{"id":37053,"date":"2018-08-25T18:08:11","date_gmt":"2018-08-25T23:08:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37053"},"modified":"2018-08-25T18:08:11","modified_gmt":"2018-08-25T23:08:11","slug":"financial-cold-war","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37053","title":{"rendered":"Financial Cold War"},"content":{"rendered":"
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Financial Cold War<\/a><\/h3>\n

As we crossed the finish line last week into the longest bull market in human history, a question that has been on my mind for years came bubbling to the surface again: if this is so easy, why didn\u2019t the governments of the world do it before? In other words, since it\u2019s been proved quite clearly that central bankers can prop up equity markets around the world, as well as public sentiment, why did it take them so long to figure it out?<\/p>\n<\/header>\n

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Were they really that dim? Why would the governments, and all the self-interested individuals which comprise them, put themselves through the financial horrors of 2007\/2008, the crash of 1987, the Internet bubble collapse of 2000, or the grinding equities-are-dead market that lasted the entire 1970s? It doesn\u2019t make any sense.<\/span><\/p>\n

However, I\u2019ve been fleshing out something that I think might provide an answer to the question by way of a surprisingly strong analogy. During this \u201cEverything Bubble\u201d, conjured up by Mario Draghi, Ben Bernanke,\u00a0Haruhiko Kuroda, and\u00a0Zhou Xiaochuan, the idea of \u201cmutually assured destruction\u201d keeps springing to mind. M.A.D. is defined as \u201ca form of Nash equilibrium in which, once armed, neither side has any incentive to initiate a conflict or to disarm.\u201d<\/em> As a child of the cold war myself, I probably have this M.A.D. analog deeply planted, but as I thought about it more deeply, I was astonished how cleanly it explains our new financial world.<\/p>\n

<\/p>\n

To explain this analogy, I\u2019ll lay out the players involved:<\/p>\n

The Pre-Atomic World<\/em>:<\/strong> In the case of military conflict, there were obviously countless wars throughout the centuries. In the financial world, there were likewise countless periods of booms and busts. The mass of humanity in both the military and financial worlds tended to engage locally, and there certainly was no overarching global \u201chand\u201d over either of these worlds.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Financial Cold War As we crossed the finish line last week into the longest bull market in human history, a question that has been on my mind for years came bubbling to the surface again: if this is so easy, why didn\u2019t the governments of the world do it before? In other words, since it\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[124,149,312,10959,21411,21409,21410],"class_list":["post-37053","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-central-banks","tag-cold-war","tag-financial-crisis","tag-financial-war","tag-internet-bubble","tag-slope-of-hope","tag-tim-knight"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37053"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37053\/revisions"}],"predecessor-version":[{"id":37054,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37053\/revisions\/37054"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}