OBSERVATION OF THE DAY. Michael Munger explains the error in believing in fiscal stimulus.

The simple answer is to let markets do their work of pricing assets. The use of federal power to filter packages of mortgage-backed securities through Freddy Mac and Fanny Mae was one of the primary causes of the recession.

But I would also say that economic booms and recessions are facts of life in capitalism. (Not in a socialist system. Under socialism you have one permanent recession. But without any growth, ever, maybe you don’t notice the lack of growth!). The government must never give citizens the impression that they are insulated from risk. Personal anticipation of risk, and choosing an investment portfolio to limit risk, are key private responsibilities of every citizen. The government can’t do it for you.

The people who made their living peddling those dubious assets as The Next Sure Thing have some responsibility as well. The best thing for investors to keep in mind when some hustler sells The Next Sure Thing is Complex Adaptive Systems Do What They Darn Well Please.