Epsilon Theory is Dr. Ben Hunt’s ongoing examination of the narrative machine driving human behavior, political policy and, ultimately, capital markets—an unconventional worldview best understood through the lenses of history, game theory and philosophy.
Short-form notes (longer than a Tweet, shorter than our usual tomes), responses to reader emails, and new voices. We’re committed to writing at least two posts every day.
Dr. Ben Hunt hosts the Epsilon Theory podcast with co-hosts and special guests from financial services, the financial media *gasp* and beyond. The Epsilon Theory podcast is the quickest way to get all of the unconventional perspective, historical context and narrative analysis you’ve come to expect from Epsilon Theory pumped directly into your head.
We’re growing our family of Epsilon Theory contributors to include a broad range of voices on an evolving range of subject matter. If you listen to the podcast, you’ll recognize some of the names as colleagues, partners and friends of Ben from Salient, any number of past lives, and the growing circle of outspoken truth-seekers in financial services and beyond.
Epsilon Theory author Dr. Ben Hunt is frequently quoted in print, radio and TV appearances.
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Trump advisers calculate hourly pay grew 1% in the second quarter, rather than the official figure of 0.1%, citing a new way to measure
Nowhere is the cartoonification of data more obvious than in the construction of labor reports, and nowhere is it more influential on markets and politics.
The macroeconomic data that drives markets up and down is, in the technical sense of the word, a cartoon. It is an abstraction of an abstraction, and it is always and in all ways constructed in service to the Nudging State and the Nudging Oligarchy. These cartoons are part and parcel of the intentional effort to support status quo political and economical Narratives, and once you start looking for them, you will see them everywhere.
The simple fact of the matter is that the most powerful institutions in America – the Fed, the White House, and Wall Street – all want wage inflation. They NEED wage inflation, if not in reality then in appearance, to achieve their institutional goals. And so we’re gonna get it. One way or another, we’re gonna get it, even if that means counting different things in different ways to get the answer that they want.
The Council of Economic Advisers is an Executive agency established in 1946 to advise the President on economic matters. It’s currently chaired by Kevin Hassett, an economist best known for co-authoring the not-at-all silly and hyperbolic book Dow 36,000 in 1999, and formerly the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute. Yes, the State Farm endowed chair. That is, apparently, a thing.
Here’s an actual quote from Chairman Hassett.
“Consumer sentiment has hit a 20-year high, business confidence is up, and GDP growth has climbed above 4%. But some wage measures seem inconsistent with all of that good news.”
Golly, what to do with data that doesn’t fit all of that good news? Clearly it must be a problem with the data. Clearly we need to change our measurements to make this good news, too!
I am not making this up.
I wish I were surprised, but of course I’m not. And before the Trumpkins work themselves into some sort of MAGA apoplexy, I wrote a long Epsilon Theory note – “The Icarus Moment” – about how the Obama administration did the same damn thing.
This is the hallmark of the modern world. It is the triumph of abstraction, the triumph of the cartoon. We model the model in order to instill fear or greed or pleasure or patriotism. Constantly. Everywhere.
How do we resist? We see the world for what it is, not what we wish it were. We are long volatility and short abstraction. That’s the formula for living in the Cartoon Age, both as an investor and as a citizen. It’s a lonely perch, because it doesn’t scale. You’ll never get rich and you’ll never get elected President being long volatility and short abstraction. But you can do better than that. You can be a free human being.