Bond Curves Right All Along, But It Won’t Matter (Yet)

Men have long dreamed of optimal outcomes. There has to be a better way, a person will say every generation. Freedom is far too messy and unpredictable. Everybody hates the fat tails, unless and until they realize it is outlier outcomes that actually mark progress.

The idea was born in the eighties that Economics had become sufficiently advanced that the business cycle was no longer a valid assumption. The mantra, “eliminate the troughs without shaving off the peaks” was repeated repeatedly especially in Greenspan’s nineties.

Ever since Plato, people have tried to achieve Kallipolis, the fabled city representing Socrates’ idea of perfect justice. Only, he put the enlightened philosophers on top to make the rules and see them carried out. History has proven that though philosophers do exist (they think) the perfect state of enlightenment doesn’t and the pursuit tends more toward practical nightmare than the utopian dream.

Mathematics and computerization have rebirthed the ideal anyway. If past experts didn’t get it right, a new crop will be using the most modern of sophisticated digital tools. The very notion of technocracy is within reach, at least that’s what they keep saying. They’ll defend it to the end no matter how much damage it keeps doing.

Congressman Wright Patman, the populist Democrat from Texas, once opened a committee session on monetary policy by asking Fed Chairman Arthur Burns, “Can you give me any reason why you should not be in the penitentiary?” But those once hostile to the very idea of something like the Federal Reserve now embrace it – on both sides. Only the Ron Paul guys are still talking about an audit, having long ago abandoned “end the fed.”

Jared Bernstein, VP Joe Biden’s former chief economist, wrote for The Washington Post in January 2015 a long poem on technocratic competence (don’t laugh) under the title, Technocrats know how to fix the economy. And they did.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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