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Musings Report 2025-7 2-15-25 What's Valuable Now May Become Valueless--and Vice Versa
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What's Valuable Now May Become Valueless--and Vice Versa
If extremes exhaust themselves and revert to the mean, if cyclical highs slide to cyclical lows, and if the pendulums of human emotions and certainties swing slowly from one extreme to the other, then what's considered valuable now will become valueless and what's considered of low value now will become valuable.
In summary: The way of the Tao is reversal.
What's considered valuable now? Financial assets and the casino of trading them. This mania began 30 years ago, in the first Tech Bubble of the late 1990s, when online trading platforms (eTrade, et al.) enabled everyone to trade securities for minimal fees without having to call a broker to handle the trade, and stories of admin assistants becoming instant millionaires when their tech employer went public (IPO--initial public offering) circulated.
A friend who worked at Oracle at that time related that employees were trading stocks in their mid-day break, making a few quick trades to pay for lunch.
This mania has now reached extremes as it has become mainstream: options, once a security traded mostly by professionals as hedges, are now the financial trade of choice as they offer the greatest leverage and risk/return. This chart of popular smartphone-trading platform Robinhood (take from the rich and give to the poor via trading securities) shows the dominance of trading options as the means to "beat the house" in the trading casino. (Options expire, so it's easy to lose the entire bet.)
The opportunity arose in the aftermath of the 2008 Global Financial Meltdown to rein in the speculative mania, but authorities chose to double-down on making speculative trading of financial assets the most compelling way to make a fortune and escape the increasingly arduous treadmill of the workaday world.
Now 15 years later, this speculative mania is no longer a mania, it is simply everyday life: it is no longer recognized as an extreme of speculation and certainty that will revert to the opposite end of the spectrum.
What is the certainty? Simply this: there's a Bull Market somewhere. The trick is to hopscotch from one Bull Market to the next, and continue doing so until the end of one's life, because why stop making money so easily?
That this is not certain is not recognized, as the past 30 years have proven that there's always a Bull Market somewhere. Just move to another table in the casino.
What makes something valuable? We have several stock answers. Demand makes something valuable: something increases in value if people want it. Scarcity: it's rare, so it increases in value. So people want to live in a nice neighborhood, the number of houses in the neighborhood is limited, so the value of the house rises 10-fold over a generation.
Money in all its forms is intrinsically valuable, as we can use it to buy assets, goods and services. Money is also a tradable commodity, so another way to get rich is to trade currencies and various forms of money: gold, bitcoin, etc.
All this is self-evident. Or so we think. But we're thinking of money and value in the casino, which is now the entire world. Or so we think. But there is a world outside the casino where value is measured in ways that cannot be reduced to a price tag or profit from a trade.
In a recent podcast with LeafBox (on Substack), Robert asked me to explain my recent experiments with reducing our electricity consumption. Interview: Charles Hugh Smith - Spring 2025.
The idea was simple: how much could we reduce our consumption of electricity with behavioral changes and a relatively modest 1500 watt battery / 400 watt solar array?
The goal was to reduce our consumption without reducing any of the comforts and conveniences afforded by electricity: no sacrifices were made, we retained every comfort and convenience.
The essence of the scientific method is to isolate the variable you wish to study, design an experiment, collect data, and then observe what changed or didn't change. Then run another experiment. The process is incremental.
The variables here were 1) how much electricity could we generate and store and 2) how much could we reduce consumption by making behavioral changes?
Our main behavioral adjustments were 1) avoid wasting electricity and 2) turn the electric water heater off after an hour. Since we lived on water catchment for a time, we keep showers short and don't waste water, and since modern water heaters are well-insulated, the water stays hot enough for all uses the next day.
(We consume 1,500 gallons per month, 300 gallons of which are used on our vegetable gardens. The average household in the state uses 9,000 gallons per month, and about half the households use under 6,000 gallons per month. So we consume between 25% and 17% of the average household.)
