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Complexity and Simplicity

Real experts, in any field, are people who can make the most incomprehensible issues and complex things simple.  They can explain it so it makes sense.  At the very minimum people who can’t easily do that lack communication skills.  They also often lack any real understanding of what they are talking about.  Take the subject of money as an example.  Money can seem quite complex and “complicated” – but only if it is made to seem that way.  The basics of money are really pretty simple.

Money is a medium of exchange.  Money is an idea backed by confidence.  It isn’t a piece of paper – but it can be.  It isn’t a credit card, but it can be a credit card.  It is an idea backed by confidence.  I totally trust in your word that you will give me the exchange you say you will.  That is all it ever was, is, or will be.  Money is an idea backed by confidence.  If we lived in a society where the exchange was “direct” – I’ll give you four chickens and a box of oranges for your young calf, it would be impossible to have “inflation” or a “collapse of the system”.  If the people who control the money supply did what they are actually supposed to do (allow an increase of “money” that matches an increase in production) we would not ever have a “financial crisis”.

Money is a medium of exchange.  Something for something.  Dentists exchange a service for money.  So do Realtors, plumbers, brick layers, etc.  Entertainers exchange a valuable smile or an entertained feeling of some sort.  General Motors and BMW exchange automobiles.  An exchange would always be in the category of a product or service of some kind.  Trouble only enters in when the exchange is out.  The something for something factor isn’t present: short selling, hedge funds, futures trading and of course, most investment banking.  There are people who work night and day to take the necessary, simple concepts of money and deliberately make them so complex that even the other “financial professionals” don’t quite understand them.  Nice work.  For a criminal.

There is an endless sea of “data” on the subject of finance.  There are really only a few important fundamentals.  Anyone who had the well being of his fellows in mind wouldn’t work to make a simple subject incomprehensible to everyone else.  The current mess didn’t just happen.  It wasn’t an “accident”.   It was engineered and created by Wall Street types.  Every single one of them who had a hand in this took money from everyone else – with no exchange.  The inflation alone that will result from these actions will make most of the world’s money less valuable.  And now some of the very people who stood by while it was happening – seemingly asleep – will take credit for “fixing things”.

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The good news is the sun will still come up tomorrow.  Regardless of the government and media gibberish, this isn’t “the end”.  I’m pretty sure the earth will continue to spin on it’s axis.

Written By

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at and



  1. Steve Simon

    September 29, 2008 at 6:04 am

    I disagree with a large portion of your post. You have oversimplified an very complex problem and essentially blamed poor communication for the problems we currently face.

    Simple answers to complex problems are often (not all the time, but often) incomplete!

    The subject of “money” is only simple when you are discussing a household budget or some basic rules of good investing.

    It is not simple when you’re speaking about an over leveraged market; which was created by the Clinton era rules and regs that pushed the intstitution towards lending in areas that were suspect, to people that were not qualified in a traditional sense (meaning good payment history, and a saved downpayment ready to placed in the equity column).

    It is not simple whe the above was compounded by a upward spiral of purchase that was fueled by speculation and the desire of many to move towards the safety of real estate (the seeming safe market), after the stock downturns of 9/11.

    The above was made worse by lack of enforcement of secondary market player guidelines being enforced. They (the guidelines) were in place, they were not however enforced. Human resources were stretched thin, in the appraising ranks, and two types of bad appraisals started appearing: those that were bad becasue they were don in violation to the USPSP rules,and those that were bad because they were fraudulant.

    The entire situation was made even worse because the warnings that wer issued went unheeded, this being the case,partly becasue the warning from the administration carried the taint of a very unpopular President attached to them:
    But here are some of the warnings over six or seven years (this from my blog):
    but the attempt to blame the current admiistration for the bailout and crisis is so wrong it is frightening that those that make the comments can believe them.

