A balance sheet does not hold an audience by itself. Maybe to an accountant or a policy wonk, but not normal human beings. Give it a character, a conflict and a government official insisting everything is under control, and the material begins to breathe.
The story is what draws people in, engages them and provokes action.
During “the middle” years, we found several ways to put ideas onstage. Some became books, one became a movie, and others filled a conference hall in Vancouver with geologists, gold bugs, financiers and promoters whose every deposit was the “motherlode”… the next hole in the ground to power civilization.
All the successful characters shared one skill in common. They were all good storytellers. “Don’t let the facts get in the way of a good story,” Mark Twain may have said.
From a distance, Agora Financial – the name we gave the business that grew around the Daily Reckoning – had a remarkable 20-year lifespan.
Sometime in the early days, probably during one of our lunch meetings, I overheard Bill talking to another elder. “Businesses have a life cycle all their own. They are born, have turbulent teenage years, mature, spawn offspring, grow old and die. Although Addison is young, he probably doesn’t want to hear that yet.”
As it turned out, Bill was right. It’s not fate. Some things you only learn through experience.
From the outside, the business’s growth between 2000 and 2020 was phenomenal. We grew both gross and net profits every year during that stretch. What profits that were not funneled back into maintenance and expansion were distributed on a royalty basis. To the outsider, or even an accountant, it may have looked orderly. A ragtag group of writers grouped together for a common purpose became a publishing business with newsletters, trading services, books, conferences, an annual flagship symposium, award-winning films and offices abroad.
From inside, it felt nothing like a straight line. We were a rogue set: writers, editors, analysts, marketers and publishers who learned whatever they needed to when the next problem required it, usually after blindly committing ourselves to solving it first.
Learning Sideways
Knowledge does not always advance toward an expected answer. It can spread sideways through an abandoned draft, an unfamiliar medium or an argument that refuses to sit still.
The iconoclastic English teacher turned philosopher, Robert Pirsig, described the most valuable form of learning as “lateral thinking”.
Knowledge gained from experience rather than instruction is expansive, not linear. Often surprising, it requires its own level of energy and purpose. To learn, you have to drop assumptions, tolerate long periods of being “stuck” and remain open to truths arriving from unexpected directions.
We did not decide to master books. The arguments outgrew a newsletter and became several.
We did not set out to learn documentary filmmaking. At the time, we thought a film might be a better way to communicate our ideas on the empire of debt than a 400-page tome of economic and political history.
We did not create the Vancouver symposium because conferences appeared in our strategic plan. We actually inherited it because another publisher had included it in their strategic plan, but didn’t want to go through the hassle of hosting it. What we found was a dispersed community of writers, geologists, investors, gold advocates and monetary skeptics needed a room large enough to disagree in person.
Each undertaking looked like a diversion from the main business. Each diversion in turn altered and expanded the main business. Lateral thinking.
A manuscript did not behave like a newsletter, and a film did not behave like a manuscript. A conference hall had its own physics, especially when several thousand investors, mining promoters and an open bar occupied it at once.
Through it all, the business that began as an email newsletter endured the onslaught of technological change that came with the information age, spawning cottage industries in internet marketing, search engine optimization, video sales letters and podcasts.
When the familiar tools stopped working, we got to work figuring out how to test the new ones.
The Books Behind the Books
No single school of thought animated “the work.” After Kurt died, I inherited his library, shipping it physically from Cannes to Baltimore.
Even on the new tidy shelf, no single body of ideas captured our efforts. There were many writers from the Austrian school of economics. A lot more with critiques of the Austrian school. There were also books on woodworking and collecting antiques. Guides for travel, wine and cheese. Reviews of art and museums. Lots of history.
My favorites were the dusty old ones, written in academic German, and Kurt’s notes, etched in his native tongue, in the margins. None of us spoke German at that level. But just the idea that they held some ancient wisdom was enough to keep them in the library.
The facts were all there, of course. Prices were gathered from factories, households, ports, mines, and markets, and officials distorted those signals by manipulating the prices of money, labor, energy or risk.
The writers gave the facts purpose. Friedrich Hayek showed us the respect for the utility of knowledge scattered among millions of people and an even more profound respect for a society of free people, rare as it is in history. Ludwig von Mises supplied the discipline that showed why capital, savings, time and prices mattered, and political intention would never replace economic calculation. Mises also reminded us that we are in the business of studying human action, which is not easily reduced to a science at all.
We learned that long periods of calm and prosperity deserve their own level of suspicion. Stability encouraged leverage, weakened balance sheets and concealed fragility, an instinct we absorbed from Hyman Minsky. The Scottish historian Charles Mackay, writing a century earlier, had already advanced the argument that individuals can be reasonable and sensible on their own, but, as part of a crowd, they become irrational and susceptible to speculative contagion.
Technological progress produced both linear progress and speculative excess, creation and destruction. Seems like common sense today, but reading Joseph Schumpeter for the first time is like a stiff slap to the face after a night of hard drinking, for those who work their way through the thick prose, that is.
Nassim Taleb, having made a fortune trading during the 1987 flash crash, later gave us a name for events that cannot be forecast – black swans – and those that are likely to happen but seem improbable during the build-up.
These latter events – grey swans, we call them – happen more frequently than most people trying to manage their own money are typically aware. When they do happen, they change history and investor fortunes, for better or worse.
Certainty also deserves a laugh, particularly when it arrived dressed as progress. G.K. Chesterton inadvertently supplied that older and more useful instinct.
Technology will and does enter politics, alter sovereignty, taxation and institutional power. James Dale Davidson and Lord William Rees-Mogg carried that argument through their books and newsletters.
Financial abstractions eventually demanded roads, fuel, buildings and maintenance. James Howard Kunstler kept returning the discussion to the physical world, while Jim Rickards followed money into sanctions, intelligence and statecraft.
Cheap credit could make errors look like growth. Kurt, long after he shed his mortal coil, kept asking from the library what had been saved and what had merely been financed.
Bill just wanted the world to fit into a moral sphere. “Markets make opinions,” he would often say. “In the end, people get exactly what they deserve.” And follow that up with, during financial crises, “they get it good and hard.”
Markets, it turns out, are complex systems populated by people acting on incomplete knowledge and irrational self-interest. Prices carry the most accurate information, but they, too, can be distorted by credit, debt and speculation.
Periods of calm change behavior. Technological progress creates unimaginable wealth, encouraging, rewarding and then punishing leverage and fraud.
In the end, debt has to be financed and refinanced. But in the end, too, John Maynard Keynes reminded us, “we’re all dead.”
~ Addison
P.S. You’ll find more on how we applied the ramshackle philosophy of the Grey Swan in our business when we return to the legacy, tomorrow. Stay tuned. (Teaser hint: Plato makes a surprise appearance.)
And in case you missed today’s Grey Swan Live!, the replay is available here.
Joel Bowman joined us from Argentina with an on-the-ground look at Javier Milei’s sweeping reforms, what’s actually changing inside the country and why Argentina’s economic turnaround remains one of the most compelling stories in the world today.
