Straight Talk from Al Jacobs
For those of you who extol the fortunes of Bitcoin, you’re in seventh heaven. Within the past several days the market value of a single coin surged to $5,832. At the end of 2016 its price was about $950, but thereafter skyrocketed to its present worth, a sixfold increase. Believers in Bitcoin say it’s the money of the future, a digital alternative to the other established currencies such as the dollar, the euro or the yen.
For those of you unfamiliar with this device, it’s “digital currency” created in 2009 by an unknown person. Transactions involve no banks, no transaction fees and allow anonymity. Bitcoins are stored in a “digital wallet,” which exists either in an imaginary bank account, known as a cloud, or on a user’s computer. You may think of them as peer-to-peer currency, in that no central authority issues new money or tracks transactions. This task is managed collectively by the “network.” They are sent – or signed over – from one addressee to another, with each user maintaining multiple addresses. This technique entails a fast and presumably reliable payment network with easy access. In this way they may be bought, sold, and used to purchase things from those entities which accept them.
What will become of this milieu is hotly debated, as it’s mostly unregulated. Whether Bitcoin rises or falls in value seems to be dependent upon the euphoria of its supporters, so its history has been one of wild volatility. You might note the field of cryptocurrency is not confined to this single example. At present there are more than 1,100 other players, though all far less prominent than Bitcoin.
As you might guess, there are analysts, such as Thomas Lee, founder of Wall Street firm Fundstrat Global Advisors, who predicts Bitcoin will enjoy broader adoption as a “store of value” similar to gold. Others, however, view it as a passing fancy which will be a relic of the past within the next few years, and fade from memory as did the 17th century Dutch tulip bulb mania.
A final thought: As to the future of this digital currency concept, despite the monetary success of Bitcoin thus far, I agree with the doubters. I firmly believe any investment craze easily prone to manipulation and with no sound basis for value must end – normally amidst chaos and recrimination. We shall see what the future holds.
My compliments to Elon Musk – Tesla, Inc. CEO, SpaceX chief executive and all-around entrepreneur. He’s a most remarkable visionary. His recent address to the International Astronautical Congress in Adelaide, Australia, announcing his intention to begin spaceship construction within nine months, with regular flights of cargo and crews to Mars commencing within the next several years, certainly attracted attention. His conception of establishing a self-sustaining colony of at least a million people on the planet, thereby making humans a multiplanetary species, is inspiring.
You might note, those persons who choose to live on the Red Planet will find it somewhat less inviting than the French Rivera … or the island of Tahiti. Inasmuch as it’s some 48 million miles farther from the sun than is Earth, it’s a good bit cooler. With temperatures ranging from a high of about the freezing point of water to lows approaching −200°F, it’s considerably less hospitable than our South Pole, where the all-time record low on June 23, 1982, reached only −117°F. Obviously, Mars is not a place you’ll enjoy leisurely Sunday strolls. For that matter, since its thin atmosphere is mostly carbon dioxide, you’ll not find it very breathable either. Exactly how the inhabitants Mr. Musk envisions will reside there can possibly function … or what they’ll do for a living … somehow escapes me.
Despite the challenges, the Mars project may thrive as well as Tesla. How a company which never produced a commercially viable vehicle, nor earned a dime in net revenue, propelled itself into the automotive forefront is a tribute to exalted promotion – a Musk specialty. Most certainly government, with its granting of credits and preferences, is the key to its achievement, with non-emission vehicles having joined the list of government-subsidized programs. As Amtrak and the Postal Service demonstrate, a losing operation can drag on unprofitably for years, subject only to political considerations.
A final thought: To survive, both Tesla and the Mars undertaking must at some point actually generate a profit. Humbug can only exist on PR hype and contrived obsession for so long. It must ultimately produce a saleable product before the public loses its fascination. As the late British Prime Minister Margaret Thatcher declared, “Eventually you run out of other peoples’ money.”
