The negatives of negative interest rates

The Thinker by Rodin

Donald Trump wants the Federal Reserve to drop interest rates to zero or to even allow them to go negative. It’s pretty obvious why: so he can avoid being at the wheel if a recession inconveniently hits before Election Day. He’s clearly freaking out about the election still more than a year away, as also evidenced by his decision to suspend some tariffs on Chinese goods.

Why should negative interest rates matter to you? It’s not like you can set up a Federal Reserve bank account. The Fed Funds Rate is currently 2.25%. This is the interest rate the Fed requires that one bank charges another bank to park its funds in their bank. It usually parked there only overnight. Any excess reserve a bank has on hand is money they cannot earn interest on. So parking it overnight at another bank allows them to make some money on it.

So what does this mean if the reserve rate is set to 0%? It effectively means there is no reason for a bank to park its excess reserves because it will not earn the bank any money. They might as well lend it. What happens if it’s a negative number, say -1%? Then effectively a bank takes a hit to park its money elsewhere. It would be stupid not to lend it.

A bank could pass its lower profitability from these lower rates onto its depositors. This happens routinely when the Fed Funds Rate changes. We bank at Ally Bank. When the Fed cut its rate by .25%, my savings and money market interest rates were cut by this amount too. Anticipating a rate cut, we at least did one thing smart: we took out a certificate of deposit for one year, which locked in our rate. We’ll earn 2.47% on it after one year, but not before. In general though most people don’t like to tie up their cash like this, so when the Fed Funds Rate drops, they will lose interest income. Better to take that money and risk it on investments is the hope.

Banks could in theory charge depositors’ negative interest rates, i.e. charge them for holding their money. (Considering all the bank fees we pay, some of us in effect already are!) They probably won’t, but accounts that effectively draw little to no interest at least one advantage: safety. Or do they?

Most accounts are fully insured because they don’t pass the threshold of $250,000 per depositor per bank. So yes, if a bank goes under you are likely to get your money back. But since the Glass-Steagall law (passed as a result of the Great Depression) was repealed in 1999, things have loosened. Banks can now invest in speculative investment with depositors’ money. This resulted in the Great Recession when banks loaded up on toxic assets to chase their bottom line. For them, the worst thing that can happen is they declare bankruptcy, which is what happened to so many banks in the Great Recession. The government got to clean up the mess and shoulder any financial losses, i.e. you and me assumed the risk.

Now, as the economy improved and Republicans controlled government again, these financial rules were loosened even further. In 2018, Trump signed into law new regulations that eased oversight on the largest banks, by raising the criteria for what comprises a very large bank. This results in less regulator oversight.

Add in low or negative interest rates though and we add a lot more risk to our financial system. Trump of course is hoping these low rates will incentivize banks to loan money, pumping up the economy. (It might also save him boatloads of money, if he can renegotiate interest rates on his loans.) But by incentivizing banks, we are in effect incentivizing risky loans. In short, we risk another Great Recession, or possibly another Great Depression by doing this.

Some countries are trying negative interest rates to stem deflation or deflation fears. Deflation occurs when money you have today is worth more tomorrow. In that case, there is no incentive to invest the money. Rather, you want to hold onto it, which means it’s not available for others to use. By making savers pay negative interest, it encourages them to loan out the money to stimulate the economy instead.

As a tactic for stopping deflation, maybe it has some merit. It’s working marginally in Japan, which has experienced years of deflation. But the United States is not in a deflationary environment. Hopefully though the Fed is instead trying to prevent deflation from happening in the first place.

Negative interest rates don’t have to lead to financial calamity, at least if they are properly overseen and regulated. But in this country it would be a very nervy thing to do at present. The Fed’s toolset though is very limited and well tried. The Fed’s policy of quantitative easing (imitated by lots of central banks) was one tactic of desperation after the Great Recession when the economy was still a mess even after virtually zero interest rates. Quantitative easing is essentially the Fed buying up investments others don’t want to buy with money the Fed creates out of thin air. They control the money supply, and can create money willy-nilly. That and low interest rates are about all the tools they have left.

A negative interest rate policy looks like the next and more desperate step to keep an economy from sinking into depression. It is basically a tool to use for deflation, which is what happened in the Great Depression. It’s like a fire extinguisher alarm: break glass only in case of emergency.

If investors though figure deflation is going to happen, they have an option: take the money out of the banking system and figuratively put it in the mattress. That way no one can use it but at least it’s safe, unless someone looks in the mattress. It’s more likely though they will move it to currencies and economies that are not deflating.

So hopefully the Fed will take a pass on Trump’s idea. In reality, the problems of our economy are structural and these tactics of the last ten years are basically stopgap measures. The Fed should have been doing more modest increasing of interest rates instead, as our economy, at least if it’s not in a recession, should be able to handle it. Mostly our economy is showing every sign of being over-leveraged and fragile again. If your economy is truly strong, you don’t need to even think about using these tools.

If this house of cards collapses again, it will be felt the way it was last time: soaring unemployment, wiped out savings. A lot of it will be due to risky investments, just like the Great Recession. If you are looking for a true revolution, another Great Recession or Great Depression is a good way to start one.

Who is going to be our next president?

The Thinker by Rodin

Who knows? At this point it’s probably easier to say who it won’t be. That likely includes any Democrat polling at under ten percent nationally. That almost certainly includes any of Trump’s Republican challengers on a quixotic quest to convince Republicans he’s the loser he is, since about ninety percent of them love Donald Trump. There is always the possibility of a great Trump implosion. It’s been long underway; it just doesn’t seem to make any difference. As I noted recently, there’s no bottom for Republicans.

Anyhow, sorry Kamala Harris, Corrie Booker and even Pete Buttigieg, who curiously raised the most money of any Democratic candidate last quarter. Mayor Pete though may be going for the consolation prize: being on the eventual Democratic nominee’s ticket. Not bad for the mayor of a city of only 100,000 people.

