WATCH LIVE: Jordan Harbinger Discusses Independence, Entrepreneurship and Mindset

By Vin Armani

WATCH The Vin Armani Show LIVE at 10am PST (1pm EST). In the first hour, Vin discusses current events related to your liberty and takes a deep dive into the recent passage of the CLOUD Act that was snuck into the omnibus spending bill.

In the second hour, we are joined by Vin’s long-time friend, Jordan Harbinger. Jordan is a Wall Street lawyer turned talk show host, social dynamics expert, and entrepreneur. After hosting a top 50 iTunes podcast for over a decade that enjoyed nearly four million downloads a month at its zenith, Jordan has embarked on a new adventure: The Jordan Harbinger Show, where he deconstructs the playbooks of the most successful people on earth and shares their strategies, perspectives, and insights with the rest of us.

Learn more about Jordan and listen to his podcast at http://JordanHarbinger.com

Follow Jordan Harbinger on Twitter.

Live free and succeed outside the rigged system at Counter Markets.

Vin Armani is the host of The Vin Armani Show, CTO of CoinText, author of Self Ownership, founder of Bebi Vodka and co-founder Counter Markets. Follow Vin on Twitter and subscribe on YouTube. Get the weekly podcast on iTunes or Stitcher. Available for interviews at email – Vin (at) VinArmani.com.

Why Credit Suisse Thinks Millennials Are The "Unluckiest" Generation

As part of the annual Credit Suisse Global Wealth Report, which as discussed earlier found that for the first time ever, the "Top 1%" owns a majority, or 50.1%, of the world"s wealth...

... the millionaire bankers behind the firm"s (Ultra) High Net Worth client division decided to also shed some tears for the world"s Millennials, whom they dubbed with one word: "unlucky"... a term which members of said generation will likely wear as a badge of honor (if only to justify their plight in life), while other generations will be eager to promptly mock.

While both sides have valid justifications for their perspective, here is why the Swiss bank has almost given up on an entire generation as a potential client:

"The “Millennials” – people who came of age after the turn of the century – have had a run of bad luck, most clearly in developed markets. Capital losses in the global financial crisis of 2008-2009 and high subsequent  unemployment have dealt serious blows to young workers and savers. Add rising student debt in several developed countries, tighter mortgage rules after 2008, higher house prices, increased income inequality, less access to pensions and lower income mobility and you have a “perfect storm” holding back wealth accumulation by the Millennials in many countries."

In a contrast that is sure to generate controversy, Credit Suisse compares the plight of the "unlucky" Millennials to the "good fortune experienced by the baby boomers, born in large numbers between 1945 and 1964, whose wealth was boosted by a range of factors including large windfalls due to property and share price increases." Additionally, CS notes that the millennial cohort is smaller as a percentage of the total adult population than the baby boomers were at the same age, and notes that while "normally it is good to belong to a smaller cohort" this time that appears not to be the case, and nowhere more so than in the United States.

So why aren"t Millennials a lucky cohort? Did the financial crisis and its fallout just swamp the advantage of being in a small cohort? Or is there more to it? Here are several key reasons cited by Credit Suisse to make its high net worth clients feel some compassion for America"s young adults.

Assets and debts of the Millennials

Table 1 provides a breakdown by age for various wealth characteristics in key developed markets.  The table shows that income and wealth both generally increase with age – certainly for the average individual, but also usually in cross-section data.

The share of financial assets also rises once young millennial adults have left the parental nest. Non-financial assets – of which owner-occupied homes are the most important – decline in importance with age. For many people, the first priority is to buy a house, with financial assets being built up later. This pattern helps to explain why the high and rising house prices seen in many countries since the year 2000 have been a special problem for the Millennials. According to the IMF, state pensions in advanced economies are expected to replace just 20% of per capita income by 2060, compared with 35% today. Also, fewer workers are now covered by employer-based pensions than in the past, and defined benefit pensions are declining fast. For example, only 10% of UK workers in the private sector born in the 1980s have a defined benefit pension plan, compared to 40% of those born in the 1960s at the same age. So it is increasingly important for people to save for retirement on their own account. The share of financial assets in total assets will need to rise in most countries in the future compared to what is seen in Table 1. This is especially true for the Millennials, who will likely face the added challenge of higher contributions and taxes required to fund state pensions and other benefits for the baby boom cohort in their retirement.

Student loans have been an increasingly important component of debt in a number of countries. The trend is particularly striking in the United States and is also evident in Germany (see Figures 2a and 2b, which use the same data sources and age groups as Table 1). In the United States, 37% of those aged 20–29 in 2013 had some student debt, which accounted for 18% of the total debt of that age group. In Germany, 12% of those in the same age group had student debt and it accounted for about 6% of total debt.

The rise in student debt is partly due to higher fees. But it also reflects the fact that the Millennials are more educated than preceding cohorts. For instance, the percentage of 25–34 year olds with tertiary education in OECD (Organisation for Economic Cooperation and Development) countries rose from about 15% in 1970 to 26% in 2000 and 43% in 2016. This greater educational attainment may help to ease the Millennials labor market diffuclties. However, although average rates of return to college and university have held up fairly well, this is largely because lower wages for less-educated workers have reduced the opportunity cost of tertiary education. But for the most university-educated Millennials the outcome may be job opportunities and wages no better than those of their parents, achieved by a dint of more costly education.

