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Dan Ariely: Why Humans Are Hard-Wired To Create Asset Bubbles

Tyler Durden's picture


Submitted by Adam Taggart via Peak Prosperity,

Renowned behavioral economist Dan Ariely explains why humans are biologically wired to make irrational decisions when money is involved. It's a case of our evolutionary wiring interfering with the decisions we face in a modern world very different from the one our ancestors adapted to.

For instance, he explains how one of the easiest phenomena to create in a lab are valuation "bubbles". Our vestigial herding instinct encourages us to imitate the actions of those around us (e.g. bidding for a particular asset), which then strengthens that signal for others (leading to even higher bidding), resulting in behavior not justified by the underlying fundamentals of reality (asset prices destined to crash).

In this podcast, Chris and Dan explore the human cognitive triggers that have led us to our third major bubble in 15 years (tech stocks, housing, credit) and why our natural programming often works against our best interests. In certain cases, like the banking sector, bad decision-making has become so ingrained in our institutions that Ariely thinks the "clean slate" approach is our best option should we have the courage to deploy it:

In very general brushstrokes I think that most bankers are in fact inherently decent people. We just put them in situation in which their conflict of interest is tremendously high and their social norms are incredibly dysfunctional.


When you hear bankers talking about their customers as Muppets, for example, they are forgetting who they are serving. They are hired by the rest of us to do a particular job; and they forget this. And then they have terrible conflicts of interest.


Imagine that I give you a world in which, if you can adopt a particular perspective on life, you could get $5 Million as a bonus. Wouldn’t you start believing that world? And then everybody around you is doing the same thing, and you have some justification for it by talking about financial market theory and so on. All of a sudden you could see how you could take good people and you could put them in this distorted way -- in the same way that we talked about how global warming is probably the perfect storm for inaction -- I think Wall Street is the perfect storm for allowing people to rationalize their own selfish motivations as if they are serving other people.


It is really, really terrible because we have not done anything to change the way we pay bankers. And we have not changed anything in terms of the code of ethics and morality.


On the consumer side, there is a tremendous loss of faith. We have been screwed and we know that we have been screwed. And we know that we are not trusting other people. And I think loss of trust is a central issue for this financial crisis and sadly nobody is trying to do anything about that. Human beings are incredibly forgiving, but nobody has really stood up and said, "I am really sorry. I made all of these terrible mistakes. I want this particular bank to start fresh and caring about people," right? Nobody has admitted anything. So we as consumers feel that there are these other people on the other side who have behaved terribly, which is true, and that are smug about it, and that nothing is different. And why should we trust them? And we do not.


I don't think it is a generational thing. I think there is a tremendous feeling of lack of control, agency, and helplessness. And the sad realization -- this is one of the things that came out of financial crisis -- is that it is much harder to start a new bank now. So young people are actually quite idealistic and I think people would have started new banks where they behaved very, very differently. But what happened is that it is really, really tough to open a new bank now. But I am still hopeful: I think that this anger and frustration just needs to be channeled in a better way.


I am not a religious person but the story from the Bible is that God made the people of Israel walk around the desert for 40 years until the old generation that worshipped the golden calf passed away. I do think that we need a new generation of bankers. I think you cannot take the old generation of bankers and rehabilitate them.


Recent history is not showing us that this is something we should hope for. But there is a real question of, How do we create a new generation of bankers that are going to think of themselves as the caretakers of society, rather than the rapists?

Click the play button below to listen to Chris' interview with Dan Ariely (42m:54s):




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Sat, 02/15/2014 - 22:11 | 4441038 Seize Mars
Seize Mars's picture

Look, I understand that there is a desire to seek "mystery" answers to the big, social, seemingly baffling things like economic cycles and bubbles. But the smoke has cleared. Von Mises has put it in back and white. It isn't "behavioral," it's financial.

This is being done to us, it's not something we are falling into.

Wake up, read Rothbard, Von Mises.

It. Doesn't. Have. To. Be. Like. This.

Sat, 02/15/2014 - 22:47 | 4441040 Deathrips
Deathrips's picture

Humans are hard wired to shoot heroin, says the addict.


Look at this needle I evolved with.





Sun, 02/16/2014 - 00:19 | 4441335 Anusocracy
Anusocracy's picture

I have to disagree with Dan Ariely.

Alpha males and their 'lieutenants' are hard wired to treat lower individuals as objects. The modern alphas' code of ethics and morality are hardly any different than the behavior of animals.

The politicians, banksters, and other elites are basically high-function monkey elites:

"Rhesus macaques live in complex societies with strong dominance hierarchies and long-lasting social bonds between female relatives. Individuals constantly compete for high social status and the power that comes with it using ruthless aggression, nepotism, and complex political alliances. Sex, too, can be used for political purposes. The tactics used by monkeys to increase or maintain their power are not much different from those Machiavelli suggested political leaders use during the Renaissance.

Alpha males, who rule the 50 or so macaques in the troop, use threats and violence to hold on to the safest sleeping places, the best food, and access to the females in the group with whom they want to have sex. Like human dictators intent on holding power, dominant monkeys use frequent and unpredictable aggression as an effective form of intimidation. Less powerful members of the rhesus macaque group are marginalized and forced to live on the edges of the group’s area, where they are vulnerable to predator attacks. They must wait for the others to eat first and then have the leftovers; they have sex only when the dominant monkeys are not looking.

“In rhesus society, dominants always travel in business class and subordinates in economy, and if the flight is overbooked, it’s the subordinates who get bumped off the plane,” Maestripieri said. “Social status can make the difference between life and death in human societies too,” he pointed out. In the wake of Hurricane Katrina, for instance, the poorer members of the community accounted for most of the hurricane’s death toll."

"Male macaques form alliances with more powerful individuals, and take part in scapegoating on the lower end of the hierarchy, a Machiavellian strategy that a mid-ranking monkey can use when under attack from a higher-ranking one. Altruism is rare and, in most cases, only a form of nepotistic behavior."

"Struggles for power within a group sometimes culminate in a revolution, in which all members of the most dominant family are suddenly attacked by entire families of subordinates. These revolutions result in drastic changes in the structure of power within rhesus societies, not unlike those occurring following human revolutions. There is one situation, however, in which all of the well-established social structure evaporates: when a group of rhesus macaques confronts another one and monkey warfare begins. Rhesus macaques dislike strangers and will viciously attack their own image in a mirror, thinking it’s a stranger threatening them. When warfare begins, “Even a low-ranking rhesus loner becomes an instant patriot. Every drop of xenophobia in rhesus blood is transformed into fuel for battle,” Maestripieri wrote.

“What rhesus macaques and humans may have in common is that many of their psychological and behavioral dispositions have been shaped by intense competition between individuals and groups during the evolutionary history of these species” Maestripieri said. Rhesus groups can function like armies, and this may explain why these monkeys have been so successful in the competition with other primates."

Sun, 02/16/2014 - 00:48 | 4441386 James_Cole
James_Cole's picture

Dan Ariely is boss, his ted talks are great. Funny seeing him on zh.

Sun, 02/16/2014 - 04:31 | 4441636 The Vineyard
The Vineyard's picture

I need to be on drugs.  My demons have demons.  Bitches.

Sun, 02/16/2014 - 10:09 | 4441871 Dick Buttkiss
Dick Buttkiss's picture

If the system is inherently immoral, as our money and banking system is, then those in contol of it cannot but act immorally.  That they naturally defend their immorality is perfectly understandable, never mind that it only makes the system that much worse, especially when the system of which it is a subset — i.e., the state — is inherently immoral as well.

The state is based, after all, on the coercion embodied in the confiscation of property — i.e., the theft of taxation — which is no less moral because the people acquiesce in it. On the contrary, it is for this very reason that the immorality worsens, and society, which is inherently cooperative, ultimately breaks down.

This is the situation we are in today, of course, where banks are "too big to fail," and thus bankers to "too big to jail," the system itself becoming one big prison operating under the psychic trauma of the Stockholm Syndrome.

Collapse, then, is inevitable and will only be worse the longer the prison guards are able to perpetuate it.

Sun, 02/16/2014 - 12:31 | 4442128 KickIce
KickIce's picture

Fair laws that apply to all helps keep immorality in check while risk helps to keep greed in check and the banks have obviously circumvented both of these checks.  In short, our politicians represent the United States as a corporation and not the people.


–John Adams in a letter written to Abigail on the day the Declaration was approved by Congress

"We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." --October 11, 1798

Sun, 02/16/2014 - 01:24 | 4441454 bonin006
bonin006's picture

It looks like someone (the down voter) is uncomfortable with the truth.

