Where to invest?

In Thomas Friedman's most recent column in the NY Times, he makes some very good points about the economy. He relates it to nature, and he reminds us that markets at their core are motivated by greed. He says that the market is repricing everything, but I think he too distracted by the great points that he makes to see the big picture that he paints.

What are banking services worth? Compare an interest option exchange with an tomato. Which is tastier? Which can you turn into delicious salsa and eat with chips? Which is real?


I had a very good friend in Chicago that I dropped out of contact with accidentally - one of those people in life that you always mean to call up and rekindle that friendship. She's an amazing person, and put herself through law school while working at Tower Records with a 6" mohawk . That was back in the 90s, before everyone was punk.

At one point when I knew her she was working for Bank of America, something having to do with checking contracts in the interest option exchange department. She spent two hours explaining to me exactly how these mysterious options work between banks, but the only reason it took so long was that I kept trying to get what she was saying to make sense.

Nothing to me makes sense like nature. Plants are real - I can climb trees, plant flowers, eat corn. They are fantastically complex organisms, and the more we study them the more amazing they become. Banking, on the other hand, is an utter fantasy that people take more seriously than the world around them.

Please, people, realize that money is a collective fiction that we share. The value of a dollar is what we want it to be. The only problem is that the group of people that we rely upon is too vast to convince them all at once of the same number and have it stick. Too many variables depend on the value - how much oil is coming out of the ground, how the leaders of our country are misbehaving at the moment, and exactly how much tea there is in China. There's a few more, but the more accurately you can guess at what might happen to the value of various objects, the more money you can make gambling about it.

If I understood my friend correctly, bankers invented "financial instruments" such as options, derivatives, futures, and exchanges as really complicated ways to skim the cream off the system. No one buys these things but other bankers or investors.

When you think about it, the whole system is pretty genius. At this point, we don't even need the little scraps of paper. Everything is just blips on computers, but somehow they translate to fortunes made and lost. For those who are focused on making money, there are endless ways to occupy life by chasing it going up and down.

On the other hand, what kind of life is that? If the market is truly forcing itself to examine the value of everything, can we conclude that financial instruments are utterly worthless? I don't believe that society receives anything of benefit from the people that chase wealth. They are the predators of our economic world, divorced from the prey cycles of the natural world.

At the same time, these economic conditions are incredibly real. As I sit in my heated apartment, with food in my pantry, clothes on my back, and employed, I am more fortunate than most of the population of the world. Billions of people are living on less than a dollar a day. Hundreds of millions are hungry and without a home. People who were once more fortunate are losing their houses, their jobs, and their sense of security everywhere across the world.

Mr. Friedman's column ends with a quote from Warren Buffet: "I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well."

Like nature, economics plays in cycles and surprises. There's a lot more twists and turns in the road ahead, and the cracks in the system that are beginning to show may get a whole lot bigger. I'm sure that Mr. Buffet is quite right, as I defer to his vast wealth as evidence of his economic wisdom.

For me, I'm gonna invest in seeds.