RoR: Forum

Soros' theory doesn't make any sense. He says on the one hand economic agents do not understand reality, therefore they make decisions that have unintended consequences, but then argues for a regulatory body that somehow escapes this fallib...ility that Soros says is inherent to human knowledge. He's trying to have his cake and eat it too. Either a regulatory body would also suffer from this fallibility or no one does. That he picks and chooses how and when his theory applies is the mark of how a tyrant works. It's nothing new, it's just a variation on Plato's Philosopher-King, that an appointed intellectual really understands the world and he should be in charge to dictate human action.

Post 1

Sunday, May 1, 2011 - 11:22am

Everyone can have mistaken ideas. No doubt, George Soros knows currency markets well. He probably knows less about planetary astronomy... or in this case political economy. But currencies are highly regulated, of course. His arbitrage of them was possible only because there are so many governments issuing them. But the issuing is political, of course: decided by power, not market.   He understands the markets and the powers.

We like to think of entrepreneurs as individualists, but that may be romantic fiction. There are many reasons why you are successful in business and I am not. Easily, you get along well with others. You could not survive with a bar and restaurant if you did not. I see the same thing in numismatics: you can be rich as Croesus no matter who likes you, but the successful leaders are the ones who get along well with others.

So, it should not be surprising that George Soros, Bill Gates, Ted Turner, Donald Trump, and all the others tend to have collectivist political ideas. How could they not? The evidence that those ideas are correct is measurable in dollars and cents.

Yes, there are exceptions: Ed Snider, Mark Cuban, T. J. Rodgers, and you, among many others. That only validates the pluralistic nature of the marketplace. Within some broad latitude, "anyone" - communist, capitalist, christian, hindu, scientologist, none of the above - can be successful in business. But if you look at the statistics, it is not at all surprising that the world's wealthiest people share the world's most common opinions.

Again, Henry Ford and Thomas Edison went camping together, but most of America's capitalists could think of nothing better to do with their leisure than to go to Europe.

Contradictory philosophical premises lead to sanctioned victimization.  Someone needs to set George Soros straight. You or I might need about three to nine billion good sentences to do that. Someone else might do it with far fewer and far better statements. But I would be suprised if he has not read Atlas Shrugged. They all have. It just did not convince them.

Post 2

Sunday, May 1, 2011 - 11:33am

This was the part that I didn't understand:

"In my theory of reflexivity I assert that the thinking of economic agents serves two functions. On the one hand, they try to understand reality; that is the cognitive function. On the other, they try to make an impact on the situation. That is the participating, or manipulative, function.

The two functions connect reality and the participants� perception of reality in opposite directions. As long as the two functions work independently of each other they produce determinate results. When they operate simultaneously they interfere with each other. That is the case not only in the financial markets but also in many other social situations."

For CATO to invite him to speak is like putting a bug under a microscope.

Soros has a clear history of lying and says what he wants to say at the moment. I'd say the only way to understand him is to posit a man who organizes collapses for profit and for increased power and to satiate some deep hate. He organizes at the highest levels, pulling together any highly active social component, group, or activist as components, added to the mix like volatile chemicals to cause the reaction he is looking for.

I'm reading "The Shadow Party" by Horowitz & Poe. Soros is the key player in the Ultra-left's schemes. I'm stunned at the connections I never knew existed.

(Edited by Steve Wolfer on 5/01, 11:37am)

Post 3

Sunday, May 1, 2011 - 7:31pm

George Soros is wrong here ...

I was struck by a contradiction between the theory of perfect competition, which postulated perfect knowledge ...

I call the interference reflexivity. Reflexivity introduces an element of unquantifiable uncertainty into both the participants� understanding and the actual course of events. ...

In the real world, positive and negative feedback are intermingled and the two extremes are rarely, if ever, reached. Thus the equilibrium postulated by the efficient market hypothesis turns out to be an extreme � with little relevance to reality.

... because he is ignorant of the fact of learning.

Let's say you're trying to buy clothes that fit you, but you live in a country without official clothes sizing and in a country where you are not allowed to try items on before you buy them. Okay, what do you do in this terribly imperfect world with such terribly imperfect knowledge (at least imperfect at the outset)? Well, you do one of 2 things:

1) You waste a ton of money buying clothes left and right, on the off-chance that some of them might actually fit you.
2) You waste a little money, and that becomes a disincentive (you don't want to keep wasting your hard-earned money) so you, by applying your reasoning skills to everyday life, learn how best to tell whether a garment is going to fit you or not.

If it is a pair of pants, you will learn how to hold them up to your hips and check for leg length and you will learn just about how far both waist ends have to go past the outside of your hips (when held flat against your tummy), in order to fit tight after being filled out by your body.

If it is a pair of shoes, you will learn to hold the shoe upside down pressed against the bottom of your own foot.

You may also learn to bring a tape measure to the store with you, before you buy more clothes.

If you didn't do all of this when you started to shop for clothes, you will eventually learn to do all these things if it starts costing you too much money. You will eventually approach either perfect -- or at least near-perfect-- knowledge by doing this. But this real-life process is entirely missed with George Soros' sophomoric account of economics.

