Gomer to the Fed: “Surprise, Surprise, Surprise!”

From the wires:

Comments from Janet Yellen, the vice chairman of the Fed, Monday reined in the most exuberant hopes in the markets. In remarks to economists in Denver, Yellen warned that excessively easy monetary policy, involving ultra-low interest rates and an expansion in the Fed’s balance sheet, could create big problems down the line. “It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking,” Yellen said.

Gomer responds:

4 thoughts on “Gomer to the Fed: “Surprise, Surprise, Surprise!”

  1. The Fed’s action(or inaction) is perhaps just a reflection of our society’s loosey-goosey attitude towards risk. At least ancient man was well aware of the consequences of his actions. Intellectual hubris often leads one to believe one has more ‘control’ than he/she does.

    I like this part of Larry Hite’s quote:
    “Winning a bad bet can be the most dangerous outcome of all, because a success of that kind can encourage you to take more bad bets in the future.”

  2. “At least ancient man was well aware of the consequences of his actions. ”

    Not arguing with you, but this is something I’m perplexed by. If genetically successful humans were those that could judge risk/reward properly, then where does the seemingly natural instinct to “average down” (averaging losses) come from?

  3. I think that ancient man was much more open and responsive to “present evidence” than modern man. It looks to me like people instinctively average down because they are acting based on “future expectations”. I think for the most part our instincts no longer respond to direct experience out there but to thought process occurring inside our minds.

  4. See Michael’s video from a couple months ago with the professor who created a market among monkeys using tokens…their behavior replicated human market behavior…and to a TF’er this is the competition so the odds are in our favor.

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