Who saw the financial meltdown coming?

Like most people I didn’t really see the financial meltdown coming. I did think that money was too loose and that interest rates were the wrong tool for fixing that issue, however I merely expected some inflation and perhaps a minor slow down once the central bankers moved to arrest it. I certainly did not expect any sort of widespread collapse of previously successful and stable businesses, or a situation where a subsequent doubling of base currency in the USA could happen at the same time that commodity prices declined (theoretically I have no problem with both coinciding but I didn’t expect to see it in my lifetime). For a glance at the post crisis spike in base currency take a look at the following chart, note the time scale and then note what happens at the very end of the chart:-

Clearly people like me, and clearly people a lot more educated in economics than the likes of me, were missing part of the picture.

So who saw the financial meltdown coming? Not as some vague problem in the future but as a specific impending problem.

Not many people apparently. Certainly not the likes of Alan Greenspan or Glenn Stevens who are pretty much on the record as saying that this was not expected. Ron Paul proponents say that he did. However he has been forcasting bad things for a long time so perhaps people are inclinded to think he just got lucky.

The Peter Schiff footage from 2006 and 2007 shows that he was screaming about the impending finanical crisis. Watching some of his footage now and the stock tips of his critics is quite hilarious and also somewhat tragic. Clearly he was very confident of his forcasts and clearly he wasn’t going to be told he was merely being gloomy. I know this footage already got a plug in the previous ALS article but it really is worth a look.

The other name that gets bandied about is Australian Steve Keen. Initially like anybody that cuts against the mainstream he sounds like a crank. However Steve isn’t just huffing and puffing about the evil of markets and the neoclassical models. He does at least seem to have some reasonably sophisticated alternative models figured out. Whether sophisticated in this context means better is obviously a contentious issue and I’m not really familiar enough with his work to comment.

Here is how he starts his story:-

How come I got it right, and “they”–the official economic managers–got it so wrong?

It’s not because I’m any brighter than they are–there are plenty of highly intelligent people in those organisations. Instead, it’s because they follow mainstream views in economics, and I follow a minority perspective. The economic history we are currently living through is proof that the mainstream is fundamentally wrong about the nature of the economy, while my minority perspective is at least partially right.

This is not something one should be able to say about a science, and there lies the rub: economics is not even close to qualifying as a science. A better model for economics is a group of warring religions–or science, such as it was, before Galileo’s empirical revolution, when what mattered to scientists was not empirical relevance, but conformity to with the Bible.

Forty years ago, Keynes was The Messiah, and his General Theory was the Bible. But the “stagflation” episode of the 1970s allowed a new Messiah to arise: Milton Friedman, with his doctrine of Monetarism. Though Monetarism itself is no longer espoused, the economic religion that Friedman represented–known as “Neoclassical Economics”–supplanted the previous Keynesian orthodoxy. Today, the majority of economists know of no other way to think about the economy–and they run Central Banks and Treasuries throughout the world, and dominate tuition in universities.

However I can’t really do his story justice here so check out his blog.

What I’d love to see is a debate / discussion between Peter Schiff and Steve Keen on what caused this mess, and what policy position we should adopt as a result. Does the worldview of these guys converge or are they each using a different brand of tea leaves.

39 thoughts on “Who saw the financial meltdown coming?

  1. Greetings,

    I’d be pleased to have that debate with Peter. We had a bit of a one on George Negus’s program on SBS a few months ago, but only enough to indicate that we do have different views on the nature and creation of money.

    Peter’s position seems to be pretty stock-standard Austrian, that the quantity of money is a function of State policy in a fiat money regime, and therefore the State has caused the problem (and can also hyperinflate its way out, in one sense–though not one Austrians would support).

    My perspective is the endogenous money argument from Post Keynesians and a subset called the Circuitist School–and I’ve developed differential equation models of the process that are available on my blog under Theory.

    Thanks for an interesting post, by the way.

    Cheers, Steve Keen
    PS Of course, I spotted this post from a ping back to my blog. Thanks for linking the story.

  2. Steve Keen:

    [beep — keep things friendly please]

    On the Austrian School of Economics
    ———————————–

    Austrians claim that since Collectivists hold monopoly power on manufacture and distribution of money, Central Bankers set the rate to rent cash (rate to pay those of money for their interest) below the natural rate of interest.

