2022-11-16_The_Gods_of_the_Copybook_Headings_With_Terror_and_Slaughter_Return
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00:00:25.640 | As I pass through my incarnations, in every age and race, I make my proper prostrations
00:00:31.900 | to the gods of the marketplace.
00:00:34.360 | Peering through reverent fingers, I watch them flourish and fall.
00:00:41.120 | And the gods of the copybook headings, I notice, outlast them all.
00:00:46.280 | We were living in trees when they met us.
00:00:48.840 | They showed us each in turn that water would certainly wet us, as fire would certainly
00:00:53.400 | burn.
00:00:54.680 | But we found them lacking in uplift, vision, and breadth of mind.
00:01:00.640 | So we left them to teach the gorillas, while we followed the march of mankind.
00:01:06.720 | We moved as the spirit listed.
00:01:09.720 | They never altered their pace, being neither cloud nor wind-borne like the gods of the
00:01:15.520 | marketplace.
00:01:17.260 | But they always caught up with our progress, and presently word would come that a tribe
00:01:22.520 | had been wiped off its ice field, or the lights had gone out in Rome.
00:01:27.820 | With the hopes that our world is built on, they were utterly out of touch.
00:01:31.920 | They denied that the moon was Stilton.
00:01:34.300 | They denied she was even Dutch.
00:01:36.440 | They denied that wishes were horses.
00:01:38.760 | They denied that a pig had wings.
00:01:41.360 | So we worshipped the gods of the market, who promised these beautiful things.
00:01:47.120 | When the Cambrian measures were forming, they promised perpetual peace.
00:01:51.640 | They swore if we gave them our weapons that the wars of the tribes would cease.
00:01:58.040 | But when we disarmed, they sold us and delivered us bound to our foe.
00:02:03.880 | And the gods of the copybook headings said, "Stick to the devil you know."
00:02:09.120 | On the first Feminian sandstones we were promised the fuller life, which started by loving our
00:02:14.680 | neighbor and ended by loving his wife.
00:02:18.640 | Till our women had no more children, and the men lost reason and faith.
00:02:25.080 | And the gods of the copybook headings said, "The wages of sin is death."
00:02:31.160 | In the Carboniferous epoch we were promised abundance for all, by robbing selected Peter
00:02:37.080 | to pay for collective Paul.
00:02:39.920 | But though we had plenty of money, there was nothing our money could buy.
00:02:44.880 | And the gods of the copybook headings said, "If you don't work, you die."
00:02:50.720 | Then the gods of the market tumbled, and their smooth-tongued wizards withdrew.
00:02:55.780 | And the hearts of the meanest were humbled, and began to believe it was true, that all
00:03:00.560 | is not gold that glitters, and two and two make four.
00:03:04.440 | And the gods of the copybook headings limped up to explain it once more.
00:03:09.520 | As it will be in the future, it was at the birth of man, there are only four things certain
00:03:14.760 | since social progress began.
00:03:17.560 | That the dog returns to his vomit, and the sow returns to her mire, and the burnt fool's
00:03:23.520 | bandaged finger goes wobbling back to the fire.
00:03:27.760 | And that after this is accomplished, and the brave new world begins, when all men are paid
00:03:32.120 | for existing, and no man must pay for his sins.
00:03:35.820 | As surely as water will wet us, as surely as fire will burn, the gods of the copybook
00:03:41.440 | headings with terror and slaughter return.
00:03:48.480 | That poem is by Rudyard Kipling, it's titled "The Gods of the Copybook Headings," and it's
00:03:55.820 | one of my two favorite Kipling poems.
00:03:59.960 | My other favorite is the classic Kipling poem "If," but this is my second favorite.
00:04:08.500 | And I've thought about this a lot over the last week or two.
00:04:11.900 | This last month in October we read Kipling poems every day at our breakfast table, among
00:04:17.180 | other assorted readings we read a poem together.
00:04:20.660 | And this last month we were reading Kipling, and I was reminded of this classic excellent
00:04:25.900 | poem.
00:04:26.900 | I've been reading it for a few years, when reading it to my family, and it's just been
00:04:29.780 | burning in my mind ever since I read it, as I've watched events happen in the world.
00:04:35.420 | Let me give you a quick bit of analysis to help the uninitiated to understand and perhaps
00:04:39.780 | appreciate this poem on a deeper level.
00:04:42.940 | Rudyard Kipling wrote this poem, or at least it was published, in the year 1919, the end
00:04:48.540 | of the year in England, and then early the next year in the United States.
00:04:53.260 | If you think for a moment about what was happening in the world in 1919 and 1920, you'll quickly
00:05:00.100 | come to realize that World War I had officially come to a close.
