Jim Grant recently appeared on the Santelli Exchange on CNBC and the conversation quickly turned to this notion that “intellectuals” have the wherewithal to run the economy. Friday Gold Wrap host Mike Maharrey recently explained two very important economic principles that make it impossible for central planners to ever truly succeed. As he put it, they might be smart, but they aren’t smart enough to know they’re not smart enough. Nevertheless, this doesn’t seem to dampen the fatal conceit and hubris of central bankers who think they can micromanage a complex economy.
Grant put it another way. He called it the ignorance that knows not it’s ignorant.
Stock markets have settled down after an awful couple of weeks earlier this month. On Feb. 5, the Dow Jones suffered its largest-ever drop in terms of points. It was down 1,600 at one point and ultimately lost 1,175.21 points, a 4.6% drop that day. At one point during that week, the Dow was off 10% in correction territory. But everything is calm now and most of the mainstream is once again feeling bullish and optimistic.
Peter Schiff spoke at the Vancouver Resource Investment Conference 2018 last month before the market tanked. But his message remains relevant in the aftermath of the plunge and the subsequent recovery because the dynamics in the market remain pretty much the same. Conditions are still ripe for a 1987-style market crash.
Investors have not been this optimistic…since 1987. They are even more optimistic than they were at the height of the technology bubble, the dot-com bubble, the new era. Of course, 1987 didn’t end well, right? We had a stock market crash, and there’s a lot about what’s happening today that reminds me about what was happening in ’87.”