Entrepreneurship

It is sometimes claimed that Millennials are starting more businesses than earlier generations, and doing it at younger ages. But the official statistics suggest otherwise: only 2% of Millennials in the United States are self- employed, versus 8% of Generation Xers (those born between 1965 and 1980) and baby boomers. And entrepreneurship, as measured by the fraction of self-employed workers, has been declining in most OECD countries since the turn of the century. The OECD self-employment rate fell from 17.6% in 2001 to 15.8% in 2011; in the United States it dropped from 7.4% in 2001 to 6.5% in 2015. Sagging entrepreneurship in most countries is consistent with relatively few Millennials starting a business in this period.

The apparent decline in entrepreneurship among Millennials relative to their predecessors seen in the official statistics may reflect the fact that the cohorts being compared are observed at the same point in time, not at the same age. More Millennials will start businesses as they age. Another explanation is that those Millennials who have become entrepreneurs have each created more businesses than their counterparts in earlier cohorts. This may reflect their ”tech savvy” and the greater ease of starting multiple businesses these days with the help of the internet. A third factor is that although many Millennials would like to start a business, for a time they were restrained by  tough economic conditions. This suggests a surge in millennial entrepreneurship may occur soon or may already be taking place, as has been seen in some emerging markets, such as China and India.

Comparing cohorts

Figure 4 shows wealth components for US adults aged 20–29 and 30–39 in 1992, 1998, 2007 and 2013. Total assets increased markedly for the 20– 29 year-old group between 1998 and 2007, due mostly to an increase in real assets caused by rising house prices. Real assets for 30–39 year olds also increased rapidly at that time, but mean financial assets fell in this age range, perhaps reflecting re-allocation of portfolios in response to the changing returns from real and financial assets. Things went into reverse between 2007 and 2013: real assets declined substantially for both groups and financial assets increased a little. Debt rose strongly for both groups between 1998 and 2007, but has since returned to its 1992 level. These comparisons tell us about the experience of Generation X and the Millennials in their early adulthood. Generation X was still in its late 20s and 30s when house prices rocketed in the United States prior to the global financial crisis, and during the crisis itself. So it, as well as the first wave of Millennials, had a wild roller coaster ride. They experienced not only the effects of the general rise and fall of economic activity, but also the impacts of wild swings in asset prices. Both aspects are reflects in the wealth changes seen in Figure 4, which simply shows that young Americans aren"t getting wealthier any more.

General Indebtedness

Figure 6 shows US age-debt ratio profiles. For each cohort aged 40 or more in 2017, the debt to income ratio was higher than that of previous cohorts at all ages. The “crossing over”observed for wealth in Figure 5 is not seen reflecting the fact that debts do not fall in value when houses and shares crash, as they did during the financial crisis. But, perhaps most interestingly, the pattern is interrupted for the Millennials. The debt to income ratio started out higher than earlier cohorts for those aged 35-39 in 2017 and also rose (briefly, in 2010) above earlier cohorts for those aged 30–34 in 2017. But then there was a crossing-over in 2013 for both of these cohorts, with their debt to income ratios declining below previous cohorts. This hints that the Millennials became more cautious about debt than their predecessors due to the shock of the housing bust in the United States and the global crisis.

Student Debt

Student debt has leapt up for the most recent cohorts in the United States (Figure 7). The biggest increase came for the cohort aged 35–39 in 2017 – i.e. the “leading edge” of the Millennials – but those aged 30–34 in 2017 saw a further increase. As noted earlier, as a consequence, student debt now forms a substantial portion of total debt for young people in the United States.

Living in their parents" basement

The percentage of adults living in owner-occupied housing shows much more stability over cohorts (Figure 8). The oldest cohorts follow almost exactly the same path, but for those aged 40–49 or 35–39 in 2017, there was a higher initial fraction of home owners in successive cohorts. The financial crisis resulted in crossing-over once again, and by 2013 these cohorts slipped below previous cohorts with regard to the fraction of homeowners. 

Inequality and mobility

Millennials have been affected by the general rise in income inequality in advanced economies over recent decades. In a world with constant mean income, constant inequality and no mobility, parents and children would be equally well off. If – more likely – mean income is rising, and there is some mobility, but inequality is constant, then most children will be better off than their parents. But income inequality has been rising in the United States since the mid-1970s, and while mean income has also risen considerably, median income has not increased much. Mobility has also gone down. Similar trends have been seen in other “anglo” countries (with some notable differences, of course). The net result is that past expectations no longer apply. For example, 90% of children in the United States born in 1940 had earnings greater than their parents’, but this ratio had fallen to 50% for children born in the 1980s. About 70% of this decline was due to the rise in inequality.

