Comments on: Admit economic ignorance http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/ Wed, 07 Oct 2015 17:23:32 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: disbeliever http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-908 Fri, 09 Nov 2012 05:11:25 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-908 I believe that the Bankers and their government lackeys will be decorating trees and used as pinjatas sooner than they think. You cannot abuse the worlds population forever. You can run but you can’t hide. Being an econimist is a rather silly profession, reading Tea leaves makes more sense.

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By: DefiningQuality http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-903 Mon, 05 Nov 2012 22:28:20 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-903 Wide scale financial corruption is the clear cause of their failure!
Corruption can not be forcasted and no model will ever take corruption into account! Economists will never be able to factor in or out this new government sanctioned wide scale financial and insurance corruption, and that fraud now defines the supposed Free Markets world wide.
Blind as a bat defines those beng stolen from, while the elite binge on power and ill gotten money!
When this all implodes they will scream the loudest.

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By: Samrch http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-901 Sun, 04 Nov 2012 02:09:47 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-901 The economists do not want regulate micro problems and indeed we have best politicians money can buy with little knowledge of the real world. But the reasons an economy fails are micro and corruption.

There no way around industries that are profitable and pay wages need to have their growth subsidized by those that re not.

Also we got into a ridiculousness system of trade where we depend on China, Korea, Japan and Germany to limit our imports to what we export. Obviously we have to do things to balance the two ourselves. Even if means getting different trading partners.

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By: Slagathor http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-900 Fri, 02 Nov 2012 17:10:43 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-900 As for those saying we do not have enough stimulus…what in earth do you think running a deficit of 10%+ of GDP is. THAT is counter cyclical stimulus. So…what you are saying…is 10% is not enough.

Let me explain why we do not have enough…OK. The reason is that ALL our growth is due to the deficits. Today…virtually all Federal spending goes right back into the economy. Spending backed by borrowing is thus spending that otherwise would not have happened. The growth is fake. Yet people even now…credit for out tepid growth goes to “the economy”..what ever that means.

Cut the deficit to 5% of GDP…and we are in a recession of -4-5%. Increase the deficit to 13% of GDP…and we have 5% growth..and economists will pronounce the economy self sustaining…and we will cut the deficit…upon which growth will fail.

Why? Why can’t the economy self sustain? The reason why…is what we call economic growth, is essentially private sector credit expansion…and we have entered the 1st private sector credit down cycle vs GDP since…1929-1946.

The only way to not have this problem…is to not let private sector credit growth get out of hand, as it did from 1922-1929…and from 1980-2007. The reason that we repeated the mistake in 22-29…and made it much worse…is that we have taught economists for 50 years that private credit growth is demand neutral…and should be left to the ‘free market’ to sort out….

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By: Slagathor http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-899 Fri, 02 Nov 2012 17:03:13 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-899 On “Keynes”. What is called Keynesian economics is more correctly labeled as a specific type of NeoClassical economics. Much of what Keynes theorized was simply dumped by the mainstream…or warped. Keynes died too early. The mainstream took those ideas of Keynes which were…easy. The ideas that were hard…were dropped like a rock. Minsky’s credit cycle views, and his instability hypothesis were essentially derived from Keynes…and yet Minksy is completely outside the mainstream…and only recently has he been paid attention to.

The abject failure of mainstream economics is very well explained in Steve Keen’s “Debunking Economics”. It is pretty stunning that Hadas could take the time to write this article, and not mention Keen or his book.

As for the main reasons that economists are clueless…here are the top three…in my opinion:
1. Rational Expectations. This bogus premise is wrong on both counts (rationality, and clairvoyance!), and virtually every ‘free market’ and finance theory is built on this foundation of quicksand.
2. The belief, by mainstream economists, that private sector credit growth (PRIVATE…not PUBLIC debt…which everyone is so worried about) is demand neutral. There was a great debate between Keen and Krugman a while back, during which Krugman made his ignorance plainly clear. The current economic malaise has NOTHING to do with public debt and deficits…it is a result of a 25 year private debt bubble (290% of GDP in 2008). In reality, we are in a depression much worse than the 30s (ALSO created by a private debt bubble…175% of GDP in 1929) and our current and temporary ability to plug the hole with public debt is masking reality. 100% of our growth since 2008 is due to deficits. It is borrowed “growth”. Until we liquidate our way down to private debt less than 100% of GDP…we will be dependent on public debt expansion to plug the hole. The problem, is that we will have a monetary crisis and systemic crisis before we get there. The hole created by private debt correction is too large to fill. Economists dont understand this…because they have been taught that private credit is demand neutral. It is NOT…and Kyndland and Prescott showed as much…even though they and all mainstream economists chose to forever ignore those findings…because they did not agree with NeoClassical dogma.
3. The complete intellectual bankruptcy of the academic economics establishment. I was an economics and engineering major. As an engineer..I had to take some pretty heady math. As an economics major, I observed how the economics ideology was taught as if it was mathematics. In math, you build theorems and new derivations on the back of existing PROVEN theorems. In economics….you are expected to do the same…but they part about building on ‘proven theorems’ is just left out. So you have sand built upon sand upon sand. It is an entire body of made up knowledge, the justification of which is really more the happenstance of history during a period of abnormally positive economic conditions (Post WWII – 2000)

Economics is a complete joke..and it should be no surprise that mainstream economists had no idea in 2006 what was coming…and still do not know what is coming.

