Objective Problem Assessment And Solution Is Uncommon

What we “know” is an enormous dataset. For most people, the dataset is very wide and very shallow. It is very narrow and deep for specialists, but only within their field of study. Nobel laureate Murray Gell-Mann observed that when reading a magazine article about physics, he noticed the errors, the incomplete thoughts, the misdirected logic, and the unwarranted conclusions in just a few seconds.

However, he was not skeptical when he turned the page to an article about biology, nano-tech, or plate-tectonics. He tended to accept those articles as valuable and interesting even though moments ago, he had dismissed one about his field of study. Why would he accept the other articles when he knew the process of creating them was fallible.

Maybe he accepted things as true until he had facts with which to argue.

Why does that matter? 

It matters because we tend to think everyone else is as honest as we are. If Gell-Mann had started from the position that everything in the magazine was as unlikely to be true as the physics article he read, his knowledge of other subjects would be narrower and no deeper. His understanding of different subjects would contain less wrong or biased material.

Having less wrong information in the pool means it’s easier to accept the truth when it comes along. You need not forget something you already know.

Applying skepticism when the subject is unfamiliar

Once Dr. Gell-Mann added distrust of magazine articles to his thinking repertoire, how long do you think it would be before he became more selective about the magazines he read? My guess is not long.

When you notice that much of what passes for knowledge is, in fact, propaganda to serve the needs of a few, you become skeptical of everything. You can defend yourself a little, but it’s work, and most people won’t do the job unless the field interests them, like money.

Skepticism leads me to question the Federal Reserve and most other central banks. Is their history one of solving problems, or is it one of creating problems?

The objective evidence is that central banks working with governments cause problems they eventually seek to solve. Upon declaring a solution, they claim credit, all the while ignoring why the problem was there to begin with.

How to deal with one-sided information

The answer is obvious. Find the other side.

The single problem you will have is finding the information in real-time. You will notice the people who like control and regulation have publicists. They have a marketing plan or at least talking points. Does free-market capitalism have publicists, a marketing department, or a vast media that reports its vision?

You can find the information you need only much later. It is a matter of general acceptance that the Great Depression of the 1930s resulted from errors by the governments and the Central banks.

The 2008 financial crisis is coming to be seen as initiated by policy, not by banks or capitalists. This TEDx Talk from 2014 describes how that came about. It deals with an arcane accounting idea, “Mark to Market,” that tended to make assets with long value be valued as if they were sold today for whatever they would fetch.

Market valuations include human emotional factors, incomplete information, and weak analysis. That factor caused fundamental and economic values, one side of business valuation, to be joined with market valuation, the other side. As a result, prices the FED used to assess otherwise stable assets became volatile. Volatility includes sharp drops, and if an assessment is made, then entire businesses and many people can be destroyed financially.

The question

Given their objective history, why should we trust the government and central banks to do better today?

The bits to take away

When you can find only one side of an argument, you should mistrust it.

It is unrealistic to believe that the people and methods that caused the problem can solve it by doing more of the same.

Think through what you mean by cure. There are three possible approaches

  1. Remove the symptoms.
  2. Discover and alter the conditions that lead to the symptoms.
  3. Assess the potential more widely and assess what new conditions should exist so no similar problem can exist in future.

Good decisions involve complete and objective information. Learn to look for it.

How many government programs operate beyond symptoms. – #1 cure Some do, but not all.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

 

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