Interest Rates and Rates of Return

The financial prospects of a cohort are affected by the rates of return they receive on investments and by the interest rates they face. Throughout the world, equity returns were high in both nominal and real terms during the 1980s and 1990s, providing favorable investment opportunities to baby boomers in the first half of their working lives, and also to young members of Generation X. In the first dedcade of the new century, however, both real and nominal returns collapsed, creating quite a different investment environment for the Millennials. After 2010, returns rebounded, but not to the level seen in the 1980s and 1990s. The interest rate story is similar to that for  equity returns, but the decline in real rates began earlier, in the 1990s. Although they rebounded slightly in Europe after 2000, the decline was steady in the United States. This is significant because workers trying to acquire assets increasingly have to switch to riskier investments to get a reasonable rate of return. Real lending rates, which are also important for young people, via mortgages for example, have declined over time as well, but more slowly than deposit rates. In the United States, lending rates reached quite a low level after 2010, but in Europe they remained at 3.8%, far above the real deposit rate of 0.4%. Hence safe saving opportunities have deteriorated for young people, while borrowing has not become correspondingly cheaper.

* * *

Finally, Credit Suisse"s conclusion:

The Millennials have not been a lucky cohort so far. They faced the rigors of the financial crisis and the high unemployment that followed in many countries, and have also been widely hammered by high and rising house prices, rising student debt and increasing inequality. Their pension outlook is also worse than that of preceding cohorts. Some of the Millennials have prospered in spite of these difficulties, as reflected in the more positive picture we see in China and a range of other emerging markets, and the recent upsurge in the number of Forbes billionaires below the age of 40. Some have had substantial family help in paying for education and buying homes, and some stand to inherit from wealthy boomer parents in the future. But there are many Millennials who have not been so fortunate. As a result, the Millennials are not only likely to experience greater challenges in  building their wealth over time, but also greater wealth inequality than previous generations.

And some parting words of comfort: Millennials" may or may not be unlucky, but all they have to do is lat a few years, and slowly but surely their wealth should start to grow....

... Unless, of course, the entire social-economic matrix has been corrupted by a decade of central planning and there truly is no hope for America"s young adults. In which case, if you need directions to the Marriner Eccles building to protest your fate to the appropriate authorities, we are glad to provide.

Oh, and for those Millennials who hoped to become the next ultra wealthy clients of Credit Suisse" high net worth group... our condolences, but we hear HSBC will take anyone these days.

Eric Peters: "We Are Investing As If 1987 Will Happen Tomorrow, Because It Will"

Excerpted from the latest weekend notes from One River Asset Management, courtesy of CIO, Eric Peters

Speculation

“People are no longer investing, they’re speculating,” said the CIO. “Is that wrong?” he asked, not waiting for an answer. “Depends on what you’re speculating in.”

Investors are implicitly worried about further price gains, they’re not really forecasting future fundamentals. “Investing is about estimating an asset’s fair value based on fundamentals, then forecasting what others will be willing to pay for those fundamentals.” But you can assign almost any value to the latter, and this means that for periods of time, fundamentals need not matter.

“There are a number of things that you’re absolutely meant to speculate in,” continued the same CIO. “It’s just that the universe of these opportunities is rather narrow relative to what people think it is.”

Paying a lot for everything is quite obviously foolish, but that’s where we are today. The only truly cheap asset class left is implied volatility. “People should be speculating in venture capital. Which is not to say that you can ignore price and value, but at least with venture capital you have a chance to make a lot of money.”

“Unfortunately, few people have access to venture opportunities,” explained the CIO. “Unlike decades past, new companies need very little capital to execute their business plans.” Years of regulation have discouraged smaller firms from going public. So the big platform companies gobble them up in private transactions.

“By owning Google and Facebook investors get access to innovation through acquisitions. Buying these big platforms is like buying closed-end venture capital funds. It’s one of the few ways to own a piece of the future.”

Binary

“We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform. “So we construct option trades that are binary bets.” Which pay X profit if stocks rally, and cost Y if markets fall. No more and no less.

“What you do not want is a portfolio whose losses multiply depending on the severity of a decline.” That’s what most people have today. “At the last stage of the cycle, you want lots of binary bets. Many small wins. Before the big loss.”

“Are we at the start or the end of the ‘Don’t know what I’m buying’ cycle?” asked the same CIO. “No one knows.” But we’re definitely within it.

“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out.

“LTCM traded things they didn’t understand. They sold volatility swaps, which they thought were tethered to reality, subject to gravity. In theory, they are. But like many such things, they’re simply numbers on a screen.”

More Spending Does Not Drive More Employment

It is almost universally asserted today that consumer spending drives employment.

This thesis gives support to the general Keynesian idea that government should “stimulate” the economy when it is suffering from a recession, whether it is through fiscal or monetary policy.

Glorious Spending

At the core, the idea is that if spending on goods and services goes up, then more people are needed in their production. And, as a consequence, more people are able to get jobs, earn a wage, and thus buy goods and services. In other words, it doesn’t matter if government wastefully increases spending — even if it is borrowed money — because the economic wheels start turning and as growth picks up we’ll be able to deal with debt, deficits, and so on.

Not to mention the human suffering through involuntary unemployment and poverty that is averted by such a single act!

Government spending in a recession is therefore seen as an almost costless solution that we simply cannot afford not to make as much use of as possible.

So it is easy to understand why Keynesians are at best confused by those arguing against government stimulus, and would likely call them “evil” for opposing something so grand.

The problem is while the logic is easy to follow, it is based on an utterly false assumption. There is no such relation between consumer spending and employment as Keynesians believe is obvious.