    Bush begged for reform of FNMA and FHLMC more than a dozen times in 2008 alone. There was a timeline released about his position since 2001 I have placed it below this text:


    April:The Administration’s FY02 budget declares that the size of Fannie Mae and Freddie Mac is “a potential problem,” because “financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity.”


    May:The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)


    January: Freddie Mac announces it has to restate financial results for the previous three years.

    February:The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that “although investors perceive an implicit Federal guarantee of [GSE] obligations,” “the government has provided no explicit legal backing for them.” As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. (”Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO,” OFHEO Report, 2/4/03) Read the rest of this entry »

    Russell I could go on, but I think you get the point. Your statement about a true expert can simplify anything is simply wrong… Complex problems very often are the result of mutliple factors weighing against something. The combination of their effect is sometimes extremely diffcult to overcome, and not easily explained.
    Just my thoughts:)

  2. Laura Cannon

    September 29, 2008 at 9:58 am

    Steve, -I agree with your point that sometimes big problems are complex and need to be respected as such; however, I am not sure that you yourself respected the complexity of the stated problem.

    Your exculpatory remarks about the Bush administration and your critical remarks of the Clinton administration are simplistic at best and more likely misleading. For one, you forget that the Bush administration has been managing or mismanaging monetary policy for EIGHT years. If, and I would stress the “if” here, the Clinton policies were problematic eight years ago, there was time and, for a while the necessary cooperation with a Republican Congress, to pass legislation to correct those policy problems.

    “Begging” for reform is hardly strong leadership. Your time-line of the Bush administration’s actions to avoid our current economic collapse is unconvincing given the complexity of what preceded our current economic problems and the actions that were NOT taken. Even Bush’s Treasury Secretary Paulson admits that regulations have been “primitive” and completely inadequate for the sophisticated markets we inhabit today.

    Truth be told, I am not sure the Clinton or Bush administrations had the grit or foresight to slow down what seemed to be economic prosperity. The will to curb what seemed to be growth was absent from both parties. It may have been willful ignorance, but I think it was more likely simply ignorance. Both parties and most economists are genuinely surprised by the extent of this downturn. A major factor in the sting of this blow is just how unforeseen it was.

  3. Steve Simon

    September 29, 2008 at 12:14 pm

    What a twister:)
    I am not a lover of Bush nor a hater of Obama or Clinton. My response was and remains spot on,
    “Complex problems that are treated with simple solutions; the solultion will usually be found to be lacking.”
    You wrote in response to that:
    “Steve, -I agree with your point that sometimes big problems are complex and need to be respected as such…”
    After that you went on a rant leaning a little to the left:)
    Just because you are in the Oval Office, that does mean you get what you want either.
    This man made mistakes (Bush), so will the next and Congress will be there to make them larger.
    My response was not about the monetary trouble it was about the post “Simplicity”. I used some information to support my point to that end, nothing more…
    It wasn’t my timeline it was the White House’s…
    Also the ignorance you describe, simply and willful, have and will be in abundance anytime there is a significant problem.
    Again these are my thoughts on Simple solutions being inadequate for complex problems:)

  4. Steve Simon

    September 29, 2008 at 12:38 pm

    Response to Ms. Cannon,

    I’m betting you were not old enought to care (or even born) when the real seed of the money trouble was planted:

    Jimmy Carter in the late seventies approved the CRA, (the Community Reinvestment Act).
    FNMA and FHLMC got the message; “Make loans to minorities”.

    Bill Clinton rewrote the rules, again there were warnings in 1994 (but you don’t seen to like it when I post them 🙂 He, by this action turned the two players into the half government half private giants that we are seeing in trouble today.

    The rule changes were the “planted seeds” of this crash.

    For the record, I think the intent was good. It’s just that rarely does good come of playing with the free flow of the free enterprise system.
    Bill Clinton’s National Homeownership Strategy, widened Carter original Act in ways that were never proposed in the begining.
    Robert Rubin rewrote the rules in 1995…
    This is where it started…

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