Ed

p.s. This same basic reasoning process can be used in order to get good at predicting whether someone is the type of person both willing and able to pay back a house loan (in order to prevent crashes in real estate markets). Some banks may loan out money indiscriminately, but they will weed themselves out of the market soon after that (they will "fail" and go bankrupt).

(Edited by Ed Thompson on 5/01, 7:42pm)

Post 4

Monday, May 2, 2011 - 2:04pm

Totally agree. Soros is a ...... unprintable here.

Post 5

Monday, May 2, 2011 - 2:30pm

The damage Soros is doing is enormous.

Post 6

Wednesday, May 4, 2011 - 11:16am

(Reuters) - The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.

When I woke up this morning, I was in a cold sweat. I'd had a nightmare: what if the federal debt limit was insufficient to ensure the government can keep borrowing through the 2012 presidential election?

Fortunately for us all, the world leaders and shakers are all over that problem. They've pooled their combined mental capacities, and come up with the figure 'roughly $2 Trillion' should about do it.

Whew. America really dodged another bullet there.

Unlike the side of OBL's face.

It's good to know that Treasury is considering ... political questions.

(Edited by Fred Bartlett on 5/04, 11:18am)

Post 7

Wednesday, May 4, 2011 - 1:35pm

I was talking to a fairly sharp stock analyst this morning and he said the consensus on the street is that interest rates won't be increased till after the 2012 elections - again, not a political decision by the Fed, right?

Post 8

Wednesday, May 4, 2011 - 3:41pm

The word on the street is that Soros is selling gold and silver after buying them for several years and that this is the reason for the dramatic downturn in those prices, and commodities in general.

Post 9

Wednesday, May 4, 2011 - 4:01pm

The middle east has always been big on gold and silver - that might link the change to Osama Bin Laden's death, to the possibility of a sharp draw-down of US forces in Afghanistan, etc., to a perception of less US involvement in the middle east, or less chance of a terrorist invoked danger to the US.

Another explanation is that people who were into gold and silver as a safe place to wait out the recession are deciding the recovery has started and have been putting money into equities.

I've watched the DOW Jones climbing and wondered if that was Fed money and the market was a kind of mini-bubble of inflationary funds. But the analyst I talked to today said it was the end of bond cycle and that people are moving out of bonds and into equities.

But I think the problems of the debt and deficit and inflation remain and that gold and silver will start back up again. That analyst I spoke to mentioned that the people on the street don't think interest rates will be boosted (to curb inflation) until after the elections in 2012. That means that we should see a lot more money chasing goods and services and ever-increasing rates of inflation. And the Fed might get a nasty surprise at anytime, finding out that they will have to raise interest rates or not be able to sell enough debt to keep the spending binge going.

Just my perspective on an area I'm no expert in.

Post 10

Wednesday, May 4, 2011 - 4:21pm

I just take the simplistic approach that I won't dispose of my precious metals holding until I have some indication that Obama (i.e. the Fed) will stop printing money.

Sam

Post 11

Wednesday, May 4, 2011 - 5:20pm

Sam,

I'm also in this for the long-term. Theorizing on the ebb and flow of short-term demand is interesting, but, for me, just academic.

Post 12

Thursday, May 5, 2011 - 4:26am

The Fed should be abolished.

Post 13

Thursday, May 5, 2011 - 3:44pm

VSA: "The Fed should be abolished."

Of course, it depends on what you mean by that. Like a government automobile factory or steel mill, the problem is state invention in a market. The solution to "the problem of the Federal Reserve" is to make it independent.

As originally intended, there was not too much wrong with the idea of a "banker's bank." The Suffolk Plan touted by Murray N. Rothbard in his A History of Money and Banking in the United States: the Colonial Era to World War II was a bank clearing system. Indeed, it was actually a 19th century version of the 17th century coffeehouse where bank runners exchanged their papers. During the 1907 "panic" or "depression" banks lent each other money with "Clearinghouse scrip" printed ad hoc for the crisis. So, there is some functionality in such a private system.

1907 CLEARING HOUSE SCRIP ARTICLE

One of your Editor's collecting specialties is 1907
Clearing House certificates, a substitute for paper
money resulting from the 1907 U.S. bank panic.
Nolan Mims, in the August 2003 issue of Numismatic
Views, a publication of the Gulf Coast Numismatic
Association, has an article featuring a piece of 1907
scrip from the Second National Bank of Hamilton,
Ohio. The note is a $2.00 denomination. Mims
references a February, 1950 Numismatic Scrapbook
article by Elston G. Bradfield on the scrip, which
appeared in 42 states in response to the short-lived
panic.
http://www.coinbooks.org/esylum_v06n34a11.html

The original "Aldrich Plan" was definitely a "money trust" but its notes would have been private obligations. When the Democrats swept the White House, Congress and Senate, their legislation made FRB notes the obligations of the US Treasury.

Even today, however, the 12 Federal Reserve branches operate as independent businesses. I toured the Cleveland Fed in 1997 and the Dallas Fed in 2000. Cleveland used its profits to refurbish its interior to the oak and wool glory of 1912. I have never been to the White House, but people on my tour who had, said the the Fed was nicer. Dallas put its profits into a new steel and concrete office building with integral fiber optics. So, they are private businesses. But they are also agents of the Treasury. That conflation is the problem.

Post 14

Friday, May 6, 2011 - 5:35am