Mark Spitznagel Cautions The Powers That Be:"The Reckoning Will Be Excruciating"

Tyler Durden's picture

Authored by Mark Spitznagel (author of The Dao of Capital), originally posted at Forbes,

In the midst of the epic dysfunction known as the 16-day government shutdown, we lost sight of the fundamental issue whose inescapable logic cuts across politics and party lines: We are feeding the rapacious appetites of our current selves (we want what we want now) at the dire and escalating cost to our future selves (whom, we assume, will somehow have the patience and resources to bear the burden). If that sounds unworkable and unsustainable, it is.

If government spending continues apace, feeding the monster known as the national debt will swallow the resources of our future selves, whether we personify that concept as ourselves at retirement or our children who will inherit an astronomical bill for our rash and compulsive spending.

We cannot expect Washington to solve these problems, because politicians are, by definition, creatures of the moment who want to please their current constituents who will re-elect them, rather than worrying about future constituents who cannot vote. It’s up to us to advocate for our future selves, both personal and progeny.

As simple and logical as this might sound, it is nigh onto impossible to do. We simply can’t help ourselves, because of our human nature and a behavioral concept—applicable to most everything in life, including my bailiwick of investing—called time inconsistency, or hyperbolic discounting. Simply stated, we discount the present now more than we expect to later—that is, we act one way now—impatient, demanding our appetites (food, drink, investment returns) be met at all costs—while deluding ourselves that, in the future, we’ll somehow be patient and better able to act rationally and take care of problems. But when later becomes now, we are just as impatient. The easiest and most universal example is dieting. We indulge now, telling ourselves we’ll diet tomorrow. The parallels to our bloated spending and ballooning debt are too obvious to mention.

The root of the problem goes to our human origins, when overlooking immediate needs was reckless and life-threatening. Consider the 1.8-million-year-old pre-human skull unveiled recently, with its massive jaw and big teeth, but small brain. I’m certainly no expert in human evolution, but it doesn’t take much to imagine this ancestral precursor was more concerned about eating now than preparing for the future.

Yet, humans did overcome that predilection, through making tools, domesticating animals, growing and storing grains, smelting ores and metals, and eventually amassing great entrepreneurial capital structures that required upfront investment and lost opportunity costs in the moment. This became possible because objectives switched, from satisfying immediate appetites to gaining an intermediate, positional advantage for the future. My shorthand phrase for that is becoming ever-more roundabout.

Our only hope to stop the battle between present and future selves is to adopt a more roundabout perspective, seeing time differently in an intertemporal dimension. When we are no longer hyper-focused on the moment, we can pursue proximal aims that look across slices of time. We avoid eating, drinking, acting, and spending as if there is no tomorrow, so that we can, indeed, have better, healthier, and more prosperous tomorrow.

Admittedly, grasping these concepts about our human nature and our perplexing time inconsistency requires a mental leap. By becoming more aware, though, we give ourselves a roadmap with which to navigate the minefields of our own human nature. With an intertemporal perspective we can avoid the mad scramble for 11th hour solutions, which in politics always equals crisis.

Since we cannot expect Washington and its stable of political animals to do the work, we must press for it ourselves, by sending the message to Capitol Hill: Taking on ever bigger amounts of debt is mathematically unsustainable. Using the Federal Reserve and its zero-interest-rate policy to kick the proverbial can down the road only postpones the pain, which intensifies with the passage of time. The reckoning will be excruciating.

When another shutdown looms in the months ahead, we have to keep in mind who the battle is really between: our present selves versus our future selves. We who can think, act, and vote now, must advocate for the currently disenfranchised who will pay the bill.

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lordbyroniv's picture

MOAR !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!111

CH1's picture

objectives switched, from satisfying immediate appetites to gaining an intermediate, positional advantage for the future.

That was before politics became the most important thing in the universe.

DoChenRollingBearing's picture

Hey, CH1, I suspect it's always been that way...

Peter Pan's picture

Things don't add up too well for the future. So either our future is cut short or our expectations are cut short. Perhaps both. I also would not count on technology, science and medicine bridging the gap between means and ends.

Truthseeker2's picture


Excrutiating because --->


"Are The Markets HOPELESSLY Addicted to Deception?"



