Risk + Fail = Good

When in 2008 Ben Bernanke decided to tamper with monetary cycle algebra, virtually -, by assuming there was some sound reason to grant liquidity to illiquid banks, what he actually did had a major impact in this area of human psycho-socio economic behaviour.

When business people cannot make accurate monetary and velocity flow assumptions, then one of the main issues that arises which is rarely discussed, is the human social tradition of avoidance of failure...

Right now there is no real knowledge in the hands of any market economist anywhere about the immediate, much less the mid-term future. It is not predictable what the consequence of QE actually means for corporate dividends. And it is especially not predictable what the consequence will be for the ending of QE.

AClub of Rome? Federal Reserve Committee?
No - Haig Welcome Club.

But what is most certain and visibly demonstrable, is that business owners, managers, and entrepreneurs have stopped learning. And this is because on the whole they fear failure, and they won’t take risks when the future is as unknown as it has just now become – compared to the past structure of monetary cycles.

This unwillingness to take risk is of course, a huge mistake, although it separates out the true entrepreneurs from those who had been in the role previously but were relying on the predictability of economic growth rates (whether positive or negative) determined by monetary policy fed through actual market pricing of money, to take calculated risk.

In fact, the acknowledgement of the possibilities for failure, but the understanding that managers must be in a position to learn from failures – is what permits leadership and unique successes in the long run.

Profit-seekers must take risk, and against a background of greater unknowns about currencies and money pricing than ever before – but they must accept when they encounter failure and learn from it and go back and try again.

The one big unknown is however will policy makers deal with the coming discounting of four trillion dollars of QE money, and the subsequent increases in market interest, and which will most certainly break governments as we have known them...