Information Asymmetry

Tue, Mar 17, 2015 - 1:47am

Well lookey there! The lawyer pops up from the foxhole!

Recess is over. Time to get back to analysis.

Let us start with a most simple observation, and apply it to the many, important, global events unfolding seemingly every day. The concept is not radical. It is just the way things are, based on the fact that we are imperfect human beings. So let's look at it, intelligently, and use it to our advantage.

There exists at once, both the known, and the unknown. Just the other day, physicists discovered that particles of light are intertwined over space and time. Up until this time, that fact was not known. This discovery will change things, for sure.

Here is what it means for us. At any given instant, there exists information that is known to perhaps no one, or perhaps only a few persons, or perhaps to many persons. Some information is critical, time-sensitive information, which, once revealed, radically alters the given circumstances forever.

Humans appreciate, if not crave, stories. We love the drama, the emotion, the sense of intrigue, the challenges, all of it. Heck, I am a trial lawyer, I tell stories trying to persuade people on a jury to vote for my clients. Stories are what we humans gravitate to, and what we use to pass on knowledge and understanding. We need context to make sense of things, because our evolved brains learned long ago to adapt and survive based on remembering stories.

Applying these principles, take for example, the simple professional sporting contest, like the recent Superbowl. That was dramatic. The game was close. The Seahawks were certainly going to lose, because Tom Brady's Patriots scored late in the game to put it away. Only a miracle would win it for the Seahawks. Sure enough, Russell Wilson makes an incredible throw, and an impossible catch is made. First and goal, with the best running back in the game, 4 chances to go four yards? Surely the game was over and the Seahawks would win! Oh, the drama!

But what the hell happened? Pete Carroll, one of the best coaches in the game, called a play, a mistake was made, and oops, ball game. Patriots win. <obviously, I am NOT a Brady fan . . .>

So for all the drama, all the excitement, all the anticipation, the Patriots won the game, as they were favored to do all along. Bets were made. Some won, some lost, on to the next sporting contest.

But what do we know about information asymmetry and how does that relate to the Superbowl?

Here's how. What if someone knew in advance the outcome of that game, before it actually happened? Would that not be important information to have? If one had that information, and say, laid down a big bet at a casino, then such information would benefit the one that had it first, so long as the game was still not decided. In other words, there was a time component that added value, and it was NOT simply knowing the information.

So too is the information advantage today, applied on a much broader scale. This information asymmetry applies to EVERYTHING! It is the basis for arbitrage. It is the basis for valuing some human labor.

It certainly is the basis for valuing what I do for a living. I am a trial lawyer. I read and assimilate reams of information. I cull through that information in a timely manner that adds value because I have a distinct educational and experiential advantage over a non-lawyer, and even over other lawyers because I have done so many jury trials that I know what to look for and what is valuable.

It is NOT because the information is so magical and wonderful. It is simply because there is SO MUCH INFORMATION, that knowing WHICH facts to emphasize and WHICH facts to minimize makes all the difference in the outcome. Of course, in retrospect, it was obvious all along!

I mention all of this, because the similarities between what I do for a living, and the absolute bombardment of streams of disparate information at once contradictory and impossible to reconcile require some knowing, experiential differentiation or else the information stream is impossibly complex and ceases to be valuable for any purpose other than a distraction.

Take, for example, the Putin ten day absence, and the firestorm of speculation that it unleashed. I read with great interest, hoping that world war III was not going to start. Thankfully, at least from my point of view, Putin is alive and well, and the next war is still not yet underway.

But what about the most obvious information asymmetry that confronts us DAILY?

Of course I am talking about the US FED and the fiat paper we call the dollar. All of us here on this wonderful blog know full well, without reservation of any kind, that the fiat paper dollar is worthless, except for the time being because it is mandatory legal tender. We also know that holding paper positions, or ethereal digital positions, is at best a gamble, as all of it is subject to disappearing without recourse in an instant should the fiat system collapse or suddenly be deemed "replaced" by something different.

This information asymmetry is being used by the central banks of the world, and their owners, to spew forth worthless fiat dollars and other currencies, in a race to the bottom, while simultaneously trading those worthless scrips of paper for real assets, like land, and minerals, and energy supplies. The rest of the world, not knowing the truth, plays in the dark, unaware, perhaps purposefully so. Others, who have taken the "red pill," view things with more knowledge, but still, not full knowledge, and it is here, at this frontier, that we denizens of tfmr, ply our intellectual craft.