    In doing so, a cluster of errors builds overtime as men make wrong bets about any future they believe shall arise. Eventually, the stream of income dries up from which to pay debt service on rented cash. Subsequently, a domino effect of default follows.

    The gist of the Austrians argument is political — granting monopoly power for money manufacture and distribution leads to power, control, distortion, booms and busts — with the street-level man suffering at the whims of the those holding power — bankers, major CEOs, politicians.

    Because money is a commodity — it’s the thing you trade for to get another thing, say money for wheat and always one of two things swapped in every trade — it’s the Politics of Collectivism that affects the Economics (the right of claim of one thing for another). Moreover, Austrians say that Monopoly Central Banking changes continuously, the relation of Now Money for Future Money, thus no one can make accurate economic calculation for any future. This is the essence of the Austrian School of Economics.

    Schiff’s Claims
    —————

    Schiff does not get on TV to blather about differential equation mathematics and other meaningless esoterica in an open system. Instead, Schiff gets on TV to tell the story unfettered by such meaningless jargon.

    Rightly, Schiff claims that it’s the excess growth of Consumer Credit (home equity loans, credit cards) owing to phony house prices that led to unsustainable consumption because such consumption did not grow forth from production.

    Said another way, J.B. Say is right! (Production-based) supply makes its own demand.

    If the buying power of incomes does not grow to support debt service, eventually, default happens. If the buying power of income falls in the face of growing debt service, default happens sooner.

    On Differential Equation Analysis
    ———————————

    Those of Academe strive to believe the fantasy that they can “model the economy” by putting together a few differential equations. Of course, such beliefs are false and the act is folly. Why? Kurt Gödell leads the way. To track all of the things involved in an economy would require an equation for each factor, from every thought in the head of every man, to every water molecule in every sea, to every particle from the sun streaming toward the earth.

    Why? Each and everything affects the acts of men toward each other — weather and weather shocks, personal relationships. A man would need a equation for each thing, plus an equation for the relation of each thing to all things, plus an equation for each equation for each thing.

    What you end up with is an infinite regress of equations needed yet another equation. Thus, differential equation analysis lacks sufficient energy in the universe to model an Open System.

    On Design — Instead, the right way to predict what shall happen in any future rests upon the design of a thing. It’s easy to see that rigged games leads to problems and disaster.

  3. While Schiff was right about the economic problems America is facing, that doesn’t mean he’s the best representative of the Austrian school of economics. Likewise, neither is Ron Paul, although he also was saying the same thing.

    I don’t think either of these two men have the depth to defend their positions against an academic onslaught, although they do a good job of spreading awareness of an alternative set of ideas.

    However, there are other Austrians with degrees in economics who predicted what would happen. These folks can take on the mainstream economists much more ably. To name a few names: Frank Shostak, Mark Thornton, Stefan Karlsson, and a bunch of others that can be found by doing some research online (esp. at mises.org).

    Having predicted something correctly doesn’t necessarily mean you know what the right policy solutions are. But what is most distressing is that these alternative ideas are being totally ignored by policymakers, who still seek out the floundering mainstream for advice.

  4. Hi Steve, and thanks for joining the debate. You say that Schiff believes that the govt (or perhaps more correctly the reserve banks) set money supply. I find that hard to believe.

    Surely Schiff (like most Austrians) are aware that we have a fractional reserve banking system which invovles a credit multiplier.

    Economics involves the study of the interactions of 6 billion independent minds… so it is not suprising that predictions can be wrong. However, there were predictions that US banking regulation (Freddie & Fannie encouraging low-doc loans, and the existence of walk-away home loans) would cause problems, and there were predictions that moral hazard would cause problems and there were predictions that loose monetary policy would lead to malinvestment and a consequent economic adjustment (read: recession). Many mainstream economists agree with several/all of these points.

    Of course, the exact size and timing of the consequences is much harder to predict.

  5. Mistakenly, Keen writes, “is a function…” instead of “as a function”, in which he assumes Collectivism is moral and right, thus those holding power have the right to hold a monopoly on the manufacture and distribution of money.

    This failing grips all Keynesian, Neo-Classical and Post-Classical Economists, especially those from the Church of Academe. Because Collectivist Championing economists assume their politics are right on economics, they assume that you are right about money.

