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>The presence of a totalitarian ruler willing to constantly backstop markets prevents panics and actually makes the system work better. Not really. Remember th
by ameister14 9y ago
>The presence of a totalitarian ruler willing to constantly backstop markets prevents panics and actually makes the system work better.
Not really. Remember this? https://www.forbes.com/sites/gordonchang/2014/01/19/mega-default-in-china-scheduled-for-january-31/#628a39ec5e00 https://www.forbes.com/sites/gordonchang/2014/01/19/mega-def...
If the government backs everything, people will engage in riskier behavior because they don't accurately assess risk. That creates a massive bubble of risky investments until it's too large for the government to effectively control.
There's an interesting book on the subject you might want to check out:
https://www.amazon.com/Chinas-Guaranteed-Bubble-government-propelled/dp/1259644588/ref=sr_1_1?ie=UTF8&qid=1511885714&sr=8-1&keywords=China%E2%80%99s+Guaranteed+Bubble%3A+How+Implicit+Government+Support+Has+Propelled+China%E2%80%99s+Economy+While+Creating+Systemic+Risk https://www.amazon.com/Chinas-Guaranteed-Bubble-government-p....
- api 9y agoI think you are right, but it hasn't happened yet. China keeps growing and developing with what seems to outside observers such unbelievable might that it's psyching people out. I think the rise of strong man rule and neo-fascist ideologies in the West and elsewhere is a reaction. "We need to become more totalitarian now or we will be left behind!" Bubbles always psych people out. They always go higher than anyone expects. They always make the nay-sayers look like fools... until they don't, and the nay-sayers end up looking like prophets. My brother in law lived and worked in China for about 10 years. He went from thinking China would conquer the world in the first few to thinking China is Enron.