If "Over 90% of the systemic risk that exists in the system today is created by the fact that we have a Federal Reserve” is t true as Brook suggests - how much of that 90% did devout Rand lover Alan Greenspan contribute? Surely an Objectivist like himself would never intervene in private sector matters . . .
"Objectivism" boils down to "my facts are facts and your facts are not" and when held as an ideal by political/economic decision makers leads to the consolidation of power via "self-interest" and the very capricious behavior that they lament when the government acts unfavorably to "objective reality."
Brook should take a look at the Fed's investment advisory committee. If that isn't self-regulation, what is?
Ayn Rand, while not a boomer, is a first ballot honorary member of the boomer hall-of-fame.
Great point. Even libertarians have bestowed far reaching powers on state authorities, or made instrumental use of state power - because they are forced to reckon with the fact that core elements of political experience are essentially existential. Legitimate political decisions (don't have to, but often do) refer to nothing other than the efficacy of a particular set of political power holders over others. Politics is essentially a question of power, or domination. Libertarianism is anti-political, or anti-domination. Nonetheless they still must grapple with the implications of a politicized environment indifferent to their moral approbation. Nonintervention is non-binding. And never universally guaranteed.
I would like a world compatible with libertarian utopias, with a simple state apparatus that is exclusively normative, and above-the-fray of special interest. But I recognize this is fantasy. Yet they take it on as fact, thus committing themselves to a rather narrow worldview, which is always going to come up against, and fail, against the yardstick of the real world where the tension between the norm and its exception (inherent to politics), inevitably plays out.
And then, when they do chose to play a political game, they can do so only in bad faith.
From the title, I assumed the path of the narrative would include South Africa. Oh well. That's a great example in real time of what happens when the coercive power of government metastasizes from protection from X to protection of X (racism and the elite rule there now, worse than ever before, I think). Sad. We the people using coercive power to achieve a public good (Mancur Olson yet again) becomes "we with the guns make the rules" over time. Human nature. The fatal flaw in Ayn Rand's hopefulness is human nature, too. I watched that Wallace interview and thought the naivete on both sides of the table was high.
Philosophy for emotionally/socially immature late adolescents with precocious minds.
Human evolution isn't just about the mind, but also about our capacity to feel, to have social bonds and to weigh the relative merits of both these aspects of being human.
Unfortunately, she seems to have taken Nietzche's 'ubermensch' without the sophistication of the original, who was very much aware of the classic Greek approach of not worshipping at the altar of one god alone (Apolo or Athena in this case) but giving due respect to all aspects of human experience or risk hubris.
We have fallen in love with the mind and technological progress and created a very unbalanced society - quite likely a development that started when we moved from nomadic life in small groups to sedentary existence - and the nemesis of global catastrophe is nearer to us than ever.
While on the topic of lopsided development -
When the US supreme court in its infinite wisdom ruled on Citizens United and recognised corporations as persons, we regressed even further - now we have, in corporations, the strongest 'persons' with the socio-emotional development of a toddler.
The reason I mention this is that the free market, libertarian, objectivist crowd simply ignores the fact that mind, technological progress and the benefits that accrue to those adept at playing this game are only a part of being human, and sooner or later invite an ugly and violent backlash. Whether or not this mind set has led us to the verge of climate catastrophe, nuclear war etc. is hard to judge, but these threats certainly loom larger when humans fail to temper the extremes of both mental and emotional behaviours.
There is something "like" the S&P 500,000 -- the Vanguard Total Market fund which invests in roughly 3500 companies. We, unfortunately, see the same dynamics there. More in coming posts.
My point was to break up larger companies or at least enforce laws that are on the books. Big business and government are to cozy, they should be more adversaial. The federal reserve just sets the price of money, what people do with it thats on them. The constant scapegoating and blaming of goverment for all are problems is the real systemic problem. It is just a lazy way to shift the blame.
For me the the core of this narrative to include both the individual and collective environments is one "Linchpin" .....COOPERATION within the context of Regional/Continental/Global. When we see this tide change as we currently do...structure/regimes adapt & morph and it potentially can go any direction without control (Network Effects).
As for the the ref of the Ayn Rand's of the world...lets remind ourselves..."Libertarians: They are convinced of their fierce independence while utterly dependent on a system they don’t appreciate or understand."