The Economy Backwards

Treating the economy as demand driven is placing the cart before the horse. It is easily done if one does not include entrepreneurship or have a conception of what entrepreneurs do in an economy, as is commonly the case in the formal modeling of modern economics.

If we think of the economy in terms of equilibrium, then there is no reason to consider the entrepreneur. As a result, as Schumpeter noted, economics has become Hamlet without the Danish prince: a system view of the economy devoid of both actors and action.

But such a mechanistic view of the economic system is necessary to successfully argue for government intervention as a means to improve economies. The economic organism, in contrast, will always produce unintended consequences that undermine and make impossible such interventionism.

Furthermore, viewing the economy as a mechanistic system is also necessary for the very possibility of establishing and running a socialist economy. Indeed, the market socialists’ attempted rebuttal of Mises’ calculation argument implicitly assumes this mechanistic view. But Mises’ original argument does not — it is based on the view that entrepreneurship is the driving force of the market.

In a mechanistic, circular-flow view of the economy, too little spending is a problem as that causes a general glut, which in turn forces employers to cut costs and lay off workers. This is not how the real economy works, however. As Ricardo noted, "[the actual problem is that] men err in their productions, there is no deficiency of demand.".

The Role of Entrepreneurship

Economists prior to the Keynesian avalanche, which contemporary Say’s Law scholar Steve Kates argues was all about dismissing the organic view of the market economy, had the same understanding of the economy as Mises. What drives the economy is not demand or spending, but entrepreneurship and production.

Indeed, JS Mill famously notes that "Demand for commodities is not demand for labour" in his fourth fundamental proposition on capital. While this statement is subject to much debate and most modern economists cannot make sense of it, it is in effect very straight-forward if one recognizes the role of entrepreneurs.

What is it that entrepreneurs do? They produce in anticipation of being able to sell their goods and services. Whether there "is" demand for the individual entrepreneur’s undertaking depends on people’s valuations of the goods when they are offered. It also depends on what other goods and services they can choose to buy instead. Also relevant is how consumers view the world, because in some situations they will find saving instead of consuming the best course of action.

In other words, entrepreneurs bear the uncertainty of their enterprise. They anticipate that consumers will value their goods and, based on this, estimate the price. That price, in turn, determines what costs the entrepreneur can reasonably expect to cover in production, which means the entrepreneur’s actual choice is for the cost structure in production – the price is an anticipation of consumer value.

Spending Is Inconsequential

What this means is that entrepreneurs speculate about the future in which they will offer their intended goods for sale. Consequently, the investment to produce happens whether or not there “is” spending in the market. Entrepreneurs do not make decisions based on what is, but based on what they anticipate about the future. Production, of course, takes time, so what is at the time the decision is made is not very relevant for what will be when the production process is concluded.

This fundamentally undermines the Keynesian view of the economy, because the entrepreneur will employ people before demand is known — in fact, even before demand can be known.

When the entrepreneur is successful, which means the goods are eventually sold at a price that covers the cost of production, there is a relationship between spending (on those goods) and the profitability of the enterprise.

But if the entrepreneur fails, which means there is not sufficient demand to generate revenue to cover the costs, the enterprise still employed workers. Granted, if the entrepreneur does not believe the situation will change, those workers may lose their jobs. But the point is that the jobs are created whether or not there is spending.

The case of the successful entrepreneur actually only strengthens the argument that spending does not drive employment. If the entrepreneur realizes there is a much greater quantity demanded than he dared hope for, does this not drive employment? Not necessarily: there is nothing saying that the entrepreneur must employ more workers.

Rather, if this demand is anticipated to remain in force (it is still speculation), the entrepreneur will invest to increase production. This can be done by simply doubling down on the existing processes, but it is more likely that investments are made in automation. Higher production volumes make it easier to cover fixed upfront cost of machinery, and profits would suffer from relying on variable cost such as wages. Also, employing more people will require training of the workers — also an upfront investment.

But even if we disregard the observation that capital replaces labor (by making it more productive) and instead assume the entrepreneur simply doubles down on the initial production process, the Keynesian demand-driven view still falls. The investment to increase production volume is still in anticipation of future demand — not a response to existing demand.

There is no escaping the fact that production precedes consumption in a very real and fundamental sense: that entrepreneurs endeavor in production before they know that they will be able to sell the goods produced.

Spending is a possible outcome of entrepreneurial production, but not the other way around. The former does not employ people, but the latter does.

Visualizing The Side Hustle Economy: 25 Ways To Make Extra Dough

Popularized in recent years by people like Gary Vaynerchuk, the “side hustle” has quickly become a preferred mentality for aspiring entrepreneurs to make additional money on the side.

As Visual Capitlsist"s Jeff Desjardins explains, the gist of it is: by working hard outside the traditional hours of a 9-to-5, a side hustle allows you to build a business around what you are truly passionate about. And if that endeavor is successful, it can also help you make the full transition into permanent entrepreneurship later on.

ENTER THE SIDE HUSTLE ECONOMY

Today’s practical infographic from Quid Corner highlights 25 different ways to dip your toes into the side hustle economy.

