Factfulness PDF Summary

Factfulness PDF SummaryTen Reasons We’re Wrong About the World – and Why Things Are Better Than You Think

Terrorist attacks, climate change, pollution, children dying of preventable diseases…

Think that the world is worse than ever?

Well, it’s time you stopped being a pessimist and become “a very serious possibilist.”

What you need is a little dose of:

Factfulness.

Who Should Read “Factfulness”? And Why?

Hans Rosling devoted most of his life to teaching people how to see the world more accurately.

Not only because, by his own admission, this has saved his life; but also, because it could help everybody act a little more reasonable and more in tune with what reality actually is.

“The world would be a better place if literally millions of people read the book,” wrote Bill Gates.

So, please do: you won’t regret it.

About Hans Rosling

Hans RoslingHans Rosling was a Swedish medical doctor, professor of international health, academic, statistician, and renowned public educator.

Listed by Time magazine as one of the one hundred most influential people in the world, Rosling was an adviser to UNICEF and WHO, and a co-founder of Médecins Sans Frontières in Sweden and the Gapminder Foundation.

In addition, his TED Talks – in which “global trends and economics come to vivid life” – have been viewed by almost 40 million people.

Rosling died in 2017. He spent the last years of his life writing Factfulness, his only book. The book was completed by Ola Rosling and Anna Rosling Rönnlund, Han’s son and daughter-in-law.

“Factfulness PDF Summary”

You either know and love Hans Rosling or, well, you don’t know him.

Because it’s almost impossible not to love him even if you have seen merely one of his numerous engaging and wonderful TED Talks.

We know that not many people like to read stats, and even those who do, have problems making data and tables interesting.

Bar graphs certainly help, as do line graphs and pie charts.

But what Hans Rosling did was magic!

He basically made stats alive.

Don’t believe us?

Here’s the evidence:

Now, unfortunately, Hans Rosling left us a year ago, at the age of 68.

What he left behind him was the all but finished manuscript of Factfulness, as he says in the “Introduction,” his “very last battle in [his] lifelong mission to fight devastating global ignorance” and his “last attempt to make an impact on the world: to change people’s ways of thinking, calm their irrational fears, and redirect their energies into constructive activities”:

This is data as you have never known it: it is data as therapy. It is understanding as a source of mental peace. Because the world is not as dramatic as it seems. I will teach you how to recognize overdramatic stories and give you some thinking tools to control your dramatic instincts. Then you will be able to shift your misconceptions, develop a fact-based worldview, and beat the chimps every time.

And, in a nutshell, that’s what this book is about: a definitive proof (after all, it’s stats) that the world is not as bad as it seems.

There are ten reasons why you think that it’s terrible.

Ten instincts, ten mega misconceptions which prevent you from seeing the world accurately.

Let’s have a look at each of them.

And teach you how you can fight them!

Key Lessons from “Factfulness”

1.      The Gap Instinct
2.      The Negativity Instinct
3.      The Straight Line Instinct
4.      The Fear Instinct
5.      The Size Instinct
6.      The Generalization Instinct
7.      The Destiny Instinct
8.      The Single Perspective Instinct
9.      The Blame Instinct
10.      The Urgency Instinct

The Gap Instinct

Explanation: The gap instinct is basically the ubiquitous “us vs. them” logic, which leads you to categorize people into two groups with a large gap between them.

Examples: There are rich people, and there are poor people, there are developing, and there are developed nations.

Now, that’s true, says Rosling, if you’re living in the 19th century!

Because, nowadays, almost 75% of the population fits in the gap between the developing and developed! So, it’s not really a gap anymore, is it?

A more accurate model nowadays would be a model of four income levels:

#1. Level 1: 1 billion people (14%) live on around $1 a day (compare: in the 1800s, more than 85% of humanity could be described this way!)
#2. Level 2: 3 billion people (43%) make, on average, $4 a day
#3. Level 3: 2 billion people (29%) make $16 a day
#4. Level 4: 1 billion people (14%%) earn $64 a day

How to fight it: Always look for the majority: it’s usually in the middle, where the gap is supposed to be.

The Negativity Instinct

Explanation: Thinking that things are getting worse; evolutionary, it makes sense: it is more important to notice bad things than good if you want to survive.

Examples: Most people hear all the time news of terroristic attacks and watch CSI shows and think the world is getting more violent than ever; it is most certainly not; also, things can be both bad and getting better; for example, 4% of children younger than 5 died in 2016; however, almost half of them (44%) died in 1800; so, it’s a huge improvement!

How to fight it: Expect bad news, since they are much more likely to reach you; good news is not news, but that doesn’t mean that things are not gradually improving day in day out.

The Straight-Line Instinct

Explanation: The belief that trends go up in a straight line.

Examples: The population is rising steadily ever since the Industrial Revolution, and it’s only natural to expect that it will keep on rising if things are going as great as Rosling says. however, the United Nations think that we’re close to hitting the peak precisely because of better conditions, because as poverty decreases, so do the number of children.

How to fight it: Remember that straight lines are rare in reality: you grew up until you reached your twenties, and then stopped growing; so do many other things; so, don’t assume straight lines.

The Fear Instinct

Explanation: Now that we live in a world safer than ever, we’ve started fearing things that don’t exist; in fact, that’s where your stress (and ulcers) come from.

Examples: How much do you fear terrorist attacks? A lot – especially if you’re living in, say, Paris, or New York. However, do you know that during the past decade and a half, no more than 50 people are killed by terrorists on a yearly basis? Just for comparison: on average, 5000 people die in traffic accidents in a year!

How to fight it: Don’t ever forget that frightening things get your attention because of evolutionary reasons; but if something is frightening, it doesn’t mean that it is risky: stop overestimating the risks of violence or contamination; remember this equation: risk = danger × exposure.

The Size Instinct

Explanation: The size instinct is the reason why you overestimate the things your fear instinct tells you to dread.

Examples: Listen to this: 9.5 million crimes were reported in the United States in 2016; that’s too much! But, let’s put that into perspective: 14.5 million crimes were reported in the USA 1990. Does it sound that bad now?

How to fight it: As demonstrated in the example, by putting things into perspective; lonely numbers seem impressive, but mean nothing if not compared or divided by relevant numbers; always look for comparisons.

The Generalization Instinct

Explanation: Your instinct to oversimplify things by putting them into large categories; compare to the gap instinct.

Examples: Categories are usually used as explanations, but not as the only possibilities; generalization is helpful in the former case, misleading in the latter; for example, if I say, with Malcolm Gladwell, that there are two types of geniuses (Picassos and Cézannes), I’m explaining two extremes, but ignoring those that are in-between.

How to fight it: Always question your categories; look for differences within groups and for similarities across groups; beware of vivid examples and never forget that Blakean quote: “to generalize is to be an idiot; to particularize is the alone distinction of merit.”

The Destiny Instinct

Explanation: The idea that some outcomes are unavoidable because some things never change.

Examples: Hans Rosling is Swedish and, as is well known, Sweden is one of the most liberal countries in the world; you can’t even imagine that Catholic Poland will ever be as open about topics as sex and abortion as Sweden, can’t you?

And yet, in 1960, abortion was illegal in Sweden, and, in order to get one, young pregnant Swedish students traveled to – you’ve guessed it – Poland. Five years later, Poland banned abortion, and Sweden legalized it. The lesson? There are no innate characteristics of people. Things change.

How to fight it: Never forget that slow change is change nevertheless; try to keep track of gradual improvements and to update your knowledge as often as you can. Also: talk to Grandpa; that’s the best way to be reminded how values (even those which seem to have been there forever) regularly change.

The Single Perspective Instinct

Explanation: If you see the world through pink lenses, you’ll see it pink; if you see it through black, you’ll see it dark; both are limited, single perspectives: you need to use more than one lens.

Examples: North Korea and Venezuela are two of the worst countries to live in nowadays; for comparison, South Korea and Chile are highly developed, rich, and democratic nations. The lesson? Capitalism and democracy bring peace and prosperity; communism – doom.

However, if you visited these four countries in the 1970s, you’d have a very different opinion; back then, Venezuela was so rich it was called Saudi Venezuela, and people in North Korea earned more than their southern neighbors; moreover, South Korea and Chile were ruled by military dictatorships.

Did you know that?

And do you know that nine out of the ten fastest growing economies today are not exactly democratic? Still thinking that only democracy leads to economic growth?

How to fight it: Recognize that a single perspective can limit your imagination; test your ideas and beware of simple solutions: the world is just too complicated; travel to test your ideas; get a toolbox, not a hammer.

The Blame Instinct

Explanation: Once you identify a bad guy, you look no further than him; suddenly, he’s the one who should be blamed for everything.

Examples: Pharmaceutical companies often don’t research solutions to some ailments which only affect the most impoverished populations (malaria, sleeping sickness, and other neglected tropical diseases). So, blame it on the CEOs! However, does the CEO decide for himself or follows the lead of the board members? What about the shareholders?

Another example: Trump. It’s easy to blame him for all the problems in America, but it’s difficult to ignore the fact that many of them were there before he came to power.

How to fight it: Look for causes, not villains: there are usually no Darth Vaders in the world, but system malfunctions; the opposite is true as well: sometimes the system works well; so, resist pinpointing scapegoats or heroes.

The Urgency Instinct

Explanation: This is the instinct which tells you that if you don’t act now, tomorrow will be too late; activists and rhetoricians cultivate it so as to be heard; but resist the temptation to believe them.

Examples: Urgency usually comes with a clear-cut solution; take a breath before rushing into anything; for example, the refugee problem (and the maltreatment of people just like you) is a real one, but don’t point your fingers before understanding its complexity.

How to fight it: Recognize when a decision feels urgent: it rarely is; take small steps and insist on the data; beware of fortune-tellers, because every single prediction about the future is uncertain; also, beware of drastic actions

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“Factfulness Quotes”

There’s no room for facts when our minds are occupied by fear. Click To Tweet Forming your worldview by relying on the media would be like forming your view about me by looking only at a picture of my foot. Click To Tweet The world cannot be understood without numbers. But the world cannot be understood with numbers alone. Click To Tweet Every group of people I ask thinks the world is more frightening, more violent, and more hopeless—in short, more dramatic—than it really is. Click To Tweet Here’s the paradox: the image of a dangerous world has never been broadcast more effectively than it is now, while the world has never been less violent and more safe. Click To Tweet

Our Critical Review

According to Bill Gates, Factfulness is “one of the most important books… an indispensable guide to thinking clearly about the world.”

His wife Melinda shares the same opinion: “Hans Rosling,” she writes, “tells the story of ‘the secret silent miracle of human progress’ as only he can. But Factfulness does much more than that. It also explains why progress is so often secret and silent and teaches readers how to see it clearly.”

