In today’s world, central bankers are often revered as the captains at the helm of the global economy.
It’s as if their actions dictate the trajectory of the future…and their influence trumps all. A globalist oligarchy, ruling from their columned thrones at the Federal Reserve, the European Central Bank, and the Reserve Banks of various nations.
Names like Jerome Powell, Ben Bernanke, Alan Greenspan, Mario Draghi, and our own Adrian Orr invoke a sense of veneration amongst the financial elite. Perhaps because they’re all cut from the same cloth…and maybe it’s because they’ve ‘made it’.
In that vein, the proletariat of the financial sector — your traders, brokers, advisors, and commentators — also sycophantically look up to these figures as heroes and as role models…hanging on to their every word and cutting down those who offer an ounce of scepticism.
And central bankers eat it up…
I mean, Ben Bernanke titled his own memoirs The Courage to Act. How egotistic!
Now the problem is, of course, that this industry — the industry of money — has evolved into an ideological vacuum. There’s a single party line…and if you stray from that message, you’re cast out. You’re ‘fringy’. You’re a lunatic.
Because of that social phenomenon, a ‘mainstream’ school of thought emerges…
Not sure what that looks like? Take a look at any major media source. They know that the cover fee to get into this boys’ club is toe the official line…and they’re quick to do so.
You’ll very rarely see any mainstream talking head speak critically of a central banker. Interviews will be softball questions from start to finish. Opposing viewpoints receive little to no airtime.
And the banker’s words are heralded as gospel. If the central banker says all is good…then by golly, all must be good…right?
(This marvel of central bankers controlling the markets by their tongue is called the ‘Draghi Effect’, named after the glib head of the ECB, Mario Draghi.)
Do you see the problem there? As consumers of media, we’re handed the equivalent of an economic Little Red Book with a single, enforced perspective.
Because what you end up with is a narrow-minded society churning out similarly insular generations after generations…a downward spiral of intellectual faculty.
In other words, we’re getting dumber.
The antidote, of course, is the willingness to hear out, consider and engage alternative ideas.
For example, perhaps you were taught that the best investment you could ever make is buying a house.
Many Kiwis were certainly raised under that banner…
And it’s become the mainstream message, hasn’t it? Read through the paper, turn on the TV, listen to the radio…you’ll be hard-pressed to find anyone condemning property. Instead, you’ll hear a spectrum of opinions ranging from ‘Buy a house as soon as you can’ to ‘Buy a house, even if you have to sell your firstborn.’
Where’s the opposition?
Where are the people pointing out that stocks have returned roughly double what property has over the past decade?
Where are the people cautioning homeowners on the many wealth-wrecking risks and vulnerabilities that property assets encompass?
Those voices are too few and too muffled…
Instead, there’s one message…and one perspective.
The reason it’s dangerous isn’t that it’s necessarily wrong…no, property may be a good investment after all.
But maybe it’s not the best investment out there…maybe it’s more vulnerable than folks think. Maybe you’d be better off doing something radically different. Without having that conversation, we can’t know for sure…
That’s why we need discourse…and more importantly, we need friction.
We need people to disagree. We want debate. That back-and-forth is what fleshes out ideas and encourages new ones. It’s where holes are poked in the old regimes…it’s where weaknesses are exposed…and where progress can be made.
To be clear, I’m not talking about the debate façades you see on TV between two ‘opponents’ who believe slightly different variants of the same mainstream idea.
I’m talking about daring challenges to the popular paradigms…actually rocking the boat.
Bohr and Einstein. Chomsky and Foucault. Malcom X and MLK. Tesla and Edison. Keynes and Hayek.
These cerebral scraps produced some of the most important ideas in the history of humankind…where are the debates today? Where are the challenging ideas that make us uncomfortable?
They’re certainly not found on your prime-time talk shows or your front-page columns. They’re relegated to the 2am slot or halfway down on page 13.
And in the financial world, you might find them in the textbook chapter titled ‘Other Theories’…contra-consensus ideas that no self-respecting economist would support.
(At least, no self-respecting economist with aspirations to work in a central bank.)
It’s a sad state of affairs.
For us, the hungry information-seekers, this reality means that we’re constantly fed a one-sided slop of news and opinions…but it doesn’t mean we’re enslaved to that perspective. We can explore. We can investigate. We can seek out challenging ideas.
Want a place to start?
Google ‘Austrian Economics’. There you’ll find one of the most hated pariahs of the financial sphere…but also one of the simplest explanations for why money works the way that it does.
After reading a little, maybe you still think it’s a terrible idea.
That’s great! The point isn’t persuasion; it’s education. It’s stripping off the blinders and appreciating the broad range of ideas for what it is. It’s engaging an uncomfortable idea…and becoming a bit more enlightened in the process.
Good on you.
Editor, Money Morning New Zealand