Sun, 02/16/2014 - 14:54 | 4442472 dark pools of soros
dark pools of soros's picture

anyone that crys about a punch should get 50 more!

Sun, 02/16/2014 - 07:47 | 4441740 Oracle 911
Oracle 911's picture

The current "elite" is a conglomerate of sociopaths and psychopaths, they don't have conscience, lack empathy and they are net consumers not producers (they produce physical feces, but that doesn't count).

The monkeys lack conscience, lack empathy and  they are consumers and not producers. So the comparison of the human "elites" to the macaques is befitting.


Note: I'm talking about physical feces, the intellectual feces a.k.a. lies counts.

Sun, 02/16/2014 - 10:17 | 4441889 ohBehave
ohBehave's picture

Well, that's all well and good.

In general, we ALL treat "the others" as less important.   For example, we can watch real human being suffer greatly in other cities or nations, but we look at them in much the same we'd watch a movie.

We kinda care, but we do nothing.  We focus on our own lives and those who are closest to us.  

We see a homeless dude, but instead of bailing him out, we buy a nice Audi for ourselves.  Sure, we could have bought a Honda Fit with money left over for that guy sleeping on the sidewalk.  In fact, the Honda would be more reliable and more practical.... but no, we act like those evil elites.... we treat ourselves to the nice latte' as we step over the legs of the homeless.

How are any of us behaving ANY differently than those elites or bankers?

We aren't.   To complain about them is to complain about being human.

The answers are simple:  severely limit government

Sun, 02/16/2014 - 19:03 | 4443130 MeelionDollerBogus
MeelionDollerBogus's picture

I don't. If I have $20 to spare I'll give it to the homeless guy or buy him a meal.
I usually don't have it to spare but I'm not buying some fucking Audi. Ever.
I understand in another city my maximum spending output will do nothing, given the distance, because I can do math. A person's free, even hitch-hiking, to find another city or another country. It's been done before & I may need to do that myself as well.

I don't act even 0.0000001% like those evil elites. Ever.

They are not human. They are wolves posing as humans. Most of us refuse to ever behave like them.

Sun, 02/16/2014 - 18:59 | 4443125 MeelionDollerBogus
MeelionDollerBogus's picture

considering all the receptors we have for opiates & how convenient it is these happy plants produce opiates, it does appear to be the case.

Sat, 02/15/2014 - 22:14 | 4441049 Irene
Irene's picture

Actually, at this stage of the game, I'd recommend Hayek.  He emphasizes the need for societal, cultural, and educational institutions that lay the foundations for a free people and a free market.  We need to get back to basics.  It ain't just about the money anymore.

Sat, 02/15/2014 - 22:48 | 4441142 NoDebt
NoDebt's picture

I'm about tired of institutions telling me how to be free.  Haven't found the institution yet that doesn't exist to protect it's own as it's primary purpose, no matter how well meaning.

Sat, 02/15/2014 - 23:03 | 4441176 Harbanger
Harbanger's picture

That would be the self created institution of awareness.

Sat, 02/15/2014 - 23:24 | 4441236 Irene
Irene's picture

Hayek doesn't tell you how to be free.  He talks about how institutions and law that organically arise out of the growth and experience of a society and continue to improve society are preferable to state/top down imposed ones, among other topics. 

Every society needs good institutions, but good institutions also need good oversight.  Protecting one's own is a natural human reaction.  So, don't expect the impossible. 

Sat, 02/15/2014 - 23:48 | 4441278 NoDebt
NoDebt's picture

And who will provide this benevolant oversight?  Me?  I don't even trust you to do it, and you seem like an OK guy/girl.

The fewest number of institutions possible, commensurate with running the society.  And nobody knows how many that is.  So until further notice, the fewer, the better.  Certainly far fewer than we have today.

Sun, 02/16/2014 - 01:46 | 4441489 Irene
Irene's picture

I'm not disagreeing with you but "institutions" do not need to be bricks and mortar types.  Marriage is an institution.  Belief in the rule of law is an institution.  These non-physical institutions are very important.  They were built up over centuries of experience and reflect a lot of collective wisdom.

Sun, 02/16/2014 - 08:27 | 4441766 new game
new game's picture

checks/balance????? another human with an agenda. or is that hidden agenda? groups to provide the check/balance????

ultimately it works for a while and get hyjacked by viloence... these are self evident facts.  the cycle of human life.

so you live in a time period within the cycle. ie peace/war. do you feel lucky? tic- toc...

Sun, 02/16/2014 - 18:58 | 4443122 MeelionDollerBogus
MeelionDollerBogus's picture

marriage is a cultural meme, it isn't an institution. That's simply mis-use of the word.

Tue, 02/18/2014 - 01:55 | 4447081 Canoe Driver
Canoe Driver's picture

Marriage is an institution of the state, extant for the support of the state, and the state has always used the church to bolster state power. The church itself, in general, is merely another, larger institution of state power. That most of the people understand marriage as a cultural phenom is one of the most significant political manipulations of history. Further, at least since the industrial revolution, child-rearing is essentially reduced to a service provided by individuals, at their own expense, for the support of the state. The fact that we love our children and find them adorable, loving and innocent human beings is irrelevant to the political utility of child-rearing. Society is awash in such poltical manipulations which have been made to pass for the will of the people.

Although it is a topic too lengthy for discussion here, one need only look at the full history of modern sport, yes, sport, and its promotion from the days of the British Empire, for yet another eye-opening revelation about the use of purported "cultural memes," to control the population and channel its energies into the support of the state.

In fact, such are of the very essence and nature of government.

Thu, 02/20/2014 - 01:10 | 4447211 MeelionDollerBogus
MeelionDollerBogus's picture


Marriage pre-dates states and goes back to tribes. Culture. Not states.

Marriage even pre-dates ALL CHURCHES on Earth.

Even marriages in India & all their temples predate every Western Church ever to exist by more than 2 THOUSAND years and marriage easily predates the first building of the first temple in India - ever.

Sun, 02/16/2014 - 09:53 | 4441848 Hail Spode
Hail Spode's picture

Good observations NoDebt.  The first goal of any bureacracy is its own well-being, no matter what purpose the institution was originally founded for.   Break government up enough that it is subject to the market and the interests of those running it will co-incide with those living under it because the transaction costs of getting away from bad government would be low.  See

Sat, 02/15/2014 - 23:58 | 4441297 Seer
Seer's picture

"He talks about how institutions and law that organically arise out of the growth"

Perpeptual growth on a finite planet isn't possible.  ANYONE who doesn't get this is an IDIOT.

Anything growing out of cancer is BAD!

Sun, 02/16/2014 - 01:33 | 4441474 RumCurrency
RumCurrency's picture

That is nonsense.  As any technology matures it becomes commoditized so that even the poor gain access to it.  While this is happening, wealthier individuals are buying the newest more experimental technologies, and this helps to finance further research and development.  Technology is the never-ending struggle to do more with less.  Eventually (in hundreds or thousands of years) technology will expand human reach far beyond this planet.  The universe may be finite, but I highly doubt all of its resources will ever be fully utilized.

Sun, 02/16/2014 - 17:34 | 4442856 RECISION
RECISION's picture

If you imagine Homo Sapiens are going to go Star-Treking off into the universe, and raping and pillaging mining planets and asteroids as they go, then you seriously don't understand the factors and issues involved...

Sun, 02/16/2014 - 18:57 | 4443111 MeelionDollerBogus
MeelionDollerBogus's picture

really? The poor will gain access to HFT trading, to BMW's and to organic GMO-free foods in stores, and to land upon which to grow their own food?

Fuck no. You're dreaming in LSD-technicolour.

Technology isn't cheap enough for the poor to benefit from it. iPhones on contract are but a contract is a debt & the device adds ZERO to survivability. Robotics are too difficult for them to understand & motors far too expensive even to build their own. Computers get discarded now that are too old & can be used by the poor but again, without the tech knowledge (they are poor in knowledge, money & useful experience) this becomes a game-computer or a facebook terminal. Nothing useful.

Very many technologies out now are a way to do less with more, to be stupid & insanely so. Seer is right.

Sun, 02/16/2014 - 18:53 | 4443098 MeelionDollerBogus
MeelionDollerBogus's picture

indeed, you are right.

That isn't to say we can't do a lot of cost-cutting at the physical level for resource-usage, storage & power transmission but again, this is finite. Either human population x consumption comes to equilibrium the easy way or it doesn't. If it doesn't then there's the hard way, or extinction. That's the entire set of future options.

It's disappointing 3 retards gave you a -1 because they are part of the problem & wilfully blind.