00:05:06.180 | But what is very important to understand about World War I and its impact on the world is
00:05:13.500 | that World War I basically destroyed the progressivism of the era.
00:05:20.220 | A little bit of broad social commentary.
00:05:24.140 | Remember that the 19th century and the early 20th century was a time of high-flying ambition
00:05:34.120 | for most of the cultural elites in the West.
00:05:38.420 | Coming out of the Renaissance, the Renaissance period, where people believed that all things
00:05:45.540 | were being reborn and rebirthed and that we were coming together to create the dream world
00:05:52.420 | that we wanted.
00:05:53.420 | You look around the world, you see various revolutions in many places, revolutions in
00:05:56.940 | social thought, etc.
00:05:58.260 | A lot of those violent revolutions had died down in the 19th century, and the elites of
00:06:05.340 | the world, especially the elites of the West, were flying high, believing that we were in
00:06:10.340 | a brand new era where none of the old rules applied and we had the choice to remake everything
00:06:18.660 | exactly as we wanted to be, to basically remake the world in our image as the most enlightened,
00:06:25.500 | most informed human beings of all time.
00:06:29.980 | This was a heady and euphoric era in the cultural elites.
00:06:36.180 | And yet an event happened that destroyed all of that.
00:06:41.300 | That event is called World War I.
00:06:44.420 | World War I devastated, on really a global basis, the culture, because it proved that
00:06:52.620 | not only were the many predictions of eternal peace and prosperity, etc., certainly wrong.
00:07:01.980 | Worse than that, World War I was so exceedingly destructive that it proved that on the flip
00:07:08.300 | side all of the worst things of the human experience were available to a much higher
00:07:14.140 | degree, and war could now be more destructive than ever before.
00:07:20.780 | So in the wake of World War I, Rudyard Kipling wrote this poem called "The Gods of the Copybook
00:07:25.300 | Headings."
00:07:26.300 | Now, who are the gods of the copybook headings?
00:07:28.540 | What is a copybook heading?
00:07:30.820 | In those days, a century back, it was very common and normal that in order to learn and
00:07:36.660 | practice handwriting, you would be given a copybook.
00:07:40.460 | A copybook was a bound collection of pages with lines drawn on them, and at the top of
00:07:46.500 | the copybook would be a pithy aphorism or a proverb or some other maxim or verse.
00:07:54.140 | It could be a verse of poetry, a verse of scripture, etc.
00:07:58.580 | And this was given to you to copy multiple times as a way of simultaneously perfecting
00:08:03.540 | your handwriting, but also as a way of drilling into your head the moral instruction that
00:08:09.620 | mattered.
00:08:11.580 | And this would have been very commonly understood at the time when he published the poem.
00:08:16.260 | For example, he makes three specific quotes in this poem from the copybook headings.
00:08:21.300 | "Stick to the devil you know," "The wages of sin is death," and "If you don't work, you
00:08:26.060 | die."
00:08:27.060 | And of course there were many others.
00:08:28.740 | But these gods of the copybook headings were part of the common culture.
00:08:33.220 | This is the classic wisdom of the centuries collected into a form that we could use to
00:08:39.660 | instruct our children.
00:08:41.900 | And yet there was this... we wanted to disregard all of the gods of the copybook headings.
00:08:48.780 | We wanted to disregard these classic forms of wisdom, and we want to show that these
00:08:53.540 | things are out of touch.
00:08:55.560 | We wanted to show that the gods of the market, the comparison here between the gods of the
00:09:00.860 | market is the ideas of the current day, showing that all the ideas of the past are out of
00:09:05.460 | touch.
00:09:06.460 | And this was a time of tremendous social change.
00:09:09.220 | But of course, on virtually every level, as you see Kipling's analysis here, is social
00:09:14.380 | commentary showing that no, actually the wisdom of the ages is here to stay, and it's not
00:09:21.740 | changing.
00:09:22.920 | It's the gods of the market who are foolish and deluded, and what's worse, they may be
00:09:28.640 | more than foolish and deluded.
00:09:32.200 | They may genuinely be immoral.
00:09:36.400 | They may genuinely be... they may not just be wrong, they may be worse than that.
00:09:43.320 | Now the temptation for all of us is to assume that our situations... that we understand
00:09:52.880 | exactly what the flow of history is going to look like.
00:09:56.440 | And yet throughout history, it's very difficult to see why you're in the middle of it.
00:10:01.800 | And so I want to be cautious, because I of course have my own opinions and my own perspectives
00:10:07.040 | on the things that will work and the things that will not work in our day and age, ranging
00:10:11.480 | from financial topics, which is my primary focus here at Radical Personal Finance, to
00:10:16.600 | social topics and cultural topics, political topics, etc.
