To learn, or to unlearn, that is the question

“It ain’t what you know that gets you into trouble. It’s what you know for sure that just ain’t so.” —Mark Twain

When I went to visit my grandma as a young teenager, I remember showing off what I thought were my amazing superwoman skills. If you think I do this a lot now, you should have seen me back then! I was walking on a bar like a tightrope about six feet high. I thought I had mastered the technique, but a loud noise startled me. Before I knew it, one foot slipped right, and the other slipped left, and I landed smack on my you-know-what! OMG! I had never felt so much pain, and it lasted for a very long time. Black and blue, for months! I never ever walked on a bar like that again. A hard lesson to learn.

Mark Twain was right. If there’s one secret to staying out of trouble, it’s recognizing that what we know might not be so. When we think we understand something, but have missed one or more miscellaneous factors in our analysis, we get ourselves into trouble. We also get into trouble when we dismiss others who think differently than us, rather than giving them the benefit of the doubt and probing further. And when something changes that we didn’t anticipate, like being startled by a loud noise, we can end up with a big ouchy you know where.

Things just happen. I never thought the cost of oil could go negative, but it did during the Covid crash. I didn’t see Roaring Kitty coming a few years ago, and I didn’t see him coming back last week. I never anticipated an evil real-life Batman and Robin in the form Klaus Schwab and Yuval Noah Harari from the World Economic Forum. Watch out, Harari, we are not “hackable animals” in the way that you think. I strongly suspect that Harari has missed some critical miscellaneous factors in his analysis. I never dreamt of stonks or “crypto” (from the word crypt, a burial place…WTF? ). I had no idea how stocks could burn me until I got burnt and learned.

Like explosion and implosion, learning and unlearning works in similar fashion. We bloat up with confidence and ego, like Narcissus (mythology), during the good times, and this drives us into a false sense of ourselves that is fragile and easily broken when bad times return. Being broken then drives us into post-traumatic stress or overconfidence in certain people or things that we think can save us. Healthy human beings see themselves on par, but uniquely different from everyone else. They have an attitude about themselves that allows them to learn and unlearn with ease.

Unless you realize the fallacies of your own mind, you will not open the doors to explore other people’s minds. It’s like Plato’s Allegory of the Cave from Republic (514a–520a, Book VII). Prisoners are chained up in a cave. There’s a fire behind them, and they are facing a blank wall. Shadows of themselves and other objects are projected onto the wall, from the light of the fire behind them. The prisoners cannot see the fire, only the wall, and this is their reality. They have no idea what is outside of the cave. Only a prisoner who is freed from the cave comes to understand.

We are the prisoners. The industrial revolution is the cave. The fire behind us is a storm of abundance that was created by a combination of debt, fossil fuels, and technological inventions. It ignited massive progress and a population boom creating a sense of permanent prosperity and progress inside the cave. Outside the cave is the future. It’s where the prisoners will go when the fire inside the cave burns out (cheap energy), and they are sitting in the dark. Their Shadowland is gone! It just vanished into thin air. Going outside the cave will be quite different and will require a great deal of unlearning and relearning. There is no more easy credit and cheap energy, no more light in the cave to create an alternate reality.

Today’s colleges and universities educate you to live in the cave of Shadowland, the alternate reality created by a limited supply of credit and energy. They teach you a whole bunch of useful and not-so-useful things to thrive in a reality of shadows. Both my sons got some pretty awesome scholarships to study engineering at a small private college. Had they not gotten scholarships, I would have done a cost-benefit analysis with them to see if a skilled trade were a better investment. After all, college is an investment. Paying $200K and spending four years to become an expert analyst on the complex interaction of gender with other identity markers will surely not be monetizable outside the cave.

Unless you’re rich and time is no matter, you should get real value out of your college investment in terms of skill that a post-techno-industrial society will need. It could be five years away, or ten, before many people notice the changes, but we have already reached the peak and are on the other side. I didn’t have to think about this when I went to college. I got to work in Shadowland for decades, doing what I love. But will the future be more of the same for my kids and grandkids? I think not. Fact is, most parents don’t send their kids to college to become wise, or to become skilled at learning and unlearning, and thinking. College is the “gatekeeper” to many job sectors in techno-industrial society.

What is money outside the cave? What skills will be needed? What stocks will go up? What will happen to bonds? How will the world cope with very expensive limited energy? I don’t have all the answers, but I do know that we will have to unlearn many teachings of the Industrial Revolution and relearn the teachings from Nature. We have gotten too far away from nature. Learning, unlearning, and relearning is, in fact, a cycle that goes along with the major cyclical societal changes we are seeing today. The herds are clinging to old narratives (like Roaring Kitty’s GameStop and Tesla), but they are in for a huge switcheroo, like deer in the headlights.

In Tesla is to automakers as America is to the world (2020), I explained that this company never made money selling cars. It made money selling regulatory credits (which come free from the government) to other automakers. I wrote…

I’m the Forrest Gump of finance, but according to other smart and credible accounting experts, Tesla’s gain from selling regulatory credits exceeded the net, pretax and operating income, AND free cash flow for Q2. For this reason, the media has gone bananas proclaiming Tesla as ‘the most valuable car company in the world’… Am I missing something here? Or has everyone gone mad?

Fact is, Tesla is slashing prices everywhere to create demand and they only produce half of one percent of cars. More production is better, not because Tesla can make a business out of selling cars, but because Tesla can make a business out of selling “regulatory credits” BKA free stimulus money it gets from the government for every car it produces. Of course anyone can sell $1 bills for .75 cents…

It was apparent to me long ago that Tesla wasn’t operating under the natural laws of supply and demand. The government was artificially propping it up with the magic of fiat. Think of tariffs as the weaponization of fiat, while credits are the magic. It made Tesla look like the future, contrary to the natural law of supply and demand. Government interference in the free marketplace is never a good thing, and fiat is government’s ONLY magic weapon. Sooner or later, creating more and more illusions of power and success become critical for the government to stay afloat. I think we’ve been hanging out here for awhile now.

When the government started printing trillions of dollars during the pandemic, the unnatural process of decline accelerated greatly. Fiat was doing amazing things. It gave tremendous value to thin air, to nothing burgers, to companies that should have failed under the natural laws of supply and demand, but didn’t. The current of nature stayed the same, but the counteraction against nature got a lot more forceful. Like Jesus Christ raised Lazarus, fiat raised companies from the dead! Remember when investors drove up the price of bankrupt Hertz? See How Hertz Went From Bankrupt To Buying 100,000 Teslas (Forbes, November 7, 2021). That was another event I never imagined could happen.

Steph Pomboy, founder of Macro Mavens, said in a recent interview that corporate bankruptcies are the largest since 2012 and the top 100 companies in the S&P 500 now account for 75% of earnings growth. Finally, with massive layoffs, price cuts, and new tariffs this year on Chinese built EVs and batteries, it looks like Tesla may be on the verge of bankruptcy, and investors still haven’t gotten the message. But if there’s one thing I’ve learned about markets, it’s that crowds can stay mad for a long time, and cults are resilient. But sentiment can change overnight, and if you’re climbing a beanstalk to the clouds when a hurricane hits, you’re probably gonna get killed.

And if you made it this far, and you’re wondering how I’m doing with that weird kikuchi disease—I still have the swollen lymph nodes, and I’m seeing a hematologist now. Regarding my portfolio composed of mostly gold and silver miners, it’s looking positive. I’m still way down from the many catastrophes of the past, but this year seems different, somehow. Maybe, just maybe, this is it!

 

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