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Steve Keen vs. Krugman/The Science of Economics

Chris Celi's picture





 

Having been an onlooker of the recent tiff between Paul Krugman and Steve Keen, I was very eager to see what Mr. Keen had to say in tonight's LSE public lecture on "Banks Versus the Economy." Observing how Keen had quarreled with Krugman and effectively ate his lunch, I thought he would bring a lot to the table. I was wrong.

Keen had raised the (very interesting) issue about how neoclassical economists and their models fail to recognize the role of banks in the economy. When attempting to defend against this allegation, Krugman acknowledged that banks do play a role in the economy, and that in fact the Fed is fully able to contain the supply of money via monetary policy tools (i.e., manipulating the amount of reserves banks hold and therefore restricting or encouraging lending). In a word, neoclassical models still assume no banks in the economy, so point to Keen here. Moreover, Keen closely adheres to Hyman Minsky, whom I find very inspiring and am glad to hear Keen reiterate Minsky's theory of debt and banks in the economy. Keen uses Minsky to prove that the Fed does not in fact have control over credit in an economy, since it is solely borrowers and lenders who influence credit, and that reserves have nothing to do with the amount of credit in an economy. For instance, the Fed only has a 10% RRR for household deposits, and does not have a RRR for corporate deposits. The amount of credit in an economy consists of the demand for loans by borrowers, and supply of loans that lenders are willing to lend, irrespective of reserves, end of story.

But while Keen is quick to chastise neoclassical economists (namely Krugman) for inadvertently proclaiming that their models reign supreme whereas they fail to incorporate substantive variables and therefore fail to reflect reality in the least, Keen offers no alternatives. My main issues with Keen and his (horrific) showing tonight, are as follows:

If he goal is to denounce macroeconomic models and their failure to account for real world phenomena, he should not be bringing microeconomic models and their assumptions into the equation. These are two separate issues. Since his attack is on economic models' failure to predict crises such as the one we have just/still are experiencing, his condemnation of microeconomic models is superfluous
If he wants to attack micro and/or macroeconomics and their models, then he cannot only point at neoclassical economics since he is raising an entirely different discussion, namely the discussion role of models in economics
To (1), Keen denounces the assumptions of perfect competition and utility maximization in the economics courses taught in universities today. This, I understand, is why he targets neoclassical economics, given its prevalence in economics programs globally. However, Mr. Keen acknowledged himself importance of the role of abstraction in his own "sect" of economics (whatever that is), but has decided that it is bad if the "neoclassical" tag slapped on it. If he is going to debase unrealistic models in economics, he has to address models across economics, not just within one realm (2).

Moreover, microeconomic models should not have been mentioned at all if he is discussing Dynamic Stochastic General Equilibrium (DSGE) models and their role in the macro economy. DSGE's do not account for many endogenous factors in the real world, such as regime shifts, and they make drastic assumptions such as intertemporal optimization, perfect information, a single representative agent, zero transaction costs, and no banking sector. These are the models that professionals relied on leading up to the crisis, so it is good that Keen is raising awareness of this fact and calling for newer and better models to guide policy. But this issue does not relate to an individual ideology or any individual such as Krugman; it relates to the question "what role should models play in economics?"

There are two answers to this question, none of which Keen addressed (or even seemed to think about addressing). One is that they should emulate the real world, and should be considered worthless if they do not contain information from the real world and do not describe what occurs in the real world. Ironically these proponents are called realists. The other side tends to believe that models do not need to contain real world information at all, but as long as they either a.) tell us about some factor that occurs in the real world or b.) lead to correct predictions, then the model will do just fine. Proponents of this camp are instrumentalists. Clearly Keen is just another realist, and he could have simply conceded to this and we could have moved onto bigger and better things.

In essence, the role of models in economics should have been the topic of discussion tonight and should be what Keen is out campaigning for. Instead of useful insights regarding how to fix the banking system, we got a campaign against neoclassical economics (yawn). He proposed no alternative models (except that he is building a model which emulates the real world in its entirety, named, you guessed it! Minsky), but he did offer some groundbreaking fiscal policy solutions!

