Gluten (Seitan) is an Underappreciated Cheap and Tasty Plant Protein

With the cost of living pressures affecting many, a cheap protein source that is underappreciated is gluten, which for many seems to cause fear and anxiety. However, gluten is safe for most people unless they have celiac disease.

Most people know about gluten from bread, but pure gluten has been used for a long time as part of Chinese cuisine. Chinese Buddhist monks "invented" gluten (also known as kao fu or seitan) back in the 6th century CE as part of the Tang dynasty. The gluten was obtained by the "wash method" which involved mixing wheat flour with water and then continuously kneading it to remove the carbs, leaving behind virtually pure protein. If you do not have time to knead flour, it's much faster to buy gluten from the store. I purchased mine from a local Asian store for AUD 2.50 (USD 1.68) for 300 grams.

Some argue that gluten is an incomplete protein because it has low levels of lysine. However, this is not a concern because you can simply eat other protein sources that are high in lysine such as soy or beans. In my opinion, calling gluten incomplete is unfair because practically all food is incomplete in some way e.g. "complete proteins" such as soy or eggs have low levels of vitamin C, but this does not mean they are inferior. It just means that if you eat soy or eggs you should also eat something else to get vitamin C such as oranges. The same logic applies to gluten. 

Gluten is remarkably simple to prepare. You can prepare them e.g. in an air fryer if you are in a rush, but one way I like to prepare gluten is by pan frying them. Firstly you should cut the gluten into smaller blocks. I recommend using a cast-iron pan to avoid PFAS contamination concerns in non-stick pans. Add avocado oil into the pan and then fry the gluten chunks in the oil You will notice that it turns a golden brown colour.

A block of gluten fried in avocado oil

The golden brown colour of gluten signifies it is ready. Once it is golden brown, I usually stop frying as one of the advantages of gluten is that it doesn't matter if it is undercooked, that is, there are no pathogen risks with undercooked gluten. It is better to undercook gluten rather than overcook it.

Taste is subjective, but gluten has a chewy texture that I like, but on its own gluten is tasteless, so in this case I added rice seasoning to add flavour.

Gluten with rice seasoning

The Alpha Strategy

I have just finished reading The Alpha Strategy, which is a book that I simply downloaded off the internet (see the link earlier) and put onto my mobile phone using a free software called EBookMe. In other words, I paid nothing to read this book. I think there is no need to pay money to buy a book because ebook programs like EBookMe are free and there are virtually infinite free books out there on the internet that you can easily find.

The Alpha Strategy is a good book. It is about the problem of inflation and what individuals can do to protect themselves from inflation. This books pretty much claims that a good way to protect wealth from inflation is to stock up on goods, e.g. toilet paper, wine, honey, and so forth. The ideal is that you stock up on goods that you will need anyway so that it won't matter if the price of these goods go up. If this is not possible e.g. because it is difficult to store wine, etc, then the next best move is to stock up on raw commodities like copper. There is a whole section near the end of this book that explains how to buy copper from the futures market. This book was probably written during a time when there was no exchange traded commodities (ETCs) for sale.

I think stockpiling goods is a great idea, but the main problem is that a lot of what the author is explaining is just too difficult. It is very unrealistic for me to start stockpiling because I still live with my parents. If I were to start piling up toilet paper in my bedroom, my parents would not be happy. Because most goods deteriorate (e.g. wine may go off if exposed to too much light) then you have to be very careful about the storage conditions and you have to make sure everything is stored securely because of the threat of theft. It is all very difficult. While reading the book I got the feeling that this investment strategy of the author was just an excuse he was using to justify his love of shopping, e.g. he describes in detail different types of wine.

I think the author's stockpiling strategy is good and I definitely will think about using it, but I won't put all my wealth in stockpiled goods. I think putting, say, 10 per cent of your wealth in stockpiled goods is a good idea, e.g. I might stock up on some soap or some breath mints or tic tacs.

Inflation Much Worse than Deflation

According to The Alpha Strategy, which in my opinion is one of the greatest books on investing ever in the world, there are three things one can do to preserve purchasing power: lending, investing, and buying.

Lending includes keeping money in a bank account since you are lending it to the bank and the bank pays interest for this privilege. It also includes buying government bonds, which effectively is lending money to the government. Investing refers to owning a business and sharing in the profits of that business. Investing includes actually starting your own company or buying shares. Buying refers to buying actual tangible things like gold or land.

