Inflation Hits Us All, Even Of Two Minds

February 1, 2024

Those subscribed as of February 29 will lock in the current rate for the life of the blog, those subscribing on March 1 or later will pay the inflation-adjusted rate.

Inflation hits us all, even Of Two Minds. I started accepting subscriptions in 2011 at $5/month. According to officially calculated inflation (which understates real-world inflation), what $1 bought in 2011 now costs $1.40. Ouch. What $1 bought in January 2020 now costs $1.20. In effect, $5 is now worth in the neighborhood of $3.

Like every other enterprise with expenses, Of Two Minds must get back above water. From March 1, 2024, the subscription rate will be $7/month. (The $1/month option in Patreon will go to $2/month.) This increase gets the rate back to where it was a decade ago in terms of purchasing power.

The good news is current subscribers on every platform (Substack, Patreon, PayPal/checks/quatloos) will keep the current rate for as long as the blog remains active. If you find any value in supporting Of Two Minds, it makes sense to subscribe in February to lock in the current inflation-ravaged rates--in effect, a 40% discount.

OK, so what's the value proposition in subscribing to Of Two Minds? My short-and-sweet "elevator speech" is: Understanding is wealth, too. What I mean by this is a great quantity of commentary and analysis is focused on preserving financial wealth in the tumult ahead. This is common-sense, as having money makes life a lot easier than not having money.

But the vast majority of commentary and analysis implicitly makes two assumptions I find questionable: 1. the status quo will continue operating more or less as it does now far into the future, and 2) financial wealth is the master form of wealth that guarantees all other forms of wealth (health, agency, mobility, etc.)

In my view, there is no way the status quo can chug along virtually unchanged for decades to come. There are two basic reasons: 1) do the math: the limits of the real world cannot be dissolved by trickery, and 2) the core systems of the status quo are obsolete. They are being defended not because they work but because those being enriched by the systems want to maintain their power and perquisites.

Another way of saying this is that the forces that have been tailwinds--hyper-globalization, hyper-financialization and stable global arrangements--have shifted into headwinds. What were deemed solutions have become problems, and doing more of what worked in the past only accelerates the unwinding.

We are accustomed to technological obsolescence, in which a new technology seamlessly replaces previous technologies: DVDs replaced videocassettes/VCRs, etc. This model of obsolescence is consumerist: all we need to do is buy the new technology and toss the old one in the landfill.

Obsolete systems are much more difficult to replace, for everyone being enriched by these arrangements will move Heaven and Earth to keep them firmly in place, lest their share of the gravy train diminish.

The maximization of self-interest comes at the cost of system stability. Put another way, the system can either be optimized for self-enrichment or for dynamic stability, but it cannot be optimized for both, as self-enrichment is best served by monopoly--the destruction of the dynamic stability created by competition--or by reducing adaptability as a means of locking in private gains.

And so various policies are ramped up to keep all the machinery in its current configuration. These policies may be for show, accomplishing little, or they may reach extremes, as only extremes can keep the machinery duct-taped together as obsolescence decays the system's functionality.

We can anticipate the uneven unraveling of systems which no longer respond to extreme policy "saves." I expect healthcare, higher education, commercial real state and banking, and the financial system based on extremes of debt and speculative leverage to all unravel, despite the hasty passage of ever more extreme policies.

Human nature being what it is (as opposed to idealized versions of what we wish it were), by definition any system which is currently enriching us cannot be obsolete. It merely needs some sacrifice-free adjustment to restore its vitality. In other words, the status quo is by definition permanent and forever because we wish it to be so.

As for financial wealth guaranteeing all the other forms of wealth: this assumes the status quo will continue on unchanged, and everyone with gold, bitcoin, farmland, etc. will be able to keep all these forms of wealth as society unravels around them. History suggests this isn't how social disorder works.

Where my analysis differs from the majority is I anticipate a social revolution that cannot be tamped down with financial or political sops. Sociological forces are not as controllable as financial or political forces, and if (as I foresee) sociological forces become the primary drivers of transformation, financial trickery (let's just lower interest rates again, etc.) or political sops (let's increase the childcare tax credit, etc.) will only exacerbate the sense that the system is broken and incapable of adapting to social realities and novel conditions.

For the past 40 years, finance and markets have dominated policy. Politics has done nothing consequential to reverse the decay and stagnation created by globalization and financialization. The political structure has done zero to reverse the wealth inequality driven by Federal Reserve policy, or the speculative mania that the Fed has fueled.

If we're entering the culmination of Turchin's 50-year cycle, the Kondratieff credit cycle and the 4th Turning's 80-year cycle, financial extremes will unwind, either because the people finally demand action or the system will veer completely out of equilibrium and what seems impossible now (the expropriation of all extreme wealth, regardless of source, etc.) will become "obvious" solutions.

There are few limits on what might happen since the status quo is incapable of doing anything other than protecting elite perquisites while wringing its hands in public, as everyone is on the take to the tune of millions and they believe the inequalities that are enriching them can persist forever.

Nothing is forever, and the system is already so far from equilibrium that more of the same policy tweaks have zero chance of stopping an unwinding as extreme in the opposite direction as the current inequality.

Since the vast majority of all commentary and analysis assumes the status quo will continue on virtually unchanged for years or decades to come, what is the value of projections based on such a false premise?

The starting point of my analysis is unstable systems are not predictable, yet everyone is supremely confident in their understanding and projections of what will unfold. I have zero confidence in such projections because the system is no longer linear or predictable. Maybe I'm wrong, but if I'm confident about anything, it's that the system has already crossed the event horizon of nonlinear instability. Nothing's broken on the surface, and so we're living in the eye of the hurricane, thinking the storm has passed.

Self-organizing open systems evolve in unpredictable ways, and life may well become more interesting and demanding than we might expect. Small changes cascade faster than anyone anticipates, and suddenly the entire downtown business district is a ghost town, and there's no pathway back to its previous vitality and stability.

That which is obsolete cannot be preserved, though much else can be ruined by throwing good money after bad in vain attempts to restore what is beyond restoration without a bottom-up system reset that sends the current status quo arrangements into the dustbin of history.

One dynamic that is scale-invariant is we only act decisively after crisis has cracked something we took for granted wide open. We ignore all the well-meaning advice to clean up our diet and start exercising until we have a heart attack.

My sense is many of you support Of Two Minds financially as part of your own quest for authenticity and to validate what you sense. I too rely on you for the same two qualities: to cling fast to what shreds of authenticity remain and validate the intuition that the endless loop of cheerleading is little more than hubris and simulacra.

Abundance, blah-blah-blah. OK, so what happened to our leisure? Where's the abundance of leisure? Where's the abundance of quality in goods and services? Where's the abundance of well-earned trust in institutions?

The sense that everything is a self-serving con job of one sort or another is pervasive, and this increases the value of understanding systems and the social dynamics that will drive adaptation and change.

Of Two Minds will never have the audience of those promising to increase and secure your financial wealth, as the focus here is on all forms of wealth and security, which begins with understanding the forces at work beneath the surface and moves on to health, productive real-world assets you control directly, and a home you own in a locale that is conducive to social networks of other productive, willing-to-share people.

It seems to me that we are on a voyage that is best described as spiritual, for it may well demand we learn and adapt in both the practical world of everyday life and in our inner world of insight and grace.

Onward to self-reliance, reciprocity and frugality:




New podcast: Opportunities and Benefits of International Cities and Special Administrative Zones (49 min).