Publisher: Unicorn Publishing House (UK)
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Capital Offence: Book Summary
The world is becoming increasingly divided on many fronts and I believe that one of the root-causes of this is policymakers (for the most part well-intended) who have drunk the something-from-nothing Kool-Aid which they believe leads to economic prosperity. The direct result of these policies is growing wealth disparity where people are able to extract more from our economic system than they create. What my book explains is that this is not a result of the free-market system. Rather, it is due to fallacious economic doctrine that justifies making popular decisions that quickly paper over short-term symptoms as opposed to the unpopular and sometimes painful decisions that deal with the fundamental issues at hand. Of course, the public will always applaud the popular decisions that seem to benefit them in the short-term, and policymakers will always attempt to deflect blame from the longer-term consequences that inevitably result. The success of policymakers in escaping blame is due to a structural misunderstanding, by most policymakers and by much of the public, of how an economy actually works as well as the related topic of the concept of money.
As a professional investor managing over $10 billion in assets for over 20 years, I’ve had a front-row seat observing those in charge steering the economy down a treacherous path. This is not about conspiracy theories, nor is it about incompetence: very capable and well-meaning people are the ones steering the ship. Instead, it’s a sad story of arrogance and intellectual dishonesty for which literally millions of people are paying a stiff price. And it’s going to get worse.
For the last few hundred years, the next generation has always been better off than the one that preceded it. However, this is the first time in modern history that the opposite will be true. And this is happening not because the previous generation is more productive than the one following it, but because we are actually benefiting at the expense of our children. Not only is it immoral, but it’s not sustainable i.e. the math simply doesn’t work. And as the saying goes, if something’s not sustainable, eventually it will end. The key question of course, is how it ends. Do we carry on our current course and convince ourselves that our unearned wealth is really due to our efforts and ability, or do we take a real hard look at what has happened and take steps to rectify the situation. The first way results in an out-of-control explosion which could result in significant social upheaval and permanent economic malaise. The second would be a carefully controlled implosion with shared pain for all which would set us on the right path. The pain that will result from either decision is unavoidable, but that associated with the former will be significantly worse than the latter.
When presenting to my clients I always felt it was my responsibility to communicate as clearly as possible so that they would have a good understanding of how we were investing their clients’ capital. It was never about attempting to impress people or “make a sale,” but to educate and empower people so that they could make the best decision for their clients. My book is written in that same spirit and is not just targeted at those who work in the financial services industry. Instead, I’ve written this book for anyone who is intellectually curious and would like some ammunition to help them take matters into their own hands by demanding change from policymakers.
The empowering process in this book starts where it must, with the concept of money. Only with a good understanding of that and by being able to differentiate between money and capital will the subjects of interest rates, inflation and government etc. be appreciated and understood. I use many analogies to help people understand the concepts at hand. The story builds to show how the wealth confiscation has been happening for many years, but in earnest for the last two decades.
At the end of the book, I offer steps we can take that I believe will once again set us on the right course, but it won’t be easy. And policymakers will only make the right and difficult decisions once people demand it. I have great faith in people with respect to their ability and desire to do the right thing. On the other hand, we’re all susceptible to delusionary thinking that justifies actions that benefit us in the short-term while closing our minds to the longer-term consequences, especially if those consequences only impact other people. It has sometimes been said that the public always gets the government that it deserves. However, that can only be true if the public truly understands what’s going on and today, that is decidedly not the case. This book is a humble attempt to change that.