Monster and the Fed


A blog post originally written for the Prometheus Institute.

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There's a reason the earliest economists likened the economy to a human body

I’m a huge fan of Monster energy drinks.  The things are dangerous.  I have to severely limit myself.  I only consume one if I’m in desperate need of a wake-up and I know I can handle the crash that inevitably follows.

Energy drinks are basically a way of fooling your body.  When the human body needs something, it sends all kinds of signals to let you know.  When you need sleep, you feel tired.  It tells you when you need food.   You feel sick when you’ve not eaten the right nutritional mix.  Health problems kick in when exercise is lacking.  Headaches can mean lack of sleep, water, nutrition, too much stress, bad posture, etc.  These signals can be a pain in the butt – but they perform a vital function.  Ignore them at your own peril.

Your body is begging you to sleep; so you slam a Monster to make you feel like you have energy and shut down the bodily signals screaming for repose.  This may give you a temporary productive burst, but there is no long-run net benefit.  The burst is followed by a crash of equal (sometimes greater) magnitude on the opposite end.  Worse still, the greenish liquid you’re putting in via Monster has other deleterious health effects (sugar and acid which rot your teeth to name just one) that will be especially pronounced if you frequently imbibe.  So while your body is tricked into telling you that you feel great for a few hours, inside bad things are happening, and they’ll be felt in short order.

If you begin to rely on high doses of caffeine and ginseng, you find the dosage must be continually increased, which makes the crashes greater.  To avoid the crashes, even more must be taken; but this only prolongs the inevitable and causes more negative health effects.  It can get to a point where the Monster fails to give you a boost at all.  (If you’ve gotten this far, I suggest stopping vs. moving on to anything stronger).

Monetary inflation is a lot like a Monster drink, and the Fed is a lot like an addict.

The current housing “crisis” was created in part by the Fed injecting constant doses of caffeine-like dollar bills into the economy, tricking the market into thinking it had more capital than it did, and mixing up a system as vital to economics as your nerves are to your body – prices, profits and interest rates.

The problem with mortgages was created largely by the Fed increasing the money supply, causing rates to be artificially low like your body is artificially energized via Monster.  Meanwhile, the screwed up rates diverted capital and production away from its truly best use towards uses that looked deceptively profitable – i.e. the purchase of crappy mortgages banked on exaggerated equity rates.  The natural market signals were fuzzied by an injection of valueless dollars, and some made decisions based on those false signals.

As with Monster, a crash has to come.

I would say that the Fed should be as careful with inflation as I am with Monster, but that wouldn’t be a fair comparison.  They need to be far more careful than that.  When I drink Monster, I choose to do so and take the consequences myself.  When the Fed inflates they are force feeding the monetary Monster to us and making us pay for the fallout.  That’s not just economic stupidity, it’s moral transgression.

Isaac Morehouse


Isaac Morehouse is the CEO of Crash, the career launch platform, and the founder of Praxis, a startup apprenticeship program. Isaac is dedicated to the relentless pursuit of freedom. He’s written some books, done some podcasting, and is always experimenting with self-directed living and learning.

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Four Options When Government Gets in the Way of Your Dreams


Four Options When Government Gets in the Way

Illustration by Matthew Drake

 

This article is adapted from a presentation given at FEE and SFL seminars.  Co-authored with James Walpole for The Freeman.

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We all want to live free, but we have a problem: governments don’t always want us to.

From seemingly mundane rules (like banning raw milk sales) to the truly horrific (like taking your house from you or throwing you in jail), the state is probably going to mess with you at some point in your life. It will throw taxes and fees and fines and rules at you and erect roadblocks and regulations inhibiting your progress — especially if you’re trying to do something new and innovative.

What can you do?

You do have options. Grave as the stakes may sometimes be, you must first accept this outlook: it’s all a game. If you treat it that way, you’re more likely to find a way forward rather than simply cowering in fear or trembling with anger.

Here, then, are four options when you’re faced with the game of government interference.

1. Play the Game

This is the strategy you’re probably most familiar with. It’s what we’re all encouraged to do. Whether through voting, lobbying, or holding office, you can try to take on the state while playing by its rules. You can try to change it from the inside. This is a strategy we cannot recommend.

In business, this strategy leads to the phenomenon economists call “regulatory capture.” Many companies become involved in lobbying and political action to prevent hostile regulations. It’s understandable. They spend hundreds of thousands of dollars on campaign donations and dinners trying to sway politicians and regulators to delay a vote, join coalitions, or carve out exceptions.

It’s a tough, slow process, one that involves endless compromise of principle and decency, and the few who succeed end up with political power and the ability to gain more. They end up using that power not just to expand their own freedom but to crush the freedom of competitors.

But any changes you make will be temporary. Laws passed in one decade are easily repealed in the next, especially if they limit state power. The bigger loss is a personal one. If you play the game long enough, the game ends up playing you. You become a part of the power structure you were trying to fight.

2. Defy the Game

When the state crushes your dreams, you can fight back. History is full of people who stopped taking oppression for granted and started resisting. Look at the civil rights movement in the United States, the Hungarian revolt against Communist rule, or even Uber’s commercial rebellion.

Today, the ridesharing company is operating illegally in dozens of cities, and it’s already paid hundreds of millions of dollars in fines for its drivers who are caught violating local laws. The company is growing fast enough to absorb the damage, and while governments don’t like Uber, customers love it. In Uber-hostile cities like New York, riders are standing up for their favorite way to get around. The “rebellion” has been a huge success.

But rebellion plays out in more desperate ways in the rest of the political world. For people and companies without the money and reputation of Uber, successfully defying the game is hard. While you can get tremendous satisfaction from sticking it to the man, you might end up in jail. You might be killed. In other words, playing this way means you might run into the real power of the state in its rawest form.

