I suppose the bailout is a psychological ploy, and thus does not have to make any economic sense.
- posted
15 years ago
Re: Is this math(bailout)?
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- posted
15 years ago
The economy runs on confidence; humans operating in the free market don't make particularly rational choices, so all effective interventions in the market have to be psychological ploys.
Free market economists have this beautiful theory which is based on the assumption that the free market is perfect, and every participant knows exactly what is going on and makes rational choices.
Each one of these hypotheses has been falsified by repeated experimental testing and investigation, but the Chicago School continues to claim that their theory predicts the way the real economy will work - despute the fact that it doesn't - and will no doubt claim that their (long exploded) theory proves that the bailout doesn't make economic sense.
-- Bill Sloman, Nijmegen