The devaluation of everything

Written April 23rd, 2012

The Economist has a nice summary of panflation:

Inflation of all kinds devalues everything it infects. It obscures information and so distorts behaviour. A former German central banker, Karl Otto Pöhl, compared inflation to toothpaste: easy to squeeze out of the tube, almost impossible to put back in. The usual cure, monetary and fiscal tightening, will not work for panflation. Women will never squeeze back into their old clothes unless they reject size inflation. Instead, it is time for everybody to tighten belts (literally) and fight all sorts of inflationary flab.

Read the full article here.

The article points to grade inflation, clothing size inflation, and job titles as just a few example of the devaluation of everything. I’ll take it a step further, and mention the devaluation of language itself. It’s a longer, philosophical argument. Remember when cursing was a social faux pas? When someone described something as “awesome” it had a certain gravitas? The devaluation of language is a bigger concern for me than Starbucks making their smallest size a “tall”. It could be because even the smallest size at Starbucks isn’t small, for one. More likely is that by devaluing language we are actually making communication increasingly difficult. By not having a shared sense of standards, we are forced into conversing in lowest common denominators; witness reality television, Jackass movies, and 100+ character limits on daily updates.

This is not the pessimistic ramblings of an angry old man fighting technology. For starters, I’m not old. It’s the opposite. I’m optimistic that the conversation is happening and gaining steam. In the past week, I have seen articles about Facebook and managing our online personas in The Atlantic, technology changing our relationships and conversations in the NY Times, and countless others. What is especially encouraging is that these conversations are happening in different disciplines – education, psychology, technology, etc.

What does this have to do with investing? Plenty. Investing is about human psychology, our own and others’ (discipline, bias, etc.). We learn from others, including what NOT to do. That only happens in conversations, direct or through the written word. Both of those mediums are changing, so we need to understand and integrate the new tools in smart, thoughtful ways.