The Blue Bloods Leading Us Astray
An interesting snipet from Investors Insight, John Mauldins Outside the Box - Yield Curve Conundrum By Chris Dialynas of PIMCO.
The Ivy League blue bloods have been leading us astray for some time now with their bizarre "new math" and economic "voodoo" ideas.
The government, big business and the public have all fallen victim to the flashy credential confidence game that is all too pervasive these days with the academic intelligentsia.
The moral of the story: beware of advice from advisors holding risky portfolios. Understand their biases and ask who is paying their rent?
The Clinton and Bush administrations, as well as the Greenspan Fed, have relied upon any internal and external advisors. Without doubt, most of these advisors are of Ivy League vintage.
It is particularly noteworthy to understand that the endowments of most of those universities--endowments that substantially accrue to the benefit of the respective professors--are primarily invested in very high-risk assets and high-risk strategies (as are numerous other investors in their quest for high returns in a low interest rate world).
It is, consequently, of little surprise that policy advice has tended to aggressive stimulus. A disciplined, "take-your-medicine/rebalance-the-economy" set of policies would most likely be detrimental to the endowments of many of this country's leading educational institutions.
As long as these institutions maintain high-risk portfolios, the policy advice from the ivory towers will be highly stimulative based upon new, bizarre economic ideas. The global imbalances will grow. Professor Bernanke is a member of this fraternity.... My concern is his presumed pro-reflationary bias.
The Ivy League blue bloods have been leading us astray for some time now with their bizarre "new math" and economic "voodoo" ideas.
The government, big business and the public have all fallen victim to the flashy credential confidence game that is all too pervasive these days with the academic intelligentsia.
The moral of the story: beware of advice from advisors holding risky portfolios. Understand their biases and ask who is paying their rent?
The Clinton and Bush administrations, as well as the Greenspan Fed, have relied upon any internal and external advisors. Without doubt, most of these advisors are of Ivy League vintage.
It is particularly noteworthy to understand that the endowments of most of those universities--endowments that substantially accrue to the benefit of the respective professors--are primarily invested in very high-risk assets and high-risk strategies (as are numerous other investors in their quest for high returns in a low interest rate world).
It is, consequently, of little surprise that policy advice has tended to aggressive stimulus. A disciplined, "take-your-medicine/rebalance-the-economy" set of policies would most likely be detrimental to the endowments of many of this country's leading educational institutions.
As long as these institutions maintain high-risk portfolios, the policy advice from the ivory towers will be highly stimulative based upon new, bizarre economic ideas. The global imbalances will grow. Professor Bernanke is a member of this fraternity.... My concern is his presumed pro-reflationary bias.
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