Will it be Joe Biden, the current presumptive Democratic frontrunner? If history is any judge, probably not. The odds favor whoever wins the Iowa caucuses. You have to go back to 1992 to find a case where the Democratic nominee did not first win in Iowa. That was because Tom Harkin was running and he was Iowa’s senator. He got 76% of the vote; Bill Clinton got just 3%. New Hampshire’s primary is hardly a bellwether; it’s more often wrong than not at calling the Democratic Party’s eventual nominee.

Polls will doubtless be all over the place between now and February’s Iowa caucuses. The Des Moines Register hasn’t polled the state since June when Biden had a comfortable lead. It will be interesting to see their next poll, since theirs in typically the most valid. Generally though the candidate with the most enthusiastic supporters is the one who ultimately wins, since they show up on caucus night. You have to look hard for Biden enthusiasts. If I had to pick a winner of that primary, it’s most likely to be Elizabeth Warren. At least, that’s the sense I’m gleaning from reporters following her around: she generates the most enthusiasm and highest crowd sizes.

The Iowa caucuses and the New Hampshire primary have the effect of quickly winnowing the field. They also perversely assure that white Democrats get an oversize ability to help pick the eventual nominee. Is this racism? It wasn’t intended that way, as it was set up at a time when our country was overwhelmingly white but today it looks racist. Multicultural Nevada now rings in third, with its caucus on February 22. After Super Tuesday on March 3, which now includes California, we’ll probably know with 80 percent probability who the Democrats nominee will be: whoever has racked up the highest delegate count. Barack Obama was the exception, although he did win in Iowa in 2008.

I don’t think the Democrats are going to nominate Joe Biden. It’s not just because of his gaffes and his tepid support. It’s because if you add up the polling for the other progressive candidates, they trounce him. As candidates drop out, it’s unlikely that those supporting progressives will realign behind Joe Biden. They are more likely to align behind Elizabeth Warren or Bernie Sanders instead.

Warren probably has more enthusiastic supporters, plus Sanders is a known and older commodity. So I think the omens look quite good for Warren, who also happens to be my choice at the moment. Warren has been steadily creeping up in polls.

Democrats would be wise to nominate someone they are actually enthusiastic about voting for. That won’t be Joe. What brings out Democrats in droves on Election Day is someone new and different. Unfortunately, what they often get instead is someone tried, true and tired but favored by party insiders. Their candidate should be someone with good favorability ratings, particularly among independents. Currently, Joe Biden and Bernie Sanders qualify. This will change. Biden’s are declining while Warren’s are rising. Many candidates have underwater favorability ratings solely because most voters don’t yet know who they are.

I’m rooting for Warren and have been giving her $50 a month for many months now. After people really listen to her, they tend to like her. She seems relatable in a way few Democratic candidates are. I’m betting that she wins the nomination and I hope the election too. If she does, I will definitely enjoy watching her debates with Donald Trump. Trump will never know what hit him.

How the “American Dream” killed the American Dream

The Thinker by Rodin

The truth is, I think of Tom a lot. Tom and I go back to fourth grade. He was the new kid in class and unlike any of the other boys there he was a bit geeky like me. So we struck up a friendship. Decades later we are still friends, but we are bicoastal. I’m still on the east coast; he’s on the west coast near Portland, Oregon.

We lost touch with each other for a long time. My family moved south to Florida. His call was advertising, which took him various places further and further west, including Alaska. Tom is a brilliant at advertising and art in general. Frankly, my talents were far less impressive than his. For a long time I didn’t know what I wanted to do. My BA in Communications was largely worthless. It was the rise of computers, the dearth of talent in a rising industry and my willingness to get into a rising field that finally gave me a calling that paid. This led to a career largely working for Uncle Sam, a master’s degree that came later in life at age 42, and retiring in 2014 on a comfortable pension.

Tom, truly the more talented of us, wasn’t so fortunate. Both of us are now age sixty plus. Tom works in an industry that worships the young. Tom has worked for many advertising agencies over the years. These turned increasingly into gig jobs. Younger talent, more conversant in the nuances of social media and willing to work for cheap, tended to get the work instead of him. Mostly he worked for himself. Huge economic forces like the 2008 recession left him reeling. He’s had some ups since then but arguably more downs than ups. Tom is hardly alone.

I am the exception. It’s unnatural to retire at age 57 these days. Only the rules of an old civil service system let me do so. Pensions are getting hard to find, but I got one. It pays for the bulk of my retirement, but I also have a 401K to supplement my income. I also am not quite unemployed. I do some consulting from home, and a little teaching as an adjunct too.

As for Tom, he is scrambling. I’m sure he does advertising gigs when he can get them. His talent though is undiminished, just largely not recognized anymore. Mostly he is scrambling. His most recent “gig” was working at a local Amazon distribution center, working the night shift for a small pay differential. Amazon was shamed into raising wages to $15/hour, so he’s earning a bit more than that. I’m sure his wife is working too. Clinging to their middle class life must be excruciatingly hard with two boys to raise.

How did this happen? It’s been driving me nuts, and filling me with something akin to survivor’s guilt. Granted, I really like retirement, but it feels like a gilded life. It’s not too hard to imagine me in Tom’s shoes. Through someone’s grace I got lucky. Tom didn’t get that grace.

It’s Tom and millions like him. They were supposed to live the American Dream and it was supposed to work for them, as it had for his parents. You educate yourself, you try your hardest, you give the best of yourself and you expect to get rewarded. It worked for Tom for a while, until it stopped. It wasn’t because Tom suddenly became less talented. It was because someone moved his cheese.

An early factor was that Tom dropped out of college. It didn’t stop him from getting into some great ad agencies and even teaching college for a while, but the student loans dried up. His father got his education from the GI Bill that paid all his tuition. Tom never joined the military. Tom’s father also rode a successful career with IBM as an engineer, which gave him a generous pension. You can’t get a pension if you work for IBM anymore.

In short, the American Dream left Tom behind, and he’s a smart white guy like me, supposedly a privileged sex and race. It probably would have left me behind too had not I sensed opportunity in this computer thing, made the best of it, and got lucky. It also helped that I made a career working for the government. There were times when I didn’t like the work, but the bills got paid regularly and I had only one incidence of unemployment.

