Current Economic System Considered an Impossible Construction
November 26, 2013
We aren’t exactly economics experts around here, so we’re not sure we understand this fully, but it may explain why search vendors are stuck on a merry-go-round. In “M.C. Escher and the Impossibility of the Establishment Economic View,” Zero Hedge explores the fallibility of official financial forecasts.
Writer F.F. Wiley supplies evidence rich with statistical details and a wealth of graphs to support the assertion that we cannot depend on predictions from the Federal Reserve and the Congressional Budget Office. See the article for those details, which this theatre major will not attempt to interpret here.
Wiley summarizes:
“In a word, the CBO’s projections are preposterous. They ignore effects that are clear in the data and obvious in real life. But the charts reveal more than just forecasting flaws at a single governmental institution. More broadly, the assumption of a smooth and lasting return to normality is standard practice for mainstream economists, particularly those at the Fed.
Essentially, economists are hardwired to focus on the near-term effects of policy stimulus, while dismissing long-term effects that are often far more important. Standard models fail to account for either natural cyclicality or the payback seen in Charts 4 to 6. Although establishment economists often speak about sustainable growth, they really mean any growth that restores GDP to where they believe it should be. They don’t seriously contemplate the unsustainable growth that occurs when the economy is over-stimulated through credit and financial asset channels.”
Wiley believes this all boils down to an “Escher” economy, where we will go round in circles getting nowhere until the existing system falls apart. Afterward, another could (should) be constructed with better policy, but what are we to do in the meantime? Have the folks stuffing their mattresses with gold been right all along?
Cynthia Murrell, November 26, 2013
Sponsored by ArnoldIT.com, developer of Augmentext
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