[FoRK] Cutting through the stimulus BS

J. Andrew Rogers andrew at ceruleansystems.com
Mon Oct 26 21:06:05 PDT 2009


On Oct 26, 2009, at 3:30 PM, Andre Uratsuka Manoel wrote:
> You may end up calling me both naif and neo-keynesian, but still,
> "stimuli" do work unless you have perfect information without
> assymmetries and prices aren't sticky, i.e., if the efficient market
> hypothesis holds, than the stimulus package doesn't work, but then, of
> course, no one ever gets rich on the stock market, except by luck, and
> we do know that some people do.


There are several levels of distinction required here.  First, there  
is the public markets and then there are the markets. These are not  
the same thing. Government regulations focus most people's attention  
on the public markets; most of the interesting activity is elsewhere.  
Everything you see in the USA news is solely focused on the public  
markets.

I am having difficulty reading your assertion in a way that doesn't  
come out as a non sequitur. Care to elucidate? I have a really hard  
time thinking of any scenario where the nominal stimulus produces a  
positive result.  You seem to be positing a superfluidity that no one  
is claiming exists. It has to be possible to reliably beat the market,  
and some people do, but that says things about the participants in the  
market and not the market itself.


To the point: your model of the "efficient market hypothesis" severely  
and unreasonably bounds the characteristics and capabilities of the  
agents in the market.  You are tacitly assuming similarly competent  
morons.  If this is not in fact the case, and there is no evidence  
that it is, then your model fails. In essence, the "efficient market  
hypothesis" you seem to be using is naive and not reflective of the  
full scope of the hypothesis.


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