On Sunday I took my family out for lunch at a restaurant on the Navajo Reservation near our home in Arizona. Afterwards, we drove to an “informal” location where you can see dinosaur footprints in the sandstone. The Navajo residents nearby have set up awnings and sell jewelry. As a kid, this was always one of my favorite stops. No paved parking, no visitor center, no drinking fountain, just a windswept plain in the high desert. This time, the local entrepreneurs had ratcheted up their operation. Someone stepped out as we drove up and offered to take us on a tour. I had always suspected there were more than footprints here, that one could find dinosaur bones if you knew what to look for. As she led us further away from the parking area, the site came alive with weather-beaten bones and eggs turned to grey sandstone—a different color than the usual tan shade of other fossils I have viewed. I had been stumbling across these bones my whole life focused on the footprints. I just needed a tour guide to point out the rest of what was right in front of my nose. How could I have been so blind for so many years?
The last time I looked at those footprints was in about 2007. If you had asked me back then some simple questions about the Federal Reserve System, I was equally blind and would have bumbled through some uninformed explanation trying to make you think I understood economics. I would have said that the Fed was that benign branch of the government that prints our paper money and sets the prime interest rate for banks to borrow so they can lend to us. I would have insisted that inflation occurs because the economy is complicated and you have unions and suppliers continually pressuring industry for higher wages and higher prices for raw materials.
To be honest, I really didn’t have a clue. But I would have balked if you suggested that the Fed wants inflation, that the Fed was NOT part of the US Government. So how did I get from There to where I am Today? Which tour guide opened my eyes? Can we learn anything useful about that journey that will help us enlighten our friends and relatives?For the next few weeks, I hope to submit a series of articles on practical persuasion, and hopefully hear in the coming months that your friends and relatives are moving from there to here, taking steps to prepare for our new economy.
Today, I hold that the Fed was created by sociopathic, greedy, power-hungry people who want to control this nation and steal its wealth. Just last night I was thinking about the Fed, about how they promised to cut back on the Quantitative Easing and get our economy back to normal, and how what they really did was just give money to a mystery buyer in Belgium to keep up the QE Bond purchases. The Fed has lied to America and the world. The Fed's policies have destroyed our economy. The Fed creates inflation to steal the wealth of our nation, bit by bit. Worst of all, the Fed is not part of the American Government.
But I could not have concluded this in 2007. Why? Because of human nature: cognitive dissonance, normalcy bias, a conservative impulse to resist change, or any number of social-psychological theories that do a darned good job of explaining why I do what I do. But the problem is not in understanding why, but in learning what we can do to help others to get from there to here.
Persuasion begins and ends with your credibility. Aristotle (my fine avatar on the right with his teacher,. Plato) taught that your “character,” is the “controlling factor” in your ability to influence others. Your character is made up of several factors that all work together (or against) one another in the persuasive process.
First is your reputation—all your failures, successes, sins, blunders, brilliance—in fact, everything from your past. People, especially friends and family know you. They must see you as a reasonable person who does not act on impulse or fall for hair-brained schemes.
Your arguments comprise the second portion of your character. People who listen to your (or read your stuff) are evaluating your arguments, and evidence. Are you using “accepted” argument formulas, or using fallacious arguments? Is your evidence outlandish, believable? Take care not to present arguments with shaky evidence that cannot be verified, or is not common knowledge.
The third aspect of character is the way you speak and write. What people are looking for is called “naturalness.” This one is hard to nail down in the same way as the quality of arguments and evidence. At the core, naturalness is forfeited by a “scripted” presentation, like a salesperson following a memorized flowchart, or a motivational speaker telling tried and true stories. Naturalness comes from the heart, not the head. Your passion is involved to the degree that you believe what you are saying or writing. It’s why we love to read “rants” of members here who are fed up with something. It’s why we love to hear a speechmaker lose their composure, just a bit, giving a wedding speech. We see the veneer of social respectability giving way to the heart underneath. And when you hear some slick salesman, Like our good friend Porter Stansbury, you can just tell that something isn’t natural. The words are too scripted, the voice too polished. Beware.
But I don’t believe that “naturalness” is the problem for most of us as we attempt to teach our friends & relatives. Frankly, I believe our biggest challenge in helping others see the poor condition of the economy due to Fed policy, to wake up, and to take steps toward self-sufficiency is that we have been wrong thus far. We have been wrong about the timing of the collapse, and wrong about “metals to the moon.” Our reputation has been damaged.