His solution to global debt overhang is for governments to implement a "debt jubilee" whereby governments pay consumers (rather than banks) to either a.) pay their debts off or b.) if they don't have debts, use that cash to SPEND. Wait a minute, this guy who I thought was a neo-Hayekian superhero who finally toppled Krugman from his high-horse is proposing that government cut out a check to a.) people with high debt (i.e., less well-off individuals) so that they can pay down their debt, and b.) to individuals who DON'T have debt because they are wealthy enough that they don't need it. Excellent, now the poor are "less poor" and the rich have more cash to inflate our economy back to (wait for it) equilibrium. What an absurd "solution."

Finally, Keen has not even read into Austrian economics. He admitted not having done so because he is too focused on toppling neoclassical economics. How does he expect to do this with no viable replacement?

All said, Krugman is a boob. This is a quintessential example of how an "expert" in one facet of a profession is assumed to be infallible. Krugman won the prize for his trade theory and his theory of "new economic geography." I would assume the concept of banks are not mentioned once in his research. So he is not an expert in monetary policy, or the banking sector as a whole, and should not step into this foreign territory. Keen has demonstrated that this nobel-laureate, NYT-writing rockstar is as fallible Lindsay Lohan. But Keen should keep to what HE specializes in (i.e., Minsky), and focus his arguments in the right areas, before the whole profession of economics turns on him next.

 


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Sun, 04/08/2012 - 17:15 | Link to Comment Sean Fernyhough
Sean Fernyhough's picture

In his book "Debunking Economics II" Keen explians why he hasn't incorporated into his research programme:

1) An acceptance of diminishing marginal returns as a characterisation of production.

2) It's capital theory fall foul of Sraffa.

3) Acceptance of Say's Law.

4) They argue that currently the money supply is exogeneously determined by the State.

 

Thu, 04/05/2012 - 15:45 | Link to Comment Dismayed
Dismayed's picture

Here's a good post by Scott Fullwiler that clearly explains how banks create credit money:

http://www.creditwritedowns.com/2012/04/krugmans-flashing-neon-sign.html

Boottom line is that Keen is right, Krugman is wrong, and Celi is clueless.

Thu, 04/05/2012 - 15:07 | Link to Comment pzyktzle
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What?

 

My main issues with Keen and his (horrific) showing tonight, are as follows:

If he goal is to denounce macroeconomic models and their failure to account for real world phenomena, he should not be bringing microeconomic models and their assumptions into the equation. 

 

Bullshit! Of course he should! It is the microeconomic underpinning assumptions of macroeconomic theory that he is criticising. And he is talking to economists who use these assumptions. 

What a stupid thing to be critical about!

Thu, 04/05/2012 - 11:10 | Link to Comment flow5
flow5's picture

"reserves have nothing to do with the amount of credit in an economy"

If you believe this you do not understand money & central banking & the U.S. Federal Reserve System.  Unfortunately that excludes everyone but me.

 

Thu, 04/05/2012 - 06:13 | Link to Comment LokiBear
LokiBear's picture

I've got to chime in here sorry Chris, I think your article is basically a Keen bash for whatever reason or another.

You seem to miss the fact that Neo-classical macro is microfounded, thats the whole point the NC school tries to simplfy the maximum possible degree, a noble goal i'll admit but when your models can't predict financial crises don't take into account patently important things like the banking system or money then most people (with rational expectations!) would see them as fundamentally flawed. Therefore when Keen is methodically dismantling micro he is basically turning the foundations of Neo-classical macro into sand.

The reason he bangs on about NC so much is because NC is what is taught to the vast majority of students, and NC models are used by policy makers to make real world extremely important and far reaching decisions.

I think Keen is very careful not to label himself too strongly into any school of thought as he is basically an empirisit he just wants to get to the truth of the matter. His models are coming along and so far are able to simulate financial crisies and the effect of private debt with pretty good correlations to real world data. I'd say this is a step in the right direction and his input should be valued not denigrated just because it doesn't fit into your view of what economics should look like or disagrees with some aspect or another of your economic dogma.

Wed, 04/04/2012 - 12:27 | Link to Comment macroeconomist
macroeconomist's picture

and here is an excellent article about Neo-classical economics with its underlying axioms, and what distinguishes it from the rest of mathematical economics. 

http://varoufakis.files.wordpress.com/2012/04/neoclassical-economics-as-a-most-peculiar-failure.pdf

Wed, 04/04/2012 - 09:59 | Link to Comment spooz
spooz's picture

Zerohedge does itself a disservice to allow someone who relies on Investopedia to post on this topic.  Credibility is hard to come by, one can point out some of the excellent contributors to this site (Chris Whalen, Robert Brusca, Chris Martenson), but allowing some UNH undergrad to post on a topic that he apparently has only a cursory grasp, especially such an important topic, reflects badly on the whole blog. 

