Money and Finance
- Howard Marks Memo: On The Couch
Link to Memo: On the Couch I woke up early on Saturday, December 12 – the morning after a day of significant declines in stocks, credit and crude oil – with enough thoughts going through my mind to keep me from going back to sleep. Thus...
- The Relation Of Science And Religion: Some Fresh Observations On An Old Problem – By Richard P. Feynman
The 3 paragraphs in the second excerpt below relate a lot to investing, and many other things in life. In this age of specialization men who thoroughly know one field are often incompetent to discuss another. The great problems of the relations...
- John Mauldin: The Theology Of Inflation
We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I’m sorry – your answer is wrong. Or rather, we can’t know if your answer is right or wrong because we are not sure what is meant by the question. We may...
- Problem Solving: Complexity, History, Sustainability - By Joseph Tainter
Sustainability or collapse follow from the success or failure of problem-solving institutions. The factors that lead to long-term success or failure in problem solving have received little attention, so that this fundamental activity is poorly understood....
- Gary Taubes Blog Post
Some very interesting thoughts from Taubes relating not just to health and obesity, but also to science and the drivers behind paradigm shifts in any field. A lot of what he is saying reminded me of things Steve Keen has talked about. While Taubes is...
Money and Finance
Howard Marks Memo: Will It Work?
The other day, my son Andrew – college senior and credit-analyst-to-be – asked whether I think Treasury Secretary Geithner is doing the right things. As has happened before, his question elicited a fatherly response that grew into this memo.
When you want a bridge built, you hire a civil engineer whose “calcs” will determine exactly how much concrete and steel should be used. Then it’ll be sure to hold the weight of the cars you expect to cross it. And if you have to perform a task in carpentry, you can employ specialized tools developed and tested expressly for the job: esoteric things like miter boxes, routers and extractors.
One of the most important things to bear in mind today is that economics isn’t an exact science. It may not even be much of a science at all, in the sense that in science, controlled experiments can be conducted, past results can be replicated with confidence, and cause-and-effect relationships can be depended on to hold. It’s not for nothing that economics is called “the dismal science.”
Solutions in economics aren’t nearly as dependable as engineers’ calculations, and there may not be a tool that’s just right for fixing an economy. Of course, the toolbox offers lots of possibilities, including interest rate reductions; quantitative easing; tax cuts, rebates and credits; stimulus checks; infrastructure spending; capital injections; loans, rescues and takeovers; regulatory forebearances and on and on. But no one should think there’s a “golden tool,” such that solving the problem is just a matter of figuring out which one it is and applying it. Anyone who holds the problem solvers to that standard is being unfair and unrealistic.
When you want a bridge built, you hire a civil engineer whose “calcs” will determine exactly how much concrete and steel should be used. Then it’ll be sure to hold the weight of the cars you expect to cross it. And if you have to perform a task in carpentry, you can employ specialized tools developed and tested expressly for the job: esoteric things like miter boxes, routers and extractors.
One of the most important things to bear in mind today is that economics isn’t an exact science. It may not even be much of a science at all, in the sense that in science, controlled experiments can be conducted, past results can be replicated with confidence, and cause-and-effect relationships can be depended on to hold. It’s not for nothing that economics is called “the dismal science.”
Solutions in economics aren’t nearly as dependable as engineers’ calculations, and there may not be a tool that’s just right for fixing an economy. Of course, the toolbox offers lots of possibilities, including interest rate reductions; quantitative easing; tax cuts, rebates and credits; stimulus checks; infrastructure spending; capital injections; loans, rescues and takeovers; regulatory forebearances and on and on. But no one should think there’s a “golden tool,” such that solving the problem is just a matter of figuring out which one it is and applying it. Anyone who holds the problem solvers to that standard is being unfair and unrealistic.
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- Howard Marks Memo: On The Couch
Link to Memo: On the Couch I woke up early on Saturday, December 12 – the morning after a day of significant declines in stocks, credit and crude oil – with enough thoughts going through my mind to keep me from going back to sleep. Thus...
- The Relation Of Science And Religion: Some Fresh Observations On An Old Problem – By Richard P. Feynman
The 3 paragraphs in the second excerpt below relate a lot to investing, and many other things in life. In this age of specialization men who thoroughly know one field are often incompetent to discuss another. The great problems of the relations...
- John Mauldin: The Theology Of Inflation
We begin this week with a simple pop quiz. Is inflation good or bad? Answer quickly. I’m sorry – your answer is wrong. Or rather, we can’t know if your answer is right or wrong because we are not sure what is meant by the question. We may...
- Problem Solving: Complexity, History, Sustainability - By Joseph Tainter
Sustainability or collapse follow from the success or failure of problem-solving institutions. The factors that lead to long-term success or failure in problem solving have received little attention, so that this fundamental activity is poorly understood....
- Gary Taubes Blog Post
Some very interesting thoughts from Taubes relating not just to health and obesity, but also to science and the drivers behind paradigm shifts in any field. A lot of what he is saying reminded me of things Steve Keen has talked about. While Taubes is...