Thursday, August 27, 2015

What moves the market?

Democrat Paul Krugman says buyers buy because others are buying, and sellers sell because others are selling.

The lemming theory.

Republican Ben Stein says both buyers and sellers are victims of manipulation by traders who get rich by causing people to trade.

And they do that by generating stampedes wholly unconnected to underlying economic reality, cited only in passing when used as flimsy and entirely fictitious justifications.

The markets in question, of course, are absolutely fundamental institutions of capitalism, which is not even imaginable without them.

Remember these accounts of how markets really work the next time some conservative blowhard starts sounding off about the rationality and competence and precision and skill that government and socialism lack but capitalism and private institutions possess in superabundance.

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