Wed, 04/04/2012 - 10:10 | Link to Comment Chris Celi
Chris Celi's picture

May I ask what I failed so miserably to grasp?

Wed, 04/04/2012 - 06:55 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

a "debt jubilee" whereby governments pay consumers (rather than banks) to either a.) pay their debts off or b.) if they don't have debts, use that cash to SPEND.

Does he not see the contradiction contained in his own solution?  While the "jubilee" would tend to reduce household debt, it would do nothing for society's debts.  In order to pay for the households their jubilee bonus, the government would go into....wait for it....more debt, obliging the future taxpayers to pay for it.

 A real jubilee must reduce the absolute load of debt in the system.  However, in a system based entirely on debt (from the base currency all the way up to derivatives cubed), such a jubilee will be massively deflationary and thus painful.  Nevertheless, it will happen...either voluntarily or involuntarily because the debt carrying capacity of any people is finite.  So Keen's basic idea is a good one (an organized and orderly jubilee) even if it's not particularly well thought out.

Wed, 04/04/2012 - 10:39 | Link to Comment Thisson
Thisson's picture

I agree with your observations except that debt deflation is not necessarily painful.  It will hurt creditors but will help debtors in equal proportion.

Wed, 04/04/2012 - 05:49 | Link to Comment Moe Howard
Moe Howard's picture

Krugman is NOT a Nobel laureate.

There is no Nobel Prize for Economics. Period.

Some made up award "in honor of" the Nobel Prize is not a Nobel Prize. Please stop calling him a Nobel laureate. It is a lie.

Although the Nobel Prize is nothing to write home about. Look who they give it to:

Yassar Arafat

Barak Obama

Need I go on?

Thu, 04/05/2012 - 15:03 | Link to Comment RobertBrusca
RobertBrusca's picture

It's not the 'who' but 'for what'. Barack got his nomination after being in the oval office less than two weeks

Shameful.

Nobel is all politics.

Wed, 04/04/2012 - 05:22 | Link to Comment Nukular Freedum
Nukular Freedum's picture

I have to say I do not think the author of the article understands the concepts he uses. The term "neo-classical economics" covers a wide range of schools from the Krugmanite and other Keynesians at one extreme to the various shades of the Austrian and Chicago schools on the other.
To suggest that neoclassical economics failed to predict the 2008 economic crisis is therefore false. The prediction of the crisis, albeit not the timing is implied by the Austrian model (alone I think). Unfortunately the dominant neoclassical school is the Keynesian/Chicago one.
For the authors info "Neo-classical" refers to any economics school which accepts the marginal theory of value - which is pretty much all of them.
The problem with banks and the money supply is that the central bank controls both of these monopolistically.

http://pearlsforswine.wordpress.com/2012/04/03/fractional-reserve-bankin...

Wed, 04/04/2012 - 05:30 | Link to Comment Nukular Freedum
Nukular Freedum's picture

Furthermore economics is not an empirical science but an analytical discipline, like mathematics or logic. Ergo models are at best useless and at worst dangerously misleading. Advocating their use indicates one is truly adrift in ones understanding of what economics actually is.
For a cure read Mises "Human Action" available at

Mises.org

Or Rothbards useful recensions of this.

Wed, 04/04/2012 - 06:03 | Link to Comment Chris Celi
Chris Celi's picture

First, I understand my concepts just fine: 

Investopedia explains 'Neoclassical Economics'

Since its inception, neoclassical economics has grown to become the primary take on modern-day economics. Although it is now the most widely taught form of economics, this school of thought still has its detractors. Most criticism points out that neoclassical economics makes many unfounded and unrealistic assumptions that do not represent real situations. For example, the assumption that all parties will behave rationally overlooks the fact that human nature is vulnerable to other forces, which cause people to make irrational choices. Therefore, many critics believe that this approach cannot be used to describe actual economies. 

Read more: #003399;">http://www.investopedia.com/terms/n/neoclassical.asp#ixzz1r43qrsQE

 

Second: My point precisely regards Keen's conception of economics in general, and I would agree that economics should be more analytical than empirical. I tend to side with the instrumentalists with regard to economic models. But I would not say that economics is not empirical either.. That is a stretch...

