Investing under Bullies and Rare Earths

Here at Puritanical Libertarianism we reflect often on the conditions in which we find ourselves. Namely, we live under a regime that requires the acceptance of services (Defense, Dispute Arbitration/Courts, Social Security), determines the price for those services (taxation, regulation, licensure), and finally, the icing on the cake, the price structure is progressive (progressive is a sweet sounding word for arbitrarily picking who pays what price and who gets what quality of service according to what characteristics).

Examples of progressive policy: Social Security is progressive. Those who pay more get less, and those who pay less get, proportionally, more. The same is true with defense services. It is not always the case though. Occasionally the progressivity works in the opposite direction: the children of the lower-class attend university much less often, and so the taxes they pay that go toward subsidizing state university education are transferred to the upper-class families. In addition, inflationary fraud generated by the federal government benefits the wealthy upper-class disproportionately while the lower-class bears much more burden than benefit. Onward.

How to invest in such conditions? It is not easy. Far more of the value of production and trade is dependent on the arbitrary decisions of states than ever before. Take, as example, the meteoric rise in health care costs. This would not have been possible but for the lax policy of the post-Great Society Johnson initiatives in which private health care providers were permitted to charge “reasonable” prices for Medicare and Medicaid services.

If one is watching the stock market these days one cannot help but watch the value of the dollar and its impact on the broader market. Ultimately the value of the dollar rests with the Treasury and the “independent” Federal Reserve. Policy decisions by bureaucrats (people without ownership incentive to choose responsibly and carefully), government subsidy through legislation (again no ownership incentive), and the introduction of all manner of restriction, licensure, regulation (again no ownership incentive) make investing treacherous (but not impossible).

Not impossible? No. What the investor has to do is think about where bullies might compete for goods. The increase in demand will lead to increases in the value of goods.

Take as an example, the one bully China controls roughly 85-90% of rare earth refining on planet earth. Part of the past several decades of dominance have been the result of government subsidy. The Chinese government can force its citizens to subsidize the mining and refining of rare earths, can reduce costs there by imposing them elsewhere. This has been quite an advantage for the Chinese market.

In recent years the bully USA has grown frightened by the dominance of the bully China. Rare earths are important in many industries but in particular the military industrial complex. The military industrial complex is subsidized by the American citizen. There the US bully forces its citizens to subsidize the production of defense goods at whatever quality and cost it arbitrarily determines.

Enter the “Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022”. It follows teh “Reclaiming American Rare Earths (RARE) Act” of 2020. The former has bipartisan support which means that the factions of the US bully known as Republicans and Democrats are trying to stand in league to push this legislation through. What would the legislation require? It would require the federal government to ONLY purchase rare earths that are mined and refined (or whatever wins out) in the US. What would the results be? A meteoric rise in the value of the nascent REE sector in the USA! REEMF, UURAF, TMRC, AREC, UUUU and many others are on the cusp of various start-ups to restart the most difficult part of the process of production: refinement.

Can a Puritanical Libertarian, one concerned with membership in the church of good will, invest in this way? Put another way, can one living under state oppression take advantage of locating where the state is interested in increasing demand, and place a pittance of his own private property in the area in which the state is demanding by force? There is nothing that the Puritanical Libertarian does that breaks his own promises to others or harms the property of others (in fact he may hope to see the return of a bit of his property). In addition, the investment, could be, and I emphasize could be, seen as an extension of prudence (phronesis, good judgment). Time will tell.

Remember, investing is not trading. The Puritanical Libertarian is not a trader. The Puritanical offers no investing advice either. This is simply an example of an effort to invest in a climate of bullies. Best wishes.

Published by Purilib

Anonymously interested in grasping the good life.

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