" of taxes regardless of what their personal and corporate income tax returns state.

Of course it would be ideal if all highly successful business owners would look to be exceedingly generous and kind with their team members and truly view them as partners rather than expendable paid help - we can only hope that more business owners would adopt this mindset, as history tells us that over a long enough time frame, a rising tide lifts all boats.

I believe it's also fair to acknowledge that none of us can know with certainty what others are doing with their resources. Isn't it within the realm of possibility that many billionaires choose to make donations quietly or even anonymously? It's wonderful to see people like Mackenzie Scott set a great example by donating billions to more than a thousand groups thus far. Perhaps others are also embracing philanthropy without the media uncovering their acts of generosity.

Finally, I wonder how many of us have taken the time to deeply consider what we would do if we were to become billionaires after many decades of working to build something that the world deems valuable enough to make us billionaires? It's easy to say that if we were to amass many millions or billions, we would donate to this and that. There's no doubt that some would indeed be exceedingly generous with such wealth. But let's not ignore what percentage of our current resources we are donating to those who can desperately use our support - my life experiences have me believe that this percentage wouldn't change for the vast majority of us should we become billionaires through decades of work.

I understand the anger and sense of unfairness that many feel when they read sensational headlines on billionaires, their splashy displays of wealth, and how little personal and corporate tax they allegedly pay. What some people don't seem to recognize is that the problem isn't entirely in the personal choices of the ultra wealthy. Rather, the problem is that the monetary system is broken, and as long as the world continues to run on fiat currencies that can be issued at will by central banks while being backed by nothing, our purchasing power will continue to be eroded by the year.

I have an aunt who is retired and has about $100,000 in a retirement account that is yielding almost nothing. She and her husband live on about $2000 a month that they receive from the government, a form of social security. Thankfully, their home is paid for. For the time being, $2000 a month is enough to cover their basic monthly needs. But with gas and food costs soaring over the past year, they now think twice before making a one-hour drive to the big city to get Korean groceries and visit a Korean hair salon. At some point in the years ahead, they will need to sell their home and use that money to subsidize their monthly expenses, as $2000 will become insufficient as the cost of living continues to get inflated.

This is a direct result of the Central Bank printing enormous sums of money for the government to hand out to people and businesses far and wide and to keep asset prices propped up through perpetual funding of the bond markets - when the Central Bank prints funny money and is the main buyer of all debt on the market, people with money need to park their funds in other assets, which is primarily how equity and real estate prices become massively inflated.

This is why those who own assets get wealthier and those without assets become poorer. A $1200 check from the government looks great until a person realizes that this amount is virtually nothing relative to what many corporations and governments have received from the money printer. By the way, all this funny money decreases the purchasing power of all existing savings. The $100,000 that my aunt has saved up is losing purchasing power of real goods and services by far more than the published rate of inflation. Want evidence of this? Look no further than real estate, food, and gas prices.

The easiest path to garner support from those who are suffering is to blame the increasing wealth gap on billionaires and greedy corporations that are opportunistically raising prices when they don't have to. Populist outcries from politicians that live on promoting this narrative have convinced a lot of people that many of our problems would be remedied if we could only force the ultra wealthy to pay their fair share of taxes. Regrettably, this doesn't come close to identifying the root causes of wealth inequality, nor would seizing a significant portion of the wealth of all of the world's known billionaires lead to lasting relief for those who are living in poverty. The real problem is that Central Banks are printing countless trillions of dollars without backing.

Thankfully, those who have not figured out a way to protect their long term purchasing power have solutions available to them, solutions that were not available during the Financial Crisis of 2007-2008. But before any of us can identify such solutions and actually apply them to our lives, we need to ask ourselves if our current views are actually helping us and our loved ones thrive, or if our views aren't making a positive difference in our lives.

One solution is putting some percentage of our assets into Bitcoin or a proxy for it with the mindset of holding onto it for at least 5 years. Bitcoin is the most sound form of money the world has known thus far and mathematically programmed to be increasingly scarce and valuable over time. But it takes time and effort to really understand its merits and how it works.

I've spent considerable time sharing what I've learned about blockchain technology and decentralized networks over the past few years. While some people have been encouraged to actually study it for themselves, judging by messages that have come in, many haven't looked past mainstream media headlines that exclaim how bad it is for the environment, how governments will eventually ban it, how risky it is, and how it will cease to exist if the internet goes down. It's easier to believe such headlines and not put in the work to really understand blockchain technology than it is to put a hundred hours into learning about the value of a truly decentralized, trustless, and permissionless monetary network.

Ultimately, what I wish to share is this: First, we need to ask ourselves if we are thriving? If not, we should honestly consider what we can be doing to allow ourselves to thrive, assuming that this is what we really want. History tells us that populism - a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups - doesn't actually lead to widespread improvement in quality of life. Rather, it is a predictable phase that all declining empires experience before losing superpower status, and for all of recorded human history, the root cause of such declines has been the population and government taking on unsustainable debt.

I'll bring today's message to a close with the points I began with:

1. If our desire is to be giving, we look to be giving regardless of how much we have.

2. I believe that just about all of us wish to preserve our right to share any resources we have rather than have others seize our assets and re-distribute as they see fit.

3. Rather than vilify those who have amassed great wealth, it's more fruitful for us to look within, identify our shortcomings, and strive to create more of what we want for ourselves and the world.

I hope these thoughts have been worth considering, if not for many, then at least for one person out there.

Sending love to all,

Ben