I am not part of anyone's tribe, don't drink anyones cool-aide or their BS or cult of personalities....me personally I will be glad when the center of gravity shifts back to the center away from both LF & RT Extremistans...but what do I know, worth about two cents! GL
Thanks for investing your time in sharing your thoughts on the markets and other areas. Truly enjoy the perspective you bring. Wondering if you could address the role of passive in market valuations in a future post? John Hussman and others make a strong argument on the role of gravity in bringing market valuations back to their historical norms. With passive having their big thumb on the scale, is this even true anymore or are we in a new era of permanent higher valuations due to the constant bid? Dare i say it, is it different this time?
Why is it the S&P 500 and not the S&P 500,000? It seems to me if they were smaller companies they would not pose risk to the system and would follow existing laws more closely. Thanks for all your inteviews and writings. You have made this 56 year old roofing contractor a much better investor.
There is something "like" the S&P 500,000 -- the Vanguard Total Market fund which invests in roughly 3500 companies. We, unfortunately, see the same dynamics there. More in coming posts.
(1) Although a great debate, you lost the debate to Yaron.
(2) Jack Bogle has done more for the individual investor than any other person, and without him, we'd still be paying ridiculous fees to Wallstreet. I don't necessarily agreen with all of Bogle's beliefs including only investing in a U.S. broad-based index, age in bonds, and his disdain for ETFs. He does, though, belong on the investment professionals Mount Rushmore.
(3) The fear of index funds distorting the market is overblown. Until indexing makes up greater than 90% of the global public securities market, there is enough active management to keep the market prices honest.
You're welcome. Thank you for your sarcasm. Obviously, number 1 is subjective and partially dependent on philosophical beliefs - no certainty. Number 2 is just an opinion - no certainty. Number 3, I've researched (I know you have too, in depth) and while not completely certain of the 90% figure, it is CERTAINLY in that ballpark.
Super post. Never ceases to amaze us the quality of Substack content/writers.
The Rand references made us think of one of her works that specifically deals with our area of focus - environmental.
Return of the Primitive - The Anti-Industrial Revolution (originally published as “The New Left” in 1971). Quite prescient relative to the current political climate on all things “environmental”.
The broadness of your intellect never ceases to amaze me Mike! Sharing a drink or coffee with you at some investment conference is not only on my bucket list, it is officially on my vision board...consider yourself warned!
“and the Vanguard ideology is being increasingly put to nefarious purposes, leading to our generation's most important market power concentration story.”
Maybe I missed the point, but this seems like the most important sentence in the piece and the crux of passive investing. What happens when, literally, millions of people wake up and cannot retrieve the $$ they’ve been dutifully socking away with every paycheck - or they can only get it at vastly reduced amounts? Do they ever wake up to the fact that no one is managing their $$ and they’ve been dealt a load of 401k BS because the market doesn’t always just go up? If the market takes a REALLY serious dive, what does a run on Vanguard look like? 🥶
My initial reaction was that this issue was pondered two generations ago by those prominent monetary theorists Bobby Darin and Johnny mercer whose brief ruminations can be heard at:
More seriously , monetary oversight political consensuses which either emphasize achieving short-term stability ,the agency benefit to government of "doing something" and forestalling deep panics likely to incur without intervention versus avoiding the ultimate the risks of regulatory capture , institutional corruption and eventual systemic crisis from the mission creep of progressively more extensive direction of monetary policy and apportionment of its effects .
We have opted for the first course and over the last 30 years have been steadily more aggressive in going down that path. At some point we are likely to reach its practical limits ; but we don't seem to be there yet.
Fantastic piece Mike. I’m reminded of this quote from Supreme Court Justice John Marshall Harlan’s opinion in the 1905 Jacobson v. Massachusetts, which addressed the issue of vaccine mandates:
“the liberty secured by the Constitution does not import an absolute right in each person to be at all times, and in all circumstances, wholly freed from restraint...that all shall be governed by certain laws for the protection, safety, prosperity and happiness of the people, and not for the profit, honor or private interests of any one man, family or class of men.”
This is an embarrassing light-weight article. Rand wasn't an economist but still had the sense to appreciate Mises' works on banking . And therefore had a much deeper understanding of the subject. I also note the complete misunderstanding of the subject in the comments.It's the model of the day, criticize what you don't understand using straw men. Read Aquinas or Bohn-Bawerk to see how it's properly done.
If "Over 90% of the systemic risk that exists in the system today is created by the fact that we have a Federal Reserve” is t true as Brook suggests - how much of that 90% did devout Rand lover Alan Greenspan contribute? Surely an Objectivist like himself would never intervene in private sector matters . . .
