‘In the short run,’ says billionaire investor Warren Buffett, ‘the stock market is a voting machine. In the long run, it’s a weighing machine.’
Put another way, in the short run, the stock market responds to myths and fads. In the long run, these give way to facts.
Remember, myths are not necessarily untrue.
But whatever truth they have seeps from human imagination, not from facts imposed by the outside world.
Gravity, for example, is a fact. You jump out of a second story window; it doesn’t matter how hard you flap your arms or what you think, gravity will pull you down toward the sidewalk.
Corporate profits, too — though they can be manipulated and massaged — are facts. Mythical profits don’t pay real bills.
But there are other ‘facts,’ too…those that owe their existence entirely to our mythmaking ability.
They may begin life as plausible observations. But then they have a way of growing…expanding…mutating into outsized delusions — ones that may cost a nation its money and its soul.
Were the pharaohs divine?
Apparently, the ancient Egyptians thought so. For 3,000 years, they were so devoted to this myth that they applied almost the entire economic surplus of the Nile Delta to building monuments in their honour.
We know of no physical tests for divinity. You might say, ‘Someone who is divine can’t be killed.’
On occasion, they put a Thutmose or a Neferkare to the blade; they died like everyone else.
‘Gods don’t die,’ said the doubters. But Jesus did. And Christian scholars spent centuries arguing about how and why that was possible.
In the end, a divinity can do what he wants. He can appear dead…or seem to be mortal in other ways. There is just no way of knowing.
For all we know, the pharaohs were divine. Certainly, it was convenient to believe it — at least for them and the elite surrounding them.
Adolf Hitler (among others) promulgated the myth of a master race.
At first, people took him for a crank. The intelligentsia made fun of him. The ‘Austrian corporal,’ they called him. Or the ‘little housepainter’.
Even when Hitler became chancellor in 1933, the thinking in polite society was that he could be ‘tamed’ by dutiful functionaries and the weighty responsibilities of his office.
Instead, the myth of the Übermensch (an idea Hitler borrowed, completely out of context, from Nietzsche) took hold of large numbers of Germans.
Again, there was no way to prove it wasn’t so.
And as time went by, more and more people found it agreeable; it gave them a way to feel superior…and perhaps buy a house down the street that used to be owned by Jews, at a bargain price.
Besides, the Austrian corporal was making German industry the envy of the world…with factories booming and full employment. (This, too, was a myth: Hitler had created a bubble economy based on dead-end military spending.)
But as more and more people found it convenient to believe the myth, the more self-evident it became. Soon, they were marching to Stalingrad.
Myths stretch or shrink depending on what you think of them.
According to a new report from Brown University, next year the total sum committed to the War on Terror will rise to $4.7 trillion.
That’s an amount equal to nearly one-quarter of annual US GDP, transferred from the public to the terror-fighting industry.
The War on Terror is the longest war in US history. And for the security industry, it’s the most profitable war ever. Of course it is real!
(When President George W. Bush first announced the War on Terror, we guessed it would do no good…and that it would cost ‘more than a trillion dollars.’ We were off by $4 trillion!)
Bomb, drone, kill
There is a word for this phenomenon. We can’t remember what it is. ‘Self-fulfilling’ will have to do.
The more you focus on it…the more real it becomes. Give out the word that terrorists are lurking around every corner. Bomb them, drone them, kill them. (Some estimates put the number of dead at more than 1 million.)
See something, say something! The more enemies you make…the more enemies you have. Then there is no need to look for evil; it will find you!
‘Another suspicious package found…’ says a Bloomberg headline this morning.
Sticking with round numbers, the War on Terror has cost about $350 billion a year over the last 15 years. Like the pyramids, the project absorbs much of the nation’s surplus output.
But wait. Where did the feds get so much money? Were taxes raised to cover it? Was spending cut in other areas?
How was it financed?
With debt, borrowed at the lowest interest rates since Ramses and Amenhotep.
At current yields and current inflation, the US federal government can borrow at almost no cost. It is free money.
But that, too, is a myth…
For Markets and Money, Australia
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