Silly ZIRP Ideas

Ideas, like things, have a cost. Some people can afford to hold silly ideas because they are sheltered from the consequences of acting on those ideas. Others can’t afford to have too many silly ideas, especially if they get in the way of food, shelter, protecting their loved ones, and the like.

This is true not only of people but also of societies at large, at least at certain times. As the saying goes, hard times make strong men, strong men make good times, good times make weak men, and weak men make hard times…

Low interest rate times were good times; for about 13 years, good times made weak men with weak ideas. As the ZIRP (zero interest rate phenomenon) ended, so did the weak ideas of people sheltered from the consequences that only made sense when money was free.

Take the example of DEI. The most extreme version of DEI ( Racial justice is a critical goal of the U.S, but the rule of race over excellence is not), is an idea that is only possible when money is cheap. See the graph below: noticed how DEI peaked about the same time interest rates started to go down:

DEI has an interesting journey: it grows out a legitimate concern, it gets radicalized against merit, and once the money runs out, it slowly starts to revert to its original scope.

Another example from SF local politics: In late January 2021, the SF school board voted 6-1 to rename 44 schools around the city over “racist” namesakes including President Abraham Lincoln, who only abolished slavery in 1863 with the Emancipation Proclamation.” By 2022, a massive recall cleared the board on an electoral landslide.

Look at this table for three board members:

For what it is worth, pretty much the same thing happened to Chesa Boudin, the radical left SF DA, in about the same timeline.

I have focused on the left because I see more of it. But the right has similar ideas that have gone through similar journeys: gun rights to thoughts and prayers on school shootings, concerns of rust belt jobs to isolationism, defense of conservative values to radical limitations of women’s rights. All these ideas follow the same journey: some basic idea with some anchor in reality, a radicalized version when money is cheap and we can afford to be silly, and a slow return to normal once money is no longer free.

Ideas have a real cost. These costs can be absolved privately or publicly, shared by some more than others, or impact a broad spectrum of the population.

Often, we assign ideas to private worldviews and personal values, but often, ideas come and go depending on how cheap or costly they get. As it happened with communism and fascism, capitalism and globalism, and wokesism and the multiple alternatives presented, economics often determines which ideas people can afford.

With the end of ZIRP easy money, tons of crazy ideas became no longer affordable. We needed to go back to ideas that connect more directly with freedom, justice, prosperity, and safety. And as we can see, this is slowly happening.

Free money yields silly ideas. When these ideas win, we are all trapped in fantasy silos, unable to understand each other. However, when we can’t afford those dreams, we are driven towards simpler, more real things: the harvest, the houses, and how to govern each other. More straightforward ideas are easier to agree on, so as a result, it is also easier to get along.

As we look at the U.S. internal political conflicts, from fiscal policy to immigration, individual rights to state rights, a lot of expensive ideas that, from day one, made sense to few are no longer affordable.

The same thing applies to international conflicts: When money was cheap, many of the enemies of the modern democratic value systems, like Russia, Hammas, Iran, and China, could finance ample conflict abroad and dissent inside democratic nations. This is getting increasingly harder each day.

Domestically, our two political candidates are ZIRP candidates, which is why no one is happy with either; they represent a version of us we no longer like because it entails an expired worldview that today looks silly and wasteful. We simply can’t afford their ideas. Of course, candidates know this too, as we see both adjust their language and proposals, moving closer to the center, putting in evidence the irrelevance of much of the ZIRP-financed culture.

Internationally, though we might worry about the internal support of Hamas or an adversarial Russia, the truth is that internal support for these causes is small, getting smaller, and runs against the very few things that work in politics (issues both parties can agree on). Luckily, violence and terrorism are no longer cool. That’s good.

The dark clouds of today are leftovers from a time that no longer exists. I am optimistic about the near future because we can no longer afford to play fools. Silly ideas are going away, and we are starting to understand each other again on the common ground of ideas that need to work.

I think the US and the world at large are moving on from rewarding posturing and theatrics to gravitating towards ideas that allow us to live together in harmony and with prosperity. We still need to see many dark clouds pass, but I fully expect an amazing next decade where we will have a more united US with stronger and more impactful ideals.