Event Horizon

If this isn’t the greatest short article on financial economics that you’ve ever read, you can get a full refund from me. (UF is probably going to have it tattooed on its abdomen.)

A sample, just to suck you in:

I always knew that ZIRP was bad, but I just thought it would be normal, run-of-the-mill bad. You know, where most normal people get screwed for a long time, and then “suddenly” everything comes unglued and the financial system implodes, followed by a government intervention while the usual suspects (free markets and capitalism) get hung from telephone poles. […] …and then everything would mean revert and overshoot. In this case, interest rates north of 15% (a la 1980), massive debt default, another economic depression, followed by a grand new government intervention, and the blame would be placed squarely at the feet of runaway free markets and capitalism. […] In other words, I have long thought we have been existing at a cyclical extreme on the spectrum of financial repression, which would eventually become untenable and then we’d swing up to the other extreme (of financial repression). […] However lately I have been hearing and reading things that put this scenario, this comfortable (in it’s familiarity) expectation of central bankster boots stomping on my face forever, into doubt. It might end up being a lot worse than that. …

(Plot spoiler — division by zero plays a central role.)

(Via.)

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