The Long Term Investor

I ALSO like this article today. Nothing like ECONOMICS.....as an academic exercise as FAKE SCIENCE.......and.....nothing to do with investing. So....read at your own risk....to your sanity and your investing.

Economics: The Art Of Complicating What Is Incredibly Simple

https://www.forbes.com/sites/johnta...ng-what-is-incredibly-simple/?sh=24d7beef1585

(BOLD is my opinion OR what I consider important content)

"“The sole use of money is to circulate consumable goods.” Those are the words of Adam Smith. It was a throwaway line in Wealth of Nations so over-the-top obvious was it. Money only has a purpose insofar as there’s already production. Money doesn’t instigate production; rather money is a consequence of it. Producers have long needed a common measure or language to enable exchange, and money was the result. It made possible the rapid circulation of actual production.

The sad truth is that economists have been hard at work trying to get the non-credentialed to forget Smith’s statement of the obvious ever since. It’s not hard to see why. Professions need to perpetuate themselves. Complication is their friend.

That’s why in a political sense there will likely never be a flat federal income tax, or even better, a flat sales tax that replaces all other federal levies. Politicians need to perpetuate their prestigious existence that includes having people much smarter and accomplished than they are standing up every time they enter the room. Politicians also want cushy retirements. What’s comfy for politicians after politics is a complicated tax code that they can lobby minor changes of once out of office. For very good pay. This basic truth also ensures that federal spending will never decline. There’s lots of money in lobbying the allocation of what grows all the time.

When it comes to economics, growth is as simple as removing barriers to production. We have infinite wants, production is what enables the accession of some of those wants, so get out of the way of producers. Since wants are once again endless, and evolving, the natural state of humans is to grow. They’ll strive to produce more in order to get more.

In that case, reduce what limits production, which is the penalties placed on it: taxes. Don’t penalize work with an income tax, don’t penalize investment in enhanced productivity with the capital gains tax, don’t shrink the capital necessary to produce with government spending, don’t tax the purpose of work with tariffs, don’t harass workers with inept regulation since competition already handles the latter expertly, and don’t limit the exchange of production (and productivity-enhancing specialization that results) with money that bounces around in value. Economics is basic.

Of course, the credentialed in the economics space want to live well just as politicians do. So they complicate things. They do so most notably with money.

Though the purpose of money is blindingly simple to anyone who bothers to understand it, economists work tirelessly to make it opaque. They pretend that the creation of money itself is the instigator of growth, they more laughably claim that economic growth can be centrally planned via fixed annual increases of the so-called “money supply” (these are the “free market” monetarists) by central bankers, and then some of the truly dense claim that devaluation of money stimulates growth by rendering producers more competitive. Which is the equivalent of a 5’5” NBA aspirant claiming he would make the League if the Weights and Measures division of the federal government would just shrink the inch.

Back to reality, currency devaluation is by its very name anti-growth precisely because it creates uncertainty about the unit; in our case, the dollar. This uncertainty means less trade, and less productivity-enhancing specialization. Also, devaluation is inflation. When the value of the unit is shrunken, the dollar we all earn exchanges for fewer goods and services. Inflation is a tax on work, and it’s by extension a tax on the investment that enhances the quality of our work. Only members of the economics profession could actually believe devaluation boosts growth.

Worse is that in elevating devaluation, economists have tried to redefine what inflation is. To Keynesians, inflation is caused by too much economic growth. They claim it’s when demand outstrips supply. Which is an impossibility. All demand begins with supply. They balance. By definition. Furthermore, economic growth springs from the very investment that enables more production at lower and lower costs. In short, economic growth is the surest sign of falling prices.

The “free market” monetarists aren’t much better on this score. Call them Keynesians turned inside out. Eager to complicate what is simple while arrogating to themselves a role in planning economies in “free market” fashion, they claim that inflation is caused by too much money. They then comically throw around all sorts of impressive sounding words like “velocity” to make their case that inflation results from them not controlling the so-called “money supply.” More troubling, “free market” monetarists claim that they can centrally plan economic growth given their professed ability to know what the actual supply of money should be.