Wed, 04/04/2012 - 06:34 | Link to Comment Nukular Freedum
Nukular Freedum's picture

Investopedia (!) is wrong. Nce is defined not by ones belief or otherwise in rational expectations (Keynes made a big thing of this) but rather in ones acceptance of the marginal theory of value. The distinction you are getting at is more between Keynesian and other schools. But all these schools are NCE. For a more useful intro try the wikipedia entry, though even this is flawed:

http://en.wikipedia.org/wiki/Neo-classical_economics

As for economics being an empirical science, this is the greatest and most pernicious shibolleth of all because the hardest for everyone to comprehend. It is a shibolleth which is responsible for the current mess that is the economics profession. For a much cleaner and apodictic perspective follow my advice, reade Human Action. Sorry to sound patronizing etc.

Wed, 04/04/2012 - 06:38 | Link to Comment Nukular Freedum
Nukular Freedum's picture

Also as regards empirical models; as some wise person down thread said:
Trash in trash out. Too many variables. Economics, though true, cannot operate as a science and hence cannot operate as a proactive policy vehicle. Until people accept this fact we will retain this great mess.

Wed, 04/04/2012 - 10:13 | Link to Comment Chris Celi
Chris Celi's picture

All of these criticisms are actually pretty funny because ones like you are making, namely my misunderstanding of a very vague term such as "neoclassical economics" has simply been taken from the mouth of Keen, and misses the point of my article entirely anyway. You basically want to agree with me but are trying to turn it to disparage me for whatever reason.

 

I really don't get what all the hostility is for, and at the very least you could target and critique my points rather than fruitlessly trying to question my understanding of "terms."

Thu, 04/05/2012 - 15:11 | Link to Comment RobertBrusca
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Nice thought. Welcome to ZH Chris. Put on the skin-toughener

RAB

Wed, 04/04/2012 - 04:42 | Link to Comment Zero Govt
Zero Govt's picture

Keen uses Minsky to prove that the Fed does not in fact have control over credit in an economy, since it is solely borrowers and lenders who influence credit, and that reserves have nothing to do with the amount of credit in an economy... The amount of credit in an economy consists of the demand for loans by borrowers, and supply of loans that lenders are willing to lend, irrespective of reserves, end of story.

Very Excellent point (and new/s to me).

Which is why despite Benny blowing bubbles for 4 years he's not had control of the contracting credit mountain

the economy is a private thing, not given to being pushed about by some economic dipshit behind a Govt desk pretending he is God at directing it (Paul Krugman take note)

Wed, 04/04/2012 - 04:06 | Link to Comment Dull Which
Dull Which's picture

The talk/debate will be on BBC radio 4 on 4th June

 

http://www.debtdeflation.com/blogs/2012/03/15/economics-without-a-blind-...

Wed, 04/04/2012 - 04:02 | Link to Comment dcb
dcb's picture

Writer, give me a break. Keen is a ground breaking economist who has had to fight just to get his voice heard. he's not part of the establishement. what you expect of him is equal to the output of thousands of economists working for the system. How much is one man suppossed to do. Krugman wins a noble for an obscure small thing trade theory, and you expect keen to have a full model fo the world.

Get real!!!

Wed, 04/04/2012 - 03:42 | Link to Comment dcb
dcb's picture

lse????

Wed, 04/04/2012 - 07:32 | Link to Comment Shylockracy
Shylockracy's picture

London School of Egomaniacs, where Fabians and Imperialists comingled to create "social imperialism", the unacknowledged goal of Keynesianism and state-sponsored debt-enslavement on a global scale.

Also the McKindergarten* of future servants to the international bankocracy.

 

*McKinder was one of LSE's founders, and this quip was approvingly made by two other founders, the Webbs.

Wed, 04/04/2012 - 02:33 | Link to Comment DalaiLamaInAShark
DalaiLamaInAShark's picture

Wake up folks!

Kurgan basically said: banks CANNOT create debt from thin air. They need CURRENCY. The Fed controls the supply of said CURRENCY. End of Story.

QED.

...what a bunch of putzes.

Wed, 04/04/2012 - 10:46 | Link to Comment Thisson
Thisson's picture

I'd suggest reading the "Roaming Cavaliers of Credit" (google it) - Loans are made first; then the banks source reserves.