Sun, 02/16/2014 - 00:08 | 4441316 JeffB
JeffB's picture

Hayek certainly warns of the problems of a socialistic government, &/or a government that wants ever more power to conrol an economy.

The Road To Serfdom, has some timeless insights. No doubt that was why it was such a timeless classic.

Sun, 02/16/2014 - 00:25 | 4441342 Anusocracy
Anusocracy's picture

There isn't an example of a government that doesn't want ever more power to control an economy (and everything else).

And there won't be.

Sun, 02/16/2014 - 01:03 | 4441406 JeffB
JeffB's picture

and that's undoubtedly why our Founding Fathers were so prudently careful in trying to erect a series of checks and balances on that governmental power... and it worked pretty well for quite awhile.

Once the banksters were able to seize control of the money making machine by deceit, among other devious methods, when they were able to spawn the Federal Reserve, aka The Creature from Jekyll Island, putting themselves in the driver's seat, it was just a matter of time before things spun out of control.

Now we're left with the very dangerous task of trying to get the spinning plane back under control again.

Good luck to us.


Sun, 02/16/2014 - 07:03 | 4441714 A Nanny Moose
A Nanny Moose's picture

Meh. We started with the smallest government the world has ever seen, yet still ended up with the largest, most intrusive government ever.

So much for checks and balances. The only government that does not seek to consolidate power, is one that does not exist.

Sun, 02/16/2014 - 20:16 | 4443322 Dr. Acula
Dr. Acula's picture

>The Road To Serfdom, has some timeless insights.

Yes, here's a choice one from Hayek the socialist planner:

""[T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody. ... Nor is there any reason why the state should not assist the individual in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision... In any case, the very necessary effort to secure protection against [economic] fluctuations do not lead to the kind of planning which constitutes such a threat to our freedom.”

Sun, 02/16/2014 - 03:56 | 4441618 All Risk No Reward
All Risk No Reward's picture

Which came first - the Money Power or the screwed up societal, cultural and educational institutions?

Because the Money Power has hijacked all of the above and a bag of potato chips.

Debt Money is fraud.

The "business cycle" is a euphamism designed to fool the ignorant.  It really is a debt money Ponzi scheme debt bubble / bust operation.

Sun, 02/16/2014 - 07:36 | 4441730 Offthebeach
Offthebeach's picture

The masses have government plantation "education". And TV. The ones troubled with confused imaginations, self medicate.


Sun, 02/16/2014 - 09:23 | 4441811 headhunt
headhunt's picture

It is simple greed that drives these people to do what they do. The fact is these people are insulated from the majority of ordinary persons daily life. They work long hours and only associate with their breed of aristocracy. They view everyone else as a muppet to justify their greed, if it is not a real person they just stole from it is simple and easy to justify  the greed.

The herd mentality of groups has a tendency to lead groups off the edge of cliffs - look at our last two elections - baaaa...

and they introduce 'common core' to continue the stupification of America

Sun, 02/16/2014 - 20:06 | 4443301 Dr. Acula
Dr. Acula's picture

>at this stage of the game, I'd recommend Hayek

His teacher, Mises, is clearly a better economist.

Hayek is a socialist who recommends a welfare safety net. For adopting socialism, he even won a central bank's prize.


Sat, 02/15/2014 - 23:21 | 4441227 nmewn
nmewn's picture

It. Doesn't. Have. To. Be. Like. This.

Unfortunately, yes it does.

There are genuinely stupid people walking the planet and you can't fix stupid. Ignorance, is an entirely different matter.

Sun, 02/16/2014 - 00:34 | 4441362 Seize Mars
Sun, 02/16/2014 - 01:34 | 4441475 JeffB
JeffB's picture

Thanks for that link.

It looks like a great book. I'll have to check it out.


Sun, 02/16/2014 - 10:12 | 4441878 nmewn
nmewn's picture

Thanks for that.

It looks like what we've always said around here. Rewarding bad behavior (or bad economics) never leads to a change in the bad behavior. There is no clearing mechanism, no floor at which the real, saved capital comes in and establishes one, just more of the artificial and of course, never any punishment for the ones who caused it in the first place.

And the ponzi grows on.

Sat, 02/15/2014 - 23:21 | 4441228 JeffB
JeffB's picture

You hit the nail on the head, Seize Mars.

For a pretty nice reasonably concise explanation, see Auburn's economic Prof. Roger Garrison's Youtube clip of a PowerPoint presentation he gave to a class on the Austrian Theory of the Business Cycle.


Sun, 02/16/2014 - 00:35 | 4441365 Seize Mars
Seize Mars's picture


Good one, bra. I love that video.

Sat, 02/15/2014 - 23:22 | 4441229 OC Sure
OC Sure's picture

Seize Mars is correct.

The symptom is the behavior but the cause is financial [the money printing].

Von Mises analysis and teachings on praxeology certainly prove this and is precisely why Human Action is eschewed in the USA's indoctrination system.

Tu ne cede malis.

Sun, 02/16/2014 - 01:30 | 4441468 dtwn
dtwn's picture

Yup.  This X100.  Really, economics from the Austrian viewpoint expounded upon by Rothbard and Mises is I believe, the best explanation for how an economic system 'should' be working.


Now, I also do enjoy Ariely's work as well, behavioral economics is quite fascinating as well. However, the Goldman-type bankers with their large bonuses and treating the rest of us peons as muppets would not exist in a free market.  They only exist currently due to teh moral hazard given to them by our corrupt political system. 

I believe that in a truly free market, i.e Austrian economic system, they would not last long.

Sun, 02/16/2014 - 04:09 | 4441625 All Risk No Reward
All Risk No Reward's picture

The Bnaksters aren't going to pay people to teach people anything close to the truth about their Debt Money Tyranny system...

Debt Money Tyranny


Sun, 02/16/2014 - 04:31 | 4441638 pcrs
pcrs's picture

As long as their is a gun on he head of the tax slave to bbail out the elites, these elites will make seemingly irrational decisions with your money.

Sun, 02/16/2014 - 06:57 | 4441709 A Nanny Moose
A Nanny Moose's picture

Thank You! Bubbles result from currency debasement.

Sat, 02/15/2014 - 22:12 | 4441041 Irene
Irene's picture

While you're figuring out how to get "better bankers", try working on "better politicians" too. They go hand and hand.

Sat, 02/15/2014 - 22:18 | 4441051 wisehiney
wisehiney's picture

You should study a little more and qualify that headline. You minority within a majority defeatist are wired to lose.

Sat, 02/15/2014 - 23:14 | 4441207 Harbanger
Harbanger's picture

I was just hanging with my manly self at bar tonite next to 3 lesbians.  Don't tell me about how we're wired.  The head lesbo had a very hard time keepin her bitchez from looking and talking to me.

Sat, 02/15/2014 - 23:16 | 4441215 LetThemEatRand
LetThemEatRand's picture

They obviously thought you were one of them.  

Sat, 02/15/2014 - 23:20 | 4441221 Harbanger
Harbanger's picture

I always know what gets to you Lola.  Who da man?

Sat, 02/15/2014 - 23:49 | 4441271 Harbanger
Harbanger's picture

Drawn and quartered by your neighbors Lola, that's what I see as your end.  Take it for what it's worth, it's your fate.

Sun, 02/16/2014 - 01:28 | 4441438 LetThemEatRand
LetThemEatRand's picture

Okay, lezzie.  By the way,your post about lesbians wanting you reveals much about the mindset of the Randian.

Sun, 02/16/2014 - 04:13 | 4441627 Harbanger
Harbanger's picture

I can't wait until you gay fuckers experience a populist totalitarian rule.

Sun, 02/16/2014 - 03:41 | 4441613 prains
prains's picture

hangin out by yourself next to three lesbians seems a tad strange to be a coincidience......

Sun, 02/16/2014 - 04:15 | 4441629 Harbanger
Harbanger's picture

Don't expect any sympathy when they string your ass up, you don't deserve it.

Sun, 02/16/2014 - 00:50 | 4441395 Anusocracy
Anusocracy's picture

Being a sane minority within a destructive majority, we are bound to lose.

Sun, 02/16/2014 - 08:38 | 4441774 new game
new game's picture

you have two options fight/flight - quite simple to me.  so what are you really doing?

i have sold my real estate and have positoned myself with some options within the subset of fight/flight.

maybe way too rational. i can't help myself-lol as ilook into the mirror.

it had to come to this eventually.  peace only lasts so long...

Sat, 02/15/2014 - 22:22 | 4441064 Tinky
Tinky's picture

Having just altered my state of consciousness (here in Colorado), masturbated, and wolfed down a pint of Häagen-Dazs while reading this post, I must say that I find the idea that humans are "hard-wired" to be preposterous.


