Grok the basics of economics

ShrinkWrapped says it succinctly:

The economy is one of the most complex man-made structures ever built. It is a classic example of complexity arising from the application of simple rules on a very large scale. As with any complex system, it is impossible to accurately define all, or even most, of its parameters, and impossible to predict the effects of any single perturbation. Within limits, the economy has been a self-correcting system, as long as none of the basic rules are interfered with, ie, over time, markets are the single best tool for discovering prices and once prices have been established, supply and demand takes over and temporary downturns remain temporary. The business cycle includes recessions because humans are not rational actors (despite the most profound wishes of economics professors and modelers) and governments can worsen economic downturns much more readily than they can reverse them.

For lagniappe, a rundown on academic papers is also provided:

I long ago determined that the best Psychoanalytic literature was that which was written most clearly and concisely. If an author confused me, it was likely that the confusion had more to do with the author’s shortcomings as a writer than my shortcomings as a reader. I am not being immodest here; I simply recognized that I am pretty good at understanding what I read and when I can’t understand what I read it is usually the case that the author was confused or unnecessarily arcane. It is an unremarkable observation that most academic literature has minimal substance. Perhaps 10% will include real ideas of some originality, the majority will involve restating the obvious and corroborating other’s more original work, and a small but not insignificant percentage will be dross. The worst examples of academic nonsense typically involve papers which are almost purposely abstruse and laden with jargon rather than ideas. (Post-modern literary and art deconstruction offer classic examples on a regular basis.)

Each of these insights deserves consideration but this post connects the two as a means to describe an opinion about the latest bank rescue plan.

An example of a few simple rules creating a complex picture is fractals. Those rules define a focus and a philosophy or set of values for the system. It is generally true that a plan for a solution will be more effective and more efficient if it properly addresses and uses the underly precepts of the situation. ShrinkWrapped does not see this happening with the government’s proposed solutions to the asset value decline that has just occurred.

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