Central Banks: First Order Thinkers?

Daniel Mueller

Forager Funds

Forager's Vienna-based European analyst, Gareth Brown, provides an interesting insight into the problems of central bank policy. Gareth applies behavioural psychology to examine the actions of central bankers and their unintended consequences. Inspired by Daniel Kahneman, it’s become popular to think of our brains as dual-track systems. Whether referred to as our Fast and Slow brains, System 1 and System 2 or First Order and Second Order thinking, they all describe the same thing—an intuitive, rapid, ancient ‘reptilian’ brain very good at roughly working out consequences most of the time; and a slower, uniquely human, neo-cortex driven brain that takes more deliberate effort to fire up but that is much better at solving unique problems and consequences of consequences. Perhaps I’m overly sceptical, but unprecedented actions by central bankers around the world—zero interest rate policy (ZIRP) usurped by negative interest rate policy (NIRP), asset-buying programs being extended into corporate bonds and even shares, a ‘whatever it takes’ mentality—strikes me as firmly first order thinking. Read the full blogpost (VIEW LINK)


Daniel Mueller
Senior Analyst/Portfolio Manager
Forager Funds

Daniel joined Forager in April 2016 as a senior analyst / portfolio manager for the Australian Fund. He is an avid value investor having previously worked at Investors Mutual and MMC Asset Management. He has a Bachelor of Commerce degree...

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