“A hopeful book about the potential for human progress when we work off facts rather than our inherent biases” (Barack Obama), Factfulness is an eye-opening account of what the world is and how we’ve made it that way.

And features numerous great pieces of advice to teach you how you can make it even better!

Indispensable.

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Why Nations Fail PDF Summary

Why Nations Fail PDF SummaryThe Origins of Power, Prosperity and Poverty

Some countries are rich, and others are poor.

Why?

Daron Acemoglu and James A. Robinson try to give a definite answer to these questions in their ultra-popular and heavily discussed book:

Why Nations Fail.

Who Should Read “Why Nations Fail”? And Why?

Why Nations Fail, writes Jared Diamond, “should be required reading for politicians and anyone concerned with economic development.”

It should also be required reading for those who want to understand why some nations are rich and others poor, as well as those who want to put an end to inequality and corruption.

About Daron Acemoglu and James A. Robinson

Daron AcemogluDaron Acemoglu is a Turkish-born American economist and professor of economics at the Massachusetts Institute of Technology for the past two and a half decades.

After completing his Ph.D. at the London School of Economics in 1992, Acemoglu embarked on a very successful career which made him one of the most recognizable economists of the 21st century.

In fact, a 2011 survey of American economists ranked him the third most favorite living economist under the age of 60 (just behind Paul Krugman and Greg Mankiw), and a 2015 study named him the most cited economist of the past decade.

James A. RobinsonJames A. Robinson is a British economist and political scientist with a Ph.D. from Yale University; he has worked as a professor of economics at numerous prestigious institutions, currently at the Harris School of Public Policy, University of Chicago.

A close collaborator of Acemoglu, Robinson is mostly interested in comparative political and economic development of countries in Sub-Saharan Africa and Latin America.

He has written quite a few books and studies, many of them collaborations.

Acemoglu and Robinson have written two books together: Economic Origins of Dictatorship and Democracy and Why Nations Fail.

“Why Nations Fail PDF Summary”

In Why Nations Fail, Daron Acemoglu and James A. Robinson set before themselves a very ambitious task: to pinpoint, once and for all, the real reasons why some countries are rich and prosperous, and why others are poor and doomed to fail all over again.

And in fifteen chapters, they lay out a thought-provoking theory which, if not something more, has incited a lively discussion among the most famous economists, intellectuals, and political thinkers of the XXI century.

Let’s see what all the fuss is about.

The Existing Explanations

It isn’t difficult to guess that Why Nations Fail isn’t the first book to try to get to the bottom of the “rich vs. poor countries” quandary.

And it is even easier to suppose that before presenting their theory, Acemoglu and Robinson try to point to the faults of other people’s explanations of the problem.

They group them into several categories, which we’ll further group into three.

Geography and Climate

According to the geography hypothesis most eloquently demonstrated by Jared Diamond in Guns, Germs, and Steel, some nations were merely lucky enough to form countries on locations blessed with a pleasant climate.

There’s a reason why the poorest countries in the world are located in tropical regions, and why the wealthiest can be found in cooler climatic zones.

Simply put, diseases are more likely to develop in the tropical zones of central Africa and America, and, thus, it is only natural to expect from a Zambian to be far less productive than a Norwegian.

However, ask Acemoglu and Robinson, then why are neighboring countries such as North Korea and South Korea so different?

Moreover, why is Singapore so prosperous, even though it is located in the tropical climate zone.

Culture and Religion

According to the culture hypothesis, some people are simply more inclined to work than others, because of their cultural and religious heritage.

Most of the developed countries, for example, went through the Protestant Reformation.

And, as any Protestant knows, work is a religious duty, and everyone should embrace it; so, it’s only natural to expect that a country with a Protestant past should be far more prosperous than one with, say Confucian values.

Because the latter thinks that humanity, loyalty, and honesty is much more important than work and success; and, because economics is, well, to quote Thomas Carlyle once again, a dismal science.

However, this once again fails to explain why North Korea is one of the poorest countries in the world, and South Korea one of the most developed ones.

Ignorance

According to the final group of explanations, the ignorance hypothesis, North Korea is less developed than South Korea because of the ignorance of the ruling elites.

In other words, the people who ruled North Korea were incompetent, and instead of solving problems, they merely created more; on the contrary, those who ruled South Korea understood the root of the problems and tried to solve them.

This does explain some things, but it doesn’t do well in the case of others.

A few case studies provided by Acemoglu and Robinson – such as, for example, Ghana – show that it is not the ignorance of political leaders which causes the economic decline of countries, but it is, on the contrary, their very shrewd understanding that this decline also leads to their personal economic evolution.

And that’s basically the main point of Acemoglu and Robinson’s study.

Rich countries are founded around inclusive and uncorrupted economic and political institutions; poor countries, on the other hand, suffer because of extractive institutions.

Let’s analyze both of them in detail.

Inclusive Institutions

In essence, inclusive – or integrative – institutions are those which allow large groups of people to have a say in political and economic decision-making.

Inclusive institutions give individual members of a society access to high-quality education and allow them to freely choose the profession they like.

They also incentivize them to be creative and challenge the status quo.

And this is especially important because it provides a relatively fair and level playing ground in which the talented know that they can benefit by providing benefit to the other people.

Bill Gates and Jeff Bezos became the wealthiest people in the world because their products made the lives of many people easier; however, Carlos Jesus Slim in Mexico earned his money by exploiting the monopoly in landline telephony.

The extractive institutions in Mexico allowed him to prosper and become rich without providing his countrymen additional value; integrative institutions would almost never allow this.

And how do inclusive institutions come about?

Well, interestingly enough, in many cases, merely by accident.

Consider the example of the Glorious Revolution of 1688 in England; in less than a century, this revolution would lead to the Industrial Revolution which would eventually change the world in ways nothing before ever did, practically marking the beginning of the “rich vs. poor” debate, as argued in A Farewell to Alms.

And it all started because of the plague.

The plague, you see, had led to the deaths of so many people, that, the ones who survived had to work the jobs of five and still received the paycheck for one.

So, they rebelled, and the attempt to meet their demands eventually led to the establishment of economic institutions which guaranteed the protection of private property and, with it, introduced actual free market policies.

The rest is history.

Extractive Institutions

Extractive institutions are – you’ve guessed it – the very opposite of inclusive institutions.

Acemoglu and Robinson call them extractive because they believe that the thing which defines these institutions is their inclination to extract wealth from those who are not part of them.

So, in countries ruled by extractive institutions, there are always two classes, with the first one (the elite) always in a position to repress the latter one.

The only way for those who are not in power to prosper in a country governed by extractive institutions is to join the vicious circle, i.e., to become part of the elite and prevent others from doing it.

Extractive institutions disincentivize people from taking part in the political and economic processes of a country; the reason for this is simple: they want to keep the status quo.

Now, don’t get Acemoglu and Robinson wrong: they firmly believe that in addition to inclusive institutions, centralized political power is a must if you want to create a wealthy and prosperous country.

However, there’s a limit to how centralized it should be since the economic processes are too complicated for one to be able to predict the results.

For example, in the time of Stalin, the centrally planned economy of the USSR decided to reward workers with bonuses as high as a third of their paycheck for exceeding the assigned quotas.

This did the trick for a while, and USSR became the second largest economy of the world; however, in retrospect, it also disincentivized these workers to think outside the box, which prevented the process of creative destruction (Schumpeter).

But, then again, extractive institutions fear innovation and creative destruction, since these forces usually lead to them losing their power.

So, they stifle them, and thus, cause the failure of their countries.

The Curious Case of China

Now, Acemoglu and Robinson are capable of explaining many things through their framework, but, even at first glance, China is a curious case.

Even though it is still an authoritarian country, China’s economy is growing at such a rapid pace that many have started wondering if we’re living the last years of American dominance.

So how did China succeed to become the second largest economy of the world even though still a communist country ruled by extractive institutions?

Well, according to Acemoglu and Robinson, the main reasons for this are the inclusive policies advocated by Deng Xiaoping, whose economic reforms opened China’s economy to the world and, in addition, they reoriented it internally towards market-based economic programs.

However – and this is the more exciting part of Acemoglu and Robinson’s analysis – their model predicts that, unless China furthers the inclusiveness of its institutions, its growth will steeply drop over the next decade.

What we may be seeing is just another case of the 1970s Soviet Union.

Back then, the relocation of labor from the agricultural sector to the manufacturing industry worked wonders, but twenty years later, the USSR collapsed.

Something similar may happen to China as well unless the country improves its political and economic inclusiveness.

Now, that’s a bold prediction.

Key Lessons from “Why Nations Fail”

1.      The More Inclusive the Institutions, the Richer the Country
2.      Democracy Evolves Because of the Threat of Revolutions
3.      Foreign Aid Is Sometimes the Opposite

The More Inclusive the Institutions, the Richer the Country

The central thesis of Acemoglu and Robinson’s Why Nations Fail is that economic prosperity depends on the inclusiveness of the political and economic institutions of a country.

In other words, the more people make political and economic decisions, the better off a country is supposed to be.

Inclusive institutions flourish because they change. And they change because they allow people to freely choose their professions and the market to guide the country on a prosperous path through its invisible hand.

Extractive regimes, in contrast, are more interested in keeping the status quo, since it is the status quo which allows them to remain in power.

However, the status quo means no innovation or creative destruction, and this is the main reason why some nations have never – and may never – attain wealth.

One more thing, though: a powerful, centralized government is always essential, because, as the case of Somalia shows, without it, neither the free market nor anything else really works.

Libertarians would, of course, beg to differ.

Democracy Evolves Because of the Threat of Revolutions

According to Acemoglu and Robinson, the history of democracy is the history of revolutions prevented.

They think that all societies must begin as non-democratic regimes in which elites rule through extractive governments.

However, at some point, the ruled realize, to quote Marx, that they have nothing to lose but their chains, and this is when they start pondering whether revolution is the optimal escape from their doom.

Since a revolution would cost them all of their benefits, the rich act so that they lose only some of them. Namely, they propose smaller taxation rates and appropriate measures which don’t necessarily lead to revolution; in turn, this causes redistribution which helps some of the ruled ones move vertically upward.

And this works until it doesn’t anymore – when the process restarts.

Thus, democratization happens when the rich try to avoid revolution by willingly increasing monetary redistribution and making some of the poor richer.

In time, this leads to the inclusion of many, and to the transformation of extractive institutions to inclusive ones:

Inclusive economic and political institutions do not emerge by themselves. They are often the outcome of significant conflict between elites resisting economic growth and political change and those wishing to limit the economic and political power of existing elites.

Foreign Aid Is Sometimes the Opposite

Interestingly enough, the analysis above implicitly suggests that foreign aid will more often do a disservice to a country rather than helping it.

