See, in particular, Fromm , Brown and Goodman Brown and Goodman point to similarities between the Freudian theory and Keynes's economics.
Brown , pp. I have already quoted his remark about a Freudian complex of Woodrow Wilson. In his essay on Newton, he claims that Newton was, in vulgar modern terms, profoundly neurotic of a not unfamiliar type, but — I should say from the records — a most extreme example. His deepest instincts were occult, esoteric, semantic — with profound shrinking from the world, a paralysing fear of exposing his thoughts, his beliefs, his discoveries in all nakedness to the inspection and criticism of the world.
What we do sometimes find is emphasis on the anal-sadistic traits. This is particularly so in his essays on Jevons and Foxwell. Such traits are also pointed to in the essay on Marshall and in some scattered remarks about Hayek. William Stanley Jevons Keynes's psychological portrait of Jevons both points to anal-sadistic traits and suggests they have unconscious roots. In particular, in Jevons's beliefs and actions Keynes claims to find expression of the "hoarding instinct", of compulsive orderliness and of an excessive sensitivity to interruption when concentrating on some task.
He claims B, p. His collection of both writing and packing paper was so large that fifty years after his death his descendants had not yet succeeded in using it all up. Moreover, Jevons himself did not make use of this accumulation; he wrote most of his own notes on the backs of old envelopes and odd scraps of paper. Jevons was also "the first of the distinguished tribe of economic bibliomaniacs. By the end of his life he had accumulated several thousand volumes, lining the walls and passages of the house and packed in heaps in the attics, an embarrassment to his family both then and in their subsequent removals B, He was, Keynes claims, "a born collector.
He quotes Jevons as having once said of himself: "My mind is of the most regular structure, and I have such a strong disposition to classify things as is sometimes almost painful Keynes, B, p. He was a major contributor to "the study of deductive economics based on simplified and abstract principles B, p. This trait also influenced Jevons's statistical work. Keynes points B, pp. Jevons also objected to outside interference in economic activities; "on the side of morals and sentiment [he] was, and always remained, an impassioned individualist B, p. Foxwell Foxwell is presented as a paradigm instance of the type.
To begin with, he is described as having had an extreme "passion for orderliness and classification. He was also unreasonably obstinate. Foxwell was not an easy man for those who had to do with him. He was wilful, obstinate, and could be most unreasonable — exceedingly troublesome to anyone who wanted to smooth over personal difficulties and keep the peace. Here too, the trait got in the way of the attainment of his ends.
Foxwell was also a hoarder. This trait found its fullest expression in "bibliomania" B, pp. Alfred Marshall Marshall's case is less clear-cut. Keynes credits him with having moved economics a good distance away from the inappropriate methods and assumptions of orthodoxy. Marshall, for example, understood in a sophisticated way the organic character of the material of economics. Keynes does, however, both point to irrational elements in Marshall's beliefs and behaviour and explain these in terms consistent with psychoanalysis.
To begin with, Keynes connects some of these elements to Marshall's family background. Marshall came from the sort of patriarchal and authoritarian family likely to produce anal- sadistic traits. This is made clear by Keynes's description of his father B, p. Keynes points to this background in explaining Marshall's attitudes to ideas and activities that provide an outlet for the anal and sadistic interests which are transformed by regression and repression into an interest in orderliness.
In Marshall's case the result was an irrationally anchored interest in mathematics and chess. In both cases the interest was partly a response to the conflict with his father and was further transformed as a result of that conflict. Keynes, for example, quotes Mrs. Marshall's report that, during Marshall's boyhood, chess alleviated psychological pressures which otherwise resulted in severe headaches B, p.
The interest in mathematics provided both an unconscious and a conscious means of canalizing hostile attitudes to his father B, p. The father strongly disapproved of both interests and prohibited Marshall from pursuing them. Marshall Keynes, B, p. The outcome was ambivalence towards both chess and mathematics. Thus, though he never again played chess after his father made him promise to give it up, he could never see a chess problem in a newspaper without getting exited B, p. Similarly, his ambivalence to mathematics prevented him from forming a fully rational attitude toward it.