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By: Slagathor http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-898 Fri, 02 Nov 2012 17:03:07 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-898 On “Keynes”. What is called Keynesian economics is more correctly labeled as a specific type of NeoClassical economics. Much of what Keynes theorized was simply dumped by the mainstream…or warped. Keynes died too early. The mainstream took those ideas of Keynes which were…easy. The ideas that were hard…were dropped like a rock. Minsky’s credit cycle views, and his instability hypothesis were essentially derived from Keynes…and yet Minksy is completely outside the mainstream…and only recently has he been paid attention to.

The abject failure of mainstream economics is very well explained in Steve Keen’s “Debunking Economics”. It is pretty stunning that Hadas could take the time to write this article, and not mention Keen or his book.

As for the main reasons that economists are clueless…here are the top three…in my opinion:
1. Rational Expectations. This bogus premise is wrong on both counts (rationality, and clairvoyance!), and virtually every ‘free market’ and finance theory is built on this foundation of quicksand.
2. The belief, by mainstream economists, that private sector credit growth (PRIVATE…not PUBLIC debt…which everyone is so worried about) is demand neutral. There was a great debate between Keen and Krugman a while back, during which Krugman made his ignorance plainly clear. The current economic malaise has NOTHING to do with public debt and deficits…it is a result of a 25 year private debt bubble (290% of GDP in 2008). In reality, we are in a depression much worse than the 30s (ALSO created by a private debt bubble…175% of GDP in 1929) and our current and temporary ability to plug the hole with public debt is masking reality. 100% of our growth since 2008 is due to deficits. It is borrowed “growth”. Until we liquidate our way down to private debt less than 100% of GDP…we will be dependent on public debt expansion to plug the hole. The problem, is that we will have a monetary crisis and systemic crisis before we get there. The hole created by private debt correction is too large to fill. Economists dont understand this…because they have been taught that private credit is demand neutral. It is NOT…and Kyndland and Prescott showed as much…even though they and all mainstream economists chose to forever ignore those findings…because they did not agree with NeoClassical dogma.
3. The complete intellectual bankruptcy of the academic economics establishment. I was an economics and engineering major. As an engineer..I had to take some pretty heady math. As an economics major, I observed how the economics ideology was taught as if it was mathematics. In math, you build theorems and new derivations on the back of existing PROVEN theorems. In economics….you are expected to do the same…but they part about building on ‘proven theorems’ is just left out. So you have sand built upon sand upon sand. It is an entire body of made up knowledge, the justification of which is really more the happenstance of history during a period of abnormally positive economic conditions (Post WWII – 2000)

Economics is a complete joke..and it should be no surprise that mainstream economists had no idea in 2006 what was coming…and still do not know what is coming.

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By: deLafayette http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-897 Fri, 02 Nov 2012 16:37:18 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-897 Typo: In 1929, unemployment was 3.2% – ten years later it was still at 19% – ten long years of excessively high unemployment. Despite Roosevelt’s Alphabet-Soup recovery spending, it took WW2 to end the Great Depression.

Should read: In 1929, unemployment was 32% – ten years later it was still at 19% – ten long years of excessively high unemployment. Despite Roosevelt’s Alphabet-Soup recovery spending, it took WW2 to end the Great Depression.

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By: XRayD http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-896 Thu, 01 Nov 2012 17:40:40 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-896 Free market economics does not work when failing enterprises are bailed out by tax payers and savers, and when no one is held accountable for any mismanagement verging on morally wrong conduct.

Most mainstream economists are bought by think tanks to sell policy to Washington for nice donations and retainers.

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By: thesafesrufer http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-895 Thu, 01 Nov 2012 16:11:58 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-895 #3 is pretty preposterous. Do large deficits hurt an economy. Individual deficits make no difference one way or the other. It’s accumulation over time that is the question.

Does a large national debt hurt an economy is the proper topic for #3.

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By: StevePhillips http://blogs.reuters.com/edward-hadas/2012/10/31/admit-economic-ignorance/comment-page-1/#comment-894 Thu, 01 Nov 2012 15:53:34 +0000 http://blogs.reuters.com/edward-hadas/?p=333#comment-894 Years ago, this pseudo-profession was referred to as “Political Economy.” And it truly had some merits in describing what was necessary to promote the wisest, most efficient and effective course alternatives in the processes of getting, offering, saving, and spending.

Then Lord Marshall came along and injected math into this pool of common sense with the intention of raising its practice to the level of hard science, much like physics. At this point, the practice of economics went south in a hurry.

Not long after this careen into the fanciful, where all things could not be held equal, Keynes proposed using national income accounting measures to fine-tune the economies of major, complex nations: run deficits in slumps and surplusses in booms. But he forgot the political portion of the term, political economy. Since politicians will always and at all times do whatever is necessary to garner enough votes to be re-elected, their attempts at fine tuning tend to have a spending bias which, in time, suboptimizes – and finally crashes – the system.

Thats where we are now. A broken economic system with venal, self-serving politicians at the helm prescribing much more of the same to get us out of this mess. In a serious conversation, discussing the cure of too-much debt with additional doses of debt would be somewhat laughable – but the patient is much too sick for humor to be appropriate.

I fear that so much foul water has passed under our bridge polluting the workings of polite society and (certainly) political discourse that the traditional machinations of the Democratic process will not be sufficient to avert us from Nemesis’ severe decree merited by our chronic wastrelcy and hubris.

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