In simpler terms, if a country is ruled by extractive institutions, foreign aid will rarely reach the intended addressees and will be, in fact, used by the elites to corrupt even more people interested in defending the status quo.

An excellent example of this process is Afghanistan, a country which, despite billions of dollars in foreign aid, hasn’t prospered almost two decades after the fall of the Taliban!

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“Why Nations Fail Quotes”

Poor countries are poor because those who have power make choices that create poverty. Click To Tweet Politics is the process by which a society chooses the rules that will govern it. Click To Tweet The most common reason why nations fail today is because they have extractive institutions. Click To Tweet Traditionally economics has ignored politics, but understanding politics is crucial for explaining world inequality. Click To Tweet Economics has gained the title Queen of the Social Sciences by choosing solved political problems as its domain. Click To Tweet

Our Critical Review

Why Nations Fail is both an engaging and thought-provoking read.

As we pointed out in the “Who Should Read This Book” section, even Jared Diamond, who has found many faults with its central thesis, endorses it full heartedly.

And we share his enthusiasm!

The central thesis of the book may be a bit reductive and constraining, but it is nevertheless one which will be debated for many decades.

And what more can you ask from a book?

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Liars, Leakers, and Liberals PDF Summary

Liars, Leakers, and Liberals PDF SummaryThe Case Against the Anti-Trump Conspiracy

We’ve summarized quite a few Anti-Trump books on our site in the past.

And, as the Romans knew, it’s only fair that we hear the other side of the argument as well.

And, if you know her, you know that not many people are as staunchly pro-Trump as Judge Jeanine Pirro.

In fact, even if you don’t know who Judge Jeanine is, the title of her book is a giveaway:

Liars, Leakers, and Liberals.

Who Should Read “Liars, Leakers, and Liberals”? And Why?

If you are a Republican who’s fed up with the anti-Trump stories related to you by the mainstream media, then Liars, Leakers, and Liberals is the book for you.

However, if you’re like us and you don’t want to live in the filter bubble, this book should be even more interesting to you exactly because you are a liberal who thinks that the liberal consensus on Trump reflects the truth of the matter.

Read it not because you agree with it, but precisely because you don’t; you probably dislike radical things and people, and the Truth is rarely radical.

So, get a new, fresher perspective on the Trump presidency.

If it fails to change your opinions, then you’ll not only know that you’ve been right all the time, but you’ll also have prepared contra-arguments for all the things Republicans and Trumpists will try to throw at you in the future.

If, however, it changes at least some of them, you’ll be richer for a new, more complete perspective on how the world actually rolls.

In other words, it’s a win-win.

About Jeanine Pirro

Jeanine PirroJeanine Pirro – better known as Judge Jeanine – is a former American judge, prosecutor, and Republican politician, best known as a TV personality and bestselling author.

In 1991, Pirro became the first female judge elected to the Westchester County Court; afterward, she became the first female District Attorney of the same county.

During her time as a District Attorney, she gained prominence not only for her involvement in numerous cases of domestic abuse but also for her regular TV appearances commenting on widely publicized events such as the O.J. Simpson murder trial.

In 2006, Pirro briefly sought the Republican nomination in an attempt to run against Hillary Clinton but dropped out of the race to run for Attorney General of New York. She lost the New York Attorney general election to Andrew Cuomo.

Jeanine Pirro hosted the Judge Jeanine Pirro show on the CW between May 2008 and September 2011; since then she hosts Fox News Channel’s Justice with Judge Jeanine.

“Liars, Leakers, and Liberals PDF Summary”

Liars, Leakers, and Liberals delves into the relationship between Donald Trump, the so-called Fake News media and the supposed deep state which actually governs the United States from behind the scene.

As expected, Judge Jeanine’s position is pretty clear: the media, Hollywood, FBI, and so on and so forth – they all lie about Trump so as to protect the interests of the elite and cover up the existence of this deep state.

Or, in her words:

Yes, Donald Trump arrived just in time, when our nation needed him most, when we needed to be protected and inspired. To be sure, Trump was not your typical, politically correct candidate.
Unlike the two-faced parasites in Washington, he really wanted to make America great again. They tagged him with every negative characterization they could. They called him a fascist, a racist, and twisted everything he said. Why? Because he was a threat to the greedy, corrupt Washington insiders who had captured our government.
And he did what other candidates wouldn’t dream of. In addition to the Establishment, he took on the media. They said it was suicide. They were wrong.

Let’s skim through her arguments.

Trump and the Fake News Media

According to Judge Jeanine, media wasn’t always as hostile to Trump as it has been ever since his nomination for Presidency.

In fact, back in the days of The Art of the Deal, The Apprentice, and Miss USA, he was a household name both revered and criticized by the media.

However, only the latter is true for the past few years, and the statistics prove it.

Namely, a Pew Research Center study discovered that only 28 percent of all stories about George W. Bush were negative, only 20 percent of those about Obama could be described in the same manner, and a whopping 62 percent of what the media says about Trump is a critique of him or his politics!

Why?

Because lies about Trump sell; according to Judge Jeanine, this phenomenon even has a name in some circles: the Trump Bump.

So, how does Trump deal with this?

“With just one phrase,” writes Judge Jeanine, “the president has deflected and defeated billions of negative words written about him.”

And you already know the phrase:

Fake News!

Hell, Trump even instituted the Fake News Awards, which, to quote Judge Jeanine, “raised exposure of dishonest media to an art form.”

Although, to be fair to Trump, one of the winners of this award, Brian Ross, has been involved in many controversies of this kind for the past two decades.

To be fair to the Fake News media, though, they have suspended him quite a few times on account of his unsourced reporting.

The Hypocrisy of Hollywood

“Folks,” writes Judge Jeanine, “Hollywood’s been steeped in hypocrisy for decades. As the curtain goes up on the casting couch, the town that glorifies violence, murder, and rape is the same town where the centuries-old practice of pressuring women to trade sex for a job is kept quiet.”

Of course, what Pirro is referring to is the Harvey Weinstein affair.

Weinstein, a liberal Democrat who has given almost a $1,000,000 in donations to Barack Obama, was accused by numerous women of rape, abuse, and sexual assaults in October 2017.

However, it took the Obamas quite some time to react to this story, and Hillary Clinton was nowhere to be found for at least five days.

At the same time, everybody seems to be shouting against Trump for similar accusations, even though not one of them has been documented as well as those brought out against Weinstein.

Now, why is that?

Simply put, because liberals are “fans of Hollywood’s hypocrisy.” For example, writes Judge Jeanine, after Hillary lost the Presidency, Michelle Obama commented that “any woman who voted against Hillary Clinton voted against their own voice.”

“Michelle,” she asks, “does that mean you listened to your voice and voted for Hillary and against your husband when Hillary ran against him in the primary? Where was your voice on the day your daughter got a job with Harvey?”

Moreover, where was Hillary’s or the media’s voice when Bill Clinton was accused of similar charges.

On a side note, don’t listen to the opinions of Hollywood actors about anything, says Judge Jeanine.

They don’t matter one beat since “these are people with a bloated sense of self-worth, little accountability, and practically no original thought. Without a Hollywood scriptwriter, most of them couldn’t talk their way out of a telemarketing call.”

Illegal Immigrants

This, of course, is the burning issue.

Should illegal immigrants be allowed in the United States, and are Trump and the American people for or against immigration?

Back in 2015, when Trump said that illegal immigrants are rapists, bringing drugs and crime to the USA, many liberal media predicted that this statement should spell the end of Trump.

Strangely enough, not only it didn’t, but it brought him the presidency.

Why?

Because most Americans share this opinion.

Moreover, because Trump is not against immigrants – illegal or otherwise – but against sanctuary cities, which don’t cooperate with the government on the subject of immigration:

The president was not talking about shaking down every suspected illegal immigrant household in the United States with jackbooted stormtroopers demanding ‘Papers, please!’
He was talking about finding illegal immigrants who had committed violent crimes including drug crimes. The government is supposed to arrest people suspected of committing those crimes, whether they are here legally or not!

After all, don’t forget that Trump’s wife is “an immigrant who speaks with an accent” and that his Trump Tower employees describe him as a great employer.

We’re talking about two different subjects here, and it’s time that the media acknowledges this!

Key Lessons from “Liars, Leakers, and Liberals”

1.      The Press Is Lying About Trump, and Hollywood Is Full of Hypocrites
2.      The Washington Divide: Trump vs. the Swamp
3.      Donald Trump Has Already Achieved More Than Many Presidents Before Him

The Press Is Lying About Trump, and Hollywood Is Full of Hypocrites

According to a study, two-thirds of the stories about Trump in the media are negative, as opposed to no more than a third in the case of Obama or even George W. Bush.

The reason is simple: lying about Trump sells, getting The Times 132,000 new subscribers in the first month of Trump’s time in office!

Trump countered the lies by instituting the Fake News Awards, and this worked.

“The genius of Donald Trump,” writes Judge Jeanine, “was recognizing that Americans instinctively felt that the press was lying. He was the one who put the laser focus on the press, and their lack of accountability and America came along with him.”

However, the press is not Trump’s only enemy.

Hollywood’s hypocrisy is another.

There are many actors all around us, says Judge Jeanine, but the actual actors are the worst. Their opinions shouldn’t matter at all, because they are capable of doing nothing else but getting a shot right after twenty takes.

Whether it is Robert DeNiro, Sarah Silverman, or Whoopi Goldberg, these are all people who shouldn’t be dealing with politics in the first place.

Not only they because they aren’t qualified to, but also because these are the same people who covered up the story of Harvey Weinstein’s sexual abuse for decades.

The Washington Divide: Trump vs. the Swamp

Everybody’s talking about divisions during the past few years, but nobody is talking about the important one.

In the opinion of Judge Jeanine, it’s not Republicans vs. Democrats in Washington or anywhere else; it’s Trump vs. the Swamp.

Namely, Washington is full of RINOs – i.e., Republicans in Name Only – who instead of getting behind Trump, go against him so as to further their own agenda.

And that agenda is the same as the one Trump opposes: the agenda of liars and hypocrites who want to govern America from behind the scenes.

These people are all politically correct and seem as if personifications of justice and intellect.

However, they are ten times worse than Trump who may be not as polished talker or a thinker, but “feels the way much of America feels” and “says [exactly] what he thinks.”

And “that’s why he was elected our President.”

Donald Trump Has Already Achieved More Than Many Presidents Before Him

And, according to Judge Jeanine, he’s doing a heck of a good job already.

He’s not only a caring family man – Pirro has been a personal friend of his for many years – but he’s also a decent guy who understands the American people, doing everything he can to help them.