00:10:20.680 | We all have our biases, our understanding and our perspectives.
00:10:25.240 | And I would say that history will show us that things can change, and things often should
00:10:33.680 | change.
00:10:35.800 | But there's also that classic maxim that we have, saying that the more things change,
00:10:40.560 | the more they stay the same.
00:10:42.600 | That most of the things that we argue about, most of the changes, are actually... don't
00:10:47.440 | accomplish the things that we hope that they accomplish.
00:10:49.960 | And even the changes that stick wind up with a whole long list of unintended consequences.
00:10:58.400 | I think when you think about social issues or cultural issues, you can see this classic
00:11:06.880 | tension more than financial issues.
00:11:10.340 | But in financial issues, we have to grow increasingly confident with our perspectives.
00:11:20.280 | And yet this is... meaning we have to make sure that we understand the wisdom of the
00:11:24.360 | past, and then use whatever useful frameworks we can find from the past in order to be clear
00:11:31.720 | and understanding of what is working today.
00:11:34.560 | And yet this is difficult, because it flies in the face of what seems to be apparent today.
00:11:43.080 | The change that we're particularly excited about today.
00:11:46.400 | I was struck by, of course, the event of this past week, right?
00:11:51.440 | FTX, the collapse of FTX, the collapse of various cryptocurrencies, complete destruction
00:11:56.540 | across the marketplace in terms of stealing of customer money, many accounts disappeared,
00:12:03.100 | just massive levels of destruction, right?
00:12:04.900 | We've talked about that elsewhere.
00:12:05.900 | But I was thinking about this when comparing a little meme that I saw showing the collapse
00:12:13.940 | of the net worth of Mr. Facebook, Zuckerberg, Mark Zuckerberg compared to Warren Buffett's
00:12:23.300 | net worth over the past months.
00:12:26.420 | And Warren Buffett is basically this archetype of the classic traditional investor, right?
00:12:33.800 | This is Warren Buffett who owns Nebraska Furniture Mart, and who owns railroads, and who invests
00:12:38.580 | in these long companies.
00:12:39.580 | And this is the Warren Buffett who said, "I don't invest in tech because I don't understand
00:12:42.700 | it."
00:12:43.700 | Now, always remember with Warren Buffett that a lot of his folksiness is more of an image
00:12:52.340 | that he has cultivated rather than a genuine expression of who he is.
00:12:58.700 | If you read a biography of Warren Buffett, you'll quickly see that he is exceedingly
00:13:04.820 | smart, he is exceedingly current, he is extremely progressive, but he has cultivated over the
00:13:14.180 | years this impression of kind of the folksy grandfather from Omaha.
00:13:20.220 | So don't be fooled by the image that he has cultivated.
00:13:24.580 | But there is also a sense in which we see a tremendous truthfulness behind kind of the
00:13:34.660 | tried and true.
00:13:36.860 | If we look at, for example, Buffett, his investing philosophy goes back to Benjamin Graham and
00:13:44.940 | the writers of a century back, and the philosophies of a century back.
00:13:52.340 | And in that context, we can see that you can still use the tools and tactics and techniques
00:13:58.580 | of the past century very, very effectively in our modern age.
00:14:04.300 | I myself find myself drawn consistently to the concept of value investing because it
00:14:11.420 | aligns with this idea that there is value, here's how we arrive at the value, we buy
00:14:17.540 | when the markets are inexpensive and we keep for a very long time and sell when they're
00:14:25.940 | overvalued.
00:14:26.940 | The problem is this requires you to go against what is often years of seeming wrongness.
00:14:39.300 | And I want to bring our attention to this in the wake of the cryptocurrency markets
00:14:44.180 | over the past few years.
00:14:46.940 | There was a time, feels like a year ago, maybe about a year ago, when I looked around and
00:14:52.580 | I wondered, are all of the rules of finance completely broken?
00:14:57.580 | I looked around and I looked at the rates that people were earning on various schemes
00:15:03.460 | in cryptocurrency, the rates of return, etc.
00:15:06.180 | And I thought, what's wrong with me?
00:15:08.580 | Why do I not see that this stuff could work?
00:15:11.020 | But I didn't come out and just completely oppose it all as scams because I don't think
00:15:14.740 | it all is.
00:15:17.180 | But it was very evident, especially in hindsight, and again, I'm fully aware that it can be
00:15:22.820 | easy to talk about, oh, look, I was so smart after the fact.
00:15:27.020 | But it was evident that, wait a second, this can't continue because the numbers just don't
00:15:31.580 | make sense.
00:15:32.900 | So always remember that markets can be very irrational for a significant period of time.
