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The Golden Road Remains Constant

The Golden Road Remains Constant

One must always be careful to distinguish between a truism, a claim or narrative which is so deeply embedded into the fabric of cultural understanding that it is taken to be an indisputable historical fact, and truth, a continuing, self-evident feature of reality which is available to be observed, reasoned about, and tested in the present. Truisms are the handmaidens of convention which, for economic participants, eventually come to replace objective observations. The result is that the ‘science’ of economics is transformed into a battleground for subjective beliefs, where the soldiers are not self-evident observations or testable predictions, but, rather, fashionable claims and politically-correct statements. In recent times, we have seen this to be the case for the Philips Curve, the theory of aggregate demand, and Keynes inversion of Say’s Law.[1] These, among many similar economic ideas, are modern truisms which, though falsified by present-day economic observation, persist as structures of belief which are dearly held by the economists and politicians who shape our collective future.

In this essay, I will draw the reader’s attention to a truism which endures as conventional wisdom today, even though it can be easily falsified by plain experience and objective examination. I speak of a belief which colours the whole of recent economic history: the judgment that the natural element Gold (Au) is now relegated to its present status as a store of value because payment technology has evolved beyond physical media. The whiggish story goes something like this: just as we humans evolve, so, too, does our civilization progress along the rising road of history; therefore, just as our maturing societies exhibit increased technical capabilities, so do our monetary instruments undoubtedly improve with the march of time…

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Do Not Waste One More Second

Do Not Waste One More Second

Do not waste one more second of your time on this earth, for the insects are all dying, and the ice caps are vanishing, and the oceans are filling with plastic.

This could all be gone very soon, so don’t waste it. Don’t take any part of the crackling miraculousness of this cacophony for granted, because there are missiles being targeted, and there are vast battle plans being drawn. You could look outside your window tomorrow morning and see a mushroom cloud on the horizon, and you will regret letting life’s preciousness slip through your fingers.

We do not like to think about death. We say, “I will think about death some other day. Today I must busy myself with mental chatter about nonsense and the avoidance of feeling my feelings. I would love to stare into the white skull of the human condition, but my schedule is chock full of escapism.” We push death aside, and push death aside, and push death aside. And then, one day, death pushes us aside.

One way or another, the end is coming. But if you truly, deeply engage here, you can live more life in a week than most people live in an entire lifetime. By that I do not mean that you can have more experiences, I just mean that you can experience far more moments with far more depth and clarity than someone who’s just drifting through life on autopilot. One week fully and consciously appreciated contains more lived life than an entire stay in this world from cradle to grave when it is taken for granted.

And of course you will also have far more amazing experiences than someone who isn’t directly interfacing with the moment.

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Of Stocks & SCOTUS: The Perils Of Memory

Authored by Nicholas Colas via DataTrekResearch.com,

We have been thinking a lot about human memory over the last few days. Part of that is some lingering thought about the 10-year Lehman bankruptcy anniversary earlier this month. Another is the fact that Monday will be the one-year mark for DataTrek publishing these notes. And, of course, the Supreme Court nomination hearings today put human memory in a starring role.

The science of memory shows this subject is much more complex than most of us realize. One classic example:

  • Daniel Kahneman, who won a Nobel Prize for Prospect Theory, once did an experiment with subjects who were undergoing a colonoscopy.
  • Some patients received the standard exam, which featured an especially painful part near the end of the procedure. This is one reason colonoscopies had a bad rap for so long.
  • Others had their procedure altered so the last part was not so painful.
  • The latter remembered the whole event as being much less painful than those where the last bits were especially difficult. Same procedure, but entirely different memories based on whether the last slice of time was easy or hard.
  • As an aside, we’ve watched Kahneman’s TED talk more times than we can remember. It is worth a look if you haven’t seen it.

The researcher we follow most closely on the topic of memory is American academic Elizabeth Loftus of UC Irvine. One of her specialties is how eyewitness testimony in criminal cases can be incorrect, leading to false convictions. The crossover to the stresses of investing and how those affect our memories is what drew us first to her work. Here is a sample:

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Wisdom, Experience and Just-In-Time Thinking

Wisdom, Experience and Just-In-Time Thinking

I try to remind myself each generation considers itself smarter than the previous iteration. If you follow the bouncing logic ball, this means the next (younger) generation believes itself smarter than its present day cohort. In essence the millennial generation of today feels superior to those older than them while simultaneously inferior to the pack nipping at their heels.

Call it a superiority/inferiority complex, though admittedly the superior portion leads the inferior since we are all immortal gods at that age. Soon enough that wears off, usually around 30ish when we begin to recognize vulnerabilities already present and obvious to all but ourselves.

Ultimately smartness or intelligence is a relative measuring tool. There is no doubt my nineteen year old college student rocket scientist is much more adept at deciphering mathematical equations or manipulating genomes than I am. But can she determine which way a tree will tend to fall before cutting it, or smell snow in the air long before it begins to fall?

I’ve written before about the tendency of a technological culture to breed, and reward, specialists while dismissing generalists out of hand as the decaying fossils of our time. And while those who pontificate such wisdom are not exactly wrong, neither are they precisely right.

Obviously I understand with complexity comes specialization. I get it. The company designing and manufacturing the latest central processing unit (CPU) essentially the ‘thinking’ brain of a computer, cannot expect one person to understand and execute the thousands of steps involved in creating the finished product. Efficiency and economy demands a better way forward and, for now at least, that way is via specialty.

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The Triumph of Hope over Experience

On Wednesday the socialist central planning agency that has bedeviled the market economy for more than a century held one of its regular meetings.  Thereafter it informed us about its reading of the bird entrails via statement (one could call this a verbose form of groping in the dark).

Modern economic forecasting rituals.

A number of people have wondered why the Fed seems so uncommonly eager all of a sudden to keep hiking rates in spite of economic data in Q1 indicating surprising weakness in   economic output (of course they once again didn’t hike rates, this time).

We have long suspected that the real reason for the urge to hike is to accumulate “ammunition” for the next downturn. After all, it really shouldn’t make much of a difference where the federal funds rate is; the federal funds market is basically dead anyway, and the Fed continues to refrain from shrinking its balance sheet (i.e., bank reserves will remain elevated, and the Fed won’t actively exert pressure on money supply growth).

Then again, the statement is actually in keeping with the orthodox (largely Keynesian) view of the economy and the central bank’s presumed tasks. There is actually no need to take it at anything but face value. The complete statement can be seen here, but we want to focus on one particular excerpt – which follows an enumeration of various data points in paragraph one:

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Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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