Sat, 02/15/2014 - 22:30 | 4441091 Peter Pan
Peter Pan's picture

Without down voting you, I must say I disagree a little. The reason for this is that I believe that stupidity, greed and a few other traits are hereditary and in turn this explains why the ugly aspects of history keep repeating themselves.

Sat, 02/15/2014 - 22:50 | 4441147 NoDebt
NoDebt's picture

It was sarcasm, Pete.  Read it again.

Sat, 02/15/2014 - 22:58 | 4441162 Peter Pan
Peter Pan's picture

Sorry NoDebt. But a late Saturday night has left me a little dull of mind.

Sat, 02/15/2014 - 22:27 | 4441080 Peter Pan
Peter Pan's picture

I must confess that one of my sons in law is a banker.

Strangely enough he meets his employer set targets within 8 months at the most.

His secret? He knocks back finance applications that he would not advise his own children to lodge. He backs this up with good solid advice and then leaves it to the client.

He tells me that over 70% come back at a later stage when their finances are more solid. The foundation for a solid ongoing relationship is formed and the added bonus is the referrals these clients make.

I keep reminding him that the only incident of Christ being violent is towards the "bankers" when he threw the out of the temple.

Such attitudes are few and far between.

Even tellers these days are pressured to make sales over the counter for insurances etc and you can tell they become uncomfortable and the client becomes irritated when it happens again and again on each visit.



Sat, 02/15/2014 - 22:41 | 4441084 Cabreado
Cabreado's picture

I scanned the article for greed, corruption, ignorance, control... narcissism and self-absorption too...

what a waste of time.

"In very general brushstrokes I think that most bankers are in fact inherently decent people. We just put them in situation in which their conflict of interest is tremendously high and their social norms are incredibly dysfunctional."

Right in there would've been a perfect place.

Sat, 02/15/2014 - 23:20 | 4441223 JR
JR's picture

If the author is talking about the top officials of the big international banks, he is mistaken. They are participating in this wealth transfer which is detrimental to the United States. They are not decent people. They are robbers.

The answer is to stop the DEBT Wagon set in motion by the central bankers and to begin the difficult road back to sound money.

The president of the Bank of England in the 1920s and second richest man in Britain, Josiah Stamp, said: “The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again… If you wish to remain the slaves of the Bankers and pay the cost of your own slavery, let them continue to create deposits.

“However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in.”

Stamp’s had the solution: End the Fed. Can there any longer be any doubt?


Sun, 02/16/2014 - 01:16 | 4441422 Cabreado
Cabreado's picture

Great quotes from decent bankers from a hundred years ago mean (unfortunately) nothing.

"Stamp’s had the solution: End the Fed. Can there any longer be any doubt?"

And we are beyond the "End the Fed" thing.

Sun, 02/16/2014 - 01:40 | 4441482 JeffB
JeffB's picture

Maybe it's too late, the cancer has certainly spread, but the Fed was/is the major culprit in spawning and spreading that cancer, and it should be one of our first targets in putting a stop to the ongoing damage.

Even if a fire is out of control, it's probably still a good idea to take out the idiot pouring more gasoline onto it... especially one using a fire hose.


Sun, 02/16/2014 - 19:58 | 4443287 Dr. Acula
Dr. Acula's picture

"Great quotes from decent bankers from a hundred years ago mean (unfortunately) nothing"

How does the age of a statement affect its truth value?

"And we are beyond the "End the Fed" thing."

So you're saying it won't end, like the First and Second Banks of the United States ended?


Sat, 02/15/2014 - 22:28 | 4441085 ShrNfr
ShrNfr's picture

I cannot recommend Dan and his books too much. Thanks for this interview. He is one of the best in the field.

Sun, 02/16/2014 - 00:51 | 4441393 BigJim
BigJim's picture

He's an ignorant fool.

But there is a real question of, How do we create a new generation of bankers that are going to think of themselves as the caretakers of society, rather than the rapists?

Modern banks comprise a money-creation cartel, and bankers are just responding to the incentives our fiat currency and legal tender laws create. We don't need 'virtuous' bankers... we need genuine competition and market forces to ensure that banks that extend too much credit go bust.

Sun, 02/16/2014 - 09:26 | 4441823 billwilson
billwilson's picture

Agreed. Took his behaviral economics course and learned more in it than from any other course I have taken. His concepts of predictable irrationality are bang on.

Sat, 02/15/2014 - 22:41 | 4441126 OC Sure
OC Sure's picture

"Why Humans Are Hard-Wired To Create Asset Bubbles"

Does this mean that printing money, counterfeiting, is NOT the source of asset bubbles?

Sure, there is madness in all herds and an abundant amount of obsequiousness inherent in the indoctrinated adult, but WHERE do they get all that hot air to blow into the bubble?

Isn't THE fundamental question to ask:  Why humans are so gullible as to support and cheer their thieving masters?

Sun, 02/16/2014 - 01:06 | 4441418 Anusocracy
Anusocracy's picture

In the past their overall survival was improved by "their thieving masters".

That is no longer true in the present with freedom and free markets.

Which is why governments are dead set against people being free, since they will see that governments are totally unnecessary and, in fact, extremely destructive of just about everything.

Sun, 02/16/2014 - 18:23 | 4443003 MeelionDollerBogus
MeelionDollerBogus's picture

You got it. It's like the chain of command but worse: the chain of obedience.

Sat, 02/15/2014 - 23:04 | 4441180 Atomizer
Atomizer's picture

Me,me,i,i, ...I'm Jewish and promote fags to help build the ACA empire. We don't care where you put your dick, just pay into the system.‎



Sat, 02/15/2014 - 23:11 | 4441197 I Write Code
I Write Code's picture

Cute article, but a bit lacking in outrage.  He may understand the psychology, but not the financial impacts. 

The current bubble is Fed script.

What do you say about a bubble with infinite supply?

Sat, 02/15/2014 - 23:14 | 4441209 kchrisc
kchrisc's picture

I call bullshit!

Only sociopaths calling themselves "government" and "bankers" are "hard-wired" to create bubbles. Bubbles that are really ponzi schemes of theft backed by violence. In other words, they have all the smarts and drive to create wealth, but they would rather use their gifts to steal from others and destroy wealth.


"If one gets rid of these habits one can think more clearly, and to think clearly is a necessary first step towards political regeneration... Above all what is needed is to let the meaning choose the word, and not the other way around.'"--George Orwell, "Politics and the English Language," 1946


Sun, 02/16/2014 - 04:47 | 4441648 Amagnonx
Amagnonx's picture

People may be herd anaimals, but when a system is created whereby control of interest rates (all prices) is placed into the hands of a small group - then they can raise and lower the prices of everything to their own benefit - at the same time herding people into buying whatever it is that they are raising the price of.


Bubbles are a product of central control of interest rates and a credit system that is based on fraud - fractional reserve.

If capital were to derived from its real source, savings, then there is an automatic brake on rising prices - scarcity and increasing price of capital.



Sat, 02/15/2014 - 23:39 | 4441210 Radical Marijuana
Radical Marijuana's picture

The kind of discussion presented in this podcast is typically too much psychology, and not enough evolutionary ecology to examine why that psychology was selected to become dominant. Bubbles are the froth on the fundamental systems, which are claims backed by coercions. The ability of the biggest bullies to dominate societies, and therefore, become the most "popular" members of their society (until after another bigger bully comes along) is the foundation of pecking orders in most social animals. There is nothing new about that in human societies.

What is NEW is the advances in science and technologies which have enabled the biggest bullies to develop weapons of mass destruction that became many orders of magnitude BIGGER than anything that ever existed before in any human society, or any other animal society. The introduction of science and technologies which are trillions of times BIGGER than ever before into our political systems is guaranteed to drive those extremely complex systems to become more stark raving mad than we are currently able to comprehend.

Bubbles are driven by the ability to back up frauds with force, which are related to the more basic reality that private property is based on staking claims, and backing those claims up with violence. Human behaviors are basically organized lies, operating organized robberies. Those are the BASIC HUMAN STORIES, which tend to be framed in terms of dichotomies, which the story tellers tend to exaggerate are fundamental. Since there are NO fundamental dichotomies, all ideals based upon that there are fundamental dichotomies result in the opposite being eventually caused to happen in the real world. 

Those who benefit from blowing bubbles were able to influence the established systems to give them more opportunities to do so, while those who suffered from the consequences of that "bubbleconomics" became less able to resist the systems from enabling more and bigger bubbles. The overall trajectory of human civilization has been warfare whose success was based on deceits making and maintaining a political economy where success was based on frauds. The obvious problem is that the short-term successes due to those few benefiting from deceits and frauds have longer term cumulative consequences which will become worse.

