I nominate this as the most profound, but at the same time obvious (it is analogous to rather be a big fish in a small pond, then a small fish in a big pond) ever stated on ET. Imo, it explains probably 85% of human psychology. BTW, the American Dream is sold the world over by showing people how much more they have here than anywhere else. Most people "fall" for it. What they don't show you is what you give up to be "middle class", and many imigrants regret their imigration. It is too late by the time they figure it out (too old, children here, etc). The real progress comes to their offspring, and probably not until second or third generations when they have figured it out. The cultures that do well in the modern US are the ones that are ancient like the Jews and the Chinese (although the railroad workers from China might disagree), where there is a strong tradition of passing down wisdom to their children from generation to generation, imo. The rest figure it out the hard way.
And that was one of the core philosophical arguments in one of Taleb's books. The basic concept of perception of wealth as defined by one's relative standing to his/her peers.
I remember reading that in his book Fooled by Randomness. He describes a top Wall Street lawyer that lives in a prestigious complex in Manhattan. Whereas he made upper hundreds of thousands or low millions a year, his wall street neighbors made that in a month. Needless to say, from what I remember, he and his wife felt inadequate! Yet if that same guy went to his high school reunion and saw his friends that pump gas, he would feel like Bill Gates. But that's irrelevant, he lives in Manhattan.
And this is the reason why I don't want this bill to pass. Because the emotions you feel is called revenge!
I call BS. What do you think is the right thing for the country? Want to make a bet that when Volcker jacked the rates that everybody had the same opinion as now? Want to bet that people thought Volcker was ruining the country and that people like yourself "knew" how to run the country?
Everything I said are my personal opinions, obviously, no more, no less. My opinions are based on some familiarity with the Fed and its function. It is my view that the Fed had always been and remains now a largely technocratic, apolitical organization. Moreover, your point about Greenspan doesn't imply he wasn't a technocrat. He was one and he preached the popular gospel of the time. Nobody disagreed with him, not on things that mattered, anyways. Moreover, everyone was singing him praises, which suggests he operated with the public's full blessing. How many times do we have to talk about this? The Fed has nothing to do with overspending and creation of enormous debt. The US treasury, with its Presidential and Congressional mandates, is in charge of issuance and other aspects of fiscal policy. The Fed's main responsibility is monetary policy and its transmission in the mkts. So far, in my view, the Fed's conduct of monetary policy has not been tainted by politics. The audit, to me, is a small step on a slippery slope taken by hungry politicians, who just want more control over how all aspects of the system function. At the end of the road is a political Fed, where there's no possibility of someone like Volcker standing up to the establishment to do what's right for the economy in the long term. BTW, Kahneman and Tversky did lots of great work on behavioral economics long before Taleb started shouting his stuff from the rooftops.
I enjoy your nuanced views of the fed, the congress, and the treasury. But you still don't get it. It's all one giant beast now. From bank lobbyists that buy congressmen, Bankers that rotate in and out of the fed, Fed officials and lobbyists that rotate in and out of the Treasury.... over time, it has all coalesced into one GIANT beast. The people that changed the regs in the recent past, that silenced and marginalized the whistleblowers in the more recent past, are now covering up their crimes by using the beast's last sanctuary - the FED. They are all the same people with the same interests. I'm not saying that monetary policy should always be open to politicization - I'm saying that the system needs to be flushed, however painful that may be. The alternative is to allow the same people and secrecy to reign. Their interest is self preservation over the best interest of the country. They naively think that they can have their cake and eat it too. That covering up this crime and managing the crisis for the better of the country are not conflicting goals. Democracy and a merit based system is under attack. This is serious stuff. As for Kahnemen and Tversky - yes, their published observations predate Taleb's. But you know what? Who cares. All observations of humanity are derivative of past observers. Or, yes, it is possible to arrive at the same conclusion as someone else had that lived in the past without knowing about that past study. I'm sure someone in Ancient Greece or Babylonia witness the same behavioral economics at play. But you do get a gold star for knowing the names of Kahneman and Tversky. I won't take that away from your argument. (Nothing personal - I view debate as bloodsport - I sincerely appreciate your views and always look forward to your posts.)
I would agree that perhaps the general public was not disagreeing with Greenspan, but the general public is usually occupied with day-to-day living and monetary policy is not their daily focus. Certainly those profiting at the time had no motivation to oppose him. But that No One opposed him is not correct. http://online.wsj.com/article/SB118134111823129555.html?mod=todays_us_money_and_investing "Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies. "I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board." The Fed was "captured" by a cult of personality (Greenspan's) - so much so that Gramlich felt he had to discuss it personally rather than openly. This is too much power in one man - a demagogue - and you can't control when another appears except to place checks on the position that (might) prevent it from happening.
Fed didn't like the idea of letting American Banks to fail; "do what I tell you to do, not what I did", typical American style of hypocrisy.