The Digest #99
Trading Bans, Used Car Insanity, Focused Attention, Digital Advertising, UPS, Peloton
“Congressman, I couldn't agree with you more that inflation is a tax, and that inflation currently is too high. And it's a top priority of the Federal Reserve to run a policy that's going to bring inflation to an acceptable level consistent with price stability as we go forward.”
— Federal Reserve Chairman Ben Bernanke, July 16, 2008
Stock-Trading Ban for Members of Congress Gains Traction by Siobhan Hughes, February 9, 2022. As this article reports, momentum is building for a ban on trading for members of Congress. Although a ban might appear to eliminate risk of conflicts of interests, it will also come with inevitable side-effects. Perhaps it makes more sense to permit trading but to require immediate disclosure of the portfolio and trades of all members, to be posted on an easily searchable website for the world to see. Sunlight can often be the best disinfectant when it comes to detecting corruption. (WSJ)
Fed Chair Powell Traded During FOMC Restricted Periods by Pam Martens and Russ Martens, February 10, 2022. It appears that the government is not even enforcing stock trading restrictions that are already on the books: “We fact-checked the Occupy the Fed report by downloading the dates of all FOMC meetings from 2015 through 2020 and comparing them to the trading transactions listed on Powell’s financial disclosure forms filed with the Office of Government Ethics (OGE) for years 2015 through 2020. We can verify that Powell traded on April 29, 2015, and on December 11, 2019. Both were the final day of the FOMC meeting.” (Wall Street on Parade)
Seven-Year-Old Honda Fit Sells For More Than it Cost Brand New by Sean Hollister, February 10, 2022. New and used cars have experienced rapid inflation over the past year. In some cases, used cars have been reported to sell for more than new vehicles but this story takes the insanity to an entirely new level. A 2015 Honda Fit has sold for more than it cost when it rolled off the dealership lot brand new. (The Verge)
If You’re a Wage Earner, You’re Going to Fall Behind by Jeffry Bartash, February 8, 2022. This article contains excerpts of a recent Barron’s interview of Thomas Hoenig who was featured in The Lords of Easy Money, a book I recently reviewed. “I think they will be very slow in shrinking their [$9 trillion] balance sheet. It would affect the housing market because they buy a lot of mortgage-backed securities … they don’t want to do it too quickly … we’re probably talking about a decade to get the balance sheet back to any kind of balance. The thing is it won’t come without pain.” (Market Watch)
How to Retain What You Learn by Sahil Bloom, February 9, 2022. The author presents a framework for retaining more of what you learn. It consists of five steps: Inspired Consumption, Unstructured Note taking, Consolidation, Analogize, and Idea Exercise using spaced repetition and other methods to exercise your new learnings and prevent atrophy. (The Curiosity Chronicle)
Do I Have Your Attention Now? by Nick Maggiulli, February 8, 2022. A good article on protecting your attention at all costs. The truth is that anything that takes us out of a state of flow is destructive to productivity and, in many cases, destructive to overall happiness as well. “… Protect your attention at all costs. Because if you don’t, someone else will happily take it from you. That someone else could be a corporation, a social media influencer, or someone in your personal life. Whoever it is, watch who and what you give your attention to.” (Of Dollars and Data)
After the Fact by Morgan Housel, February 8, 2022. Everything has a price, whether it involves exercise and diet or earning and spending money, and the price is not always clear: “… But all wealth relies on the ability to receive an extra dollar and say, ‘I could spend this, and spending feels great, but I’m not going to.’ It’s the same as turning down a big meal after working out, and it’s just as hard. All great things are hard.” (Collaborative Fund)
Digital Advertising in 2022 by Ben Thompson, February 8, 2022. I found this article regarding trends in the digital advertising market quite interesting. It is an update of the author’s assessment of digital advertising in 2016 and incorporates various changes that have taken place over the past six years. The discussion of the advertising businesses of Amazon and Apple was particularly insightful. (Stratechery)
Fusion race kicked into high gear by smart tech by Paul Rincon, February 9, 2022. I found this interesting article on nuclear fusion on Paul Graham’s twitter feed which I highly recommend. Graham commented: “Another sign that fusion is really coming this time is the sense that there's a race happening. One never felt that in the days when fusion was perpetually 30 years in the future.” (BBC)
The Gamification of Life by Lawrence Yeo, February 2022. The idea of going through high school with social media seems like a total nightmare to me… “One thing I feel rather fortunate about is that when I was in high school, there was no social media. No one had an Instagram or TikTok account that prominently displayed how many followers they had, or some number that signified their popularity. In a period where one’s social standing was so glaringly valued, it would feel daunting to have a metric tied to my name at all times. But what’s astounding is how the internet has made the essence of high school extend outward in perpetuity.” (More to That)
Story Study. This is a free ten-day email-based course from Lawrence Yeo, the author of More to That. Lawrence is a master of using his artwork to tell a story. He has some great tips for creating compelling narratives using visual elements.
UPS: Leaders of the Package, February 9, 2022. Zack Fuss and Matt Reustle discuss the business model of UPS: “UPS is a 200 billion plus market cap, an over 100-year-old business. Yet it's relevance amongst financial investors is relatively low in contrast to how much it impacts our lives. Let's just start at a thousand feet about the business, helping to quantify it and contextualize it in the context of the US economy…” (Business Breakdowns)
New Peloton CEO, Spirit + Activision + Cedar Fair Mergers, & How Will Higher Interest Rates Affect Bank Stocks?, February 10, 2022. Geoff Gannon and Andrew Kuhn discuss a variety of issues in this episode. Their discussion regarding the impact of rising interest rates on banks and insurance companies was particularly interesting. The Peloton and Activision discussions also added value. (Focused Compounding)
Zachary Resnick — Bitcoin SV, Music, and Poker, February 10, 2022. “Zachary Resnick is the Managing Partner and co-founder at Unbounded Capital, a trumpet player and composer, and a poker enthusiast. We speak with Zach about: Scaling issues with BTC, Why isn't Bitcoin SV the prominent Bitcoin?, The best use-cases for Bitcoin SV, Can Bitcoin SV survive a govt. attack?, Jazz music, Poker, and much more!” (Infinite Loops)
The Inflation Tax
In this video of a hearing on July 16, 2008, Rep. Ron Paul asks Federal Reserve Chairman Ben Bernanke about the inflation tax and the role of the Fed in increasing the money supply and ultimately imposing the inflation tax upon US citizens. Chairman Bernanke agrees that “inflation is a tax.”
The CPI was running at 5.6% at the time of this hearing in July 2008 but would soon decline as the economy plummeted into the depths of the financial crisis. Today, the BLS announced that the CPI increased by 7.5% over the past year.
The tax bill is rising.
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