00:15:39.740 | And those may be interesting and fun times to speculate, but you always want to make
00:15:45.060 | sure that you go back to what has always worked, the traditional things that are proven, because
00:15:55.740 | the irrationality of today will eventually be corrected by the gods of the copybook headings,
00:16:02.380 | that true wisdom that has been collected from our forebears.
00:16:12.100 | My first argument is simply that you should accept that.
00:16:14.340 | You should accept that there is wisdom in the past.
00:16:20.020 | If I were starting Radical Personal Finance over again, I'm not sure I would choose the
00:16:23.620 | name Radical Personal Finance.
00:16:25.980 | I still like it.
00:16:26.980 | I'm going with it because I believe it expresses some very useful truths.
00:16:31.500 | But over the years, over the last almost 10 years that I've done this podcast, I have
00:16:35.500 | come to appreciate how...
00:16:39.740 | I have come to appreciate the wisdom of the past on so many issues.
00:16:46.620 | And I've come to realize that this is more to simply a reflection of my age, and what
00:16:52.540 | a man learns as he grows older.
00:16:54.660 | When I started with the name Radical Personal Finance, I was frustrated by the world as
00:16:58.640 | it was, and I wanted to change it in a very progressive shape.
00:17:03.220 | And so I had many ideas about how everything should be different from the past, and I wasn't
00:17:08.060 | paying attention to the wisdom of the ages the way that I should have.
00:17:11.700 | And what I found very interesting and ironic is that as I have tested many ongoing radical
00:17:18.860 | ideas, I have frequently found that there was a wisdom in the traditional conservative
00:17:26.100 | culture of the day that I didn't appreciate.
00:17:30.840 | And I've come to believe that I should be very slow about just simply throwing out the
00:17:35.100 | old system and wiping my hands of it and just saying, "Oh, it's all worthless."
00:17:42.460 | I think any long-time listeners would notice that I have tried to become much more cautious
00:17:47.820 | in my commentary and be more accurate, rather than being flippant and revolutionary in my
00:17:54.540 | comments, to be accurate and thoughtful and acknowledge what has gone well, and acknowledge
00:18:01.700 | that I may not understand until many years from now why a certain structure exists.
00:18:13.540 | And that if we replace something we don't understand, we often reap consequences that
00:18:22.380 | we didn't anticipate.
00:18:25.460 | And unfortunately I see this happening very broadly.
00:18:29.700 | I'll give you an example from the financial space, and then we'll go on to other examples
00:18:36.260 | as well.
00:18:37.260 | The example from the financial space simply has to do with how we create money.
00:18:44.060 | I myself don't think a lot of the modern Federal Reserve System of fiat money creation.
00:18:54.020 | But where I've always tried to temper myself is to say, "Until I can clearly explain why
00:19:01.020 | fiat money was created to supersede the previous system and what was attractive about it, I
00:19:07.100 | should be cautious in just systematically waving my hand and saying it's for nothing."
00:19:15.060 | And I find this very interesting as an example.
00:19:18.900 | Why did we disconnect money from the gold standard?
00:19:22.540 | Right now in our day there is increasing conversations about the need to anchor money to an external
00:19:28.900 | unchangeable standard.
00:19:31.300 | And I'm a fan of those things.
00:19:33.180 | I'm not a flag-waving, unconditional supporter, but that makes a lot of sense to me because
00:19:38.780 | I look at the destruction that happens and inflation of fiat systems when government
00:19:44.900 | bureaucrats can just wave their hands and fund everything they want and destroy it.
00:19:51.900 | Let's go back to that stanza from Kipling's poem.
00:19:55.420 | In the Carboniferous epoch, we were promised abundance for all by robbing selected Peter
00:20:00.520 | to pay for collective Paul.
00:20:02.580 | Welcome to the "there's nothing new about the progressive tax systems, etc. that we
00:20:06.900 | live under and argue about today."
00:20:09.100 | Next line, "But though we had plenty of money, there was nothing our money could buy."
00:20:12.980 | And the gods of the copybook headings said, "If you don't work, you die."
00:20:17.660 | And so the point is simply that if you can't explain clearly the problems that the money
00:20:27.220 | system that was unlinked from the gold-backed system was trying to accomplish, then I hesitate
00:20:34.360 | to follow your advice about what the new system should be, because you can create a whole
00:20:42.000 | bunch of new problems.
00:20:44.220 | And we could do this in many—again, on social issues or on environmental issues.
00:20:54.200 | If you go back and you look, I have a real passion for smart urban planning and urban
00:20:59.100 | design.
00:21:00.460 | And what I find interesting is how we've, in many cases, transformed cities into hellscapes.
00:21:08.060 | Many modern cities, especially in the United States, just feel like urban hellscapes.
00:21:13.540 | They're not pleasant places to be.
00:21:15.060 | Nobody wants to come and visit them.
