The Awesome Science of Chinonomics

Gordon Gekko famously quipped “ greed is good ” in his iconic Wall Street 80's movie. The phrase came in the middle of an era of deregulation and liberalization. A phase where "shoot for the fences" was the name of the game. Financial markets then became more of a cumulative distillation of the collective psychological state of its participants. And now, just as then, greed-dominated markets engender euphoria, happiness and (even if only fleeting and paper-based) great wealth. Fear-induced markets are the mirror image of the former, degenerating into panics, wealth destruction and (in some tragic cases) even death .  Fear is connected to the negative. It’s why policemen shoot first and find out later. It's how some autocrats gain power over a very fearful electorate. Why politics have become so toxic as of late, and why the youngest generation these days is  despairing and gloomy  (where 60% of them "experience persistent feelings of sadness or hopelessness"...

Nobody can really  take credit for having solved a problem that never happened. Any attempt at it drags you into the realm of non-existent hypotheticals and becomes moot the moment you open your mouth. This is the position leaders around the world find themselves in when trying to fight this pandemic. It doesn't matter how informed, intelligent, prescient our leaders might (or might not) be, they face the same fog of uncertainty when trying to predict the future while making decisions to fix a problem this complex. For better and worse, we're equipped with minds that can only draw on history to construct patterns when trying to face the future. And in a Bayesian dance , all we can aspire to do is to  tinker with our course of action as that fog of uncertainty chooses to spit the next piece of evidence at us. There is no other way. Leaders (simple humans* that they are) fall prey to the same  Law of Small Numbers ; forced to take action in the face of clouded, sm...

The dollar. The intangible monetary construct concocted  in its paper form in 1861 to finance the civil war is arguably the United States' most precious asset. Its solidity is underpinned by an enviable  rule of law . It gives good ol' U.S. of A the blessing of perennially low interest rates (which elevates the standard of living of Americans to the tune of $100bn annually ), and the ability to throw in the trash can any resemblance of fiscal restrain. Why be frugal when normal market rules don't apply to you? After all, there is no such thing as a U.S. Treasury bond market " vigilante ." Not in the same way they exist  for any other --more normal-- sovereign bond markets, anyway. We live under a de facto Dollar Standard. Nations hoard greenbacks to bulk up reserves (save some very wacky exceptions ) to have dry powder to prop up (or push down , as recently seen) their currencies when they're under attack, or to buy imported goods. It is a very exorbitant p...

It seems these days that the United States is not living its best days as the world's sole hegemonic superpower. From the way the Syrian crisis has been dealt  with, to the way the drone wars have changed the meaning of military conflict, to the embarrassing release of formerly secret espionage programs  that force the president to apologize to foreign leaders. The reputation of the U.S. seems to be taking beating after beating. Yet, despite all this, the role of the U.S. in the world is idealized by many in the U.S. as the paragon of collective virtue and liberty. American Exceptionalism  still thrives . The society of the rule of law --the Land of The Free. Outside the U.S., humankind yearns for a leader. A nation to look up to for guidance and hope --a preserver or global stability. The decades that followed the fall of the USSR have given way to the concoction of multiple purported superpowers that could, like Ivan Drago  to our beloved Rocky, crush the U.S. ...

Trying to make sense of this financial world through traditional stock fundamental measures is futile these days. Playing the money game has become a binary flip of a coin on the last dollar: either you invest in assets (all in) or in cash (all out). This duality simplifies the plethora of alternatives that normally overwhelm the investor. "Correlation-One" Markets that rise and fall at unison. The value of your investments is determined by the latest decision of a policy figure. Take the value of your money, for example. The value of your money measured in assets (or how many barrels of oil, bars of gold, pairs of Nike shoes or heads of lettuce can you buy with a fixed amount of green stamps called "money") is established by its relative abundance (or at least its perceived abundance), which in normal times is determined by the decision of a counsel of elders in which we have trusted our savings (the central bank). We never think of it this way, but our wealth is...