In reality, presumptions about “money supply” are as conceited as were the Five Year plans crafted by Soviet central planners. To see why, return to the Adam Smith statement that begins this write-up. “The sole use of money is to circulate consumable goods.” Since money is a consequence of production, planning its supply is as impossible as is the planning of production. Translated, it can’t be done.

“Velocity”? Money movements once again signal exchange of real goods and services. Which means that rising “velocity” isn’t inflationary as so many economists assume. Quite the opposite, really. Money that’s rapidly changing hands is logically trusted, non-inflationary money precisely because producers will take it in exchange for market goods. They wouldn’t do so if its value were in decline. Few work to give others more in return for less.

One economist, Texas Tech professor Alexander Salter, claimed in a recent letter-to-the-editor in the Wall Street Journal “that all the money in the world won’t drive up prices if it doesn’t circulate.” His assertion is backwards. Money that’s heavily circulated is generally the opposite of inflationary. See above. Good money is circulated in abundant supply precisely because money flows signal goods flows. Salter’s letter implies that he knows how much production should take place in an economy, and subsequently how much money should be circulated. Trust me, he doesn’t know this.

Money isn’t complicated. Economists just make it so. Neither is inflation. It’s a policy choice. So is cessation of inflation. The shame is that what’s so basic isn’t acknowledged by economists. It seems they want cushy retirements too."

MY COMMENT

I have yet to meet a successful BUSINESS PERSON that ran their business based on economics........or the pronouncements of an economist. Yet we allow....economics...to infect EVERYTHING to do with the business of our country.

 

I am SITING and doing nothing today. YES....nothing for me to do....my money is invested and productive. It WILL grow over the long term in spite of me doing nothing.......actually....as a result of me doing nothing.

ACTUALLY....I guess that pretty well sums up my life. I am siting and doing nothing with my stocks and funds. I am siting and doing nothing with my house. I am siting and doing nothing with the art on my walls, antiques, my hoard of shiny metal, my income sources,......and....I guess just about everything that I consider any sort of asset.

ALL....are appreciating.....but....at different rates.

Stocks and funds plugging away as usual at a long term average of somewhere between 10-15%.

Houses in my area are BOOMING and appreciating at the rate of 10-15% per year....lately. I expect that the housing BOOM in my area will continue for at least a few years. At the moment in my little area......4200 homes.....the SPRING RUSH is on.......we NOW have......seven, yes, seven......houses for sale. I look at the neighborhood data every day.....it is taking an average of about 1-5 days for any new listing to go "pending".

Art, antiques, metals, etc.......

well metals are up nicely recently......meaningless to me short of a world economic collapse.

Art......making some money there.....with EVERYTHING hanging on my walls now being sell-able for more than I purchased it for......some for much more. A good investment? Not comparable to having the money in the stock markets.....but definite appreciation. BUT......the enjoyment value and fun of collecting....priceless.....and at the same time there is appreciation happening. Of course.....we ONLY buy certain types of art that we like.......that has actual value reflected in the fact that there is an active market for buying and selling.......auctions. AND of course....some pieces appreciate much faster than others.

Antiques......probably about even....some are up, some are down...in value. We could probably sell every antique in our house for a small profit. BUT....better than anything we have bought at a furniture store.

My income sources are stable and locked in for life...so I am siting and doing nothing there......also.

SO.....WOW.....I guess my life is summed up as......SITTING........and doing nothing. At least when it comes to money and assets. My actual time......I am free to do whatever I wish.....every day.....because my long term investing/money plan has provided me that freedom. For ALL the young investors out there.....THE FUTURE IS YOURS....but...you have to plan for and implement it NOW.

 

AND....as I sit.....the markets are UP nicely.......so far......today. ALL the averages are POSITIVE with the DOW being up over 448 points for the day. EVEN the poor NASDAQ is up today. BUT...I have not looked at any of my accounts....so far.....I have been too busy.....SITTING.

 

I am going to write a book......"The Art Of Doing Nothing". I guess kind of like Seinfeld...."a show about nothing".

