Funny Things Happen on the Way to ‘Restoring Financial Stability’
We can also predict that the next round of instability will be more severe than the previous bout of instability.
Everyone is in favor of “doing whatever it takes” to “restore financial stability” when the house of cards starts swaying, but funny things happen on the way to “Restoring Financial Stability.” Whatever “emergency measures” are rushed into service to “stabilize” an inherently unstable system resolve the immediate problem but opens unseen doors to new sources of instability that eventually trigger another round of systemic instability that must be addressed with more “emergency measures.”
These unintended consequences proliferate as policy extremes are pushed to new extremes, and “emergency measures” become permanent sources of the very instability they were supposed to eliminate.
As @concodanomics recently observed on Twitter: “A major flaw of finance is that it nearly always mutates the very instruments meant to protect investors into crisis-inducing tim
Article from LewRockwell