Pearl Harbor Caused the Financial Crisis of 2008


Pearl Harbor ruined my life. I’m going to cut right to the chase. When the Japanese invaded Pearl Harbor, provoking our massive WW II response, in a very direct way, it cause the financial crisis of 2008, my divorce, my potential poverty, and most other problems in my life.

Yeah, yeah, yeah, and so did Lincoln’s assassination, right? No, I didn’t say that. Don’t put words in my mouth. In fact, originally I was going to say women caused the financial crisis but it’s not their fault and it’s a bit more accurate to say Pearl Harbor did. We are going for accuracy here. And through accuracy we will eliminate all of the BS, find the truth of what is happening to our financial system, and much more importantly, what is happening to us as a society, as a family, as individuals, and where we are heading. Without truth lies despair.

(love was in the air that day)

And why should we? For the past three years I’ve been reading non-stop nonsense about what caused the financial crisis. And even though the events are now three years old and its thoroughly boring to read about collateralized debt mortgages over and over again, the events of that foul period have reared their ugly heads again in the anger made manifest by the “Occupy” movements.  And then another flurry of articles (and that’s what they are – a flurry –  the first taste of snow in a new season of blame, anger,finger-pointing, she said-he said, we’re broke, they’re rich, world is over, contagion, storms that are hitting both coasts and will begin to move inwards.)

So let’s just quickly decide what didn’t cause the financial crisis: Bush and Obama were too clueless. They messed up the bailouts  but whatever. Andrew Cuomo when he was Secretary of HUD under Clinton certainly contributed by lowering the lending standards of Fannie Mae so more people could buy a house. But lets not blame the sick and the ill: he had the best intentions, little knowing that allowing more people to get into massive debt is not necessarily a good solution to anything.

Greenspan kept interest rates artificially low for a long time, allowing the lending splurge to continue, but he did not  really know what he was doing. He was afraid  of the Internet  bust, of 9/11, of Enron, of Bush, of congress, of his reputation falling to pieces, of his sycophantic lust for Ayn Rand. Psychotherapists are now handling him in the asylum so it’s a sad situation and we should let the mentally ill alone.

(the arrival of the double-income family.)

What we really want to get at is not the finger-pointing. It does me no good to blame you, her, him, them. I only care what’s going to happen for ME and my family NEXT. And here it is. I will be as straight as possible, Disagree in the comments but here’s the real historical and psychological roots of what happened and NOBODY has gotten to the heart of the matter until this very post:

Pearl Harbor was invaded.

–          Men went to war. All of the men. Except for me. I wasn’t born but if I was I certainly would not have gone. But that’s another story.

–          With all the men at war, women went to work.

–          Suddenly the war was over (only several million civilians had to die from nuclear radiation or massive city-wide bombing) and the men came back.

–          Along with the men, there was a new family that arrived on the block and try as we might we can’t kick them out: the Jones Family.

Oh those Jonseses. What a bunch of braggarts. They have everything we don’t have. And starting after World War II, they had two incomes.

The wife had gone  to work in World War II and tasted the first sip of that syrupy but addictive monetary freedom and WILL NOT go back. So Mrs. Jones is hard at work so they can afford an extra station wagon, a pool, a watch, a television set (for  those notborn then, that means “a TV”), a phone, two radios, a vacation, an HP calculator, and so on.

(Where's Ashton Jones?)

–          And good for the Jones family! No more War! No more Depression! Let’s put t all behind us. We’re going to buy things now. Buy, BuY, BUY! There’s nothing we can’t buy in a no-inflation, two income world.

–          But inflation creeped up. Recession happened. Our spending was cut off. HELP! We need to spend. We NEEDto keep up.  Early 60s malaise. So we had to boost things. Kennedy started cutting taxes so we could have more take-home money. This spurred the stock market again. We had a boom for almost 8 years in the 60s.

Ahhh, now we can spend again. Stocks were going up. Money managers were starting to be superstars.  With all that extra money what should we do? Johnson had an idea – “The Great Society”. Might as well have government join in the fun. Money was not only being spent by the Jones family but by the government. We were going to have one Great Society while we bombed another Great Society (Vietnam) all to hell. No problem, we had the money.

But then of course, inflation creeped in. We needed more money than we had. How were we going to KEEP UP WITH THE JONES FAMILY? So Nixon said, no problem, let’s get off the gold standard and we’ll just GIVE people the money to spend. PHEW! That solved that problem. For a micro-second. And then inflation got  out of control. Which at first sounds good. People had more money to spend. But first Ford, then Carter, got scared about it. Ford even made these nifty little buttons (I own a few in my political items collection started as a kid): Whip Inflation Now.

Why did anyone think a campaign button would whip inflation?

So the Carter /Volker team decided to raise interest rates until everyone lost their jobs, lost their businesses, and spending stopped.

Let me tell you something: YOU CANNOT STOP THE JONES FAMILY from spending. So Carter was fired. In comes Reagan. Taxes cut, interest rates cut, stock market goes up.

Ahhhh, we can spend again. Relief!

And then let’s step on the gas pedal. Some crafty guy, Mike Milken, comes out of Wharton with this new idea about Junk Bonds (the first derivatives bordering on exotic).  Now a trillion or so gets injected into the system via borrowing JUNK money. Beautiful. The Jones family needed a TV in every room, two cars, and Charlie Jones needed a computer in his room. A Macintosh.

But even that wasn’t enough. The junk bond thing was nice but fell apart. Milken went to jail and his prostate went on fire. This is really unpleasant. How can we kick up that spending again?

Oh thank God! The Soviet Union disappeared AND the World Wide Web  was created. No more military spending and suddenly the stock market was booming again despite our irrational exuberance for it. Clinton stepped on the gas pedal when he took off all ecommerce taxes. And Cuomo stepped it up again by lowing lending standards for houses. No problem. It’s good when people spend. We don’t want a 1930s Depresson after all. Do you? The only way the economy grows is when people spend faster than it (they have to spend faster than the economy because some people put money in the bank and that takes the money out of the system.)

(Thank God Al Gore created the Internet)

Phew! We’re ok. And then thanks to a good ol’ fashioned crisis out of Asia plus the blow up of a major hedge fund, Greenspan kept interest rates particularly low. So you can now borrow, buy stuff cheap on the Internet, buy a house if you live in the ghetto, and use any leftover money to buy stocks. BAM!