AND....that is why I have so much time to talk......I do nothing.

 

Welcome TGInvesting.

Looks like a pretty good basket of BIG CAP Tech that you have there.

 

Although I am not particularly concerned.....an understatement......with infltion....HERE is one BIG reason why it will not be an issue going forward. We are going to see MASSIVE decreases in white collar jobs over the next 1-20 years. there will be HUGE unemployment, wage drops and underemployment.

The Robots Are Coming for Phil in Accounting

https://www.nytimes.com/2021/03/06/business/the-robots-are-coming-for-phil-in-accounting.html

(BOLD is my opinion OR what I consider important content)

The robots are coming. Not to kill you with lasers, or beat you in chess, or even to ferry you around town in a driverless Uber.

These robots are here to merge purchase orders into columns J and K of next quarter’s revenue forecast, and transfer customer data from the invoicing software to the Oracle database. They are unassuming software programs with names like “Auxiliobits — DataTable To Json String,” and they are becoming the star employees at many American companies.

Some of these tools are simple apps, downloaded from online stores and installed by corporate I.T. departments, that do the dull-but-critical tasks that someone named Phil in Accounting used to do: reconciling bank statements, approving expense reports, reviewing tax forms. Others are expensive, custom-built software packages, armed with more sophisticated types of artificial intelligence, that are capable of doing the kinds of cognitive work that once required teams of highly-paid humans.

White-collar workers, armed with college degrees and specialized training, once felt relatively safe from automation. But recent advances in A.I. and machine learning have created algorithms capable of outperforming doctors, lawyers and bankers at certain parts of their jobs. And as bots learn to do higher-value tasks, they are climbing the corporate ladder.
The trend — quietly building for years, but accelerating to warp speed since the pandemic — goes by the sleepy moniker “robotic process automation.” And it is transforming workplaces at a pace that few outsiders appreciate. Nearly 8 in 10 corporate executives surveyed by Deloitte last year said they had implemented some form of R.P.A. Another 16 percent said they planned to do so within three years.
Most of this automation is being done by companies you’ve probably never heard of. UiPath, the largest stand-alone automation firm, is valued at $35 billion — roughly the size of eBay — and is slated to go public later this year. Other companies like Automation Anywhere and Blue Prism, which have Fortune 500 companies like Coca-Cola and Walgreens Boots Alliance as clients, are also enjoying breakneck growth, and tech giants like Microsoft have recently introduced their own automation products to get in on the action.

Executives generally spin these bots as being good for everyone, “streamlining operations” while “liberating workers” from mundane and repetitive tasks. But they are also liberating plenty of people from their jobs. Independent experts say that major corporate R.P.A. initiatives have been followed by rounds of layoffs, and that cutting costs, not improving workplace conditions, is usually the driving factor behind the decision to automate.

Craig Le Clair, an analyst with Forrester Research who studies the corporate automation market, said that for executives, much of the appeal of R.P.A. bots is that they are cheap, easy to use and compatible with their existing back-end systems. He said that companies often rely on them to juice short-term profits, rather than embarking on more expensive tech upgrades that might take years to pay for themselves.

“It’s not a moonshot project like a lot of A.I., so companies are doing it like crazy,” Mr. Le Clair said. “With R.P.A., you can build a bot that costs $10,000 a year and take out two to four humans.”

Covid-19 has led some companies to turn to automation to deal with growing demand, closed offices, or budget constraints. But for other companies, the pandemic has provided cover for executives to implement ambitious automation plans they dreamed up long ago.

“Automation is more politically acceptable now,” said Raul Vega, the chief executive of Auxis, a firm that helps companies automate their operations.

Before the pandemic, Mr. Vega said, some executives turned down offers to automate their call centers, or shrink their finance departments, because they worried about scaring their remaining workers or provoking a backlash like the one that followed the outsourcing boom of the 1990s, when C.E.O.s became villains for sending jobs to Bangalore and Shenzhen.

But those concerns matter less now, with millions of people already out of work and many businesses struggling to stay afloat.

