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December 07, 2007



The problem is that statistically, defaults should be uncorrelated.

Defaults *ARE* correlated because there's a structural defect in the monetary system. With debt-based money, a certain number of defaults are guaranteed in each bust phase of the economic cycle.


This shows that rare events - infanticide - can bunch together. Similarly, defaults on debt are rare but also bunch together.

There's some sort of correlation between these two examples too but it escapes me. Why would you say debt default is rare?

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