Seth Klarman: “If The Economy Is So Fragile That Government Can’t Allow Failure Then We Are Indeed Close To Collapse”

Friday, May 3, 2013
By Paul Martin

by Tyler Durden

Following today’s flashback to the most euphoric and irrationally exuberant days of market peaks gone by driven entirely by the now constant central-planner dilution of current and future wealth, Klarman’s latest letter to investors is just the cold water of common sense everyone needs: “The average citizen knows that a society’s wealth is not unlimited, and that if the economy is so fragile that the government cannot allow failure, then we are indeed close to collapse. For if you must rescue everything, then ultimately you will be able to rescue nothing. They also know that the only reason paper money, backed not by anything tangible but only a promise, has any value at all is because it is scarce. With all the printing, the credibility of our entire trust-based monetary system will be increasingly called into question. And when you tell the populace that we can all enjoy a free lunch of extremely low interest rates, massive Fed purchases of mounting treasury issuance, trillions of dollars of expansion in the Fed’s balance sheet, and huge deficits far into the future, they are highly skeptical not because they know precisely what will happen but because they are sure that no one else–even, or perhaps especially, the policymakers—does either.”

The Rest…HERE

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