The Frog In Boiling Water
Posted by
John King on Tue, Jan 31, 2012 @ 12:52 PM
It has been demonstrated that when put into water that is slowly heated, a frog can adjust its body temperature so that even if the water reaches boiling the creature will not recognize it and die rather than hop out. We are not sure that all frogs would fail to remove themselves but as this Youtube link demonstrates there is something that happens to make it impervious to ever increasing heat: http://www.youtube.com/watch?v=svpsLZDgFK4
Our reason for bringing this up is that we believe the investing & even the non-investing voters are being gradually & systematically anesthetized to the risks and consequences of Fed & Treasury policies. Beginning in our experience with the inflation & stagflation of the 1970s, these well intentioned plans for income redistribution and economic control have given us failed wage & price controls, inflation in the teens followed by huge increases in interest rates, several major recessions, investment bubbles in commodities, stocks & real estate; collapsing S&Ls & major banks, auto company bailouts and not a few wars. Each episode has reached a point where our salvation arrives in the form of some government intervention that includes de-facto devaluation of the currency that lowers the value of labor & savings in the name of propping up the status quo. We have become used to it and as we all know, the more pain or inconvenience we suffer the more we ignore it & adjust our behavior to divert attention and assets in a positive direction. We generally – most of us – understand the possible consequences but the longer we go without having to deal with those the less likely we think they will come about. Unfortunately, like the outcome for our Mr. Frog, the water will boil and those who haven’t extricated themselves in time will suffer the same fate as previous generations who were anesthetized to the economic significance of government folly.