Uh-oh, but even that wasn’t enough to feed the spending monsters the Jones Family created. Dot-com bust, 9/11, Enron, unemployment ticking us up. Help us Obi-Wan Greenspan! You are our only hope.

So let’s get creative. We’ve used almost every tool in our tool chest. So he kept interest rates low. And mortgages started to get bundled together and sold as AAA bonds to pension funds (why not? In a billion years, people haven’t defaulted according to all the  statistical models, COMPLETELY ignoring that the rules changed in 1997 and there wasn’t enough data yet).

Housing boom! I even got a credit card off of my house. We all did! PART-EEEE!

But it had to end. We couldn’t keep spending. Eventually houses ran out of steam, all the bonds defaulted, the banks went out of business. People stopped spending.

Ok, ok, don’t worry. Tim Geithner, Hank Paulson,  Jamie Dimon,  Lloyd Blankfein – the smartest minds since the Manhattan Project times ten, got together and figured out one last place  where we can get the money so the party could continue:  and it wasn’t stocks, or lower taxes, or junk bonds, or no gold standard, or bundled mortgages, and houses, and internet stocks, and getting rid of monogamy (think about it – how about triple income homes?) – the GOVERNMENT can give us money. Just print it up and hand it out to people on the street. Or themselves. Same thing!

So Bernanke has now printed up about 2.5 trillion. The stock market doubled from a low of S&P 666 (seriously, I’m not going to be a “Left Behind” conspiracy theorist here but that is a little spooky. Did Lloyd Blankfein do that on purpose?). But what’s going on? The bank reserves have gone up by almost an equal amount – they decided to not lend the money after all. And unemployment went up 50%. What the..!?

(how did Damien Thorn know that the S&P would hit a low of 666?)

But consumer spending is still at an all time high? I spoke to a vice-chairman at a top 3 bank a few weeks ago. I was told (not giving up the gender of the person in question) that “the foreclosure problem is so great we can’t even count how many are out there.” That’s just great actually. If the Jones family is unemployed, and stocks are going down, and taxes are too high, and healthcare has gone up three times faster than inflation in the past 40 years then there’s only one place to get the money we need to up our spending – let’s stop paying the mortgage! As millions have done. So now they can buy a motorcycle. I hope they buy helmets also. It’s the law!

Who is left? It’s been 70 years since Pearl Harbor started this long national nightmare of spending just so we can keep a little bit ahead. We’ve tried everything to keep our spending up since. Double incomes, stocks, houses, government, etc. What the hell is next?

To me this is much more important than finger-pointing about 2008. Above I describe what really happened. The roots of it back 70 years. The non-stop fear that we slip back into the Great Depression. And it points to only two obvious answers. The classic route, which allows us to spend more. And a new innovative approach, which will save everything.

(a China export)

The classic route: there is only ONE new source of new dollars we can go to to increase our spending: CHINA. China has two trillion of our dollars. We only have about $80 billion in the US treasury. So China has  to give our consumers money somehow so they can spend. And believe me, they will do this. It’s already too late. We’re the biggest economy by far still and still the most innovative but bit by bit China will start buying everything up and we’ll inflate the prices of the things we sell to them (they can’t avoid this, they have all our money and it’s like a game of musical chairs – they don’t want to be the last ones holding onto it) and we’ll have more and more money to spend…until about 2050. Then we will run out of things to sell to them. Then we need to learn Chinese.

The new approach: Sell everything now before China gets it’s grubby hands on it. The government needs to shut it all down. Every state should sell their highways (they break even on the highways because of poor management.), sell all the schools, the hospitals. Sell the post office which is horribly mismanaged. Shut down the education department (which has spent hundreds of billions and yet higher education costs have gone up 10 times the rate of inflation since the Department of Education was started). Shut down the FDA and let people get the medicine they need at 1/100 the price. Shut down every department (do we even really need a State Department? Are there any treaties we really need to get our grubby hands on?) Obviously Abolish Congress  (if you read the post that links to you’ll see there’s zero reason for Congress) and save billions if not trillions. And once you’ve sold everything (can we even sell Alaska to Canada?) we can shut down the Presidency. Job well done.

The result: A country with no debt. A country where everyone has jobs (someone has to work at all the schools and highways and hospitals that have just been sold and are now finally making profits with proper management). We’re right back to 1945. A clean, fresh start. We can let our great grandkids worry about what happens 70 years  from now. Let’s let the spending begin again – gray skies are going to clear up.

Follow me on twitter.


Enjoyed This Post? Get Free Updates

  • Adam

    Bravo James. Excellent post. But I do think the classic route is far more likely to happen than the new approach.

    • jaltucher

      Unfortunately…agreed. Even visiting DC where you see mammoth building after mammoth building all created by bureacracy, there is no way they shut that down.

  • Tad Dunville

    Your writing is great. It’s always worried me that Britain hocked their country to win a vicious war against the Germans, while American hock our country to buy a blue ray. Last year I made a list of all the new awesome things I wanted: phone, watch, speakers, tv, ipad, ipod, on and on… I added up the list, it was about $10k. Minus the phone with the broken “up volume” switch, I realized I didn’t actually *need* any of this stuff, and it really wouldn’t make me happier either. (Ok, I learned to hard-reset the phone which also reset the volume at high, so I didn’t really need a phone either. It was a pain doing that twice/week, though).

    Spending is the devil. It is a total ball and chain, or more realistically, a drug. A totally awesome new toy will suck in six weeks because someone else buys one that takes voice commands. The high is gone in a matter of days now. If you can wean yourself off that buying high, life is a whole lot easier.

    • jaltucher

      Tad, I kind of realized that also. Yesterday. I had been away for almost two weeks and I missed nothing I had at home. The only things I actually needed were 2-3 pairs of pants, somechanges of underwear and undershirts, a sweater or two. And some used (and cheap) books to read.

      Even computers – as long as you know which local hotels provide Internet for free you can be in good shape.

