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February 06, 2018


Mongo, A Free Dog

Keynes also noted that, "Even apart from the instability due to speculation, there is ... instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations... [Most] of our decisions to do something positive... can only be taken as the result of animal spirits — a spontaneous urge to action rather than inaction, and not as the outcome of [reasoned decisions based on weighing the data]."
-- The General Theory Of Employment, Interest, And Money (1936)

I'd say there's plenty of Animal going on, out there, just now. And more to come.

Luis Enrique

animal spirits are so last century, it's algo spirits now baby yeah

also: how about that FTT


As JM Keynes wrote in the next paragraphs, that means that the froth of speculation is what drives trading.

In effect JM Keynes is saying that stock traders are playing a game, "Fantasy trading", like people play "Fantasy football" etc., but with some important details:

* While "Fantasy football" is played with made-up "points" the "Fantasy trading" game is played with "real" money.

* Every time a trader collects some extra "points" in "Fantasy trading", they claim half of those "points" for themselves and their executives as bonuses, because after all they are "real" money.

* Therefore the total amount of "points" in "Fantasy trading" shrinks all the time, because half of every winning is taken off the game.

* When the total amount of "points" in "Fantasy trading" becomes too low, the Treasury makes sure that the BoE gives a new round of "points" to the "Fantasy trading" teams.

The process is also described in slightly allegorical terms in John Kay's book "Other people's money".

PS Another source of "points" in the games is retail players who are advised to "buy and hold", which with an increasing number of people can provide a steady stream of new "points" into the "Fantasy trading" game.

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