Who of us truly knows the full story? Jim Willie? Trader Dan? Mr. TF? Mr. Fix? The simple answer is easy. We all know instantly that we do not know!

So, because we do not know it all, and none of us ever will, then we can confidently state, without doubt, that SOMEONE, at a minimum, will have an information advantage. That is, someone will have information asymmetry with us, placing them in a better knowledge position than us, at least for an appreciable amount of time, however slight. That position of information asymmetry, is valuable, for a period of time. Then it is not. Then it becomes common knowledge. Than it passes into the history of time, and we all know that history is written by the victors.

So what do we do with the information asymmetry being used against us? Easy. We use the information asymmetry we DO have, against the others who are not as knowledgeable. Why do we struggle mightily for the same understanding that the TBTF banksters have, when we know, without a single doubt, that silver and gold are true money, have stood the test of time, and will hold their value like they have for 5,000 years? In two years, or twenty, my silver and gold holdings will still be silver and gold, and they will still weigh the same. What I can exchange them for will be anybody's guess, but I can tell you all for sure that those stacks of coins and bars will be worth far more than stacks of fiat paper! So, do I care to know more? Damn right. But is it killing me to NOT know the very minutia for which I can trade the Fedlines? Hell no.

Do I care whether gold breaks out of its downtrend? Sure. But not just yet. I have a big purchase to make. My biggest concern is whether to buy more gold than silver, or more silver than gold. I have already resigned myself to NOT be in the paper system. If that decision turns out to have been a bad decision in the long term, bad on me. I am prepared for that outcome. I was also prepared for the outcome of leaving my first wife. It seemed like such a dramatic move to make way back then, but now, not so much. Life is strange like that, because we ARE humans.

Enjoy the information asymmetry we do have, and use it. Stop worrying about that information which is unobtainable in a timely manner, and start using the information advantage which we already enjoy.

Prepare accordingly.

About the Author


Safety Dan
Mar 19, 2015 - 12:11am

Dr Jerome For Your Garden & Kates Hot House

South Australia Does This to Increase Crop Yields 300% Without GMOs

Heather Callaghan
Activist Post

Why would you go for seven per cent when you can get 50 to 100 per cent increases in yield without having to use genetically modified seeds?

The South Australian Agriculture Minister has just reported "amazing" results after trialing a new soil program. Minister Leon Bignell describes using technology that works withthe soil and other organic matter. This type of innovation, that he calls an "evolution in science" abounds over genetic engineering, he said.

The results of the following trial experiment strengthened his view that a moratorium on GM technology should remain indefinitely as it proves that GMOs are not needed. Incidentally, this year's government test run was called "New Horizons" and some of the trial sites boasted a 300% increase in yields.

Minister Bignell - who has stood with protesters against GM technology - said of the upgraded ag technique:

Instead of using the top five centimetres of the soil, you go down to 50cm or even deeper.
You put clay in it when it's needed, you put organic matter where it's needed as well.
We're seeing [yield] increases of 50 per cent, 100 per cent, even 300 per cent in some of the cases.

He told ABC (Australia) of his return from China where they appreciate South Australia's GM-free status. He calls it the way of the future and a way to increase the value of their production.

Even though he's received pressure to lift the ban and use the GM tech for weeds and pests, he doesn't believe that's the solution. He moves forward with vigor when he gets accused of being "left behind" - a favorite term of elites pushing an agenda.

"The public in most places of the world aren't convinced" about GM technology," he said. He proudly sees being GMO-free as forging ahead and entering new markets.

Apparently, a bulk of the pressure is coming from State body Grain Producers SA who say they should be able to choose their products and they are not seeing monetary benefits to Bignell's plans yet. Under Bignell's lead, the right to choose does not include untested GM tech, chemicals and future unknown ecological problems.

Bignell says the program isn't a fluke - it can be replicated and he plans to show the grain producers just that. He is now in communications with grain handlers in other countries as well as meetings in Switzerland. In China, he could see the increasing use of Australian GMO-free ingredients. He is in talks about branding products as South Australian GM-free grain.

The only thing that worries this writer is when he says:

That's when the real returns will start coming in and hopefully they're passed on to the farmer.

Hopefully? Bignell, you need to know they will. You need to make sure the farmers profit from these programs or say good-bye to a GM-free status.

For a 4-minute audio, go here.

If you look at GM and the promises around increases of about seven per cent in yields; why would you go for seven per cent when you can get 50 to 100 per cent increases in yield without having to use genetically modified seeds?

