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Bank Of England Chief Economist-To-Be Warns: "It's Time To Rethink Everything"
Andrew Haldane, who is well known among readers as being one of the most outspoken and truthy central bankers in the world, will become Bank of England's Chief Economist in June. That fact is what makes his comments - however factually honest - extremely uncomfortable for the Keynesian status quo DSGE modelers alive and well in every central bank in the world. To summarize his thoughts in the following letter - the models are useless and it's time to rethink everything...
In the light of the financial crisis, those [macro and micro model] foundations no longer look so secure. Unbridled competition, in the financial sector and elsewhere, was shown not to have served wider society well. Greed, taken to excess, was found to have been bad. The Invisible Hand could, if pushed too far, prove malign and malevolent, contributing to the biggest loss of global incomes and output since the 1930s. The pursuit of self-interest, by individual firms and by individuals within these firms, has left society poorer.
...
The crisis has also laid bare the latent inadequacies of economic models with unique stationary equilibria and rational expectations. These models have failed to make sense of the sorts of extreme macro-economic events, such as crises, recessions and depressions, which matter most to society. The expectations of agents, when push came to shove, proved to be anything but rational, instead driven by the fear of the herd or the unknown.
The economy in crisis behaved more like slime descending a warehouse wall than Newton’s pendulum, its motion more organic than harmonic.
...we are a co-operative species every bit as much as a competitive one. This is hardly a surprising conclusion for sociologists and anthropologists. But for economists it turns the world on its head.
...
In this light, it is time to rethink some of the basic building blocks of economics.
Full report below...
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In other news, Andrew Haldane threw himself off an 80 story building while shooting himself in the back of the head with a 10 guage shitgum.
Police have ruled out foul play.
no way he gets to say these things off script. this is the part of problem, reaction solution where they stick you with a solution to a crisis they created which takes even more freedom away, while making it appear as if they were helping you.
...we are a co-operative species every bit as much as a competitive one. This is hardly a surprising conclusion for sociologists and anthropologists. But for economists it turns the world on its head.
in this light, it is time to rethink some of the basic building blocks of economics.
Hardly a surprising conclusion for anyone with a brain.
This has all been scripted for your viewing pleasure as part of a long term plan by TPTB.
This has all been scripted for your viewing pleasure
Nevertheless, it's long overdue time someone whistled a different tune.
I'm not so sure he is whistling a good tune.
"The pursuit of self-interest ... has left society poorer."
This statement should scare the ever lovin' shit out of everyone.
"The pursuit of self-interest ... has left society poorer."
This statement should scare the ever lovin' shit out of everyone.
Every person alive always operates in self-interest. Rationally? No. But self-interest yes.
Why has Tyler forsaken us with this garbage?
"Why has Tyler forsaken us with this garbage?"
http://finance.yahoo.com/q/bc?s=SPY+Basic+Chart&t=5y
???
The permanently postponed collapse has forced this site to take many a different turn with what we read.
I just think thank fuck we have an economist cheif that understands markets behave more in a sociological manner than a mathematical one
Hopefully Andrew rethinks everything and if he thinks correctly (as fonestar does) he will come to the inescapable conclusion that Bitcoin is the answer.
Electronic currency will be the future. No chance in hell that it is bitcoin that gets the job....you would end up needing a server farm for each unit of currency.
It appears that Haldane has concluded that central banks rigging markets and blowing bubbles everywhere prove that market based economies don't work.
Clearly, more central planning not less is needed.
Escape velocity - are we there yet Carnie?
"Every person alive always operates in self-interest. Rationally? No. But self-interest yes."
True, this is not some new brilliant thought. This is why the statist minded fools today are selling out their nations sovereignty for their selfish interest. This is why the solution in the US is a return to limited government as per it's founders.
Behavior rationality is a mask, a paint job applied after we act. We are irrational, and then manufacture a plausible explanation.
But, um, thats all in the past. Barbaric days. Scientific socalism has lead, will lead, us going forward.
Forward? Yes.
Forward!
Sounds like he's making a play for more Statist control. Perhaps he's thinking bail-ins would be a good place to start.
Huge bail-ins and hyperinflation all around the globe are what is needed. Humanity needs to learn a lesson here and that isn't going to happen with a soft landing.