Keynes claims that part of his negative attitude was rooted in a guilty conscience which Keynes B, p. The strength of Marshall's "masterful instincts" was also reflected in his attitude to women B, pp. Marshall opposed the granting of Cambridge degrees to women on the grounds that the full-time residence in the university this would require was incompatible with the primary obligation of women to be mothers and homemakers and that, in any event, "there was nothing useful to be made of women's intellects B, p. Keynes claims this attitude had an irrational anchor in the "masterful instincts", in a "congenital bias" which Marshall derived from "the influence of the parental mould" and "which by a man's fifty- fourth year of life has gathered secret strength" B, pp.
Keynes also points to irrational elements in Marshall's attitudes to "waiting". He points, for example, to an emotional overtone — "an unusual dogmatic force" — in a passage from the Principles expressing the view that it is the unwillingness to wait which holds accumulation in check and keeps up the rate of interest A, p.
In his own work, however, Marshall exhibited an excessive willingness to wait. This made him unduly sensitive to criticism and aggravated his tendency to constantly postpone publication. Marshall was too much afraid of being wrong, too thin-skinned towards criticism, too easily upset by controversy even on matters of minor importance. An extreme sensitiveness deprived him of magnanimity towards the critic or the adversary. This fear of being open to correction by speaking too soon aggravated other tendencies.
As I pointed out above, Keynes claims there was an "evangelical moralizer of an imp somewhere inside him" that objected to his ego "chasing diagrams and foreign trade and money B, p. In his reply to the review B, pp. Other remarks he makes about Hayek suggest the passion is anal-sadism. For example, this criticism of Hayek's views on money is repeated in the passage in the General Theory A, p. Attachment to a particular set of irrational ideas about money is described as the outcome of something similar to a wild duck's propensity, when wounded, to dive down to the bottom of the marsh and bite "fast hold of the weed and tangle and all the rubbish that is down there A, p.
In "Alternative Theories of the Rate of Interest," Keynes claims that "there is a deep-seated obsession associating idle balances, not with the action of the banks in fixing the supply of money nor with the attitude of the public towards the comparative attractions of cash and of other assets, but with some aspect of current savings C, p. He claims, for example, that the "Benthamite calculus" is, like the conventional basis of business expectations, one of those "pretty, polite techniques" having the psychological purpose of enabling its users to hide from themselves how little they foresee C, pp.
The orthodox 3 I pointed above to Keynes's description of Jevons's approach to economics, an approach rooted in the Benthamite calculus and exemplifying the excessive scholasticism to which, as we shall see, Keynes objected. Keynes explicitly points to an irrational psychological anchor for Edgeworth's tenacious attachment to this approach.
Discussing the bases of Edgeworth's adherence to the frequency theory of probability and to utilitarian ethics, Keynes claims that in both cases his mind was alive to the objections, and in both cases the weight of objections increased in his mind, as time went on, rather than diminished. Nevertheless, he did not in either case replace these initial presumptions by any others, with the result that he took up increasingly a sceptical attitude towards philosophical foundations combined with a pragmatic attitude towards practical applications which had been successfully erected upon them, however insecure these foundations might be B, p.
This implied in Edgeworth an unwillingness to revise or take up again the more speculative studies of his youth. He was disinclined, in company with most other economists of the classical school, to reconsider how far the initial assumptions of the marginal theory stand or fall with the utilitarian ethics and the utilitarian psychology, out of which they sprang and which were sincerely accepted, in a way no one accepts them now, by the founders of the subject B, p.
All his intellectual life through he felt his foundations slipping away from under him. What wonder that with these hesitations added to his cautious, critical, sceptical, diffident nature the erection of a large and heavy superstructure did not appeal to him. Edgeworth knew that he was skating on thin ice; and as life went on his love of skating and his distrust of the ice increased, by a malicious fate, pari passu. He is like one who seeks to avert the evil eye by looking sideways, to escape the censure of fate by euphemism, calling the treacherous sea Euxine and the unfriendly guardians of truth the kindly ones.
Edgeworth seldom looked the reader or interlocutor straight in the face; he is allusive, obscure, and devious as one who would slip by unnoticed, hurrying on if stopped by another traveller B, pp. Keynes frequently see, for example, , pp. It attempts to impose on material a kind of precise order that the material itself does not possess.
As pointed out above, extreme orderliness is an expression of both anal erotism and sadism. It expresses both a desire to exercise sadistic control over ideas, events and objects and a reaction-formation against a component of anal erotism. Speaking of this "obsession for order," Karl Abraham , p.
