Friday, April 10, 2020

Our government caused ZIRP, not the Fed

Ralph Nader Flips Out

Nader blamed Powell.  Bu as we can see from the gray bars in the chart, ZIRP is caused by the regular presidential recession cycle.  We are an unstable government, we do not meet the conditions for a stable value added net. We cycle, have been cycling since the founding.  Note also the second component, the default cycle neatly frames the collection of recession cycles. The default was in 1972 and took 40 years to die out.

The root cause is the Senate - House mismatch, one a republic the other a democracy. The republic is the dominant force. Repub senators have to bail out the small states due to an economy of scale mismatch.  The House has to respond,  and we get the cycle.

This is right out of sandbox. Sandbox actually found the cases where Comnes conjecture was untrue. Remember the Comnes conjecture said all value nets can can converge.  We find that true only it they are adaptable, have an active market maker or pit boss.  And we find out, the politicians cannot understand the problem and they paper it over, an instability. The only thing sandbox can do is explain the problem, then let denial takes its course while the shadow banks hedge the cycles.

The government, Mr. Nader, is Unsafe at any speed.

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