    On Academics and Debates — Academics lining up to debate amounts to nothing more than a talking shop. No one cares.

    On Academics and Knowledge — Worse, Academics lack a lock on knowledge needed for right action, right design of human interaction systems. For those who believe such folly, they have surrendered themselves to bureaucratic meddling and central planning. Academics would like the world to believe that academics alone have a lock on all-knowing. After all, through such rhetoric, academics sell themselves. In truth, private men know best how to establish rules in which to swap.

    Government Collectivists and their handmaidens, their modern analogues to ancient Egyptian priest class, bamboozle the citizenry with deceits and trickery, both which let them skim billions off the top.

  6. As they say … KNOWLEDGE IS POWER! Sites like the following ( http://www.jsmineset.com/ & http://www.financialsense.com/) were warning of a catastrophe (Re: too many bad sub-prime loans contributing to too much toxic paper (i.e. OTC derivatives) in market place, etc.).

    Who saw the financial meltdown coming? These people did … Jim Sinclair, Marc Faber, Peter Schiff, Ron Paul … at least 2 years ago and people have done well from their advice. Peter Schiff was also an economic adviser for the Ron Paul campaign in the 2008 Republican Party primaries.

    When thinking about themes such as …

    — USA being a good (the best ?) creditor nation in the 1980’s
    — USA currently being a good (the best ?) debtor nation
    — gold (etc.?) being manipulated for quite a few years
    — many people spending tomorrow’s money today (rampant credit card debt, etc.) rather than having good savings
    — a fiat money system has a “use by date” (Re: rampant running of printing presses producing too much money from thin air leading to devaluation of currency)
    — a “loose” (RE: heavy use of printing press) fiat money system lacks the discipline of a commodity-based (e.g. gold-backed) monetary system
    — too many companies becoming too big while being leveraged with high debt, especiialy if the company is not being productive in use of technology (e.g. some big auto-makers in USA)
    — politicians/people like regulating the market (e.g. Community Re-Investment Act in USA), mucking around with interest rates (the market knows the real interest rates, not humans), etc with no absolute certainty of potential ramficiations in years to come, etc

    …then it may not be too surprising to think that something was going to BREAK.

    ADMIN: Please people (especially the austrians for some reason), try to edit your comments so that they are easily readable.

  7. Steve – I take it from your brief outline of differences with Peter Schiff that you agree with the notion that there was a failure of government but that you err on the side of thinking that says that there should have been more government oversight and control rather than less government interference. Obviously at a libertarian website such as this a position like that it is a bit like poking a hornets nest. None the less I’d love to hear more details about your proposed framework to avoid such problems. Either as a detailed comment or as a link to where you have previously answered this question.

  8. Sukrit,

    Sure the ‘Austrians’ got it right, so far (we have not yet seen the predicted hyperinflation…yet).

    But these guys have been predicting a collapse of the financial system since, at least, 1971. Even a broken clock tells the right time twice a day.

    The other problem is that they reject empiricism. Now, I understand why they do so, but unfortunately this undermines their credibility.

  9. Sure the ‘Austrians’ got it right, so far (we have not yet seen the predicted hyperinflation…yet).

    The ‘Austrians’ aren’t one big glob of sameness. Some were wrong about the economic problems (e.g. Bob Murphy), and some were right. Many more were right than wrong. Probably the vast majority, in fact. Read some of the essays here and here addressing the accuracy of their predictions.

    Your hyper-inflation comment is a cheap-shot. There is a difference between Austrians like Peter Schiff or Ron Paul – who are unqualified and have a tendency to exagerrate – and serious academic Austrians, like Peter Boettke, Mark Thornton, etc. who are more measured.

    I have seen many commentators, even libertarians on this blog, confuse the two types. My comments relate only to the academic Austrians.

    But these guys have been predicting a collapse of the financial system since, at least, 1971.

    It should go without saying that we are talking about specific predictions here. Like how Ludwig von Mises predicted the Great Depression of the 1930s (read Mark Thornton’s paper on this). Check the links above for examples of the specific predictions.

    The other problem is that they reject empiricism.

    You say you understand why they reject empiricism. Then why do you classify it as a “problem”? There are certain questions that are empirical in nature. Others are not. Austrians understand the difference. Most mainstream economists don’t.