The American Dream is that if you work hard and apply yourself you can live a reasonably prosperous life, one better than your parents’. The dream is that there will be opportunities there for you and that with persistence and tenacity you too can claim them. For a while, it was the American reality, not just a dream. It wasn’t for everyone of course, but for white men like Tom’s dad and mine it was.

The reality though is that the American Dream wasn’t so much a dream as it was the American system. The “Dream” was made possible by progressive government. The GI Bill funded not only Tom’s father’s education, but also my father’s. Without it, it’s unclear if he too would have gotten his engineering degree. He might have swept floors instead. There were plentiful scholarships for the talented, but also student loans. There were beneficent companies willing to invest in employees for the long term. Both our fathers had such employers. Climbing the ladder was possible because there were many rungs and they were fairly easy to climb.

Since about the time of President Reagan, the tables have turned. Pensions became 401Ks, if your employer even offered a 401K. Student loans became less generous, had higher interest rates and became harder to pay off. The cost of living in general went crazy, with housing disproportionately harder to afford. The cost to buy a ticket on the American Dream kept getting pricier: tuitions skyrocketed, class sizes swelled anyhow but the career you often aimed for often turned into something you could not market profitably. It happened to me with a BA in Communications and would have brought me down too had I not found an aptitude in information technology and low entry requirements at the time. Now, more of us have advanced degrees than ever. They just don’t buy us much. For example, there is my friend Tim who I met when we both worked retail. He has a PhD and earns his living largely through a lot of adjunct teaching. It doesn’t pay very well.

The American Dream used to come with a support system that made it possible. Now that support system is gone. The one that exists is mom and dad, if they are wealthy enough. Unsurprisingly, these people are the ones who are most likely to attain it and prosper. We have decided not to make the investment that makes the American Dream possible. Unsurprisingly a lot of people like my friends Tom and Tim arguably fell through the cracks. A few, like me, got lucky anyhow. But rather than making me feel good, it just makes me feel sick.

Religion is failing us, Part Two

The Thinker by Rodin

(Read Part One, if you haven’t.)

For a couple of decades now, I’ve been interested in the phenomenon of Near Death Experiences (NDEs). I’m not obsessive about it, but my interest in it picks up from time to time. Yesterday, it was snagged again watching this video on YouTube:

The speaker at this TED Talk, Thomas Fleischmann, knows a thing or two about NDEs. As an emergency doctor he has witnessed about two thousand deaths. Since it’s his job to try to resuscitate them, he sometimes succeeds. These people are clinically dead: no heartbeat and no brain waves. The uniformity of their NDEs is amazingly consistent across ages, religions, races and geographical regions.

What makes Fleischmann’s case unique is that he also had a NDE, and he gave the same report his patients did. People brought back tend to be happy, caring, highly relational and lose all fear of death. They report moving toward a light after death, often seeing relatives, and feelings of absolute peace and unconditional love.

This is not quite the Pearly Gates, a greeting from Saint Peter and sitting near the Right Hand of God, but it sounds pretty good. I’m reminded of that snippet from Peter Jackson’s Lord of the Rings movies. If you read the books by JRR Tolkien, he says largely the same thing:

PIPPIN: I didn’t think it would end this way.
GANDALF: End? No, the journey doesn’t end here. Death is just another path, one that we all must take. The grey rain-curtain of this world rolls back, and all turns to silver glass, and then you see it.
PIPPIN: What? Gandalf? See what?
GANDALF: White shores, and beyond, a far green country under a swift sunrise.

Given that none of us can escape death, assuming all these experiences continue to progress the way it seems like they should, death should not be something to fear at all. Perhaps it should be welcomed because arguably for many, if not most of us, it’s a great improvement over our reality.

Tethered as we are to this reality, or perhaps to what we think is this reality, only the suicidal will want to hasten their demise. It’s a bit crazy not to fear death, as it seems to be instinctual. So many of those many early Christian martyrs fed to the lions in Roman coliseums must have been crazy. They thought they were earning a place in a heaven. At least it appears that some of them were able to surmount the fear of death to spread the message of Christianity to the heathen.

But overall, religion isn’t helping us confront our mortality in a healthy way. Arguably, most religions make it worse.

These NDEs strongly suggest there is an afterlife, the soul is real and our death moves us into a different, happier and more loving realm. It doesn’t seem to matter how evil you were in life; you are still loved and accepted in the afterlife. It’s kind of hard to get my mind around that given that someone like Jeffrey Epstein recently joined the ranks of the dead. You would figure some of them would deserve eternal torment. Yet if Jesus bought us salvation, then it appears that the Universalists were right: he did so for everyone, for all time. It’s not something you have to earn like a Boy Scout merit badge. It’s something that just is. It’s innate. It’s built in.

You have to look hard to find a religion that tells us not to worry about death, or more specifically eternal damnation as a result of death if you don’t get their religion. Most religions preach just the opposite: you have to work really really hard to get into heaven, or at least be a sincerely good person in this life to get your eternal reward. Yet even Jesus seem to be providing a hint that we are all due salvation. (See Matthew 20).

The atheists aren’t helping either. They don’t believe in an afterlife, hence they don’t believe in NDEs either. Yet it sure looks like they are going to get one whether they like it or not. Or maybe by believing you aren’t going to get one, you actually don’t. There’s no evidence of this though from the many atheists who’ve had NDEs.

Many Buddhists believe we are stuck in a cycle of birth, death and rebirth, unless you achieve Nirvana, which is apparently very hard to do. It’s probably easier for a rich man to get through the eye of a needle, as Jesus also taught. The Buddhists appear to have picked up a lot of this from the Hindus, since Hinduism preceded Buddhism and Hinduism permeated Buddha’s life.

The monotheistic religions all believe in one God and one chance at salvation. Naturally they are very concerned about straightening you out now so you can make it to heaven. Some are arguably more than a bit crazy about it. As I noted in an earlier post, some fundamentalists are actively trying to bring about the end of the world, convinced that they are chosen ones like Donald Trump, and will be raptured.