In his essay on Marshall, he claims that those with a tendency to extreme orderliness often find the methods which are appropriate in economics "overwhelmingly difficult". The amalgam of logic and intuition and the wide knowledge of the facts, most of which are not precise, which is required for economic interpretation in its highest form, is, quite truly, overwhelmingly difficult for those whose gift mainly consists in the power to imagine and pursue to their furthest points the implications and prior conditions of comparatively simple facts which are known with a high degree of precision.
For example, in some correspondence with Roy Harrod about this method C, pp. Keynes makes similar claims about orthodox economic doctrines. He claims, for example, that there is a parallelism between the role given to sexual love in Darwinism and the role give to the love of money in economic laissez-faire. The "individualists", who, of course, obstinately and vehemently oppose any and all interference in money-making activities, are said to give "the love of money, acting through the pursuit of profit" the same role in bringing about "the production on the greatest possible scale of what is most strongly desired as measured by exchange value" that Darwin gives "sexual love, acting through sexual selection", in directing "evolution along lines which should be desirable as well as effective A, p.
In the original galleys of a reply to Dennis Robertson's Economic Journal review of the Treatise, Keynes explicitly connects this argument to psychoanalysis. In the last paragraph of his review , pp. In his reply, Keynes claims that the policy is indeed an expression of sadism, though of sadistic puritanism rather than barbarism, and that its explanation is found in psychoanalysis rather than economic analysis. Mr Robertson's last paragraph of all — yes! But at this point psycho-analysis must take charge and economic analysis withdraw discreetly.
In the Tract on Monetary Reform, he had claimed that, although it is a "barbarous relic" B, p. Of late years the auri sacra fames has sought to envelop itself in a garment of respectability as densely respectable as was ever met with, even in the realms of sex and religion. Whether this was first put on as a necessary armour to win the hard-won fight against bimetallism and is still worn, as the gold-advocates allege, because gold is the sole prophylactic against the plague of fiat moneys, or whether it is a furtive Freudian cloak, we need not be curious to inquire.
But before we proceed with a scientific and would-be unbiased examination of its claims, we had better remind the reader of what he well knows — namely, that gold has become part of the apparatus of conservatism and is one of the matters which we cannot expect to see handled without prejudice.
You have to believe that a funding issue will prevent workers and others from spending their increased incomes. This conviction must be a vermiform appendix of the mind, which has survived from the long past days when you genuinely believed in the quantity theory of money. If you are not too old, as to which I have no information, I strongly recommend an operation.
By modern methods an inflamed quantity theory can be removed with much less danger than formerly! This view, combined with his claim that a "Freudian complex" of President Wilson's made a subject "intolerable to discuss," his emphasis upon the pronounced anal traits of economists, and his implicitly and occasionally explicitly psychoanalytic accounts of particular economic and political doctrines, points to the possibility that Keynes made use of what Freud calls "poetical economy" in his political economy. This would explain the infrequent explicit references of any kind to psycho-analysis in his economic writings and the complete absence of any explicit indication that use is being made of psycho-analytic premises.
Poetical economy is made necessary by the need to take account of "resistance" in a reader or audience. Ernest Jones A, p. He also claims B, p. Perhaps the most astonishing of Freud's findings — and certainly the one that has evoked the liveliest incredulity, repugnance, and opposition — was his discovery that certain traits of character may become profoundly modified as the result of sexual excitations experienced by the infant in the region of the anal canal.
Freud , pp. According to Freud, the dramatic effect of this play depends upon its content having been so constructed that even though no explicit reference is or can be made to an incestuous relation between a central character, Rebecca, and her father, both the relation and the motivation underpinning it will be unconsciously assimilated by the spectator.
Laws of poetical economy necessitate this way of presenting the situation, for this deeper motive could not be explicitly set forth, it had to be dissimulated, kept from the direct perception of the spectator or the reader; otherwise such serious resistances, based on most painful emotions, would have arisen that the effect of the tragedy might have been imperilled.
George Rylands , p. A letter Keynes wrote to B. His call is to return earnings to shareholders instead of investing them in buying more shares. Two: on August 2nd, Apple became the first private company in history to top USD1 trillion market valuation mark when company stock closed at above USD Company's path to this achievement was based on far more than just a portfolio of great products. In fact, two key financial engineering factors in recent years have contributed to its phenomenal success: aggressive tax optimisation, and extremely active shares buybacks programme.