Ar-Pharazôn's picture

10k years ago, i think you could easily go and beat the brain out of the politicians very easily. just slamming the mace til the work is done. very effective

Religion Explained's picture


Not between our present and future selves. BETWEEN THE PRESENT TAKERS AND THE FUTURE MAKERS.

acetinker's picture

Thank you.  And I don't see much promise for the future makers.  In fact, I don't see any makers, only takers.

ReactionToClosedMinds's picture

and the crony capitalist sycophants sucking the blood out of the capital markets.  Clever manipulation only gets one so far eventually when the ediface comes tumbling down 

johnQpublic's picture

whats with the "WE"?

like we have control over anything

try 'they'

macholatte's picture


whats with the "WE"?


 Spitznagel is just another late bloomer, wannabe product of the "hey, look at me" media.  Is he actually actively recruiting people to do something? Is he taking any risk? Did he say anything at all that hasn't been hashed and re-hashed on ZH for 2 years already? Looks like he's just another billionare covering his own ass with a private life boats all his own while he watches the ice berg coming toward the ship.



HardAssets's picture

Well, we've had 98% of the value of our earnings and savings stolen over the last century through their private money printing inflation. They used that to buy off the politicians, bureaucrats, and judges and steal our republic. They then stole the pittance that was left in various 'taxes' at multiple levels.  Now after they steal our money, at essentially the muzzle of a gun, through social security and other taxes - they rename what was sold to us originally as 'saving for retirement' and 'help for our old age' to wicked 'entitlements'.

And this doesn't even include the trillions spent on 'defense' and other government programs which stole countless trillions more in various ways.

And now, there are those saying 'We' are greedy and want too much ? 

What a bunch of b.s.

There's a lot of stuff that 'we' don't want including Commie-'health care', multiple wars, wide open borders, good jobs off shored overseas, outrageous college tuition & fees, and a high tech police state.

'They' don't give a sh*t what We want.

Mainly because most of those making up the 'We' have been so brain washed that they don't know Up from Down.

As for the article . . . if you don't get right to the heart of things . . . the criminal central banking/big corp/big govt system of fascism . . . youre either ignorant or blowing smoke.  This guy ain't ignorant.

Wahooo's picture

Yup. TPTB will never experience excruciating reckoning.

CPL's picture

There is no them.  There is no We.  Just You.  How do they control you?

You have lost control of yourselves.  Without yourself, there was no past and will certainly never be a future for you.  The present is where you balance between the two.


acetinker's picture

You?  There is only "us" CPL.  "We" are one organism, and we consistently fail to realize this.

CPL's picture

That's being unreasonable to expect people to behave like a flock of birds. 

We are a herd of cats, everyone generally goes in a direction that has something interesting to themselves.  So don't plan for the impossible, when you can plan for success by understanding what you are working with.  So what is the end goal?  With 7.2 billion people, there's roughly 7.2 billion goals.  Which one is right?  Depends on the week and who you are talking to.

So how do you get 'there'?  Where ever 'there' is because 'We' exist when you and another are in balance with each other and complimentary.   'We' leads to 'them' and 'us'.  'We' leads to blame games.  e.g. 'They' did that because 'we' did not.  To remove the blame game of 'them' and 'us' the collective 'we' build a process. 

Processes don't get angry.  Processes cost nothing but time to make.  They give back every time they are used repeatedly.  When they no longer work they can change as long as they match the task that needs to be done.  Or they can simply be disposed of when they aren't applicable.  The individual can still be an individual in a process, unfortunately when the process is removed the individual has to go find something else to do.

...Or be part of the conversation and contribute to building a new process.  It takes all sorts of people to build a process, from saints to dickheads.  Look at Linux, 15 years and the one thing that has kept it knitted together as a cohesive 'we' of technophiles is open community processes.   The Open Source standards are well described using active participation from artists to zookeepers, there is a lot of input from every where in every language.  While we sleep the processes to drive the Linux community are still running and it's all powered by people.

Each time a change is committed to the the process pool, the intention is to first test the change.  If it sticks, then leave it alone. 