00:21:17.480 | And we go back to an old city in Europe and we walk around and we take our cameras and
00:21:22.100 | we dream of our vacation to Venice or we dream of our vacation to a small Swiss town or to
00:21:29.500 | a great kind of classic 500-year-old city.
00:21:33.380 | And people love to be in those places.
00:21:35.180 | But we created something new without understanding what was brilliant about the old design.
00:21:43.020 | And we ignored, in many cases, the collected wisdom of millennia of human experience.
00:21:51.940 | And we paved it all over in the United States.
00:21:53.860 | We paved it all over.
00:21:54.860 | We destroyed our cities and put parking lots up instead, made these massive roads.
00:21:58.980 | And they're just unpleasant places to be.
00:22:03.380 | Last night I shared a great YouTube video by the Not Just Bikes channel, a wonderful
00:22:08.740 | channel on social commentary.
00:22:10.740 | It goes and talks about why nobody wants to raise children, why you should never live
00:22:14.220 | in the suburbs when you want to raise children.
00:22:15.820 | I'd encourage you to look at it and think about it because it's a perfect encapsulation
00:22:19.900 | of this rule of unintended consequences.
00:22:24.100 | The suburbs in the United States, which were very, very commonly built, the suburbs were
00:22:31.620 | created without an understanding in a time of massive expansion where people didn't understand
00:22:37.860 | what was happening and what would be created.
00:22:40.260 | And so the suburbs were created because people said, "Oh, that's where I want to go to
00:22:43.980 | raise my children."
00:22:45.620 | The suburbs became exceedingly car dependent and they kind of created this whole culture.
00:22:51.620 | But that culture itself is very, very unfriendly to children.
00:22:55.540 | And it's funny, there's an argument about this, about, well, do people want to move
00:22:59.180 | to the suburbs when they have children?
00:23:00.180 | Right?
00:23:01.180 | I have four children, so I know something about this.
00:23:03.340 | But while I appreciate certain aspects of the suburbs, and I try to be cautious in my
00:23:08.300 | commentary, what we created is a world that is completely unfriendly to children.
00:23:12.860 | It continues to have ongoing impact on our child rearing.
00:23:19.700 | And our world continues to be emptied of children.
00:23:23.060 | We could look at the same thing on social issues.
00:23:27.820 | One of the single biggest issues of our day is population collapse.
00:23:32.740 | We're not having children.
00:23:34.100 | You can see this all over the world in different areas.
00:23:36.060 | In the United States, we can trace this back dramatically towards the rise of industrialization.
00:23:42.060 | We can trace this back to the invention of the birth control pill.
00:23:45.020 | We can trace this directly to liberalizing divorce laws, no-fault divorce, which started
00:23:52.300 | during the 1980s.
00:23:53.300 | We can continue on through the era to today, through even to right now, the US Congress
00:24:02.280 | and Senate are debating the so-called Respect for Marriage Act.
00:24:08.640 | And yet, if we look at the results of these things, we see that in reality, if marriage
00:24:14.480 | formation has collapsed, marriage continuation has fallen apart, and the production of children
00:24:20.940 | in our society has collapsed, which has massive impacts for the long term.
00:24:25.740 | So the social progressives that have wrought the future that we now live in didn't understand
00:24:31.900 | the things that contributed to a basic, functioning, stable society.
00:24:37.860 | And they've systematically built a world in which the idea of getting married is very
00:24:44.860 | unattractive, the idea of having children while continuing to be a strong biological
00:24:49.460 | urge is very unattractive, etc.
00:24:52.260 | So you can go and look at China, right?
00:24:54.980 | China is collapsing right now.
00:24:56.220 | Why is China collapsing?
00:24:57.700 | Because social progressives and communists came in and said, "We have way too many people,
00:25:02.420 | population control is out of control."
00:25:05.740 | And so they came in and implemented the one-child policy, and in a single generation, an entire
00:25:11.980 | population is already and is going to be completely wrecked, with no ability to continue itself
00:25:18.780 | in a meaningful way, because a millennia-old civilization was destroyed in some decades
00:25:28.660 | by revolutionaries.
00:25:30.880 | Now let's go to money and to finance.
00:25:34.780 | We have to be on guard for this same thing happening in money and in finance, because
00:25:42.100 | there are always going to be – the more things change, the more they stay the same
00:25:47.060 | – there's always going to be these basic human impulses.
00:25:56.420 | There's always going to be swindlers, there's always going to be Ponzi schemes, there's
00:25:59.860 | always going to be people promising a brand new solution to a problem you didn't have,
00:26:04.500 | and you need to firmly keep in mind the truths that will endure.