Therefore, the same old systems of lies, backed by violence, benefiting those who were the best at operating within those systems, have relatively SUDDENLY been pumped up by many orders of magnitude by technologies. We are still in the first generation of people who were born into this world of globalized electronic frauds, backed by atomic bombs. It looks extremely improbable that our current social systems, and psychological attitudes, are going to be able to adapt to those changes ... The vast majority of people are living with such EXTREME COGNITIVE DISSONANCE that it is practically impossible to imagine how sever the psychotic breakdowns are going to be.

The biggest of all bubbles is the exponential growth of the overall human population. As long as the overall population is ABLE to continue to grow, then that bubble has NOT popped. When that bubble does POP, it will probably pop in more spectacular ways than we can currently imagine. Everything that human civilization is doing is based on the biggest bullies' bullshit being able to dominate society, through their fundamentally fraudulent financial accounting systems. Collectively, we are acting to continue to try to maximize our short-term advantages, while having the most evil deliberate ignorance possible towards the longer term consequences. (That is especially true because of how the biggest bullies have the most power over blowing economic bubbles, and being able to benefit from riding those both up and down, due to their degree of insider knowledge.)

HOWEVER, THE SHORT-TERM BENEFITS ARE GOING EVENTUALLY TIP OVER THE POINT WHERE THE LONGER TERM COSTS WILL BECOME GREATER. That is the future turning point for human civilization, where the previous successes from being able to strip-mine the planet reaches some points in the future where the collective consequences from having done that accumulate to overall become worse than the short-term benefits ever were, especially when those turning points means that there is not enough high quality natural resources left to strip-mine to keep that strip-mining system going.

Although it is theoretically possible that we might be able to develop better human, industrial and natural ecologies, the path we are actually on now is to very rapidly reach psychotic breakdown points, where the previous options to have adapted to develop better ecologies have mostly been foreclosed upon. Of course, it was theoretically desirable to have changed the systems of incentives, so that behaviors would have better collective longer term consequences. However, as guys like William K. Black have demonstrated, what ACTUALLY happened is that the biggest bully banksters have been able to continue to change the systems of incentives to drive them to benefit from blowing even bigger bubbles.

The DEEP PROBLEM is that the real world is actually controlled by its murder systems, backing up its money systems. Therefore, no genuinely better solutions would be possible without better death control systems operating at the core of that. However, that issue then faces the paradox of warfare, that success was based upon deceits. Therefore, we have had dramatic paradigm breakthroughs in basic science, enabling technologies that became trillions of times more powerful, which primarily got employed to make weapons of mass destruction, to back up even bigger, automated electronic frauds!

In that real context, it tends to be ludicrous to talk about "what kind of world do we want to create?" The way that world is actually created is through the biggest bullies' bullshit driving collective social madnesses to become almost omnicidal. The real world structure is due to the runaway paradox of short-term success being achieved by backing up lies with violence, regardless of whatever the longer term consequences will be ... There are no good reasons to believe that will change, other than when those longer term consequences finally overwhelm us. Too bad, so sad, that, by then, it will be way too late to attempt to prevent that from happening. The basic social pyramid system is the problem, where organized lies, operating organized robberies, benefit those best at doing that the most in the short term. That situation has been amplified trillions of times by advances in science and technology. However, nothing about how badly we are collectively going to be screwed by that in future is enough to stop that from happening anyway. The core of the current system is the feedback through the funding of the political processes, where less than 1% of the people pay for practically 100% of the politics, while 99% of the people pay for practically none of the politics.


The more you know, the worse it gets. The younger you are, the more you are being lied to, cheated, and robbed by the political system you were born into. Everything that used to work, from financing the strip-mining the planet, is reaching a limit where there is not enough fresh planet left to strip-mine. Theoretically, we might have adapted to that by working towards better systems of human ecology, industrial and natural ecologies. However, the central concepts to all of those are the necessary death controls, while our ACTUAL death controls are based on the history of the success in warfare being based on backing up deceits with destruction, which then enabled financial systems to be based on the maximum possible frauds.

It is an interesting question to what degree that drives "irrational behavior" since energy is still flowing through the path of least action, which requires the least human morality to resist that from happening. Theoretically, we should construct better systems of social resistance, in terms of different systems of incentives, for everyone, including the banksters, so that they would all behave more rationally and intelligently, for the sake of the longer term collective consequences. However, IN FACT, the banksters, and the corporations that grew up around those banksters' fraudulent financing, are ACTUALLY driving the political processes to enable even worse systems of incentives, to blow even bigger bubbles.

One could suppose that that is not merely human nature, but the nature of energy systems generally, to flow down their path of least resistance, or the human path of least morality, unless there was some organized resistance to change what that path actually was. However, nothing that one observes in the real world is doing that in any significant way. Rather, the biggest bullies are constantly undermining and eroding whatever little there was left of the constitutional rule of law, to wipe out any checks and balances even more so.

Therefore, the overall tragic trajectory appears to be to continue to pump bigger and bigger bubbles, which are more and more likely to produce unprecedented psychotic social storms when they POP! In my opinion, we ARE pumping trillions of times more energy into systems which were never adapted to do that before. Therefore, they are going to fail in more catastrophic ways that we can currently comprehend. My view is that world is WILDLY OUT OF CONTROL, including out of the control the biggest bullies who originally made and maintained that world to be the way it is now.

Sun, 02/16/2014 - 00:11 | 4441322 Seer
Seer's picture

Perfect example of why reading comments has more value than (most) articles.  Seems very few people actually understand what the real problems are...

Sun, 02/16/2014 - 00:16 | 4441330 the question
the question's picture

I enjoyed reading this post. To summarize: It's all Bullshit!

Sun, 02/16/2014 - 22:53 | 4443863 Radical Marijuana
Radical Marijuana's picture

"It's all Bullshit," however, not all bullshit is equal. The scientific method is a way to try to tell which was the more plausible bullshit. That is still a relatively useful thing to try to do. However, the biggest bullies have set up their bullshit as being "The Absolute Truth," which has backfired badly.

A better scientific epistemology starts with the axiom that ALL knowledge is based upon relative subtractions, and therefore, relative illusions, or lies, since no part is ever actually totally subtracted from the whole. Therefore, any system of understanding is necessarily some system of relative lies. But nevertheless, there are more or less relatively useful ways to tell stories about the world. There are scientific methods to attempt to discover which stories better describe the world than other ways.

The problem is that the paradox of warfare, being the art and science where success was based on backing up deceits with destruction, has enable some of the worst bullshit, the biggest bullies' bullshit social stories to become excessively dominant. The leading example of that is the way that private banks can make the public "money" supply out of nothing, as debts, with various central banks, such as the Federal Reserve Board, being the Kings of Fraud in each country, which are integrated into a globalized system of financial frauds, which is at the root of the series of economic bubbles, and the socially demented incentive systems which favour the middlemen blowing and popping financial bubbles, one after another.

It is the triumph of the biggest bullies' bullshit, especially the triumph of the banksters' bullshit, that is the biggest problem that we currently face, since "It's all Bullshit!" HOWEVER, THE ONLY SOLUTIONS AVAILABLE NOW ARE TO TRY TO FIGHT BULLSHIT WITH BULLSHIT, BY MAYBE DEVELOPING BETTER BULLSHIT, TO REPLACE THE OLD BULLSHIT.

Theoretically, it is possible to apply the scientific method to develop better bullshit, i.e., better systems of organized lies, operating organized robberies. However, to do that, enough people would have to understand and agree that the current problem is the way that banksters are getting away with dominating civilization with their kind of old-fashioned bullshit, by having turned the monetary system into an absurd State Religion, backed up by the force of almost inconceivably crazy and corrupt governments, whose control was captured by the banksters, primarily through them dominating the history of the funding of politics, as well as then leveraging that up through the mass media, and school systems, so that most of the public were being brainwashed to believe in the banksters' bullshit.

In that context, the question is whether we will be able to survive through the selection processes required to generate better bullshit, or will be destroyed by how bad the currently dominant bullshit is before we are able to do that?

Sun, 02/16/2014 - 00:40 | 4441375 disabledvet
disabledvet's picture

whatever "beast" has been created still needs care and feeding.

the sustenance was QE..."until it wasn't."
Now "size" becomes a problem not a solution.

Or i should say "state" as "massive amounts of liquidity" (through oil or natural gas plays) suddenly "run everything" as they have indeed a "quantity with a quality all its own." The history of the USA can be very easily summed up in two words: "liquidity starved."