Peasants, workers, small capitalists, ignorant in the beauty of the modern crony Keynsian state, must trust and obey their appointed leaders, and redouble their efforts and tighten their belts. In the long run....
Forward!
"The pursuit of self-interest ... has left society poorer."
Every person alive always operates in self-interest. Rationally? No. But self-interest yes.
That is why the Rule of Law is necessary for a society to function. When the Rule of Law is corrupted by sociopaths like it is now (separate laws for TPTB versus the masses), you have the mess we have now. It is now the New Feudal World Order. The rich and powerful redistributing all assets and wealth to themselves from the lower classes.
Depends upon what we, as individuals, consider to be in our self-interest, doesn't it? If we go about our lives trying to do well by others, expecting they will do the same for us, we'll realize a very different outcome than if we wake up every day scheming how to take advantage of others, won't we?
The scheming part of humanity has a well-deserved ass-kicking coming... at least I hope that's the case, anyway.
The pursuit of self-interest fails miserably in societies based on coercion.
As when under the control of government.
"The pursuit of self-interest ... has left society poorer."
What they really meant to say was "The pursuit of self-interest among the world's populist demagogue socialist leaders... has left society poorer."
That's much better... Oh, by the way translation of the above; We are going to confiscate all of your wealth and there's not a damn thing you can do about it.
Sing the error of Big Gov is over, like it's your favorite gingle.
Change error to era, and I'm all in... Almost missed gingle. We're buds, or used to be, anyway- It's jingle, dude. Ewe don't want peepul thinkin' ewe don't no how to speyal and shit.
Era is the quote what Bill Clinton said. It's funny but went over everyones head, gingle is ole english, oh well.
Brother, I'm losing you. There's static on the line- interference that is. You're breaking up. Can you please repeat that? I didn't understand what you just said.
Why don't you re-read it brother and spell check it for me. You're a big boy.
I am a big boy, but I still don't get what you're trying to say. OTOH, you can forever and always fuck off, and not one drop of sweat will form on my balls. Get it?
Don't even think of challenging me unless you can handle my response, shit for brains.
A different tune?
In the light of the financial crisis, those [macro and micro model] foundations no longer look so secure. Unbridled competition, in the financial sector and elsewhere, was shown not to have served wider society well. Greed, taken to excess, was found to have been bad. The Invisible Hand could, if pushed too far, prove malign and malevolent, contributing to the biggest loss of global incomes and output since the 1930s. The pursuit of self-interest, by individual firms and by individuals within these firms, has left society poorer.
This sounds like the same old socialism to me.
And he completely disregards that one school of Economics already has models that capably handle crises, depressions, recessions...
Haldane is promising more of the same but worse. Expect additional layers of complexity and obfuscation to follow.
So is it time to rehabilitate Karl Marx?
In my humble :) opinion, it's about time we rethink fiat currency, the Fed, and the fascist welfare state that fake money created.
"It is time to rethink some of the basic building blocks of economics."
Well, in addition to tacit continuation of un-tapering through Belgium, bail-ins would be yet another viable option...
Rethinking might be pretty tough to puzzle out a hard optimization problem: How to change something without changing anything?
How this is supposedly a negative for the Keynesians, I've no fucking idea.
If the impossibility of Stagflation didn't end their rule, nothing will.
This is merely more smoke and mirrors to repair the damaged facade.
John, this is exactly what Ron Paul talks about in END the FED and it's the biggest problem of all. At every chance they had in the 20th century they just took more power while assuring the masses it wouldn't happen again, then an even bigger problem happened and the cycle repeated.
At somepoint we just have to flat out reject whatever their ideas are because they've all been wrong for 100+ years. I do not think all these resurections of communist ideas is a coinciedence... it's apart of the plan to make us all their serfs, for the greater good of course...
"At somepoint we just have to flat out reject whatever their ideas are because they've all been wrong for 100+ years."
They, the timeless bankers, tempt you with a little bread for you to get into the cage. That's what happened to Pres. Wilson in 1913. They tempted the progressives of the time by financing their dream of Utopia. The creation of a fiat banking system which was unconstitutional, end result is a bankrupt nation.