    • Anonymous

      And a great way to wean yourself from shopping is to move. Having moved recently, I am now convinced that packing is some kind of divine punishment for having shopped. ….And that reminds me of an earlier Altucher post on the evils of homeownership. Renting means easier moving…which means more packing…which means you begin to dread having more stuff!

      • John

        And for those of us who hate shopping, what about the other “necessary” stuff we buy without even getting anything concrete in return to sit around and collect dust. Like NFL ticket, MLB package, tickets to games that leave us with nothing but wasted time.

        I think I just found a new sport I can follow for free. “Competitive Shopping”. When someone breaks out the pepper spray and sends 20 people to the hospital just to get an Xbox… now there is some serious sport. I am not sure I have ever seen the “Joneses” go that far. They’ve got to step up their game if they want to keep up with the “pepper spay lady”. We have to find out who she is so I can buy her jersey.  And I can follow it all for no cost on the nightly news.

        • John

          Correction: 20 people were treated at the scene. They didn’t go to the hospital. Guess they went to the locker room.

    • Anonymous

      always, always, always, buy used.  You get an awesome discount from those people who lost that high that you speak of.  Heck you may even get it for free.

  • Andreas Moser

    I came across a very good explanation of the US housing bubble in a novel, actually:

  • Ccfaille

    Yeah, that was one LOUSY movie.

    • Doc Hawkins

      Was referring to the book. Never saw the movie.

  • Doc Hawkins

    Quote from Moe Berg noted in “The Catcher is a Spy”

    “I collect experiences”

  • Matt Busigin

    Only a few million people died?  You mean in just Belarus alone, right?

  • DanStafford

    We need more money?

    How about competing currencies? My initial issuance of 1 billion DanDollars is backed by Gold. You can come to my bank at any time and get Gold for your DanDollars, or you can trust me to keep your gold safe while you work magic competing against all the other fiat currencies whose value over the next few years will be a big fat zero.

    • Mark Wasson

      I’ve thought about this as well. Why tie currency to nationality? If we could break that relationship I think we might get through this mess. I’ll bet there’s about 400 million Europeans that might be interested in divorcing thier currency from politics and politicians….

  • Anonymous

    You do realize that when the usa government stops spending, usa (thus the world too) will skip the delay that Bernanke is trying to create and head straight into the inevitable depression?

  • Anonymous

    This happened in Rome.  In Great Britain.  To repeat is human.

  • db

    A great post until the end.  The Supreme Court was not mentioned?  I love The President and The Congress.  When those go away our Constitution goes away. Then what?  I was at the bank the other day.  I found money in the trash can.  It was three pennies, but still money.  The next day I saw a guy drop coins on the ground, and he was too lazy to bend over and pick it up.  Fine, more for me.  What is next, burning bills for heat?  Sounds like Germany in the 20’s.  And then what is next?

  • dawn

    I’ve finally figured out why I like your writing style so much! It’s your structure. You start with a brief “What this means to me and why I’m writing about it,” then you explain the problem, then offer constructive solutions. I don’t always agree with your solutions, but they always make me think of other potential solutions. You don’t just rant. Plus, you’re often educating me on the problem. Thank you very very much. :)

  • Rainbo

    I really liked this article, but in the past you used to come across as the happy “optimist” – what happened?

    • jaltucher

      My optimism is personal – we will always innovate. I will always innovate. And I will attempt to be happy regardless. Even in the above scenario I do not necessarily paint a pessmistic outcome. But outcomes are in the future and  today we can choose to be as happy as we want.

      • Vernon Dozier

        So true.  Personal freedom and peace is always an option, because that’s really all we have control over — our own minds.

  • 736hundred

    I hope everyone else spends a lot, so I don’t have to. However, I spoke with a clerk at Target today and she said it wasn’t as busy as they expected.

  • Macwild


    Isn’t Europe a pefect example of your thesis?  They’ve spent their way into collapse.  I just hope we can survive the shock on our system and learn from it before it’s too late.

    • Tim

      I get the feeling you don’t understand the current European fiasco. Its the result of mismanagement by select governments. The outcome may be the same (for some of the countries) but the actual cause is very different.

  • Robert Torres

    Another great post,…the next ten years are going to be messy. I’m pretty much tired of answering to some Agency, who have officials, who are not accountable to the electorate,..for everything from my food to my ability to make a living. Years ago, I ran a web design business from my home, and with the stoke of a bureaucratic pen, I wasn’t allowed to. The licensing people just shrugged their shoulders when I complained saying, “Sorry”. Sorry! Sort of like:

    “How can I make bricks without straw?!” The brick maker said

    “Sorry, you don’t have a license for straw.” The official answered.

    • JD

      Perhaps you didn’t have enough facilities and parking for your 6-8 (or more) employees at your home? If your business was just you and 1 or 2 others – how did anyone know you were running a business from home? Did you bring yourself to the attention of the “authorities”? Doctors, lawyers and civil engineers need licenses. Web design?

  • Travis Fields

    I’ll forgive the bad ending (advocating for Anarchy) due to the good beginning (a picture of Kate Beckinsale) and middle (a shotgun explanation of our roller-coaster economic policies).

  • Marc Cuevas

    I’d say it starts in 1913, but the basic Spending Apocalypse Thesis remains the same.

  • Anonymous

    Central Banking causes a lot of these issues. “The cycle” seems to start with fiat currency. Seems to be universal too. That said, can a modern economy run on precious metals based wealth? I Dunno. Greater minds than mine will have to suss that one out.

  • Anonymous

    James never ceases to surprise me.  One day you swear your reading a post from a European socialist, next day its a a NY quasi-capitalist, followed by something bordering Libertarianism and today straight into a Rand hating neo-anarchist. 

    Not even your hardcore Rothbourdian would advocate, essentially, getting rid of the entire government.

    However, I think I get James’s overall point, someone correct me if I’m wrong.  He’s viewing government like a business.  A bsuiness that is asset heavy with a high debt burden does what?  Sells assets, pays down the debt and balances the books so that its not so, over leveraged.

    Do I win a prize?

    • Anonymous

      I think we have to take the profit out of government.  Then only people who really want to do a good job would even be involved.  It would be a job kind of like being your kids baseball coach.  People would be damn glad someone wanted to do it, and everyone else would try and help out as best they could by baking cookies and cleaning the teams uniforms.