If it doesn't, people bitch and then get together to look under the hood in a more forensic manner.  They find root cause OR the accidental secondary processes that form 'magically' because in a world of ideas, a lion and a hamster can breed then make a lionster (fierce animal that terrifies cabbages).  As a lionster it's a fairly humorous visual, but understanding that when an accidental process is created it has to be dealt with as if it were a designed process.

Example;  Workstation power management, biggest energy pit on the planet next to server power management. 

Everyone is designing process to match a process 'we' all know sort of works to meet industry guidelines requirements, but never provided any input to.  It is claimed as 'practical'.  But the power industry guidelines ask the wrong questions and are also the wrong people to ask the question of in the first place.  They are SELLING you the power.  The power industry's guidelines are self serving and anything offered in terms of 'savings' or 'wisdom' from them should be suspect to begin with.

They ask everyone else to solve their own problem by counting on people being motivated to turn off appliances instead of properly measuring the individual problems of the technology being used.  We live in a world that we've known this problem for 50 years.  That's a lot of time, in technology time that's forever.  The best solution is to make a bigger power supply instead of develop better usage of power. 

I have a couple of laptops, a POS Acer from a black friday sale and a used Apple notebook with matching specs (yeah, Apple is as cheap as Acer).  The batteries in both have been hammered down to 15% capacity.  If I run the laptops as shipped with Win7 or OSX, I can get between 40-60 minutes on the Acer and the Apple workstations on old beat up batteries.  If I wipe them to bare metal and install Linux and install an applet called Jupiter ( my battery life on both workstations goes up to around three hours.

Why?  Because the individual developer of the applet asked a different question.  "What do I need vs what I want for the application I'm using?" 

On my newish Dell workstation, I'm getting 14 hours with a 17 inch laptop screen with an i7 processor and a mid range video card on a single charge.  If I leave it on standby it runs as long as a blackberry (about a week if 5 minutes here and there all week).

Why?  Again the developer asked a different question.  He decided to tackle the vicious 'Lionster' process that was accidentally created with corporate/consumer workstations and power industry processes and make it work FOR the user.   All because he developed a process to be automatically handled to tame the beast of power management and increase it's efficiency by a measurable factor of 275 - 450% because he looked at usage by the people, not power production metrics from energy companies which are questionable on the best of days.

In the case of power management, the developer asked the secretary what she did before the Product manager and spun gold in 97k of code.  If used universally would save a LOT of building of unnecessary nuclear reactors, cut down coal emissions and further stretch the little remaining good diesel reserves for more practical purposes like maintenance and farming.  Instead of powering a dual core video card to watch a youtube video and IM a friend.

Ask the right question then the rest of it fits properly and returns the investment in under a month.

DoChenRollingBearing's picture

Spitznagel is very much an optimist that we can do much.  We are now pretty much at the point where it's every family for itself.


Bay of Pigs's picture

You mean this asshole is no good? Wow....who'd a thunk it? Gee, another one of those fuckers...

DoChenRollingBearing's picture

The alert guy with the beard gets green...  We's just gold fishez....

Bay of Pigs's picture

So tired of these guys who talk shit and do the same things.

prains's picture

we have to keep in mind who the battle is really between:


SPITZ !! it's between us and billionaire Oligarchs......don't forget it !!!!


sure hope you can run 4 hours in the dark over rough terrain without shoes, that's THE best hedge you'll ever had made. Bel Aire ain't gonna mean shit in your life time and you know it.

gould's fisker's picture

The reckoning "WILL BE" excruciating? Please give me a moment while extract this nine foot pole from my ass. Excuse me.

Moe Hamhead's picture

So, basically, since the majority of us aren' t willing to voluntarily come forward and sacrifice our lifestyles for the sake of the common good, we are destined to ride this train to the end of the track and take our chances together.  We realize that it isn' t going to be pretty, but it's inevitable. So, we' ll solve the future's problems in the future; and live life the way we're used to until then. Is that the human nature we' re talking about ?

therevolutionwas's picture

somebody's human nature, not mine.

Wahooo's picture

Common good, eh? What the hell is that?

Singelguy's picture

Basically, the majority are not even aware that the train is going to crash so they are content to sit back and enjoy the ride. The ones who are aware of the coming crash, are slowly working their way to the back of the train so that they will suffer minimum injury when the crash finally occurs. Every man for himself! That is human nature!

newworldorder's picture

+ 1000

That is a very good summary of our current situation.

