As Scott Sumner argues the extreme instability of the price of Bitcoins should be understood as a confirmation of the efficient markets hypothesis (EMH) not a refutation of it. But that in turn is just another illustration of the extent to which the use of the English language word "efficient" as an economics term of art can get confusing.
After all, there's nothing particularly efficient about the kind of wild gyrations that are often associated with efficient financial markets. There isn't, as of yet, much of a Bitcoin economy. But if there were basing long-term investment decisions on these wacky market fluctuations would be a terrible idea. Efficient markets just exhibit a level of instability that's highly undesirable from the standpoint of normal people trying to run a real economy.
TODAY IN SLATE
The Ebola Story
How our minds build narratives out of disaster.
The Budget Disaster That Completely Sabotaged the WHO’s Response to Ebola
PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer
The Shooting Tragedies That Forged Canada’s Gun Politics
A Highly Unscientific Ranking of Crazy-Old German Beers
Welcome to 13th Grade!
Some high schools are offering a fifth year. That’s a great idea.
The Actual World
“Mount Thoreau” and the naming of things in the wilderness.