The world of Finance

The world of finance is often presented as opaque, convoluted and just plain spooky.  A bunch of weird statistics are used to quantify probable outcomes to scenarios to predict the required actions to be taken at a future event in a manner that becomes advantageous to a party or parties.  Then, and this is the tricky part, selling those outcomes to the vast majority of listeners, readers or viewers as preordained truths in order to bring about without fail that particular outcome and that particular outcome only, based on the hidden but guided actions of a vast crowd in order to mitigate outliers and various other scenarios that could potentially happen which would be less advantageous or less desirable to those making the predictions. 

In simpler terms, in other words, a group of people make a prediction for an action that when completed, would be advantageous to them but often in unseen ways to the large group of people they want to use to bring about the actions they want.  Then arrange a series of events in a manner that would propel said large group of people to act so that the desired reality by the small group comes to fruition thereby benefiting them and under the best case scenario yield a neutral outcome for the large group or do harm to them, which is an acceptable outcome but under no circumstances is the large group to benefit from the actions they undertake because that would rob the small group manipulating the scenario from achieving maximum profitability.  It is not enough for them to make the most of a situation and gain tremendous advantages financially, they want to make sure that most people not only do not profit from their actions but negatively are impacted to ensure that they achieve no positive outcome.  Any positive outcome for the large group would detract from the profitability of the small group and that is not acceptable.  The reason is simple – the shear size of the large group would scale up their insignificant individual gains in a way that would rob the small group of the maximum profitability they could recognize.  So, most people need to lose, and they need to in fact suffer the results for the small group to profit insane amounts of financial rewards. They want every single penny for themselves and anything short of that is not acceptable.

Here is the problem.  Most people alive are biologically programed, as any mammals are, to do a series of simple tasks that would allow them to accumulate resources that would make their existence easier and less stressful.  I.E.  most people would like to have more money so they can accumulate more stuff, thereby reducing the need to continuously have to work for the funds to accumulate resources, almost on a day-to-day basis.  Naturally, if they were made aware of the plan of the small group to essentially rob them of their ability to accumulate resources to enrich themselves, most people would rise up an mass and demand that the resources are shared in a more equitable way.  So, the plan has to be introduced and administered in a way that makes the vast majority of the people think that even though the evidence plainly states to the contrary, they have to be on board with it as if they were personally to benefit from it as well. 

One way that this is accomplished is the plan is introduced in a manner to appeal to the vast majority of viewers or listeners or readers in a way that would make them believe that they are an internal part of it and everyone else is a sucker.   This appeals to our internal instinct of selfishness where we justify our thinking of being more important than others as “survival”.  Yes, we understand a lot of people would probably suffer if we were to win at this game, but it is perfectly ok because we will be fine and our offsprings will be fine. So our continued existence and flourishing overrides and indeed corrects the injustice of others suffering. 

The best demonstration of this idea in my mind is the Efficient Market Hypothesis, or EMH for short.  What is the EMH?  Basically, what the EMH is, is the idea or theory that states that all prices (specifically share prices on an exchange) reflect all the information available at any given time.  Stocks trade at their fair market value on exchanges and proponents of EMH believe that investors benefit from investing in a low-cost passive portfolio since it is impossible to beat the market and stocks selection or market timing is irrelevant since all prices are correct at all times.  Essentially, the EMH says there is no way you will ever be able to beat the market, don’t even try and the collective wisdom of the market is smarter than you will ever be so therefore you don’t know anything of value that will enable you to gain an upper hand.  In other words, the way I interpret that is you will never be able to make better decisions than the market so you might as well accept your faith and just go along with the market.  You can’t afford your rent?  The market knows better the correct rent price than you do, and the landlord is justified in charging 5 times your salary because that is what the market will bear.  Medicine prices are out of control, and you can’t afford your medication?  The market has set the price and who are you to argue with it, if you don’t like it, oh well, that is the market price and not everyone is meant to live. 

