alpha pig

The Liquidity Trap & Open Market Operations on the Risk Premium on a Pan-Galactic Scale

I think the most important point here is the huge gap between academic "theory" and market reality. This crisis will completely dethrone Samuelson and efficient market proponents, as well as Friedman and his monetarist solutions, which Bernanke whole-heartedly embraced.

Risk cannot be understood by looking only at the past. Unfortunately, there is no way for economists to do controlled tests of their theories. Here is the test, and Bernanke and his Friedman-ish ideas have failed. What next?