In fact, in merely two years, he has created three million jobs, and today there are more available jobs than people unemployed in the US; unsurprisingly, unemployment is at the lowest it has been for seventeen years.

Despite being labeled as “cuts for the rich,” Trump’s tax cuts have helped the ones most in need: a typical American family should save over $2,000 a year because of them.

In addition, Trump has been doing wonders in America’s foreign policy. Working with our allies, Trump has all but neutralized ISIS, doing what Obama should have done but never did.

He has also strengthened America’s ties with its closest ally in the Middle East (Israel) by recognizing Jerusalem as its capital, and normalized USA’s relations to many countries – even starting peace talks with North Korea!

And yet, CNN talks nothing of this, focusing instead on conspiracy theories such as the Mueller investigation which has turned up nothing so far.

Why would they do that if they actually cared about the American people?

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“Liars, Leakers, and Liberals Quotes”

The minute Donald Trump announced his presidential run, on a platform that didn’t politely acquiesce to their progressive, globalist agenda, they turned on him like a pack of feral dogs. Click To Tweet Most Americans have no idea that less than two years after his inauguration, Donald Trump has accomplished more than most presidents accomplish in their entire presidencies. Click To Tweet Just eighteen months into his presidency, Trump accomplished what Obama couldn’t do in two terms: provided concrete proof that African-Americans are legitimately better off under the Trump presidency. Click To Tweet Since losing the election in the worst upset in American electoral history, Hillary Clinton has given over fifty paid speeches blaming just about everyone she can think of for the loss except, of course, herself. Click To Tweet Obama and the Clintons sold our uranium and with it the security of our nation. Click To Tweet

Our Critical Review

Even if you didn’t know before that Judge Jeanine has written quite a few books, Liars, Leakers, and Liberals might just be a title that sounds familiar to you.

The reason?

Pirro’s heated debate with Whoopi Goldberg on The View, after which the sales of Liars, Leakers, and Liberals skyrocketed, pushing the book to the top of The New York Times bestseller list.

Does it deserve to be there?

Well, not exactly.

It is biased and full of conspiracy theories that are, to say the least, unfalsifiable. And that, as Karl Popper has taught us, may just be a sign that they bear no relation to reality.

Moreover, if you label everything everyone says against you Fake News than you’re not actually interested in a fair fight, aren’t you?

Even so, Liars, Leakers, and Liberals does have a few fair points and some truths you won’t be able to hear in the mainstream media.

So, give it a chance: you’ll lose nothing but parts of your filter bubble.

 

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Financial Reckoning Day PDF Summary

Financial Reckoning Day PDFSurviving the Soft Depression of the 21st Century

What if someone told you that there are serious indicators attesting that we are experiencing the beginning of the end of American capitalism?

And what if that same guy added that, in fact, American capitalism wasn’t that great to begin with – but just another case of plain old dumb luck?

You may have second thoughts whether you should listen to that guy even a second more – probably just another time-forsaken communist, right? – but William Bonner and Addison Wiggin are anything but.

And, at least at first glance, they offer a strong case in “Financial Reckoning Day.”

Who Should Read “Financial Reckoning Day”? And Why?

“Financial Reckoning Day” references almost everyone from Adam Smith to Robert Merton, and from Freud to Einstein. In other words, it’s not exactly an easy read, but, strangely enough, it’s not a difficult one either.

Those who are interested in economics will certainly find here many things to think about. Those who are not – may find a reason to be.

About William Bonner and Addison Wiggin

William BonnerWilliam “Bill” Bonner is an American author of articles and books on economic and financial topics.

He is also the founder and president of Agora Inc. and the driving force behind its email newsletter The Daily Reckoning.

Bonner has co-authored two bestsellers with Addison Wiggin, the other one being “The New Empire of Debt” (in two editions). In addition, he has co-authored “Mobs, Messiahs, and Markets” with Lila Rajiva and “Family Fortunes” with his son, Will Bonner.

Independently, he is the author of “Hormeggedon” and, most recently, “Dice Have No Memory.”

Addison WigginAddison Wiggin is an American financial author and filmmaker.

Executive publisher of Agora Financial, he is a long-time friend and collaborator of Bill Bonner, with whom he has co-authored two books.

In addition, he has co-authored “I.O.U.S.A.” (with Kate Incontrera) and written “Demise of the Dollar” and “The Little Book of the Shrinking Dollar.”

“Financial Reckoning Day PDF Summary”

Back in 1989, Francis Fukuyama published a widely discussed essay titled “The End of History?” on the pages of the renowned international affairs journal, “The National Interest.”

Inspired by the events happening in Eastern Europe and Germany at the time, Fukuyama had an interesting case to make:

What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.

One dot-com bubble and another financial crisis later, and not even Fukuyama himself currently believes his barely three decades old own prediction! In fact, in retrospect, it couldn’t have been further from the truth!

The truth – in the opinion of Bill Bonner and Addison Wiggin – has much more to do with luck than it has to do with smart organization.

Let’s look at the twentieth century, they say, but this time, without prejudice or partiality.

The United States currently accounts for about one-fifth of the world’s economy, but back in 1870 it accounted for no more than a tenth – a little less than what the United Kingdom did at the time; China accounted for more than twice as much.

The US economy grew during the next half a century, and most of the other economies stagnated, which resulted in the country being one of the richest in the world before the start of the First World War.

However, neither that war, nor the next one, were as gentle to USA’s competitors as they had been to the United States themselves.

As you probably already know, the US lost about half a million people in both wars combined and emerged from them without a single decimated city. For comparison, France lost six million people in World War I and the Soviet Union and Germany at least thrice as much in the Second World War only.

Needless to add, whole cities were ravaged throughout Eurasia, and industrial complexes had been irretrievably devasted.

In a nutshell, even though the United States did become the largest national economy in the 20th century, don’t you think that another European country would have achieved something similar if it hadn’t been bombarded and

What followed next was the Cold War during which – and don’t forget that – the Soviet Union was surely an enemy to fear from: its often ridiculed economy accounted for 20% of the world’s GDP in 1966!

At that time, the Soviets – and even the North Koreans! – believed that communism has brought not only the end of capitalism but the end of history as well. But we all know how that ended two decades later, don’t we?

Cue for rereading the Fukuyama quote above.

Notice the cycle?

Things are going great, everybody believes in progress and ultimate victory, and then everything goes down in blood and mud and flames!

Well, brace yourself for a somewhat similar future!

How do Bonner and Wiggin know this?

Well, because the US economy seems to freakishly closely mirror the Japanese economic miracle, offset by a decade.

The Japanese bull market began in 1971; the US in 1981. Stock market value increased by 500% by 1985 in Japan and by 1995 in the United States. Within the next five years, it increased three-fold in both countries, peaking in 1990 in Japan and at the turn of the millennium in the United States.

Who would have guessed back then – when everybody was investing in everything with .com at the end – that merely a year and a half later, the U.S. stock market would drop about 30%! The Japanese, interestingly, lost almost the same amount of value by the third quartal of 1991.

Supposedly, the Americans fared better during the next decade because of their consumerism: tight-fisted spending should have been the thing that hurt Japan.

But it isn’t: it’s simply the way the current economic system works. Too much optimism is never a good thing, especially if history has been kind to you; because it will certainly come back and hit you on the head.

Don’t forget: this book was written before the financial crisis of 2008 which it all but predicts: “…when those bubbles burst, it’s going to be worse than the stock market bubble, because there are many more people who are involved in consumption and housing.”

Key Lessons from “Financial Reckoning Day”

1.      The Cold War Was a Battle Between Myths
2.      The Trouble of the Market
3.      The Damning Relation Between Economics and Demography

The Cold War Was a Battle Between Myths

You’ve already heard a lot about how the idea of a communist society was always a myth. However, barely half a century ago, a large part of the world firmly believed in this myth.

Well, capitalism is another myth based on the very same premise: the one of constant progress.

Constant progress is impossible and the fact that the US has experienced it for a century is merely evidence that things will soon deteriorate.

In a nutshell: don’t believe all those George Gilders out there!

The Trouble of the Market

The case of LTCM should be a lesson for everybody: the market is irrational, and there’s no way to predict it. In the words of Keynes, it can stay irrational much longer than an investor can remain solvent:

The trouble is that the market may look mechanistic, but it is not. The market is an unbounded, organic system; mastering it is a human science, not a hard science.

The Damning Relation Between Economics and Demography

Historian Jack Andrew Goldstone, in his book “Revolution and Rebellion in the Early Modern World,” argues that the fall of three empires (the Ottoman, the Chinese, and the Japanese) occurred because of population growth.

Currently, we have one even more serious problem: in the developed world, old people live far too long for the current social institutions to work.

Will we learn how to be flexible before it’s too late?

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“Financial Reckoning Day Quotes”

History shows that people who save and invest grow and prosper, and the others deteriorate and collapse. Click To Tweet

Policies being pursued at the Fed are making the bubble worse. They are changing it from a stock market bubble to a consumption and housing bubble. Click To Tweet

The consumer was the last man standing in the U.S. economy. Greenspan was compelled to do all he could to hold him upright, even if he was already dead. Click To Tweet

The average boomer came of prime ’stock-buying’ age in the years when all good things seemed not just possible, but inevitable. Click To Tweet

Most economists will tell you that the economic system is controlled by mood changes at the Fed. Click To Tweet

Our Critical Review

“Financial Reckoning Day” was first published a decade and a half ago and, in few years’ time, one of its predictions came true: the United States (and the world) was hit by a serious financial crisis.

Now, if Bonner and Wiggin are right, that’s bound to happen again; and again; and again.

So, excuse us for reserving our judgment for now.

Because if it does, then this one will definitely go down in history as one of the most prophetic and visionary economics books ever written.

If, however, it doesn’t, then “Financial Reckoning Day” is hardly anything more than those apocalyptic religious prophecies (not that dissimilar from the Mayan 2012 phenomenon) which tend to scare a few people from time to time before turning into ingenious memes and the laughing-stock of multitudes.

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Guns, Germs, and Steel PDF Summary

Guns, Germs, and Steel PDFA Short History of Everybody for the Last 13,000 Years

You’ve read that right:

Guns, Germs, and Steel” tells everything about everybody.

In 500 pages.

Here summarized in about 1,500 words!

Who Should Read “Guns, Germs, and Steel”? And Why?

The main reason why Jared Diamond wrote “Guns, Germs, and Steel” was a conversation he had with a New Guinean politician called Yali.

Yali asked Diamond: “Why is it that you white people developed so much cargo and brought it to New Guinea, but we black people had little cargo of our own?”

If you want to find out the answer to this question – then read “Guns, Germs, and Steel.”

Because this book does give the most widely accepted one.