3. Change the Game

Changing the game is about recognizing the incentive structures and putting external pressure on the government to bend. Often, all you need to do to win is to hold the state to its own rules.

But it’s not as easy as it sounds, and the people who try to change the game in this way have to be heroic, if not martyrs. They’re taking the longest route. Game-changers lower the cost of information to the public while raising the cost for government to break its own rules or be thuggish. This group includes lawyers, journalists, public intellectuals, and everyday citizens.

Look at the case of occupational licensing. Municipal and state governments throughout the United States require entrepreneurs to give up money and time to comply with regulations. Many would-be entrepreneurs are stopped dead in their tracks by competition-killing regulations.

Before the Institute for Justice (IJ) challenged the regulation, eyebrow threaders in Texas were required to train for 750 hours before they could set up shop. Before another IJ case in 2011, Texas required bakers wanting to sell cookies to the public to rent commercial kitchen space and obtain food-handling permits.

Changing the game isn’t limited to the courtroom. Governments will break their own rules if they can get away with it. Both IJ cases included concerted efforts to raise public awareness about the unfair consequences of the regulations while simultaneously challenging them in court. These efforts raised the stakes for any judge who wanted to rule for the status quo. It also resulted in politicians jockeying to change the law before the court case was even settled so that they could take credit and benefit from the positive PR. Think about the state lawmakers who jumped at the chance to restrict eminent domain after theKelo outrage.

This is one of the biggest pros of changing the game: if you’re successful, you’ve kept your own integrity, and you’ve helped to protect others from the dream crushers in government.

The problem is that you may not win. You can spend years of your life fighting the battle to change the game and lose — plenty of people have, from the Dred Scott case to the Kelo decision. Even if you do win, the victory is too often short-lived: as soon as public awareness and scrutiny abate, courts will “reinterpret” hard-fought constitutional changes put in place to restrict government.

4. Ignore the Game

Entrepreneurs in the last decade have made international-trade and immigration restrictions less and less important. Today, anyone can telecommute to work in the United States from a call center in India, an Internet cafe in Bangladesh, or a personal laptop in Mexico. These innovations allow labor to move freely, and the inventors never needed to lobby politicians.

You can quit, exit, and opt out of the games government uses to stop you. You can move. You can pull your kids out of school. You can alter your business plan. You can quietly sidestep the obstacles placed before you.

There are major benefits to ignoring the game. For one thing, you don’t have to think about politics. Psychologists and philosophers have long told us to not worry about things not under our control. By ignoring the game, you can be politically ignorant and much happier. You don’t have to fight court battles or Internet comment threads. You can focus on creating, not protesting.

Ignoring the game isn’t always as satisfying as defying it, but ignoring the game offers an immediate sense of personal freedom. It allows you to create a freer life for yourself while providing an example that others can learn from. Over time, if enough people ignore the game, it begins to wane in importance and power.

How Will You Respond?

If your goal is to live free, first understand the game and know the rules. The way you respond to the game is then up to you. The strategy you choose will have more influence over your quality of life than any near-term victory or defeat will.

You may respond to the government in many different ways throughout your life, but if you treat it like a game, it will be less likely to ruin you.

Episode 47: Tam Pham on Life Outside the Classroom


Entrepreneur, author, and college dropout Tam Pham is working hard to introduce people to self-directed learning.

Tam and I talk about jumping off the conveyor belt, how to identify one’s goals and directions, what obstacles are in the way of anyone publishing a book, the ‘Steve Jobs Fallacy’ and failure in entrepreneurship.

Check out his website outsideoftheclassroom.com and get his bestselling book on how to build a network for free.

This episode sponsored by The Foundation of Economic Education.  Check out seminars for 14-26-year-olds and enjoy a mind-opening experience!

This episode is also sponsored by Praxis, for those who want more than college and think they have the entrepreneurial bug.  Apply today for a real world education.

This and all episodes are available on SoundCloud, iTunes, YouTube, and Stitcher.

Protest is a Poor Substitute for Living


You don't have to be against something to be for something else.

You can like what you like without feeling oppressed by the fact that others do not share your preferences and proclivities.

Any felt need to combat those who don't agree reveals a desire to gain their acceptance, which reveals a lack of self-acceptance.

You'll never enjoy what you care about as much if you keep caring that others don't.

Smart People Say Stuff About…Backup Plans


Are backup plans an absolute must, or can they actually do more harm than good? How can you think about and mitigate risk while not holding yourself back?

I asked seven smart, interesting people to give me their take on the concept of backup plans.

None of them heard each other's take and I gave no further instructions, just whatever came to mind. It's pretty cool to hear the results!

Responses from:
Cameron Sorsby
Levi Morehouse
TK Coleman
Jeff Till
Albert Lu
Derek Magill
Zak Slayback

There is a wide range of takes on the idea of backup plans, but some clear themes emerge. Enjoy!

This and all episodes are also available on SoundCloud, iTunes, YouTube, and Stitcher.

Ask Isaac: Goals – Hate ’em? Love ’em? Use ’em? Shove ’em?


I'm not big on goal setting, yet I think consistent structure is key to achieving what you want (even if what you want isn't perfectly defined).

I discuss this and a few other items on this episode.

Check out the episode sponsor, The Foundation for Economic Education to apply for an amazing experience learning about economics!

This and all episodes are also available on SoundCloud, iTunes, YouTube, and Stitcher.

Isaac Morehouse


Isaac Morehouse is the founder and CEO of Praxis, a startup apprenticeship program making degrees irrelevant for careers. Isaac is dedicated to the relentless pursuit of freedom. He’s written some books, done some podcasting, and is always experimenting with self-directed living and learning.

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