Since it was and is unconstitutional then none of the debt is valid. We just need to take control of the country and declare this (referencing specifically the bankers as nations will need a finer touch). Then let the bail-ins begin.
Mr. Bernanke, welcome to your cell. The bad news is that there is no bail and you are in for life. The good news is LawofPhysics is running a little late so life will be longer than expected.
Debt repudiation for all, except the bankers and politicians.
If you haven't noticed, AS A NATION, WE ARE NOT PAYING BACK THE DEBT. The USD is FINISHED. The Bankers and Progressive politicians with the help of our Gov/Media complex have stolen our national wealth and Gold. Get this in your head.
"You're so concerned with squabbling for the scraps from Longshanks' table that you've missed your God-given right to something better. There's a difference between us: You think the people of this country exist to provide you with position. I think your position exists to provide these people with freedom." (William Wallace - Braveheart)
He was so depressed that he threw himself off the building twice.
and to be sure shot himself 3 times in the head (thinking of the nail gun specialist banker)
Forming Of Eurasian Economic Union And Joint Currency Accelerates
http://www.ingoldwetrust.ch/forming-of-eurasian-economic-union-and-joint...
But keep paying $100k for that college degree, cause you know its for the future /sarc
I will, thanks. Come say that to me in 15 years.
Interesting.
"If you look at bananas under a black light, you will find that they glow blue at the peak of their ripeness."
This also works with women.
(Your insights have been missed. Welcome back.)
what happens if your banana is green?
The Invisible Hand could, if pushed too far, prove malign and malevolent, contributing to the biggest loss of global incomes and output since the 1930s.
sorry, but he's talking rubbish,
hows the flippin Invisible Hand supposed to work when its been bloody well nailed to a desk by CB imposed interest rates,
there was no flippin hand, only false signals,
He's talking the same trash as Piketty. He merely added "unbridled competition in the financial sector" to it. The idea that he represents an alternative is pure idiocy.
This is one of the worst Tyler written posts, EVAR!
That should be quote of the week.
You could also add, "How's an economy supposed to work when it keeps getting fucked over by economists?"
For those of you happy about this dude's statement I don't think his solution is more capitalism, more free markets. The way I am taking it he is advocating for more "sharing of the wealth". "From each according to his ability to each according to his need"
"The pursuit of self-interest ... has left society poorer."
Yup.
I agree. They feel the need to do morer because they already tried doing more, and it wasn't enough. That's how adicts rationalize their next hit. I get the feeling they're gunning for the great bail-in. If you got it, hide it.
The problem is the bankers NEED so much MOAR than the little people because in their sick sociopathic mind, they have to PROVIDE for the little people. That's why the bankers have to TAKE everything from everyone else. His statements are textbook examples of circular logic.
."..we are a co-operative species every bit as much as a competitive one. This is hardly a surprising conclusion for sociologists and anthropologists. But for economists it turns the world on its head."
It is people co- operating together that worries them most.
Competition they can control, but off grid invisible networks, are like cancer for the central planners.
Mr Piketty is causing the Central Bank Economists to make their COMING OUT.
"We got it aLL WRONG", is now becoming RESPECTABLE!!!
hahahaha....you can't make this up.
Trickle down and wealth inequality don't make good bedfellows. In fact trickle down smells awfully like : I've peed into my slippers and by God its gonna provoke a tsunami!
"Four years ago, George Soros set up the Institute for New Economic Thinking (INET) to
stimulate a refresh and reset of the economics discipline and, within that, economics teaching. Two years ago, Gregory Mankiw’s undergraduate economics class at Harvard walked-out at the narrowness of the curriculum. Here in the UK, Wendy Carlin from UCL isleading a project to reform the economics curriculum among a number of UK universities,with sponsorship from INET. These are all encouraging steps in the right direction"didn't stop Soros the WS HF king to make another few billion off the casino wheel with ZIRP at beck and call on cash and carry.
One law for the plebes another for the Oligarchy kings.
Soros NEVER takes steps in the right direction. This is yet another limited hang-out operation designed to put the financial sheeple world back to sleep, by making the facade of investing respectable again.
We're being goose-stepped into full-blown communism all while it's called something else.
Wake me up when Soros starts quoting Menger.
