A parable on quantitative easing

By Emanuel Derman
September 11, 2012

When my son was a little less than two years old, I used to play a game he liked, bouncing him up and down on my knee while chanting a nursery rhyme:

Half a pound of tuppeny rice
Half a pound of treacle
Mix them up and make them nice
Pop goes the weasel!

On “Pop goes the weasel!” I would sharply drop my knee all the way down and let him bump to the floor. He always chortled. He liked the game so much that one day he asked me to repeat it over and over again, perhaps fifteen times, laughing at each bump except the last one, when he turned to me in surprise and asked: Why it’s not funny anymore?

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