Wed, 04/04/2012 - 06:11 | Link to Comment Cojock
Cojock's picture

Sorry pal, you don't understand the system.

Banks create virtual look-alikes - some would say counterfeits - of Fed currency and either:

(a) spend this virtual currency - by crediting the reserve accounts of suppliers, staff, managers, shareholders, and above all, the Treasury itself in exchange for debt; or

(b) lend it at interest through what is effectively a sale and repurchase.

The Fed attempts to control the credit/currency created by banks firstly through capital requirements, and secondly through open market operations, which are useless at the zero bound.

There is no such thing as fractional reserve banking and has not been for many decades, if ever.

Wed, 04/04/2012 - 00:06 | Link to Comment q99x2
q99x2's picture

Krugman. No friend of the NWO.

Tue, 04/03/2012 - 22:30 | Link to Comment Lednbrass
Lednbrass's picture

Interesting article, but I take issue with one sentence:

b.) to individuals who DON'T have debt because they are wealthy enough that they don't need it. Excellent, now the poor are "less poor" and the rich have more cash to inflate our economy back to (wait for it) equilibrium. What an absurd "solution."

There is a flaw here: you assume that anyone "needs" debt. Nobody needs it at all, they make the choice to take it on.   You ignore millions of people in the real world who have chosen to live without it their entire lives, or only use it in very small amounts here and there. Not having debt does not by any stretch mean that one is "wealthy", it can very much mean that said person has simply had the basic intelligence and forethought to live within their means.  The underlying premise that lack of debt is somehow correlated to wealth is entirely incorrect.

Wed, 04/04/2012 - 05:47 | Link to Comment Sabremesh
Sabremesh's picture

Whilst taking on debt is a choice, a healthy economy needs people to take on "debt". If entrepreneurs and businesses cannot borrow money, they cannot grow, meaning only the very rich can start businesses. Society would become sclerotic, with the rich getting forever richer and the poor stuck in a rut of perpetual serfdom.

Wed, 04/04/2012 - 10:47 | Link to Comment Thisson
Thisson's picture

False.  You can grow your business organically without debt.  Or you can fund growth via equity instead of debt.

Wed, 04/04/2012 - 02:35 | Link to Comment AnAnonymous
AnAnonymous's picture

Millions is probably an excessive number as money is debt.

All the others live in a debt system.

Tue, 04/03/2012 - 22:27 | Link to Comment macroeconomist
macroeconomist's picture

This post is very biased and written by someone unknowledgable (yet another Austrian "fanboy") about Prof. Keen's research I will not go through the details here, but the author should keep in mind that almost all microeconomic models contain stupid assumptions like perfectly competitive markets, optimization, utility maximization, which is what Prof. Keen is rightly all against. Therefore, there is absolutely no reason not to attack microeconomic models.

Second. Keen is one of the most knowledgable economists in classical economics (Marx, Ricardo, Schumpeter, Hayek, and even Sraffa and Kalecki) so to accuse him for not being an Austrian fan is not fair at all!

His research falls into the field of econophyics, which uses equations and models from modern physics to model economic behaviour. Broadly, there are two strands in this area, the first one uses statistical phsysical models (particularly probabilistic quantum models) and the second one models from classical physics (electric circuits, thermodynamics). Keen's work lies in the second strand, his models are mainly macro models drawn from ideas of circuitist school, Minsky, Schumpeter, Keynes, Marx and Kalecki. The models have no optimization, and explicitly model banking and finance sectors, credit and monetary profits. To argue that Keen offers no alternatives -just because he doesn't mention Austrians in his speech - is totallyy groundless.

Wed, 04/04/2012 - 06:08 | Link to Comment Chris Celi
Chris Celi's picture

Keen has not read Hayek. Second, the unrealistic assumptions of microeconomic models are useful in identifying key factors that occur in situations under exaggerated circumstances so we can more easily see how they act. I'm not sure where you observe any bias in the article. My point is simply that Keen came from the right apparently superseding the left, but then encourages government intervention to solve the problem, which I found a ridiculous suggestion. He literally is taking the "best ideas" from both liberal and conservative economics to gain a following.