    You seem to be suggesting that they don’t use empirical techniques at all, which is preposterous. I don’t understand how their credibility is undermined, given they have PhDs from mainstream schools of economics (where empiricism is compulsory).

  10. I’ve been telling you since the first time I got on ozblogistan that the financial system could be likened to an elephant balancing on its trunk. I’ve been saying that it was inherently unstable.

  11. That is a lot of stuff to read!! Briefly then, are you saying Schiff/Paul (Faber and Rogers as well?) are predicting hyperinflation, but the academics are predicting something else? If so, what?

    The Thornton paper looks particularly interesting.

  12. Absolutely there is a difference between lay-persons like Schiff, Paul and academic Austrian economists. It’s sort of like the difference between an amateur (like me), and Murray Rothbard. There’s no comparison. No doubt, it is easy enough to understand some of the key arguments and make accurate predictions, but an amateur couldn’t defend Austrian economics against a technical economics argument. So amateurs aren’t good “representatives” of Austrian economics.

    Similarly, Ron Paul is a politician. Peter Schiff is an investor. Neither have degrees in economics. They do a good job of promoting Austrian economics, but they aren’t the people who we should turn to for INSIGHTS.

    Real academics, who produce substantive journal articles and know their stuff, are quite boring people. They don’t get interviewed on TV much. If you do some research into these types of Austrian economists, you will find they are not as pessimistic or simplistic. But even the academic Austrians are, of course, predicting rough economic times due to government stupidity. They are also predicting inflation, but not hyper-inflation. It could be a repeat of the 1970s (high inflation + recession).

  13. Let’s see.

    Would you rather earn profits by having Peter Schiff as your “economist” or would you rather have some academe wanker saying to you, as you lose money, “In theory I am right, yet my model does not account for what is happening”?

  14. Sukrit – my brother has a PhD in Maths. says it was the biggest waste of time of his life. only did it because he couldnt be arsed to get a job. dont be so impressed by titles.

  15. Terje

    As a non-economist (and certainly no PhD holder), i find it confusing that the supply of base money had doubled and at the same time the value of fiat currency has appreciated so dramatically (when measured against tangible assets such as land and commodities).

    why do you think this is?

  16. Recessions and financial crises are difficult to forecast, because if policymakers or the public could foresee them with any certainty, they would change their behaviour to avert them. Recessions and crises occur precisely because they are not expected.

    Contemporary Austrian business cycle theorists implicitly assume investor irrationality, namely, that investors fail to learn from previous credit and asset price cycles. Proponents of ABCT argue that this is due to the failure of economic agents to understand or accept their theory, in other words, the theory holds only because most people reject it.

    Unlike many of the contemporary exponents of ABCT, Mises both anticipated and accepted the implications of a quasi-rational expectations view of monetary policy and the business cycle:

    ‘The teachings of the monetary theory of the trade cycle are today so well known even outside the circle of economists, that the naïve optimism which inspired the entrepreneurs in the boom periods of the past has given way to a certain skepticism. It may be that businessmen will in the future react to credit expansion in another manner than they did in the past. It may be that they will avoid using for an expansion of their operations the easy money available, because they will keep in mind the inevitable end of the boom… as the boom comes to an earlier end, the amount of malinvestment is smaller and in consequence the following depression is milder too.’ Human Action XXXI 5.

  17. Peter Schiff was absolutely right about diagnosing the problems, but his timing and gloomy predictions of hyperinflation have been way off. His investment fund was down massively for the year, because commodities were hammered during this bout of deflation.

    He may yet be proven correct, after all, the only choice now is for central bankers to inflate their way out of this mess.

    I think quite a few others have been right in predicting the crisis but completely wrong in their policy proscriptions, like Nouriel Roubini who calls for even more bailouts.

    The best Austrians on this subject are Frank Shostak and Mike Shedlock.

    Listen to this podcast of Frank Shostak talking about how deflation came about:
    http://www.lewrockwell.com/podcast/

    And Mike Shedlock has some excellent posts on his blog, where he has repeatedly defended his predictions of deflation whilst other gold-bugs were screaming inflation:

    http://globaleconomicanalysis.blogspot.com/2008/12/humpty-dumpty-on-inflation.html

  18. E.D lets get something straight. The Austrians are not the perpetual doom-sayers who happened to be right only once.

    That would be the communists, who think these events signal the failure of capitalism as an ideology that they’re always waiting for.

