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This is part three of a three-part series. For part one, click here. For part two, click here.
I and members of my family are minority investors in Dr. Kelly’s majority-owned company, fouRy LLC, or 4Ry. I have performed and will continue to perform, various services for 4Ry, for which I may be compensated. The opinions and analyses are mine alone. This blog post is neither a solicitation of investment nor an offer to sell securities. 4Ry is a Delaware Limited Liability Corporation and its trademark application is pending.
The guillotine is the most effective and humane way to execute someone. It severs the head and brain from the body; it’s quick and foolproof. Would that society’s ongoing attack on its own brain were so quickly effectuated. There would be an almost instantaneous regression back to the mindless miasma with which so many are comfortable, and that would be that. Unfortunately, the execution of creativity, invention, innovation, enterprise, and logic is death by countless brain excisions—each deeper than the previous one.
Pick your candidate for what, singly or in combination, causes the collapse of present civilization: debt, war, pollution, moral rot, statism, or any of the other ills besetting the world. They all have their champions. Rarely if ever mentioned is the effort to stymie the best human minds. It’s not new, having gone on since humanity made the evolutionary leap. The malevolent and malicious recognize that if the mind is threatened, persecuted, and ultimately, stopped, disaster takes care of itself. Of course this is suicide. but that’s precisely what the malevolent and malicious are after (see “Life, or Death?” SLL).
Historically, the times when the best minds have had the freedom to flourish have been blinks of an eye compared to the eons when they have not. The progress and innovation we take for granted are orchids, growing only under a limited set of conditions, not impossible-to-eradicate weeds. The weeds are the doctrines that hold that people’s lives and minds are not their own, they are common property, which boils down to the property of whomever exercises coercive power at the moment. The battle for freedom is the enduring theme of history. As it has waxed and waned, human hardship and misery have waned and waxed.
I invested in 4Ry for the usual reasons one undertakes such an investment: to make money and further promising technologies. I’m also buying a front row seat for the ongoing battles: freedom versus repression; progress versus decay; happiness versus misery. How badly has the commercial, legal, and political environment deteriorated, and how much worse will it get? As I said in Part 2, “you don’t really know how things work until they’re tried out under real life conditions.” 4Ry offers a real life demonstration of how well innovation and entrepreneurship, the fonts of progress, are working, or not working, in today’s economy.
This may seem like an odd, irrational motivation for an investment, but look at the current financial universe. Like most people in my age group (I’m fifty-eight), I have to generate a return on my savings if I’m to provide for my impending dotage. Where does one go for return? Many bonds now carry negative nominal yields, and virtually every bond’s real yield is negative after one factors in inflation, taxes, and credit risk. Capitalization rates for commercial and residential property have followed bond yields, and offer correspondingly unappealing yields. When interest rates rise, investors will be handed capital losses to go with their tiny or negative yields. Equities, valued on either GAAP or phony-baloney adjusted earnings, are trading at valuations that historically have been followed by minimal or negative long-term returns.
Consider the foundations of my investment in 4Ry versus the foundations of investment in today’s crop of financial instruments. The sprayer and other ESD technologies have been developed and tested by the foremost expert in the field. Importantly, I’ve seen demonstrations and understand the theoretical basis for the technologies—although not all the engineering nuances—and their potential applications. I know and trust Dr. Kelly and David Bird. I have an ongoing role in the company and its business plans, and can pick up a phone and get answers to my questions. There are substantial business risks, but in my judgment the potential returns are commensurate.
The prices of stocks, bonds, and property are artificially propped up by governments’ and central banks’ something-for-nothing perpetual motion machinations that must inevitably fail. I have no way to cut through the PR screens maintained by managements to evaluate their ability and integrity. From what they do disclose in their reports to shareholders and the SEC, many companies are earning less and borrowing more, often to speculate in their own shares or fund overpriced acquisitions, egregious wastes of corporate assets.
I can’t follow or understand the many ways earnings are adjusted and manipulated through accounting maneuvers. As financial engineering and accounting gimmickry has flourished, investment in raising labor force and industrial productivity, innovation, and invention—the foundations of long-run growth—has dwindled. Although it is difficult, bordering on impossible, to investigate individual companies, there are thousands of mutual funds and ETFs that bundle together stocks of multiple companies. I’m assured by financial salespeople that investing in companies I know next to nothing about will build my wealth. There’s certainly nothing odd or irrational about that.
Investing in financial assets is an implicit bet on the health of the underlying economy. Our economy is a camel burdened by an ever-increasing load of regulations, taxes, cronyism, financial repression, and debt, awaiting its final straw. We’re a seasonal or inflation adjustment away from a recession by the officially cooked figures, which means we’re already in a recession. Given the overhang of debt that cannot be repaid and the inevitability of debt deflation, this recession will either kick off or herald the resumption of a depression. (I prefer the latter interpretation, but ultimately the statisticians and historians will decide.) Which brings up one last reason for my investment in 4Ry. What’s coming will be relentlessly deflationary, and Dr. Kelly’s technologies can cut costs significantly.
Invention, innovation, and entrepreneurship are the foundation of a functional economy. Among all the economic statistics, the most ominous is that net business formation has gone negative—more businesses are closing than opening. Undermine the foundation and the structure collapses. Stop the Dr. Kellys and David Birds of this world—the inventors, innovators, and entrepreneurs—and it’s only a matter of time before the economy collapses. That could have a negative effect on the prices of stocks, bonds, and property, even if all the world’s central banks were to monetize debt full-time.
Grand designs to build new world orders from the rubble amount to grand fantasies. Stopping the mind stops logic and creation, and what will be left after the collapse is blind panic, irrationality, and terror. It’s one or the other: a world where the best minds have the freedom to create and thrive—and humanity benefits—or chaos, destruction, and death. The former requires a conscious choice and a relentless struggle against its foes. The latter requires only the failure to choose the former.
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