  • Matt Wagner

    James, you left out the other option, which is when about a half dozen Southwest and Mountain states, including Texas and SoCal say “We’re done. Fund your own discretionary budget. Seacrest OUT!” I don’t see a war being waged to stop it if it happens. It might not seem thinkable if you life on the East Coast, but if you live in a flyover state and you’re tired of DC sending you their dollars only so that you can send them back to be laundered it seems like an eventuality, assuming that many of the changes you mentioned aren’t undertaken.

  • TJX

    Great article. Although I’ve come to different conclusions than you, I definitely noticed the “cause” of America’s cultural and economic struggles a while ago. Your article is practically indisputable as far as the timeline goes. 

    But a few things that you mentioned do resonate with my alternate conclusion. You say that medical trials would be better off conducted online (and correct me if I’m wrong, but you suggested that the same should apply to voting). I understand that technology is cheap right now, but think about all of the harmful labor that goes in to it – do you really think that all of the metals dug up from hundreds of different holes, the synthetics created from millions of chemical compounds, complex machinery made from more of the same ores and synthetics, and thousands of man hours are really worth the $99 that they charge for a tablet PC? No! In a healthy and just economy such an item would be worth much more. Accessible technology is the ultimate luxury, and only possible because of our fanciful and deluded approach to happiness and, of course, our “rig-it-up-as-we-go” economy. 

    I’m sure you’ve paid a gas or electricity bill recently. Now just imagine if the already partially-monopolized ISP industry became that much of a necessity. Suddenly that freedom stops looking so free. 

    Technology is just a way to make disposable happiness just that much more accessible. 

  • CJWertz

    Why not blame the great depression or maybe even something that came before that?

  • Anonymous

    i just skimmed it, gotta run, but did you add about the military – industrial complex? (can add the police / legal system too….more laws, more money). that would seem to fit pearl harbor as well. in the meantime…..some ramones:

  • Anonymous

    You are right on the target, but I think there are two or three things going on here, and they are much bigger than Pearl Harbor. It started the first time Ooga saw that OooOooOoo had three more women and a bigger leg of mammoth than he had. Materialism is at first, a great survival tool, but then a sickness. Just like the human diet has evolved. Eating a lot of fat and storing it on our bellies used to be the difference between making it through the winter, and now it has become something we do to fill up the time. We eat and don’t even know why. We buy, fall asleep, and wake up and buy again. It’s a sickness.

    Having stuff prolongs survival. Stuff can make life good. Having money can make life good (as you have well seen). But we cannot find a way to avoid going crazy and spending all of it (as you have admittedly well seen). We CANNOT find a way to keep equilibrium. It always turns to materialism for its own sake. It’s a idea that even the ancients figured out quickly. It’s not a new idea: Lao Tzu called it the obsession with the “10,000 things.” He called them straw dogs, fake manifestations of what is real.

    The fact that the evolution of history had finally reached women going to work was just an inevitable piece of the puzze. And remember, if we realize that what is happening right now is actually just a small step in future history, the logical conclusion is: it will continue to accelerate. Since we humans are often under the illusion that life events are static, there are very few people, other than the prophets (and you know what happens to prophets), who are willing or able to deduce the logical obvious: materialism will continue to grow. And that will affect everything, not just economics. It will affect family, personal joy, time, work, society structure, government, environment, etc.

    Love your blog…great dialogue….

    Benji Battle

  • gregorylent


  • JohnH

    And here I thought that the cause of the Financial Crisis was simply due to most Americans not engaged in the Daily Practice. Well James, Brahman of Wall Street, I hope you will tell me that the solution is the Daily Practice.

  • Laurentiuvladu

    HY James!
         I am a 22 year-old guy from east europe , struggling for a while  to learn a bit of programming  and not managing to succeed at it at all. I`m currently study economy at my local university, but this topic(and the way is taught) just bores the crap out of me.The frustration is bigger due to the long list of unsuccessful activities i pursued along the way. It got to the  point i don`t real know what to do with my life,a state very common among people around me.The difference is that i hate to imagine myself not making it in few years time at something i am passionate of.  This thought is just eating me.I had been used to be pretty good at chess in my adolescence and  to compete at a national level,so i  got the “privilege” to taste how is like to love and be competent at something. Despise my chess talent  i blew it along other things that turned disastrously in my life ,top of the stack helping a “buddy” with 4k(all of my money) only to run away with it.
    .     So living with 150 dollars on a monthly basis i try to put some order in my life and learn some technical stuff to free myself financially  and do only what i desire, without any burdens.The problem  is that after spending a lot of time learning the basic concepts of programming i found myself knowing squat and i realized good and top notch programmers started learning their craft way back in their lives,starting at least in highschool, if not earlier when their age was 1 digit number.. So i decided to post here in a bit desperate attempt to decide if  i continue this path at my age or try something else less vast and more suitable for someone to master it his mid-twenties.I mean the pressure of doing something and making a good living out of it haunts me and i would really appreciate a thoroughly reply from a person who used o program for a living. I must specify i see web developing  as a way of gaining some capital and know-how for creating a tech start-up in few years time. Entrepreneurship has been an interest of mine for several years now. Is it a realistic plan? Please wake me up if you consider i should focus on other useful things.I sure don`t have a clue what to do with me.

           Sorry for the long comment!

    • JC

      Hi Laurentiuvladu,

      I’m a fan of James Altucher and have been reading his work for quite a while. I’ve gotten the free ebooks that he wrote (I don’t have a lot of money to buy) and I think his other blogs will help you in your problems in different ways. I’m also in the East (Philippines), and my life is in tatters – no money, broken relationship, lots of pressure from other people, failures in activities, and depression. I’ve recently thought a lot about taking my life, but I’m holding on because I don’t have the guts to do it, and hope is an oppressive thing – it allows me to continue living (thinking of “what if there IS meaning?”) even if life might just be a meaningless piece of BS. I also don’t know what to do and am struggling to find inspiration. I am also in the programming field and trying to start something, a startup, a website, an innovation, but I think I suffer from major depression and I no longer believe there is meaning to life – which also means I find no reason to continue living. I also have a dream to be a writer, I write regularly about reflections, though not as great as James’, and I’m also a varsity chess player like you when I was in school. 

