Re: [Geege] It takes one nanosecond to sell stock, btfw.

Dave Long (
Wed, 12 May 1999 12:08:38 -0700

> Low interest rates allow a lot more ideas to get funded -- and a lot
> more really silly enterprises (which can actually destroy value,
> too). The rate can control how many people are sitting on the
> sidelines (employment).
> But suppose every decent idea has been funded at, say, 5%. All you
> can now add to the race are the plans which eke out a mere 4% return
> -- or are 1% odds of making 400% -- which are ALL less sound than the
> business plans already out there.

One way to look at it is that business cycles run a fancy annealing algorithm:
generate a bunch of silly ideas during the easy credit phase, then find out
which ones actually work during the tight credit phase. Repeat to taste, but
note that it doesn't work unless you alternate phases.

Another way to look at it is to ask at what point the State has an interest in
preserving employment, even at the risk of destroyed value. Federalist 10
shows that it isn't a new argument for the US, and the corn laws show that it
wasn't a new argument in Britain. Perhaps the pyramids show that it wasn't
new in ancient Egypt, either.

> So in Japan, they're saying (if there was a sound banking system),
> look if you have even the world's silliest idea -- an iMac-style
> toilet, say -- then we'll fund it if you can give us even a penny on
> the dollar each year.

Be careful when stowing thrones in grass houses! I'm not sure what the yield
on the S&P 500 is these days, but a penny or two on the dollar sounds awfully
close. I suppose that for the S&P 500, we ask for a nice story about growth
along with our penny.