May 25, 2010

Nassim Taleb on "Keynesian Stimulus"

Nassim Taleb offers us a few thoughts on "Keynesian Stimulus":

I just realized that what is called "Keynesian stimulus" works differently when the government is starting off in a situation of deficit. The math works out differently, which makes me wonder why economists cannot spot it (I inject more perturbations and see massive fragility). In one case, to make an analogy to an individual, you can invest money you have on the side (assuming you've had suspluses from the past). In the other, you fragilize yourself by borrowing, and transfer the liabilities cross-generations. Patris delictum nocere nunquam debet filio. [A father should not leave liabilities to his son.]

But you can't expect economists to perturbate their models, or inject rigor in their arguments. They are the very same idiots after all who got us here.

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