"Objectivism" boils down to "my facts are facts and your facts are not" and when held as an ideal by political/economic decision makers leads to the consolidation of power via "self-interest" and the very capricious behavior that they lament when the government acts unfavorably to "objective reality."
Brook should take a look at the Fed's investment advisory committee. If that isn't self-regulation, what is?
Ayn Rand, while not a boomer, is a first ballot honorary member of the boomer hall-of-fame.
Great point. Even libertarians have bestowed far reaching powers on state authorities, or made instrumental use of state power - because they are forced to reckon with the fact that core elements of political experience are essentially existential. Legitimate political decisions (don't have to, but often do) refer to nothing other than the efficacy of a particular set of political power holders over others. Politics is essentially a question of power, or domination. Libertarianism is anti-political, or anti-domination. Nonetheless they still must grapple with the implications of a politicized environment indifferent to their moral approbation. Nonintervention is non-binding. And never universally guaranteed.
I would like a world compatible with libertarian utopias, with a simple state apparatus that is exclusively normative, and above-the-fray of special interest. But I recognize this is fantasy. Yet they take it on as fact, thus committing themselves to a rather narrow worldview, which is always going to come up against, and fail, against the yardstick of the real world where the tension between the norm and its exception (inherent to politics), inevitably plays out.
And then, when they do chose to play a political game, they can do so only in bad faith.
From the title, I assumed the path of the narrative would include South Africa. Oh well. That's a great example in real time of what happens when the coercive power of government metastasizes from protection from X to protection of X (racism and the elite rule there now, worse than ever before, I think). Sad. We the people using coercive power to achieve a public good (Mancur Olson yet again) becomes "we with the guns make the rules" over time. Human nature. The fatal flaw in Ayn Rand's hopefulness is human nature, too. I watched that Wallace interview and thought the naivete on both sides of the table was high.
Ayn Rand...🙄 Really?
Philosophy for emotionally/socially immature late adolescents with precocious minds.
Human evolution isn't just about the mind, but also about our capacity to feel, to have social bonds and to weigh the relative merits of both these aspects of being human.
Unfortunately, she seems to have taken Nietzche's 'ubermensch' without the sophistication of the original, who was very much aware of the classic Greek approach of not worshipping at the altar of one god alone (Apolo or Athena in this case) but giving due respect to all aspects of human experience or risk hubris.
We have fallen in love with the mind and technological progress and created a very unbalanced society - quite likely a development that started when we moved from nomadic life in small groups to sedentary existence - and the nemesis of global catastrophe is nearer to us than ever.
While on the topic of lopsided development -
When the US supreme court in its infinite wisdom ruled on Citizens United and recognised corporations as persons, we regressed even further - now we have, in corporations, the strongest 'persons' with the socio-emotional development of a toddler.
The reason I mention this is that the free market, libertarian, objectivist crowd simply ignores the fact that mind, technological progress and the benefits that accrue to those adept at playing this game are only a part of being human, and sooner or later invite an ugly and violent backlash. Whether or not this mind set has led us to the verge of climate catastrophe, nuclear war etc. is hard to judge, but these threats certainly loom larger when humans fail to temper the extremes of both mental and emotional behaviours.
There is something "like" the S&P 500,000 -- the Vanguard Total Market fund which invests in roughly 3500 companies. We, unfortunately, see the same dynamics there. More in coming posts.
My point was to break up larger companies or at least enforce laws that are on the books. Big business and government are to cozy, they should be more adversaial. The federal reserve just sets the price of money, what people do with it thats on them. The constant scapegoating and blaming of goverment for all are problems is the real systemic problem. It is just a lazy way to shift the blame.
For me the the core of this narrative to include both the individual and collective environments is one "Linchpin" .....COOPERATION within the context of Regional/Continental/Global. When we see this tide change as we currently do...structure/regimes adapt & morph and it potentially can go any direction without control (Network Effects).
As for the the ref of the Ayn Rand's of the world...lets remind ourselves..."Libertarians: They are convinced of their fierce independence while utterly dependent on a system they don’t appreciate or understand."