      But his tips are great, do read more of his blogs. The problem though is I’m reading anything that might help but I’m just too tired to pick myself up like he did when his life was also broken, as he writes in one or two of his blogs, by writing ideas daily or doing the daily practice.

      I hope reading more and putting it into practice helps you. I personally think being physically, mentally, emotionally, and spiritually fit will help you think whether programming is a right choice, and also help you to be creative in finding your path. I, though, I don’t know what I’m doing. I’m giving advise yet my life feels… I don’t know. Good luck with yours.


    • JD

      If you like it, stick with it. I taught myself assembly language programming in the 70’s when I was 30. Then I taught myself Unix (actually Linux and BSD) in the late 90’s when I was almost 50. Got an admin job on Solaris (unix-like) with a Fortune 100 company when I was 50. Of course, that was back when there were jobs. Now no one seems interested in someone who is innovative, creative and still self-educating at 64.

  • Caroline

    I’d go back further to 1913 when the Federal Reserve was created.  Lifestyle Larry (or the Joneses) and warmongering would not have happened without it.

  • David

    Our interim president should be Ron Paul however, as he is the guy who wants to try the ‘new approach’ now!

  • TheAcsMan

    I’ve come to believe that the last 150 years in the history of the world has been entirely formed by Lincoln’s decision to defend Fort Sumpter.

    Had Lincoln decided to simply withdraw and set the stage for two seperate nations, the rest of North America would have developed much as Europe did, with a number of smaller country-states and a couple of major players.

    Perhaps today we’d be taling about a potential collapse of the American Union currency, rather than the Euro, which would have never been born out of economic necessity.

    In the meantime, the colosus, that ultimately became the United States of America would never have formed. In fact, the South, fueled by cheap labor, favorable weather and easy access to the ocean and Gulf, easily bests the North in economic growth.

    Then think of all of the ramifications of that failure to coalesce the union.

    Kaiser victorious. No real impetus for Hitler to come to power. Soviet Union dwarfed by a militaristic Germany, etc.. etc…No nuclear race, maybe no atomic energy, at all.

    And yes. The book in its final stages of editing.

    Pearl Harbor? Never would have happened, As Hawaii was a Japanese Territory.

    But somehow, The Altucher Confidential still exists, because human nature and its dealing with extrernal forces is forever.

    • Mark Baker


      The Japanese did not invade Pearl Harbor, they bombed it. Invade is when guys show up and take over things. However, I will blame the Japanese invasion on my horrible investment of Citi in 2007.


      • TheAcsMan

        Don’t think I said that Japanese invaded Pearl Harbor, although from a strict definition, “to enter forcefully as an enemy; go into with hostile intent,” Japan clearly invaded Hawaiian airspace. 

        Now, as far as Citi goes, I think Dick Bove is to blame.

        • Mark Baker

          You are correct, I meant that for the original post. 

    • Daniel Maldonado

      I was thinking that the other day…how things might be different if Lincoln wasn’t such an idiot and if the Union was separated. 

      • TheAcsMan

        Hard to say. Depends on how long you can hold your breath and self-induce a trip down history lane.

        Lincoln may have been an idiot by some measures, or he may have been the saviour of our known universe.

        What is probably true is that Lincoln had no choice but toi act as he did. Remember, we’re still not that far removed from the days that even so called civilized societies chose the most warrior like and fearless person to lead them.

        Do you think Popes were chosen on the basis of piety?

        Lincoln, by virtue of being elected President had to show strength, as compromise is weakness and surrender is far worse. Had Lincoln vacated Fort Sumpter without a whimper the fight likely would instead have been transferred over to the new territories. The emboldened South would nit have easily ceded control to the paper lion President of the North.

        But, wait for the book. I’m thinking of Raymond Massey for the movie.

        • Anonymous

          I have to disagree.  Lincoln went to war that killed upward of 500,000 Americans for something that really didn’t exist in any real sense in the first place.  The south had no intentions because the south was not a signle entity but a group of states that wished to exercise their constitutional rights to self determination.  The southern states were not looking to create a new country as they already considered their individual states as countries and were simply leaving the union which under agreement of the constitution they could.  Lincoln was a tyrant and a fool and soon all those dead will have been in vain because the thing is going to break apart anyway.

          • TheAcsMan

            No argument about the personal tragedy and human toll. But the question to consider is what would have occured in the 150 years after the war that never was.

            Whatever role the US may have platyed in the world, and they key word in US is “United”, but would the effect had been if the US had not been there?

            Whether you agree or disagree with the US acting proactively, reactively or as a strategic deterrant, the fact is that it acted and consequentially had significant impact on history.

            In fact, I think that if the Civil War had not occured, the country-states of the agrarian South would have gone into some kind of unions (or confederacies) if only to have some economic clout against the industrial North. Doubtless that some states would join no such unions, while the territories were up for grabs.

            But a splintered North America would have resulted in a far different world than we have today and in all likelihood a much more repressed world economically and socially.

          • Libertymike

            Go with your first post.  The world would have been a much better place had Lincoln chosen not to be a mass murderer.

            Keep in mind that Great Britian, France, Spain, Portugal, Italy, the Dutch, most of the Latin American countries and RUSSIA all ended slavery WITHOUT A BLOODBATH.

            A splintered North America probably would not have employed atomic weapons nor would it have fire bombed hundreds of thousands of people to death nor would it have been able to so efficiently and ruthlessly complete the genocide of the red man. 

          • TheAcsMan

            Historical fiction is complicated stuff.

            The other nations didn’t have secessionist movements. You should have no doubt that if a portion of the Russian empire had chosen to secede over slavery or servility, the Czars would have been ruthless and merciless.

            As far as a splintered North America not using the atom bomb, that may be actually unlikely. Remember, we didn’t use the bombs in 1945 out of desperation. We did it out of the desire to quickly end the war. We weren’t being threatened on our own shores. We were already victorious in Europe and there was great demand to bring the war to an end.

            But in the scene where there is no US, if we had the means to engage atomic weaponry, we might be forced to do so out of desperation if a militaristic German government, the successor to the Weimars (Hitler likely would never had come to power) threatened our shores.

