Category: Media

A powerful description of America’s current economic dilemma

http://charleshughsmith.blogspot.com/2021/02/trapped.html

The first market shadow nationalized was the mortgage market, the foundation of the housing market. After Wall Street’s epic swindle (subprime mortgages) imploded in 2008, the Fed printed trillions of dollars out of thin air and bought hundreds of billions of dollars in mortgages. The federal government nationalized the quasi-governmental mortgage issuers Fannie Mae and Freddie Mac, and the net result was virtually the entire mortgage market was government guaranteed or owned.

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Since Wall Street’s fraud had nearly vaporized the entire global financial system, the Fed also shadow nationalized the stock market, which had imploded once the house of cards collapsed. Thus the S&P 500 has advanced from 667 to 3,850 with just enough brief wobbles to maintain the semblance of an organic market.

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Now the Fed is in the process of shadow nationalizing the entire bond market. It signaled its intent long ago with quantitative easing, i.e. strangling price discovery in the Treasury market, and recently it began buying corporate bonds (proxies come in handy here).

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But that will release rogue waves of unintended consequences that will sink the Fed and the economy. Kill authentic price discovery, you also kill markets, and in killing markets, you kill allocation of capital and risk management, and in killing those, you kill the economy.

Paul Tudor Jones: A magical moment in a great documentary

The documentary is a fascinating and brief slice in the work life of Paul Tudor Jones, one of America’s all time great macro traders.

There’s this one moment that really stands out to me, where Jones, after losing about 5% of his portfolio in a single terrible trading day (at that time, ~$6M dollars), says this:

“The money’s irrelevant but it’s the whole concept of having analysis that’s just so completely off the mark. It’s a mental blow, it’s an intellectual blow, and it’s part of the business. This is going to happen a thousand times in the next five years to me, so it’s just something you learn to live with. I hate it.”

Talk about timeless advice.

First, his focus on PROCESS and ANALYSIS instead of outcome.

Second, his mental preparation for future pain. On the heels of a terrible performance, he reminds himself that this is going to happen 1000 MORE TIMES in the next 5 years.

Pretty remarkable. I encourage you to watch it, as he’s apparently known for trying to remove publicly available copies of this documentary.

6 articles to recommend: Social collapse (!); Elite competition; Why people use jargon

How Do You Know When Society Is About to Fall Apart? [NYT]

Social complexity, he argues, is inevitably subject to diminishing marginal returns. It costs more and more, in other words, while producing smaller and smaller profits. “It’s a classic ‘Alice in Wonderland’ situation,” Tainter says. You’re “running faster and faster to stay in the same place.”

Animal Ethics and Evolutionary Psychology – 10 ideas [source]

Dogs aren’t just cuter to us; they’re also cuter to wolves themselves! In one study a wolf mother was given two different litters to foster, one with wolf puppies and one with dog puppies: The foster-mother wolf was… more nurturant with the Malamute pups than with the wolf pups.

For Learners: 50 Beautiful Japanese Words & Phrases Pt. 7 [source]

Natsukashii = Nostalgia/Nostalgic
懐かしい
Literally, this word means “nostalgic” and is an adjective. But, this carries a lot more meaning and emotion to the Japanese. People don’t normally blurt out “oh, how nostalgic” in English, because no-one likes nostalgia. It’s seen as negative. For the Japanese, it’s something that brings back memories and warms the heart.

Intra-Elite Competition: A Key Concept for Understanding the Dynamics of Complex Societies [source]

A great expansion in the numbers of elite aspirants means that increasingly large numbers of them are frustrated, and some of those, the more ambitious and ruthless ones, turn into counter-elites. In other words, masses of frustrated elite aspirants become breeding grounds for radical groups and revolutionary movements.

10 ideas from Good Reasons for Bad Feelings – Insights from the Frontier of Evolutionary Psychiatry [source]

The German psychologist Jutta Heckhausen… studied a group of childless middle-aged women who were still hoping to have a baby. As they approached menopause, their emotional distress became more and more intense. But after menopause those who gave up their hope for pregnancy lost their depression symptoms. The irony is deep: hope is often at the root of depression.

People Use Jargon To Make Up For Their Low Standing In A Group [source]

Overall then, the work suggests that jargon use is “a novel form of status compensation”, allowing people to make up for their low status through their language choices. It’s obviously not the only reason that people use jargon, but is one that hadn’t previously been considered.

The New Yorker suggests we take more walks

From this article:

When we go for a walk, the heart pumps faster, circulating more blood and oxygen not just to the muscles but to all the organs—including the brain. Many experiments have shown that after or during exercise, even very mild exertion, people perform better on tests of memory and attention. Walking on a regular basis also promotes new connections between brain cells, staves off the usual withering of brain tissue that comes with age, increases the volume of the hippocampus (a brain region crucial for memory), and elevates levels of molecules that both stimulate the growth of new neurons and transmit messages between them.

While reading Daily Rituals, the most common pattern I noticed among successful creative types – outside of their propensity to ingest, uh, “substances” – was their penchant for long walks.

Boiling the fiat frog

From Rothbard’s free book, What Has Government Done to Our Money?:

At first, governments refused to admit that this was a permanent measure. They referred to the “suspension of specie payments,” and it was always understood that eventually, after the war or other “emergency” had ended, the government would again redeem its obligations.

When the Bank of England went off gold at the end of the eighteenth century, it continued in this state for twenty years, but always with the understanding that gold payment would be resumed after the French wars were ended.

Temporary “suspensions,” however, are primrose paths to outright repudiation. The gold standard, after all, is no spigot that can be turned on or off as government whim decrees. Either a gold-receipt is redeemable or it is not; once redemption is suspended the gold standard is itself a mockery.

Another step in the slow extinction of gold money was the establishment of the “gold bullion standard.” Under this system, the currency is no longer redeemable in coins; it can only be redeemed in large, highly valuable, gold bars. This, in effect, limits gold redemption to a handful of specialists in foreign trade. There is no longer a true gold standard, but governments can still proclaim their adherence to gold. The European “gold standards” of the 1920s were pseudo-standards of this type.

Finally, governments went “off gold” officially and completely, in a thunder of abuse against foreigners and “unpatriotic gold hoarders.” Government paper now becomes the fiat standard money.

Very worth reading for a clear, concise, if a bit dated, explanation of a major reason for America’s current economic stagnation, which is closely intertwined with – if not a direct cause of – its social and political problems.