The easiest person to fool is yourself.Richard Feynman
It is fascinating to watch how even the President of The United States still spreads a feeble message of hope as the newfound opioid of the people without ever addressing the major foundational fallacies of the manmade constructs responsible for human efficacy. Worse, the rest of the world adopts our constructs as the creme de la creme without even thinking twice.
As the included slide indicates, the constructs we designed and collectively employed to improve human excellence do quite the opposite. They move the vector of human ingenuity in a direction fundamentally incompatible with how nature evolves—granting artificial dominance of one person over the other, thereby spawning unnecessary interhuman strife that distracts from our collective quest for survival.
I am adamant about my observations, not because I hate The United States of America, but because the world looks to us for answers. Honoring that reputation requires us to reinvent ourselves and to inspire the world with newfound excellence we first and successfully apply to ourselves.
So, let’s break down what is wrong with the constructs we have devised and rely on to manage and promote human excellence.
The U.S. Constitution
First, any scripture 233 years old that has evolved only downstream is, by definition, a relic of its time. As Thomas Jefferson declared, “You cannot expect a man to wear a boy’s jacket, urging the Constitution to be rewritten every 30 years. We never have.
Our Constitution fails systemically because it needs to define a theory embedded in a system to describe how and what people must adhere to achieve our collective objectives. Freedom and rights alone do not embody the paradoxical rules needed to manage freedom for all. Hence, the presumption that conformance to our Constitution improves human excellence is, at best, a feeble hope.
Simply put, the Constitution could be a better plan, serving the needs of the legislature out of touch with reality. Its gaping holes and omissions are so large we can quickly improve our operations without constitutional change.
Freedom, referred to as liberty in the Constitution, is liberally dished out as an inalienable right. This is a big mistake since liberty cannot exist without rules, which is freedom’s paradox. The vile maxim of individual liberties cannot tarnish the trust in collective freedom, as nobody is free unless everyone is free. Hence, freedom as an inalienable right must include equally inviolable obligations to protect freedom for all.
Furthermore, freedom is only practical when subjugated to a theory to improve human excellence and longevity. Even when curtailed by paradoxical rules, freedom without an evolutionary compass yields a vector of expansion incompatible with nature. Freedom must promote human adaptability to nature’s entropy, or else freedom delivers the opposite.
Our poor definition and laissez-faire implementation of freedom put humanity on a vector of expansion, diverging further from nature’s compass. For the first time, freedom must be subjugated to the evolutionary objectives of nature and curtailed by rules that promote humanity’s expansion in line with nature.
As a responsible parent, you know that assumption to be a solipsistic fallacy. A child’s desire to eat ice cream every day is a want all children may agree with. Yet, such addictive caloric intake will not benefit a child’s evolutionary needs. The same applies to grownups. The desperate want to acquire as much money as possible leaves seventy percent of Americans dependent on prescription drugs, primarily antidepressants, unable to serve their evolutionary needs independently, and consequently, passes those regressive genes to the next generation.
The easiest way to disclaim the mantra of economics is to evaluate the meaning of GDP, considered one of the most essential economic metrics on a global scale. Gross Domestic Product (GDP) is a consequence of human performance, not the cause. In the same way, the final score of a soccer game is a consequence of gameplay, not the cause.
Now, imagine me trying to infer what soccer gameplay must have looked like from knowing the final score. I cannot. Then imagine me proclaiming another game ending in the same score, which must have come from identical gameplay. That, my friends, is the confounding of cause and consequence impregnating grave depravity of reason in economics.
Sustainability does not exist anywhere in the universe. Nature’s entropy, described by Nobel Prize physicist Richard Feynman as the reduction of available energy, stipulates nothing is static and instead requires humanity to do more with less as time passes.
Sustainability is an evolutionary oxymoron to which new asset allocation and investment programs, like ESG, cling to give its much-needed reinvention, new cachet, and new indices of self to regurgitate. This a dangerous and damaging predicament, considering the expansion of human ingenuity is now directly tied to an evolutionary philosophy incompatible with nature.
What could happen when the innovation arbitrage -finance- violates nature’s principles? The right strategy would be to deploy a renewable investment thesis with completely different first principles directly tied to nature’s evolutionary principles and values.
“Everyone names everything wrong” is a quote from Richard Feynman I borrow to explain the frivolous use of the word “system” for everything under the sun.
For example, a weather system is not a system but a weather pattern—a consequence of cloud formation without indicating causation. The reference to systems that do not hide the grave depravity of reason emanating from the confounding of consequence and cause (Nietzsche) murks the water of expectations—a distinction much more important than a merely linguistic one.
None of the constructs we have instituted today, such as capitalism, socialism, communism, or democracy, can be called a system. They would all require the defensible definition of the theory, the process of selecting input, and the description of the desired output. Call me when you get there.
Out of the thin-air implementation of “systems,” you ought not to expect or debate desirable outcomes. Only when we establish a theory for humanity can we establish systems that produce the desired results for humanity? I have one.
Markets are a consequence, not the cause of human behavior. Again, this confounding of cause and consequence traps humanity in grave depravity of reason, especially when monumental decisions are tied to the inanimate consequence rather than animate causal behavior. In stock-market vocabulary, markets do not behave or fluctuate; people do. Cause over consequence.
