AI Summary #
Here is a summary of the podcast in bullet points, highlighting key takeaways and insights shared by the host:
- The host discusses the life cycle of greed and fear, which they believe is an inherent part of human nature that cannot be eliminated.
- The cycle begins with an innocent idea that one’s views and opinions are right, fueled by a sense of being owed something for their efforts and deserving of rewards.
- As people receive rewards, delusion sets in, leading to an inflated sense of skill and value, which compounds into addiction-like behavior.
- Greed eventually gives way to fear, as individuals begin to doubt their abilities and wonder if they have missed something.
- Fear leads to a cycle of self-doubt, ignorance, and avoidance, where individuals try to fix the problem but ultimately become stuck in survival mode.
- The host argues that this cycle is not just a personal issue, but also a societal one, as people take cues from others’ behavior and become blind to positive outcomes.
Notable quotes include:
- “The life cycle of greed and fear is just a part of human nature that we cannot fix.”
- “Greed is a blinder of how much risk you are taking and how much collateral damage your actions have.”
- “You start all the way over at square one. And then embarrassment creeps in.”
- “Fear peaks when you start to fear what else you have to fear.”
Actionable advice or conclusions include:
- Understanding the life cycle of greed and fear is crucial to making sense of economic fluctuations and personal struggles.
- Recognizing that greed is a natural part of human nature, but also acknowledging its dangers can help individuals avoid getting caught up in it.
- The host suggests that instead of trying to eliminate greed entirely, one should focus on becoming aware of its presence and learning to manage it.
Overall, the host’s discussion provides a nuanced and thought-provoking exploration of the life cycle of greed and fear, highlighting the importance of understanding human nature and recognizing the dangers of unchecked ambition.
AI Transcription #
Welcome back.
And a quick note before we get going.
This podcast, I think this is episode 20.
And I’ve been working on this podcast for about four months now.
It started with no plan, no vision, just hack it together and see what happens.
And I think it is already roughly the same size in terms of audience as my blog that I’ve been working on full time for 15 years.
I don’t know if that says something good about the podcast or something embarrassing about the blog, but I’m grateful for all of you for listening.
This has really been fun.
I have a new book coming out in November.
It’s called Same as Ever.
It’s about things that never change.
Things that no matter what the future holds for us, no matter who wins the next election or what the next big technology is, what is guaranteed to be a part of our future?
And I want to talk about one of those things today.
This is actually not in the book, but it easily could have been.
Maybe it even should have been.
And it’s the life cycle of greed and fear.
Now for decades, economists and politicians and philosophers have been toying with the idea of how do you eliminate the boom bus cycle in economies?
How do you make a good healthy economy that just kind of grows the same amount every year?
And it doesn’t have these wild swings of booming bubble to crippling crash.
How do you just spread things out evenly?
And I think it’s become so clear that the answer to that question is you cannot.
You cannot do it.
Because one of the things that will never change has always been the same and will never change going forward is the life cycle of greed and fear that is just in a neat part of human nature that we cannot fix.
And I think understanding where it comes from is really important.
Because if you view every bubble and every bust, every crazy stock market and every recession as a flaw of human nature, it kind of makes you cynical.
You look around and you just don’t understand what’s happening.
Whereas I think if you understand the life cycle of greed and fear, it’s still crazy.
It’s still a wild thing to watch, but it makes a little bit more sense.
And even most important, maybe you will really come to believe as I do that this is just a normal part of human behavior that will always be with us.
So let me introduce you to what I call the life cycle of greed and fear.
All greed starts with an innocent idea that your views and your opinions of the world are right.
And you deserve to be right because you have put in so much effort in developing those views and opinions.
And not only that, but you are owed something for your efforts.
You put so much work into developing your views and your opinions of the world that the world owes you something in return.
This is a reasonable feeling.
No one falls for this feeling.
I do.
It’s a reasonable thing.
But economies have three superpowers.
Competition, adaptation, and social comparison.
Competition just means that life is hard.
Business is hard.
Investing is hard.
Careers are hard.
Not everybody gets a prize even if they think they are right and deserving of one.
Adaptation just means that even those who get prizes get used to them, get accustomed to them.
So the bar of adequate rewards moves perpetually higher.
Social comparison means that every prize is measured only relative to those earned by other people who appear to be trying just as hard as you.
So that feeling that you deserve a prize, even when success is hard and contentment is fleeting and rewards are measured relative to others.
That is the early seeds of greed.
It fuels both the push for more, which is generally great, and the lack of satisfaction when you get more, which is potentially dangerous.
Once people get a taste of a reward, especially in above average reward, delusion starts to creep in.
Because it’s luck, misidentified as skill, or in inflated sense of the value that you produce at your job, or overconfidence in your ability to find another reward, maybe in the stock market.
