… is from page 105 of Roger Koppl’s new and must-read monograph, From Crisis to Confidence: Macroeconomics after the Crash (footnote excluded; links added):
The major policy responses to the [2008 financial] crisis have created Big Players and regime uncertainty, thus ensuring that the state of confidence is low. In particular, the low state of confidence has discouraged lending and, therefore, the creation of new enterprises. It is not that the animal spirits have waned for no particular reason or for purely psychological reasons, as implied by followers of Keynes. It is more that the subjective and objective costs of financial intermediation have been driven up by the very policy measures undertaken to restore economic health. In this case, as in so many others, policy makers would have served the public better by following some simple advice attributed to Ronald Reagan: ‘don’t just do something, stand there!’
Roger’s useful theory of Big Players” was developed, in part, along with our mutual professor Leland Yeager. Here’s Roger’s and Leland’s summary description of a Big Player:
A Big Player is anyone who habitually exercises discretionary power to influence the market while himself remaining wholly or largely immune from the discipline of profit and loss.*
*Roger Koppl and Leland B. Yeager, “Big Players and Herding in Asset Markets: The Case of the Russian Ruble,” Explorations in Economic History, July 1996, Vol. 33, pp. 367–383.