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Insider Telling


Over the last several weeks the site has become a touch more focused on economics and politics; Toddo and John have both posted a few pieces about the intersection of economics, politics, and the markets. And that is decidedly to the readers' benefit, in my humble opinion, since government intervention has been, if nothing else, the hallmark of the US economy for the last 3 years.

To this end, I have long been writing that intervention can only make matters worse, owing to, among other things, the moral hazards associated with intervening in a free market system. The malinvestments wrought because of the perverse incentives associated with, for example, reflation through stimulating aggregate demand, actually destroy more real capital than they create. [And if you don't think it's a perverse incentive to spend future income now by buying a car you don't need and extracting equity from a home, then you and I have vastly different viewpoints on capital and risk.]

In any case, I came across a speech that I think speaks volumes about the intersection of politics and economics, written by an economist who was in the belly of that very beast.

Read on.
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