Markets Must Clear for Growth to Happen

“I can calculate the motion of heavenly bodies but not the madness of people.” – Isaac Newton

In this post by John Aziz he explains that poor investments, business practices, and even ideas must be allowed to die for true growth ever to happen again.

He is very right on this. Markets need to clear in order for things to get moving again in the economy. The market feedback mechanism has been held at bay since the 2008 crisis and our economy feels like cotton candy made from saccharine because of it.

I disagree with Aziz on one important piece in the attached post. He asserts that the big banks were indeed too big to fail. There is increasing evidence that this is not true, that it is a very convenient myth. David Stockman has talked about this. Retail banks would have survived 2008. ATMs would still have spit out 20s. Life would have continued on, just without Goldman Sachs. (Tell me that would not have been for the better.)

But overall the piece is good.


“Our ancestors who correctly judged the climate, soil and rainfall and planted crops that flourished were rewarded with a bumper harvest. Those who planted the wrong crops did not get a bailout — they got a lean harvest, and were forced to either learn from their mistakes, or perish. While some surely perished from misfortune, and some surely survived from luck, this basic antifragile mechanism ensured the survival of the fittest agriculturalists and the transmission of their methods, ideas and genes to further generations.”

Click here for the post.