"Unbridled competition, in the financial sector and elsewhere"
I cal BS! Unbridled cronyism is more accurate. He is blaming the free market for the damage done by cronyism.
Given the new precedent that Congress can make us buy products and services, the many existing bans on products and services, the millions of pages of regulations, the fact that our money is printed out of thin air without competition, and the federal debt; I think it is fair to say that government now exercises absolute power over commerce and is not wielding that power in good faith.
The decline leading to the great crash began when regulation forced us to go from mark-to-model to market-to-market in 11/2007 and the current bull market began when regulation forced us back to mark-to-model in 03/2009. It is almost as if regulation is being used to create bubbles and crashes. Even when we briefly had mark-to-market, that was not a move to free markets because everyone was forced to do the same thing. In a free market, some would use mark-to-market and some would not, and those who chose mark-to-market would get the trust of more customers, and failures would be spread out and fewer, and thus not serve as a pretense for new regulations, bailouts, QE, ZIRP, and lower fractional reserves.
Competition in the financial sector?
Our financial sector has been socialized since at least 1913 (via creation of the fed). What the hell is this guy talking about?
Instead of rethinking everything, why don't we hang all the corrupt and return to common law?
A separation of commerce and state might be pretty effective:
Separation of Commerce and State Amendment
The powers over commerce and money granted by the Constitution are very limited. The Congress can:
Of course, the government now exercises absolute power over commerce. For example, the Supreme Court recently ruled that the power to tax justifies forcing everyone to buy health insurance or else pay a fine. Even though this new precedent gives the Congress a way to force us to buy products and services, it was still not satisfactory to the four so-called “liberal” justices because they wanted the decision to include a direct assertion that the commerce clause empowers the Congress to force us to buy products and services. How is it that so-called “liberals” want to force the little guy to buy products and services?
The so called “liberal” Clinton administration argued before the Supreme Court that the power to regulate interstate commerce justified banning the presence of guns in homes within 1000 feet of a school because guns impact education, and education impacts the economy, and the economy impacts interstate commerce, and the Congress has the power to regulate interstate commerce! Amazingly, five of the Supreme Court justices disagreed with the Clinton administration. Of course, once one of those five justices has been replaced by Obama, his plan to ban guns everywhere within, not 1000, but 5000! feet of a school will pass the Supreme Court.
Given the new precedent that Congress can make us buy products and services, the many existing bans on products and services, the millions of pages of regulations, the fact that our money is printed out of thin air without competition, and the federal debt; I think it is fair to say that government now exercises absolute power over commerce and is not wielding that power in good faith.
Such extreme power and corruption requires an extreme remedy. Therefore, I propose a new Freedom Amendment – The Separation of Commerce and State:
Separation of Commerce and State
I know a broken record right now.......but the markets are sending a 'lot' of really bad signals right now. I'm pretty sure a sizeable selloff is near. Of course tomorrows friday not a real fav day for selloffs we'll see. The viagra just isn't working anymore.
Please tell this truth, stop hiding it!
http://patrick.net/forum/?p=1241650
As sweet as it is to hear something new from Central Banksters, I'm afraid this won't lead to more free markets and Austrian economics.
There's nothing new in this in the least bit. It's just the next bait-and-switch operation to usher in Marxism as the inevitable "death of capitalism."
Why every one can't see that Haldane is holding the murder weapon is beyond me?????
How can you usher in a hoax to replace the true thing; unless the true thing is a bigger hoax than the hoax itself.
Now the hoax is on the folks who thought that invisible hands gave better hand jobs than firm totalitarian hands on tired knobs.
Why would the people who have done so well over the last 60+ years - the top 20% (that's 60 million people) - want an unknown highly competative system where they might lose?
When shiney new asshole talks, people listen.
Hey, a clear and informed public voice? In England? OMG! Anarchy in the UK?
Just nice to hear someone describe the actual facts on the ground. Does he have a solution in mind? I dunno. If they elected me emperor would I have a solution ready to go? Nope. But the first thing I'd want to do is just what he says, "rethink" the basics, cuz the textbooks are NFG anymore.
Talk a bit louder and be unseated in July, or worse...
En Ingle, por favor.
Just pulling the tip of the "head out" until he busts our arseholes beyond repair.