Jared DiamondAbout Jared Diamond

Jared Mason Diamond is an American polymath (geographer, physiologist, biologist, anthropologist) and the author of many popular science books, such as “The Third Chimpanzee” and “Why Is Sex Fun?”

A professor of geography at UCLA, he is one of the most influential public intellectuals in the world.

Read more at http://www.jareddiamond.org

“Guns, Germs, and Steel PDF Summary”

“It seems logical to suppose that history’s pattern reflects innate differences among people themselves,” writes Jared Diamond in “Guns, Germs, and Steel” in a sentence which sounds controversial despite the italicized verb.

But, nevertheless, it’s difficult to dismiss it simply because it is not politically correct.

After all, there are some questions which seem unanswerable without a “convincing, detailed, agreed-upon explanation for the broad pattern of history.”

For example, why almost all of the hunter-gatherer societies disappeared even though the ones we could study until recently seemed non-violent, lawful in the absence of laws, egalitarian, and, for all intents and purposes, more content than us?

Why did practically every technological innovation you can think of was made either by a European or a Chinese for millennia?

Even more controversially: why did the white people enslave the African-Americans and not the other way around?

In “Guns, Germs, and Steel,” Diamond attempts to answer these – and numerous similar – questions by taking a wide interdisciplinary look of history, biology, and – possibly most importantly – geography.

In fact, the main thesis of the book, in the words of the author, is the following one:

History followed different courses for different peoples because of differences among peoples’ environments, not because of biological differences among peoples themselves.

In other words, it does matter where you are born; not because of the who; but because of the where.

The main environmental difference between the conquerors (Europe and Asia) and the conquered (Africa, the Americas) is the primary geographic axis.

Namely, as opposed to the Eurasian east-west latitudinal axis, the African and the American axis is longitudinal, i.e., north-south.

And, unfortunately, that is the direction in which climate changes.

Consequently, European and Asian countries were able not only to communicate easily between them even before the proper sailing and marine technology was developed, but they were also able to almost inadvertently share each other’s progress in agriculture as well.

For example, domesticated crops could easily spread from Europe to Asia and vice versa via one domestication, few bugs and a little bit of wind; contrary to this, cotton or squash had to be domesticated over and over again in Mesoamerica in multiple individual areas, because the crops couldn’t spread by themselves in north-south direction.

As Diamond notes, “all human societies contain inventive people. It’s just that some environments provide more starting materials and more favorable conditions for utilizing inventions than other environments.”

And this, logically, meant many different things in the long run, best summed up in this cycle: more food → more people → more intellectual power → better technology → more food…

Less intuitively, it also meant better immunity, due to the domestication of numerous animals and the subsequent exposure to deadly germs.

Which is why far more Native Americans, Australians, and South Africans died from infectious diseases than from knives and guns.

Speaking of which, Jared Diamond points out four primary reasons why the Europeans conquered the Americans and the Africans and not the other way around:

#1. Opportunities for domestication of plants and animals.

Europe and Asia had by far the best prospects in this area, as opposed to, say, Australia, whose chances to become a superpower were always going to be slim to none. We can place Africa and America somewhere in the middle.

However, the fact that Europeans and Asians could eat far better food and in far larger quantities (these continents were inhabited with a far larger number of domesticable animal and plant species) meant that they were able to reproduce in larger numbers when compared to the inhabitants of Africa or the Americas.

#2. Agricultural and technological expansion.

In addition to having more domestication-worthy/viable animals and plants, the Eurasians also had the luxury of domesticating them at a faster rate, due to the primary direction of the continent’s geographic axis (east-west) and the absence of any significant geographic barriers (deserts and mountains).

#3. Intercontinental diffusion.

Since Eurasia is one large (easily traversable) landmass, it was always easy for ideas and technologies to spread from China to Portugal – even in the absence of direct contact. The northern parts of the African continent profited from this communication as well.

However, such communication was all but impossible in the Americas which are connected by an almost inhabitable area notorious for its susceptibility to floods, landslides, and earthquakes.

#4. Population size.

This is self-explanatory: you can’t have a large army if you don’t have a large population. And you can’t profit from competition if you don’t have someone to compete against:

In short, Europe’s colonization of Africa [and America] had nothing to do with differences between European and African peoples themselves, as white racists assume. Rather, it was due to accidents of geography and biogeography — in particular, to the continents’ different areas, axes, and suites of wild plant and animal species.

Key Lessons from “Guns, Germs, and Steel”

1.      Geography and Progress
2.      The Anna Karenina Principle
3.      Centralized Power vs. Fragmentation

Geography and Progress

The main thesis of Jared Diamond’s transdisciplinary classic “Guns, Germs, and Steel” is that “history followed different courses for different peoples because of differences among peoples’ environments, not because of biological differences among peoples themselves.”

Throughout the book, he attempts to show that Eurasians had the opportunity to develop more and better than the Americans or the Africans simply because they lived on the better continents.

In a nutshell, the fact that Eurasia is one large landmass and that its primary geographic axis is east-west meant better diffusion of technology and culture and more efficient communication between the people living on these continents as opposed to the ones living in the Americas and Africa whose geographic axis is north-south.

The Anna Karenina Principle

According to the Anna Karenina principle – inspired by the memorable first sentence of the Leo Tolstoy classic – in order for an endeavor to be successful, all factors must be met; in other words, if any one of these factors remains unmet than the endeavor is doomed to fail.

Jared Diamond uses this principle to explain why there are only 14 (out of 148 possible candidates) domesticated species.

In his opinion, the factors which must be met for an animal to be domestication-worthy are at least six: diet (it must be easy to feed), growth rate (it must grow fast enough), captive breeding (it must be able to breed in captivity), disposition (it must not be ill-tempered), tendency to panic (it mustn’t take flight), and social structure (lonely animals are not good candidates).

Very few animals – in Diamond’s opinion only the 14 we have already domesticated – meet all six criteria.

Centralized Power vs. Fragmentation

Interestingly enough, the only reason why Europe crossed the Atlantic first – and not China the Pacific – to colonize the Americas was the social structure of the continents.

China, in other words, had the technology, but about half a century before Columbus set sail, a local political dispute resulted in a national ban on transoceanic expeditions. This was possible because one man had the power to do that.

In Europe, Columbus was turned down by four different kingdoms before Spain decided to fund his trip. A Chinese sailor with an idea to cross the Pacific didn’t have another country to look funds from but China.

In other words, a little fragmentation is good; too much centralized power is not.

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“Guns, Germs, and Steel Quotes”

Much of human history has consisted of unequal conflicts between the haves and the have-nots. Click To Tweet

With the rise of chiefdoms around 7,500 years ago, people had to learn, for the first time in history, how to encounter strangers regularly without attempting to kill them. Click To Tweet

It's striking that Native Americans evolved no devastating epidemic diseases to give to Europeans in return for the many devastating epidemic diseases that Indians received from the Old World. Click To Tweet

Rhino-mounted Bantu shock troops could have overthrown the Roman Empire. It never happened. Click To Tweet

One way to explain the complexity and unpredictability of historical systems, despite their ultimate determinacy, is to note that long chains of causation may separate final effects from ultimate causes lying outside the domain of that… Click To Tweet

Our Critical Review

“Guns, Germs, and Steel” won the Pulitzer Prize for general nonfiction in 1998 and was turned into a National Geographic documentary seven years later.

About a decade after this, we didn’t think twice before including it in our list of top history books ever written.

Not because numerous giants of modern scholarship – from Yuval Noah Harari to Gregory Clark – have been directly inspired by “Guns, Germs, and Steel.”

But, simply put, because we have been as well.

One of our favorite books.

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Is the American Dream Alive or Dead? It Depends on Where You Look PDF Summary

Is the American Dream Alive or Dead? It Depends on Where You Look PDFIn “Guns, Germs, and Steel,” Jared Diamond first championed the notion that geography has had a profound influence on the distribution of human wealth.

Now, in the appropriately titled report “Is the American Dream Alive or Dead,” the Economic Innovation Group demonstrates that the American reality of today can be described along the same lines.

Which is a scary notion.

But, unfortunately, is backed by data.

Who Should Read “Is the American Dream Alive or Dead? It Depends on Where You Look”? And Why?

Whether you believe in the American dream or not, this article is certainly a wakeup call – for the latter to see their fears validated by the available data, and for the former to realize that, even if still alive, it’s all but a nightmare for millions.

Economic Innovation GroupAbout the Economic Innovation Group

The Economic Innovation Group (EIG) is a bipartisan public policy organization founded half a decade ago with the mission “to advance solutions that empower entrepreneurs and investors to forge a more dynamic economy throughout America.”

To do that, EIG combines research and data-driven approaches to thoroughly examine some of the most pressing economic challenges facing the United States.

The organization considers itself “a leading voice in bringing geographic inequality into the national conversation.”

“Is the American Dream Alive or Dead? It Depends on Where You Look PDF Summary”

Ever since being both invented and overused ad nauseam by Horatio Alger Jr. in the second half of the 19th century, the nature and the reality of the American Dream have been explored by a host of great American writers in some of USA’s essential works of literature.

However, whether it’s F. Scott Fitzgerald’s “Great Gatsby” or Steinbeck’s “Of Mice and Men,” Arthur Miller’s “Death of a Salesman” or Hunter S. Thompson’s “Fear and Loathing in Las Vegas” – these books all seem to have in common a profound distrust in Alger’s vision, neatly summed up in George Carlin’s famous quip: “it’s called the American dream because you have to be asleep to believe it.”

Well, many still do, George: if you work hard enough – they think – you can reach the top of the ladder, no matter how many steps you need to climb on the way to there.

In EIG’s report “Is the American Dream Alive or Dead?”, we learn that things are not as pink.

On the contrary, in fact: the American Dream is unequivocally at risk, since “more than half of all U.S. counties [exert] a negative impact on children’s future earnings.”

You heard that right:

Basically half of America can only sleep through the American Dream!

Why?

Because they live in the wrong counties.

Really:

Place matters. While many like to think of the United States as a country where anyone willing to work hard can succeed, the reality for many is more complicated. The American Dream lies far out of reach for young people across much of the country not due to any individual shortcomings, but due to the unique mix of social, cultural, and economic forces at work in their communities—forces that condition and affect, if not always determine, lifetime outcomes.

Based on data coming from 2,869 US counties, EIG has discovered that “economic prosperity and economic mobility are positively and meaningfully correlated.”

Meaning: upward mobility is possible in prosperous counties, but unlikely in the poor ones which suffer from high rates of inequality as well!

The ratio is staggering:

Three out of five children under the age of 18 (so, 60% of underage Americans) live in counties where the American Dream is all but a nightmare.