 

Your reply sounded a bit biased toward Keen... :)

Wed, 04/04/2012 - 11:19 | Link to Comment macroeconomist
macroeconomist's picture

I am sorry Chris, but NC or NK or call it what you would like, mainstream microeconomic models are utter bullshit and nothing but absolutely nothing can be learnt from those idiotic models that have one consumer, one firm, a continuum of identical firms, firm optimization, consumer optimization, etc. They are more useless than many macro models, and most microeconomists do not even have a clue about how an economy functions, not even at a micro scale. (I exclude experimental economists, who are genuinely trying to grasp how decision-taking process works)

Now you are accusing him of something more sinister "He literally is taking the "best ideas" from both liberal and conservative economics to gain a following". Keen does not really need admiration by ultra-right-wing market fetishists and he is not taking any ideas from liberal or conservative economics, you guys are not the only ones that identify banking and credit creation as the main source of instability in capitalist economies; marxists, post keynesians, and some institutionalists share a lot of similar views on banking and finance, and they have not learnt it from Austrians. If you read Prof. Keen's blog, you will find some nice lecture slides on classical economics and the source of his ideas. And if you ask himself, he will say he is a Keynesian-Schumpeterian-Marxist, but not identify himself as Austrian, which is what annoys you I guess.

What were you expecting him to suggest to get out of the crisis anyway? Succumb to the fetish of efficient markets? Massive deregulation? Austrians' imaginary free capitalism, which has never existed and will never exist? Of course as a Keynesian, he is suggesting increasing government spending and also writing off debt, regulation of financial markets in order to control debt creation and bubbles, which are all consistent with his approach. So there is no ground for you to accuse him of using conservative ideas to gain popularity.

And yes I am pro-Keen, I myself work on similar models.

Thu, 04/05/2012 - 02:25 | Link to Comment Chris Celi
Chris Celi's picture

I don't care about terminology. I use NC because that is what Keen uses... so all of the heat I have received about the terms I've used has been absurd, especially since the criticisms are coming from Keen-proponents, so I don't know where the misunderstanding is coming about regarding my use of NC.

I think too much emphasis is being put on NC micro models when the issue here are is with  macro models like DSGE's. This is my fundamental point, which has been completely overlooked solely in an effort to undermine my disagreement with the way in which Keen has received publicity. He is using the fact that micromodels are based on crazy assumptions to gain publicity in his attack against mainstream economics, which I find to be cheating because micromodels haven't caused the crisis. 

 

Moreover, if he wants to attack neoclassicals then he wants to attack every sect of economics because everyone uses models based on unrealistic assumptions because it is impossible to model an economy perfectly. As someone mentioned earlier, economics is completely variable, ever-changing -- this is why I don't find false assumptions to be a very pressing issue because it isn't the assumptions that matter, that is if you are an instrumentalist (as Milton Friedman was btw).

Thu, 04/05/2012 - 06:14 | Link to Comment LokiBear
LokiBear's picture

Hmmmm

Tue, 04/03/2012 - 23:54 | Link to Comment jpmrwb
jpmrwb's picture

Keen's problem is that he is looking at economics assuming there are  constants when in ecomonics it is all variable. You can't find something that is not there.

In the mathematical treatment of physics the distinction between constants and variables makes sense; it is essential in every instance and variables makes sense;it is essential in every instance of technological computation. In economics there are no constant relations between various magnitudes. Consequently all ascertainable data are variables, or what amounts to the same thing, HISTORICAL data. The mathematical economists reiterate that the plight of mathematical economics consists in the fact that there are a great number of variables. The truth is that there are only variables and no constants. It is pointless to talk of variables where there are no invariables.

Tue, 04/03/2012 - 23:51 | Link to Comment Aquarius
Aquarius's picture

I am sure that this article cum post will be received with great sighs of relief by institutional and consensual economists all around the globe; 'It's okay, nothing to see please move on' - '...  just a momentary abberation and the Profession of Dogmatized Economists is fully intact with all our beloved opinions': Go back to sleep.

Keyword: opinions

Fact is Economics is as much as Science as my dog is a scientist. Yes, Economics is a cult supported by only conflicting opinions and nothing more besides being a crime against humanity.

Let's get to the Prime Directive as to Economists and economics:

No decision maker, or even rational thinker, and not even Bernanke gives a shit about "Economic Theory" or what Economists opine. Bernanke is not even consistent within his own stated opinions and the fact that he lies a lot is not even challenged - it is expected. The fact that he knows nothing about reality economics, Banking, Money, Credit, Debt, Profit, etc., is not even in dispute and Gold?; Dr. Bernanke knows nothing of Gold and more often that not misquote Keynes - just like all or most other of his ilk.

