A reader asks: which is the best paradox, Zeno or Javon?

A reader asks: Which is the best paradox – Zeno or Javon?

Archer replies: In his anti-war novel, Catch-22, the anti-hero, Yossarian, says about the titular catch, “That’s some catch, that Catch-22.”

“It’s the best there is,” agrees his friend, Doc Daneeka.

So it is. Yossarian and company are making bombing runs over Italy in World War II, a very perilous enterprise. The catch, if you recall, says that you can stop whenever you want; all you have to do is to say you’re crazy. But if you recognize how insane what you’re doing is, you can’t be crazy. So … The author, Joseph Heller, knew whereof he spoke; he flew 60 missions over Italy in World War II as a B-25 bombardier, says Wikipedia.

Zeno’s Paradox says that “any moving object must reach the halfway point on a course before it reaches the end. Because there are an infinite number of halfway points, a moving object never reaches the end in a finite time.”

This would seem to more or less describe the Fed’s crusade to reach 2% inflation. It’s getting closer – the most recent reading on personal consumption expenditures (PCE) showed a year-over-year rise of 2.6% and a seasonally adjusted monthly rise of just 0.1% – but it’s not there yet and possibly never will be. There are an infinite number of half-way points, as Zeno noted.

Mohammed El Arian, Mark Zandi and others have argued for abandoning this somewhat arbitrary target but Fed Chair Powell has stayed the course, maintaining the kind of morbid determination usually reserved for the pursuit of albino whales.

In truth, this kind of obsession – that there is a divine relationship with, between, or among a series of numbers – dates back thousands of years. It is currently reflected in the notion of so-called “life path numbers” and “destiny numbers.” The always definitive Glamour Magazine poses the question as follows, “… searching for answers and explanations? Constantly wondering whether the universe has some greater plan in store?” If so, then numerology may be for you.

Does this sound like someone you know? A certain data-dependent fed chair? So what is the Chair Powell’s life path number? Without revealing any tantric secrets, I am free to disclose that this number is basically a distillation of the digits that comprise one’s birthday. For the Fed chair, who was born February 4, 1953, that number is six. According to Cosmopolitan Magazine, the qualities that define a “six” are “service, caregiving, nurturing, healing, and helping the vulnerable.”  Does that suggest a rate cut may be coming soon? Maybe. (Not investment advice.)

The Javon Paradox states that, “an increase in efficiency in resource use will generate an increase in resource consumption rather than a decrease.” Faster, better, cheaper leads inevitably lead to more, not less. Wall Street is replete with examples of this. Day trading is a case in point – a function in part of falling trading costs – and, more recently, the advent of zero-dated options – buying an option in the morning and selling it in the afternoon.

From a standing start zero-dated options have grown to account for about half the daily volume in S&P 500 index options, up from 17% a few years ago, says Barron’s citing CBOE Global Markets data. Good idea? Here’s the money quote from the story, “You can go completely broke, but there are occasional Lotto-sized payouts.” This from Garrett DeSimone, head of quantitative research at OptionMetrics. You be the judge.

How about AI?  Can it, for example, solve the global climate crisis? Possibly, but it turns out it may need a Krell-like source of energy to do it. A bit of a paradox there, too.

It’s worth noting that Heller’s early working title for his book was the less auspicious Catch-18. Lucky for him that number was taken (Leon Uris, Mila 18). It was his editor, the inestimable Robert Gottlieb, who came up with the solution. “I’ve got it!” he exclaimed, Archimedes-like, following a nighttime brainstorming session (as reported in The Atlantic). "It's Catch-22! It's funnier than 18."

Time has confirmed Gottlieb’s view: it’s the best there is.

Woof!