If the American Dream is a “twofold promise of prosperity and mobility,” then “neither is in good health,” since both promises are alive and well in only 420 (i.e., one-seventh) of the examined counties. These are mostly located on the East Coast and the metropolitan areas on the West Coast, as well as the upper and the industrial Midwest and Texas.

The Southeast, on the other hand, and the remote desert Southwest (populated by Native Americans), abounds in counties in which the American Dream is merely a distant prospect.

Most of the counties have less than 100,000 people, “but altogether 14.5 million Americans live in these corners effectively vacated by the American Dream.”

In between these extremes, EIG analyzes two more groups of counties: such where mobility is possible, but the upward move doesn’t mean prosperity as well (the American dream is within reach) and such which are prosperous, but immobile (the American dream is fenced off).

The American Dream is fenced off in 28% of USA’s prosperous counties where 47.5 million Americans live in wild inequality.

On the other hand, the American dream is within reach against the odds for about 1.4 million Americans living in the few counties “that are still able to reconcile distress with mobility.”

The conclusion?

If the American Dream is to become more accessible, the country needs a more geographically inclusive pattern of growth, and it needs to tackle the determinants of mobility at their roots, neighborhood by neighborhood, at the same time.

Key Lessons from “Is the American Dream Alive or Dead? It Depends on Where You Look”

1.      The American Dream Is a Twofold Promise of Prosperity and Mobility
2.      The Four States of the American Dream
3.      The Stats Behind the American Dream

The American Dream Is a Twofold Promise of Prosperity and Mobility

By definition, the American Dream promises two things: that if you work hard, you’ll be able to move up the social ladder and become rich.

EIG’s report studies the data of almost 3,000 counties to see in which condition is the American Dream in relation to these two promises.

The Four States of the American Dream

After studying the data, EIG then categorizes each county in one of the four possible categories: prosperous and mobile counties (the American Dream is alive and well), prosperous and immobile (the American Dream is fenced off), distressed and mobile (the American Dream is within reach) and distressed and immobile (the American Dream is a distant prospect).

The Stats Behind the American Dream

Overall, over 60 percent of Americans under the age of 18 are growing up in counties which are geographically and environmentally incapable of fostering economic mobility.

The American dream is alive and well in 72% of USA’s prosperous countries examined by EIG (about 71 million people), mostly located in the Upper Midwest and Northern Plains.

The rest 28% (which encompass 47.5 million people) lack policies capable of translating prosperity into mobility and are, thus, fencing off the American Dream from many dreamers.

Against the odds, about 10% of America’s distressed counties (only 1.4 million people) still manage to foster upward mobility, rendering the American Dream within reach.

However, for the rest of the Americans living in USA’s poor counties (14.5 million), the American Dream is merely a distant prospect.

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“Is the American Dream Alive or Dead? It Depends on Where You Look Quotes”

The American Dream can be summed up as a two-fold promise of prosperity and mobility. Neither is in good health. Click To Tweet

Overall, the majority (51 percent) of counties in the United States exert a negative impact on the economic mobility of low-income children. Click To Tweet

Fewer than 10 percent of the country’s distressed counties manage to provide disadvantaged children with a ladder to higher incomes in adulthood. Click To Tweet

Altogether 14.5 million Americans live in… corners effectively vacated by the American Dream. Click To Tweet

The American Dream does indeed exist; our task is to expand its reach. Click To Tweet

Our Critical Review

The concluding sentence of EIG’s report may be the most important you’ll read this year if you still believe in the American Dream or, at least, in some things such as compassion and humanity:

The American Dream does indeed exist; our task is to expand its reach.

We’ll just leave it at that.

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How Futures Trading Changed Bitcoin Prices PDF Summary

How Futures Trading Changed Bitcoin Prices PDFSome hail it as the future; others warn that it may be the newest economic bubble.

Either way, few people haven’t heard of bitcoin by now.

In this May 2008 FRBSF Economic Report, authors Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz take a careful look at “How Futures Trading Changed Bitcoin Prices.”

Who Should Read “How Futures Trading Changed Bitcoin Prices”? And Why?

“How Futures Trading Changed Bitcoin Prices” is not exactly an article for people who have been, are, or are planning to trade with bitcoins or bitcoin futures.

Simply put, there isn’t any investment advice here – especially not in relation to Bitcoin.

However, there is an interesting conclusion concerning the relation of price dynamics and futures trading in general.

Which should make this article interesting for any future investor or trader.

About Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz

Galina B. Hale Galina B. Hale is a research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco.

Arvind KrishnamurthyArvind Krishnamurthy is a Professor of Finance at the Stanford Graduate School of Business, with a Ph.D. in Financial Economics from MIT.

Marianna Kudlyak and Patrick Shultz are both research advisors in the Economic Research Department of the Federal Reserve Bank of San Francisco.  

“How Futures Trading Changed Bitcoin Prices PDF Summary”

Nobody knows who Satoshi Nakamoto is, or even if it is one person for that matter.

But many people know that, almost a decade ago, he/she/they developed the bitcoin and devised the first blockchain database.

The first decentralized digital currency, bitcoin was hailed by the leaders of the bitcoin movement as “inherently anti-establishment, anti-system, and anti-state,” not to mention “fundamentally humanitarian.”

Now, between January 2009 and February 22, 2017, bitcoin’s price never exceeded $1,150.

And, then it suddenly started skyrocketing, reaching $19,511 on December 17, 2017.

Coincidentally, the day bitcoin reached its peak was the very same day the Chicago Mercantile Exchange (CME) opened up a futures market for the cryptocurrency.

In barely a month, bitcoin’s price fell to half of its peak price and is currently at half of that, selling at about $6,000 per bitcoin.

So, you can’t blame the authors of “How Futures Trading Changed Bitcoin Prices” for seeing much more than just a coincidence between bitcoin’s fall and the opening of the futures market for bitcoins.

Even less so if you take into consideration that the same happened in the home financing market in the 2000s, when “financial innovations in securitization and groupings of bonds” attracted optimistic investors, before instruments were created which “allowed pessimistic investors to bet against the housing market.”

Similarly, the advent of blockchain introduced a new financial instrument, bitcoin, which optimistic investors bid up, until the launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics.

Simply put, before December 17, 2017, there was no way for pessimists to bet on the decline in bitcoin prices.

The only ones who traded were optimists who, by buying bitcoins, were betting on the rise of bitcoin.

It’s always easier to bet on the rise because all you need to do is just buy a bitcoin.

However, once CME futures trading for bitcoin was launched, pessimists entered the equation.

Now, they could finally bet on the bitcoin prices going down, by short selling the digital currency.

The prophecy was, once again, self-fulfilling: as many people took short positions on the digital currency, its price started falling, and this triggered even more pessimism.

According to the authors, this pricing dynamic happens over and over again:

Once derivatives markets become sufficiently deep, short-selling pressure from pessimists leads to a sharp decline in value.

Now, the only question left is: do we know the real price of bitcoin?

Of course, this is not an easy question to answer.

However, in time, by analyzing some fundamentals such as mining costs, transactional demand, regulatory governance and the use and benefits of rival cryptocurrencies, investors will reach a clearer picture of bitcoin’s value.

By then – it’s all a speculation.

Key Lessons from “How Futures Trading Changed Bitcoin Prices”

1.      Bitcoin Was the First Decentralized Digital Currency
2.      Bitcoin’s Decline Coincided with the CME’s Opening of a Futures Market for the Cryptocurrency
3.      In the Future, Sell Before the Futures

Bitcoin Was the First Decentralized Digital Currency

Bitcoin is a cryptocurrency, i.e., a digital currency not backed by any asset of intrinsic value.

Launched in 2009, it was the first decentralized digital currency since its system was designed to work without administrators or a central bank.

Bitcoin’s Decline Coincided with the CME’s Opening of a Futures Market for the Cryptocurrency

Between 2009 and February 22, 2017, bitcoin’s price was relatively steady, never passing the $1,150 threshold.

However, during the next 11 months, it skyrocketed, and on December 17, 2017, one bitcoin was selling at a price of nearly $20,000.

That very same day, the Chicago Mercantile Exchange opened the futures market for bitcoin.

This provided pessimists with a mechanism to express their opinion about bitcoin by short selling. In merely a month, the price of bitcoin halved, and half a year after that, it revolves in the realm of $6,000 per bitcoin.

In the Future, Sell Before the Futures

“How Futures Trading Changed Bitcoin Prices” argues that Bitcoin’s price volatility is consistent with the rise and collapse of the home financing market of the 2000s, i.e., that, once again, the price dynamics was reversed once futures were launched.

If the logic of the authors is sound, be sure to sell before the futures start trading during the next investing craze.

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“How Futures Trading Changed Bitcoin Prices Quotes”

The launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics. Click To Tweet

The rapid run-up and subsequent fall in price after the introduction of futures does not appear to be a coincidence. Click To Tweet

As speculative dynamics disappear from the bitcoin market, the transactional benefits are likely to be the factor that will drive valuation. Click To Tweet

Optimists bid up the price before financial instruments are available to short the market. Click To Tweet

Once derivatives markets become sufficiently deep, short-selling pressure from pessimists leads to a sharp decline in value. Click To Tweet

Our Critical Review

“How Futures Trading Change Bitcoin” is a well-written, tightly-structured, thought-provoking analysis of a hotly debated topic. Highly recommended.

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The Accidental Investment Banker PDF Summary

The Accidental Investment Banker PDFInside the Decade that Transformed Wall Street

Want to learn more about investment banking?

Interested to find out more about its fabulous past and its speculative present?

Then delve inside the decade that transformed Wall Street – the 1990s.

With Jonathan A. Knee, the “The Accidental Investment Banker.”

Who Should Read “The Accidental Investment Banker”? And Why?

“The New York Times” has described “The Accidental Investment Banker” as “a rare, ringside seat inside the madcap and often egomaniacal world of Wall Street’s Masters of the Universe” adding that for would-be bankers, the book is an excellent primer on what it’s really like; for current bankers it will be a guilty pleasure.

And even if you are neither, we truly believe that you’ll find a lot of enjoyment in peeking behind the curtain and seeing what’s really happening on the fabulous stage of Wall Street.

General readers will marvel, noted “The Wall Street Journal.”

Jonathan A. KneeJonathan A. Knee

Jonathan A. Knee is the Michael T. Fries Professor of Professional Practice of Media and Technology at Columbia Business School and a Senior Advisor at Evercore Partners.

He has earned a BA from Boston University, MSc from Trinity in Dublin, MBA from Stanford and JD from Yale. Before joining Evercore Partners, Knee was a Publishing Sector Head in the Communications, Media and Entertainment Group at Goldman Sachs and, then, a Managing Director and Co-head of Morgan Stanley’s Media Group.