Some of these side hustles, like building courses or writing eBooks on your area of expertise, are great ways to begin building your personal thought leadership brand.

Meanwhile, other hustles listed here are more appropriate for supplementing your regular income. Getting extra cash in your pocket – and on your own terms – can help give you the confidence to start a business, or invest in further education.

GOING FROM 0 TO 60

If you are ready to make the dive into entrepreneurship, we previously posted 5 Ideas for Online Businesses in 2017.

If you’re still just getting your feet wet, it’s side hustle time. Work on the side for additional capital, get a proof-of-concept for your idea, or find ways to build your personal brand.

Even if your ambitions are huge, start slow, start small, build gradually, build smart.

– Gary Vaynerchuk, Serial Entrepreneur

Side hustling allows you to get a start while still having two feet on the ground. However, that’s not to say that side hustling is easy – it takes lot of work and commitment, and you have to be prepared to spend evenings and weekends to pursue your passion, with no guarantee for immediate results.

"Overwhelming Demand" Sees Filecoin ICO Raise $250 Million Without A Viable Product

It’s official: Filecoin, a blockchain project created by Protocol Labs, has raised nearly $250 million following a private “pre-sale” and public initial-coin offering – all without having a viable product to market.

According to the Wall Street Journal, the hotly anticipated ICO raised nearly $250 million after opening its offering to the public on Thursday. Thanks to a promise to offer discounts to the earliest investors, the Filecoin site crashed during the first hour of the public sale due to “overwhelming demand.”

“Because of heavy traffic on the site, the coin offering was paused when it started Thursday, raising some doubt about where the endeavor will end up. On Saturday, the firm announced it had reopened the token sale at 2 p.m. EDT. The outage was caused by a flood of orders, the firm said.

After fixing the initial issue, the firm took more time to double-check orders. There were some minor issues, such as some investors accidentally paying twice, that the firm said it is correcting, adding that all investments were correctly accounted for.”

Those who are unfamiliar with the company can be forgiven for their incredulity at the amount raised. Filecoin has been aided by a well-orchestrated media hype campaign, beginning when Wired published a feature story about the project, comparing it to “Pied Piper,” the fictional company from the popular HBO sitcom “Silicon Valley.”

The company’s idea is simple: allow users to receive payment in cryptocurrency for donating unused hard-drive space to Filecoin’s network.

In addition to the $193 million raised from the public, the project also raised about $52 million in a presale involving several prominent venture capital firms, including Sequoia Capital, Andreessen Horowitz, Union Square Ventures, and Winklevoss Capital.

And the total raised could rise, as the public sale is expected to continue for another month.

“Going by reported totals, it appeared the fundraising is already about 70% complete. Even if Filecoin’s fundraising stopped at this point, it would be a large deal, $245 million in virtual currencies when combining the venture-capital round with Thursday’s offering. The figure would top the $232 million raised by San Francisco-based Dynamic Ledger Solutions Inc. for its Tezos service earlier in the summer.

Filecoin’s “presale” round came from venture-capital funds including Sequoia Capital, Andreessen Horowitz, Union Square Ventures, and Winklevoss Capital.

Protocol Labs, based in San Francisco, was founded in 2014 by technology entrepreneur Juan Benet. Its Filecoin initiative is designed to allow users to exchange empty storage space on their computers for tokens. Users can earn tokens for contributing space on their hard drives, or can use tokens to buy space from other users.”

More alarmingly, Protocol Labs hasn’t yet built the Filecoin network – it’ still in the whitepaper stage.

In exchange for their money, investors are receiving only a promise to deliver Filecoin tokens once the network has been launched. Presently, the company hasn’t specified when the release date might be. To be sure, Filecoin’s promise echoes the tactics used by the Ethereum Foundation, which funded the protocol’s construction with a “presale” in 2014. Investors didn’t receive their tokens until the protocol went live in the summer of 2015, nearly a year later.

But while Ethereum yielded massive returns for anyone willing to bear the risks in the beginning, some wonder whether Filecoin tokens will be worth anything once they launch.  Considering that the overwhelming majority of ICOs flounder, investors have every right to be concerned.

“Token prices, which initially began at $1.30, would start on Saturday at $4.68, rising along a defined price function, and offering investors various vesting periods, with higher discounts for longer vesting periods. The tokens being bought in this sale won’t be delivered until the Filecoin Network launches. Currently, there is no launch date set.”

In what might be considered a vote of confidence, the Securities and Exchange Commission has apparently signed off on the Filecoin ICO, according to a story in the New York Times, which reported that the Filecoin team worked with a law firm to “structure” its ICO in a way that would appeal to regulators.

And though the long-term viability of Filecoin remains uncertain, the success of the offering has a broader significance. It affirmed that ICOs are already changing public markets in profound ways. In just a few short months, they’ve transformed from an internet novelty to a serious threat to the dominance of investment banks that have traditionally controlled the process of raising money from public markets. As WSJ points out, both Filecoin and Teza, the second largest ICO with about $230 million raised, are comparable to the size of Blue Apron’s initial public offering, which raised $300 million, and even raised more than the average IPO from 2016.