I would think it should give even a fundamentalist pause to consider that Trump will be raptured too, along all the other sinners out there who they are desperately trying to help see the light, but seem to secretly despise. Frankly, from all the Left Behind books, the Rapture seems like a lot of fun to these elect. It’s like God will be burning these souls like marshmallows over the campfire of Hell, and they get to watch gleefully. After all, they are the chosen, not the rejected.

It’s hard to think of a point to religion if we all make it to a great afterlife for free, and if no one checks our punch cards to make sure we’ve earned our Golden Ticket. The obvious consequence of religion though is to hype our fear of death, so we get so scared that we change our behavior to act and worship a lot like them. And that appears to add a lot of misery to people’s life by pushing them to act in way contrary to their nature. It seems sadistic.

At the very least though, it is not helpful. In fact, it’s very hurtful. We all need to get along in this life as best we can because we are trapped inside this matrix. If religion has a purpose, these NDEs suggest that’s it: to model in some small way the peace and brotherhood and unconditional love we will all find after death, at no charge and unconditionally. Yes, even Donald Trump.

How about some of that religion? And a lot less of the apparently hurtful and counterproductive crap we are getting instead? Sounds good to me. You best not hold your breath.

No bottom for the Republican Party

The Thinker by Rodin

It looks like I have been giving Republicans too much credit. I assumed there was some core group of Republicans who could agree, “This time Trump has gone too far” and bring him down. Apparently, there is no bottom for the Republican Party.

That’s because I assumed that there were some sane Republicans out there. But it looks like when push comes to shove, sanity takes a back seat to subservience and fealty. Republicans apparently love to take orders. They love authoritarians. I’m guessing it gives them some feeling of comfort that somewhere a Big Daddy is taking care of things. Having decided to get on the Trump train, they can’t seem to find a reason to get off, no matter how surreal and ridiculous it gets.

Signs are pointing to a huge train wreck for Republicans in the 2020 election. Some years back I pointed out that Trump would kill the Republican Party. To severely maim the party, Republicans have to lose both the presidency and the Senate. Barring some massive election fraud, Trump is destined to be defeated in 2020. He’s never polled over 50% and most of the time his approval ratings have been mired in the low 40s or lower. Winning with these sorts of negatives is possible only with massive voter fraud or a third-party candidate that siphons off a lot of Democratic votes. Both the 2000 and the 2016 elections likely would have elected Democratic presidents had it not been for the third-party spoiler effect. It’s not Trump’s base that will win him reelection, but Democratic fragmentation.

Winning the Senate requires flipping three Republican seats, which is a bit of a long shot but not impossible in a wave election. Aside from his base, Trump has managed to piss pretty much everyone off. But even among his base, he is bleeding supporters. White men support him, but according to polling he’s recently lost white women without a college education. Trump is losing farmers from his trade wars, and truckers are seeing major layoffs plus the latest tax law raised their taxes by doing away with a lot of their deductions. Meanwhile, Senate Majority Leader Mitch McConnell is deeply loathed in his home state, with only 33% approval. He can’t even be bothered to pump up a pension fund for coal miners. Yes, in deep red Kentucky, McConnell may lose reelection next year.

Rather than face criticism, Trump does the only thing he knows how to do: reshuffle the deck. This means changing the subject, generally by saying things or posting comments on his Twitter feed that are increasingly outrageous. This is effective but it doesn’t actually fix the issues that got him in trouble in the first place.

Moreover, his pattern never varies. When he decided not to put those 25% tariffs on Chinese goods so people could enjoy nice presents under their Christmas tree mostly made in China, then of course when China added new tariffs on U.S. products as they promised it all went out the window. New tariffs were back on and markets plunged about three percent yesterday. They were doing fine until his announcement.

But just when you thought Trump couldn’t possibly get any wackier, he doubles down on the stupid. Just this week Trump:

  • Said he was the Chosen One, implying he was the King of the Jews
  • Said any Jew voting for Democrats was disloyal and un-American because they should put Israel first … uh, what? And how is putting Israel before the United States showing you are an American patriot? Oh wait, because Trump says so. Gotcha.
  • Ordered U.S. companies to leave China, even though he can’t
  • Decided he could issue an executive order to end birth right citizenship, as if he could unilaterally override the 14th Amendment
  • Blamed the chairman of the Federal Reserve for his economic woes because he wouldn’t cut interest rates fast enough, while apparently absolving himself of the blame of nominating Jerome Powell in the first place
  • Said he wanted to buy Greenland and canceled a summit with Denmark, which manages the island, in a huff because they wouldn’t consider it. Actually, Denmark couldn’t even if it wanted to. Residents of Greenland would have to decide. Oh, and he called their female prime minister “nasty”, his word of choice when acting like the obvious misogynist that he is.

We have a president that is, quite frankly, totally nuts and bonkers. Just one of these by a Democratic candidate like Joe Biden would sink their candidacy. But Republicans so far show nothing but increased fealty to a president who by any objective standard is mentally ill and could not be trusted to even competently manage a child’s savings account.

Moreover, a recession is clearly on the way and every action Trump takes seems to be designed to make it worse. It was tariffs that brought us the Great Depression. Doubling down on tariffs simply increases the odds that a recession will turn into a depression. And if there is a recession, there’s not a single adviser to the president who has either the smarts or the wherewithal to help lead the US out of a recession. The closest we have is Jerome Powell, and only because the Fed is independent of the executive and he can’t be fired. When you surround yourself by incompetent sycophants, well, you get incompetent sycophants. Hell of a way to run a “government” … don’t bother to actually govern!

I was thinking yesterday that the tanking stock market might finally be the straw that broke the Republicans’ back. Moneyed capitalists ultimately hold up Republican power. Yesterday, three percent of their wealth vanished because Trump’s ego was hurt. Likely a lot more of it will vanish soon.