In May , the company pledged USD billion of its USD billion cash stash accumulated primarily off-shore, in low tax jurisdictions such as Ireland, Jersey and in the Caribbean for shares buybacks. As of end of July, it was already half way to that target. Apple is an industry leader in buybacks, accounting for close to 15 percent of all shares buybacks planned for But Apple is not alone. A study by the Roosevelt Institute released in August shows that U. And on foot of the USD1.
The Squeezed Generation And this brings us to the third fact: the lure of cash in today's world of retail investment. If cash is where Warren Buffetts and Apples of the financial and corporate worlds are, it is quite rational that cash is where the new generation of retail investors will be. Per Bankrate. In comparison, only 21 percent of Generation X investors who prefer cash instruments, and 16 percent for the Baby Boomers.
American retail investors are predominantly focused on low-yielding, higher safety investment allocations. For example, recent surveys indicate that only 18 percent of all American investment portfolios earn non-negative real returns on their savings, and that these households are dominated by the Baby Boomers generation and the top 10 percent of earners.
Amongst the Millennials, the percentage is even lower at 7. The conventional wisdom suggests that the reasons why Millennials are so keen on holding their investments in highly secure assets is the fear of market crashes inherited by their generation from witnessing the Global Financial Crisis. But the conventional wisdom is false, and this falsehood is too dangerous to ignore for all investors - small and large alike.
In reality, the Millennials scepticism about the risk-adjusted returns promised by the traditional asset classes - equities and bonds - is not misplaced, and dovetails neatly with what both the largest American corporates and the biggest global investors are doing. Namely, they are pivoting away from yield-focused investments, and toward safe havens. The reason we are not seeing this pivot reflected in depressed asset prices, yet is because there is a growing gap between strategic positioning of the Wall Street trading houses all-in risky assets and those investors who are, like Buffett, focusing on longer-term investment returns.
Overvalued Investment In simple terms, the U. The former is not difficult to illustrate. Take Buffett's Indicator: normally, the markets are rationally bullish when the indicator is in the percent range, and investors pivot away from equities, when the indicator hits percent. Today, the indicator is close to percent - a historical record. But the longer run valuations are harder to pin down using markets-linked indices, because no one has a crystal ball as to where the markets and the listed companies might be in years to come.
Which means that any analyst worth their salt should look at the macro-drivers for signals as to the future markets pressure points and upside opportunities. Here, there are worrying signs. This suggests that not all is well amongst the wealthiest retired generation, the Baby Boomers, who are currently holding the vastly disproportionate share of all risky assets in the economy. For example, 80 percent of Baby Boomers own property, accounting for roughly 65 percent of the overall housing markets available assets. All in, Baby Boomers have over As they age, and as their healthcare costs rise, they will be divesting out of these assets at an increasing rate.
This effect is expected to lead to a The latter is, in part, the legacy of the Global Financial Crisis, which has resulted in an unprecedented collapse in wealth held by the American middle classes.
In other words, nine out of ten U. Over the same period of time, wages and incomes of those currently in middle and early stages of their careers, aka the Generation X and the Millennials, have stagnated, while their career prospects for the near future remain severely depressed by the longer in-the-job tenures of the previous generations. Share of wealth held in housing assets for the top 1 percent of earners currently stands at around 8. For top 20 percent of income distribution, the numbers are more even at 28 percent of wealth in housing.
Middle class distribution of wealth is completely reversed, with The problem is made worse by the fact that following the financial crash of , the U. Government failed to provide any meaningful support to struggling homeowners, focusing, just as European authorities did, on repairing the banks instead of households. Markets Forward What all of this means for the asset values going forward is that demographically, the economy is divided into the older and wealthier generation that is starting to aggressively consume their wealth, looking to sell their financial assets and leverage their housing stocks, and those who cannot afford to purchase these assets, facing lower incomes and no tradable equity.
This is hardly a prescription for the bull markets in the long run. In this environment, on a years time horizon, holding cash and money markets instruments makes a lot more sense not because these instruments offer significant current returns, but because the expected upcoming asset price deflation will make cash and safe haven assets the new market king. The same is apparent in the corporate decisions to use tax and regulatory changes to beef up their cash holdings and equity prices, as opposed to investing in new growth activities.