DeaconBenjaminDoctor J
Mar 18, 2015 - 9:56pm

worth every dollar you paid them

I have no doubt, which I why I continue to serve on the school board 2 years after my daughter graduated. It is an amazing education, and not just academically.

Joseph Warren
Mar 18, 2015 - 2:39pm

@DeaconBenjamin - glad to hear you're involved w/ a school

offering a classical education. True 'liberalism' and a 'liberal education' have always been about liberating a person's mind. (These terms have been co-opted to mean the opposite today.) It is about being able to question, discuss, and examine any topic in depth, including even religion itself - without falling back on dogma.

If you have this, yours is a rare school and your students are very fortunate.

P.S. - it doesn't cost a lot of money to get a classical education. Good books and an environment and attitude of inquiry will do the trick. I've seen many schools that have spent millions on technology and sports & building facilities only to turn out the ignorant.

This was no accident. Check out " The Underground History of American Education" by John Taylor Gatto. It can be read online for free.

Mar 18, 2015 - 11:50am

I am making plans

so that my future grandchildren will not go to public schools.

Mar 18, 2015 - 11:37am

third generation poor education

Deacon, that private school may well be worth every dollar you paid them. What a blessing.

Now, most college professors (4 out of 5) have NOT had a good classical education ... too specialized--poor writers, use flawed logic, have no clue what rhetoric is. They are often too arrogant to recognize it. Our latest batches of elementary and high school teachers are two generations removed from a solid classical education. Today's kids have few chances to be educated by an educated teacher. History teachers seem to have the strongest education. My daughter had one (count-em) good teacher in HS--out of 30-40 faculty? He is the one she still talks about.

Blind leading the blinder.

Mar 18, 2015 - 11:21am

not taught in public and lower tier private schools.

That would be news to the Classical Christian School that my daughter attended. I assure you, the families represented at that school are neither wealthy nor particularly influential in the community of 100,000 where the school is found.

Mar 18, 2015 - 11:09am

I am dense at times...

Thank you for the great Post CALaw

All this talk of sociopaths has me thinking... and I am beginning to understand.

The French philosopher Diderot cites a saying that was floating around during the French Revolution: "We will strangle the last king with the guts of the last priest." The brutality and beheadings of the French Revolution used to disturb me to read about. Now I see why. Sociopaths probably cannot be redeemed. Too bad Napoleon stepped in to fill the void after the passionate citizens took care of business. My wife and I have been spending our long winter evenings watching yet another TV story series. Therein, the chief villain has just been labeled a "sociopath," and reaffirmed as such in the next episode. Hmmm... You don't often hear that term cast upon a political character on mainstream TV.

We must, as a society understand these sociopaths, be able to spot them, and keep them marginalized, out of power.

I am also becoming convinced that the evil kind of sociopaths are made, not born. An anecdote: I have a friend who cheerfully admits to being a sociopath--telling stories of slitting throats in Vietnam as a Green Beret without any feelings of remorse. Today, he is an honest & good man. He has done well in business--due to his ability to make dispassionate business decisions. But he has chosen to live within the law. I can be a neighbor to a guy like this. I also watched childhood friends act cruelly, become thieves, talk casually about hurting people, sharpening their lying skills, and going on to become first rate criminals as they grew into adulthood. I was on that path, losing my empathy, until I became a Christian at age 15 and began to reverse the damage to my conscience. These days, the pendulum has swung far to the other side. I am too soft with my students, empathize deeply, and do not like to engage in conflict (even though I teach the class in college). But I prefer to live this life over the the sociopathic one.

  • So politicians lie and take "gifts."
  • CEOs lie, cheat, bribe give gifts, and steal.
  • Gov administrators become corrupt.
  • Banker cheat, steal, manipulate markets
  • And random mid-level bankers (who understand where and how money travels around) get shot in, the head with nail guns multiple times with "honest" police ruling it as a suicide.

I think those French citizens headed the right direction. The problem was that honest people did not step up at their opportune moment.

Joseph Warren
Mar 18, 2015 - 9:07am

@Barfly - I agree that people are easily fooled . . .

The tools to help change that have been known for centuries.

They are at the foundation of Western science & technology. They are only taught on a very narrow, vocational basis in some US technical specialist education programs today. Those same specialists are as likely to be ignorant of how to apply these tools to broader social and political issues, as the general population.

These methods Are taught to the off-spring of the wealthy and/or influential so-called 'elites' in private boarding schools. They are not taught in public and lower tier private schools.

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Mar 18, 2015 - 8:55am
Mar 18, 2015 - 8:54am

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