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Ambrose Bierce, an American poet and journalist, was able to say this in his book called The Devil’s Dictionary–a business is considered gambling but it disfavors gambling businesses. It does ring a bell when someone thinks about the transactions involved in “casino banking” that led to the financial crisis a decade ago. Those words signify casinos up until today. If only the financial services industry is accepted as the gambling industry, the crisis could have never happened. But of course, the financial sector calls itself professional in spite of financial scams and scandals, which Freidrick von Hayek, a famous economist, recognized as the “pretence of knowledge.”
Distraction amid professionalism
Von Hayek succumbed to the idea that economics is just being used as a scientific term. The financial sector keeps covering its “pretense of knowledge” by using languages to distract customers from noticing that the financial industry is nothing but an arm of the gambling sector. The term “betting” is replaced by financial words and if deeply looked at, the truth prevails–most of the transactions in the business industry are mere bets.
It becomes obvious that the financial industry is trying to detach itself from the gambling sector. Aaron Brown, a financial expert who wrote the book The Poker Face of Wall Street, said that during Tulipmania in the Netherlands, the courts denied ruling in favor of the merchants who tried to make contracts for sale because it was seen as gambling. The Tulipmania was an event in the 17th century where there was a manic buying of tulips at unreasonable prices.
Bluffing with confidence
The games played in both finance and gambling are not the only noticeable similarities. The skills used in these sectors are identical too. Fast decision-making despite pressure, discipline, embracing the risk no matter what the level is, and a sharp memory are the skills that keep traders successful, which are just the same skill sets exceptional poker players have at dewapoker21. A professor who taught finance at Harvard and a professional card player at the same time, Brandon Adams, suggested that a number of best traders are expert professional card players online.
Bullying and bluffing are two essential gambling elements. These served as the subjects of Robert Shiller, a Nobel Laureate who recently conducted research and published a book called Phishing for Phools. In his book, he challenged the efficient market theorists (EMT) who believe that the market is unbeatable by claiming that as long as businesses are making a profit, entrepreneurs will keep on exploiting customers’ psychological weaknesses. Sellers will systematically manipulate and deceive the ignorance of buyers.
Confidence and overconfidence play big roles in sellers’ manipulation and deception. Shiller referred to another book entitled Animal Spirits to recommend five psychological factors where confidence, or its opposite, is the most crucial in the economy and in one’s personal life. He argued that confidence creates two opposing sides. One is that it helps in accumulating the billions required to drive the modern sector while the other one is that it is an instrument that can fool hundreds of innocent investors.
Tipsters, advisors, and trust
Paul Seabright, a teacher of Economics, thinks that trust in the economy has evolved into a different level. People are now confident to entrust thousands of dollars to strangers, the amount they would never let their neighbors take care of. Well, there’s no one to blame. This action is done because of the fact that the people claiming they are professionals in this industry have established their privilege, wealth, and power by taking the ownership of knowledge and skills and then putting them up for sale. This leads to people becoming dependent on “professionals” and therefore, a “pretense of knowledge.” With that, buyers trust their expertise without questioning them.
If translated into the real language, these “advisors” are mere “tipsters.” They persuade you to entrust your money to them so that they can bet with it. They ask for management fees for betting your money and when you win, they will demand a percentage of what you earned. If they lose the bet, you are the only one who suffers.
It’s up to people to listen to others who choose to gamble their money knowing that this is the kind of transaction they are entering into. What’s dangerous is that a lot of them don’t know how to gamble. If the financial sector will not be known for what it is, financial scandals and scams will resume.
