Justin just read a great article. It is his object to take some points out of the article to illuminate your mind, and provide a different perspective on our world.
Author Tim Ferris is a fan of wildly successful people. He seeks them out, asks them questions, builds relationships with them, and shares their wisdom with us. As a result he’s a great success himself. To those of us tuned in to Tim’s trends he sends out an email every Friday called 5-bullet Friday.
In this week’s email he shared on article published by John Authers on the Financial Times website www.ft.com. It is entitled Ed Thorp: the man who beat the casinos, then the markets.
Ed is a Ph.d. from MIT who founded and ran Princeton Newport Partners hedge fund, “Over 18 years it turned $1.4m into $273m, compounding at more than double the rate of the S&P 500 without suffering so much as one quarter with a loss.”
Originally intended as an insightful article into the thinking processes of a mathematical genius the article bluntly reveals why our markets, economy, and political system is in the shape it is in.
In other words we are hearing directly from an inside establishment outsider. A man who has mixed intimately with the “establishment” but has fundamentally rejected their deeply flawed philosophies.
The article begins potently:
“As far as Ed Thorp is concerned, Wall Street is no better than a casino — not because it is a gamble, but because it is fixed. ‘The invisible hand has become the invisible middle finger. It’s a controlled and manipulated marketplace.'(Authers, 2017)”
At the outset he tells us the truth. A truth that would be glaringly obvious to those of us alert enough to pay attention to the world’s workings. Take the Federal Reserve System and buying its own debt from the Treasury to prop up the bond market.
Ed continues, “Adam Smith’s (author of The Wealth of Nations) market is a whole lot different from our markets. He imagined a market with lots of buyers and sellers of things, nobody had market dominance or could impose things on the market, and there was a lot of competition. The market we have now is nothing like that. The players are so big that they control the levers of financial policy. (Authers, 2017, emphasis added)”
Check the news any given day and search for mergers & acquisitions (M & A), or buyouts. Become familiar with terms like parent corporation, umbrella corporation, and cartel because these kinds of businesses are the “big players” Ed is talking about. They like to glut, gut, modify, and eliminate business that otherwise would have been Adam Smith’s buyers and sellers in a laissez faire economy.
He is not fond of banks, either. Especially as they are structured today. In times of old the banking schemers, once they were found out were strung up and/or burned at the stake. With our modern economy in shambles I don’t think that is too much of a diversion from how we ought to punish scheming bankers today.
Ed Thorp, though is a critic of the “too big to fail” epithet.
“The banks who are too big to fail should have been allowed to fail. Their shareholders should have had to pay the price. Big companies go through organised bankruptcies. Why is it that we couldn’t afford for the banks to go bankrupt? It’s that they are so influential. They can persuade the government not to let them go bankrupt. (Authers, 2017)”
I personally have a belief that there are certain businesses that should not be allowed to go public. That among these are banks and insurance companies. Becoming publicly held companies in the business of taking care of (and exploiting) other people’s assets should not be allowed to be responsible for “performing” for the sake of the publicly traded share. It just invites too much corruption. Witness Wells Fargo‘s spectacular cluster*.
Mr. Thorp is a man who knows. We are a people who sees, but often “People aren’t good processors of information. Not collectively. Witness the recent political campaign in America. They can be fooled by fake news easily. (Authers, 2017)”
That is a realization hundreds of millions of us must make, or there will be no change. We are victims of misinformation. It is rampant. On top of that we are reactive, gauged by our emotions, and it has become commonplace to engage in beliefs rather than in rational thought. And I’m not talking religion. I’m talking politics, race, psychiatry, environmentalism, sociology, Darwinism, anthropology and any combination thereof to name but a few of the “disciplines” that undermine our basic divine nature.
If we are no better than animals, then we are capable of sinking into great evil and destruction.
What follows below is Ed Thorp’s most loaded quote. His offices were raided in 1987 when philanthropist and disruptor Michael Milken, then known as the junk bond king, was being investigated by Rudy Giuliani’s department in New York City.
“’Milken’s crime was far greater than any other person on Wall Street because he began unhorsing the old-line white shoe establishment [medical establishment] and driving the companies they were running into the ground. He had to be stopped. And unfortunately he gave them some ammunition.’ As for Giuliani, Thorp resists [Authers’] bait to criticise. ‘I don’t know how to install an ideal system. First, is there such a thing as an ideal system? And, second, is it politically possible to achieve it? I’m not sure about the first; to the second I’d say absolutely not, because the people with power don’t want it to happen.’”
If you have come this far into my post you cannot question now that there are powers that be outside the political spectrum who control policy and politics in this country, and around the world. They control your information. They give energy to the disruption of civilized society. They are the financial elite, the establishment, the oligarchy – the literal conspirators seeking to overthrow all liberty and freedom in all lands. They do it behind the scenes, sneakily, and subversively.
This is common. It is seen again and again throughout history. Where an empire crumbles you will find an oligarchy undermining the virtues and morals of a civilized society to better control you. They instigate and promote a culture of fear, of offense, and of entitlement that leaves everyone but them desolate both in material worth and moral worth. Such a society, as I’ve stated half dozen times before, will not stand.
Ed Thorp says that an ideal system of law, government and policy is not possible to achieve because these low-lifes don’t want it to happen. You have your eye witness who speaks with a bluntness and a simplicity I cannot help but admire. I thank you Mr. Thorp for your brutal honesty, and Mr. John Authers for his excellent article. For the full article do a google search for the title to bypass the subscription page:
Ed Thorp: the man who beat the casinos, then the markets