A:

Fool in the shower is a term that was coined by Milton Freidman, an American Nobel Prize-winning economist, who advocated a marketplace with minimal government intervention. His policy prescriptions maintained that any stimulus to the economy should be done slowly, rather than all at once because it takes time to determine the effects of the changes. For example, a change in the federal funds rate takes about six months to fully integrate into the economy.

He compared the situation to taking a shower. A fool gets into a cold shower before the water has had time to warm up. Rather than waiting for the temperature to adjust, the fool turns the hot water all the way up and eventually scalds himself.

For more on this read, The Whens and Whys of Fed Intervention.

This question was answered by Katie Adams.

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