Wisdom—How My Father Predicted the Great Financial Crisis

For some time now, I’ve been tweeting into the void about economic issues, investing, and American culture. It’s a decent way for me to track my thinking, to see if I was directionally right, and to occasionally interact with and learn from others. 

My overall thesis is this: interest rates will cause a profound cultural and societal shift in the United States and the downside risks are not only significant, but significantly underestimated. They will expose profoundly foolish behavior. Now is the time to talk about wisdom. 

I’ve become more confident that I am at least headed in the right direction, because many of the things I was anticipating have begun—the most important being inflation, tech layoffs, and the emboldened aggression of Russia and China. I believe at least I am heading in the right direction, which is the best anyone can hope for when thinking about the future. 

What’s your maturity age? 

Growing up, my dad used to ask all the 6-8 year olds he taught at Sunday school an interesting question that had the effect of improving behavior. “Class, would you say that your maturity age right now is below or above your actual age?” He would draw a vertical line on the chalkboard, denoting the average age for each grade, and then ask us where our maturity ages were based on our behavior that week. He would say, “Well, I’ve noticed something interesting this morning. There are some first graders who are acting more mature than a third grader, and some third graders who are acting less mature than a first grader”. It was great fun. The first graders all wanted to be mature third graders and no self-respecting third grader wanted to be a first grader. We would watch spellbound as he would hover the chalk above and below and we would all spring into action to tidy up our belongings and sit up straight. It was great fun and a wonderful way to teach an important lesson that I never forgot. 

No such maturity exercise exists for adults. 

I remember seeing Alan Greenspan’s face on the cover of magazines. He was an economic wizard, an alchemist, an architect of wealth. In the early 2000’s, everyone seemed to be making easy money in real estate. My father came to visit me in Atlanta and we were driving around with signs for new housing everywhere. I remember him saying, “What type of nation allows this? These young families are going to go bankrupt.” I thought he was overreacting at the time, but he was sincerely grieved by it and he was right. Starting in 2008, many did go bankrupt. Although years younger, with no PhD, he was wiser than Greenspan. 

Housing did collapse and many families were wiped out. If only Greenspan had been taught this maturity lesson as a child and taken it to heart, he could have easily seen the grossly immature and selfish behavior for what it was—unsustainable. 

My dad didn’t know enough to short the market, but he did call it. How? He spent a lot of time thinking about wisdom.

Wisdom is a simple and a great predictor of how things are going to go. If you build your house on the sand, it will be washed away when the storm comes. Your house isn’t a way to get rich, it’s a place to live. You work for money, you don’t gamble your home or other people’s homes for money. That’s the simplicity of wisdom and the avoidance of folly. 

What if we asked our leaders to stop being really smart and clever, and focus simply on being a little wiser? 

Growing up, my dad talked all the time about wisdom and what a precious gift it was, because all the education and money in the world is wasted on a child who doesn’t learn this lesson. What good did the best education and having Stanford professors for parents do for Sam Bankman-Fried? What a waste of a life. 

This applies to individuals and also more gravely to nations. Eventually, a nation has to live with its decisions. If enough people act below their maturity age and are rewarded for it long enough, eventually, the result is self-fulfilling. 

It may take a long time, perhaps decades, but there will be consequences. An immature person doesn’t just make one unwise choice, he or she makes many, and they compound. 

Today, we are seeing inflation and there is no mystery to it. It is the result of folly in our culture and in leadership. Higher interest rates are about to expose the truth—fraud, folly, and foolishness have been rewarded with wealth at the expense of the productive and the consequences will be difficult of us all. 

Folly, lack of wisdom was the predictor of the Great Depression. When you see folly celebrated, watch out. Things seemed to be going great economically until they suddenly weren’t. The 1920s show that you can be a fundamentalist Christian with a maturity age well below your actual age. You can be a progressive atheist with a maturity age well below your actual age. Folly does not discriminate. Not much has changed. 

If you’re interested, I will be exploring the intersection of wisdom, culture, money, and the future, because America is long on money, but in my lifetime, short on wisdom.


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