At 3:31 A.M. (PDT), Friday, September 15, 2017, a 3,420-pound mechanical device ceased to exist. At that moment it became swallowed up by the fiery interior of the gaseous planet Saturn, nearly a billion miles from Earth. Why this event should be of concern to anyone is a matter which deserves to be told.
The device created by NASA’s Jet Propulsion Laboratory over 20 years ago, and named Cassini, began its voyage into space aboard a Titan IVB/Centaur launch vehicle on October 15, 1997. The project, a collaboration between NASA, the European Space Agency (ESA) and the Italian Space Agency (ASI), was to send a probe to study the planet Saturn and its system, including its moons and rings. The $3.9 billion cost of the operation is a legacy of the go-big mentality of the early days of space exploration, where few restraints existed to minimize the scope of such explorations.
The result of this voyage produced nearly a half million pictures of moons and rings for observation by the many teams of scientists assigned to scrutinize the data. The final report is summed up by NASA’s program scientist Curt Niebur: “The mission has been insanely, wildly, beautifully successful, and it’s coming to an end. I find great comfort in the fact Cassini will continue teaching us up to the very last second.”
This brings us to a fundamental question. What’s the purpose of this pursuit into the cosmos? In an earlier time, during the Cold War, with world supremacy on the line, the space race could be rationalized. The U.S. and the USSR aggressively competed in technological one-upmanship, and the expertise we might develop could be a factor in guaranteeing our national survival. Here in the 21st Century this is no longer the case. Except for providing grants for selected beneficiaries and salaries for a lot of chosen people, it’s difficult to describe exactly what NASA’s 2017 budget of $19.0 billion actually does for the average American.
Nonetheless the quest goes on and there’s no bit of trivia too insignificant not to be cited as a basis for continuing, for as with any government program, perpetuation is the primary aim. It’s projects like this which bolster the continuity of NASA’s involvement in an endless succession of studies and explorations that never end.
Letters to the Editor are always fascinating. Where else can someone with no identifiable knowledge of a subject be entitled to express opinions for the world to view? The subject in this most recent instance is Deferred Action for Childhood Arrivals (DACA), an immigration policy established during the Obama administration which permits minors who entered the country with undocumented parents to avoid deportation under specified conditions. At this time approximately 800,000 such individuals are authorized to remain here under the program, although President Trump previously announced he would end it.
Apparently the ejection of “illegals,” under any circumstances, plays well with a segment of the population, and Letters to the Editor is a convenient place for these persons to laud the eviction process. One such letter from a man in Huntington Beach bemoans the fact the youngsters ever crossed our borders, stating: “Laws are meant to solve problems we are facing. Children entering the country illegally with or without their parents are subject to being sent back to their country of origin even though they have remained here for long periods of time. They have broken the law … if laws are not meant to be followed, why have them on the books in the first place?”
As the writer contends, “laws are meant to solve problems.” Exactly what problem is solved by the removal of longtime law-abiding residents, many of whom own homes, operate businesses and served in the armed services, isn’t described. Perhaps he has them confused with the tens of thousands of foreign-born inmates currently in custody in our prisons – a group I’d be pleased to see removed forthwith. However, I suppose it’s sufficient to simply enforce a law … in keeping with that ancient tradition: “The lawr must not be violated.” In addition, as these DACAs all voluntarily registered in accordance with established government policy, they’re readily locatable. That makes grabbing and deporting them much easier than corralling the roughly 11 million undocumented immigrants currently residing in the United States and trying to force them to leave.
A final thought: Creation of laws can be an exercise in the grotesque. Prussian Chancellor Otto von Bismarck once cautioned that the two things you don’t want to see made are laws and sausages. For rationality, their enforcement must be selective.
