Inherent Instability (when BerBanke got it wrong)

[Markekohut]

History is a Step-Function.

Sent from my iPad

On Jul 19, 2013, at 8:24 AM, alice wellintown <alicewellintown at gmail.com> wrote:

> In the world today, he says in “Antifragile,” “Black Swan effects are
> necessarily increasing, as a result of complexity, interdependence
> between parts, globalization and the beastly thing called ‘efficiency’
> that makes people now sail too close to the wind.” So how to deal with
> the dangers posed by this proliferation of uncertainty and volatility?
> 
> Mr. Taleb contends that we must learn how to make our public and
> private lives (our political systems, our social policies, our
> finances, etc.) not merely less vulnerable to randomness and chaos,
> but actually “antifragile” — poised to benefit or take advantage of
> stress, errors and change, the way, say, the mythological Hydra
> generated two new heads, each time one was cut off.
> 
> In Mr. Taleb’s view, “We have been fragilizing the economy, our
> health, political life, education, almost everything” by “suppressing
> randomness and volatility,” much the way that “systematically
> preventing forest fires from taking place ‘to be safe’ makes the big
> one much worse.” In fact, he says, top-down efforts to eliminate
> volatility (whether in the form of “neurotically overprotective
> parents” or the former Fed chairman Alan Greenspan’s trying to smooth
> out economic fluctuations by injecting cheap money into the system)
> end up making things more fragile, not less. Overtreatment of illness
> or physical problems, he suggests, can lead to medical error, much the
> way that American support of dictatorial regimes “for the sake of
> stability” abroad can lead to “chaos after a revolution.”
> 
> 
> 
> http://www.nytimes.com/2012/12/17/books/antifragile-by-nassim-nicholas-taleb.html?pagewanted=all&_r=0
> 
> 
> On 7/18/13, Mark Kohut <markekohut at yahoo.com> wrote:
>> Another inherent vice.......
>> 
>> 
>> ________________________________
>> From: alice wellintown <alicewellintown at gmail.com>
>> To: pynchon -l <pynchon-l at waste.org>
>> Sent: Thursday, July 18, 2013 4:46 PM
>> Subject: Inherent Instability (when BerBanke got it wrong)
>> 
>> 
>> Mr. Bernanke wrote, “argued for the inherent instability of the
>> financial system but in doing so have had to depart from the
>> assumption of rational economic behavior.” In a footnote, he added, “I
>> do not deny the possible importance of irrationality in economic life;
>> however it seems that the best research strategy is to push the
>> rationality postulate as far as it will go.”
>> 
>> It seems to me that he had both Minsky and Kindleberger wrong. Their
>> insight was that behavior that seems perfectly rational at the time
>> can turn out to be destructive.
>> http://www.nytimes.com/2013/07/19/business/economy/when-bernanke-got-it-wrong.html?pagewanted=all&_r=0