Now, Mr. Vega said, “they don’t really care, they’re just going to do what’s right for their business.”

Sales of automation software are expected to rise by 20 percent this year, after increasing by 12 percent last year, according to the research firm Gartner. And the consulting firm McKinsey, which predicted before the pandemic that 37 million U.S. workers would be displaced by automation by 2030, recently increased its projection to 45 million.

Not all bots are the job-destroying kind. Holly Uhl, a technology manager at State Auto Insurance Companies, said that her firm has used automation to do 173,000 hours’ worth of work in areas like underwriting and human resources without laying anyone off.

“People are concerned that there’s a possibility of losing their jobs, or not having anything to do,” she said. “But once we have a bot in the area, and people see how automation is applied, they’re truly thrilled that they don’t have to do that work anymore.”

As bots become capable of complex decision-making, rather than doing single repetitive tasks, their disruptive potential is growing.

Recent studies by researchers at Stanford University and the Brookings Institution compared the text of job listings with the wording of A.I.-related patents, looking for phrases like “make prediction” and “generate recommendation” that appeared in both. They found that the groups with the highest exposure to A.I. were better-paid, better-educated workers in technical and supervisory roles, with men, white and Asian-American workers, and midcareer professionals being some of the most endangered. Workers with bachelor’s or graduate degrees were nearly four times as exposed to A.I. risk as those with just a high school degree, the researchers found, and residents of high-tech cities like Seattle and Salt Lake City were more vulnerable than workers in smaller, more rural communities.

“A lot of professional work combines some element of routine information processing with an element of judgment and discretion,” said David Autor, an economist at M.I.T. who studies the labor effects of automation. “That’s where software has always fallen short. But with A.I., that type of work is much more in the kill path.”

Many of those vulnerable workers don’t see this coming, in part because the effects of white-collar automation are often couched in jargon and euphemism. On their websites, R.P.A. firms promote glowing testimonials from their customers, often glossing over the parts that involve actual humans.

“Sprint Automates 50 Business Processes In Just Six Months.” (Possible translation: Sprint replaced 300 people in the billing department.)

“Dai-ichi Life Insurance Saves 132,000 Hours Annually” (Bye-bye, claims adjusters.)

“600% Productivity Gain for Credit Reporting Giant with R.P.A.” (Don’t let the door hit you, data analysts.)

Jason Kingdon, the chief executive of the R.P.A. firm Blue Prism, speaks in the softened vernacular of displacement too. He refers to his company’s bots as “digital workers,” and he explained that the economic shock of the pandemic had “massively raised awareness” among executives about the variety of work that no longer requires human involvement.

“We think any business process can be automated,” he said.

Mr. Kingdon tells business leaders that between half and two-thirds of all the tasks currently being done at their companies can be done by machines. Ultimately, he sees a future in which humans will collaborate side-by-side with teams of digital employees, with plenty of work for everyone, although he conceded that the robots have certain natural advantages.

“A digital worker,” he said, “can be scaled in a vastly more flexible way.”

Humans have feared losing our jobs to machines for millennia. (In 350 BCE, Aristotle worried that self-playing harps would make musicians obsolete.) And yet, automation has never created mass unemployment, in part because technology has always generated new jobs to replace the ones it destroyed.

During the 19th and 20th centuries, some lamplighters and blacksmiths became obsolete, but more people were able to make a living as electricians and car dealers. And today’s A.I. optimists argue that while new technology may displace some workers, it will spur economic growth and create better, more fulfilling jobs, just as it has in the past.

But that is no guarantee, and there is growing evidence that this time may be different.

In a series of recent studies, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University, two well-respected economists who have researched the history of automation, found that for most of the 20th century, the optimistic take on automation prevailed — on average, in industries that implemented automation, new tasks were created faster than old ones were destroyed.

Since the late 1980s, they found, the equation had flipped — tasks have been disappearing to automation faster than new ones are appearing.

This shift may be related to the popularity of what they call “so-so automation” — technology that is just barely good enough to replace human workers, but not good enough to create new jobs or make companies significantly more productive.