00:26:10.740 | You need to firmly keep in mind these truths as you approach your life, your earning, your
00:26:15.060 | spending, your investments, and think about how you can align yourself with those long-won
00:26:22.500 | truths.
00:26:26.020 | The question that I can't answer for you is, where do you draw the line?
00:26:31.200 | So let's deal with a couple of obvious examples.
00:26:36.740 | When we wade into the collapse of the cryptocurrency space over the last week, there is a strong
00:26:44.020 | distinction between the crypto people and the Bitcoiners.
00:26:49.100 | The Bitcoiners say everything except Bitcoin is worthless, and the crypto people say, "But
00:26:54.500 | we innovated on the back of Bitcoin."
00:26:57.460 | Now I myself am drawn and swayed to a distinction, to want to distinguish between Bitcoin and
00:27:05.780 | various other tokens that are made up and created.
00:27:09.300 | But at its core, let's be very humble and acknowledge that while indeed we may have
00:27:15.100 | solved a very long embedded problem with the ability to transact between individuals and
00:27:24.300 | to externally verify those transactions, Bitcoin may indeed have solved that problem in a new
00:27:30.100 | and innovative way.
00:27:31.740 | Let's be exceedingly humble about the relative newness on the human stage.
00:27:39.380 | And it concerns me deeply when individuals get so wrapped up in their revolutionary fervor
00:27:48.000 | and their ideological blindness that they ignore the wisdom of the ages.
00:27:55.040 | They ignore the classic things like owning your home.
00:27:58.380 | They ignore the classic things like keeping cash on hand, etc., and put everything in
00:28:03.920 | favor of something new and revolutionary.
00:28:06.700 | When everything is going up, it feels exciting, it feels euphoric.
00:28:10.520 | But when all of a sudden you face brand new headwinds, the wisdom of the ages, the copybook
00:28:16.800 | headings come into play.
00:28:19.320 | Now let's go back and go a step further.
00:28:21.800 | Go back a century and you have a completely different perspective on stock market investing
00:28:28.920 | than we have today.
00:28:30.960 | Today stock market investing, through the use of a balanced, diversified portfolio of
00:28:36.360 | mutual funds, is considered to be the wisdom of the ages.
00:28:40.600 | But even there, I think we should always be skeptical.
00:28:43.920 | I am perfectly fine with stock market investing, but stock market investing is a fundamentally
00:28:50.520 | new concept.
00:28:52.520 | And even though it's more than a century old, it's still a fundamentally new concept.
00:28:58.120 | And what has never been tested, to my knowledge, anywhere at any time in human history, is
00:29:03.720 | even the concept of broad-scale stock market investing.
00:29:08.080 | If you went back 70 years and look at who owned stocks, it was a very small percentage
00:29:14.480 | of the population.
00:29:17.520 | Wealthy elites who owned stocks.
00:29:20.200 | You fast forward to today and increasingly, virtually all of the citizenry is engaged
00:29:25.720 | in stock market investing.
00:29:28.000 | I don't oppose it, I support it, but I support balancing that with the wisdom of the ages,
00:29:35.440 | with the wisdom of other forms of assets, with the wisdom of owning physical assets,
00:29:40.240 | with the wisdom of being prudent with regard to debt and the modern financial system, etc.
00:29:45.200 | And we can go back and back and back and back.
00:29:48.000 | Now of course I've been reading systematically chapters from the excellent book The Richest
00:29:52.240 | Man in Babylon here on Radical Personal Finance.
00:29:55.320 | That's an old book, it's in the public domain, that's why I'm reading the entirety of it.
00:30:00.400 | It's an old and classic book, and that book is written as an allegory.
00:30:08.080 | It's written in the context of it being a millennia old.
00:30:10.880 | But what you see in that book is you see wisdom expressed.
00:30:16.120 | Obviously the book is an invention of the modern age, but by using the old-fashioned
00:30:22.360 | language and the old-fashioned concepts, we can see the truth that has existed throughout
00:30:29.680 | time.
00:30:30.760 | We can see that there very well could have been these characters who learned these lessons,
00:30:36.600 | and they learned their lessons in the context of copper pennies and pieces of silver and
00:30:41.400 | gold, and we apply them in our modern age through dollars or yen or pounds or euros,
00:30:49.060 | but yet those lessons are—there is a continuity, a similarity between these lessons that arches
00:30:57.060 | over the millennia.
00:30:59.260 | So it's very important that we study our history, that we understand past events of history,
00:31:05.560 | that we look at the arc of history, we understand what is the wisdom that does not change, and
00:31:13.920 | then how do we embrace the changes that are truly new and useful, that solve the problems
00:31:20.920 | of the past.
00:31:22.860 | And we need to understand that in order to look at our modern day.
