Imposing order = escalating chaos...

WE NEVER enjoyed history growing up, writes Nickolai Hubble at Dan Denning's Daily Reckoning Australia.

It seemed like just a bunch of stuff that's already happened. But when you're young, you don't realize there's a lot of history yet to come. And it helps to be informed about what's been if you want to know what's going to be.

One of the things you'll notice if you take a look at history is that the Law of Eristic Escalation holds true. The Law states that the 'imposition of order = the escalation of chaos'. The more you try and keep things orderly, the less orderly they become.

The trick is not to try to impose order in the first place. You have to cultivate your taste for disorder instead. Become a small-cap investor, for example.

If you knew about the Law of Eristic Escalation back in 2007, you would have been worried. It was the heyday of the 'Great Moderation'. Economic order had been imposed by the monetary authorities of the world. Inflation was low.

Unemployment was low. Asset prices were high. But the chaos escalating in the background soon made a break for it. As Erisians would say, Lady Eris threw her Apple of Discord and all hell broke loose. The first time the Greco-Roman Goddess threw her apple, it caused the Trojan War. More on her and the Erisian Movement in a moment.

The Law of Eristic Escalation also states that the longer order is imposed, the worse the chaos. That's why we're still stuck in the financial crisis.

The order imposers are working hard to gain control again. They're making laws, printing money, spending money, trying to save money and bailing out anyone who doesn't have enough money.

All this money is eventually going to cause a different mess. But who is this Lady Eris, how did her followers predict the financial crisis and how do you invest like a Discordian?

Another gap in our knowledge growing up was religion. Our first ever school report card featured 'at least he knows the Christmas story now.' But that's going to change. We've decided to become religious. You're the first to hear of this, by the way. And consider yourself invited to join in too.

So what's our choice, you must be wondering. Lutheranism? Islam? No, it's Discordianism. We're going to worship Lady Eris, the Greco-Roman Goddess of Chaos.

If you're not convinced by the Law of Eristic Escalation that this religion could be useful for your investment habits, consider the following: The religion was created in 1958 after shared hallucinations in a bowling alley.

That kind of insight is just what you need in a world of Quantitative Easing, 'too big to fail' and stimulus. The more order they impose, the more chaos there will be. You better get ready for it. And what better way to be ready than to worship the Goddess of Chaos herself?

On a more serious note, Discordianism is a parody religion. But a very well thought out one. For example, the Law of Eristic Escalation strikes you as quite stupid unless you apply it. In fact, that's a good way of describing Discordianism in general — stupid until you apply it. Now that's our kind of religion!

The Law of Eristic Escalation is similar to many more credible ideas like Chaos Theory, Complexity Theory and behavioral economics. But throwing in a goddess makes the whole idea more fun.

Anyway, the central idea of Discordianism (you can disagree with it and still be a Discordian) is that order and disorder are illusions of interpretation. One man's messy room is his son's organized chaos. Just ask his wife about the tool shed and you'll get the idea.

How you see the world determines what makes sense, not whether it actually makes sense. That's why there is no real 'makes sense'. All other religions try to explain and provide structure, while Discordianism revels in the idea of chaos and doing your own thing. After all, who knows best?

Even Discordian rules always seem to end with something that provides a universal escape clause.

If you want in on the Discordian Society

then declare yourself what you wish

do what you like

and tell us about it

or

if you prefer

don't.

Just to keep you interested, here's another useful part of Discordianism for investors:

'The Law of Fives states simply that: All things happen in fives, or are divisible by or are multiples of five, or are somehow directly or indirectly appropriate to 5. The Law of Fives is never wrong.'

That sounds a bit dumb. But consider this statement by a leading Discordian:

'I find the Law of Fives to be more and more manifest the harder I look.'

Figured it out yet? People who try and maintain the illusion of credibility (not Discordians) would call the Law of Fives 'Confirmation Bias'. It's the idea that, if you look hard enough, you can convince yourself of anything. Once again, it's a sophisticated and useful idea presented in a stupid way. But it's made easier to remember by making it funny.

Confirmation Bias is the foundation of modern economics. Students are taught to mathematically analyze data until logic is bred out of them. If they analyze long enough, they tend to find something. And, because it doesn't have to be logical, it can get published in a journal.

If you hacked into the economic databases of the world and replaced GDP growth figures with your children's growth figures, it wouldn't set back economics a single day. Economists would just keep going.

We once used economic analysis to predict the stock market's annual performance with an 80% degree of success using Big Day Out music festival attendance figures. But we made a mistake with the data. The stock market predicts Big Day Out attendance, not the other way around. So close!