Let no one accuse politicians and bureaucrats of lacking Homeric courage. When prices change in ways that disturb the electorate – whether it be gasoline prices rising or corporate share prices falling – the political class springs into action against prices that dare to truthfully reflect less-than-rosy underlying realities.
Like Homer Simpson who routinely deals with problems by closing his eyes and pretending that what he no longer sees no longer exists, government efforts to stop or modify price movements – such as the SEC’s unprecedented ban on short-selling – merely blind markets to reality. The result is immediate relief from unpleasant sights, followed by uncomprehending and harmful stumbling in the resulting darkness.