This was not true from the 1890's through to the early 1900's to 1910.
Nor was it true after World War II...although the bulk of that funding went into massive public "investments" that boom was rather more than a decade i would say. We've gone thirty years now of the "boom/bust cycle" and interest rates keep "plumbing the depths."

so what provides "liquidity" in this day and age? here is one thing:
the first one they built nearly bankrupted the company.
there were questions as to whether or not something this massive had any value whatsoever actually.
now they call it a "flagship."

now that metal prices have collapsed and the dollar has soared the production value has been enhanced beyond belief of that thing.
It still will set you back 350 million per of course (for now.)
But if that production line can remain open for the next hundred years...even if you're only making twenty a year the "value added" is beyond belief.
Indeed you could argue "it's a bargain."
be interesting to see how that works out this year.

Sun, 02/16/2014 - 01:13 | 4441436 Seer
Seer's picture

"But if that production line can remain open for the next hundred years...even if you're only making twenty a year the "value added" is beyond belief."

Air travel will go down in flames.  Not enough "businessmen" (and rich Chinese) to support the necessary volume of air traffic.  Most people aren't aware of how massively subsidized the industry is.

And then there's the little matter of available fuels (at prices that won't break the airlines' bank).

Economies of scale in reverse.  Lots of chains tie things together.  As Jarred Diamond eluded in Collapse, civilizations can be shown to have collapsed due to the loss of a key trade partner.

Sun, 02/16/2014 - 12:38 | 4442145 messymerry
messymerry's picture

Thank you.  I contend that while life is abundant in the universe, truely advanced civilizations are exceedingly rare.  For many reasons including those listed above, they tend to self-destruct.  Oh hell, I'm going to turn off my computer and go listen to some beautiful music.

Sat, 02/15/2014 - 23:20 | 4441218 Clowns on Acid
Clowns on Acid's picture

Certain humans are indeed hard wired toward price obfuscation, and creating bubbles. They ain't the majority however. 

Sun, 02/16/2014 - 00:47 | 4441385 disabledvet
disabledvet's picture

"Wall Street and Washington."
Move along...

Sat, 02/15/2014 - 23:24 | 4441237 ItsDanger
ItsDanger's picture

Bubbles occur in the pursuit of wealth.

Sun, 02/16/2014 - 00:14 | 4441325 Seer
Seer's picture

Bubbles are what distracts us from TPTB's ability to rule over us.  The mistake is to confuse power, which actually does things, with [the arbitrary/fleeting notion of] wealth.

Sat, 02/15/2014 - 23:43 | 4441273 Dollarmedes
Dollarmedes's picture

"...for allowing people to rationalize their own selfish motivations as if they are serving other people."

This is misguided. Very few people have ever been truly altruistic, and wishing for them to be so is irrational. Greed and self-interest are facts; get used to it. What matters instead is to introduce the proper incentives and dis-incentives.

The fascist state that Obama and his minions seek to establish is unwilling to hold their cronies to account. Washington D.C. must be downsized.

TBTF institutions must be broken up using anti-trust laws. Banking and investment must be re-separated. The Fed must either be eliminated or at least have their dual mandate rescinded to only account for stability of the currency.

Prosecutions for insider trading, price fixing, and general asshattery must become commonplace.

Privatize the gains, personalize the losses. That would all go a long way to fixing our system.

Sun, 02/16/2014 - 00:03 | 4441306 Seer
Seer's picture

Agree.  Except the part about DC: it should vanish completely.

Sat, 02/15/2014 - 23:50 | 4441281 Dollarmedes
Dollarmedes's picture

As Dennis Miller once said, "Quit the nanny-state bullshit. You want people to drive responsibly? Install a metal spike in the steering column, pointed at the driver's chest. Nobody will drive faster than two miles an hour."

Sun, 02/16/2014 - 00:00 | 4441301 Seer
Seer's picture

WTF do we need bankers?  Oh, yeah, so that we ensure that we have economists!  Yeah, I seem to recall that this has been "built-in" since Cro-Magnon times...

Sun, 02/16/2014 - 00:19 | 4441304 ebworthen
ebworthen's picture


If we allow banksters to be irresponsible opportunists and give them money from the public treasury then don't put them in jail for rigging markets - what the fuck do we think is going to happen?

You let a pack of wolves loose in the sheep corral and of course there will be slaughter.

You can't turn around and blame all animals or nature.

Where are the sheep dogs?

Where are the shepherds?

Sun, 02/16/2014 - 18:17 | 4442988 MeelionDollerBogus
MeelionDollerBogus's picture

You mean they WON'T personally deliver puppies & unicorns to us?

Oh, pity.

OK, roll the guillotines.

"there will be slaughter"

Sun, 02/16/2014 - 00:24 | 4441339 Spungo
Spungo's picture

The real cause of asset bubbles: people are fucking retarded.

Sun, 02/16/2014 - 00:48 | 4441388 Dollarmedes
Dollarmedes's picture

There have been examples of irrational bubbles, like the tulip thing. Those people bet their own money on wild speculation.

That does not describe the current situation. Markets are responding rationally to government-promoted incentives.

This isn't a case of "people are fucking retarded."

This is a case of market manipulation, in this case by the government...just like the sub-prime crisis that preceeded it.


Here's a suggestion: how about we get the government the fuck out of the market?

Sun, 02/16/2014 - 04:39 | 4441428 Wait What
Wait What's picture

i, for one, don't mind being rapacious. because when SRHTF, it will be the rapacious ones, not the 'care-takers' who will pick up the pieces. what 'Tyler Durden' and his brethren represent is the opposite of the meek, self-effacing men whose lips quiver during their FOMC press conferences, who use previous generations' hoarded capital (in its various forms) to manipulate all of the others. every man should be free to determine his own destiny, on equal terms with all of the others.

Sun, 02/16/2014 - 08:27 | 4441767 Flux
Flux's picture

Problem here, though, is when things collapse, "Tyler Durden" and his brethren will be, at best, guarding their cabbage patches with shot guns. The zombie hoards will wipe you off the face of the planet. Meanwhile, those responsible will be living on their gated islands, protected by flying drones.

So all the clamor for the end of the world is kind of self-defeating. Its the poor that suffer. And in the words of George Carlin:

"You ain't in the club!"

Sun, 02/16/2014 - 22:12 | 4443698 Wait What
Wait What's picture

even the zombie apocalypse has an end. the question is: can you outlast the initial panic? after that it gets much easier.

Sun, 02/16/2014 - 23:04 | 4441443 evernewecon
evernewecon's picture


What Causes Some to Participate in Bubble Markets?


 The Study, Now U. of Utah

"The findings center around two 

regions of the brain.  One, called 

the ventromedial prefrontal cortex

 (vmPFC), can be thought of as 

"the brain's accountant" because 

it encodes value. The other, the

 dorsomedial prefrontal cortex

 (dmPFC), is strongly associated 

with theory of mind."






Don't Be So Gullible, McFly.



TBTF means the banks have nothing 

to lose betting pro-self made bubbles

and only more to gain from buying

the adversity, with the incentive

being the greater the adversity the




Just for a sense of the

possibilities, one can (I do) use that/related,

with other variations (they're adding up)

noting the bio-economics (biology, economics

separately, biology and economics together)

of variation, including the apparent

applicability of anti-fragility, popularized

by Nassim Taleb.


I'd (advocate) only apply(ing) that in economics sectors

in a "market progressive" sense, rejecting

inappropriate monopoly/privatization at one end

and finding perfect info/perfect ease of entry

in fact existing in fantasy land only and, 

even if they were to exist for real, no one

would make a profit, a mathematical absurdity

as far as livable commerce is concerned.)


Democratically conducted markets, including

not privatizing the absence of risk, can 

actually often provide a better result for

everyone, still with full tilt free 

enterprise the main process, if they 

realize such things as how pollution

impacts health, and if they accept 

special realities such as:

the junctional pre-melanoma has

a persistent disinterest in prices.




Here's the formula parallel to

the bubble/adversity with not just

a sector privatized but absence of

risk privatized.


In any industrial sector, imagine 

there's a dominant producer/supplier.


Then, imagine it's also, or is linked 

with, a banker/banking.


Then, imagine that controlling 

supplier/lender lends as much as it

can to zillions of would be and actual

competitors on the production side,

likely during an earlier time perplexing

people as to why one would lend so much

to one's own competitors.


Now, imagine, being the dominant supplier,

that supplier floods the sector with supply.

Then, it calls the loans.




That's analogous to the adversity.

The adverse get powerless.