Greenspan once favored a gold standard, too. Sometimes you just have to say things to get a job...in this case the populist rhetoric is being used for advantage and a less obvious manipulation of the public. Obama did the same thing to get into office in '08.
Ok, fine. End the Fed, blah blah blah.
The top 10% need the fed, the 10 - 20% are doing good keeping the top 10% happy.
That's 60 million people who like the current system.
How do you get the bottom 80% (the loser dumbasses trash useless loser dumbasses worthless lazy loser trash class) to oppose all the people that like the current system?
Of course this system is broken ...but the Oligarchs are not going to let us fix it without a fight.
If you were to describe to the American Public of 50 years ago that the economic system would eventually lead to a level of wealth inequality surpassing that of the Gilded Age or the 1920's...
...that in 2014 the richest 0.1% of the population would take home >50% of all capital gains...then they would have chosen a far sterner progressive tax system then what we have today.
We have allowed the Oligarchs, through our "legal" political corruption system, to lower their inheritance tax so much that we have ensconced a vicious and greedy new form of Old-Europe style aristocrats. It will get worse before it gets better. It will be a bloody fight. Count on it.
Who is going to be doing this fightin'?
The top 20% are winning, so they don't want anything changed. The OldFarts don't want their free hip replacement surgery's cut-off, everybody living off of Big-MIC sure doesn't want anything changed.
So, between the top 20%, the OldFarts, and Big-MIC who's left?
"She can stay afloat with the first four compartments breached, but not five! "
Elysium Class passengers to the life boats. Elysium Support Class please stand by. Trash Class, free wi-fi sports and porn now being offered in your rooms.
He said the word think. Employed economists reflexively regurgitate the nonsense indoctrinated in their schools, or required to cover for their masters. You cannot rethink, if you didn't first think.
marketoracle.co.uk
"The Invisible Hand could, if pushed too far, prove malign and malevolent, contributing to the biggest loss of global incomes and output since the 1930s."
These fcking central bankers can never describe the crimminal activity that their regulatory staff managed. First politicians, regulatory and bank executives gamed the system (eg. MERS is one of many examples). Within this gamed system, the banking system knowingly sold "snake oil" financial paper to fools seeking yield. The key word, knowingly, makes this FRAUD. The Invisible Hand works when crimminals are caught and sent to jail.
Throw all cronyist in jail and the invisible hand will work its magic.
Thank you.
Mervyn King, shame on you. You had the duty to expose all of this and press the reset button. Nay, you had the obligation.
You spoke in riddles to assuage your guilt (I can't spell conscience), took the money, and skipped off into retirement.
It isn't economics that is the problem, it is organised pinstripe crime.
The banks do not have to rethink anything.
They just have to stop interfering with the free market.
FUCK ANDREW HALDANE - YOU FUCKING NIMROD!!!!
The fucking planet was telling you this in 2009, 2010, 2011, 2012, 2013. In 2014 the fucking planet just gave up.
YOU, ANDREW HALDANE, HAVE A LISTENING PROBLEM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Seems when they can see their ponzi imploding and the very real possiblity that they may end up swinging from a tree, they want to rethink thinks. I say hell no, reap what you sowed.
Anyone who looked at the system - and it hasn't changed one bit - would expect EXACTLY what happened. You have a political class that has been bought off by special interests, a captive central bank and regulators that don't regulate.
How about this? Maybe banks shouldn't be 12x leveraged normally and shouldn't be allowed to blow well over that via derivatives. Maybe the Fed should not be providing free money or buying mortgages to push up house prices. Maybe the FHA and banks shouldn't be providing 3% down payment loans to this day. Maybe interest shouldn't be deductible for anyone, individuals or corporations included so that debt isn't encouraged.
I'm so tired of the "it's the banks and free market's fault". Markets aren't free when the government is manipulating them. The system is destined to fail by design. The government has screwed up markets from healthcare to education to housing finance beyond belief. They never seem to look in the mirror and the media sure does a crappy job of policing them.
"the models are useless and it's time to rethink everything..."
But they knew that before they even started. Bernanke wrote in 1988 that QE DOESN'T WORK.
Naturally, any model that couldn't work in the first place, is useless.
