It’s the million-dollar question
Are you seeing the current financial environment as it is?
Or…are you actually imposing your own biased interpretation on it?
Well, the Rorschach test might offer an answer.
Psychologists sometimes use this.
They will show you a piece of paper with an inkblot shape. Then they will ask you, ‘What do you see?’
Well, depending on your state of mind, you might see a bull. Or you might see a bear. Or you might see the face of your childhood bully from decades ago.
Source: The School of Life
Indeed, when Swiss psychologist Hermann Rorschach first invented the test in the 1930s, he was astounded at the simplicity of it.
All he had to do was drip ink on a piece of paper. Just on one side. Then he would fold the ends up. Push the paper together. Then he would unfold.
Eerily unique in every case.
By showing his patients these inkblots, he was able to unlock their subconscious state of mind. What they hoped. What they dreamed. What they feared.
Indeed, the interpretations of the Rorschach test are open-ended — which makes it incredibly fascinating to observe.
This phenomenon is known as ‘apophenia’. It’s the human mind’s tendency to impose meaning on patterns that may be random or accidental.
What is remarkable is that this pattern recognition guides our decisions — hour by hour, day by day — much more than we would care to admit.
Conspiracy theories in Turkey
Recep Tayyip Erdoğan is the president of Turkey.
He’s a Muslim ultranationalist.
At the moment, while most countries in the Western world are raising interest rates to curb inflationary pressure, Erdoğan is actually doing the opposite.
He’s turning a blind eye to inflation, while making an effort to keep interest rates low.
In fact, at the end of 2021, Erdoğan pressured Turkey’s central bank to lower its base rate from 19% to 14%.
‘Those who try to impose on us a link between the benchmark rate and inflation are either illiterates or traitors.
‘Don’t pay attention to the ramblings of those whose only quality is in viewing the world from London or New York.’
But here’s the problem: as of June, Turkey’s inflation rate has hit an astounding 79%. This has led to tremendous economic hardship for ordinary Turks.
Still, Erdoğan remains defiant, pushing interest rates even lower. And he’s sacked members of his own government who disagree with him.
Now, if you happen to be a foreign observer, looking at what’s happening in Turkey, you might be tempted to ask: ‘Why is this guy so stubborn? Why can’t he see the error of his ways?’
But wait. Hold on. Perhaps it might be useful to apply the Rorschach test here. Gain a better understanding of Erdoğan’s state of mind.
Now, here’s my personal opinion.
I grew up in Malaysia, under an authoritarian Mahathir government, with many striking similarities with Erdoğan’s current regime.
Here’s what they share in common: a misguided belief that a Jewish banking conspiracy is engaged in a mission to bully and dominate the Islamic world.
Here’s what Prime Minister Mahathir Mohamad once said:
‘We are actually very strong. 1.3 billion people cannot be simply wiped out. The Europeans killed 6 million Jews out of 12 million. But today the Jews rule the world by proxy. They get others to fight and die for them.’
Erdoğan, of course, has made similar racist remarks. In particular, he has invoked the accusation of blood libel, which is morally abhorrent.
So, in Erdoğan’s mind, the logic goes like this: ‘If the Yahudi bankers in the corrupt West are raising interest rates, therefore we must do the opposite and drop interest rates. Ha-ha! The joke’s on them!’
Uh-huh. Yeah. Right.
Erdoğan’s problem may well be his failure to recognise that no one is actually plotting against his country. Rather, he’s shovelling himself deeper and deeper into an economic hole — and he claims that the shovel is to be blamed.
Erdoğan sees only what he wants to see.
Alan Moore, an English writer, sums it up best:
‘The main thing that I learned about conspiracy theory, is that conspiracy theorists believe in a conspiracy because that is more comforting.
‘The truth of the world is that it is actually chaotic. The truth is that it is not The Iluminati, or The Jewish Banking Conspiracy, or the Grey Alien Theory.
‘The truth is far more frightening — nobody is in control.
‘The world is rudderless.’
What does your Rorschach test look like?
So, are you seeing the current financial environment as it is?
Or…are you actually imposing your own biased interpretation on it?
Here’s the truth: we may well be the first generation in human history to have access to so many different data points at the same time.
We’re really spoilt for choice.
And yet, we find ourselves creating our own echo chambers by default.
- If we’re liberal, we only read the liberal news.
- If we’re conservative, we only read the conservative news.
- If we’re feeling positive, then we’re convinced that something good must be coming.
- If we’re feeling negative, then we’re convinced that something bad must be coming.
Well, if life is actually one big Rorschach test, then we actually run the risk of misreading the inkblots daily.
For example, spare a thought for the people who invested in the Auckland property market or even cryptocurrency just as these asset bubbles were peaking.
Or…spare a thought for the people who are refusing to invest now because they think that the economy is flatlining and going into cardiac arrest.
In both cases, their perceptions are driven less by concrete facts than they are by emotional impulses.
Excessive greed — and excessive fear — are like beer goggles. They distort your view of the world. And they could be leading you down the wrong path.
Things are seldom as good — or as bad — as you might think.
Here’s what history shows us:
- The market is neither liberal nor conservative. It is apolitical.
- The market is neither moral nor immoral. It is amoral.
- The market is neither a conspiracy nor a plot. It moves on its own accord.
So, here’s the million-dollar question: are you reading the Rorschach test the right way?
Are you being clear-minded?
Are you being rational?
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Analyst, Wealth Morning
(This article is general in nature and should not be construed as any financial or investment advice. To obtain guidance for your specific situation, please seek independent financial advice.)