Ben has already talked about the biggest and most important thing we can do in the face of the admissions bribery scandal.
But many remain convinced that this scandal is an inflection point, a change in the Zeitgeist. It isn’t. But that doesn’t mean we can’t be watching for our opportunity to weaken the influence of the Church of Credential.
“Oh, little Jimmy is going to 20-Years-Ago-This-Was-A-Second-Rate-University? I hear really good things about that school. Congratulations!”
“Thanks! We’re all very pleased. Everyone except my bank account, that is. Hahaha!”
It’s true, everyone is VERY pleased by the current system. Prestige university credentialing is a steam valve … \whispers\ just like elections.
It all started with the Maestro, Alan Greenspan, and his determination to create a Great Moderation. And it was all going so swimmingly, too, until the Great Disaster of 2008.
Now that there’s so little central banks can do, they are dead set on preventing another downturn before it even starts. So how does risk ‘price’ in capital markets when the cost of capital is constantly set too low? It doesn’t.
Everything about the Zeitgeist is working to steer promising minds toward cultivating the skills and temperament needed to succeed in a Fiat World. We are creating a generation of missionaries.
Just one small problem: a competitive game among missionaries is a stag hunt. The dominant strategy for each of us individually is bad for us all. So what the hell do we do?
We are immersed 24/7 in a Fiat World, where we are TOLD that inflation does not exist, where we are TOLD that wealth inequality and meager productivity and negative savings rates just “happen”, where we are TOLD we must vote for ridiculous candidates and buy ridiculous securities and borrow ridiculous sums.
We’re not Flat Earthers. Ha Ha! Those guys are idiots! Can you imagine believing that stuff?
No, we’re not Flat Earthers. We are Fiat Earthers.
Why are institutional investors in trouble with the new Zeitgeist of capital markets transformed into a political utility?
Because everything you think you know about portfolio diversification will fail. Because emerging markets are going to be crushed before this is over. Because everyone’s inflation-investing muscles have atrophied to the point of helplessness. Because you think long-vol and crisis-alpha are things.
We will be hosting our next Epsilon Theory Live Event at 2PM Eastern Time on February 19, 2019. ET Premium and ET Professional subscribers will be able to access the livestream through their ET Live link in the navigation bar. Premium and Professional subscribers may also submit any questions live or in advance. If you …