We reduced our consumption of utility-provided electricity by 20%. We now consume about 4.5 kilowatts a day, compared to the state average of 16.3 KW a day, so we use about 28% of the average household. In addition to the electric water heater, we also use high-consumption power tools (13 amp Skilsaw, heat-gun, etc.) We generate and consume about an additional 10% of this consumption with our modest solar array.
What's valuable here? Let's start with comfort and convenience, which we "price" by the cost of the electricity and appliances. But comfort and convenience don't distill down to the price, as we would pay a lot more for some and abandon others if the cost soared.
Internet service is now an essential utility just like water and electricity, and so I rigged our modest solar generator to power our electronics: laptops, modem/router, printer, etc. These are now off-grid.
The idea here is to experiment with how large my own private utility must be to run the Internet, lighting and a refrigerator if the grid goes down in a major weather event.
The experiment's purpose is to right-size my own utilities to the minimum required to maintain all the comforts and conveniences of modern life. Maybe a costly rooftop solar array and big battery aren't necessary.
It's worth noting that many solar-rooftop arrays serve the local utility; the homeowner has no way to tap the electricity being generated by their own PV panels.
This raises another question: in terms of use-value, what do you actually own and control 100%? What's the value of things you nominally own but that are dependent on / controlled by others?
What's the value of owning one's own modest electrical utility? We can state this another way: what's the value of a kilowatt? When the utility is providing the power, the cost is very low in much of the nation: 11 cents, 15 cents, 20 cents. But how much would you be willing to pay for a kilowatt after two days without electricity? How about after five days?
Demand and scarcity: when the water and electricity are no longer flowing, we still need them but they're now unavailable.
You see the point: the value of things can change very dramatically and is not as predictable as we assume. It's impossible to "price" the use-value of things we need prior to an event that dramatically changes demand and/or scarcity.
Food is something else we assume will always be abundant and if not cheap, far cheaper than in many places around the world, where households spend 40% or more of the family income on food.
What's the value of growing some of your own food? When the supermarket shelves are full and prices stable, we turn up our noses at those gardening and tending home orchards. Why bother doing all that work when the "value" measured in money of the produce is so modest? Why spend an hour gardening to grow $5 worth of vegetables when you could have made $25 working and bought five times the amount of produce you grew?
This perspective assumes value can be equated with price. But growing food is a good example of how this equivalence is misleading. We know nothing about the nutritional content of the food we buy at the grocery store. Even buying organic produce tells us nothing about the soil or trace nutrients; organic simply means no pesticides or herbicides or chemical fertilizers were applied. This doesn't automatically equate to nutrient-rich soil or nutrient-dense produce.
The long-term decline in the nutritional content of food has been quantified, and we're told the "solution" is to "take a supplement." But studies have also found supplements don't replace real food. Many studies have found supplements have little to no value in terms of increasing our uptake of trace minerals, as this process isn't like a machine: taking a pill doesn't mean our bodies will absorb the minerals the way a computer transfers files. It's far more complicated than the mechanistic model we apply to virtually everything.
So what's the value of knowing what's in your soil and thus in your food? What's the value of connecting to the earth and the joys of harvesting what you've grown?
There is no "price" that can be assigned to these qualities. To even attempt to do so reveals the absurdity of how we reckon value in financial terms.
Let's say you grew more food than you can possibly consume, so you share it with family, friends and neighbors. What's the value proposition here? I'm often told, "why don't you sell your harvest at the farmer's market?", as if the "value" must be monetary or there is no value at all, as if sharing and the exchange of value has no value.
We live in such a cynically financialized era that we assume integrity has a price tag, too. We say, everyone has a price, meaning that there's always a financial price point at which a person will prostitute themselves. The possibility than one's integrity has no price tag and it's the $10 million offered to purchase integrity that has no value doesn't compute. Who would pass up $10 million? The answer depends on what's valuable.
Millions of words are composed daily about money, and about how "fixing money will fix all our problems."
As I've explored in my books, particularly Money and Work Unchained, this is a profound misunderstanding of money as a social contract and as a means of exchange.
