Just what is in a title? Apparently, a mouthful when you are dabbling with the sometimes relevant, always painful world of economic theory. Luckily, I've engaged the help of Dr. George Cooper, a former fund manager at Goldman Sachs who coined the brilliantly militaristic phrase above.
So what is pre-emptive asymmetric monetary policy? It's a strategy employed by a central bank to artificially combat an anticipated wrinkle in the monetary equilibrium, mostly due to the potential pressures of political downfall should the economy collapse prematurely (ie. right before voters hit the polls). On the surface, if one trusted the "wisdom" of their national central bank, this theoretically would be a good thing : after all, no one wants to suffer through a recession or depression if it could be avoided with a little fiscal massaging.
In reality, things are never that easy. We really don't need to play "fact-checking" with each other as if this were a presidential debate : recent and not so recent history and the collective consciousness of the American people all point to evidence of dramatic economic crises, and the management of such events have arguably led to an even more tenuous situation.
But the real irony to pre-emptive asy...eh...can we just call it P.A.M.P.? is that it should by default never be necessary. That's because most economists, and more importantly, central bankers throughout the world, ascribe to Efficient Market Hypothesis, that is, today's market prices, no matter what they are, correctly reflect assets' true values, based on both current economic conditions and the best estimate of how those conditions will evolve in the future (Dr. George Cooper, The Origin of Financial Crises).
Given that all assets are priced correctly at all times, there should be no need for any kind of intervention, inflationary or deflationary. After all, if markets are truly efficient as the name of the theory suggests, then whatever is occurring at any particular moment is the most ideal condition. Any intervention by human hands is sure to be less efficient and therefore, under the inverse principle of arbitrage (I'll explain this in a future blog), wholly undesirable.
Of course, this would not be a popular slogan for the bankers and thus they give us our medicine, even if it's just a placebo.
So what is pre-emptive asymmetric monetary policy? It's a strategy employed by a central bank to artificially combat an anticipated wrinkle in the monetary equilibrium, mostly due to the potential pressures of political downfall should the economy collapse prematurely (ie. right before voters hit the polls). On the surface, if one trusted the "wisdom" of their national central bank, this theoretically would be a good thing : after all, no one wants to suffer through a recession or depression if it could be avoided with a little fiscal massaging.
In reality, things are never that easy. We really don't need to play "fact-checking" with each other as if this were a presidential debate : recent and not so recent history and the collective consciousness of the American people all point to evidence of dramatic economic crises, and the management of such events have arguably led to an even more tenuous situation.
But the real irony to pre-emptive asy...eh...can we just call it P.A.M.P.? is that it should by default never be necessary. That's because most economists, and more importantly, central bankers throughout the world, ascribe to Efficient Market Hypothesis, that is, today's market prices, no matter what they are, correctly reflect assets' true values, based on both current economic conditions and the best estimate of how those conditions will evolve in the future (Dr. George Cooper, The Origin of Financial Crises).
Given that all assets are priced correctly at all times, there should be no need for any kind of intervention, inflationary or deflationary. After all, if markets are truly efficient as the name of the theory suggests, then whatever is occurring at any particular moment is the most ideal condition. Any intervention by human hands is sure to be less efficient and therefore, under the inverse principle of arbitrage (I'll explain this in a future blog), wholly undesirable.
Of course, this would not be a popular slogan for the bankers and thus they give us our medicine, even if it's just a placebo.
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