{"id":1135426,"date":"2023-02-05T10:10:33","date_gmt":"2023-02-05T15:10:33","guid":{"rendered":"https:\/\/bugaluu.com\/news\/charlie-munger-exemplar-of-cantillionaire-privilege\/1135426\/"},"modified":"2023-02-05T10:10:33","modified_gmt":"2023-02-05T15:10:33","slug":"charlie-munger-exemplar-of-cantillionaire-privilege","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/charlie-munger-exemplar-of-cantillionaire-privilege\/1135426\/","title":{"rendered":"Charlie Munger: Exemplar Of Cantillionaire Privilege"},"content":{"rendered":"
\"\"<\/a><\/div>\n

Charlie Munger: Exemplar Of Cantillionaire Privilege<\/span><\/p>\n

\n

Authored by Mark Jeftovic via BombThrower.com,<\/em><\/a><\/p>\n

The Oracle of Omaha\u2019s second banana\u00a0has pronounced judgement on crypto<\/a>.<\/p>\n<\/p>\n

It was even more unhinged than previous attacks (\u201crat poison\u201d), as Munger applauded communist China\u2019s technocratic dictatorship as a sensible ideal we should be following here in the West.<\/p>\n

\n

\u201cthe communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit\u2026What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense:\u00a0Thank the Chinese communist leader for his splendid example of uncommon sense<\/strong>.\u201d<\/em><\/p>\n<\/blockquote>\n

The fact that Munger is able to aggrandize a communist police state that maintains concentration camps, engages in organ harvesting and forced labour with impunity is a testament to his insular position (not to mention the lopsidedness of our political zeitgeist).<\/p>\n

Munger is a Cantillionaire \u2013 after Richard Cantillion who wrote one of the first economic treatise in the eighteenth century describing how proximity to the monetary inputs of a society confer special advantages at the expense of wider populus.<\/p>\n

<\/a><\/p>\n

The Cantillon Effect<\/em><\/p>\n

Munger\u2019s crocodile tears for those who lose out in the economic game of life are ironic, given that Berkshire Hathaway\u2019s mantra (and Westco, Munger\u2019s sidecar conglomerate) for decades has been to buy often distressed businesses that are out of fashion but have a \u201cdurable competitive advantage \u201d or \u201cmoat\u201d.<\/p>\n

Those are euphemisms for monopolies, and both\u00a0Buffet and Munger love owning them.<\/a>\u00a0They don\u2019t seem to care if those monopolies draw rentier like returns on monetizing\u00a0low income housing<\/a>\u00a0or\u00a0opioid addiction<\/a>.<\/p>\n

Munger and Buffet\u2019s dynastic wealth was built on the crest of three structural tailwinds:<\/h2>\n

If there is such thing as \u201cstructural inequality\u201d, it has more to do with the way the monetary system is constructed to benefit people who are already super-wealthy than anything else.\u00a0\u201cFix the money, fix the world\u201d.<\/a><\/p>\n

The first of these pillars below is more of a dynamic than a structure, and one that there\u2019s nothing wrong with, actually.<\/p>\n

But it seemed odd to hear Munger, a man who made his fortune exploiting valuation gaps in publicly traded companies, singing on the virtues of\u00a0 England\u2019s\u00a0\u201cbann[ing of] all public trading in new common stocks and kee[ping] this ban in place for about 100 years.\u201d<\/em>\u00a0.<\/p>\n

That happened back in the 1700\u2019s when Richard Cantillon was figuring out that the monetary system was structurally rigged, even then.<\/p>\n

So while Buffett and Munger\u2019s investing acumen is not in dispute, these three forces acted as the lubricant, if not steroids, for their astonishing returns over the decades:<\/p>\n

1) Value investing<\/strong><\/h3>\n

\u2026is the foundation upon which Buffett (and Munger) built Berkshire. It is buying companies or assets below their perceived intrinsic value.\u00a0 The fact that other investors have lost money on it is a prerequisite, otherwise they wouldn\u2019t be \u201cvalue plays\u201d.\u00a0\u201cAll this wild and wooly capitalism\u201d<\/em>\u00a0 that Munger is ruminating about in his WSJ op-ed is what created the valuation asymmetries that Berkshire Hathaway has exploited ever since the duo took it over, in 1965.<\/p>\n

2)\u00a0 Fiat currency debasement<\/strong><\/h3>\n

The Cantillon Effect makes inflation acutely pernicious, widening wealth inequality as the asset values of the ultra-wealthy get higher, it drives up the cost of living for everybody else.<\/p>\n

Buffett and Munger have been playing inflation like a fiddle for decades. They both\u00a0know\u00a0<\/em>that all fiat currencies are headed for zero, so they gravitate toward \u201cinflation proof\u201d assets with \u201cpricing power\u201d and \u201cmoats\u201d (\u2026because inflation-proofing goes better with monopolies.)<\/p>\n

