ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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"Why did financial markets like Nixon's price controls so much?"
My hypothesis:
Because government policy makers and market participants were all armed with the same economic models with which they process to a large degree the same government collected aggregate information.
We saw the same thing with the housing bubble. Those on the left want to blame the market entirely for what happened and they call for more regulation. Missing, apparently, that regulators based their policy decisions on the same economic models processing the same aggregate information that many big market participants were using.
Yes, Marcus I agree. Thus is the danger of Baesian thinking. It seems to trade off very short term risk from volatility for systematic risk.
Because finance is not economics. Finance is more like a dye that lets us see movement in the system. And financial elites are fine with playing to win in a zero-sum or negative sum game, so long as they improve relative to everyone else.
Why did financial markets like Nixon's price controls so much?
And thus, the EMH founders on the rocky shores of irrational markets. . .