The reliance on the movement of markets is as idiotic as the reliance on GDP explained in the economics section above. We should create marketplace systems using the appropriate definition of a system described above to produce the predictability of the outcome we wish to see.
Capitalism is the collective exchange of money for products or services rendered. Capitalism is not a system from which any expectation can be inferred. It needs to include the description of a defensible theory and the identification of input to yield the desired output, as described above of what a system should entail.
Capitalism today is merely a way of allocating and distributing money, bound by rules and regulations, that does not infer a human theory to warrant or direct such distribution. Hence, we ought not to expect conformance to a human theory we have not embedded in capitalism. Refrain from acting surprised when the outcome of capitalism is what humanity wants rather than needs.
Again, the absence of a human theory to which capitalism should be normalized wreaks major havoc on humanity. To the tune of eleven times the size of production (in the U.S.), finance distorts and limits the renewal and expansion of human capacity in line with nature’s rule. We must redefine capitalism’s role, priority, and goal to serve humanity.
Socialism, defined as groupthink, is omnipresent in capitalism, where asset managers cling to socially accepted standards of asset allocation strategies and investments based on the regurgitation of, say, the S&P 500, the socialist index of self. Vice-versa, in a country deemed socialistic, the role of capital is crucial in maintaining order.
And do not kid yourself. Healthcare is not free under socialism. The cost is the same under capitalism because the collective care burden of its people (roughly) is. Socialistic societies merely ask more for health insurance upfront by taking more out of people’s paychecks. Capitalistic societies depend more on the acute risk and payout borne by an elective health insurance program, fraught with sneaky exemptions.
The strength and resistance to pathogens define the health of a human being (or any other species). But, unfortunately, with seventy percent of Americans chronically dependent on prescription drugs and many antidepressants, the needs of the evolutionary walking-dead have spawned a gigantic vending machine of medicine instead.
That approach has evolved to make insurance companies the arbiters of patient care, not the doctor. The payout to doctors, often below 50% of billings, makes doctors recommend less effective treatment that allows them to pay for their time.
The plot thickens, and primary care physicians are now being made responsible for the effectiveness of the drugs they prescribe to their patients. This responsibility exposes doctors unjustly to the lofty promises of pharmaceutical companies and the inherent lack of absolutism in understanding the human body.
Care suffers greatly as doctors become increasingly enslaved by health insurance companies and less driven by morals and merit to do the right thing for patients. Again, the absence of a human theory has created practices that consistently damage the evolutionary excellence of humanity.
Crypto is like a religion, not becoming more accurate because you can find more believers.
Unsurprisingly, a giant pool of believers in anything exists in a country where fake wrestling is enormously popular. Thus, investing in crypto makes sense as long as the supply of those greater-fool believers is not depleted.
Currencies are a consequence, not the cause, of human performance. For human performance delivered through products or services rendered, instill trust in the “I owe you” that pays for them. Crypto lacks the exchange of any production and thus lacks intrinsic value capable of improving humanity.
To suggest crypto changes our economics for the better is an ill-formed inference from consequence to cause. A currency is a consequence, not the cause, of human ingenuity and performance. Grave depravity of reason is the malaise at the foundation of the faith in a currency that does not comport with or spawn human excellence. Kill it before it kills us.
By the theory that determines what can be discovered, according to Albert Einstein, global institutional investors, in actuality, decide how the fractal of human ingenuity and capacity expands, accelerated by immense capital.
And yet, I found that asset management allocators, sometimes referred to as expert risk managers, need to understand more about the actual risk they deploy as part of their distribution strategy. Ten bottom-heavy diversified embedded risk levels before a single dollar is spent comprise the standard operating procedure by which asset managers expect consistent investment returns.
Moreover, the default, highly socialized, stacked, and interdependent investment allocation strategy regurgitates hindsight with the infinite regression of an index of self to narrow the investment thesis and diminish humanity’s fractal expansion. Therefore, I devoted and narrated a video on the subject.
Having worked in venture capital in Silicon Valley, I discovered firsthand how the failure of many innovations is related to the misplaced theory of venture capital that holds innovation hostage. As a result, I coined the term subprime venture capital to describe how, again, in the words of Einstein, the theory (of venture capital) determines what can be discovered.
As I predicted some fifteen years ago, the unchecked rush for anything called innovation moves power from government institutions to technology companies. It opens the unprotected doors to nation-state sovereignty.
Few people listened to me then, but the chickens of the right to sovereignty have returned to roost. Suddenly, technology companies are getting sued left and right to combat their overt constitutional overreach. Who cares? Say a few venture capitalists who escaped the wrath of subpriming, pumped and dumped their private shares, and made a killer return to make them look like humanitarian geniuses.
The constructs we built in the United States promote and preserve our megalomaniac agenda to remain on the leaderboard we invented. But nature does not care. Therefore, the normalization of human truth must shift to our best proxy of nature’s truth for humanity (and my daughter in it) to excel and live as long as humanly possible.
For the reasons above and many more engrained fallacies in society, I can talk about how I began to invent a new theory and operating system for humanity eight years ago. I am happy to talk about the specifics through my advisory.
If we continue to ignore the above, we, collectively, are doomed.