“The offering route has allowed firms to raise amounts that are comparable to other avenues of capital raising. Blue Apron Holdings Inc., for example, raised $300 million in a June initial public offering. In 2016, the average U.S. initial public offering raised about $219 million, according to Dealogic.”

ICOs have now raised $1.3 billion this year. And a team of analysts at Pitchbook believe the total will climb to $1.7 billion by year’s end. That’s a lot of money for a stack of whitepapers.   
 

How Preparedness and Self-Sufficiency Turned Jack Spirko Into An Anarchist

By Vin Armani

In this video, Vin Armani interviews Jack Spirko of The Survival Podcast about how preparedness and self-sufficiency feeds his political philosophy as an anarcho-libertarian voluntaryist. Spirko’s 5-day-a-week podcast is about managing his homestead in Texas, practical prepping, permaculture and self-reliance. It receives a remarkable 150,000 downloads per day.

Visit Jack at http://www.TheSurvivalPodcast.com/

Watch the full broadcast here
Live free and succeed outside the rigged system! Join the Counter Markets newsletter and community

Vin Armani is the host of The Vin Armani Show on Activist Post, TV Star of Gigolos on Showtime, Agorist entrepreneur and co-founder of Counter Markets. Follow Vin on Twitter and subscribe on YouTube. Get the weekly podcast on iTunes or Stitcher. Vin is available for interviews at email Vin (at) VinArmani.com.

They're Killing Small Business: The Number Of Self-Employed Americans Is Lower Than It Was In 1990

Authored by Michael Snyder via The Economic Collapse blog,

After eight long, bitter years under Obama, will things go better for entrepreneurs and small businesses now that Donald Trump is in the White House?

Once upon a time, America was the best place in the world for those that wanted to work for themselves.  Our free market capitalist system created an environment in which entrepreneurs and small businesses greatly thrived, but today they are being absolutely eviscerated by the control freak bureaucrats that dominate our political system.  Year after year, leftist politicians just keep piling on more rules, more regulations, more red tape and more taxes.  As a result, the number of self-employed Americans is now lower than it was in 1990…

In April 1990, 8.7 million Americans were self-employed, but today only 8.4 million Americans are self-employed.

Of course our population has grown much, much larger since that time.  In 1990, there were 249 million people living in the United States, but today there are 321 million people living in this country.

What this means is that the percentage of the population that is self-employed is way down.

In fact, one study found that the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.

And if you go back even farther, the numbers are even more depressing.  It may be hard to believe, but the percentage of “new entrepreneurs and business owners” declined by a staggering 53 percent between 1977 and 2010.

Sometimes I like to watch a television show called Shark Tank, and on that show they make it seem like entrepreneurship in America is thriving.

But the exact opposite is actually the case.  In a previous article, I discussed how the number of new businesses being created in the United States has been steadily falling over the years.  According to economist Tim Kane, the number of startup jobs per one thousand Americans has been declining for several consecutive presidential administrations…

• Bush Sr.: 11.3


• Clinton: 11.2


• Bush Jr.: 10.8


• Obama: 7.8

So why is this happening?

As I mentioned at the top of this article, self-employed Americans are being absolutely strangled by oppressive rules, regulations and taxes.

To illustrate this point, I would like to share with you some quotes from an open letter that was authored by a small business owner named Don Chernoff…

#1 I work for myself and have to pay my own medical expenses. Before the “affordable care act” I was paying about $200 per month for a high deductible policy. It was far from perfect but it got so much worse under the “Affordable” care act.

I now pay over $400 a month, my deductible went from $5,000 to over $6,000 and my out of pocket costs for care have skyrocketed.

#2 I have to spend dozens of hours and thousands of dollars for a tax accountant each spring to prepare my taxes because I cannot possibly understand how to do it myself, and I have a master’s degree in engineering.

#3 Many years ago when I quit a perfectly good job to start my own small business, I was shocked to learn that I had to pay both my share and what had been my employer’s share of Social Security.

#4 Between state, federal and local taxes you’ve probably paid 50% or more of your income in taxes, but that’s not enough for politicians.

If you’ve been lucky enough to have created a business you can sell, now you’ll get to enjoy paying another tax on the capital gain from the sale.

This is another reason why we need a conservative revolution in Washington.  We should demand that our members of Congress lower tax rates dramatically, completely eliminate the self-employment tax, greatly simplify the tax code and get rid of as many regulations on small business owners as possible.

In fact, if it was up to me I would abolish a number of federal agencies completely.

What we are doing right now is not working.  Small businesses have traditionally been one of the main engines of economic growth in this country, but thanks to the left they are unable to play that role at the moment.

It isn’t an accident that over the last ten years the U.S. economy has grown at exactly the same rate as it did during the 1930s.

If we want our economy to be great again, we need to go back and start doing the things that made it great in the first place.  If we continue to suffocate our economy, we will continue to get the same results.

And with each passing day, we get more signs that the economy is heading into another major downturn.  For instance, we just learned that Sears is closing 30 more stores on top of the 150 that had already been announced…

Sears Holdings, which wasn’t shy when it announced at the start of the year that it is closing 150 underperforming stores, has quietly added at least 30 more to the list.

Another 12 Sears stores and 18 Kmarts are among the locations that are closing, from Carson, Calif., to Hialeah, Fla., with most scheduled to shut their doors in July, based on calls to the stores, malls and confirmation in local media.