            Further imagine that if a militaristic Weimar ruler had allied with Southern states and created a front along the North-South border.


            A splintered US would have just as likely engaged Native Americans in precisely the same way as history has recorded, except that state militia would be more likely involved and command and control would be entirely local, rather than based on central government plicies. In such cases, when local control exists over a militia, they tend to be even more ruthless.

            Or not.

      • Anonymous

        Life would be better in every way.  The states would have real sovereignty and you would have something much closer to representative government.  Think of the competition between states to attract people.  It would be a buyers market as to where to move next. 

  • Guest

    Don’t think I said that Japanese invaded Pearl Harbor, although from a strict definition, “to enter forcefully as an enemy; go into with hostile intent,” Japan clearly invaded Hawaiin airspace.
    Now, as far as Citi goes, I think Dick Bove is to blame.

  • Bparrish2

    So it’s Ron Paul then?  I’m ok with that.

  • Kyle Davidson


    You’re getting awfully close to dabbling in Anarcho-Capitalism. Welcome. :)

    • jaltucher

      My main belief: that more ipads need to be created. And more robot surgery techniques. And more cars that are driverless. And more seeds with greater output. And more diagnostic techniques for cancer. And so on. Everything that is for greater innovation, I’m for. Everything that is anti-innovation – I’m against.

      • Daniel Maldonado

        Which, we could safely say, is everything the govt does, right? It’s almost as if the govt collectively hates innovation because they’re always trying to find a way to hinder it or get their dirty, rotten hands on it.

  • Skunk1980

    “The only way the economy grows is when people spend faster than it.”

    ORLY? Are you both a Keynsian and a libertarian? Is that possible? You sound like one.

    FYI, an economy grows when wealth is *created*, not when people spend. Besides, people *are* the economy (i.e. the market) and fiat paper money is “worthless.”

    Well… intelligent business man that you are, I dont suppose these comments will be well taken…

    • jaltucher

      Why does everyone want to label: I’ve been accused to everythign from Eurosocialist to John Birch Society. I believe in  Innovation. Innovation must always come first and that will drive an economy. Everything else (government, anarchy, socialism, whatever) is garbage.

      • Skunk1980

        People like to label because labels and neat, handy, and quick. And people probably want to label *you* because you are influential.

  • Guy

    I think the author of “Rich Dad Poor Dad” needs to feature in there somewhere – he started the frenzy where suddenly houses were no longer homes but “investments” – a way to make easy cash. The bubble mantra was “climb aboard the bubble frenzy or be a loser like Poor Dad”. And the people did … and then the governments were scared so they allowed it to keep on going … and when it did finally burst … well we have the global financial disaster zone we are now in the middle of.

    Places like the UK, Australia and South Africa still have housing bubbles that have barely started their implosion (at least in the US, the housing bubble crash has done exactly what it should), held back by terrified governments, so this global mess is still only starting. 

  • GiavelliReport

    I disagree a lot with this analysis. An economy grows when it is creative and invents goods and services to trade/sell/exchange. Our economy faltered because the boomers who went to good schools (and the cusp of the boomers like myself who caught the tailend) before mass immigration and a push for an irrational equality destroyed our schools. That plus the DOE pushing schools as a propaganda tool destroyed quality in education. It was only by competing and fostering competition that the brightest get rewarded did schools ever work. The professor who announces every A cheers and jealousy and every F  .. to jeers… knows that for most it will strive them to compete and to do better. Instead we imported from 3rd world nations, allowed the dumbest to receive all our efforts with no child left behind, and left the geniuses to wither. The same thing happened in the housing market, as there were fewer and fewer boomers to trade up houses back and forth suddenly there were no other new people who could afford to buy in… because they weren’t educated, were from 3rd world countries, or offspring of welfare blacks and violent mexicans. So they changed the lending criteria to let the trades continue even though the truth was the pool of people smart enough and hard working enough to afford the rising housing prices was gone. Now a house in SF, SD, LA all cost over 800,000 just for 1500 square feet in a non ghetto neighborhood. Because those neighborhoods are getting rarer. Because america is changing demographically. The browning of america brought on by destroying our education systems, throwing out competition, not rewarding the hard workers, relentless immigration has resulted in the first symptoms which is this economic collapse. Only by reversing all these trends will America succeed again. The smart kids need to be “cool” again. Being a software engineer needs to pay what being a lawer or banker pays like it did in the sixties. All of these government driven distortions need to be removed from the market. Instead of bailing out failed banks we should have started venture funds for entrepreneurs. Our whole focus has been wrong and that will lead to the great collapse of 2012 (or possibly 2013 if it holds that long).

    • jaltucher

      It doesn”t sound like you disagree with me. What I’m saying can also be summed up in the following way: real innovation needs to outpace financial innovation. Financial innovation will ALWAYS happen to take advantage of the new money-making innovations. But the real innovation must happen first and faster else we slip behind.

      • dawn

        James, kudos to you for not confronting your audience. I’m a forum moderator on a website (sounds lame, but it’s not :D). When your readers’ comments are this disgusting, I encourage you to investigate by looking at their website, etc. I am assuming that the link provided is the same as – in which case, I don’t think you’ll appreciate the Thanksgiving comments based on your take of OWS. If I’m wrong on the site match, I apologize.

    • dawn

      I hope we collapse. I hope we get back to the roots. I hope we lose the “cool”. I want to become a world without borders, without race, religion, greed, power, etc. Innovation and living together drives us. As a “white” American, I’m ashamed to be associated with the likes of you.

      “Browning” of America? Giavelli? sounds Italian. We didn’t all get to this country by magic. We all immigrated. Oh, except for the people from whom we took. Oh, and those we “transferred” here to do our work who still live here.

      We really need to let racism go. This is a fair message:

  • Dan

    Ummm, no.  To whom are you going to sell everything if its isn’t those with US$ (e.g. the Chinese)?  It’s not as if the average American citizen has any significant money and/or unused line-of-credit.

    One problem is that the American currency doesn’t conform very well to the standard (e.g., wikipedia) definition of money which requires it to be a ‘store of value’ over time.  Inflation gets in the way and distorts the stereotypical economic analysis out there.  Also, the US population is growing at a rate of about 0.9% per year, which means that nominal GDP growth needs to exceed 0.9% annually just to keep pace with population growth.  If you look at inflation adjusted, per capital GDP growth, the correct measure of standard-of-living growth, the picture looks very different.

