Binary Thoughts: Man Imitates Machine

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Maybe it’s ironic or maybe it’s just plain logical that as computers invaded our lives, they also invaded our thoughts. Human brains are incredibly complex systems, capable of producing an unlimited array of emotions, thoughts and opinions across complex fluid spectra. Computers on the other hand use the cold logic of mathematics to process and relay information. To a computer a problem is broken down into ones and zeros, for humanity that’s increasingly becoming the case.

Today we live in a world of extremes. All or nothing. My way or the highway. The world is deeply divided on virtually every issue. But why?

Extreme monetary and unresponsive fiscal policy have led humanity into an unknown territory. Each side’s mistakes only amplified the other’s, building on each other and taking us to a radical new place not seen in living memory. In essence, we are off the edge of the map, but if history is our guide we know things only get worse from here before they get better.

And as we head off into the unknown, people are growing with fear uncertainty and most importantly desperation. There’s a palpable tension in the air. One wrong step, and we could fall off the edge of the world. As Ray Dalio puts it “risk is asymmetric to the downside”.

The stakes are so high and the margins of error are so thin that only one side in an argument can be correct, which leads a piling up on opposite sides of the fence with nobody in the middle. No side is willing to compromise. Hence the binary thinking.

The danger of the trend towards this binary thinking is incredibly dangerous and once again echoes the darkest times in history. If we give in to this belief that there is only one way out then we are doomed, because to be perfectly honest, there is no “good” option. There are varying degrees of bad.

Humanity has failed to deliver on its promises over the last 40+ years. We don’t have universal “free” healthcare, we don’t have funded pensions and we don’t even have flying cars. The time to pay for our mistakes is not in some distant future, that time is now. We have pushed everything beyond their normal limits and the bands are so stretched that when they snap back things will break. Things that people depended on. Things that people based their whole life around. Things that people cannot live with out.

Once again, irony plays a role, as the very things people cannot live without were based on a very unique society living in the aftermath of the very road map that we are closely following today.

Unbeknownst to many WWII, which is perhaps the most powerful dislocation since the black plague wiped out 1/3 of Europe’s population in the 14th century, still affects us to this day. Tens of millions of people were killed. Entire nations leveled to nothing. And when it  was over the US held half the wealth of the entire world.

The society that grew out of the ashes of WWII was built on the a once in a 600 year dislocation. So it’s no surprise that the dollar reserve currency, social programs, and demographics, the very pillars of our post WWII society, have become obstacles standing in the way of future growth and prosperity.

These pillars are outdated, and have been for decades as the increasing bipartisan nature of politics paralyzed democratic governments. This inaction has led to the steady deterioration of society. Politicians have noticed this deterioration, which is why the only policies they can agree on, is to give themselves even more power so that when the social fabric breaks, they can step in and take control. Think about that for a second.

So the rise of extreme right and left wing parties shouldn’t be a surprise. The citizens have been so marginalized during this whole cycle, that they are willing to support almost any change without any thought to the cost.

When it comes to volatility, politics is giving the financial markets a run for its money.  Like a phoenix reborn new and improved, the death of one extreme party will give rise to its polar opposite. Like people on a boat, running from one side to the other hoping to find safety on the other sides. As the pro EU movements fail across Europe we’ll see a rise of anti-EU ones, and most likely, the break up of the EU as we know it.

Americans should be more concerned with who they elect for president, I’m not sure any of our current candidates are capable of such a tough job, but then again they do say that time makes the man, I can only hope that is true. And remember, if you are all in one camp remember the following:

only-a-sith-deals-in-absolutes

 

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