The obvious remedy is the 25th Amendment and twisting Vice President Pence’s arms to get a majority of the cabinet to declare our president is too mentally ill to serve. I’ve been waiting more than two years for this intervention, assuming cooler heads in the Republican Party could prevail. While I still hope for it, increasingly it looks like I misjudged the nerve and sobriety of the Republican leadership. They are wholly captured by their captain, and appear ready to go down with his ship.

Is pornography bad?

The Thinker by Rodin

I’ve written about pornography sporadically over the years, including this 12-year-old post on why I liked the idea of the .xxx domain, an idea that finally came to fruition in 2011.

You don’t find too many people who will admit to watching pornography, at least regularly. Chances are though that if you are on a website at any given moment, you are on a porn site. Two of the top ten websites are porn sites (xvideos.com and pornhub.com) at #8 and #9 respectively as of this writing. Each gets more views than Wikipedia or amazon.com.

I freely admit watching Internet porn. It would be hard to write posts about it otherwise. But I will also freely admit that it’s not something I do everyday. It helps to be married and to reach an age where testosterone levels decline. Also likely a factor: the more you see the more you get inured to it.

Many people will tell you that you should feel bad for watching pornography, such as Megan Johnson whose TED Talk I watched today. Ms. Johnson makes a pretty compelling case that pornography fuels sex trafficking. A lot of (mostly) women who get into sex trafficking get their start being forced to watch nonconsensual pornography. They often end up as sex slaves, arguably for people like the recently deceased Jeffrey Epstein and perhaps some of the many famous and moneyed men in his circle. These potentially include Bill Clinton, Donald Trump and Prince Andrew.

When I compare pornography online today compared to stuff I saw ten, twenty, thirty or more years earlier, it’s quite clear that it’s no longer your grandfather’s pornography. For one thing, it’s online now. It used to be available largely only in printed form, and you had to pay for it. Now it’s free, sort of, but you will get endlessly harassed to buy premium porn on these sites, see live sex via webcams and find people near you into kinky sex. Ms. Johnson says that if you bite from that apple, you facilitate sex trafficking and prostitution.

Also unquestionably, pornography today is both more lurid and transgresses more boundaries than it used to. It might be strange to think that there were ever boundaries in the world of pornography, but there were. During the Playboy era the photographs of models were retouched and their naughtiest bits were usually hidden or suggested. Today, arguably a lot of what passes for pornography on these websites is not pornography. The new pornography is all about transgressing boundaries. That’s apparently the new hot. The other stuff: not so much.

For example, one of the hottest trends these days on porno sites is incest. Of course there is no way to know if any of these videos involve actual siblings and/or parent/child sexual encounters. If they are all of legal age it is probably not illegal, but I’d bet that at least 99% of the time no actual incest is being filmed. Even porn sites seem uncomfortable with real incest. Instead, it’s mostly hot stepmothers or hot stepsisters. Another clue: they look too professionally done to be real.

So, yeah, it’s weird but actually the incest theme is not all that shocking these days. The stuff I really object to is abusive “pornography” which in my mind is just abuse. There’s probably at least as much of this as there is the other kind. Mostly women are constantly being abused, i.e. slapped in the face, yelled out, told they are c***s, whores and other derogatory terms. Sometimes they are urinated on, not just by one man, but by groups of men. One woman having lots of sex organs in various orifices, often at the same time, has been standard stuff for decades.

Is this pornography though? Not in my book. It’s just plain abuse. I have no desire to see this sort of stuff. Many of us suffered from abuse in our childhood. I didn’t suffer sexual abuse, but I did suffer emotional and physical abuse. This is not something I want to relive or inflict on anyone else, let alone teach to those who haven’t experienced it. In fact, I’ve spent time with therapists trying to work out my feelings on what I experienced. What I experienced was probably relatively minor though compared to the abuse my own government is now inflicting on children crossing our border with Mexico. Our government is committing child abuse on a massive scale. It’s your tax dollars at work. Aren’t you proud?

“Pornography” which depicts simulated or actual abuse of people gives what I thought of pornography a bad rep. If these sites had filters where you could filter this stuff out, I certainly would. Pornography and the way real people have sex rarely intersect anyhow. Since many people are sexually awoken on pornographic websites, we shouldn’t be too surprised if more of us expect real sex lives that model a lot of pornography. If you don’t know any better, you might think this stuff is normal in most sexual relationships. It’s not.

About the time I turned a legal adult in the mid 1970s, the available pornography was IMHO pretty harmless. I don’t feel that way anymore. I think most people have a right to watch the stuff if they want, but like Megan Johnson I wish they wouldn’t. If I knew of a curated sites where pornography was just as lurid as men like but where the actors were obviously having fun and modeling healthy, consensual relationships I’d find that much more of a turn on than what passes for pornography today. Watching people actually enjoying sex and their partners is a turn on. The rest, for me, is not.

Ms. Johnson is probably right that these sites at least indirectly lead to human trafficking. It’s unclear to me how many (mostly) men going to these sites though take the next step that lead to real life sexual encounters with sex slaves and prostitutes. However many it is, just one is too many, but I’m betting that fewer than ten percent of porn viewers take this step.

On the other hand, if you are not in a sexual relationship, would like to be in one but for whatever reason can’t be in one, pornography is a reliably way to get your rocks off. Whether it is safe sex is arguable. You won’t catch a disease, but a pattern of watching pornography suggests an addictive behavior. Unfortunately, our sex drive is entirely natural, which is not true of nicotine addiction or alcoholism. Watching pornography that is not abusive is probably better “sex” than you will have with an average real life partner, and it doesn’t come with hurt feelings and human complications. My guess is that without pornography, the incidents of sexual assault would be a lot higher. So maybe some pornography is good, or at least socially useful?

It’s clear to me that today’s pornography does make it much more difficult to have good, healthy sex with someone else. It sets false expectations. In reality, a good sex life is a bonus that rests on the foundation of a healthy relationship. Those are hard to find and harder to keep. If we taught more of these skills, we’d likely have a lot fewer people finding sexual relief in pornography, and a lot fewer exploited people as well.

