One of CNBC host and NY Times columnist Andrew Ross Sorkin’s favorite phrases for linking the sausage of thoughts while interviewing an evasive guest is, “how do you square this circle?”

Not to diminish ARS’s journalistic skills or achievements I always hear this spoken in the voice of Steve Martin, especially as The Jerk, talking to mob investors saying “ahh yes, depreciating X and getting around this fair housing crap.”  Squaring the circle indeed. 

My point, I think, is Martin/Sorkin initially cover-up or fake ignorance until the racket runners themselves finally spits out the ugly truth; yes, we’re running a rigged and self-dealing game. 

Steve Martin then rips off his shirt off and proceeds to rectify the injustice by kicking the ass of those living off of kickbacks and such.  Sorkin, probably for the better, doesn’t get to take or have such immediately impactful action. 

I’m far from a conspiracy theorist or capitalist turncoat and don’t want these Monday musings to turn into a weekly rant, we’re supposed to be talking options and our positions, but it’s hard to ignore the growing discord and disconnect between all the different sets, and subsets, of data, policy and market performance. Obviously-blatant falsehoods don’t sit well with people, but I think the second, and possibly more insidious erosion of trust comes from the inconsistency of data, the stated goals, and policy from the reality and reaction of institutions and individuals. 

On a basic level, it can’t even be agreed upon as to what is safe or what is essential. To paraphrase the NY Times slogan, I get the need for various factions to ‘print all the data that fits the news’ without it becoming unhinged. But, I come not to bury data and the delusional attempt to use it for determining the truth, but for money and its distribution as a means of measuring value.  

Money has always been an allusive concept, and the shift from a barter system was based on the trust, that something without any really intrinsic value, from clamshells to gold to pieces of paper, can be used to acquire useful assets from guns to butter. Then it was the concept of credit or debt that created the true modern economy and financial system. And that rested on the idea that money costs money, otherwise known as interest rates. ZIRP killed that so dead. And I’m afraid the recent chain of events has left little chance of resurrection. 

This is not to be confused or predict the end of commerce. Once the economy starts reopening, and it inevitably will in some fashion, individuals and businesses are going to react in various ways, some to extremes just to prove their point of view.  On that front, my prediction is overall behavior will normalize much faster than expected but with widely varying outcomes for specific companies. Likewise, people have can have widely differing, some would say crazy opinions, but for the most part, they are not stupid especially when it comes to sniffing out common sense regarding money. 

So, when for years we’ve about budgets and what programs can and cannot be afforded, to now once again, watching Congress and the Fed to push a button creating some $10 trillion, most of which will be vaporized into the ether of inefficient transmission, with the promise there is no limit and will never run out of ‘ammunition’ it belies many questions that will be asked with increasing frequency.  

Starting with why all the pretend haggling over tax rates or why anyone should pay anything at all when apparently the government can self-fund whatever it wants when it wants.  This is going down a rabbit hole of no pure or easy answer but I’ll attempt to square the circle. 

It’s time for less intervention on all levels, especially monetary policy. The massive intervention in the financial markets is not helping the people that need it most. From a policy standpoint, we should trust people and businesses to make informed and hopefully rational decisions that will be in both the personal and community’s best interest.  I think. 

In both cases its matter of letting the market clear. But 10 years on from the financial crisis the policy path has been set and becomes more intractable. The irony is that just six months ago the biggest threat to U.S style capitalism was the notion of single-payer healthcare, debt forbearance, and a $2,000 a month of universal basic income. 

A small price to pay for saving the face of a free market and society. People have a hard time admitting they were wrong and need to reverse course. They would rather ride an investment down to zero. And that’s how the square gets circled. Now let’s get back to some options trading. 

 The article was originally sent on May 11th to members of Steve Smith’s Option360 Service.  To learn more click here. 

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SPY shares were trading at $290.63 per share on Tuesday afternoon, down $1.87 (-0.64%). Year-to-date, SPY has declined -9.17%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Option Sensei

Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for TheStreet.com, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...

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