Gyroscopic Investing

I spend time on another well known forum where the use of gold in a portfolio is usually scoffed at.  Most use the term "goldbug" and seem to have no concept as to integrating gold into a combination of other asset classes to provide improved long term results.  In fact discussions have evolved into questioning if gold is really a currency or can have any value in the future as it has in the past.

Well, I found an interesting article on Russia's central bank adding large amounts of gold over the past decade.  If Gold is not a store of wealth, why do so many counties maintain a large stash?

http://www.bloomberg.com/news/2013-02-1 ... world.html

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,”? Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.

We had a special cartoon made up for our book to point out the hypocrisy of the debate. I especially love it when a central banker or economist goes on the news and claims gold is not money, is worthless, etc. They just seem duplicitous, or very stupid. I'm thinking it's a bit of both.

Great cartoon!  Probably a bit of both.  I spend hours pondering if politicians and economists really believe the stupid things they say, or are they just trying to convince us how smart they feel they are.  Who knows................

glock19 wrote: Great cartoon!  Probably a bit of both.  I spend hours pondering if politicians and economists really believe the stupid things they say, or are they just trying to convince us how smart they feel they are.  Who knows................

Probably a bit of both.    And a bit of intentionally trying to deceive when they know otherwise, because they think that is what's best for us.  (Mustn't panic the population, now.)

I'm convinced that most politicians (and economists) have absolutely no clue and simply repeat what they've been told.  They usually cannot answer a question if it wasn't from their memorized (or teleprompter or earwig) talking points.

Others I think have a clue, but they say what they think they need to say at the time. (Greenspan seems to fit the "know it but say different" model if you look at the range of his comments from the 1960's thru his time as Fed chair and now since then.)

Then there are the ones that really seem to have a strong conviction of what they say, and the need to convert everyone to that viewpoint.  They know the counterpoint to every argument, or at least enough to bluster louder and longer if they don't.

I have been known to spend an inordinate amount of time trying to figure out if some talking head that just made the news truly believes (and is thus stupid) or is simply parroting what someone else has led him to believe.  Nearly every time I find no evidence of anything beyond stupidity amongst the politicians.  Economists seem to be more of a mixed bag.  Maybe because there are fewer of them in the public eye?

AgAuMoney wrote: I'm convinced that most politicians (and economists) have absolutely no clue and simply repeat what they've been told.  They usually cannot answer a question if it wasn't from their memorized (or teleprompter or earwig) talking points.

I think you're right about this. One of the big things that soured me on my former naive political outlook was actually watching some real politicians talk, in congressional hearings and panels and such. I was dumbfounded by how ignorant they were on the majority of topics they were addressing and preparing to make policy about. As I watched more, I came to realize that these were not isolated examples of senile crackpots humored by their sharper and more sensible colleagues. The young ones were no better, blustering away like fools on subjects they knew nothing about, and politicians at the state and local level appeared to be barely any more sensible or better-informed, even about pressing local issues.

It was really a shock, because prior to this I had simply made a lot of assumptions about these people's competence. But the contrary evidence was sitting right there increasing with every word they spoke. I believe they truly are mostly ignorant fools. It's sort of a wonder anything works given the power these people wield over their friends and neighbors. It's hard not to chuckle when Obama pleads for "smarter government" as he did tonight. You'd have to basically throw out the whole thing, because I don't see any great reserves of intelligence in Congress or the White House.

Pointedstick wrote:

AgAuMoney wrote: I'm convinced that most politicians (and economists) have absolutely no clue and simply repeat what they've been told.  They usually cannot answer a question if it wasn't from their memorized (or teleprompter or earwig) talking points.

I think you're right about this. One of the big things that soured me on my former naive political outlook was actually watching some real politicians talk, in congressional hearings and panels and such. I was dumbfounded by how ignorant they were on the majority of topics they were addressing and preparing to make policy about. As I watched more, I came to realize that these were not isolated examples of senile crackpots humored by their sharper and more sensible colleagues. The young ones were no better, blustering away like fools on subjects they knew nothing about, and politicians at the state and local level appeared to be barely any more sensible or better-informed, even about pressing local issues.