This post and others of the Canadian and US night which grow in my morning sun, just as weeds on the spring morning. There is a major difference between weeds and "green shoots" - I say this for the benefit of the Bernankeists and the Krugmanites. Now, Krugman after the Asian episode of the late '90's and after being rejected by Mahathir, then the Prime Minister of Malaysia - and quite rightly so, and being publically challenged by overwhelming Asians on an editorial level in local newsprint, myself included, slunk out of town to retreat to his academic fortress to fire one way missives at the Asian region and to which he provided no venue for debate.

All this why Tiny Tim et all were forcing the Indonesians to take on the IMF stealth theft mechanisms under the guise of national prosperity, which hid the realities of US fascism snatch and grab. Bottom line is that Krugman is a fraud through and through, a coward and a blowhard and was not only rejected by his owned declared persuasion of alliance but needs to enter jouranlism at the World's greatest rag and White House gopher press.

Those "Leadership" which make "Economic Decisions" make just decisions out of political expediency and without reference to their apologiests, known as the Economists cult.

So while all these polished consensual cultists agree to disagree the World burns, while Bernanke takes orders and literally "buggers" (The American term is far more vulgar) the global socio-economic state of order in the most un-natural ever conceived manner.

For whom or for what does Bernanke see as the spirit of  Americanism: It is obvious that Bernanke doesn't know anything of the Banking system and has never asked where it came from and who does it favour. If he did, and perhaps read Rothbard et al, he would use his influencial post to completely reform this system of consensual global theft, looting, rape and pillage, etc., for it appears today that the Banks now own all asset classes and productivity for at least two future unborn generations besides the current generation. And how to pay the Boomers? The obvious answer is, that they will not be paid.

The result is before your face: The Constitutional Republic ie the US is dying; the USA is done and it lashes out like all other biological life forms faced with iminent unnatural demise, in a swan song known as "extremis". The US dollar as the Global Reserve Currency is also done: Hello.

Today there is only one "Economic Theory" and that is manipulation, theft, looting, lies, wealth transfer to the Banks, austerity (incarceration) for the unwashed, fascism for the elite and "true-believers" before else and the franchise for the eilte of recursive scamming of the public. We have been here before and it don't work so can someone tell Bernanke. 

And as the nicely suited and well fatted Priests of the Economist cult offer more and more sophistry, shill, lies and cancerous viral "Economic Theory" please be reminded of the sageous words of a real giant:

 

"Be not intimidated... nor suffer yourselves to be wheedled out of your liberties by any pretense of politeness, delicacy, or decency. These, as they are often used, are but three different names for hypocrisy, chicanery and cowardice": John Adams

 

John Adams knew well that Economists only serve to be the well paid apologiests of their chosen "leadership" clique; nothing more; being an economist is merely and in reality a cheap meal ticket to the fringes of the elitists suburbia.

 

Sat, 04/07/2012 - 10:53 | Link to Comment blindman
blindman's picture

i believe the vulgar american term to which you
referred is "turd burgling". but his burgling goes
even deeper than merely for simple turds, it goes for
the lungs.

Wed, 04/04/2012 - 05:46 | Link to Comment Nukular Freedum
Nukular Freedum's picture

This self-righteous judgement you cast does not apply to the Austrian economists who have been very much relegated from the fringes of your elite group.
Hello, Mises, greatest economic thinker of the C20th, no nobel prize and denied tenure in both Germany-Austria and the US. Not a lot better for Rothbard and others. Why so relegated? Because their theories, being rooted in reality, gave no succour to the elites and prevented the sort of robbery you so eloquently described.
So quit being an ass- hat, stop tarring everyone with the same brush and try reading Human Action:

Mises.org

Wed, 04/04/2012 - 02:44 | Link to Comment AnAnonymous
AnAnonymous's picture

As long as US citizens perform the way of US citizenism, US citizenism is not dying.

Snatch and grab is US citizenism. Been done from the start. People who were on the receiving end have disappeared as social units, begging now the US govermnent for granting them recognition.

This gives Chuck Norris Indians.

Fabled past, US citizenism is going stronger and stronger.

Hard to see how USD could lose its world reserve currency status.

Quite funny to rely on fallible (or wrong) economic models to predict the end of a currency while saying the models are worth nothing.

