Mar 26, 2017

Daniel Kahneman on the spreading falsehoods

A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth.  Authoritarian institutions and marketers have always known this fact.

~ Daniel Kahneman

Mar 22, 2017

Doug Pollitt on the U.S. government bond market

If you are a creditor, the last person you want to see on the other side of the table is Donald Trump.

~ Doug Pollitt, "And the dull pangs of regret...," Pollitt & Co. Research, November 16, 2016

Mar 17, 2017

Kevin Duffy on how Milton Friedman was guilty of data mining when studying the Great Depression

Milton Friedman studied the Great Depression and noticed that money supply dropped by one-third from 1929-1933.  He came to the conclusion that this was the cause of the depression and that the Fed hadn't acted strongly enough.  He also influenced a guy by the name of Ben Bernanke who, at Friedman’s 90th birthday party, vowed not to make the same “mistake.” 

Did the Fed really sit bit idly as Friedman claimed?  Actually, no.  The Fed acted aggressively, buying government securities and expanding its balance sheet from 1929-1933.  It also lowered the discount rate from 5% to 1 ½%.  Friedman appears to be guilty of data mining.  Correlation doesn’t prove causation.  In fact, gold flows and loss of confidence in banks were contributing factors to the contraction in money supply.  If anything, the monetary inflation of the Fed probably made matters worse.

~ Kevin Duffy, "Mr. Market Flunks the Marshmallow Test," Grant's Spring Conference, March 15, 2017

Mar 12, 2017

Kevin Duffy on the elitist bubble

The financial elites think the masses are ignorant rubes who show up late for every asset party.  Yet it is the elites who are most economically ignorant -- the ultimate bag holders this cycle.

~ Kevin Duffy

Mar 9, 2017

~ Joseph Sobran on the two economies

As I see it now, there are really two economies — two distinct systems of producing and exchanging wealth.  Or rather, two systems that purport to do these things, though only one of them really produces anything, and the other is organized by a peculiar form of exchange.

The first is what is called the trade economy — the one summed up in the phrase "the free market."  The other might be called "the tax economy."

The trade economy is so familiar there is no need to say much about it, beyond pointing out that its operative principle is consent.  Its mechanism is the price system.

The tax economy is something fairly new—to America anyway.  A few generations ago the amount of wealth taken in taxes was only a sliver of the country's aggregate wealth.  But the government's share has increased to such an extent that it has become a whole separate economy.

~ Joseph Sobran, "The Two Economies," The Free Market, January 1991

Joseph Sobran on greed and the state

The state is never accused of greed.  There is no limit to what it may take from us. And those who live on what is taken in taxes are never accused of greed either.  Greed is virtually identified with the "profit motive." We have no invidious term for the parasitic motive.  The state and its clients are all but immune from moral criticism.

~ Joseph Sobran, "The Two Economies," The Free Market, January 1991

Mar 5, 2017

Business Week economist on government spending to fight the Great Depression

Just as we saved our way into depression, we must squander our way out of it.

~ Virgil Jordon, Business Week economist, 1932