“The economy continues to do okay, the stock market is hitting all-time highs every day, real estate is back on the up and up, interest rates remain very low by historical terms, the net worth of Americans is back at all-time highs, we’ve just dragged ourselves out of the worst recession in 80 years, but people are still upset about a lot of things . . . I have a feeling that there’s more to this general unhappiness than meets the eye. And I think a lot of people are mad because the fear case has totally lost out at this point.”
... there is a deeper, more fundamental reason for the unfocused rage and misdirected anger: The failure of the narratives that have been driving much of economics, investing and politics. As John Kenneth Galbraith famously said, “Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” Rather than accepting certain unpleasant realities, many participants have contorted themselves into a painful waiting game. They are “busy on the proof.”
The Galbraith quote reflects a favorite topic of ours – Cognitive Dissonance — and we have spilled more than a few pixels in these pages on the subject. As many of the narratives have failed, rather than admit the error and face the music, the rationales have morphed into a waiting game. Dow 5000 will happen eventually, Collapse of the Dollar — and all fiat currencies — is coming; Hyper-inflation (any day now), Gold will hit $10,000 (sold to you), Great Recession 2, Oil $200, etc. The reference is not to any one of these errors specifically, but rather, tot he entire narrative driven belief systems in general. They are by design money losing stories, either torturing the data or ignoring it entirely.
