STEINER: A call for confidence

“So, where did the Federal Reserve get $800 billion to spend buying bonds?”

Not the usual conversation starter, but that’s where the talk went when a gentleman at The Owl Shop struck up a conversation with me last week. I tried to explain that the Federal Reserve has control over the nation’s money supply and can instruct the Treasury Department to create that money. When I had finished, the man was panicked. Money, he figured, was too important not to be tied to something concrete.

I attempted to explain further that we should really have confidence in our monetary system. He was understandably unconvinced and said he thought the whole thing was worse than a Ponzi scheme.

I didn’t have a full answer for him. The only thing I could do was to repeat the reasons to still be confident. Economists and policy makers speak all the time about the role of confidence in determining the overall state of large systems like the economy. It is unnerving to think of major issues in these terms, because we realize the shaky ground upon which much of society rests. Yet we use confidence as a fundamental building block for even the most trivial daily interactions.

For example, say you lend a friend a textbook to do a p-set. You have good reason to think your friend will give the textbook back to you after finishing the p-set. You don’t know with absolute certainty that your friend will remember to give the book back to you, but you are confident in your friend. Granted, there are obvious recourses should your friend fail to do that — if you really wanted the book back, you could sue your friend — but even then, you’d be relying on confidence in some other entity — in this case, the courts.

The great importance of confidence holds for politics as well. Take the recently completed Ward 1 aldermanic election. We suspect newly elected alderwoman Sarah Eidelson ’12 is committed to making New Haven a better city throughout her time on the Board of Aldermen. Yet our collective vote for her, as for any first time office holder, was based in large part on our confidence in her.

Or, on the more romantic side, take two lovers’ promise to remain loyal to one another. If each one actually had to guarantee that the other were actually loyal, the hapless paramours would be driven mad. They’d have to spend every waking moment keeping an eye on each other. Yet love builds confidence in another person (or is it vice versa?). There is no loyalty without confidence.

As anyone who has ever been in love or engaged in gossip knows, trusting other people — or impersonal entities — doesn’t always work out so well. The people we trust the most can betray our confidence. Our faith in confidence will be shaken. At times, our trust will be broken. Yet we cannot lose faith in the idea of confidence itself.

An essential truth of our interpersonal relationships is that we can’t know for certain what other people’s motivations and actions will be. While we can develop an intuitive sense based on how well we believe we know them, we can’t empirically prove they will behave a certain way.

This doesn’t mean we have to become hermits removed from all human contact. It means that on some fundamental level we must be confident the people we know will do certain things, and we must accept that our trust will at times be broken. The extent to which our confidence in something interpersonal can vary — you would probably trust your best friend to keep a promise more than the Federal Reserve. Nonetheless, we must trust the people we choose to interact with on a daily basis. Otherwise, we’d always be miserable — or even worse, nihilists.

The words confidence and faith are both derived from the Latin word fides, meaning faith. Confidence of any kind requires faith in other people and the institutions that surround us. This is not blind faith. It simply means recognizing the important role our trust in others plays in our daily lives on levels ranging from the intimate to the global. Simply put, have faith in confidence.

Alex Steiner is a junior in Berkeley College. Contact him at alexander.steiner@yale.edu.

Comments

  • The Anti-Yale

    Daily spikes and dips in the stock markett are like spikes and dips in a fever: They are troubling—and do not inspire confidence. “Fake it till you make it” doesn’t work on Wall Street.

  • River_Tam

    I hope Mr. Steiner is not an econ major, because otherwise he should have been able to explain why a fiat money system is no less “secure” and a lot better for everyone than a hard-money system.