The US is making moves to strengthen USD as world reserve currency.

Just yesterday, I learned of Mali situation. To get a sense of the collapse of a pyramidal structure, you need to look the base.

US citizens might be once again reshaping borders with that tuaregs story.

Will have to check that, but would not be surprised if the land taken by Tuaregs concentrate mali mineral deposits.
It wont be finished as Niger and Burkina Faso I think have also tuareg population.

This would reinforce USD currency status as USD is backed by the environment. Tuaregs new nation will strike new deals.

Wed, 04/04/2012 - 05:09 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Snatch and grab is US citizenism.

Scratch butt and sniff finger is Chinese citizenism babboonism.

 

Wed, 04/04/2012 - 02:40 | Link to Comment Aquarius
Aquarius's picture

Just one example in the proof that Economists are not listened to by those of the stealth decisions of political expediency:

"The proper role of government is exactly what John Stuart Mill said in the 
middle of the 19th century in On Liberty. The proper role of government is to 
prevent other people from harming an individual.

Government, he said, never has any right to interfere with an individual for that

individual's own good.
 

The case for prohibiting drugs is exactly as strong and as weak as the case for 
prohibiting people from overeating.

We all know that overeating causes more deaths than drugs do.

If it's in principle OK for the government to say you 
must not consume drugs because they'll do you harm, why isn't it all right to 
say you must not eat too much because you'll do harm? Why isn't it all right to 
say you must not try to go in for skydiving because you're likely to die? Why 
isn't it all right to say, "Oh, skiing, that's no good, that's a very dangerous 
sport, you'll hurt yourself"?

Where do you draw the line?"
-- Milton Friedman
(1912-2006) Nobel Prize-winning economist, economic advisor to President Ronald Reagan, "ultimate guru of the free-market system"

It's just delusional: http://tinyurl.com/7czwbw2

 


Wed, 04/04/2012 - 02:51 | Link to Comment AnAnonymous
AnAnonymous's picture

Drugs are a strange story. Drugs have been there for millenia.

Yet nothing promoted drugs as US citizenism did.

Quite a few telling examples about that.

It is rather funny because supposedly, free will is a key element in US citizenism. Yet US citizenism has promoted as nothing else the spread and use of products known to destroy free will.
All in all, US citizens have researched many things related to addiction and implemented successfully.

Rather strange for people who claim to promote free will. Rather normal when one thinks US citizenism is all about consumption aiming to depletion of resources. Addiction is a powerful tool to increase consumption. Addiction negates any conservation instinct. Including self preservation (see US citizen armies, use of drugs, war kids phenomenum accross the world)

Comparing sky diving and drugs, you need to be a US citizen economist to do that.

Even though marketing can add addictive elements to skydiving as it is done in many ways elsewhere.

Wed, 04/04/2012 - 05:06 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

Drugs are a strange story. Drugs have been there for millenia.

Yet nothing promoted drugs as US citizenism did.

Ah, easy to say when you are writing this in wifi-enabled opium parlor hotspot.

But hey, it is self justified, until you come down from high of opium smoke.

 

Tue, 04/03/2012 - 21:57 | Link to Comment bart.naf
bart.naf's picture

Monetary base less excess reserves vs. Z1 total credit

 

http://www.nowandfutures.com/images/base_vs_total_credit.png

Tue, 04/03/2012 - 21:45 | Link to Comment steve from virginia
steve from virginia's picture

 

C'mon Celi, gimme a break! Yr real complaint viz Keen is he isn't an Austrian fanboy.

Reading the Austrian economic handbook(s) and there is no energy conservation anywhere ... fail!

Rothbard is agreeable, however.

 

Wed, 04/04/2012 - 02:53 | Link to Comment AnAnonymous
AnAnonymous's picture

Reading the Austrian economic handbook(s) and there is no energy conservation anywhere ... fail!
____________________________________________

US citizenism is all about consumption. US citizen economics (no matter the church) shall aim at consuming the environment the faster possible.

____________________________________________________
Rothbard is agreeable, however.
___________________________________________________

Indeed.

Wed, 04/04/2012 - 00:05 | Link to Comment jpmrwb
jpmrwb's picture

The market will tell what to preserve and not to preserve. It's called prices.

Continue your reading when you are sober.

Do NOT follow this link or you will be banned from the site!