It was really shock, because prior to this I had simply made a lot of assumptions about these people's competence. But the contrary evidence was sitting right there increasing with every word they spoke. I believe they truly are mostly ignorant fools. It's sort of a wonder anything works given the power these people wield over their friends and neighbors. It's hard not to chuckle when Obama pleads for "smarter government" as he did tonight. You'd have to basically throw out the whole thing, because I don't see any great reserves of intelligence in Congress or the White House.

I spent some time in Washington working in Congressional offices when I was younger, and here was my takeaway:

Members of Congress understand public policy in the same way that car dealers understand automotive engineering.  Every public policy issue is filtered through the lenses of personal gain and deal making.  It should come as no surprise that such an approach to policy making results in shallow and poorly conceived laws.

There are wonky people involved in the process who help keep it from being completely stupid, mainly on the committee staffs and in the offices of the lobbyists for certain industries, but the principal decision makers (i.e., the House Members and Senators) are mostly just expert hand shakers, baby kissers and deal makers.

MediumTex wrote:...baby kissers...

I had a smart-ass quip all worked up.  But my mother used to tell me to keep my mouth shut unless I had something nice to say, and apparently that lesson (at least partially) took.

Pointedstick wrote: It was really a shock, because prior to this I had simply made a lot of assumptions about these people's competence. But the contrary evidence was sitting right there increasing with every word they spoke. I believe they truly are mostly ignorant fools. It's sort of a wonder anything works given the power these people wield over their friends and neighbors. It's hard not to chuckle when Obama pleads for "smarter government" as he did tonight. You'd have to basically throw out the whole thing, because I don't see any great reserves of intelligence in Congress or the White House.

And that is probably why less than 25% of voters actually vote.  It is a rational response to morons in power.

MediumTex wrote: There are wonky people involved in the process who help keep it from being completely stupid, mainly on the committee staffs and in the offices of the lobbyists for certain industries, but the principal decision makers (i.e., the House Members and Senators) are mostly just expert hand shakers, baby kissers and deal makers.

And why do the smart, wonky people work for such morons?

MachineGhost wrote:

MediumTex wrote: There are wonky people involved in the process who help keep it from being completely stupid, mainly on the committee staffs and in the offices of the lobbyists for certain industries, but the principal decision makers (i.e., the House Members and Senators) are mostly just expert hand shakers, baby kissers and deal makers.

And why do the smart, wonky people work for such morons?

A chance for some power, maybe?

Pointedstick wrote:

MachineGhost wrote: And why do the smart, wonky people work for such morons?

A chance for some power, maybe?

A high school friend worked as an aide to a senator for over a decade.  It wasn't a power trip, at least not at first.  At first it was the excitement of being involved in making good things happen.

That optimism faded to a "once in a while we can make good things happen" and then to a "prevent bad things."

I think by the end it was starting to become a power thing.  Then he quit, got out of the D.C. area, and moved out west.  He was playing some minor role in local party politics the last I heard.

MachineGhost wrote:

MediumTex wrote: There are wonky people involved in the process who help keep it from being completely stupid, mainly on the committee staffs and in the offices of the lobbyists for certain industries, but the principal decision makers (i.e., the House Members and Senators) are mostly just expert hand shakers, baby kissers and deal makers.

And why do the smart, wonky people work for such morons?

Because wonks usually have to work for someone, unless they are the rare breed that is very entrepreneurial. 

Usually the people at the top of the food chain in any organization, whether it's business or politics, are great sales people.  The best sales people are masters in communication and great communication abilities usually trumps intelligence from my experience.

If you can't communicate your ideas, it doesn't matter how smart you are, no one will buy your story. 

On the flip side, if you can communicate an idea (or product, or goal, or service) well enough, you don't even have to have a great plan and you'll usually rise to the top.

Look no further than American politics.  It's all salesmanship, because you are trying to get the Average Joe to vote for you.  That doesn't equate to providing the best actual plan for the issues of today.  It just requires that you communicate your plan better than your opponent.

Ok, quit picking on wonks, guys.  We're people too.  Yes, we get caught up in details and endless research, but we're shrewd, calculating and patient.  We'll wait for our opportunities and pounce when the moment is right. 

As has been said, many people move to Washington as idealists. Then they become a business. Then they become a racket.