At the start of the year, the retailer pinpointed the 150 stores it said it would close. But it declined this week to provide a list of additional locations that are slated to shut since then, saying that it update store counts each quarter.

In addition, we just learned that new home sales in April were 11.4 percent lower than they were in March…

If you’re surprised by the collapse in new home sales in April, then you’re not paying attention.

The 11.4% MoM plunge in new home sales in April was 5 standard deviations below expectations and the biggest since March 2015.

Yes, the stock market is holding up for the moment, but for most Americans the “real economy” just continues to deteriorate.  Just because we are at the end of a giant financial bubble does not mean that everything is going to be okay.

The numbers that I brought up in this article are just another example of our long-term economic decline.  In a healthy economy, entrepreneurs and small businesses would be thriving.  But instead, they are being systematically strangled out of existence by a political system that is wildly out of control.

Signs That The Silicon Valley Tech Bubble Is About To Burst

18 months ago there was a seemingly limitless number of Silicon Valley future billionaires buying up multi-million dollar homes and renting out lavish pads.  But if demand for excessively priced real estate is any indication of the health of Silicon Valley"s tech industry then all the venture capitalists who have tripped over themselves to invest in the next "decacorn", or startups worth $10s of billions pre-IPO despite burning billions of cash quarterly, should be getting pretty worried right about now.

As the following chart from Zillow points out, home prices in San Francisco stalled about a year ago and rents have followed a similar path.

But home prices aren"t the only thing stalling, according to a note from The Guardian, resumes are also starting to flood into Silicon Valley headhunters from recently unemployed software engineers who were let go after their companies failed to attract its required latest round of financing at a ridiculous valuation.

“We’re starting to get a lot of résumés from [software engineers at] companies where the business model isn’t working and they can’t get funding, so they are closing down or cutting back,” said Mark Dinan, a software recruiter based in the Bay Area, who keeps track of companies’ hirings and firings.

These startups are running out of money because VCs are being more discerning about where they place their money, making fewer, bigger bets.

“The number of investments [in the private market] has fallen by about a third, but the amount of capital is around the same,” said Tomasz Tunguz, a venture capitalist at Redpoint, adding that some of the “fast money” from hedge funds and mutual funds had shifted away from the sector.

“It’s been happening for a couple of years. It’s not as easy to raise capital and VCs are demanding better terms,” added Aswath Damodaran, a professor of finance at the Stern School of Business.

Despite the meteoric rise in the stock market over the past several years, venture capitalists have been forced to pull back on new investments partly because of a slowdown in companies going public. Last year was the slowest for US IPOs since the recession, with the amount raised by technology companies falling 60% from 2015.

Meanwhile, if SNAP"s IPO is any indicator of how other potential tech IPOs might be expected to perform, then we wouldn"t hold out hope for public investors to save the venture market from their valuation sins.

But, a series of “down rounds” – when a company raises funds by selling shares that are valued lower than the last time they raised funds, leading its overall valuation to fall – may imply that there just isn"t a healthy backlog of companies that are IPO-worthy. CB Insights has tracked more than 100 of these down rounds and exits since 2015, including software company Zenefits, mobile app Foursquare and online music streaming service Rdio.

“It used to be that 95% of [investment] rounds were up, now 20% are down,” Tunguz said.

Then there are the so-called “decacorns” – unicorn startups valued at tens of billions of dollars – such as Airbnb, Uber and Palantir – which some believe are overvalued, but it’s hard to tell until they go public and are forced to reveal details of their underlying finances.

Ride-sharing app Uber, for example, has raised more than $16bn and is valued at more than $69bn. That’s more than automotive giants such as General Motors and Ford, despite the company losing $2.2bn last year.

“The interesting question with Uber is how long they can keep as a private company. They are raising capital like a public company without any of the disclosure and consequences of being a public company,” said Damodaran, who believes the company’s value is overinflated and it’s really worth $23bn.

So, how does this moment compare with the time leading up to the dotcom crash?  Here is the take of one Silicon Valley software recruiter:

“I got here in 97 and it was like it is now – incredibly packed, impossible to commute, high apartment costs,” Dinan said.

"We’re seeing overvalued companies, funded based on hopes and dreams and aspirations and not good business models. Companies counting users and eyeballs rather than profits. There are a lot of similarities.”

Another echo of the dotcom era is what Dinan calls “bad habits” such as the allegations of sexual harassment at Uber and human resources startup Zenefits cheating on mandatory compliance training.

“There was a lot of crazy behaviour in the late 1990s, including sexual harassment. It’s a result of there not being discipline,” Dinan said.

“The [dotcom crash] happened very suddenly and without any warning,” Damodaran said. “When it does happen everyone says they saw it coming. If you saw it coming then why didn’t you get out of it?”

Well, when all else fails there"s always the "negging" option to drive valuation...

In A Free Market, No Profit Is "Excessive"

Authored by Ludwig von Mises via The Mises Institute,

Profits are never normal. They appear only where there is a maladjustment, a divergence between actual production and production as it should be in order to utilize the available material and mental resources for the best possible satisfaction of the wishes of the public. They are the prize of those who remove this maladjustment; they disappear as soon as the maladjustment is entirely removed. In the imaginary construction of an evenly rotating economy there are no profits. There the sum of the prices of the complementary factors of production, due allowance being made for time preference, coincides with the price of the product.

