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If you can't change the world. Change yourself.
And if you can't change yourself then . . . change the world.

~ The The, from the song “Lonely Planet”

If You Can't Change the World Change YourselfI've spilled a fair number of pixels laying out why I think the extend and pretend monetary policies of the past few decades have been a mistake. You would think that strongly opposing many of the ideas that have guided western culture over the course of my lifetime might make me cynical at the least, and bitter at worst. Not at all.

While I'll admit to feeling occasionally frustrated about some of these things, I can't say that any of them cause me to lose sleep or feel too negatively about the world we live in. Why?

Context Is Everything

I can't change what's happening out there, but I can change my reaction to it. Here are a few of the reasons why I'm able to accept the current zeitgeist even as I hold to values that are completely contrary to much of its thinking:

  1. These policies are facts of reality. I can't change them. I'm not willing to sacrifice my peace of mind or my health by spending my valuable time and energy stewing about them.
  2. These ideas have been sanctioned by the majority of society. (I'm happy to live in a democracy.)
  3. There have been lots of financial crises. Not coincidentally, many have occurred over the past 40 years. During my childhood and teen years, I was completely oblivious to all of them, so maybe they weren't so bad after all. Maybe ignorance really is bliss.
  4. I could be wrong. Who knows? Maybe the Fed really can continue to print money and inflate bubbles forever without causing “The Big One.”
  5. I do worry that the failure of these policies could have harmful effects on my family's quality of life, but I'm grateful that they (for the most part) haven't yet. I'll continue to savour experiences with the people I care about in the meantime.
  6. While I can't change these policies, I don't have to support them by buying into these asset bubbles. (But I don't begrudge those who do want to take advantage of the money-printing no-brainer trades that are out there. ;))
  7. We have a plan in place that spells out how we'll react to any sharp economic changes, whether it's income reduction, a sharp rise in interest rates, continued low interest rates, or unforeseen expenditures. These measures won't eliminate the damage that some of these events might cause, but they will hopefully minimize it, or at least prevent us from panicking into poor choices.

You Can't Fight the Fed, But . . .

Here's how one astute commenter on QE Collateral Damage (Rachel from MomVesting) summarized the Fed's policy actions: ‘Clearly the thinking on any kind of “stimulative” effect, is to avoid the paradox of thrift. One great way to do that is to punish the savers. “Don’t want to put your money into our equities or real estate? Fine, watch it turn to cat food.”' OK, so maybe Ben didn't put it that way, but that's essentially what the policy is saying. It's trying to coax folks like me into equities and other asset classes.

My response to Ben? You can't make me. Yes, I realize that's juvenile, and that I may be cutting off my nose to spite my face. But the fact is, I don't like being manipulated. I don't want to invest based on monetary policy. I want to invest in entrepreneurs who offer products of real value to society. (Insert foot stomp here.)

Another fact is that the Fed's policy relies on traders buying into the “Don't fight the Fed” mantra. What if they didn't? Many of the traders I've heard comment on this policy say that they don't believe it will work, but that they have to stick to the textbook trade: Buy gold. Buy stocks. Short the U.S. dollar. If traders decided en masse to fight the Fed, the policy would be dead in the water.

If You Can't Change the World. Change Yourself.

So I may not be able to change the current policy direction, and I may be watching my savings turn to cat food for a while as a result. I can't control the policy, but I can control my reaction to it.  I'm not allowing it to harm my overall quality of life. I can still enjoy a fall walk and weekend dinners with the boys. I don't have to dwell on my opposition to the status quo, or allow it to bring me, or those around me, down.

And if you can't change yourself then . . . change the world.

I haven't allowed my adaptation to the current reality to change my underlying values either. I've made trade-offs that I'm comfortable with. There are some things I won't change. If a lot of people decided not to buy into the extend and pretend package all at once, then maybe the world would change. Maybe that will happen. Maybe it won't. Either way, I can sleep at night. I've found a nice balance between changing myself and changing the world.

I'll leave you with a few more lines from the song:

I didn't care if the sun didn't shine
& the rain didn't fall from the sky
I just cared about myself.
From this world to the next
And from the next back to this.
By our actions we are bound.

Do you think it's more important to go with the flow, stick to your principles, or try to do a little of both?


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