    When you think about sustainable inflation adjusted, per capita standard-of-living, what’s important is labour productivity.  In other words, how well you live is proportional to how much ‘economic value added’ you create, either by working longer or working smarter with extra intellectual or investment capital.  You can temporarily boost your current standard of living by borrowing, but you’ll either need to out produce your consumption later to pay back the loan or screw your lender by defaulting.  (If a government can talk its central bank into printing currency, it also has the option of implicitly defaulting by debasing the currency with inflation.)

    The average American, like the average Greek, has out consumed his economic productivity for decades.  And as the Greeks have discovered, this happy fraud can’t continue forever.  At least America can debase its currency, screw those who believed in the sanctity of the US$ (see discussion of ‘money’ above), and inflate its way out its problem.  Greece doesn’t have that option.


    • James Altucher

      Banks, companies, and private equity firms are rolling in cash. $5 trillion out there. And they are dying to buy or finance government properties that are mismanaged.

      • Anonymous

        well in that case let me print my own money and I will be happy to buy it too.  I guess I can manage it as well as a bank anyway.

      • Dan

        According to the latest Z.1 Flow of Funds Accounts of the United States (available on-line at the US federal gov’t has liabilities of about $11T and state/local gov’t have another $3T.  $5T would be a good start, but then there are also contingent liabilities/loan guarantees.  I don’t think there’s enough domestic capital available.

  • Thom Bray

    Thought provoking. Here’s my ideas:

    1. Immediately forgive all student loans.
    2. Immediately mandate that all State Schools will be gratis providing students do community public works service.
    3. Immediately spend that funny money being printed on rebuilding our infrastructure.
    4. Immediately slash the defense budget; dump as much money as possible into R&D.
    5. Go to a single payer Health System that covers all and that everyone pays into.
    6. Slash corporate tax rates to zero providing they support single payer health plans and that they use tax savings for R&D and the hiring of American workers.

    Wait and pray.

    • MC1171611

      1. Screw the taxpayer
      2. Screw the taxpayer
      3. Screw the taxpayer
      4. Screw the taxpayer
      5. REALLY screw the taxpayer
      6. Subsidized the now thoroughly screwed taxpayers

      Yeah, no thanks.

      • Anonymous

        agreed.  Here is a better way to go;

        1. abolish all student loans driving the price of college down to nothing.
        2. get rid of all state schools and save trillions.
        3. for highways make them all user fee. That way everyone pays for exactly as much of the road as they use.
        4. Get rid of the defense budget altogether and just keep a couple nukes.
        5. Get rid of health insurance altogether and watch the prices drop.
        6. get rid of all corporate taxes and all corporate subsidies which only act to keep out competitors.

        • MC1171611

          I can’t agree completely, but it would be a far sight better than the mess we have now!

    • GT

      Why (1)? If people are stupid enough to contract massive debt without doing due diligence, screw ’em. It’s wrong to bail out Blankfein and his fellow-travellers – to indemnify them from the disastrous consequences of their stupidity – and it’s wrong to do it for the little guy as well.

      As for the rest: (2) ignores credentialism – if everyone has a ‘degree’ from a State school you would need a degree to work at McDonalds. That’s been half the problem – people don’t realise that a degree (or whatever) is simply a device for rationing job candidature: debase the degree and prospective employers simply move up the chain (so in the limiting case you would need a Wharton MBA to work at McDs). Education does NOT per se result in higher productivity or wages – that is a myth that began with poor empirical work in the 1960s.

      (3) – infrastructure is fine… but if you set up a massive pot of ‘funny money’, who do you think it will attract? Honest, down to earth contractors who want to build the best bridges known to man? Or fly-by-night charlatans who set up front companies in order to exploit the existence of a badly-managed “infrastructure fund” (HELLO??? Calling SOLYNDRA).

      (4) publicly-funded R&D? Jesus wept. Government couldn’t pick winners in a one-horse race. Think of all the R&D spend that went into the F22 and F35; one can’t fly, the other requires pilots who can get by without air.

      (5) State-administered health care? How ’bout “Shit no”? Here’s the thing: I have not needed to visit a doctor – or a dentist – for a little over 10 years. I eat reasonably well, exercise almost daily, and generally do shit that results in lower wear and tear. WHY should I have to pay into a system (1.5% of income, in Australia) to fund the health costs of fucktards who choose to (e.g.,) smoke? I’m 46, 6’2″, 230lb, RHR 56, VO2Max 47… as a result of the decisions I take. My Dad – who is in his 70s – is even fitter and stronger as a result of an even better set of decisions.

      I used to be 117kg (250-ish) and decided it wasn’t helping so I changed some things. 

      I should get to SAVE the money I don’t spend on health-care, and spend it on protein powder if I want… not subsidise some other asstard’s poor decisions (especially given the “pots of badly administered public money attract Ferengi like Blankfein” argument).

      (6)… or slash corporate tax blah blah blah and watch the big end of town pocket the savings and find a way to fudge compliance… thereby enabling them to add a jacuzzi the size of the Reflecting Pool to their tasteless personal mini-Versailles.

      You’re still toking the Hope-ium pipe, my friend. Trying to imagineer a State-based system that results in less ass-rape, is almost fey in its innocence. Here’s a tip: any time you try to do that sort of imagineering, imagine TwoDicks (Fuld and Cheney) sitting behind you, wringing their hands in anticipation of the money orgasm that  you’re sending their way.

  • Ginger_gal

    Good the question is what will get us out of the crisis….will it be a world wide globalized crisis?

    • James Altucher

      I think we’ve got five years of bliss and hypnotism and then CRISIS.

      UNLESS…tech and biotech innovation can exceed the pace of “government innovation”.

      • GT

        Yep – it’s all a race between the life-enhancing possibility of biotech/nanotech/AI, and the life-destroying rapacity of government (which ALWAYS kills the host – it’s only ever a matter of time).