We have been hollering to anyone who will listen about black swans, bail-ins, liquidity crises that will freeze the banks, bank runs, market collapse, paper wealth to zero, hyperinflation and new currencies. I have withdrawn my funds twice after hearing about bank closings in America. So far, we have been wrong, and we look like idiots.
What makes our reputation look even worse are the charlatans out there calling for $600 silver—the pump & dump hawkers. This leads to bloggers saying we are part of a cult. They have just enough evidence with one or two arguments to make a “superficial case” while preaching to the choir of disillusioned metals investors.
I hang around this blog, I have committed time writing up these posts, because I am convinced, convinced by several strong arguments and a mountain of evidence, that this paper system will collapse … soon. I do not want to be ruined financially, so I continue to invest 95% of my meager increase in a diverse portfolio of commodities, rather than ETFs and other paper instruments. I keep a modest pantry filled, just in case; I stock up on other items that may be needed, just in case; and I am working on building a more remote farm/cabin to live in, just in case. I am also attempting to re-habilitate my reputation with friends and relatives with conservative advice that points the right direction to the degree that they can accept it.
Retreat and regroup
So, how do we repair our reputation? First, we admit we have been wrong and over-reacted. Now, buying $30 silver in early 2011 and encouraging our friends to do the same was not an overreaction. We were wrong on the timing. Mistakes were made in not hedging positions with out-of-the-money option contracts as the spike occurred. I bet many good traders here did not make that mistake and profited nicely in the big silver smackdown.
So admit we were wrong (even though we dodged a bullet, economically), eat your hat, let your friends and relatives gloat a bit. You have to repair your reputation here. It may also involve saying “I’m sorry” if you panicked a friend into selling their paper and buying silver. (For the record, the several friends I persuaded to buy back then are still holding for the same reasons I am). My sense in talking with these friends and relatives today is that they are more concerned for the future than they were in 2008, even though the economy has not derailed. They sense the problems and see the gulf between what is happening in their local economies and with what Washington says is the state of the union.
While your character must be solid in the three ways I describe above, the rationale motivating a decision must be logical and warranted by solid evidence. Also, a good persuasive presentation takes what is far away and brings it near—whether it is presented as a fearful situation or an opportunity that engages ones dreams and desires for the future. But as we bring that far-off situation near to our friends, we must stay on reasonable, solid ground that won’t crack beneath our feet and leave us in the position of Wile E. Coyote here. Metals to the moon, FEMA camps, widespread rioting & looting are all possibilities, but they are not possibilities that most people are ready to consider. If you discuss these much, people will tune you out.
Stay on solid ground. Argue for physical metal ownership on grounds that your friends can accept—grounds like an underpriced asset, metals cheaper than the cost of mining, an insurance policy for the future, insufficient metal to fill contractual claims. Avoid arguments of "silver to 600," "total economic collapse," "mad max world." While this all may come to pass, people just cannot go there … yet.
To help people see the real state of the economy, I suggest discussing that the Fed and other CBs want inflation, pointing out the real inflation rate they see every week in the store. Show people that the CBs are privately owned, yet run our governments and implement policies that produce bubbles and inflation. These are easy positions to support without looking like a whacko.
We have the logical arguments and evidence in support of the wisdom of long-term metal ownership to tip the persuasion scale! If we want to encourage anyone to begin setting themselves up for the new economy, we have to found our efforts on reasonable arguments, solid evidence, delivered at a “speed” that someone can process. Too much too soon typically backfires and will damage your reputation.
For me it was recognizing that the Fed was not who they claimed to be; the chain of logic began with understanding the Fed. The rest fell into place. If you can convince someone that the Fed is working in the interests of others, then a cascading chain of logic will lead a person to be skeptical about many more things at a pace they can accept, eventually opening their eyes, and reaching the same conclusions most of us have. But today, I cannot tell people that he Fed works on behalf of nefarious, greedy sociopaths to enslave people with debt.
What I wish help with from all of you is boiling down why the Fed wants inflation, and why they will lose control of inflation. I want to boil these reasons and evidence into easily understood talking points that I can memorize and explain to neophytes in the five minutes they are willing to discuss the topic.
Many of you readers have a firm grasp on these issues surrounding the Fed and can be Plato to those of us who get it, but cannot quite articulate it. I needed a guide to point out the bones last weekend. And I need to learn a bit more about how the Fed works so I can be that guide to help my friends open their eyes to what is happening out there.