    The Austrians have been spot on, in analysing the Great Depression, German hyperinflation in the 1920s, and other stock market crashes. Rothbard applies Austrian analysis to all the banking crises of the last two centuries in his book The Mystery of Banking.

    We keep seeing booms and busts, and guess what? The bubbles tend to coincide with loose monetary policy. Greenspan’s criminally loose 1% interest rates in 2003 did a lot to fuel the credit bubble.

    Also, even if you’d describe the Austrians as a broken clock that is only occasionally correct, then the same description applies to the Keynesians and monterarists who base their theories on old disproven mercantalist assumptions.

    One more thing – you claim that the Austrians reject empiricism, but thats not quite accurate. They can justify their theories with statistics, but they certainly don’t go about torturing the data and building fancy mathematical models in order to create a theory.

  19. Proponents of ABCT argue that this is due to the failure of economic agents to understand or accept their theory, in other words, the theory holds only because most people reject it.

    Stephen, your point has been answered many times, and in numerous ways. See, for instance:

    http://mises.org/journals/qjae/pdf/qjae4_1_4.pdf

    I don’t think you’re portraying the ABCT accurately. But I’m not the right person to be arguing with over this. I would suggest you take it up with those who know more than me.

  20. Terje & Pommy – You guys must think I’m really gullible. I’m not saying a degree must mean someone’s smart. Henry Hazlitt (RIP), Ron Paul and Peter Schiff could embarass most Australian economists, even though they are lay-persons.

    The point was that no significant intellectual contributions have been made by lay-persons. There’s an obvious difference between the verbal diarrhea in blogs & newspapers, versus peer-reviewed journals where authors carefully study issues as objectively as possible. You’re acting as if the lay-people came up with their ideas all by themselves, and therefore have the intellectual depth to defend them rigourously. As people like Paul freely admit, they are merely copying a long line of academics in the Austrian tradition. Usually, if you want the most rigorous defence of ABCT you have to turn to people that are actually trained in economics.

    My point is the same as John Maynard Keynes: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back”.

  21. Pommy,

    Against gold the US dollar has gone up in value over the last few months. However it is still worth less gold than it’s ten year average. As such I think we are undergoing disinflation rather than deflation.

    Arguably if the US dollar had been fixed to gold at the spot price 12 months ago then all else being equal they would have needed to print even more currency to keep it there. As an gold standard advocate I’m not uncomfortable with that notion.

    In order for the value of the US dollar to increase against the likes of gold whilst the quantity of US currency has nearly doubled can only be explained in my book by a massive increase in the demand for US dollars. Given that this crisis is primarily a solvency crisis then a high level of demand for cash would stand to reason. That it could be so strong reflects the extent to which people are concerned about cash flow. Of course M0 also includes bank deposits at the federal reserve so a lot of this new currency might be sitting idle as a form of ready reserve by the banks. Of course this is just a variation on the general theme of strong demand.

    What is of perhaps more concern is how things proceed from here on in. As confidence recovers the abnormal demand for cash should begin to decline. At that point the federal reserve will need to soak up all that excess currency if inflation is to be avoided. With an interest rate target it might be hard to rein in all that cash quick enough. At which point the US potentially risks crippling interest rates or else a period of serious inflation. Of course they could let interest rates float and simply lock on to a gold price and adjust the currency base accordingly, however it is highly unlikely that they will abandon their interest rate fetish.

    Peter Schiff may yet see his prediction of US hyperinflation if the feds don’t have their wits about them. I won’t be trying to predict which way this fish flopes because I don’t know the mind of Mr Ben Bernanke. That so much should hinge on the actions of so few shows the extent to which centralised planning (socialism) pervades the monetary system.

    Regards,
    Terje.

    p.s. I don’t have a PhD either.

  22. Sukrit – I was merely pulling on what I saw as a loose thread simply to see what unravels. No gullibility implied.

  23. Sukrit, it was actually Walter Block I had in mind as someone who claims that ABCT works only because everyone else rejects it. You don’t even have to believe in model-consistent expectations to see why that might be problematic.

    I don’t see how quoting Mises could be said to be misrepresenting the Austrian school.

