Thursday, July 18, 2019

On the Tin

There are always things worth spending money on now. Building Capital defers gratification because you put the money to work. You don’t get to use it. You don’t get to spend it. It works for others, which is why it gets paid. “Gratification” is probably a harsh word, because it implies that all spending is frivolous. Financial decisions are often really hard. The ones I struggle with most are when I feel like a bad person. Grappling with good and bad and all the baggage those words carry. Deeply emotional decisions. I hate it when money dips its fingers into choices where constraints are placed like – “we just can’t afford it”. That is particularly hard when there is money there. If you are living hand to mouth, the constraint is external – “can’t afford it” means what it says on the tin. If you are living off the fruit of Trees, there is always the option of cutting the Tree down and returning to hand to mouth living. For those living at and around the minimum required for a decent life, it can be impossible. Having an honest conversation about the minimum requirement is hard – because we are constantly buffeted with aspirational consumption. It is even harder when the choice involves others. It is far easier to be hard on yourself.

Wednesday, July 17, 2019

Lazy and Flashy

A key innovation of Capitalism is the explicit recognition of the costs of Conspicuous Hoarding & Conspicuous Consumption. If “excess stuff” is Capital, then Conspicuous Hoarding is keeping more than you need or use idle, and Conspicuous Consumption is using more than you need to show what a big deal you are. Capitalism incentivizes people to put their excess to work so it will grow. To get the stuff a job doing useful things for other people. Conspicuous Hoarding is lazy Capital… it doesn’t grow. The stuff just sits there & slowly withers. Like a fully paid off shop on a High Street that the owner doesn’t need to rent… so it just sits there empty. Like an unused field that could be turned into lots of homes. Conspicuous Consumption is stupidity tax. It fires the Capital for the one who flaunts it. In the past, wealthy people would have wanted to show how wealthy they were. Capitalism means that if you do this, forces are there to shrink the amount of Capital you have. That’s why you see many Billionaires in T-Shirts and Genes. Their money is working. Capitalism sneakily takes stuff from the Rich & gives them a number on a piece of paper in exchange. Sorry Scrooge McDuck, if you have a pool full of coins, you are a moron & won’t be Rich long.

Tuesday, July 16, 2019

Path Dependent

I studied Money in part because I hated it. Hating money isn’t particularly helpful. We are supposed to be unemotional about it. Except money is so intimately involved in our decision-making process about the life we choose to live. I was incredibly frustrated by how seemingly limited my choices were. Rather than hating it, I wanted to understand it so that I controlled my money rather than it controlling me. Much of what we do is path dependent. Who we are surrounded by, and where we are, affects our choices. Context comparison is helpful… stepping back and seeing the choices other people have made. The choices other people *can* make. Then being able to have honest conversations, so we make our choices consciously. Money isn’t a thing. It is just a way we communicate. Learning what the squiggles mean can at least make things a little clearer. So we can have a sense of what we are dealing with.

Monday, July 15, 2019


It is easier to understand something complicated with a simple story and a so what. That helps us figure out our role in the bigger thing without having to make complete sense of it. This can be both positive (if the story is helpful) and negative (if the story is unhelpful). The trick is figuring out a way to find out how to let go of the story if it is unhelpful, but is deep soaked into who we are.

Asset Liability Matching is when you try find investments that match the risk characteristics of the expenses that need to be met. Complicated, but there are easy to follow so whats people use. The simplest example is if you lend someone money with the date for repayment exactly matching when you need the money. This makes the story very clear. What happens when everyone does this? You get the crazy situation we are in now where big pools of money *have* to be lent. You get negative interest rates where Countries (like Switzerland) are being paid rather than paying to borrow. The Swiss National Bank pays (charges) -0.75% interest to Commercial Banks. The Savers who put their money with these banks end up being paid close to nothing.

Ignoring the complicated example, bring it back to normal people. If we live hand to mouth, the work we do ends up being because we have to. Expenses become a habit, and that habit needs to be met. We become defined by our jobs. Snapping the connection between hand and mouth by building a Buffer, and then an Engine, with Capital changes the story. It allows you to build the life you want to live, without being too closely dictated to by the rules of how money is made.

Friday, July 12, 2019


Micro-ambition may feel like giving up. There is less wow involved. It can appear almost like inaction. Micro-ambition is action through inaction. It starts with a complete acceptance of things as they are. With curiosity, patience, listening, questioning and engagement. Things do change all the time. Micro-ambition means you are deeply involved in that change because things change from where they are. Add time and allow the small to compound. Bill Gates says, “Most people overestimate what they can do in one year and underestimate what they can do in ten years”. Work on your endurance so you improve the chance of having more time to have an impact. Work on your resilience so that things that matter don’t get knocked off track by things that don’t. Then add a little creativity to every day… every day.

Change a little

Thursday, July 11, 2019


Money doesn’t create value. It releases it. One of the reasons I am a Universal Basic Income activist is that people trapped in Financial Poverty lack a catalyst. They have skills, knowledge, needs, and wants but this is all trapped because we speak with coins, pieces of paper, ones and zeroes. Pure-play Adam Smith Capitalism pushes decision making down from central committees to individuals making the choice to exchange. It is the “tacit knowledge” that is released when a price floats somewhere between the buyer and seller’s value… so that POP! – value is created in the swap. Money becomes a lubricant to get the whole process started. Then if some of that additional value is invested rather than consumed, the person can gradually be released from imprisoned potential to empowered engagement with the world.

Wednesday, July 10, 2019

Private Battles

"Everyone else is fighting a private battle you know nothing about. Be kind." Life doesn't revolve around any of us, except for us. So when we are at our low, others are celebrating. When we are ecstatically happy, someone else may be receiving awful news. In a global world that is connected, we can't get the signals necessary to know if someone has capacity. You can dump your emotional baggage on someone, and two blue ticks later it is in their heart and mind. Whether they are in a space to deal with it or not. At times it can feel too much to bear. Admitting that feels like weakness, because it is. If no one is the rock... where do we turn, but inwards? I don't know the answer. A wise lady once told me just to come back to kindness and respect. Build that first... the rest will follow. 

Red Flag

I don’t believe in Get Rich Quick schemes. If an idea is too easy, then several red flags come up. Is it wealth creation, or wealth extraction? Is someone being manipulated because full information is being hidden? Is it a Pyramid Scheme where a few people get paid well till the music stops playing? What’s the trick? I believe in the power of time & compounding. There is no trick involved. Neither of those work without a source. Initial ideas can be straight off the menu. What are the options available for work? What are you best at, that can generate the most money, in the most tolerable (and enjoyable if you are lucky) way? What skills and knowledge do you need to develop? Then it is a dance between spending & putting money to work. The bigger the gap between your hand & mouth, the more money can get a job. With time, you can build a Buffer and increasing Financial Security. Financial Security can grow into Financial Freedom. As individuals, and as communities, I believe it is possible to build Engines that can open up entirely different ways of deciding how to spend our time. We don’t have to live hand to mouth. Capital can work so that Labour can love. Capital doesn’t need schemes. Capital needs time & space to compound.