The Informational Advantage- What do you Know that Other People Don’t

OilPrice.om ^ | 06/29/2010 | Dave Forest

[bananaman22]

Bank of Japan Deputy Governor Kiyohiko Nishimura discusses "informational advantage" this week at the Lujiazui Forum on economics and finance in Shanghai:

"In my understanding, the Volcker Rule [proposed legislation restricting banks from making certain speculative investments] is designed to deter banks from taking excessive risk in capital markets, where volatility is inherently high and in which bankers do not necessarily have informational advantage in predicting market developments.

Rather, the Volcker Rule urges banks to return to their traditional stronghold of commercial banking business, in which they can utilize their informational advantage based on long-term relationships with their customers."

Informational advantage is a key investment concept. What do you know that other people don't?

If everyone knew everything, investment wouldn't exist. The market would price all investments (stocks, bonds, commodities) perfectly. There would be no room to buy something under-priced and then sell it at a profit after it goes up. Full article at: Information Advantage

[Uncle Miltie]

Q: What do a few government bureaucrats know about the individual preferences of millions of people that those people don’t know about themselves?

A: Nothing.

Therefore, Socialism always fails.

See Friederich Hayek, “Road to Serfdom.”