  24. Stephen,

    Here is another possible response in reference to a similar quote of Mises:

    “Nevertheless, for reasons supplied in the main text, this augural presentation Mises made in 1949 of the hypothesis of rational expectations is not entirely justified, considering that even when entrepreneurs have a perfect understanding of the theory of the cycle and wish to avoid being trapped by it, they will always continue to be tempted to participate in it by the excellent profits they can bring in if they are perceptive enough to withdraw in time from the corresponding investment projects.”

    Jesus Huerto De Soto: Money, Bank Credit & Economic Cycles, 1998

  25. ED, all entrepreneurs no doubt try and time the cycle, but these individual efforts should by and large cancel each other out. There should be no shortage of entrepreneurs willing to take the other side of this view.

    To get a general business cycle out of this process, these timing errors would need to be correlated, which is equivalent to saying that the credit cycle induces systematic error over and above normal entrpreneurial error.

  26. The main reason why so few saw this coming is that they relied on the ratings agencies such as Moody’s doing their job. People knew these bad loans were out there, but everyone assumed that if the securities they were buying was AAA, they weren’t supported by such loans.

    Hopefully, the free market will learn (and learning is its mainh strength) and alter its approach, possibly from a system based on ratings agencies to one based on insurance. My fear is that the moral hazard of government responses to the crisis will mean it never will.

    It would have been better, if, instead of these billion dollar bailouts, central banks simply sold insurance to underwrite securities (at as fair a price as their economists can work out for each security). These government suppliers would acquire private competitors over time, and governments could exit from the crisis with minimal damage later on.

  27. Stephen — I think ABCT works irrespective of whether people believe it or not. All that you need is the assumption that people do not (or cannot) automatically and perfectly adjust to expected inflation… and recognition that monetary expansion impacts on different industries/people differently.

    The first part is accepted by most monetary economists, including the monetarists (which is why monetary policy can be effective in the real economy short-term).

    And the second part (which not included in monetarist or keynesian analysis) is self-evident. This is the part of the story where mal-investment (instead of simply over-investment) comes in… which requires capital to be later re-allocated (with the associated “creative destruction”).

  28. JohnH, contrary to popular belief, monetarists have always supported the idea that money is non-neutral in the short-run (and potentially even in the long-run, given a permanent shock to financial technology). This is a basic implication of money lacking a market of its own, so that any excess demand/supply has to work its way through other markets. This is a property of money in general, not just central bank money and would be just as true of a market-determined monetary system. While relative price shifts are part of this process and you might even get something approximating a business cycle out of it, this is a very different model to ABCT, which is really a signficant departure from the broader Austrian tradition.

  29. Stephen — I know that monetarists accept the short-run real impacts of monetary policy. That’s why I wrote it. 🙂

    To get to the ABCT you only need to add one more factor, and that is to recognise that the real impacts are different in different sectors of the economy. So we don’t just have “over-investment”, but the price signals are temporarily changed and we have “mal-investment”.

    I agree that this would be true of all monetary systems.

  30. Presumably when people say mal-investment they also include under investment in some sectors. Jude Wanniski argued in the late 90’s and early noughties that the excessively strong US dollar was causing under investment in oil exploration. And presumably the subsequent weak dollar helped cause some over investment in US real estate.

    Distortions can take a long time to flow through to an impact on the supply at the consumer end of the bargain which is why I think using a consumer basket as the main measure of inflation creates a deeply flawed monetary feedback mechanism.

  31. On the question of belief/non-belief of ABCT, the situation is more insidious. The surplus liquidity creates a “demand for deceit”, which places the free market’s discovery process into the counter-productive mode of looking for new ways to deceive investors. The benefits of deceitful behaviour are significantly raised during this phase, and the higher “price” induces more “supply”.

    The market, of course, also has a discovery process to eliminate all sources of sub-optimal performance (including deceit), but this latter process is typically slower than the former.

    As a side note, if you look at recent history, the diversity of deceit methods in a single crash has been reducing. Compare the wide variety of creative accounting methods used in the 1980’s to the very debt specific method in the current crash. I haven’t been able to decide whether this is due to:

    a) possible competition between methods prior to the crash (“best lie wins”), or

    b) we are running out of new deceit methods (do we have “peak lies” as well as “peak oil”?)

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