Chief Investment Strategist, The Freeport Society
So many things in life depend on the context.
Is it wrong to lie?
Well, not necessarily if you’re telling kids about Santa Claus and the Easter Bunny.
Is it wrong to punch someone?
Certainly not if you’re acting in self-defense.
Is it wrong to end someone’s life?
That one is trickier, but reasonable people could debate the morality of euthanasia to release a person from unending agony.
How about advocating genocide?
There is no context – none whatsoever – in which that is acceptable. Even in a world of uncertainty and chaos, we should all be able to agree that calling for the extermination of Jewish people is wrong.
Given the sensitivities of college campuses – where alleged “micro aggressions” land you on the Dean’s naughty list – one might think that a macro aggression like calling for mass murder would violate school rules on bullying and harassment.
And yet, when asked in a congressional hearing, now-former University of Pennsylvania President Liz Magill told us that it’s a “context-dependent decision.”
“It depends”?! That was her answer?!
In a congressional hearing, you have to work to look worse than the blowhard representative or senator interrogating you. Before last week’s spectacle, I legitimately believed it to be impossible.
And yet, because Magill and her fellow presidents from Harvard and the Massachusetts Institute of Technology couldn’t answer a softball question on whether or not advocating genocide was against the school rules, they managed to accomplish the impossible by looking even more morally bankrupt than a congressional representative. Stop and let that one sink in.
A Well-Earned Loss of Faith
It’s no wonder Americans have lost faith in our institutions.
Elite universities are supposed to be the training grounds for the next generation of leaders in government, business, and culture. But if the people shaping their education can’t answer basic questions on whether advocating the murder of your classmates constitutes bullying, then I’m not sure I would trust these future leaders to run a lemonade stand.
When I hear of “context-driven decisions, I naturally think of the Federal Reserve. It was the “context” of the emerging market crises of the 1990s that gave us the original “Greenspan Put,” which has been renamed the “Fed Put” because every Fed chair since Greenspan has followed in his footsteps and responded to every crisis by flooding the market with liquidity.
It was the “context” of the 2008 banking crisis that led the Fed to experiment with quantitative easing – the modern-day equivalent of money printing. (Money today isn’t “printed,” strictly speaking, but it is lent into circulation when the Fed buys bonds or lends to a member bank.) And it was the “context” of the pandemic that led the Fed to explode its balance sheet by $5 trillion in 2020 and 2021… as you can see in this chart.
To be fair, we can’t lay all blame at the Fed’s feet… it was the same “context” that Congress and the Trump and Biden administrations used to increase federal deficit spending by trillions of dollars since 2020.
No matter what the context is, the actions taken always seem to be the same: more spending, more debt, and more money printing to pay for it all.
That chicken has now come home to roost.
The Fed is still struggling to get inflation under control… and we can assume the next context-driven decision will be to raise the official inflation target from 2% to 3% and then claim victory for taming inflation… even while the stated target is 50% higher than what we previously considered acceptable.
And Congress has a few context-driven decisions of its own to make. How does it keep the Social Security checks coming once the trust fund is depleted in 2034?
How does it continue borrowing now that, at over $1 trillion, we pay more in annual interest payments for money long since spent than we do for the military?
The problem with context-dependent decisions is that they require an adult in the room with the discretion to weigh the options and make an informed decision. I don’t know where these adults have been hiding, but it’s certainly not in the halls of Congress, the Federal Reserve, or, sadly, our Ivy League universities.
I can’t say I love the context we find ourselves in. It took a lot of poor context-dependent decisions to get us to this point.
Call it an incentive problem… call it an agency problem… but it should be obvious by now that past poor decisions make good decisions in the present virtually impossible for our leaders.
So, we have a few context-dependent decisions of our own to make.
In the Absence of Elected Adults…
Given that inflation is likely to run hot for years, we must not sit idly and watch our purchasing power shrink year after year. We must take control of our financial lives and put a few dollar hedges in our portfolios.
You can start with the five I share in my free special report 5 Unapologetically Profitable Stocks for 2024. Grab your copy now.
Also, we’ll soon be revealing our big prediction regarding the 2024 presidential election. Only a handful of Americans have prepared their portfolios for the chaos we believe is about to unfold. To be one of them, mark your calendar and watch your inbox for the critical announcement we’re making on December 18.
To life, liberty, and the pursuit of wealth…