Friday, February 10, 2012

Taleb and the Ketchup Bottle

Taleb on The Spectator. Perfect, so no further comments:
The basis of Sir Mervyn King’s plan for printing money on this scale is that the effects of QE can be carefully controlled. But this, says Taleb, is the biggest mistake of all. ‘It’s like a ketchup bottle. You try to pour money out of the ketchup bottle: nothing comes out, nothing comes out — and then everything splashes. This is how it works. Inflation doesn’t arrive in a nice, manageable way, so don’t mess with it. Every single person who has tried QE, or a form of printing money, has effectively lost the argument. Turkey had it, Brazil had it, Argentina had it, Italy had it when they debased the lira. Even Weimar Germany claimed that QE made the government rich. There’s always an argument to print money.’

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