... its that they act as if its the first new economy we have ever had. We have had new economies, within the basic institutional framework of monetary production economies, all the time, and one constant is that new economies mean new systemic risk that we learn about when they are first realized.

So in developing high frequency models of stochastic risk that take the range of possible values as something that has to be determined from experience, but then ignoring the historical experience of monetary production economies .... his models are lying about systemic risk.

A misunderstanding of system behavior leads to a mis-estimate of systemic risks, and since the presumption in that form of modeling informed by traditional marginalist economics is to assign a value of 0 to the possibility of true uncertainty, its always an underestimate.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.