‘Don’t go there!’ was practically the universal response to yesterday’s Diary.
Readers, friends, business partners and well-wishers all agreed; questioning God is not going to get us anywhere.
At least one reader recommended heavy-gauge lightning rods for our Baltimore headquarters. Others are out in front of the office, putting firewood around a stake.
Myths are worth wondering about
We agree, of course; God can do what He does. He doesn’t need our approval.
But wondering is what we do, here at the Diary, especially wondering about myths. ‘Myths’ are not necessarily untrue. They just can’t be known or proven in the way, say, that Archimedes could prove that the king’s crown was made of gold.
The Old Testament reports on God, for example, could be literally true…symbolically or metaphorically true…or complete fantasy. Unless you get hit on the head with a rock, or an angel speaks to you from a burning bush, you can’t know for sure.
Likewise, we can’t know for sure which candidate for president would be better.
Poor Donald Trump is sinking in the polls; the media says his reckless comments are catching up with him. But who knows?
We can’t see into the future…only God can. So, we make our decisions based not on facts, but on which myths (assumptions and prejudices that can’t be tested) we believe.
In newspapers, elections, and most of public life, myths are more important than provable facts. They direct trillions of dollars of spending…and set off wars in which millions are killed.
The largest demonstration in history was in India, with millions of people taking to the streets to protest the killing of cows. In short, myths are worth wondering about.
The Fed says it wants 2% consumer price inflation. But there is nothing scientific about it.
Is 2% better than, say, 1%? Or no inflation at all? It is myth.
Yesterday, the prophet Janet brought forth the expected blah-blah. Sticking her neck out, she said the Brexit vote next week ‘could have consequences’ for the financial system.
Hey, what couldn’t?
When you don’t want to do something, it’s not hard to find reasons not to do it.
Don’t want to mow the lawn?
The grass is too wet. Or it’s too late in the day. Or the lawnmower needs oil.
Don’t want to take a chance on raising rates?
The British could vote to leave the European Union. The Orioles could lose a home game. Or someone, somewhere could catch a cold on his way to work.
‘Amor fati’ was Nietzsche’s famous expression. Literally translated, it means ‘love of fate’.
It is a white shoe yearning for mud. It is a turkey looking forward to Thanksgiving. Or an investor stoically preparing for a bear market.
We use the term to describe the grace and courage you need to meet a complex, unknowable, and uncontrollable future.
We are all human…all God’s fools…and all bound for the grave. No use going there with a sour look on your face! And no use pretending it isn’t so.
Deeply in debt
Cowardice has been a sub-theme in the Diary for the last week or so.
The Fed provides us with an illustration. Rather than own up to the mess it has made, it hides behind a silly and superficial myth — that it can protect the economy with centrally planned interest rates.
And now, thanks largely to its own mismanagement, the world is deep in debt, with far too many people all over the world who earn far too little income to support it.
Every loan comes with a fuse. And the world now has $200 trillion worth of debt…and plenty of matches. Brexit is just one of them. Sooner or later, we’re going to see some fire and brimstone.
Ms Yellen pretended not to notice yesterday. As we guessed, she wasn’t taking any chances.
What may be significant is the market’s reaction. Until now, every time the Fed has dodged fate, investors bought stocks. They expected stocks to rise, in celebration of more EZ money.
Not this time. In yesterday’s press announcement, Janet Yellen backed off her previous commitment to gradually raise rates…and instead strongly hinted that interest rates may stay depressed for a long time.
But instead of rising on the news, the Dow registered its fifth straight day of decline.
Yes, dear reader, it looks as though the Fed’s zero-interest-rate policy has finally lost its myth magic.
There is now $10 trillion of government bonds trading at sub-zero yields. Corporate profits are falling. Productivity is falling. And even with interest rates at a 5,000-year low, US GDP growth has been falling for four straight quarters…and may already be running below zero.
And that’s just in the US.
Europe is only barely limping along…with Britain possibly deserting the EU next week. Writes our old friend Rob Marstrand:
‘I believe the EU will fall apart over time, sooner or later and in one way or another. When it comes to investing, there will be winners and losers along the way, so it’s something that needs to be watched.
‘According to the Pew survey, the majority of people in Britain, Greece, France and Spain have an unfavourable opinion of the EU. And opinion in Germany and the Netherlands is only slightly in favour of the EU.’
Taking up the slack
Meanwhile, China’s problems grow.
While the whole world adds debt — by trying to stimulate consumer ‘demand’ — China adds debt to stimulate ‘capacity,’ so it can make more things for foreigners who can’t pay for them.
Officially, the Chinese central bankers have announced their own insight into amor fati. You can’t fix a problem caused by overinvestment by providing more cheap investment capital, they said.
Although this sounds as though they are ready to turn away from the errors and omissions of the past…the banks keep lending and builders keep building.
Already, there is not enough aggregate demand in the whole world to absorb all that capacity, says Richard Duncan, editor of ‘big picture’ advisory service MacroWatch.
And there’s no way local buying is going to take up the slack. The Chinese can’t afford to buy more stuff either. The average wage in the Middle Kingdom is just $8.13 a day — far too little to sustain a big increase in domestic demand.
What will happen next? What fati is coming?
Watch this space!
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