00:31:27.320 | This is clearly hard, because history in some cases is faster than we think it should be,
00:31:34.020 | and in some cases is much slower than we think it should be.
00:31:36.980 | We think that our predictions of what will happen should happen immediately, but as I
00:31:42.500 | grow older what I realize is I can be more right—I can be very right on the direction
00:31:49.140 | of change, but I can find it very difficult to predict the timing of change.
00:31:57.540 | I think about this—I guess a relationship would be—an example would be relationships
00:32:04.940 | and also financial events.
00:32:06.780 | I have some close friends who have recently separated, husband and wife, and what's interesting
00:32:14.260 | to me is the arc of change, that the prediction of where they would wind up, has been obvious
00:32:23.540 | to me for a good number of years.
00:32:26.260 | It started with financial problems, continuing financial problems, those financial problems
00:32:32.540 | weren't addressed, change didn't happen, and you could see the direction of change
00:32:37.340 | that seemed inevitable in terms of the relationship.
00:32:42.620 | But what couldn't be predicted was the particular timing at which the relationship would collapse.
00:32:50.040 | And so as I've grown older I've learned to trust my intuition and my predictions on where
00:32:59.780 | things will go, but simultaneously to be less confident in my timing of exactly when things
00:33:07.300 | will go there, because sometimes good situations seem to continue long after we think they
00:33:13.460 | should end, and bad situations come at times that are completely unforeseen.
00:33:19.080 | So we need to be cautious and try to incorporate history, but make plans that work well regardless
00:33:27.380 | of the particular timing of events.
00:33:34.580 | I want to close with my favorite quote on this tension.
00:33:42.180 | This of course comes from another author writing a century ago, G.K.
00:33:45.940 | Chesterton, the British author and commentator.
00:33:50.120 | And this is the quote on progressives and conservatives that I think is so powerful
00:33:54.520 | for us to continue.
00:33:55.820 | Here it is.
00:33:56.820 | "The whole modern world has divided itself into conservatives and progressives.
00:34:03.420 | The business of progressives is to go on making mistakes.
00:34:07.380 | The business of conservatives is to prevent mistakes from being corrected.
00:34:12.100 | Even when the revolutionist might himself repent of his revolution, the traditionalist
00:34:16.820 | is already defending it as part of his tradition.
00:34:19.980 | Thus we have two great types, the advanced person who rushes us into ruin and the retrospective
00:34:25.540 | person who admires the ruins.
00:34:27.980 | He admires them especially by moonlight, not to say moonshine.
00:34:32.620 | Each new blunder of the progressive, or prig, becomes instantly a legend of immemorial antiquity
00:34:38.420 | for the snob.
00:34:39.960 | This is called the balance, or mutual check, in our constitution."
00:34:43.900 | I share that because it's something I think about a lot, this tension between those who
00:34:52.780 | identify themselves as progressives and those who identify themselves as conservatives.
00:34:57.620 | I have broad application to this in the political and social sphere, but I'm less interested
00:35:03.500 | in the context of this particular podcast about that as I am in making sure that you
00:35:07.980 | think of yourself as someone who can understand that things should be changed and embrace
00:35:14.900 | new solutions without rushing headlong into them and making huge mistakes that are very
00:35:20.340 | difficult to recover from.
00:35:25.140 | We need to be informed by the past and we need to write our book of those things that
00:35:30.820 | will not change.
00:35:32.420 | The wisdom of the ages is things that will not change.
00:35:36.100 | I try to do that in my work at Radical Personal Finance.
00:35:40.260 | That means that at times there are things that I miss, but what my desire to do is to
00:35:45.860 | focus on those concepts, those ideas, those principles that are timeless in their application,
00:35:52.660 | that will work just as well in 2022 as they did in 1922 or in 1622.
00:36:00.020 | My ambition is that those same things will work in the year 2622.
00:36:04.820 | Again, we don't know the specific tools, but we can see the course of history.
00:36:16.020 | Although the specific tools will change, the dollar will have—I'll make my prediction,
00:36:21.260 | you can come back and do it—the dollar will have long ceased to exist and become utterly
00:36:25.660 | worthless by the year 2622.
00:36:28.220 | How's that for a safe prediction?
00:36:29.580 | It's already collapsed multiple times.
00:36:31.340 | No chance it makes it another century.
00:36:33.860 | I don't know what will have replaced it.
00:36:35.900 | Pretty skeptical it's Bitcoin, but hey, who knows.
00:36:39.140 | The point is that whatever currency you're dealing with, you can deal with it intelligently
00:36:45.320 | between here and the year 2622 if you recognize that virtually all currencies collapse, but
00:36:52.340 | the value endures.