Labels: Bubbles , financial crisis , GFC2. Labels: Bonds , Country Risk , credit ratings , debt , Sovereign debt. Highlighting the evidence presented in the earlier-linked article, here is the chart based on data from the Deutsche Bank Research team, showing historical evidence on the total percentage of all key asset classes with negative annual returns: CHART. Source: Data from Deutsche Bank Research and author own calculations. Note: The estimates are based on a varying number of assets, with 30 assets included in , rising to 70 assets in Source: Data from Bloomberg, TradingView, and author own calculations.
Note: Risk-adjusted returns take into account volatility in prices. Gradual deterioration in the quality of corporate debt traded in the markets has been quite spectacular over Labels: Bonds , corporate credit , corporate debt , corporate debt bubble , debt markets , quality of credit.
It has been a long walk without a destination. While the current cycle of declining interest rates has been running for at least 25 years, the most recent iteration of the period has been exceptionally benign. Since the end of the global financial crisis, Corporate and, to a greater extent Government, borrowing costs have run at the levels close to, or even below, those observed in the ss. In part, this is driven by the increased buybacks activity in the less active companies not constituents of the Buyback Index , but in part the data suggests that the returns to buybacks are generally tapering out.
When it comes to challenging status quo heuristics, the younger generations usually pave the way. The same applies to the heuristics relating to geopolitical environment. While the older generations of Americans appear to be firmly stuck in the comfort-seeking status quo ante of 'Cold War'-linked hegemonic perception of the world around us - the basis for which is the alleged positive exceptionalism of the U. At least, according to the Pew Research data:. Labels: geopolitical ambiguity , geopolitical complexity , geopolitical risk , geopolitical uncertainty , hegemony , multilateralism , multipolarity , VUCA.
Europe is a sitting duck for major geopolitical risk, but the U. Labels: geopolitical ambiguity , geopolitical complexity , geopolitical crisis , geopolitical risk , Policy uncertainty , VUCA. Bitcoin has suffered a significant drop off in terms of its value against the USD in November. Dynamically, Bitcoin has been trading down, on a persistent.
Based on monthly ranges min-max for daily open-close prices , the chart below shows conclusively that as of mid-November, BTCUSD has entered a new regime - consistent with a new low for the crypto. BRIC PMIs are in, although I am still waiting for Global Composite PMI report to update quarterly series - so stay tuned for more later , and the first thing that is worth noting is that, based on monthly data: Brazil growth momentum has accelerated somewhat, in November November reading is the highest in 9 months, although statistically, it is comparable to growth recorded in March, April and October this year.
Russia growth momentum de-accelerated from November was the second highest reading in nine months, and the third highest reading in China growth has improved from Despite this, last two months remain the lowest since April this year. From statistical significance point of view, October reading was distinctly below November reading, but November reading was consistent with August-September. India posted substantial rise in growth conditions, from already robust This reading is statistically above all other period readings, with exception of being tied with July level of BRIC ex-Russia reading was at Overall, as the chart above shows, BRIC economies contribution to global growth momentum has accelerated in November, but remains bound-range within the longer-term trend of weaker BRIC growth for the last five and a half years.
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Stay tuned. Ireland seems to have a twin dependency. All of which means that the aggregate and very broad dependency ratio for Ireland is yet to recover from the decade-old crisis, and is below that for other small, open economies, for example, Iceland:.
Labels: Dependency ratio , Employment , employment to population ratio , Ireland v Iceland , labor force , labour force , unemployment. Three charts, related topics. Global wealth inequality has been a much-discussed problem these days, with both longer-term economic and social, not to mention political, impacts being assigned to it across both the Advanced Economies and the Emerging Markets.
Setting aside the causes and drivers for this development, here is the latest evidence on the wealth distribution around the world from Credit Suisse:. Labels: global inequality , political polarisation , politics of populism , populism , Wealth inequality. Russia and Turkey have announced that the two countries have reached significant progress in reviving the November shut down South Stream gas pipeline intended to land Russian gas across the Black Sea.
The project is the part of the already secured open tender contracts for purchases of gas signed between Gazprom, Bulgaria, Serbia, Hungary, Slovakia and Austria. Newer Posts Older Posts Home. Subscribe to: Posts Atom. Disclaimer This blog represents my personal views and is not reflective of the views or opinions held by any company, contractor, client or employer I work for currently or have worked for in the past. These views are not an endorsement to take any action in the markets or of any political position, figures or parties.
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