        That’s been my hypothesis for several years (since the mid-90s, in fact: when I first read “Engines of Creation” by K Eric Drexler); for me the core issue was preventing States from weaponising nanotech and biotech (you do realise that will be their FIRST idea if Drexlerian assembler tech arrives).

        If we get Drexlerian nanotech before the next gloobal conflagration, we’re golden and debt won’t matter a damn. Otherwise, the 50 years post-2025 will be shitty – because it will take 2 generations to recover from the next global-scale political pissing contest.

        I wrote a post in the late 90s on the old site (I can no longer find the link, but I have the text in an e-mail from 2002): it was all about why the sociopathic cronyCEO/politician types would do everything they could to stymie nanotech and AI. (Note – not EVERY CEO is a cronyCEO – only those who rely on State-enforced oligopoly or monopoly power).

        They would seek to stymie this development – the technological event that would take humanity past its “escape velocity” and into post-Singularity world – because the parasites that make up the State have biased utility functionals that depend critically on the GAP between their wealth and the average. They will set the world on fire, if the alternative is a ‘great levelling’, even if the ‘levelling’ is at a level of material consumption that is a million times higher than now. Fact is, those types are already at satiety when it comes to consumer goods – and the only thing that gives them power is the wealth gap.

        Seriously – anybody who has learned the “vertical summation” of demand curves (bogus) as the utilitarian argument FOR the State, invariably stopped before the input-competition effects on the SUPPLY functions of all other goods (and capital). They add up only the little triangles of consumer surplus that are added by the expansion of the public good – and ignore the deleterious effects of lower consumption possibilities in all other goods.

        And they also ignore the BILLIONS of little welfare triangles that are lost when States do a war (and ONLY states do war)… all the hundreds of millions of man-hours of labour, set afire in a pissing contest between different sets of parasites; all the debt that is contracted (to be repaid by mulcting the citizenry); all the resources diverted into destruction. Bastiat’s “Broken Window” fallacy, times a billion windows.

  • Cathy

    James, I know this isn’t your main point but just thought I’d mention that the Japanese did not invade Hawaii, they bombed it and left. As to your main point, I’m with you. Abolishing the federal gov’t would solve the majority of our problems, many that we would not even anticipate.

    • James Altucher

      Good point. And its an important subtlety.

  • Vernon Dozier

    I like your “new approach”, James.  Which one do you think is more likely at this point?  I’m thinking China buying it all up…

    • James Altucher

      Unfortunately, the China option is more likely. The new option would be better.

  • Eric

    Your solution really isn’t too far off, but instead of selling off the services, why not just sell off government land? The BLM manages millions of acres of land in the west. Some of it is near or adjacent to high-dollar properties like ski resorts.

    Of course, the green bureaucrats will shout to the press that whoever would propose selling federal land wants to sell off the Grand Canyon, instead of scrub land in Wyoming, so it will never happen.

    • James Altucher

      I like that. Sell everything.

  • Guy-o

    Great historical references.  Awesome arcane cultural references.  Fantastic use of the parenthetical.  Razor sharp sarcasm.  Excellent rhythm.  I like it.  I like it a lot.  You rock.  I invite you to check out my blog, which has a similar voice.

  • Daniel Maldonado

    James, so in your opinion, how long do you think we have before a large crisis hits? I’m not asking for a prediction of course, just your opinion.

    • jaltucher


  • Jack Tyler

    Peter Schiff has made the claim that American women actually entered the work force when Nixon took the dollar off of the gold standard.  That’s exactly what happened in my family when I was a kid.

    • jaltucher

      Interesting, perhaps there are two waves, then. it would be interesting to check the demographics on that. 

  • Marcus

    I am a fervent supporter of Ron Paul, and have been for several years now. I do not get how you and Lew Rockwell say that college kids are waisting (our) their time/money on college, when earlier in a podcast I heard him say job levels ARE MUCH BETTER than the gov. is reporting. Another thing i’d like to point out: you write like a senior in high school (despite your clever angles). I think essay vs. essay – you choose the topic – I will out-write you any day (but not Lew, who has a four year degree and 1000000x the experience).

    • jaltucher

      Well, my style is very conversational. I didn’t now I was being rated. In terms of college, its not so much about  people who went to college 20 years ago: its about people going to college now.

      Student loan levels are higher than credit card debt for the first time ever. Rather than graduating a generation of innovators and inventors, like we’ve always done in the past, we are graduating a generation of debt slaves. 

      • Marcus

        I sincerely appreciate you replying to me. However, being someone who strictly adheres to libertarian principals – questioning everything with utmost scrutiny – I think that my chances of getting the job I want are significantly better now(I graduate in the spring) than they were before I went to college. I wish I was a recipient of the low tuition prices that the next generation will receive as a result of competition with online schools, and a deflating college bubble; unfortunately I have to pay $100-$200 a month for the next 15 years in an effort to make enough money to exceed the opportunity cost of NOT paying that fee.

        I have a great deal of respect for your success that came as a result of you not going to school. I just feel a bit betrayed by the fact that I went to college because I was inspired to get inside the system and change it by people like Ron Paul and Lew Rockwell, and now I am being marginalized for going to school by the same movement I once found solace with.

  • Garydagat

    Sell everything? doesn’t that mean that there would be no country left? 

    • james altucher

      No. Quite the opposite. More of the country would be in the hands of it’s private citizens

  • Andrew Ramponi

    Yes, we could buy more time through getting rid of lumbering, wasteful institutions, but I doubt even then if the can of happy spending would be kicked down the road for anything like the next 70 years. I hope for a bright future for all children, but not one based on a return to 1945 naivety and hubris. That said, history tends to repeat, until one day it doesn’t. “It ain’t what you don’t know, but what you know for sure that just ain’t so”

  • RonPaul4Prez

    No need to blame the Japanese. The U.S. quit selling them oil for their war effort, what were they supposed to do, take it lying down? Iraq had the gall to take over our – sorry, “Kuwait’s” – oil supply, and we didn’t take that lying down now did we? 

  • Joe Pfeiff

    A very thoughtful article, but missing one important scenario – “What happens when the Jones’s retire?” That’s what’s going to happen next and a depression is probably not going to be averted, even if we all start speaking fluent mandarin.

  • Madison_mason

    wow… cool! Thanks!essay writing services