In posting this, I’m aware that I’m taken some of the punch out of Frank Shostak’s outstanding article, just submitted, which might run Monday. He covers the technical aspects of what precisely happened to monetary policy leading up to this crash, and his presentation is the best I’ve seen. Several times, he points to the great inflation between January 2001 and June 2004 as the leading cause. He doesn’t mention 9-11 in this draft but it suddenly dawned on me what should have been very obvious. What we are seeing now is a response to the response of 9-11. Just eyeballing the TMS, data here, you can see that the Fed added $1 trillion plus to the money supply in that period, and the money chase the fashion of the day, which was housing. Thanks to the Fed, the terrorists ended up doing more damage than even they could have hoped.
{ 10 comments }
I thought this was already common knowledge in the Mises community. I hardly doubt I came up with the idea by myself!
But I thought the short-sellers were the terrorists.
What about the “terrorists” who were busy shorting airline stocks on 9/10 too?
Continuing the discussion of short selling, my favorite part is that there’s a sort of common knowledge in the finance industry that when the chief executive of a company starts blaming the decline in his company’s share price on short sellers, you know the company is toast.
Now we have the chief executive of the United States basically saying that short sellers are responsible for the financial crisis.
Deductive reasoning will take you the rest of the way.
“Thanks to the Fed, the terrorists ended up doing more damage than even they could have hoped.”
I would say that 9/11 and its entire response from the US government its allied governments, have been a win-win all around for both the terrists and for our politicians, bureaucrats and hangers-on.
If Al Qaeda didn’t have the Great Satan they would have to invent it. And vice-versa.
That trend line is scary. How could they possibly not have expected this to happen?
Looking forward to Shostak’s article – that guy is a whiz.
The one thing that doesn’t make sense to me about the whole thing is that you’d expect businessmen, especially those who work in the financial markets, to understand the logic of the inflation –> bubble –> bust relationship. But nothing they do shows they understand this. It seems nonsensical.
I think it’s explainable in other fields affected by the bubble (i.e. real estate, construction, etc.). But not in the financial fields.
A carpenter makes use of a set of house plans to build a house. If he didn’t the toilet may get ignored altogether.
look at the call option series of raytheon before the fateful day and take the red pill.
http://is.gd/Zngk3v
Simply killing some in between class time on Digg and I found your article . Not usually what I favor to examine, but it was completely price my time. Thanks
magnificent issues altogether, you simply received brand new reader. What could you recommend in regards to your publish that you made some days in the past? Any positive?
Comments on this entry are closed.