Then when things run too hot, they can play the populists and urge government to raise taxes on the wealthy (suggesting tax structures which would barely impact themselves, if at all) and chide the central bank to\u00a0\u201creign in inflation, even if it causes a recession\u201d<\/a>. Like nearly all super-wealthy elites, they love to make policy recommendations that impact everybody else, yet put them in a position capitalize on the second-order effects: Recessions cause unemployment, bankruptcies and a plethora of valuation asymmetries where they can reload on durable assets and businesses at discounted prices.<\/p>\n

3) A 40-year decline in cost-of-capital<\/strong><\/h3>\n

At the age of 52, Warren Buffett\u2019s net worth was\u00a00.3%\u00a0<\/em>of what it is today, and the correlation of Munger\u2019s personal wealth to Buffett\u2019s is basically 1.<\/p>\n

That was 1982, which marked the beginning of a bond super-cycle that saw the cost of capital decline to zero by the end of it.<\/p>\n

\"\"<\/a><\/p>\n

Real rates are still negative today, and all of this compounded with the fiat currency debasement that lifted Buffett and Munger\u2019s boats and accentuated their returns for decades.<\/p>\n

\"\"<\/a><\/p>\n

I\u2019m not saying that currency debasement and secularly suppressed cost-of-capital are the sole factors for Berkshire Hathaway\u2019s success.<\/p>\n

But they were indisputably beneficiaries of the fiat system structure over decades. Also during periods of dislocation, like when it was weaponized against the plebes during lockdowns and the Fed\u00a0started buying up Berkshire\u2019s debt<\/a>\u00a0(along with every other billion and trillion dollar juggernaut) while\u00a0lending\u00a0<\/em>rapidly devaluing dollars to small and independent businesses (that is, if they weren\u2019t simply banned from operating).<\/p>\n

Berkshire Hathaway was built atop a system that Bitcoin was created to destroy<\/h2>\n

Many years ago I found myself sitting in a Bay St. conference room at one of Canada\u2019s \u201cBig Four\u201d banks. There was a representative there from three of those Big Four, plus an Entrepreneur-in-Residence from the Business Development Bank of Canada (BDC) who shall remain nameless, and had organized the meeting at the behest of another BDC contact.<\/p>\n

We were there to talk Bitcoin.<\/p>\n

He told me a story. More of a parable. Maybe it was just the facts of life.<\/p>\n

He said, basically this (paraphrasing),<\/p>\n

\n

\u201cwhen a new disruptive technology comes along, you want to be out front with big investment money behind you, you want to engage with government, the banks and policy makers right away, from the start \u2013 and you develop your relationships and your platform, all the while you are engaging with policy makers and the system\u00a0incumbents\u00a0to develop the rules.<\/strong><\/em><\/p>\n<\/blockquote>\n

When the government finally moves on regulating the new space, you are already there and you are on the right side of it, because you helped shape the policies.<\/p>\n

\"\"<\/a><\/p>\n

Then the regulatory hurdles keep getting higher, and you\u2019re always on the right side of it, while all the later entrants are playing catch up or falling behind.<\/strong><\/p>\n

In other words (and I remember this exactly, along the with the big, smug smile he had on his face when he said it):<\/p>\n

\n

“You get to turn around and pull the ladder up behind you!\u201d<\/em><\/strong><\/p>\n<\/blockquote>\n

I left that meeting not sure what had just happened and nothing more ever came of it, at least with me.<\/p>\n

But Bitcoin is more than a disruptive technology. It\u2019s a decentralized counter-attack against a structurally unsustainable and predatory financial system.<\/em><\/strong><\/p>\n

Whenever I hear Buffett, Munger, Jamie Dimon, Larry Fink or any other\u00a0High Priests of the Gerontocracy complaining<\/a>\u00a0about Bitcoin specifically, or crypto-currencies in general, I feel like that\u2019s what I\u2019m listening to: a bunch of super-rich Sith Lords frantically\u00a0 trying to pull up the ladder behind them.<\/p>\n

Because the\u00a0last<\/em>\u00a0thing they want or can fathom, is to wind up back on a level playing field.<\/strong><\/p>\n

*\u00a0 *\u00a0 *<\/p>\n

Follow me\u00a0on Nostr<\/a>\u00a0,\u00a0Gettr<\/a>, or\u00a0Twitter<\/a>. Sign up for\u00a0The Bombthrower mailing list<\/a>\u00a0to get updates straight into your inbox and get a free copy of\u00a0The Crypto Capitalist Manifesto<\/a>\u00a0while you\u2019re at it. <\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 02\/05\/2023 – 14:00<\/span><\/p>\n

From:Zerohedge<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Charlie Munger: Exemplar Of Cantillionaire Privilege Authored by Mark Jeftovic via BombThrower.com, The Oracle of Omaha\u2019s second banana\u00a0has pronounced judgement on crypto. It was even…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1135426","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1135426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1135426"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1135426\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1135426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1135426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1135426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}