Here is the problem.  The EMH is used as the cornerstone of modern finance and billions of people’s lives are impacted in a negative way based on this theory.  Financial machinery is guided by ideas and the EMH is the most prevalent idea that seems to guide the financial thinking of those who are in a position to set rules and regulations on what is and is not acceptable in the world of finance.  The EMH is set up in a way that overwhelmingly benefits those who already have the vast majority of the power both political and financial and they use it to explain to the rest of us what the plan is going forward that they think will benefit them the most, while selling it to us in a way that makes it sound like we personally will benefit from them as well.  The detriment to other people will be inevitable but oh well, we will be well off and that is all that matters.  But at the base of it all, it is all nonsense.  The EMH claims that all prices are correct based on the wisdom of the markets and the prices should not be argued with because all information is already baked into the pricing structure, but there is a gaping hole in the theory.  Political and financial information is not natural and does not exist on its own.  It must be brough into existence by virtue of being though about and spoken into existence.  All information that is in existence about finance and market pricing, at one point existed as an idea in someone’s head and it wasn’t until they voiced it and shared it with other people that it became part of the market force that set prices eventually. 

However, people, by and large, who think about and voice financial information that influences market prices, by default, do not share that information with the Earth willy nilly.  You never see a billionaire CEO buy a TV station and then go on there and start spewing information about what they intend to do in the future with their company so that you can be aware of what the product value will be in the future and make a decision accordingly.  Why?  Because it would be detrimental to their future earnings and any information that leads to them having access to the most probability of earnings and absolutely maximized profits even if it means everyone else will have to not only break even or be neutrally impacted but in fact have to incur a loss so that they can maximize their profitability will not be shared so that they can in fact … maximize their profitability!

So although it may be true that some information about profitability and future resources sharing does seep out, the vast majority of the information that could benefit society by and large is kept confidential and it is done so right in the open.  What the hell does that mean?  That means that the secrets known to those  on the inside of the information circle are hidden so well and so thoroughly that despite the fact that their appearance is crystal clear to anyone who really wants to see it, most people will look at it and think, surely, it cannot be that simple and they go on blaming each other and other people for any shortcomings they might endure.  It simply cannot be true that the need for resources is so banal and so trivial that it all boils down to really one thing.  Who has the most information and what do they want to do with it?  But while we spend all our lives trying to figure out how to live and what to do, they simply spend their times on the most basic of human endeavors which is to accumulate as much as they can, as quickly as they can by any means that they can so as to not only enrich themselves, but to deprive us all of anything of value.  That is what finance really is. 

It is the acknowledgement of our animalistic nature that we are all basically a bunch of hoarders and although we can dress it up however we want, in expensive gowns, suits, cars or houses, at the base of it, we are no better than the squirrels that spend all their time burying nuts like little scroungers. If someone were to ask me – and to set the record straight, nobody has nor ever will on this matter – my opinion would be to just flip off the norms of society that you see on TV or the internet.  The rat race is not for human beings.  Forget all that shiny crap and fancy cars and houses and yachts and all that garbage, it will only decompose in a few years anyway, along with their owners.  Oh yes, one little tidbit, no person will ever survive for so long that they will outlive all of us.  There have been roughly 100 billion people on this planet before you and I were ever born and who knows how many hundreds of billions or trillions will come after us.  None of us will ever be able to live so long that we justify spending our lives in a trivial and idiotic rate race, like squirrels trying to bury nuts all over the place. 

Yes, by all means, go get that nice car you want, have a safe house, have plenty of clean water, food and medicine to live for as long as we want to, do all those things, BUT ONLY AS LONG AS we ALL recognize the idea that we ALL should have that necessity met without fail.  If your desire is to live in a 2 million dollar home, everyone who would want to have the same, should have the same home to live in. Essentially, this would make money virtually useless and obsolete but you know, every cloud has a silver lining.

Every human being should be afforded the same level of basic survival.  But along the way, while we scrounge for supplies, let’s all remember that we have but 1 life to live.  Do you really want to be in a reality where your one and only existence is dictated by the likes of an idiotic theory like the efficient market hypothesis?  Or do you want to look back on your life at the end and say, I had an interesting existence, I learned about the cosmos, I raised great kids, I had an amazing love affair with my spouse or significant other and while I lived, I really lived.  I didn’t waste my existence on arguing about a five-dollar bill with some stranger on the phone.  To me the idea of living simply by the entanglements of financial constraints is the sign of a significantly reduced intelligence level.

There is nothing opaque or convoluted about money and finance.  It is a tool we use to get stuff and some of us have figured out how to use that tool to basically financially enslave the planet so that they can get rich at the expense of everyone else.