00:36:54.060 | This is why when you dig into what do the wealthy invest in, well, you invest into businesses
00:36:59.180 | that can change and adapt, and they can just switch out and say, "Hey, we'll start accepting
00:37:03.380 | this currency.
00:37:04.380 | We'll accept that currency from there," and they're building wealth and money and then
00:37:07.380 | turning around, investing it into hard assets and investing it into business expansion.
00:37:12.260 | And then, of course, the flip side is hard assets.
00:37:15.180 | Why does Bill Gates, who made his fortune in computer software, why is he now one of
00:37:19.780 | the largest landowners in the United States?
00:37:23.780 | Because food and land are still continually important.
00:37:28.220 | And so the lesson is not that you should go and invest in land if you're broke.
00:37:31.540 | The lesson is that if you're looking for long-term perspectives, you need a business or a job
00:37:37.780 | that's going to create income for you.
00:37:39.580 | Then once you have enough of it, you deploy it into multi-generational assets, et cetera.
00:37:44.100 | I'll continue.
00:37:45.100 | I want to close today.
00:37:46.100 | That's enough.
00:37:47.100 | I don't want to go on with example after example, but just recognize the importance of understanding
00:37:51.580 | the past and then making sure that you are being wise about what you're involved in today.
00:37:58.940 | I want to close with, I'll read this poem to you again because there's great wisdom
00:38:05.220 | in here and I would encourage you now that you understand a little bit of the background,
00:38:08.620 | some of the terms, et cetera, listen again as we close today's show.
00:38:13.700 | The Gods of the Copybook Headings by Rudyard Kipling.
00:38:19.700 | As I pass through my incarnations in every age and race, I make my proper prostrations
00:38:26.340 | to the gods of the marketplace.
00:38:29.060 | Peering through reverent fingers, I watch them flourish and fall.
00:38:34.980 | And the gods of the copybook headings, I notice, outlast them all.
00:38:40.640 | We were living in trees when they met us.
00:38:42.940 | They showed us each in turn that water would certainly wet us, as fire would certainly
00:38:47.940 | burn.
00:38:49.340 | But we found them lacking in uplift, vision, and breadth of mind.
00:38:54.740 | So we left them to teach the gorillas while we followed the march of mankind.
00:39:00.620 | We moved as the spirit listed.
00:39:03.520 | They never altered their pace, being neither cloud nor wind borne like the gods of the
00:39:10.020 | marketplace.
00:39:11.880 | But they always caught up with our progress and presently word would come that a tribe
00:39:17.240 | had been wiped off its ice field or the lights had gone out in Rome.
00:39:23.060 | With the hopes that our world is built on, they were utterly out of touch.
00:39:27.320 | They denied that the moon was Stilton.
00:39:29.220 | They denied she was even Dutch.
00:39:31.160 | They denied that wishes were horses.
00:39:32.940 | They denied that a pig had wings.
00:39:35.180 | So we worshipped the gods of the market who promised these beautiful things.
00:39:41.840 | When the Cambrian measures were forming, they promised perpetual peace.
00:39:46.140 | They swore if we gave them our weapons that the wars of the tribes would cease.
00:39:51.860 | But when we disarmed, they sold us and delivered us bound to our foe.
00:39:57.460 | And the gods of the copybook headings said, "Stick to the devil you know."
00:40:02.480 | On the first Feminian sandstones, we were promised the fuller life, which started by
00:40:07.180 | loving our neighbor and ended by loving his wife.
00:40:10.740 | Till our women had no more children and the men lost reason and faith.
00:40:15.840 | And the gods of the copybook headings said, "The wages of sin is death."
00:40:21.380 | In the Carboniferous epoch, we were promised abundance for all by robbing selected Peter
00:40:26.820 | to pay for collective Paul.
00:40:29.500 | But though we had plenty of money, there was nothing our money could buy.
00:40:33.620 | And the gods of the copybook headings said, "If you don't work, you die."
00:40:39.420 | Then the gods of the market tumbled and their smooth-tongued wizards withdrew.
00:40:44.380 | And the hearts of the meanest were humbled and began to believe it was true, that all
00:40:49.300 | is not gold that glitters, and two and two make four.
00:40:53.060 | And the gods of the copybook headings limped up to explain it once more.
00:40:57.880 | As it will be in the future, it was at the birth of man, there are only four things certain
00:41:02.580 | since social progress began.
00:41:05.500 | That the dog returns to his vomit and the sow returns to her mire, and the burnt fool's
00:41:11.500 | bandaged finger goes wobbling back to the fire.
00:41:15.620 | And that after this is accomplished and the brave new world begins, when all men are paid
00:41:19.980 | for existing and no man must pay for his sins, as surely as water will wet us, as surely
00:41:26.020 | as fire will burn, the gods of the copybook headings, with terror and slaughter, return.
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