Real estate investing is exacerbating income inequality

The Thinker by Rodin

Have you met Kevin? Kevin, i.e. Kevin Paffrath, has a YouTube channel, says he’s a millionaire and will help you get started in real estate investing so you can be a millionaire too. He’s handsome, reasonably young and looks overly caffeinated. The same is true of Graham Stephan who while being a millionaire still lives like a miser. He’s subsisting on a lot of oatmeal according to his many YouTube videos. Both are rich and made their millions buying, selling but mostly renting out their properties. And both are glad to help you do the same, as well as coach you on the secrets that made them rich too, for free if you watch only their YouTube channels but also for money if you want to attend their lectures, get their books or DVDs, and get online with them for semi-private chats.

The YouTube algorithm decided I am interested in real estate investing. I’m not interested enough to actually do what these guys are doing, but I do have a friend locally who is making most of his money through renting out rooms in houses that he owns. Maybe that’s what got me curious. This gives him time to do what he really likes: some IT consulting fixing and maintaining computers, servers and such; and coaching at the local high school which pays much less than the minimum wage.

I’m guessing though that he didn’t get all this property by chance. I’m betting he inherited a significant amount of money that let him get started in this business. I don’t know for sure because I’m too shy to ask him. But Kevin and Graham aren’t that shy, and proudly state that they made their fortune the old-fashioned and new-fashioned way. The old-fashioned way is to buy properties on borrowed money on fixed 30-year mortgages, rent them out and use the rent to maintain the properties and pay the property taxes. The new-fashioned way is to use the tax laws that make it possible for them to pay little in the way of capital gain taxes. It’s the latter that really irks me about Kevin and Graham.

Anyhow, they are happy to try to convince you to get into real estate investing too. It’s also clear from watching their videos that they are more than a little obsessed about real estate and money in general. It’s unclear if they have any time to enjoy their money and seem obsessed with acquiring more and more of it. They figure you are too so why not try to monetize their talent? And to be fair, both men don’t appear to be bamboozling anyone. They qualify themselves as just some guy on the Internet, tell you to get your own independent advice, and that making money in real estate can be profitable if you do it right, but it’s not easy.

I was watching Kevin’s recent video yesterday on why he’s not a fan of Roth IRA’s. It’s definitely a perspective I would not get from my personal financial adviser. He shows you how you could use some of the money you set aside to invest, above the amount you would lose over the years with a Roth IRA (by paying taxes on the money upfront) to buy real estate instead. And conceptually, it sounds great. When you save enough to buy one home, rent it and maintain it and ten years later use its profits to go buy another one.

But it all depends on whether you have the time and energy to commit to buying other properties, maintaining them, and being a landlord. For me, being a landlord runs about dead last on the sorts of things I would do willingly. I might sell used cars first. Basically, I’m bad at confronting nasty people. Not all tenants are bad and making sure you have the right tenant is important to keep an income stream going. But there’s bound to be some nastiness. I don’t want to deal with it. You could contract it out to someone else, but that makes it all less profitable.

Like most homeowners, I discovered that the cost of maintaining houses for over thirty years is considerable. We owned a property in Virginia for 22 years. It was bought for $192,000 in 1993, sold in 2015 for $505,000 but we also spent about $120,000 maintaining and improving it. And of course we paid lots of money in interest payments and other fees. In short, maintaining a house is not for the timid or financially challenged. If you are going to get into this game, make sure you can get cheap loans or have a whole lot of working capital.

I was so busy with my regular job that just maintaining our house was more than enough extra work, and it took 22 years to realize the gain on the property, which was transferred to buying our next property. Fortunately we own it free and clear. If you get into real estate investing, the income may appear to be “passive” but you will probably be working your ass off maintaining these properties and dealing with the hassles of investing in real estate and being a landlord.

In short, real estate investing is not for everyone, and it’s not an easy way to riches. But goodness! I’m learning from Kevin and Graham that there are some real tax advantages to it. And that part had me seeing red. It’s not that I can fault Kevin and Graham for getting these perks, but essentially they delay forever paying taxes on all the appreciation of their properties. Moreover, they can effectively escape ever paying taxes on these gains if you never sell them or don’t use the sale to buy something else. You can, for example, bequeath your properties to your posterity, and they can keep this scheme going indefinitely too.

This is in fact how Donald Trump has made his wealth. It’s why he says he loves debt. Rest assured he is deeply indebted, but if he can sell one property purchased largely with borrowed money and buy another one with the proceeds, he can pocket a lot of cash while deferring gains on them too. This is one of the reasons Trump is pulling all stops to keep his tax returns from getting released. If people discover he pays little to no taxes while they do, they are going to be furious.

When Elizabeth Warren talks about a wealth tax, this is exactly the sort of wealth I want to see taxed. You should too. These are all legal schemes, but they drive wealth inequality, exacerbate deficits and in general keep the government from having the revenue it needs to give us a first-class society.

I’m betting Kevin and Graham would grumble a little, but they definitely owe the rest of us a heap of money in the form of higher taxes. Mostly, we need to tax their capital and property gains. We should not feel the least bit guilty to go after it.

There’s (solar) gold in them thar hills!

The Thinker by Rodin

If you own a gold mine, it’s a pretty good investment until of course the gold veins run dry.

But there’s a kind of mine that never runs out: solar gold, you might say. I’ve already gotten a share of this solar gold. For three years, we’ve had 20 solar panels on our roof. According to the obsessive statistics I keep, we’ve generated 20,076-kilowatt hours (kwhs) of clean energy since it went online in June 2016. It’s the equivalent of planting 363 trees.

But twenty solar panels turned out not to be enough. The remainder comes from carbon-free wind energy, but perhaps not much longer. A solar farm is under construction in Gardner, Massachusetts. We’ll probably get the rest from that solar farm when it is operational in March 2020.

The electricity from our house’s solar panels is free, after we recoup the cost of the system, which should happen around 2023. The same can’t be said for this solar farm under construction. We won’t own any of these solar panels. Instead, we’ll be renting them. Unlike our wind energy, for which we pay a 3.8 cents/kwh premium, we’ll get this solar power for less than it would cost to draw it from the grid. So we can go greener and pay less for the privilege.