The Devil's picture

Humans. What a joke.

Dr. Engali's picture

It's too late for any of this shit. The answer will not come through the political process, and I'm sad to say that it won't happen by the iSheeple banding together to overthrow the oligarchs. The only solution is to let the system collapse, and rebuild from scratch. My suspicion is that no matter what the eventual outcome, future generations will make the same mistakes.

DOGGONE's picture

We humans in our democracy elect/select leadershiT.

Escapeclaws's picture

If the system collapses you will have competing mafias running things. It will be a bloodbath. What we have now will seem like paradise. Be careful what you wish for. Recommend you read Dmitri Orlov's "The Five Stages of Collapse".

(And please don't counter that we are already run by the mafia. If you say that you are just another ignoramus who has never been up against it.)

erg's picture

Send a message to Capitol Hill. Yah. rolls eyes

monad's picture

Send smoke signals. Yah, ahaha rubs palms

0b1knob's picture

Our future selves.  The Simpsons got there first.

Freddie's picture

Idiots who support TV and Hollywood support the oligarchs.  Keep up the good work.

Dr. Engali's picture

This from the man with the Chuck Norris avatar.

kralizec's picture

Ohh, right square in the berries!

CheapBastard's picture

Don't bother me. I refuse to come out of the Basement!


[PS: Pls send the Dominoes Pizza down here when it arrives.]

A Lunatic's picture

So the message is we can't expect Washington to fix this mess so be sure to vote. Got it.......

wisehiney's picture

When the financial system collapses and there is total chaos, someone will be sure to properly shut down all nuclear reactors to ensure human survival. 

johnQpublic's picture

the nuclear industry is what convinces me that the powers that be know there isnt as much of a future waiting for us as most people hope

and comparing fuku to backround radiation, essentially denies the fact there was no backround radiation before all of the cold war nuclear bomb testing

Riprake's picture

No background radiation before nuclear weapons? You're even dumber than your name implies, Prostitute-Using Everyman Cypher Sheeple boy. At least some of the "public" know that background radiation has existed for as long as the universe has. The biggest thermonuclear bomb in a four light-year radius is constantly going off in the sky over our heads every single day; you think nobody ever got a sunburn before the Manhattan Project?

Next thing we'll be hearing from you is how airliner contrails are a secret Jewish plot to murder us all by dousing us in flouride to sap our purity of essence, a "fact" which you "realized" during, shall we say, "the physical act of love" with one of those prostitutes. Well, a tinfoil hat probably won't help you against that (or against that raging case of drug-resistant herpes she gave you), but some of your equally stupid conspiracy theorists here will be happy to recommend that you use an atomizer to spray a vinegar solution into the atmosphere around your home to disperse the insidious and all-powerful Zionist World Order's mind-controlling chemicals.

(For the herpes? You're on your own, unless you've still got some money left from which to be parted, in which case I'm sure your fellow nutjobs here can can recommend a quack to sell you some colloidal silver, which in addition to curing any disease you have can whiten your rotting teeth, mow your lawn, power your whole house for a year per ounce, and purge the soil around your home of all Monsanto GMO products.)

Ar-Pharazôn's picture

+100 just for the dr strangelove references! :D

ebworthen's picture

My future self said he doesn't want to be homeless and toothless, my present self said to him "Fuck you, I'm hungry and want some bourbon."

jon dough's picture

I'm with you.

My younger self enjoyed life, as ig'nant as I wuz.

I am pretty sure my future self is just going to be a smart-ass and a know-it-all.

What little future self there is...

Edit: Scotch OK?

DOGGONE's picture

We humans in our democracy elect/select leadershiT.

HardlyZero's picture

The longer this goes on the more land and homes will be purchased by the government or entities, so even if you own your plot you will be surrounded by govt. property and utililites will be scattered or unavailable.

In the end we will have some sort of debtor's prison for all the debts we owe (public or matter).  We will serve our term 'in place' and just pay the taxes directly.

Then the Soylent Corporation will probably arise, a spin-off from GS or JPM.

So it will look something like Soylent Green or Matrix...but it won't be something to look forward to, if this all doesn't end differently, or evolve/devolve if it is 'gentle'.