Koos Jansen
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Koos Jansen
Posted on 6 Jul 2014 by

Does Wall Street Even Notice That The Emporer’s Not Wearing Any Clothes?

Written by Chris Marcus, Arcadia Economics.

There are several aspects about working in today’s financial industry that are less than perfect, although gaining an insight into how many on Wall Street think and why they make the decisions that they do is certainly one of the positives. In fact what many on the outside often have a hard time understanding is that most on Wall Street are in reality somewhat oblivious to massive bubbles that the Federal Reserve has inflated, and that can make things confusing when you don’t factor it in properly. However whether they should understand what’s going on or not, once you can understand the mindset from which the average Wall Streeter is coming from, it can give you an incredible trading advantage that’s almost the equivalent of spotting your opponent’s “tell” at the poker table.

While perhaps I shouldn’t be advertizing this out loud, I have to confess that until 2009 I was just as much in the dark about how the whole Wall Street and Federal Reserve system operated as anybody else. And that was after even attending Wharton’s MBA program, trading equity options on the New York Stock Exchange, and working in the financial industry since 2001. But that’s the thing. The reason that so few on Wall Street seem to be able to grasp what’s really happening is that the entire system trains you to believe the illusion each individual step of the way. In fact sometimes it almost seems like the more time someone spends in the financial industry, the harder it becomes for them to see reality clearly.

Think about it. For those of us who attended public school in the U.S., in many cases we were even forced to pledge allegiance to the flag each morning as a regular part of the start of each school day. And certainly as I learned about 20 years later how the mind works by feeding upon affirmations and statements that we repeat to ourselves for long enough, it makes sense how Americans have been trained to trust in the full faith and confidence of a system that in reality offers little to be faithful and confident in.

College and business school? Not much different there. In fact my main memory of Wharton is actually of sitting in the economics classes and listening to how the way to fix the economy whenever there’s a problem is for the Fed to buy bonds and inject more money into the system. Can you believe that? The Ivy League schools are one of the main places where everyone is getting brainwashed into believing this unicorn brand of magical government economics. Looking back on it now, it’s almost as if the business schools were like a little minor league training ground to turn our supposed finest students into future bankers and politicians.

So by the time some of these guys have spent 20 to 30 years building a career based on a set of incorrect beliefs that our government has sold us all along the way, it can sometimes be a bit to handle to find out that it’s all been a lie. Like the soldiers who are finding out that the wars they’ve been sent to fight have in reality little to do with the publicly stated purposes, or how many in the medical industry are finding out that many of the prescription drugs they were trained to prescribe are in actuality far more dangerous than most of us ever thought, many on Wall Street are faced with the task of recognizing that the whole system is about as honest as Enron. And in my experience, the shock of finding out that so much of what we’ve been led to believe has been pure mythology seemed to just be more than most of the people I worked around were ready to handle. In fact once I started talking about gold or silver to anyone who would listen back in 2009, it was as if somewhere inside you could tell that they realized that it was all coming to an end, but that they just preferred to not ask any questions and hope it would go on long enough for them to be ok. But as we found out in 2008, the markets have their own schedule, and in the end, coming to grips with reality just always seemed to make a lot more sense than continuing to try to pretend to believe in Uncle Ben and his magic cough syrup any longer.

Ultimately it’s up to each person to decide for themselves what’s “right” or what “should” happen, as it’s hardly my or Arcadia’s place to be the judge of anyone else and what they do. However to the degree that it’s useful to understand how people think and are likely to react, which certainly is the case when investing in the financial markets, it can be incredibly profitable to recognize and understand why so many of the bankers seem to be completely oblivious to what’s going on. If you want to know more, you can find some answers here, but in the end just remember that the next time you start to wonder if you’re the one who’s missing something, at least in my opinion, this time it’s them, not you.

In Gold We Trust

Koos Jansen
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  • Michael Yates

    Why should they even care anymore? These people couldn’t care less what’s true, if they’re making money that’s all that matters to them, and 99% of the world for that matter. The only time people care about truth is when the lies aren’t making them money.
    Welcome to the new reality, where truth won’t buy you a cup of coffee, and where lies and fairy tales are good currency anywhere.

    • Chris Marcus

      I hear your frustration Michael. Although the good news is that once the precious metals manipulation is overrun, they’ll start caring then. So hang in there my friend, the truth is about to buy you a lot more than a cup of coffee sooner than you would believe:)

      • mark_BC

        The problem as I see it is it’ll be too late once the metals are overrun. The bankers have already destroyed the world and the game’s over; we aren’t getting a second chance The last 40 years have been a ponzi scheme based on convincing everyone to believe in empty promises (debt bonds) that can never be fulfilled, of instilling confidence in the future that had no basis; all essentially via interest rate manipulation, which as you mention, is entrenched in our business schools as something that’s supposed to FIX problems. All the while this phony optimism has fuelled greater and greater resource consumption and population growth, when we should have instead been slowing and halting growth, and hunkering down for the energy scarcity winter that’s coming. There is little left now. We are yeast who have eaten almost all the agar in the petri dish.

        • Chris Marcus

          I hear what you are saying, although I suppose it’s just a matter of how you look at it. I used to feel pretty similarly, until I realized that while there will be an adjustment, easier for some than others, once this thing falls apart it will naturally force people to abandon these government and banking clowns and go back to providing real economic value.

          I’ve been down in Greece for the last few months, and when you think about it, housing and food are really the main things most people are looking for jobs in order to acquire. Fortunately growing food is something anyone can do with a piece of land (or perhaps one person could do it while others do what they can contribute and then they all trade), and I think at this point we probably have more houses than people in the entire globe. The only problem is that the government and bank money system gets in the way.

          I say let these guys fail and allow people like you and Koos Jansen have a shot at doing things differently. And I’m on your side too!


  • The_Spanish_Inquisition

    The key to success is navigating the World as you find it – not how you would wish it to be, and the greatest obstacle to this is striking an appropriate balance between what your brain tells you, what your heart tells you, and what your gut tells you. As I have got older my brain may have dimmed, my heart is less reliable than it once was, but my gut has certainly grown to compensate

    • Chris Marcus

      Well said Spanish Inquisition!

    • In Gold We Trust

      The key to success is navigating the World as you find it – not how you would wish it to be

      Sounds like Mises versus Keynes 😉 Politicians have embraced Keynes because they have a lot of wishes. They have so many wishes because they like to convince voters they can manage every single detail in society, this causes to get them more votes and thus power. Consequentially votes are being bought with the printing press.

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