The blame game, perhaps, being 

superficial in nature, leaves those

adversely affected sitting ducks

for being blamed for their own



Spend a little on your puppets and

get a self-administering corrupted

system.  The Stockholm Syndrome may

be nothing more than selling out to



The deeper the adversity, the more

opportunity to overvalue the ratings

and over-tranche-value sell out what

one picks up.


Realizing only a Pontiac Tempest and

not a Buick Skylark could have made

positration marks was far more 

interesting than having incentivized

bubbles/bubble bursts.

(Original screenplay--some adult content.)








Sun, 02/16/2014 - 01:31 | 4441470 are we there yet
are we there yet's picture

The economy must be getting better. There has not been a bizar banker suicide for, how many days now?

Sun, 02/16/2014 - 02:49 | 4441567 syntaxterror
syntaxterror's picture

You didn't build that Fed-induced asset bubble but if you like your Fed-induced asset bubble, then you can keep your Fed-induced asset bubble.

Sun, 02/16/2014 - 03:37 | 4441608 DOGGONE
DOGGONE's picture

The main enabler of sizable asset price bubbles is keeping the real price histories out of sight. Just look & see "Real Homes, Real Dow” here:

Obviously, these simple price histories are very instructive. Keeping them seldom seen by the people is intellectual savagery. Journalism panders to intellectual savagery. Higher education panders to intellectual savagery. Holders of elected office pander to intellectual savagery. The big con infests America.

“The financial crisis that afflicts the country is largely a result of speculative bubbles, built on false hopes, in the housing and stock markets.” Robert Shiller, late 2008

I am no attorney, so I offer this understanding of mine just as food for thought. Federal felonies include fraud, which includes false advertising, which includes deception by omission.

Sun, 02/16/2014 - 03:52 | 4441616 fijisailor
fijisailor's picture

A bubble is when one of my chickens finds a nice big bug in the back yard and the other chickens chase it around trying to take it away.

Sun, 02/16/2014 - 05:03 | 4441656 pupdog1
pupdog1's picture

In Washington, that's called Socialism.

Sun, 02/16/2014 - 04:18 | 4441630 q99x2
q99x2's picture

BTW you can't remove your Bitcoins from MtGox at this time but you can purchase them at $280 and sell them later.

Sun, 02/16/2014 - 04:21 | 4441632 North Sea Cowboy
North Sea Cowboy's picture

Fuck rehabilitation. Hang them.

Sun, 02/16/2014 - 04:21 | 4441633 North Sea Cowboy
North Sea Cowboy's picture

Fuck rehabilitation. Hang them.

Sun, 02/16/2014 - 05:00 | 4441654 pupdog1
pupdog1's picture

This confused academic states:

"In very general brushstrokes I think that most bankers are in fact inherently decent people.."

And then he describes how easily they can be swayed to rape muppets for a $5 million bonus.

No, Scooter.

The bankers you describe are fucking sociopaths, and they were sociopaths in junior high.

Integrity is what you do when nobody is looking and there is no chance of getting caught. THAT'S what "inherently decent" means.


Sun, 02/16/2014 - 05:53 | 4441680 BruntFCA
BruntFCA's picture

What no one asks is "Why do we need a new generation of bankers at all?"

They are mostly a bunch of useless parasites that iterpose themeselves between almost any human interaction that involves a transfer of value.


Sun, 02/16/2014 - 06:00 | 4441684 NuYawkFrankie
NuYawkFrankie's picture

It's not our fault!

We are hard-wired to rip you off . Don't you understand???

"They" are getting scared...

Sun, 02/16/2014 - 06:25 | 4441694 kellycriterion
kellycriterion's picture

Psychopaths and sociopaths take what they or they intimidate and create fear to get what they want. The clever sociopath soon realizes there already exists vast reservoirs of fear present in potential prey. Therefore if you offer to assuage those fears or suppress fear, you can sell pretty much any old snake oil. They quickly realize they can take it a step further. If they offer to bolster fragile egos and pander to large egos, people will beg for their snake oil. This is obvious because the two are so closely related.

Ego and fear are the brick and mortar of human construction. If that's what you're selling, people are buying like junkies. Literally. What do you think constitutes most of the appeal of booze and drugs? Or let's take greed. Properly defined and identified greed isn't an end in itself. It satisfies something more fundamental. Religion? Cults? The modern government as religion paradigm? Look at what the political class is selling.

What's more people know at some level it's all scamming. If there were enough time and sodium thiopental, I could prove it. They're that needy and desperate.

Sun, 02/16/2014 - 06:56 | 4441698 Manipuflation
Manipuflation's picture
It's fight club.

Recognize number 7?  Ochie.  I am not bragging to Russia.


Minnesota/Canada style hockey look likes this.  The NCAA wants to have a say but they universities here just make up a new conference.  It is a physical style of play.  You can just put your panties away.  I don't see much use for East coast girls hockey.  Other than possibly a goalie I don't see any use for East coast players.  You play and you slam those motherfuckers where ever you can.  Put your vagina away and play hockey.

Sun, 02/16/2014 - 07:06 | 4441716 lolmaster
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BigGov libfag imperial stooge professor spouts party line, gets platform on ABC owned ZH. Par.

Sun, 02/16/2014 - 07:16 | 4441725 pcrs
pcrs's picture

As real apogolists for TPTB global warming should not be missed ofcourse. It's clear that a new justification needs to be sought to keep the slaves hoodwinked and academia is up for the job.

Sun, 02/16/2014 - 07:35 | 4441729 buzzsaw99
buzzsaw99's picture

they create bubbles for the hookers and blow. duh.

Sun, 02/16/2014 - 08:24 | 4441763 Snoopy the Economist
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Bubbles are created to make the wealthy wealthier. Period.

Sun, 02/16/2014 - 08:52 | 4441787 Skin666
Skin666's picture

This is fucking bullshit!


Humans are irrational, but the market is not...


These bubbles would not happen without artificial increases in the money supply...


Remove fractional reserve banking and Central Banking, and the business cycle would be eliminated tomorrow...


Humans are only hard wired to create asset bubbles, when somebody's fucking around with the money supply, PERIOD...

Sun, 02/16/2014 - 08:55 | 4441789 Sufiy
Sufiy's picture

Gold will have its Bubble as well at some point, but we have seen nothing even close to it yet:


Gold And Silver Break Crucial Levels Causing Massive Short Squeeze 

  As we have mentioned before, Gold and Silver has broken to the upside causingmassive short squeeze. The big boyz are loaded on Gold now and we will monitor today how the mass media will be picking up the Gold story again. It will be nothing more than the info fed for crowd indicator, but it is important to watch the change in the investing public outlook. We will provide the digest of the most interesting articles from industry insiders as well this weekend updating this entry, stay tuned.   The most important news for us: 

"Koos Jansen reports on continued unprecedented appetite from China for Gold, according to his information, after  the unprecedented demand of 2,181 tons of Gold from China in 2013 Chinese Gold demand hits All-Time record of 247 tons in January. Now Gold today's breakout above $1,322 level can be put in another perspective."

Sun, 02/16/2014 - 09:06 | 4441798 GrinandBearit
GrinandBearit's picture

Bubbles like Bitcoin

Now at $220... going to ZERO.

There's one born every minute.


Sun, 02/16/2014 - 17:57 | 4442921 MeelionDollerBogus
MeelionDollerBogus's picture

220 mtgox 534 localbtc 552 btce


Sun, 02/16/2014 - 10:02 | 4441862 rsnoble
rsnoble's picture

Rejoice Slaves!

Sun, 02/16/2014 - 10:07 | 4441869 Miss Expectations
Miss Expectations's picture

Caretaker bankers.  That's rich.  I didn't listen to the podcast...did anyone say "oops?"

Sun, 02/16/2014 - 10:44 | 4441937 kurt
kurt's picture

My "vestigial herding instinct encourages" me to MOOOVE on to something else worth wasting my time on.

Sun, 02/16/2014 - 11:19 | 4442009 RaceToTheBottom
RaceToTheBottom's picture

Banksers should run utilities and be picked on their ability to do so, nothing else.

Sun, 02/16/2014 - 11:23 | 4442011 besnook
besnook's picture

the problem i have noticed with behavioral economists is that they think they can change the behavior of man therefore changing the direction of mankind. man is hardwired to self destruct himself and his environment owing to the paradox of genius, i.e., you think you are smart but you really are just as stupid as the next guy. the easter island model is the inevitable path of man.

Sun, 02/16/2014 - 11:42 | 4442036 moneybots
moneybots's picture



All bubbles are promoted.  It isn't just herd following.  Greenspan told home buyers to get adjustable rate mortgages.  Greenspan promoted and praised ZERO standard bank lending policy.  The Ownership Society program.

