The Slog has written before about Full Circle Investments, the so-called ‘contrarian’ wealth management company with an admirable level of success in looking after client monies. As per the outlook of JFK’s dad Joe Kennedy, Full Circle’s disagreement with the headless mob is (along with scrupulous honesty) the secret of its success.

The company’s ‘PS’ to its last outlook update included the following gem:

‘It is often forgotten that the world functions logarithmically, not linearly – acceleration is the norm. But, for reasons we can’t explain, the human brain is hardwired linear fashion – we are therefore forever surprised by acceleration, but it’s what we should expect.‘

I would have to use this first, as a vindication of what I’ve always said – that neuroscience, social anthropology and even Divinity are disciplines that can be extremely useful to market-watchers everywhere. And second, as one of many reasons why these folks are my Wealth Managers: because the above is a key insight as to why The Slog keeps on being rude about Treasuries, Banks, Chancellors and Business Ministers ‘surprised’ by adverse outcomes, and the sheer speed of events. As we tried to tell folks in late 2007, ‘there is no such thing as a gradual panic’.

In fact, Man’s linear wiring is one of many explanations for the success of credit cards….and why too many people who use them fail to grasp the exponential way in which debt mounts.

Precisely the same is true of most voters’ inability at the last election to comprehend the maths of sovereign deficit management. Most humans tended to see the calculations involved – and then swallowed New Labour drivel about ‘scaremongering’. I remain pleased to note that those who exploited this human frailty are now leaving politics in droves.

This is how Full Circle signs off its postscript for investors:

‘ Now is a period of great change. Most citizens of sovereign states in the developed world have unaffordable lifestyles financed by benefits that are no longer sustainable. As time moves on the Big Story as we call it will play out; economies will shrink, asset prices will fall; interest rates will rise whilst inflation will remain subdued, even deflation is possible. In deflation real interest rates become painfully high. Austerity will become the order of the day almost everywhere. Most investors will lose big, only a few will win.‘

So you see, it’s not just those of us here in Slogger’s Roost who see this coming.