Ben Hunt PhD's Contributions

There’s a great scene in the 4th season of The Sopranos where Tony is upbraiding his crew for their lack of “production”, particularly in the traditionally lucrative field of loan sharking. The recession is no excuse, says Tony, for failing to make money from “our thing” — organized crime.

A brief note today on what might be an arcane subject for some but is a great example of the most basic question in risk management — are you thinking about your risk questions in a way that fits the fundamental nature of your data?

There’s a wonderful commercial in heavy rotation on American television, where three women of a certain age are discussing one of the friend’s use of Facebook concepts such as “posting to a wall” or “status updates”.

If you don’t adapt, you die. Or worse … for an artist, anyway … you become uncool and passé. Your performance art becomes performance shtick. And yes, I’m looking at you, Elvis Costello. There’s an adaptive genius to the David Byrne’s and the David Bowie’s of the world, quite separate from their musical genius, and that’s what I want to examine in this note.

What we're witnessing right now in U.S. markets is a shift in the narrative structure around Fed policy, and it's hitting markets hard because the narrative structure around the Fed as an institution has never been stronger or more constant.

Two brief observations on incipient shifts in powerful narratives... First, China. The pleasant charade that recent currency intervention was nothing more than an effort to reverse the “one-way bet” of speculators and to “increase volatility” as part of China’s accession to some brotherhood of liberal nations is starting to crumble.

In 1791, Jeremy Bentham published a book describing what was clearly a revolutionary design for prisons, factories, schools, hospitals – any institutional building where a few administer instruction, discipline, or care to the many.

The market was down more than 2% last Monday. Why? According to the WSJ, CNBC, and all the other media outlets it was "because" investors were freaked out (to use the technical term) by poor US growth data.

At the outset of World War II, the German Luftwaffe attached an ear-splitting siren — the Jericho Trumpet — to the Junker Ju-87 dive-bomber, commonly called the Stuka. Dive-bombers are wonderful tactical aircraft if you have control of the skies, highly effective against tanks, vehicles of all sorts, even smaller ships, but...

If there is a better example of the overwhelming power of Common Knowledge than the Collective Solipsism of 1984, I have yet to find it.

Today economic theory is used as the intellectual foundation for a political stratagem that says you do not know what you truly like, and in particular you do not know your economic self-interest, but luckily for you we are here to fix that. This is the common strand between QE and Obamacare.