RWCG


Links: QE and non-QE
September 14, 2012, 9:56 am
Filed under: Uncategorized

Most of these are about QE, sorry about that.

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When talking about the change in the market for bond ratings from purchasers pay to issuers pay Steve Sailer noted that economists were simultaneously too pessimistic and too optimistic about the consequences. Economists assumed that when you switched the incentives that the market would fall apart immediately but nothing really changed because the people who learned under the old way of doing things and learned the old taboos were still in charge and kept working as if the market were keeping them honest*. Then everyone forgot that there might even be a problem because all the early warnings were forgotten. Turns out that the people who warned everyone about the consequences of the change were right in the long run and that you can’t trust a bond rating agency that’s paid by bond issuers.

I think fiat money is going to end the same way. Once you convert an economy to a fiat currency you’ve effectively nationalized every single asset. Everything is for sale for some amount of money and the government can just print all the money it wants so it can buy anything at its leisure. We’ve been on full fiat money for around 40 years now. Just enough time for a bunch of old taboos about printing money to buy assets have faded.

*Because saying that the market keeps them honest is a short-hand and a simplification. The market keeping firms honest means that once in a while a firm will break major rules and go out of business and that doesn’t really happen. “The market keeps them honest” actually translates to “the culture of businesses is one that prevents people from breaking the taboos against dishonest conduct”.

Comment by Steve Johnson

we_all = subset(data, people != “peoplWhoDontBenefit”)

by my calculations, Josh may be on to something. Did he do all that with His Mind?

Comment by stephen

[...] who out there knew this would be the main effect and said something about “front-running a neverending QE-crack-dealer Fed” way back when? [...]

Pingback by QE/Volcker told-ya-sos « Rhymes With Cars & Girls




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