Let's say I'm paid in dollars, bitcoin or gold on Friday and on Saturday I convert this money into a machine that generates and stores kilowatts of electricity. The value of the money I was paid is no longer of interest, as the unit of my "money" is now kilowatts. If I exchange the money for fertilizer, compost and seeds, then the unit of my "money" is the produce I grow that has real-world utility-value. The produce is now my "money."
How much "money" will it take to trade for a pound of beautiful green beans? That depends on what's valuable. If you're hungry and food is scarce, the green beans are money, just as when the utilities are down a kilowatt or gallon of fresh water are money.
If we step outside the casino, we discern value as utility-value / use-value, and "money" as an abstraction. But "money" can buy everything, we're told, but this isn't actually true. Money can't buy integrity; integrity must be earned. It doesn't have a price tag and cannot be distilled down to a precise financial measure. Neither can the value of owning one's own electrical / water utility, or knowing what's in one's soil and food.
The speculative mania that we consider so valuable now will revert to the other end of the spectrum, and our certainty about "money" and value will also revert. That this seems impossible is just more evidence that we're at an extreme that cannot hold. What's "low value" now may become valuable, and what's considered so valuable now may be revealed as worthless.
What's the optimal way to navigate this transition? Perhaps incremental experimentation regarding value, control, cost and tradeoffs in our daily lives is a worthy point of departure. The New Bull Market might just be in our own lives rather than in the casino.
Highlights of the Blog
Automation Institutionalizes Mediocrity 2/14/25
The One True Test of AI Intelligence 2/12/25
Interview: Charles Hugh Smith - Spring 2025
Best Thing That Happened To Me This Week
My book on self-reliance was just published in Switzerland (in German) by my friend and colleague Christoph P.--thank you, Christoph! The full title is Self-Reliance in the 2st Century: The Good Life after Overabundance.
What's on the Book Shelf
A-Gong's Table: Vegan Recipes from a Taiwanese Home (via Robert P.)
Ultra-Processed People: Why We Can't Stop Eating Food That Isn't Food
"These products are specifically engineered to behave as addictive substances, driving excess consumption. They are now linked to the leading cause of early death globally and the number one cause of environmental destruction. Yet almost all our staple foods are ultra-processed. UPF is our food culture and for many people it is the only available and affordable food."
From Left Field
NOTE TO NEW READERS: This list is not comprised of articles I agree with or that I judge to be correct or of the highest quality. It is representative of the content I find interesting as reflections of the current zeitgeist. The list is intended to be perused with an open, critical, occasionally amused mind.
Many links are behind paywalls. Most paywalled sites allow a few free articles per month if you register. It's the New Normal.
Record Number Of American CEOs Quit: Report -- hmm, do they know something we don't?....
Why Is the American Diet So Deadly? A scientist tried to discredit the theory that ultra-processed foods are killing us. Instead, he overturned his own understanding of obesity. -- long, paywalled, but interesting...
Hidden in Plain Sight-- Great Pyramids of Giza (via Atreya S.) -- long, very interesting, persuasive...
Southeast Asia can perhaps avoid the worst impacts of inadequate oil supply
My Father Was a Conservative Evangelical Pastor. Then I Came Out. (via Richard M.)
Instrument Shopping for Mason Bates' Alternative Energy (2:56 min) -- what better place to find percussion instruments for classical music than a junkyard?....
America’s 'Marriage Material' Shortage (via Richard M.)
Japan will loosen its grip on the country’s fiercely guarded rice stockpile as prices soar to their highest levels ever.
Rice inflation to persist despite harvest, as prices rise over 20% on year.
MIT Study Reveals Why Africa Is Still Poor: Economists from MIT released a study detailing the surprisingly bigger factors in why Africa still struggles to build wealth despite massive amounts of incoming aid and charity work.
The Critical Role of Monounsaturated Fats for Longevity and Disease Prevention.
'He smashed his iPad and headphones. My lyrics got torn up': inside Elton John and Brandi Carlile's explosive duets album -- I like the way she slings a Les Paul guitar...
"When a true genius appears in this world, you may know him by this sign, that the dunces are all in confederacy against him." Jonathan Swift
Thanks for reading--
charles |
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