How this works is that our “share” of the solar farm’s electricity is credited to our electric bill. So if our share generates 500 kwhs a month, presumably we’ll get a $0 bill from the electric company and see that as a credit that we draw from in future months. Of course, we still pay for our “share”. I’ll get into how that is done in a moment.

There are solar farms going up all around us. Land is relatively cheap here in Western Massachusetts, at least what there is of it. A lot of it is set-aside as conservation areas. But areas that have been deforested might as well become solar farms: huge arrays of solar panels that do nothing but wait for sunshine and sell it to the local electric company, National Grid. These solar farms have done the math and basically everyone wins.

  • Society wins by reducing the amount of carbon pollution
  • Electric companies win because they buy the power at a wholesale rate, and mark it up for retail pricing. Also, they don’t have the investment costs of creating new power plants.
  • I win because I get a discount on power compared to what I’d pay National Grid for their retail price
  • Solar farm gets to claim SREC (Solar Energy Renewable Certificates) payments for putting up a solar farm, plus they get the income selling the power to National Grid. These solar farms also make profits from the 15% discount I get compared to National Grid.

Moreover, there are no fields that need planting and harvesting. It’s all passive income. Maintenance costs for solar systems are almost zero. I imagine they might need to replace some inverters from time to time, and build a tall fence to keep people out, but that should be it. In thirty years or so they will probably swap the panels, or if new panels become much cheaper and more efficient, it might make sense to replace them long before then.

What I’d like to do is add more solar panels to my roof. I’ve looked into it but for reasons that look entirely bureaucratic, I’d have to put up a completely new system, with separate pipes, metering, etc. This frankly makes no sense but I’ve found no way around it after trading many emails and a phone call with National Grid. The cost of a separate system compared to adding to what I have amounts to thousands of dollars.

But even so, there’s a limit to the amount of panels I can put up. Realistically, it would be hard to add more than four panels to my roof. Putting more up in my backyard is not an option. First, I may be in a single-family house, but it’s a 55+ community, so we’re technically a condominium. Second, I have no backyard to speak of. I have about four feet of it. Otherwise my “yard” is a steep hill with about a 15% incline. There’s all this plus my new car is a Toyota Prius Prime, a plugin hybrid. So it is now drawing energy from the grid too. At least it’s all clean energy.

As we look toward a carbonless future though, it’s clear to me that these solar farms are leading indicators of what 2050 will look like. There will be lots and lots of solar farms. People who have roofs that are reasonably unobstructed will add solar panels. One state, California, requires it for all new construction. With the cost of solar panels continually dropping, pretty much any surface that points toward the sun and is unobstructed will have them. In time, they won’t look like solar panels, but will blend in naturally.

Lots of condo, apartment and city dwellers though will want to buy their share from solar farms. It’s likely that they will save money for doing so … and help save the planet.

Religion is failing us, Part One

The Thinker by Rodin

We just finished Season 2 of NBC’s series The Good Place, which we are watching on Netflix. It’s a comedy of sorts on the afterlife, more specifically on our views of the afterlife. In this version, pretty much everyone ends up in “The Bad Place”, i.e. Hell. Four clearly flawed not so good people end up in The Good Place, or do they? I won’t spoil the plot if you haven’t watched it. Despite some flaws, the show keeps you reasonably engaged, and manages to be reasonably funny while gently lampooning our common notion here in the West about the binary nature of being “good” or “bad” with no allowance for ambiguity.

Here in Northampton, Massachusetts, where I live now, at the Bridge Street Cemetery, sits the grave of someone who would recognize these versions of Heaven and Hell. Our progressive city used to have strongly Calvinist roots. Anyhow, we have the remains of Jonathan Edwards, a colonial Calvinist theologian whose sermon Sinners in the Hands of an Angry God you may have read when studying American history. Northampton has since gone all-progressive with (I’m not kidding you) rainbow colored striped crosswalks. We have probably the highest number of lesbians per capita in the country. If Edwards could arise from the grave, he’d probably figure he was in hell with all the same-sex couples here walking around holding hands.

For the most part though, Northampton is a very peaceful, civil and charming place, which is why we retired here. I’m inured to all the rampant homosexuality around me. That’s because while we have a disproportionate number of LGBTQA folks, the majority remains happily heterosexual. We quickly learned that same sex couples holding hands were no threat to us. But you don’t have to drive too far out of Northampton to find plenty of Trump voters. It’s the furthest thing from Sodom and Gomorrah around here.

I can’t say the same thing about El Paso or Dayton, Ohio. Both cities suffered mass shootings recently in less than twenty-four hours. Twenty were killed in or around an El Paso Walmart yesterday by what looks like a 21-year-old white guy from Dallas with a rifle, trying to save White America somehow. Naturally he’s a Trump supporter. Around 1 a.m this morning, a gunman killed nine people and injured 26 others in Dayton. He had a 223-caliber magazine and body armor, which let him unleash mayhem quickly. Fortunately, police were nearby and managed to kill him pretty quickly. We don’t know yet this shooter’s age, race or motives, but there’s an excellent chance he is young, white and a Trump supporter too.

It’s American carnage, Trump-style. Trump is pushing all the buttons to unleash these horrors by his most unhinged supporters.

Religion is supposed to give us a way to not just cope with life, but to improve it. It’s clearly not keeping pace with the pace of change all around us. The response of many religions is to double down on their articles of faith, but doing so seems to unleash only more of the crazy.

America is rife with “Christianity”, but for the most part doesn’t actually practice Christianity. Frankly, religion is failing us. A belief system oriented around a world where most of us were serfs and reported to a lord doesn’t work well in the 21st century. Watching The Good Place, it’s hard not to ask why so many of us still believe these antiquated notions of heaven and hell.

