{"id":3661,"date":"2014-12-28T17:30:52","date_gmt":"2014-12-28T22:30:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=3661"},"modified":"2014-12-28T17:30:52","modified_gmt":"2014-12-28T22:30:52","slug":"the-us-dollar-and-the-cone-of-uncertainty-thoughts-from-the-frontline-investment-newsletter-mauldin-economics","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=3661","title":{"rendered":"The US Dollar and the Cone of Uncertainty | Thoughts from the Frontline Investment Newsletter | Mauldin Economics"},"content":{"rendered":"

The US Dollar and the Cone of Uncertainty | Thoughts from the Frontline Investment Newsletter | Mauldin Economics<\/a>.<\/p>\n

Currently we have an international monetary non-system. Nobody has to follow any rules. Everybody does what they consider is in their own short-term best interest. The real difficulty is: What is in their short-term interest \u2013 for example, following ultra-easy monetary policy \u2013 could well backfire somewhere. It might be not in their long-term best interest. And as the easy monetary policy influences the exchange rates, it influences other countries. Almost every country in the world is in easing mode, following the Fed, and we have absolutely no idea how it will end up. We are in absolutely unchartered territory here.<\/p>\n

\u2013 William S. White, former Chief Economist, Bank for International Settlements, in an interview for\u00a0Finanz und Wirtschaft<\/em><\/p>\n

I visualize this process [of forecasting the future] as mapping a\u00a0cone of uncertainty<\/em>, a tool I use to delineate possibilities that extend out from a particular moment or event. The forecaster\u2019s job is to define the cone in a manner that helps the decision maker exercise strategic judgment. Many factors go into delineating the cone of uncertainty, but the most important is defining its breadth, which is a measure of overall uncertainty.<\/p>\n

Drawing a cone too narrowly is worse than drawing it too broadly. A broad cone leaves you with a lot of uncertainty, but uncertainty is a friend, for its bedfellow is opportunity \u2013 as any good underwriter knows. The cone can be narrowed in subsequent refinements. Indeed, good forecasting is always an iterative process. Defining the cone broadly at the start maximizes your capacity to generate hypotheses about outcomes and eventual responses. A cone that is too narrow, by contrast, leaves you open to avoidable unpleasant surprises. Worse, it may cause you to miss the most important opportunities on your horizon.<\/p>\n

\u2013\u00a0Paul Saffo<\/a>, technology forecaster<\/p>\n

Saffo borrows the term \u201ccone of uncertainty\u201d from weather forecasting. While you may not be familiar with the concept, you see it in use every time there is a hurricane forecast. The further away you get from where the hurricane actually is at the moment, the wider the \u201ccone\u201d predicting its possible paths.<\/p>\n

<\/p>\n

<\/a><\/a>…click on the above link to read the rest of the article…<\/span><\/span><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The US Dollar and the Cone of Uncertainty | Thoughts from the Frontline Investment Newsletter | Mauldin Economics. Currently we have an international monetary non-system. Nobody has to follow any rules. Everybody does what they consider is in their own short-term best interest. The real difficulty is: What is in their short-term interest \u2013 for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1733,2224,839],"class_list":["post-3661","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-for-international-settlements","tag-international-monetary-system","tag-us-dollar"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3661"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3661\/revisions"}],"predecessor-version":[{"id":3662,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/3661\/revisions\/3662"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}