If mainstream analysts continue to disregard the role of regime uncertainty in the major depressions of the modern era, especially in accounting for their extraordinary duration, then they will only demonstrate the poverty of their own mode of analysis. FULL ARTICLE by Robert Higgs
Source link: http://archive.mises.org/14091/regime-uncertainty-and-bond-yields/
Regime Uncertainty and Bond Yields
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There really doesn’t seem to be much “uncertainty” about what is out there. We have a state corporate monopoly. What is uncertain in the minds of those who benefit from this system is whether it is sustainable and whether they will be able to continue to profit off the fruits of the productive sector.
It is a true free market that would be “uncertain”.
Earning their living as they do from government-funded universities, government-protected banks or governmental institutions like the Federal Reserve and IMF, they are far more interested in examining government scats for clues to its current condition and prognosis than they are in determining the health of non-government entities.
“Regime Uncertainty” As Scientific Economic Analysis.
Fascinating analysis and fascinating term – regime uncertainty. The term is rich in meaning even though it is only two words. Thinking about the two words in the context of the contemporary political/economic world unveils many subtle elements.
To me the word ‘regime’ refers to the corruptions that stem from ego-driven interventionism in these, the Dark Ages of economics. These corruptions heap scores and scores of uncertainty onto the natural uncertainties that would occur in a free market.
I think this is a valid argument. As a college student majoring in finance I know there are a number of premiums that get factored into interest rates: Inflation premium, Maturity risk premium, Market Risk premium, liquidity premium, etc…In a normal free functioning market things would be more predictable and the volatility would not be as strong. Government acts on a whim since they have their own political power as priority number one. Perhaps the interest rate equation alluded to above should include a “who knows what the heck these jackasses are going to do next” premium. Of course unnecessary uncertainty in the market due to government intervention would fall into the market risk premium. It’s impossible for the economy to settle down when the government is constantly stirring the pot
Mr. Higgs needs wider exposure to the public. When I call in to talk shows to request him as a guest, should I reference his work at independent.org, or is there a better url?
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