Faced with such apparently nonsensical results as the Anne Hathaway effect, automatic trading programs look silly. On the other hand, this is true of any task to which humans put computers; it doesn't mean computers are useless.
The main problem with Landsburg's argument is that it unintentionally misleads the reader.
Firms have lots of cash on their balance sheet and it's not earning anything. What to do? Buy the competition.
When the state spends more money than it receives in taxes — a fact indelibly written into the bond — it is deliberately committing an act of bankruptcy. Is dishonesty transmuted into its opposite when committed by a legal entity?
Bernanke assured the national audience that the Fed was not printing money; however, he didn't explain where the Fed was going to get the funds to buy $600 billion worth of treasuries.
I have not been persuaded by Mish's alternate framework. To be clear, I'm not arguing that Mish's fans should abandon their hero. Rather, I will simply point out that Mish's "calls" have not been nearly as prescient as he so often claims.
The worst of Bernanke's statements came in 2006, near the zenith of the housing bubble. This was the era of the subprime mortgage, the interest-only mortgage, the no-documentation loan, and the heyday of mortgage-backed securities.
Recorded at the Ludwig von Mises Institute’s Supporters Summit; Auburn, Alabama; 9 October 2010.