A common example of so-so automation is the grocery store self-checkout machine. These machines don’t cause customers to buy more groceries, or help them shop significantly faster — they simply allow store owners to staff slightly fewer employees on a shift. This simple, substitutive kind of automation, Mr. Acemoglu and Mr. Restrepo wrote, threatens not just individual workers, but the economy as a whole.

“The real danger for labor,” they wrote, “may come not from highly productive but from ‘so-so’ automation technologies that are just productive enough to be adopted and cause displacement.”

Only the most devoted Luddites would argue against automating any job, no matter how menial or dangerous. But not all automation is created equal, and much of the automation being done in white-collar workplaces today is the kind that may not help workers over the long run.

During past eras of technological change, governments and labor unions have stepped in to fight for automation-prone workers, or support them while they trained for new jobs. But this time, there is less in the way of help. Congress has rejected calls to fund federal worker retraining programs for years, and while some of the money in the $1.9 trillion Covid-19 relief bill Democrats hope to pass this week will go to laid-off and furloughed workers, none of it is specifically earmarked for job training programs that could help displaced workers get back on their feet.

Another key difference is that in the past, automation arrived gradually, factory machine by factory machine. But today’s white-collar automation is so sudden — and often, so deliberately obscured by management — that few workers have time to prepare.

“The rate of progression of this technology is faster than any previous automation,” said Mr. Le Clair, the Forrester analyst, who thinks we are closer to the beginning than the end of the corporate A.I. boom.

“We haven’t hit the exponential point of this stuff yet,” he added. “And when we do, it’s going to be dramatic.”

Finding a robot-proof future
The corporate world’s automation fever isn’t purely about getting rid of workers. Executives have shareholders and boards to satisfy, and competitors to keep up with. And some automation does, in fact, lift all boats, making workers’ jobs better and more interesting while allowing companies to do more with less.

But as A.I. enters the corporate world, it is forcing workers at all levels to adapt, and focus on developing the kinds of distinctly human skills that machines can’t easily replicate.

Ellen Wengert, a former data processor at an Australian insurance firm, learned this lesson four years ago, when she arrived at work one day to find a bot-builder sitting in her seat.

The man, coincidentally an old classmate of hers, worked for a consulting firm that specialized in R.P.A. He explained that he’d been hired to automate her job, which mostly involved moving customer data from one database to another. He then asked her to, essentially, train her own replacement — teaching him how to do the steps involved in her job so that he, in turn, could program a bot to do the same thing.

Ms. Wengert wasn’t exactly surprised. She’d known that her job was straightforward and repetitive, making it low-hanging fruit for automation. But she was annoyed that her managers seemed so eager to hand it over to a machine.

“They were desperate to create this sense of excitement around automation,” she said. “Most of my colleagues got on board with that pretty readily, but I found it really jarring, to be feigning excitement about us all potentially losing our jobs.”

For Ms. Wengert, 27, the experience was a wake-up call. She had a college degree and was early in her career. But some of her colleagues had been happily doing the same job for years, and she worried that they would fall through the cracks.

“Even though these aren’t glamorous jobs, there are a lot of people doing them,” she said.

She left the insurance company after her contract ended. And she now works as a second-grade teacher — a job she says she sought out, in part, because it seemed harder to automate."

MY COMMENT

If you are a MILLENNIAL or perhaps a bit older.....welcome to your future. A basic recipe for unemployment, deflation and corporate productivity through the roof. The basic high school degree corporate job has now been passed on to low paid....reduced benefit....easy to get rid of....contract workers. NOW....we are oging to see the same with the white collar and professional and lower management jobs.

The ONLY safe occupation that I can see going forward is to SNAG a good paying GOVERNMENT job. They NOW pay better than the private sector PLUS you get that HUGE government pension.

Should be pretty good for shareholders......a huge corporation that is able to operate with a fraction of the employees that are needed today. Although even for shareholders the disruptive aspects of future technology might not turn out anything like anticipated.....for your money or the society and culture you and your children and grandchildren get to experience.