Now delusion compounds, because it feels really good.
Recognition feels good.
Attention feels good.
Rewards feel good.
They are addictive.
It gets back to the first innocent idea.
People want to feel like they are right and doing well and owe it something for their efforts.
So people keep pushing.
They keep pushing for more money by demanding a raise, or for more profits by using more leverage, or for more attention by acting ridiculous on social media.
It’s like a drug.
You quickly require an increasingly larger hit just to stay satisfied.
Read is what happens when you delusionally justify your willingness to push to get back more than you put in.
It is driven by your desire to think that you are worth it, and the economy’s ability to push back on whether you are actually worth it.
And that belief spreads, because people take their cues from the behavior and the actions of other people.
The combination of thinking, I’m worth it.
And if that guy is doing it, then I should be able to, as well, turn crazy behavior into something that feels appropriate, something that feels justified.
That’s why greed is pervasive.
It is self justified.
People believe in the crazy things that they do.
It’s different when you know that you’ve pushed past the boundaries and you don’t care.
That’s cycle pathy.
greed is a blinder of how much risk you are taking and how much collateral damage your actions have.
And it can be as blind as a bat.
But reality can’t be outrun.
The economy can tolerate outliers, people who are doing extraordinarily well, relative to the amount of effort they’re putting in, but just barely.
Fliers who don’t deserve their rewards have the shelf life of a brown banana.
And the first response to risk backfiring on you is often to double down.
The world turning against you feels like an opportunity, especially when you are blind into the realities of your skill and your contributions.
Then comes victimhood.
And maybe the stock market keeps falling or you are increasingly struggling at work.
When your results are not that good, but denial about your contributions remain intact, somebody else must be to blame.
That’s the feeling that you get.
Maybe it’s a boss who doesn’t understand you or you start saying, oh, the stock market is manipulated or you blame politicians.
At this point, greed, as we know it, is all but dead in the cycle.
But the denial about your contributions to society might be at its highest.
At some point, the last vestiges of greed gives way to the seeds of fear.
Victimhood shifts to self-doubt.
Not much of it.
You don’t question your knowledge or how smart you are, but you begin to wonder whether you miss something along the way.
This comes ignorance.
Maybe you change the subject when your friend asks how things are going in the stock market or at work.
This is more than just external.
When you know you are wrong, but you don’t want to admit it, thinking about something else is the easiest path to mental calmness.
Doubt then spreads faster than the optimism that got you here in the first place.
Most people evolved to respond to threats faster and more seriously than opportunities.
So once you see a morsel of truth about your lack of contributions or the lack of your abilities, the floodgates are opened and you can’t ignore it anymore.
Then you try to fix the problem.
Maybe you sell some of your investments.
You apologize to those who you offended.
You take a little bit off the table, as I say, in investing.
At this point, you know you screwed up, but you’re confident that you can fix it.
Before long, optimism takes its last breath.
Maybe you haven’t given up, but your memories of the mental buzz you got when risk worked in your favor are now gone.
The light at the end of the tunnel of your optimism is snuffed out for now.
And now you are in survival mode.
Your goal shifts from winning your way back to not falling further behind.
And after risk keeps smacking you around for long enough, you capitulate, you give up.
First it’s slow and then there’s a collapse.
You begin to doubt everything you thought you once knew.
And you ask, were you dooped?
Was everybody dooped?
Do you even know anything?
Are you capable of learning anything?
You have to start all the way over at square one.
And then embarrassment creeps in.
You start to avoid people, which walls you off from the ability to take feedback and gain context of your situation.
Now you are stuck inside of your own mind, which is a feedback loop of fear and doubt.
Social comparison reenters the picture.
Why isn’t everyone else suffering as much as you are?
Why isn’t everyone else doing as poorly as you are?
Maybe you truly are worse than all of them.
What do they know that you don’t?
You can’t get this thought out of your head.
Fear peaks when you start to fear what else you have to fear.
You become as blind to what positive things might happen as you were to negative things happening when you were greedy.
And so now greed has done a complete 180.
You go from taking risks you never should have to avoiding opportunities that you should not pass up.
Those clouds eventually pass, of course.
In a post-mortem of what happened, you recognize your faults and you see what you did wrong.
It looked so obvious in hindsight.
And when it’s obvious in hindsight, you vow that you will never do it again.
It was too painful.
It wasn’t worth it.
Looking forward, you tell yourself, you want to be rational.
You want to be right.
You’re smarter now.
So you will be right next time.
Because you deserve to be right.
Isn’t that an innocent idea?
Isn’t that the innocent idea that started this all to begin with?
And now we’re right back at square one.
And then the cycle repeats.
It always has and it always will.
That’s all for this week.
We’ll see you again next time.