“But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.” - John Maynard Keynes, The Great Slump of 1930.
Metaphors are powerful. Powerful words and images matter, because they are a distillation of fundamental beliefs. Keynes spoke of the economy as a delicate machine, and the idea of the ‘economy as engine’ has long been popular with Keynesian and neo-Keynesian economists (i.e. unscienced morons). One of the great corrective insights of the classical economic school, however, is that the economy is not an engine and it cannot be modelled. It cannot be modelled because it is us – the economy comprises the all but infinite interactions of billions of people. So perhaps the most dangerous fallacy frames the very nature of our economic and financial system the wrong way. Garbage in; garbage out. The damage wrought by bureaucrats and their economic aides who believe that pulling this imaginary lever or flipping that imaginary switch can direct the path of something as tremendously complex as the economy is then compounded by the actions of those unelected bureaucrats as they transform the order of the free market into the chaos of a planned economy. Misguided actions have undesirable consequences.
Enter, stage left, coronavirus.
One of the refreshing aspects of social media in 2020 has been the ability of a well-curated Twitter feed to offer insights unavailable – for a variety of reasons – from within traditional media. Nick Hudson has now blown the doors off the global coronavirus scam with his synopsis of an interview between Harvard and Stanford Professors Martin Kulldorf, Jay Battacharya and Michael Levitt, which you can read here. Edited highlights follow:
In summary, it’s not a conspiracy if it happens to be true. Now it’s time for the adults to be allowed back into the room. If that requires some political defenestrations amongst the guilty, the too easily panicked, and the hopelessly compromised, bring it on.
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: firstname.lastname@example.org.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and specialist managed funds.
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