Found: A Central Bank that is a Second Order Thinker

Daniel Mueller

Forager Funds

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. First order thinking refers to an intuitive, rapid, ancient ‘reptilian’ brain very good at roughly working out consequences most of the time. However, inspired by Daniel Kahneman, it’s become popular to think of our brains as dual-track systems. Second order thinking refers to a slower, uniquely human, neo-cortex driven brain that takes more deliberate effort to fire up but is much better at solving unique problems and consequences of consequences. I wondered whether any central banks are practicing second order thinking. So I combed the globe to find a central bank that looks deflation in the eye and raises interest rates, rather than lowering them. I found just one. Read the full blogpost (VIEW LINK)


Daniel Mueller
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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