11 January 2010
Probably, Maybe
Tim Price recently writes “Having certainty about financial markets is difficult at the best of times, but right now it is impossible. Robert Shiller, Yale professor and co-creator of the S&P Case-Shiller Home Price Index, is intelligent enough to own up to huge uncertainty about the future. In an interview with Fox Business last week, he confessed,
I am terribly conflicted. This is the most uncertain time that I can remember. Things are violating the laws that I learned.. The whole country is experiencing an upsurge but I don’t know what to make of it.
We are living in a giant experiment, surely the grandest science project in the history of money. There is a pervasive sense that we have emerged from the worst financial crisis since the Great Depression-asset markets, after all, are going though the roof. But while we know that economic laws are of dubious value, they have been largely cobbled together from the laws of physics, which are iron clad. The law of conservation of energy, for example, states that energy can neither be created nor destroyed; rather, it can change its from. Politicians and central bankers appear to believe that money, on the other hand, can be created without limit and without serious consequence.”
Too true!