If America’s quest for high standards in education were assured by the encouraging titles given to laws promoting excellence, we’d be the best educated nation on the globe. The No Child Left Behind Act of 2001 supported provisions based upon the premise that setting high standards and establishing measurable goals would guarantee success. The Race to the Top Act of 2009 awarded points to educators for satisfying various educational policies such as performance-based evaluations for teachers and principals. The Every Student Succeeds Act of 2015 provides support to high schools where one-third or more of enrollees do not graduate, as well as schools with students who consistently demonstrate low performance.
Apparently we cannot sloganize our way to scholastic perfection. In reality, the implied goals of the grandiose titles are all unattainable. Many children will be left behind, as they always were and always will be. And the likelihood every student will succeed is as implausible as the possibility all persons will master integral calculus, regardless of mental ability. It’s simply not meant to be. The fact such an outcome goes against current political correctness often leads to strange rulings. I’m informed there are schools in this country in which the students receive neither grades nor class standings, the rationale being it would lead to a loss of self esteem among those with the lower rankings. I’m also told certain institutions have done away with the valedictorian and salutatorian awards for much the same reason. Perhaps the next step will be to declare every student equal, thus entitling all to rank as first in their class.
Let me state I’m an advocate of competitiveness in virtually all of life’s endeavors. I firmly believe the challenge to excel and surpass the performance of competitors is what propels persons to first-rate accomplishment. It’s this striving for excellence which brings out the best in a people and in a nation, which is what I believe to have been the strength of our country since its founding. Conversely, any society which attempts to marginalize talent while it lauds mediocrity will, instead, bring out the very worst. And this is what I witness taking place in America today. Individual talent is suppressed in favor of collectivism while, for whatever reason, it seems superior achievement is viewed as unworthy of praise. I don’t believe this trend portends well for our future. Sadly, I envision the United States developing into the globe’s most prominent third world nation.
Among the recent letters to the editor in my local newspaper is one hard to ignore … in that the submitter turns out to be the mayors and city council members of seven Orange County cities. Their concern is clearly stated. After pointing out “it’s been over 30 years since our tax code was last reformed,” they contend taxation in this country is too complex and “in order to make America competitive again and promote growth, we need to simplify the tax code so that everyone can understand it.”
There’s nothing novel in their plea. For as many years as I can recall, the complaint from every quarter is the playing field is uneven and that the time for change is long overdue. The claim is a simplification of the tax laws can benefit the ordinary citizen who doesn’t have an army of accountants and lawyers, to decipher the arcane rules which only the favored few can understand. I’ve heard the argument, over and over that our tax code should be simple and fair.
At first blush this certainly sounds reasonable, for who can object to fairness? However I have my doubts. Such a return may be easily prepared, but perhaps not equitably so. My concern is that as a return becomes less complex, the tax collector has fewer obstacles to overcome when ruling to assess a maximum taxable income. I’m convinced simplicity works to the benefit of the taxing agency, not the taxpayer.
A second aim is that our tax code should incentivize businesses to invest and grow. In theory this sounds commendable, but I suspect incentivizing will merely devolve into the creation of conventional tax credit incentives which are traditionally lobbied by ever more politically motivated campaign contributions. Unfortunately, the only way government encourages creativeness in business is by throwing money toward the source and hope something worthwhile happens.
I’ll add a final though. I’ve come to the realization there’ll be no viable tax reform proposals benefitting the taxpayer that come from government officials. This is true regardless of party affiliation or philosophical inclinations. The reason is fundamental. The contest is between those on the inside collecting the taxes vs. those on the outside paying the taxes. When dealing in the political world, don’t place much faith in pronouncements. The government wants only one thing from you; it wants your money.
Roadway to Prosperity embodies the heart of the author’s last ten years of newsletters, written monthly under the heading On the Money Trail. Those articles prominently displayed in numerous publications, both in print and online, directed attention toward financial matters, normally with an emphasis on personal achievement in a variety of endeavors. Whatever your age or background, the revelations disclosed in this book will empower you to deal with the world in a more effective manner and employ the tool and techniques the book describes.