In addition to “The Accidental Investment Banker,” he has authored one more book, “Class Clowns,” and co-authored another, “The Curse of the Mogul.”

“The Accidental Investment Banker PDF Summary”

Before we delve briefly into the quiet beginnings and the wild decades of investment banking, it’s only appropriate to explain what an investment bank actually is.

By strict definition, an investment bank is usually a private company which provides various financial (and finance-related) services to individuals, corporations, and even governments.

Mostly these all boil down to two primary functions: corporate finance and sales and trading.

Corporate finance is what investment banks traditionally do (and have done for centuries).

In a nutshell, it means helping customers raise funds (via mutual funds, pension funds, etc.) so that they can develop new capabilities or purchase new assets.

In the latter case – i.e., mergers and acquisitions (M&A) – investment banks can also give advisory services to companies on how to best consolidate the new assets under one entity.

In its sales and trading function, an investment bank basically serves as the middleman, buying and selling securities on behalf of itself and its clients, earning some percent of the funds it raises.

On IPOs, for example, an investment bank’s “spread” can be up to 7% of the raised finances!

Now, even though investment banking began with the activities of the Dutch East India Company a few centuries ago, it actually became something big in the United States in the early 20th century.

More or less just as today, the leading investment banking houses at the time were Morgan Stanley and Goldman Sachs, closely followed by Merrill Lynch.

Behind them, four investment banks which, for one reason or another, don’t exist anymore: First Boston, Lehman Brothers, Donaldson, Lufkin & Jenrette (DLJ), and Salomon Brothers.

After the Great Depression of 1929, investment banks entered a golden era.

How could they not?

In a world practically bereaved of financial euphoria, the investment banks of the time were all but the only model financial institutions, so everybody respected them as such.

Loyal to their customers and as conservative as possible, the investment banks of this period prized integrity above all and didn’t want to blow their own horns that much:

With roots going back over a century, the major investment banking houses largely eschewed publicity and had developed their own idiosyncratic cultures built on notions of exclusivity, integrity and conservatism.

And if there is one man who embodies golden-era investment banking, then that man is certainly Goldman Sachs’ long-time leader, Sidney Weinberg, Mr. Wall Street himself.

Widely respected, Weinberg was both a shrewd and an honest man, with a keen eye for business, but also with the integrity to stay away from speculative businesses; for example, he refused to underwrite gambling-related businesses.

However, soon after Weinberg’s death in 1969, views such as these became not only outdated but also a competitive disadvantage.

And the relatively humble white-shoe conservative investment banker of the war years morphed into the unorthodox M&A rock star with a lavish lifestyle and a six-figure paycheck.

J.P. Morgan Jr. may have advised doing “first-class business in a first-class way,” but the Wall Street motto of the 1990s spelled anything but: “IBG-YBG” (i.e., “I’ll be gone, you’ll be gone.”) meant that “short-term thinking,” was now the only valid way to run an investment bank.

And, as usual, short-term thinking resulted in a disaster in the long run.

Investment banks did rebound a few years after the crash of 2000 rattled the industry, but, expectedly, they never regained their reputation of the golden-era Weinberg years.

Key Lessons from “The Accidental Investment Banker”

1.      The Two Primary Functions of Investment Banks
2.      The Golden Era of Investment Banking
3.      The Boom and the Bust of the 1990s

The Two Primary Functions of Investment Banks

Investment banks have two primary functions: corporate finance and sales and trading.

The corporate finance function includes raising funds for their clients, be they individuals, corporations, or governments. It also incorporates giving valuable advice concerning mergers and acquisitions (M&A).

The sales and trading function means underwriting the clients’ assets, i.e., buying and selling securities, and earning a percentage of it.

The Golden Era of Investment Banking

After the Great Depression, investment banks were conservative institutions, mostly interested in long-term plans and staying away from speculations.

Sidney Weinberg – Goldman Sachs’ CEO from 1930 to his death in 1969 – typified the era: an honest and reliable man, he stayed away from hostile takeover bids and refused to underwrite gambling businesses.

Most investment banks followed suit, making them the most reliable financial institutions of the war (Second World War, Cold War) years.

The Boom and the Bust of the 1990s

However, the 1980s infamously turned Wall Street into a den of thieves, and during the 1990s things really spiraled out of control.

First – for the better; and then – for the worse:

Just as the investment banks were ill-prepared to deal with the boom of the 1990s, they had no road map to manage the bust of the new millennium.

Unsurprisingly, investment banks haven’t recovered their golden-era reputation of trusted, loyal advisers.

In fact, nowadays, there’s “an unprecedented level of cynicism, suspicion, and distrust of investment banks” among CEOs.

Probably for a very good reason.

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“The Accidental Investment Banker Quotes”

What sends an investment banking firm into decline is typically a major scandal, a capital crisis, a mass exodus of productive partners, or usually some combination of the three. Click To Tweet

Investment banks and investment bankers had always thought of themselves as providing a highly differentiated value-added service – strategic advice selected based on quality. Click To Tweet

Investment banking, at bottom, is a sales job. Click To Tweet

The ‘spin’ involved in any sales job has a comic aspect that takes on an even more absurd quality when the financial stakes are as high as in investment banking. Click To Tweet

Our Critical Review

“The Accidental Investment Banker” is, by all accounts, a rare book: an insider’s look into the world of investment banking.

Written by someone who has worked at both Goldman Sachs and Morgan Stanley, the book chronicles the madness of the boom and the bust of the 1990s with appropriate flair and panache and abounds with engaging intrigues and memorable anecdotes.

To quote “Fortune” magazine, “For anyone who remembers the crazy boom times, and the even crazier bust, Jonathan A. Knee’s ‘The Accidental Investment Banker’ is a must.”

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A Short History of Financial Euphoria PDF Summary

A Short History of Financial Euphoria PDFReady for a new speculative bubble?

Because as John Kenneth Galbraith’s “A Short History of Financial Euphoria” demonstrates, if there’s one thing history has taught us it’s that there will surely be one very soon.

Read ahead to find out why.

Who Should Read “A Short History of Financial Euphoria”? And Why?

In “A Short History of Financial Euphoria,” John Kenneth Galbraith offers “dourly irreverent analyses of financial debacle from the tulip craze of the seventeenth century to the recent plague of junk bonds.”

Chances are you’ll forget the origin and the effects of all of them in the blink of an eye, which will expose you to the manipulative schemes of charlatans and cons in no time.

Which is why it’s all but necessary to not merely read, but also constantly reread Galbraith’s 100-page classic.

John Kenneth GalbraithAbout John Kenneth Galbraith

John Kenneth Galbraith was a Canadian-born economist and diplomat, one of the leading proponents of American liberalism of the 20th century.

A long-time Harvard faculty member and professor, Galbraith served in the administrations of four American presidents (Roosevelt, Truman, Kennedy, Johnson).

One of the few people to receive both the Medal of Freedom and the Presidential Medal of Freedom, Galbraith was USA’s Ambassador to India under Kennedy and a widely respected public intellectual for the duration of the Cold War.

A prolific author, he wrote numerous books, including a few successful novels. His trilogy on economics – “American Capitalism,” “The Affluent Society” and “The New Industrial State” – is still hotly debated and thoroughly analyzed.

“A Short History of Financial Euphoria PDF Summary”

There is nothing in economic life,” writes John Kenneth Galbraith near the end of his “Short History of Financial Euphoria,” so willfully misunderstood as the great speculative episode.

And this, even though on the face of it, everything should be quite plain and simple.

It all starts with a bidding war over some asset a few people believe is so rare and important that its value should only increase in the future.

That’s, after all, the basic economic rule: when supply is low, and demand is great, prices rise.

Add to this the yearning desire of many people to become rich overnight, and you get a recipe for disaster!

Because soon enough, investors join in.

Why should they not?

It’s their job to get the most out of anything, and bubbles are the perfect way for them to earn some money.

And since they are usually the earliest players, they actually do – and they do it big time!

Of course, these investors are not exactly humble people, so they start tooting their own horns, and soon even more people start investing in the asset the price of which, in the meantime, has blown ridiculously out of proportions.

The scary thing is that in this second group of people there are usually even quite a few intelligent analysts who are aware that at some point in the future this bubble must burst, but who, nevertheless, expect to be able to take their money back before that happens.

Some do. Most don’t.

And when the inevitable happens – the market crash – many lose substantial amounts of money; many more lose absolutely everything.

The strange thing: in a decade or so, financial euphoria strikes again.

Why?

In the opinion of Galbraith, it is because of several unchanging factors.

Since these are probably the most important insights of his book but are mostly scattered through brilliant historical analyses of many speculative bubbles, we tried to systematize them so that you can follow them better.

#1. Short-term fiscal memory

When it comes to money, Galbraith says, people never seem to learn anything. “There can be few fields of human endeavor,” he says, “in which history counts for so little as in the world of finance.”

In other words, when it comes to get-rich-fast schemes, you can burn yourself numerous times, because wanting more is part of your very human nature.

Rationality is just a note on the margin.

#2. The fallacious link between wealth and intellect

Most people believe that wealthy investors are, by definition, smart.

Which is why they have devised all those fancy epithets about the likes of Warren Buffet, Peter Lynch, and George Soros!

However, since almost everything that happens in life and in the markets is governed by chance, it’s all but crazy to believe that some people have found a surefire way to earn money.

In fact, most of the time, they have just been lucky.

The majority doesn’t think so.

So, it is inclined to be the victim of Ponzi schemes and speculative bubbles.

#3. Nobody believes the pessimists

Almost every bubble comes with a Cassandra or two.

Before the market crash of 1929, Paul M. Warburg foresaw the collapse and the depression, but his warnings fell on deaf ears, with the public claiming that he (a Jew) was “sandbagging American prosperity.”

Most wanted to believe Irving Fisher who famously proclaimed that the “stock prices have reached what looks like a permanently high plateau.”

Just a few days before the market crashed.

#4. Everyone chooses to ignore the real reasons

Charles Mackay, in his remarkable 1841 classic “Extraordinary Popular Delusions and the Madness of Crowds” (a defining influence on Galbraith’s book which thoroughly recounts its three chapters), commenting on the South Sea Company bubble, writes thus:

[In the autumn of 1720,] public meetings were held in every considerable town of the empire, at which petitions were adopted, praying the vengeance of the legislature upon the South Sea directors, who, by their fraudulent practices, had brought the nation to the brink of ruin. Nobody seemed to imagine that the nation itself was as culpable as the South-Sea company. Nobody blamed the credulity and avarice of the people-the degrading lust of gain…or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors. These things were never mentioned.

The truth is – these things never are.

Even though:

#5. Bubbles are an inherent part of the market

Speculation is part of the market, and it will always be that way.

