Asking The Wrong Questions

We often hear (the wrong) questions such as:

• What did politicians know about that scandal?
• Will the stock market rally another year?
• Did politicians lie to the American public about ObamaCare?
• If we elect a new president/prime minister/governor will life improve for the average person?
• Is the NSA spying on us?
• Why has my cost of living increased so much?
• Are markets manipulated?
• Why did the congress pass TARP when citizens overwhelmingly opposed it?
• What happened to penny candy?
• How much longer can “they” hold it together?
• Will gold prices ever get to $2,000?
• And 101 more…

In my opinion these are often the wrong questions.  Ask better questions and we receive more relevant answers.

What did the politicians know about that scandal?  The implication is that major politicians MIGHT be innocent and/or ignorant regarding the events in that scandal.  We usually receive an implausible answer to such questions.

A better question is:  Does the political opposition have enough clout, information, votes, and money to indict the politician on various criminal charges?  Further, does the politician have enough damaging and incriminating evidence against the opposition participants to prevent that indictment?

Will the stock market rally another year?  Answer – it might, which is a useless answer to a poor question.

A better question is:  Does the potential reward outweigh the considerable risk in the stock market at its current extreme valuation levels?

Did politicians lie to the American public about ObamaCare? Answer – of course.  This is like asking if the sun rose today.

Better questions are:  How much did the insurance and medical lobbies spend to get ObamaCare passed, and how much more will health care cost for the average person as a result of this bill?

If we elect a new president/prime minister/governor will life improve for the average person?   Answer – probably not, because special interests own and control the figurehead and those special interests are buying legislation that benefits them, not the average person.

A better question is:  What are the true legislative agendas of the special interests that own and control all major candidates at the national level?

Is the NSA spying on us?  Answer – of course.

A better question is:  Regardless of official denials, what portion of my private financial, business, and personal life is stored in digital files controlled by the NSA?  How can I reduce my digital “footprint” and increase privacy in my personal affairs?

Why has my cost of living increased so much?  – Because prices for what we need have increased, which is a useless answer.

A better question is:  Why has my cost of living increased so much more rapidly than government statistics indicate?  This reminds me of the Groucho Marx question, “Are you going to believe me or what you see with your own eyes?”  Most people understand that government statistics are influenced by a political agenda and consequently those statistics are irrelevant to those of us who pay rent or purchase food, energy, health care, prescription drugs, and college tuition.  Look at the Chapwood Index for another view of consumer price increases.

 Are markets manipulated?  Answer – of course.  They are probably managed and manipulated by government agencies and certainly they are manipulated by High-Frequency-Traders, bankers, central banks, and many other groups.

A better question is:  Market manipulation has changed the dynamics and characteristics of pricing so much that I no longer trust the signals from the market.  What can I do to better protect my assets from the misleading information provided by manipulated markets?

Why did the congress pass TARP when citizens overwhelmingly opposed it?  Useless answer – because they knew best, which is both insulting and silly.

A better question is:  How much money was required to pressure congress into voting for TARP when their constituents were overwhelmingly opposed to TARP? 

What happened to penny candy?  For that matter, what happened to 3 cent cokes and nickel coffee in a restaurant?  Useless answer – inflation!

A better question is:  What has caused the considerable inflation in consumer prices since the early 1960s?  You may have your own favorite answers but my top picks are:  Federal Reserve monetary policy, massive deficit spending by governments, uncontrolled “money printing” caused by wars and social programs, and fiat paper currencies no longer backed by gold.

How much longer can “they” hold it together?  Answer – longer than most of us think likely.

A better question is:  Will the next financial crisis be as bad as in 2008, or significantly worse, and how will it affect my life?  Answer – there is more debt, more leverage, and far more risk in the financial system than in 2008, so expect a more significant impact on the lives of most Europeans, Japanese, and Americans.  If most of your assets are held in fiat currencies, over-priced stocks, and bonds, you might want to consider alternatives.

Will gold prices ever get to $2,000?  Answer – yes.

A better question is:  The financial system is increasingly leveraged and vulnerable to a major correction or reset.  When that inevitable reset occurs, will central banks respond with massive increases in debt and digital currencies to bail out failing banks and governments, and increasingly devalue the purchasing power of most western currencies?  Will gold reset closer to $2,000, $5,000 or $10,000?

Garbage in, garbage out!  Ask better questions and the answers will be more useful.  The same thinking that brought the world to this point will not be helpful in solving the problems that threaten our financial well-being.

Gary Christenson

The Deviant Investor