"Whoa," - Neo, Teh Matrix

 

A dead Roman dude. I’ll call him Deadus Romani Guyus. Apparently all Romans were made of gold, and this is an itsy-bitsy gold fossil of an actual Roman, unless I read the placard wrong at the museum. That happens sometimes.

An Astute Reader (I’ll call him “Aaron”) noted in my little rant about economics that he’d like me to toss out some economic predictions. We’ll see if he ever asks me to write about anything again after this collection of random, lint covered Post-It© notes I’m pulling from the dark corners of my mind.

To better illustrate this, I’ll use the movie The Matrix as a backdrop to illustrate my points.

Here are my economic predictions (note, unless offered copious amounts of cash or some free beers, this economics column is a digression, not a new direction – I’ll continue on the adventures of the Family Wilder in the next column):

Prediction 1. Crowds of people will stay as stupid as a herd of drunk toddlers. This is not new. Sadly, this will not change.

Back during 1635 in Holland (I assume people from Holland are the Dutch, since whenever I say Hollandaise I get a nice, cheesy sauce instead of a strapping young blonde woman), a single tulip bulb sold for 6000 florin, which was enough of whatever a florin was to purchase sixty tons of butter (this is true). I don’t know about you, but if I had the choice between sixty tons of butter or a tulip bulb, I would choose the butter, but would have to look for 734 tons of nice hot biscuits and about 88 tons of honey. Alternately, I could melt the butter and just roll around in it until I was nice and greasy. That would still be better than telling my friends that I paid 6000 of anything for a flower.

The Dutch even sold futures contracts on tulip bulbs they intended to plant.

Why would anyone ever do something so stupid?

Internet bubble, anyone? I have a buddy who made a gazillion Internet dollars when he sold his Internet company for (sadly) stock in another Internet company. Don’t cry for him – he came out with at least seven figures in real money for two years’ worth of six hour work days.

Oh, and house prices always go up, right? Oh, and carbon dioxide, that stuff that plants eat to make more plants? It will kill us all. Maybe we should plant more tulips? Good curb appeal while pulling deadly carbon out of our atmosphere.

Let’s face it, whenever you get batches of people together, we’re stupid. This was true even in the year 348 BPH (Before Paris Hilton). How humanity manages to not drool all over itself all of the time amazes me.

Lesson from The Matrix: People are sometimes more valuable as batteries.

Prediction 2. The dollar will be worth less than it is now. Probably a lot less.

Currently, the Fed is pumping money into the economy as fast as they can print electrons. Given modern technology and quantum mechanics, they can do this pretty fast. The Fed is doing this because everyone bought tulips houses on really cheap money pumped into the economy to stop the problems from when everyone bought tulips Internet stocks.

This also is not new. Back when Sweden was warlike and had a king (six years before ABBA was formed), they messed up their money, too. Sweden based their currency on copper, since they had a good supply. Before long, everyone was carrying around copper coins that weighed in over thirty pounds to go buy a loaf of bread (this is also true). This also limited the popularity of becoming a stripper, since they had to have some seriously beefy thighs to hold up thirty-pound copper coins slipped into your (titanium, I presume) g-string. And their huge legs would be green from the copper verdigris.

The central banker that did this in Sweden? Beheaded by a burly (from carrying tons of copper to go and buy a six-pack) Swede, probably politely. We give central bankers nice pensions and book deals instead. More humane.

Side note: this is an extrapolation of a current trend – beware those, since if you did an extrapolation of Elvis impersonators from 1979-1988 you would conclude that in 2023 eight out of ten people would be Elvis impersonators.

Lesson from The Matrix: Money, like The Matrix, is imaginary, but sometimes it’s very heavy, especially if we leave the Swedes in charge.

Prediction 3. Commodities will be worth more.

Food, oil, beer, and steak: all of them are going to increase in price, maybe by a lot. Why? Because I said so.

Lesson from The Matrix: Trust Morpheus, or he’ll kick your butt.

Prediction 4. We will elect an idiot.

Okay, admittedly this is not much of a stretch. Notice I didn’t specify whether it would be a shallow idiot, a thieving idiot, or maniacal idiot.

Lesson from The Matrix: Take the blue pill. Or the red one. I forget. Take whichever one makes you forget reality.

Prediction 5. Some really, really wild things are going to happen.

No, this does not mean that Buffalo will win the Super Bowl®. Not while I’m in charge.

We live in a rather wild and interconnected world, so much so that people think, “Aha, ethanol made from corn will solve all of our energy woes!” and then wonder why Fritos™ and Doritos© cost more after we start making ethanol with corn. How on Earth did that happen? Hint: it’s a conspiracy.

I think we underestimate the connected risks of conventional wisdom and everyone acting like a member of a big flock. If we all went running to the West Coast at the same time to investigate the latest starlet’s wardrobe malfunction, well, the entire country might tip over. If you doubt me, see the sections above on tulips, the Internet, and housing. If you still doubt me, take your mouse in your right hand and beat yourself on the head with it until you don’t doubt me anymore.

No, I’m not saying that your best investments are whiskey (beer, up 50% in 8 years), ammunition (up 40%), and a concrete (up 100%) bunker, but I am saying that if you wrote down what you thought the world would look like 10 years from now you’ll say, “whoa, dude, never, ever saw that coming.”

Lesson from The Matrix: In the future you’ll probably sound just like Keanu Reeves and wear a really cool black trench coat with some really cool shades. Oh, and you’ll be able to fly. Using your mind. You’ll also be able to dodge bullets.

Disclaimer – This blog does not constitute even remotely good financial advice, and if you trade based upon the meanderings of a would-be Internet humorist, well, you’re on your own. The last trade I did lost me $1500.