Bernanke's current wealth effect stock bubble.

Sun, 02/16/2014 - 11:39 | 4442041 shovelhead
shovelhead's picture

It ain't rocket science.

If you put honest people into a flawed system that allows them to steal with impunity by data entry and counterfeit money creation you're not going to have many honest people left at the end of the day.

It's easy to be moral when you are not subject to temptation without retribution.

Creating 'wealth' without adding value is the original sin crime that siphons the value of labor undetected as we are led to believe that this is a 'normal' business practice.

It ain't. It's fraud.

But you all know that already, so never mind.

Sun, 02/16/2014 - 12:29 | 4442124 I Write Code
I Write Code's picture

How do we create a new generation of bankers that are going to think of themselves as the caretakers of society, rather than the rapists?

How do you create a new generation of citizens who are not rapists?  We haven't the foggiest idea, therefore what we do is we jail the rapists.  How about we try that in banking?

But a bank(st)er is never any more likely to be a "caretaker of society" than your average fig plucker or ditch digger.  A banker is supposed to be a caretaker of capital.  That would be more than sufficient.



Sun, 02/16/2014 - 12:32 | 4442133 Paracelsus
Paracelsus's picture

A parasite must not kill the host organism.

The FED has killed the USA,and will be destroyed with it.

Chart the disasters in foreign policy,and then highlight the regions invaded which have no Central banks.


Sun, 02/16/2014 - 17:46 | 4442889 MeelionDollerBogus
MeelionDollerBogus's picture

no, the USA is merely the location, abstractly, of the host. The HOST is the slave population. They're not going anywhere. They have religion to tell them they must make a bazillion babies. They will serve the slave-masters with utmost devotion.

Sun, 02/16/2014 - 14:08 | 4442344 besnook
besnook's picture

in other words, dumb people create bubbles. the question is, at what point are the dumb people in? and at what point is there a critical mass of dumb people to create and sustain a bubble? and at what point is there the critical mass of dumb people realizing they are dumb and pop the bubble.

take the real estate bubble. at the time, i owned a 3/4 acre lot in a neighborhood of half acre lots surrounding a private country club in a much desired city to live in. it was cheap to buy when i did for several reasons related to stupid real estate assessments. one was southern racism willing to give up on prime property because black people(middle class black people) were encroaching the neighborhood and the abundance of new homes built a zillion miles away from the jobs selling for twice the money built in 3 styles on zero lot lines.

i thought i was smart. that house went backwards in value for ten years. in 1997 congress got rid of the capital gains tax on the profit gained from the sale of a primary residence. that is what really lit the flame that blew up the ballon and lifted it into the stratosphere.  it also lifted the value of my house high enough to gain a significant profit whereupon i sought the path of the stupid to sell a coupla more houses before the bubble popped.

my point is this. the only smart people in a bubble are the people who follow the dumb people to take advantage of the greater fool method of investment and get out way before the top only to later follow the dumb people into the abyss they created by their stupidity with a boatload of puts and shorts.

that is the set up all the smart people are waiting for today.

Sun, 02/16/2014 - 17:43 | 4442883 MeelionDollerBogus
MeelionDollerBogus's picture

"But there is a real question of, How do we create a new generation of bankers that are going to think of themselves as the caretakers of society, rather than the rapists?"

There is only 1 way: no banks should exist. Every person should be their own very well-armed banker who is able to do trade, store real money & be able, but not compelled, to make loans. Take away the institution of banking & you forever destroy the institutional fraud.

Sun, 02/16/2014 - 19:47 | 4443257 Dr. Acula
Dr. Acula's picture

>Every person should be their own very well-armed banker

I would rather pay a money warehouse  (i.e. 100% reserves or else subject to prosecution for fraud) that specializes in that function.

Mon, 02/17/2014 - 22:48 | 4446644 MeelionDollerBogus
MeelionDollerBogus's picture

why? None can exist which are honest for long, if ever.

I wouldn't pay someone else to live in my house, to use my car but exclusively, or to hold my food, so why would I do so with my money? Seems a desire to be robbed would drive that motive & I desire NOT to be robbed.

Sun, 02/16/2014 - 21:52 | 4443632 SKY85hawk
SKY85hawk's picture

Were bankers less harmful before or after Glass/Stegal repeal?

Do you remember when clintoon talked ablout SURPLUSES AS FAR AS THE EYE CAN SEE?

The real cause of the problem is the rule makers.  We don't need no steenkin' Glass/Stegal, Mark-to-Market, Fraud prosecutions!

Look what happened in 1981 and all those bankers went to jail.   .     .      ..



Sun, 02/16/2014 - 17:51 | 4442904 Playtime's Over
Playtime's Over's picture

If you run back to the market with the stupids your not to bright? Could ya run that by me in English please. 

Sun, 02/16/2014 - 20:01 | 4443249 Dr. Acula
Dr. Acula's picture

"Our vestigial herding instinct encourages us to imitate the actions of those around us"

Do Dan Ariely and his followers really believe his theories are true, or are they merely driven to adopt them by their vestigial herding instincts? The theory seems to be self-defeating: if it's widely adopted, isn't that just an irrational bubble too?

"In very general brushstrokes I think that most bankers are in fact inherently decent people."

This doesn't change the fact, discussed by Rothbard, that fractional reserve banking is a kind of fraud.

"How do we create a new generation of bankers that are going to think of themselves as the caretakers of society, rather than the rapists?"

Prevent them from committing fraud, i.e., change them to be non-bankers.


Sun, 02/16/2014 - 20:20 | 4443342 SKY85hawk
SKY85hawk's picture

Are pOLITICIANS that sell favors to buy votes not equally vile?  THEY created the high levels of debt that can only be 'carried' at 1% or less!

How about those VOTERS that slurped up myriad government benfits?

Who among us can honestly cast the first stone?


Sun, 02/16/2014 - 21:06 | 4443476 pachanguero
pachanguero's picture

Living in Thailand I can tell you this.  The more money I spend on whores the crapper service I get.  There is no direct correlation to price Vs proformance.  

Sun, 02/16/2014 - 21:52 | 4443635 satoshi411
satoshi411's picture

When you go to Koh-Samet ( Rayong ), you have to wait an hour for a ferry in a place called Ban-Phe, just walk up about 3-4 blocks away from the water from where the 7-11 is, there you will find dozens' of "houses" where myanmar women who are all  young beauty's ( 18-22 ) are rented for 90 minutes to Kyhmer 'pirate' fisherman. For 200 baht, ... good service or else.

Funny the tourists pay 2000-3000 baht for 40+ year old fat AID's ridden ho's, in Pattaya, BKK, Koh-Samui,... for shit that you would only expect on METH-AVE in the USA. But for every   city in Asia there is a place for local's, but in all my years in Asia, I have seen nothing like Ban-Phe.

Here's a good story, one night a few years ago in Ban-Phe I'm having a beer near HISO Karoke  bar, its where the best women are at about a block off, every night there are fights. One night these guys got into a fight and it moved to the street, a guy came out with a machete and cut the guys head off, and to everyones amazement, then he pulled out a gun and shot the servered head with every round in his clip.


Nobody said anything, nobody did anything, when the guy was done, he just strolled back to the direction of the boats. Nobody has ID, nobody is registered, and all these guys are born and die on or near their boats.

I can't think of a night, when there wasn't a knife fight, if  nobody died, eventually a rig shows up and hauls the victim off to the hospital, the cops only show long after all the mess is cleaned up.



But yeh, the best fun and pleasure, tenderness, and bang for the buck in my life in Asia has always been found for less than $3 bucks. You pay USA prices, you get USA service, you pay local price, you get local service simple as that. In a place where a working man only makes 100 baht ( $3 bucks ) you can't expect the women to make even 1/2 that in an hour.

Sun, 02/16/2014 - 21:08 | 4443477 pachanguero
pachanguero's picture

So the more humble the better the sex.  Now that is true behavioral economics.

Sun, 02/16/2014 - 21:09 | 4443483 aka_ces
aka_ces's picture

Ariely is very interesting in describing the rational and irrational in human decision-making about money and economics.  The life-impacting macro-economics that is the meat of ZH is a different subject -- how concentrated economic and political power abuses and expands its power.  Like everyone else, those with that power, the 1% of the 1%, make irrational economic decisions (!).  What distinguishes them, what makes them toxic to life on earth, is their extreme venality and blithe indifference to the global consequences of their actions.  On that subject I see no insight from Ariely, a psychologist seemingly unaware of the Will to Power.

Sun, 02/16/2014 - 21:07 | 4443484 aka_ces
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