I am not part of anyone's tribe, don't drink anyones cool-aide or their BS or cult of personalities....me personally I will be glad when the center of gravity shifts back to the center away from both LF & RT Extremistans...but what do I know, worth about two cents! GL
Thanks for investing your time in sharing your thoughts on the markets and other areas. Truly enjoy the perspective you bring. Wondering if you could address the role of passive in market valuations in a future post? John Hussman and others make a strong argument on the role of gravity in bringing market valuations back to their historical norms. With passive having their big thumb on the scale, is this even true anymore or are we in a new era of permanent higher valuations due to the constant bid? Dare i say it, is it different this time?
loved the Robert Gordon clip.
Why is it the S&P 500 and not the S&P 500,000? It seems to me if they were smaller companies they would not pose risk to the system and would follow existing laws more closely. Thanks for all your inteviews and writings. You have made this 56 year old roofing contractor a much better investor.
There is something "like" the S&P 500,000 -- the Vanguard Total Market fund which invests in roughly 3500 companies. We, unfortunately, see the same dynamics there. More in coming posts.
(1) Although a great debate, you lost the debate to Yaron.
(2) Jack Bogle has done more for the individual investor than any other person, and without him, we'd still be paying ridiculous fees to Wallstreet. I don't necessarily agreen with all of Bogle's beliefs including only investing in a U.S. broad-based index, age in bonds, and his disdain for ETFs. He does, though, belong on the investment professionals Mount Rushmore.
(3) The fear of index funds distorting the market is overblown. Until indexing makes up greater than 90% of the global public securities market, there is enough active management to keep the market prices honest.
Thank you for your certainty.
You're welcome. Thank you for your sarcasm. Obviously, number 1 is subjective and partially dependent on philosophical beliefs - no certainty. Number 2 is just an opinion - no certainty. Number 3, I've researched (I know you have too, in depth) and while not completely certain of the 90% figure, it is CERTAINLY in that ballpark.
Still love your musings, Mike.
Super post. Never ceases to amaze us the quality of Substack content/writers.
The Rand references made us think of one of her works that specifically deals with our area of focus - environmental.
Return of the Primitive - The Anti-Industrial Revolution (originally published as “The New Left” in 1971). Quite prescient relative to the current political climate on all things “environmental”.
Fear not, Bobs shock could be felt viscerally via the audio edition too! Made for a great interview.
The broadness of your intellect never ceases to amaze me Mike! Sharing a drink or coffee with you at some investment conference is not only on my bucket list, it is officially on my vision board...consider yourself warned!
Will be my pleasure!
“and the Vanguard ideology is being increasingly put to nefarious purposes, leading to our generation's most important market power concentration story.”
Maybe I missed the point, but this seems like the most important sentence in the piece and the crux of passive investing. What happens when, literally, millions of people wake up and cannot retrieve the $$ they’ve been dutifully socking away with every paycheck - or they can only get it at vastly reduced amounts? Do they ever wake up to the fact that no one is managing their $$ and they’ve been dealt a load of 401k BS because the market doesn’t always just go up? If the market takes a REALLY serious dive, what does a run on Vanguard look like? 🥶
Just another doomsayer - pay no attention.
My initial reaction was that this issue was pondered two generations ago by those prominent monetary theorists Bobby Darin and Johnny mercer whose brief ruminations can be heard at:
https://www.youtube.com/watch?v=X6u6jvhno-c
More seriously , monetary oversight political consensuses which either emphasize achieving short-term stability ,the agency benefit to government of "doing something" and forestalling deep panics likely to incur without intervention versus avoiding the ultimate the risks of regulatory capture , institutional corruption and eventual systemic crisis from the mission creep of progressively more extensive direction of monetary policy and apportionment of its effects .
We have opted for the first course and over the last 30 years have been steadily more aggressive in going down that path. At some point we are likely to reach its practical limits ; but we don't seem to be there yet.
Fantastic piece Mike. I’m reminded of this quote from Supreme Court Justice John Marshall Harlan’s opinion in the 1905 Jacobson v. Massachusetts, which addressed the issue of vaccine mandates:
“the liberty secured by the Constitution does not import an absolute right in each person to be at all times, and in all circumstances, wholly freed from restraint...that all shall be governed by certain laws for the protection, safety, prosperity and happiness of the people, and not for the profit, honor or private interests of any one man, family or class of men.”
This is an embarrassing light-weight article. Rand wasn't an economist but still had the sense to appreciate Mises' works on banking . And therefore had a much deeper understanding of the subject. I also note the complete misunderstanding of the subject in the comments.It's the model of the day, criticize what you don't understand using straw men. Read Aquinas or Bohn-Bawerk to see how it's properly done.
Sorry you are embarassed