As has been said above, anyone suggesting "a rethinking of everything" without addressing the corruption, let alone his cohorts who enabled him to this place...
and who will surely not let him destroy their expectations...
is simply suspect.
Remember the Charm of the Narcissist and Sociopath.
It is not clear that Haldane has actually read "Wealth of Nations", since Adam Smith there said that high profits and low wages are the road to ruin:
"The plans and projects of the employers of stock regulate and direct all the most important operation of labour, and profit is the end proposed by all those plans and projects. But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin. "
Haldane is no longer an economist if he says these things.
From Ralph Raico, Was Keynes a Liberal?:
"Throughout Keynes’s career, however, clear indications appear of his longing for
a much more radical social order—in his words, a “New Jerusalem” (O’Donnell
1989, 294, 378 n. 27). He confessed that he had played in his mind “with the
possibilities of greater social changes than come within the present philosophies” even
of thinkers such as Sidney Webb. “The republic of my imagination lies on the extreme
left of celestial space,” he mused (1972, 309). Numerous statements strewn over
decades shed light on this somewhat obscure avowal. Taken together, they confirm
Joseph Salerno’s (1992) [1] argument that Keynes was a millennialist—a thinker who
viewed social evolution as pursuing a preordained course to what he conceived to be
a happy ending: a utopia (O’Donnell 1989, 288–94). [2]"
[1] Joseph Salerno, 1992. The Development of Keynes’s Economics: From Marshall to Millennialism.
Review of Austrian Economics 6, no. 1: 3–64, link to PDF: http://mises.org/journals/rae/pdf/RAE6_1_1.pdf
[2] Ralph Raico, Was Keynes a Liberal? The Independent Review, v. 13, n. 2, Fall 2008, ISSN 1086–1653, Copyright © 2008, pp. 165–188. link to PDF: http://www.independent.org/pdf/tir/tir_13_02_1_raico.pdf
The study of economics is often baffling and confusing. Many economic theories exist but many are full of holes and conundrums. Much of how people react to a policy may have to do with timing and perception instead of reality. Economics is full of loops that feed back upon themselves and unexpected pitfalls based on expectations.
All this can become quite abstract. Economist predict events that never tend to unfold as expected or planned. Many of the "modern monetary theories" in use today have not been proven over time, but reflect an attitude that we can control economic cycles better than in the past. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/03/few-people-really-understand-econ...
If we are going down the how did this happen road then I think the old chestnut of compound interest needs to be dragged out....thanks to this "most powerful force in the universe" (great quote even if Einstein didn't really say that) debt can grow exponentially. Humans are not programmed to deal with exponential anything......let alone debt. Charging compound interest on debt should be banned...as is currently the case in Islamic countries. Why should we have to pay multiple times the value of our home simply for the privilege of being allowed to pay for it over 25 years? Same with cars, education, etc. Dealing with this would go a long way to resolving debt crises around the world....imho.
i have a little checking account for just monthly recurring bills, 5 years ago the bank began charging me a service fee. i called and they told me if i opened a savings account with 100.00 minimum in it i would never have a monthly fee or debit card fee. so i did 100 dollars.
5 years later with no service fee's, the total of all interest is .03 cents.
that is the problem.
And within 5 minutes of hearing that all the talking-heads and guest-speakers and economisseds will have successfully swatted reality away again, without even breaking a sweat, and will have resumed their fantasy-world of entrenched lies where it was so rudely interrupted by that very annoying and rather pernickety interloper.
That dead-wood is going to rethink nothing.
What's to rethink bruh bruh?
Pissing in the hurricane this quack is - like one person (with a clue) even listens to an "economist" let alone believes them.
Bank of England? Is that supposed to be credibility in the land of fraud-finance?
The world economy has been manipulated by Keynesian predators since 1971, and to slightly less extent since 1914. That ALONE is enough to prove their prescriptions and manipulations are BAD for the world economy. No fancy theories are necessary, only observation.
Keynesianism is not really a theory, it is nothing more than a rationalization to justify what predators-DBA-government and predators-DBA-corporations (especially financial ones) want to do. They have always known this. For anyone to treat Keynesianism or these predators like they are serious legitimate topics only serves to sanction their rationalization and crimes against humanity.