Contrary to what many will say, the market is not infallible, since humans are not infallible as well.

Regulations can help, but even they can’t contain mass euphoria and gullibility.

So, as long as there are people and markets, there will be bubbles as well.

Key Lessons from “A Short History of Financial Euphoria”

1.      People Suffer from a Short-Term Fiscal Memory
2.      Believe the Pessimists – for Your Own Sake
3.      Bubbles Are Inherent Part of the Free-Enterprise System

People Suffer from a Short-Term Fiscal Memory

When it comes to money, people tend to forget everything, including the most disastrous financial crashes in but a few decades.

That’s why it’s too optimistic to hope that people will ever learn their lesson when it comes to speculative bubbles.

Believe the Pessimists – for Your Own Sake

Every speculative bubble comes with a Cassandra or two: a prophet of disaster whose prophecies nobody believes until it’s too late.

Unfortunately, more often than not – or, rather, for most of the people involved – they are the only ones who are actually right.

Could it be that the pessimists are also right in the case of, say, Bitcoin?

Bubbles Are Inherent Part of the Free-Enterprise System

Markets are not perfect.

Bubbles are a part of them, and, as long as there are markets, it is inevitable that many people will lose huge amounts of money due to ruinous speculation.

The earlier you realize this, the better for you.

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“A Short History of Financial Euphoria Quotes”

The circumstances that induce the recurrent lapses into financial dementia have not changed in any truly operative fashion since the Tulipomania of 1636-1637. Click To Tweet

The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. Click To Tweet

There is nothing in economic life so willfully misunderstood as the great speculative episode. Click To Tweet

Speculation buys up, in a very practical way, the intelligence of those involved. Click To Tweet

In a world where for many the acquisition of money is difficult and the resulting sums palpably insufficient, the possession of it in large amounts seems a miracle. Click To Tweet

Our Critical Review

“Financial Euphoria” – to quote a great review – is a keeper, the sort of book you’ll recommend to other investors. It is brief, readable, with a statesman-like style, yet not above the heads of small investors.

Originally, Galbraith wrote it as a warning. Unfortunately, as he explains in the Foreword to the book’s second edition, a warning he grew to believe that has no value whatsoever:

In the first foreword to this volume, I told of my hope that business executives, the inhabitants of the financial world and the citizens of speculative mood, tendency or temptation might be reminded of the way that not only fools but quite a lot of other people are recurrently separated from their money in the moment of speculative euphoria.

I am less certain than when I then wrote of the social and personal value of such a warning. Recurrent speculative insanity and the associated financial deprivation and larger devastation are, I am persuaded, inherent in the system. Perhaps it is better that this be recognized and accepted.

Unsurprisingly, Galbraith ends his book with a depressing question: “When will come the next great speculative episode and in what venue will it recur?”

That was 1994.

Unfortunately, we know now the answer.

And, yet – frighteningly – the question is still valid.

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Applied Economics PDF Summary

Applied Economics PDFThinking Beyond Stage One

Should politicians meddle with the economy?

And is economics truly “the dismal science”?

Thomas Sowell tries to answer these questions by thinking beyond stage one in his exceptionally well received “Applied Economics.”

Who Should Read “Applied Economics”? And Why?

Whether you like it or not, economics and politics affect you personally.

And, regardless of whether you’ll agree with its conclusions or think they are a bit stretched, books such as “Applied Economics” are a breath of fresh air, both for their simplicity and for their uncompromising attitude.

In other words, “Applied Economics” is not about experts, but about the general public, and especially for disinterested voters who’ should profit a lot from learning more about the relationship between politics and economics.

Thomas SowellAbout Thomas Sowell

Thomas Sowell is an American economist and the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University.

After dropping out of high school to serve in the United States Marine Corps during the Korean War, Sowell went on to graduate magna cum laude from Harvard University, a decade before obtaining a doctorate in economics from the University of Chicago.

He has taught at several universities and has written numerous articles and more than thirty books. His “Basic Economics” is considered a classic.

“Applied Economics PDF Summary”

According to 19th-century Scottish writer and philosopher Thomas Carlyle, as opposed to the gay science of verse-writing, economics was a “dismal science.”

Thomas Sowell, an economist, agrees with Carlyle.

And, believe it or not, for the exact same reason!

Namely, because – as Carlyle writes in “Occasional Discourse on the Negro Question” – economics “finds the secret of this Universe in ‘supply and demand,’ and reduces the duty of human governors to that of letting men alone.”

But, here’s the kicker:

Sowell thinks that this is great and that, in fact, the very abject nature of economics is its most wonderful attribute!

Why?

Well, we’ve already told you how “the universe is under no obligation to make sense to you;” but, if you remember well enough, you already know that, even so, Neil deGrasse Tyson sees beauty and power in its laws because “they apply everywhere, whether or not you choose to believe in them.”

In the opinion of Thomas Sowell, the same is true in economics as well.

It is the science of the cold, hard facts of life: when supply is low and demand is great, prices rise; when supply exceeds demand, prices fall; in the absence of an economic incentive, people tend to; in its presence – they.

It may be dismal – or even anticlimactic – to say that this is one of the secrets of the Universe, but it is – whether you like it or not, the same way 2+2=4.

In a nutshell, economics thinks of the world logically, in terms of the way it actually works. It believes that there are predictable consequences of people’s actions and that, in the long run, there’s no running away from some outcomes.

As opposed to economics, politics thinks about the world emotionally, in terms of the way it fantasizes the world should look like. It’s a short-term anything-can-happen mode of thinking which multiplies problems while trying to solve them:

Political thinking tends to conceive of policies, institutions or programs in terms of their hoped-for results – ’drug prevention’ programs, ’profit-making’ enterprise, ’public-interest’ law firms, ’gun control’ laws, and so forth.

Sowell speaks from his own experience.

While an undergraduate studying economics under Professor Arthur Smithies of Harvard, he was in class one day what policy he favored “on a particular issue of the times.”

Sowell proceeded to answer him with enthusiasm, explaining the beneficial consequences of the policy he advocated.

“And then what will happen?”, his professor asked.

This question caught Sowell off guard, but he managed to find a satisfying answer. But when his professor persisted with the same question and Sowell got further and further in the future analyzing the economic consequences of his policy, he realized “that the economic reverberations of the policy [he] advocated were likely to be pretty disastrous — and, in fact, much worse than the initial situation that it was designed to improve.”

The point?

Simple as this little exercise might seem, it went further than most economic discussions about policies on a wide range of issues. Most thinking stops at stage one.

Sowell’s book is rife with examples how seemingly beneficial policies are in fact beneficial only superficially – that is, at stage one.

In the long run – stages 2, 3, 4, etc. – the very fact that the government has chosen to interfere with the free markets inevitably results in economic consequences which undermine the very cause the government policies have initially attempted to advance.

We’ll look at one more specific example from the book in the “Key Lessons” section, but here’s, for now, one simplified general analysis so that you can understand how politics messes up economics 99 out of 100 times.

Problem: There’s not enough money for education.

Solution: Take it from private businesses.

Stage 1: Raise taxes. Year one: there is more money for education, and more and more students are capable of going to college.

Stage 2: Year two: corporations on the edge of profitability go bust. Other corporations start relocating to escape the same destiny.

Stage 3: There are no new businesses during the following two or three years since everybody wants to pay as little taxes as possible.

Stage 4: The happy students who profited from the policy at Stage 1 have graduated from college by now; in vain: no one is hiring, and they are unable to find any kind of job, let alone a suitable one.

Stage 5: There’s a new government now and, in addition to the unemployment, they are also faced with a budgetary problem (fewer companies, less money in the budget).

Stage 6: The new government proposes – wait for it… – a tax increase.

There’s an adjective which describes this circuitous logic.

And it’s “vicious” for a sound reason.

Key Lessons from “Applied Economics”

1.      Economics vs. Politics = Logic vs. Fantasy
2.      The Short-Sightedness of Politicians and California’s Electricity Problem
3.      Governments, Leave the Free Markets Alone!

Economics vs. Politics = Logic vs. Fantasy

Economics and politics are not exactly Butch Cassidy and the Sundance Kid; in the opinion of Thomas Sowell – the analogy is, of course, ours – they are much more akin to the pairing of Sancho Panza and Don Quixote, without the funny bits or the relatively happy ending.

In other words, economics is down-to-earth, logical, and factual; the head of politics is always in the clouds: it is idealistic, fantastical, unscientific.

Basic supply-side economics may be a dismal science, but it’s the way the world works, so economics is able to people’s behavior in the long run. Politics is much more hopeful mainly because it has nothing to do with reality.

Which is why it always messes things up.

The Short-Sightedness of Politicians and California’s Electricity Problem

When thinking about real-world problems, politicians are always stuck at Stage 1 – they never ask “what then?” when they propose a solution.

A good real-world example is the California electricity crisis of 2000 and 2001.

When California’s politicians decided that the electric prices were too high, they lobbied for votes to regulate them; and, obviously, they got enough of them to cap the price at a maximum of seven cents a kilowatt-hour.

However, as it turned out, the prices went up for a reason: due to reduced rainfall and higher hydrocarbon prices, utilities actually needed 15 cents to generate one kilowatt-hour for electricity.

So, they started shutting down their facilities, and California started experiencing blackouts and power shortages.

In the end, the government had to buy electricity and, of course, it paid with the money of the people.

So, in the end, the people actually paid more than they would have if the state didn’t try to regulate the prices in the first place!

Governments, Leave the Free Markets Alone!

Even though some respected economists such as Paul Krugman believe that conservative libertarian supply-side economics is “a crank doctrine,” Thomas Sowell thinks – with, say, Hayek and Friedman – that it is a fact of life.

In other words, that there’s no other way to organize an economy but by regulating it as little as possible and letting the free market decide what people need and how much of it they should be supplied with.

A simple, but a powerful equation.

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“Applied Economics Quotes”

Families, gangs, feudal warlords, insurance companies, partnerships, commodity speculators, and issuers of stocks and bonds are all in the business of reducing and transferring risk. Click To Tweet

For purposes of economic analysis, what matters is not what goals are being sought but what incentives and constraints are being created in pursuit of those goals. Click To Tweet

As markets replaced politically managed economic decision-making, China experienced one of the highest economic growth rates in the world. Click To Tweet

The advantages of a free labor market benefit not only the worker but also the economy. Click To Tweet

Given the low educational levels of many who become career criminals, crime may well be their best-paying option. Click To Tweet

Our Critical Review

“Applied Economics” is a bit one-sided, and, at times – and as a consequence – too simplified analysis of how economic processes work in the real world.

However, it’s also an easy-to-understand read with many good points.

Conservatives will adore it.

Others should read it since it’s too thought-provoking to be ignored.

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