There are some laws that you need to learn to remain healthy, wealthy, and wise.
My number one rule is, “Trust no one; assume nothing.” There was a book written in 2007 titled Assume Nothing, Trust No One. Sorry. I learned my rule back i n 1981 from a captain I was working for as a ship’s cook. He had previously made his living transporting contraband to various First-World countries.
The long version is, “Trust no one to do their job properly and always assume that they have not.” Except for a refrigerator, have you ever bought an electric appliance at SM and not had it tested before paying for it?
But that is not a genuine “law.” Rules are something that you can choose to follow or not. Laws, however, do not require your agreement.
Almost everyone knows “Murphy’s law”:
“Anything that can go wrong will go wrong.” The gentleman that originally wrote “Everything that can go wrong will go wrong”—British magician and inventor Nevil Maskelyne—never got the credit. Instead, an American aerospace engineer who worked on safety-critical systems, Edward Aloysius Murphy Jr., did. Murphy was angry since what he was writing about was “worst-case scenarios,” not common everyday occurrences like not getting enough screws to assemble your “Made in China” computer table. Trust no one to do their job.
Newton’s law of universal gravitation does not require your approval, either. Simply, “What goes up must come down” never fails. Even if you escape Earth’s gravity, some other large body is pulling you in. The moon would fall on Earth if not in constant revolution around the planet.
Perhaps the most important law is “The Law of Unintended Consequences,” defined in social science—a fake-science like economics—as an outcome from a purposeful action that is not intentional. But that definition only works until you are about seven years old, explaining why the Halloween “face paint” on your little brother’s face turned out to be a permanent marker.
Otherwise, it is the “Law of Obvious-but-Ignored Consequences” or the “Law of Too-Ignorant-To-Figure-It-Out Consequences.” Seventeenth-century English philosopher and economic theorist John Locke first used the phrase to discuss the “unintended consequences of interest rate regulation” in a letter to a Member of Parliament. Locke was responding to a request for his analysis of the Parliament reducing the base interest rate to “stimulate economic growth.”
His very polite and very British answer was that by artificially setting interest rates to manipulate the economy would be a disaster. “It will mightily increase the advantage of bankers” and “widows and orphans will be sure to have no more profit of their money.” In modern terms, the banks will make out like bandits and fixed income earners and savers will be screwed.
The “Law of Obvious-but-Ignored Consequences” has not changed in 300 years, especially by the central banks and governments.
We are all facing another variation of the law: “Hidden Consequences.” Excited that Bitcoin and global stock markets are going higher? Not at all concerned that the Dow Jones global commodity index is at a six-year high? Think it is great that the global average interest rates are the lowest in 5,000 years?
What all this is saying is that “money” is becoming less valuable. People are more confident in the future of all those assets than their bank deposit account. And that is dangerous.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.