[iDC] Achieving (and living with) Perfect Knowledge

Brian Holmes brian.holmes at wanadoo.fr
Tue Sep 30 20:54:12 UTC 2008

Boris Veldhuijzen van Zanten wrote:

> Not long from now you will carry a little machine with you that will  
> be able to answer any question to throw at it. There will be no  
> excuses for ignorance for any and all of us. You will know where you  
> are, what the rules are for the place you are in, what happened there  
> 5 minutes ago to whom and what happened there 5, 50, 500 and 5.000  
> years ago.

Dear Boris, I was sure your title and subtitle were ironic. Only the 
final lines could convince me. Some people we are all now hearing an 
awful lot about were convinced they had perfect knowledge. They had 
machines far more powerful than your i-Phone, proprietary databases that 
gave them much more access to information than Google ever will give 
you, squads of mathematicians to interpret the data, and the only thing 
they forgot was that the past is not the future. They assumed housing 
prices would always go up and because they acted on that assumption, 
housing prices went down, faster and further than ever before. They 
assumed that only 10% of borrowers in the worst case could default on 
their loans, and so they made loans which now have 50% default rates.b 
The chain reaction stemming from those assumptions is called the 
financial crisis, destroying a world of perfect knowledge where every 
risk was supposed to be hedged by investing in a perfectly 
countervailing risk. All the alarm bells went off at once, every 
investment became risky, and now the house of cards is collapsing before 
our eyes, since the Perfect Bailout was refused by the same group that 
proposed it. i.e. the US Republicans with their Free Market theories. 
The fallacy of perfect knowledge is enacted by precisely everyone who 
believes in its existence. Which, by the way, was disproved by a 
mathematician named Kurt Godel, early in the twentieth century.

best, Brian

For a fantastic telling of this story, but without the Kurt Godel, 
listen to the radio program here, which I am sure you _can_ get on your 


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