There are two major problems with lending: inflation and taxation. When you lend money, the money you receive back is taxed, which eats away into any profits you could make. Another problem is that inflation eats away at purchasing power. If you keep $100 in the bank and get $103 at the end of the year in interest, inflation running at 3 per cent per year means that you are no better off by putting your money in the bank.

Lending then is only good when there is deflation. The problem with investing for deflation is that deflation tends not to happen often, mainly because government is so scared of deflation that they will do what they can to prevent it, which means that they are willing to create inflation, even though inflation hurts people by reducing the purchasing power of their wealth.

Inflation can be seen as good because inflation motivates people to work hard and spend. With the price of everything going up due to inflation, people are forced to work even harder and harder in order to afford to live. If the state is seen as an apparatus of slavery then government-induced inflation is the way that the slave owners (the government) can whip (create inflation) his slaves (the citizens) in order to get them to work.

Assuming you are able to keep your job in a deflationary recession (not a realistic assumption for most jobs) then deflation is not a bad thing because the price of goods goes down. Because deflation is not a major disaster and because it is rare, I think that it pays to not devote so much of your wealth to preparing for deflation.

Many financial advisers talk about risk tolerance and asset allocation. Asset allocation refers to the percentages you devote to certain types of investments, mainly stocks and bonds/cash, i.e. how much you will invest and how much you will lend. If you are willing to take on more risk, you invest more in stocks and if you are more of a conservative investors, you invest more in bonds/cash. In my opinion, because inflation is so much worse than deflation (because prices of things go up), then it's better to devote a little more to assets that keep up with inflation (stocks, gold, and real estate) rather than assets that do well during periods of deflation (bonds and cash).

Based on my gut-feel analysis of the world economy at the moment--during this period of "unusual uncertainty," as Bernanke described it--I believe that you should hold about 60% in stocks, 30% bonds or cash, and 10% gold.

Image: Tao Zhyn

Inflation vs Deflation

For a little less than a year now the stock market has been going sideways. That is, it has gone up and then down, but the net effect is sideways. The All Ords chart below from Yahoo! illustrates this. Since September 2009, the Australian stock market has been going up and down, bounching back and forth between a ceiling of 5000 and a floor of 4500.

However, recently we have seen the stock market start to plunge below the 4500 point floor, suggesting that a dreaded double-dip recession may be just around the corner. Chinese premier Wen Jiabao warned that a double-dip recession was likely, and billionaire investor George Soros claimed that the second phase of the GFC was imminent.

This may be it!

For the last few days of the 2009-10 financial year, stocks all over the world have been tumbling. On 1 July 2010, the price of gold collapsed from US$1250 per ounce to US$1200 per ounce, and at the same time long-term US Treasury bonds have gone up in price. All this points to investors expecting deflation in the future. That is, prices are going to fall. Some people who complain about high petrol and electricity prices may be happy with this, but deflation may result in falls in stock prices and real estate prices, and this will destroy wealth, especially since many people hold wealth in their houses and their retirement funds. Economic theory also states that falling prices encourage consumers to horde cash and delay purchases becuase they expect goods to be cheaper in the future. This hording of cash and lack of spending will reduce sales, reduce business profits, and in turn lead to higher unemployment or lower wages, which will reduce demand for goods even further as consumers who have their wages cut cannot afford to buy goods. This will lead to even more price cutting by businesses, which leads to a vicious cycle or a deflationary spiral. As people lose jobs and suffer from wage cuts, they cannot afford to buy houses and the many who already suffer from mortgage stress will default. This is a nightmare economic situation.

On the other hand, there are those who believe that deflation will not happen. They claim that because deflation is so nightmarish, the government will not allow it because the government wants to win votes. Rather, the government will continue to simulate the economy by giving away cash. Splashing cash into the economy will increase wages and increase stock prices and real estate prices. Inflation will especially increase gold prices. I have my doubts about this inflation story because splashing cash into the economy cannot last forever. Eventually the government will run out of money and will have to go into debt, which is what we are seeing in Greece. Voters surely will not support neverending increases in public debt, and lenders (i.e. bondholders) will not tolerate it. The demands of voters and lenders should force governments with high public debts to impliment austerity measures that cut spending and raise taxes. Tax increases will retard economy growth, which pushes down stock prices.

If you think inflation is likely, go into stocks and gold. If you think deflation is likely, go into cash and bonds. If you are unsure, equal amounts of all four is probably the best move.