The greater the preceding maladjustments, the greater the profit earned by their removal. Maladjustments may sometimes be called excessive. But it is inappropriate to apply the epithet “excessive” to profits.

People arrive at the idea of excessive profits by confronting the profit earned with the capital employed in the enterprise and measuring the profit as a percentage of the capital. This method is suggested by the customary procedure applied in partnerships and corporations for the assignment of quotas of the total profit to the individual partners and shareholders. These men have contributed to a different extent to the realization of the project and share in the profits and losses according to the extent of their contribution.

But it is not the capital employed that creates profits and losses. Capital does not “beget profit” as Marx thought. The capital goods as such are dead things that in themselves do not accomplish anything. If they are utilized according to a good idea, profit results. If they are utilized according to a mistaken idea, no profit or losses result. It is the entrepreneurial decision that creates either profit or loss. It is mental acts, the mind of the entrepreneur, from which profits ultimately originate. Profit is a product of the mind, of success in anticipating the future state of the market. It is a spiritual and intellectual phenomenon.

The absurdity of condemning any profits as excessive can easily be shown. An enterprise with a capital of the amount c produced a definite quantity of p which it sold at prices that brought a surplus of proceeds over costs of s and consequently a profit of n per cent. If the entrepreneur had been less capable, he would have needed a capital of 2c for the production of the same quantity of p. For the sake of argument we may even neglect the fact that this would have necessarily increased costs of production as it would have doubled the interest on the capital employed, and we may assume that s would have remained unchanged. But at any rate s would have been confronted with 2c instead of c and thus the profit would have been only n/2 per cent of the capital employed. The “excessive” profit would have been reduced to a “fair” level. Why? Because the entrepreneur was less efficient and because his lack of efficiency deprived his fellow-men of all the advantages they could have got if an amount c of capital goods had been left available for the production of other merchandise.

In branding profits as excessive and penalizing the efficient entrepreneurs by discriminatory taxation, people are injuring themselves. Taxing profits is tantamount to taxing success in best serving the public. The only goal of all production activities is to employ the factors of production in such a way that they render the highest possible output. The smaller the input required for the production of an article becomes, the more of the scarce factors of production is left for the production of other articles. But the better an entrepreneur succeeds in this regard, the more is he vilified and the more is he soaked by taxation. Increasing costs per unit of output, that is, waste, is praised as a virtue.

The most amazing manifestation of this complete failure to grasp the task of production and the nature and functions of profit and loss is shown in the popular superstition that profit is an addendum to the costs of production, the height of which depends uniquely on the discretion of the seller. It is this belief that guides governments in controlling prices. It is the same belief that has prompted many governments to make arrangements with their contractors according to which the price to be paid for an article delivered is to equal costs of production expended by the seller increased by a definite percentage. The effect was that the purveyor got a surplus the higher, the less he succeeded in avoiding superfluous costs. Contracts of this type enhanced considerably the sums the United States had to expend in the two world wars. But the bureaucrats, first of all the professors of economics who served in the various war agencies, boasted of their clever handling of the matter.

All people, entrepreneurs as well as non-entrepreneurs, look askance upon any profits earned by other people. Envy is a common weakness of men. People are loath to acknowledge the fact that they themselves could have earned profits if they had displayed the same foresight and judgment the successful businessman did. Their resentment is the more violent the more they are subconsciously aware of this fact.

There would not be any profits but for the eagerness of the public to acquire the merchandise offered for sale by the successful entrepreneur. But the same people who scramble for these articles vilify the businessman and call his profit ill got.

The semantic expression of this enviousness is the distinction between earned and unearned income. It permeates the textbooks, the language of the laws and administrative procedure. Thus, for instance, the official Form 201 for the New York state income tax return calls “earnings” only the compensation received by employees and, by implication, all other income, also that resulting from the exercise of a profession, unearned income. Such is the terminology of a state whose governor is a Republican and whose state assembly has a Republican majority.

Public opinion condones profits only as far as they do not exceed the salary paid to an employee. All surplus is rejected as unfair. The objective of taxation is, under the ability-to-pay principle, to confiscate this surplus.

Now one of the main functions of profits is to shift the control of capital to those who know how to employ it in the best possible way for the satisfaction of the public. The more profits a man earns, the greater his wealth consequently becomes, the more influential does he become in the conduct of business affairs. Profit and loss are the instruments by means of which the consumers pass the direction of production activities into the hands of those who are best fit to serve them. Whatever is undertaken to curtail or to confiscate profits impairs this function. The result of such measures is to loosen the grip the consumers hold over the course of production. The economic machine becomes, from the point of view of the people, less efficient and less responsive.

The jealousy of the common man looks upon the profits of the entrepreneurs as if they were totally used for consumption. A part of them is, of course, consumed. But only those entrepreneurs attain wealth and influence in the realm of business who consume merely a fraction of their proceeds and plough back the much greater part into their enterprises. What makes small business develop into big business is not spending, but saving and capital accumulation.