What passes for Christianity these days is largely crazy and destructive. A majority of Christians in our country are clearly Trump supporters. They clearly approve of most of his policies, including separating families at the border and keeping children in cages and people in crowded, inhumane conditions. These days you can only act as a Christian to someone who is a member of your church. All others can be other-ized as not quite human. These “Christians” find “salvation” (comfort) in conformity and closed-mindedness. They want religion to impose order on a world when in fact doing so makes it worse. Christianity is breeding hatred and intolerance. It is making us less Christian every day.

No wonder so many Millennials are giving up on religion altogether. It’s not improving things, and it’s obviously phony and it’s hypocritical. But also Christianity is a very hard religion to practice, at least as Jesus taught it. It requires an open heart and love toward everyone, particularly those most unlike you. It’s clear that most Christians simply cannot and will not go there. It requires giving your treasure to the least of us. It requires you to act contrary to your nature. It requires you to constantly summon your better self and step outside your boundaries and prejudices. Most of us simply can’t, which simply drives cognitive dissonance that charlatans like Donald Trump are using for their own purposes. It feeds that chaos, the narrow-mindedness and the bigotry that is all around us.

Religion needs to be redefined for modern times. Perhaps we are better without it. Making the present try to fit the ideas of a far past is destroying us.

I’m feeling sick and you should too

The Thinker by Rodin

I was in Boston last week when the massive heat wave struck. I was there to attend a Wordcamp, a gathering of people interested in WordPress. (WordPress powers forty percent of websites, including this one.) While the “camp” was great (in part because it was indoors), the heat outside was oppressive. Walking eight blocks or so to dinner from my hotel nearly gave me sunstroke.

For a while, I walked beside a homeless man with a shopping cart. Inside were his prized possessions, such as they were. They included two plastic jugs of water that he kept drinking from. He put on a happy face though amongst his profuse sweating. “Love the heat, love the heat”, he intoned, moving down the sidewalk.

It was probably 98 degrees. To me it, was about as brutal a heat as I could ever remember, which included one 104-degree day in Virginia’s humidity. It was perhaps made worse by all the asphalt and concrete around me. I eventually found the Jewish deli where I had dinner. The threat of heatstroke went away when the waitress poured me glass after glass of ice water.

The homeless man proved to be more resilient than I was, but he had no choice. I figure it would have killed me had I had to stay out in it all day. I felt woozy, sticky, terribly uncomfortable and sweaty beyond belief. I couldn’t fathom how people endured this kind of heat before air conditioning. The truth is though that most of the time they didn’t have to because it very rarely got so hot. What I was experiencing was climate change in action. It is only going to get worse.

I remember back to the 1970s when the Environmental Protection Agency was first established. By the end of the decade, the skies were largely clean and the rivers largely unpolluted. We felt like we had pollution under control. Climate change was not on anyone’s radar, except by maybe some outlier scientists. No wonder that when Ronald Reagan declared Morning in America again in the 1980s we were so enthusiastic. Off went the solar panels on top of the White House that dopey Jimmy (“cardigan sweater”) Carter had put up. We went back to getting our energy the old fashioned way, which at the time meant importing oil from mostly corrupt Middle East countries that we supported. We did manage to modestly increase fuel efficiency standards over the decades, but mostly we tuned out Al Gore’s warnings. Trump, of course, is doubling down on willful ignorance. And he’s hardly alone. In Brazil, their new Trump-like president Jair Bolsonaro declared open season on what’s left of the Amazon.

Addressing climate change is not entirely hopeless, but nearly so. With the exception of the United States, most developed countries agree there is a problem but most are taking half measures at best to address it. It doesn’t begin to realistically address the crisis. To realistically address the crisis, we all need to work together. Moreover, there is no short-term solution. It will require generations of work and carefully nurturing of our ecosystems. In the best case there will be much more massive deforestation, widespread species destruction, mass migrations and added misery and poverty. There’s a lot to be afraid of as the crisis worsens. Most people react to fear by building walls like the Supreme Court decided Trump could do on our southern border on Friday. Countries will try to have their cake and eat it too, which will make things worse for everyone.

Heat and misery then are now the new normal, but the effects of 108-degree records in cities like Paris recently are just beginning. It’s already pushing sea levels to rise but this will get much worse too. There are ten million people in Jakarta, Indonesia but most of it is expected to disappear under rising seas as it sits at just (or below) sea level. And it’s but one of the cities to be impacted the worst by climate change. Everything is changing, and none of it is changing for the better because of climate change.

So I was feeling sick not just from the heat, but because of the legacy I am leaving to my daughter’s generation and all future generations. They may expect that their lives will closely resemble the lives they were born into, but that’s largely not going to be the case. Their lives are likely to be shorter, more miserable and with a lower standard of living than their parents’.

But it’s not just future generations but also my generation too. At least financially I am the exception, but I see plenty of people in my generation that are living precarious lives largely unknown by their parents. I learned this week that my friend from childhood, Tom, is working at a distribution center. He’s just another Amazon droid in a poorly air conditioned warehouse shoving things into bins for distant customers for a little over $15.00/hour. Tom is an extremely talented advertising professional, but at age 61 he simply can’t find much beyond spot work for doing what he does best and most profitably. He’s been aged out and his industry favors the young. So while you sleep, Tom is shuffling things into bins for a fraction of what he’s worth. The only good part for Tom is that Amazon was shamed into raising wages to $15.00/hour. Also, because he works nights he gets a small bonus. Tom is hardly alone. Maybe $15.00/hour is a living wage, but not for a man with a mortgage, a wife, and two kids, one of who is going through a gender transition.

I feel sick for Tom not to mention his friend Jeff who is in a similar situation, and that the economy is failing millions like them. I feel sick for that homeless man too. Being retired and comfortable financially, I spend a fair amount of my leisure trying to rectify the mess my generation has made, such as helping to create a community network. But it’s not nearly enough. The problem is so massive it looks hopeless. I know that fear is a very strong motivator. But since most of us are short-term thinkers, our fear will be used against us to make our lives even more miserable. Malicious idiots seem to be in charge everywhere, and most of us are stupid enough to keep allowing them to do so.

No wonder that I feel sick. I have a feeling though that this is a condition I will never recover from. Neither will you.