[FRIAM] systemic overshoot & powerful relief

[Phil Henshaw]

Guys, this just seemed worth mentioning...

There's probably only one reason for a real economic crash.   That is
group habits of expecting growing returns as a rule, that happen to run
into diminishing returns instead.    In that case a powerful means of
relief, usually overlooked, is reversing the ill-fated habit, causing
the underperforming resource to perform as expected, but by spending
investment assets on it rather than demanding increased returns from it.


What intuition tells us to do is the opposite, of course, to join the
flight to safety to protect returns. That is itself, however, the
collapse of confidence which does the lasting harm.  Alternately, people
could keep money from collapsing by spending investment earnings, system
wide.

It's unusual, but the 'prudent man rule' can be taken to include the
natural meaning of 'prudence'.    It would be better than rushing to
increase our shares of things that are about to become worthless as a
consequence. 


Phil Henshaw                       ¸¸¸¸.·´ ¯ `·.¸¸¸¸
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