Today… why some of the smartest guys in finance are total morons.
But first a report from the Rio Carnaval, where we spent last weekend.
A plumber would probably like it. A psychiatrist might say it is normal. And maybe a Roman Catholic could handle it. But there were too many quivering buttocks for an Episcopalian.
There must have been 10,000 of them – sweating… shaking… twerking… and vibrating – in the Sambadrome on Saturday night.
The costumes were as unrestrained, immodest and over-the-top as you might imagine. The idea seemed to be to attach as many sequins and feathers as possible. And almost everywhere, amid the gaud and glitz of the getup, were the shimmering cheeks.
As we made our way to the Sambadrome, we began to suspect that this was not going to be just like any other night out. Crowds filled the streets and sidewalks all over town.
One young man was retching on the curb. A young woman had passed out; her friends were slapping her to try to get her back to consciousness.
The heat? The alcohol? The excitement?
It could have been anything; several times during the evening we felt like swooning too.
A little farther on, another man was being loaded onto a stretcher – ailment unknown. And on a back street outside the stadium, two women had gotten into a fight – cause likewise unknown.
We were in the elite section of the Sambadrome. Our fellow spectators looked a bit like the crowd you’d find at one of Baltimore’s slick eateries in Camden – young, professional, good-looking.
The men looked as though they might be stockbrokers during the week. The women might have been models. Sleek, attractive… some trophies, many still competing.
Scarcely had we arrived when the music began. We missed the bombing of Dresden and the collapse of the World Trade Center. But we caught Carnaval! The decibel level must have been about the same.
Waiters circulated with trays of drinks. They were determined to give you one, whether you wanted it or not.
The idea seemed to be to increase the noise and inebriation level throughout the night. No one should wake the next day without thinking he had a good time the night before. He had the pounding head to prove it!
The parade took a long time to reach us.
And then… wowee!
Each outfit was more fantastical than the one that preceded it. And that one had been more daring than its predecessor.
One after the other they came – in groups of 50… 100… 1,000…
The music was so loud our eardrums almost burst. The drummers pounded out an unrelenting rhythm… sparing not a beat… nor granting a moment of quiet.
And so it went on – hour after hour… from 9 p.m. until 6 a.m. By then, your editor was spent. He had had enough. His job is to watch, to look and to report to you. And besides, he can only take the sight of so many buttocks in a single night.
But let’s return to our beat: the world of finance. We’ll come back to the Sambadrome in a minute….
Readers are still puzzled – as we are – by how our modern monetary system works and what it means. But one reader managed to put his finger on it:
So let me see if I understand this!
First the feds removed any real-money restrictions on their spending by voiding the convertibility of dollars to gold AND now they have removed any free market restrictions on spending (and selling debt) through an insidious process of selling their debt to themselves.
They have shifted the paradigm without telling anyone. I guess their message is: If you can’t figure it out for yourself, that’s too bad?
That’s right. There is no longer any limit on the amount of “money” the central bank can create or “lend” to the government.
We put those key words in quotation marks to indicate that there’s something fishy about them; it would take volumes to understand what they really mean.
That is the problem. The system is so novel and so nuanced that nobody really knows what is going on. Probably least of all the people who claim they have it under control.
Yes, it’s a funny old world. And among the funniest things about it is that, circa 2015, the smarter you are, the more likely it is that you are a total moron.
Martin Wolf, Paul Krugman, Joseph Stieglitz, Larry Summers – “brilliant” men, we are told, every one of them – don’t have a clue.
They are victims of their own brainpower – confident that they can figure it out as they go along… and adjust monetary policy to the needs of the moment.
Is that the way it works, dear reader? Can you just make it up as you go along, reacting first to one event, then to another?
We don’t think so. What happens is that one conceit leads to another. One reckless move requires another to rescue it.
You are like Napoleon on his way to Moscow… Gideon Gono on his way to hyperinflation… or a wayward husband on his way to a noonday tryst.
The first indiscretion seemed pardonable. But then you are trapped. You would prefer that it were different. You’d like to back up. You’d like to take a different course.
But it is too late. “Under the circumstances,” you do what you have to do. Finally, you find yourself in Hell.
Back in the Sambadrome…
The costumes – with the brightest colors possible and the most elaborate getups that the faveleiros could imagine – sparkle as the marchers made their way down the street.
The samba clubs of Rio organize the parade. The first one we saw in action was the Inocentes. It included hundreds of dancers… dozens of drummers… and five enormous floats that must have taken many months of careful preparation.
Two of the floats had giant effigies of musicians playing the guitar. There must have been a story behind them. But we weren’t able to decipher it.
All we could tell was that four groups of dancers – about 100 in each group – were meant to represent the four seasons.
One float seemed to be oriented toward Christmas, with presents wrapped up in silver foil.
Where did this idea come from?
Brazil has no snow. And its Christmas comes in midsummer, not in the colder season.
“This is like the Super Bowl for these samba clubs,” explained an informant.
“These clubs are mostly in poor neighborhoods. They save their money to get their costumes. They do much of the work themselves, preparing all year long to put on this spectacle.
“And they’re competing. Their performance is judged. And if they get a good score, they continue on to the finals.”
“Overdoing it” is not something that troubles the samba clubs of Rio. No costume is too outrageous. No one loses points for shaking his or her booty too vigorously… or for dancing too enthusiastically.
The costumes differ wildly in color and texture, theme and motif. But almost all share a common element. Behind the shimmering sun of sequins were two moons, shaking so violently we were afraid they might fly out of orbit.
Further Reading: Bill reserves a whole chapter in his new book, Hormegeddon: How Too Much of a Good Thing Leads to Disaster, to the follies of today’s economists.
As he writes, “Like a cloud rising against a mountain, when a young person enters the economics department, the higher up the academic slope he goes, the more common sense rains out of him.”
If you haven’t already got your copy of Bill’s new book, we’re giving away FREE copies to Diary readers. All we ask is that you cover shipping. For full details, read on here.