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How Much More Ridiculous Can It Get?

Tyler Durden's picture




 

Submitted by Pater Tenebrarum via Acting-Man.com,

Pretense of Knowledge

Wall Street breathlessly awaits the newest payrolls report, which is widely held to contain the information needed for the FOMC to decide whether or not it should raise the overnight interbank lending rate from zilch to zilch plus a few basis points later this month.

 

aggression

The payrolls report is going to be revised umpteen times after its initial release, is in many ways driven by statistical artifacts (such as the “birth-death” model) and concerns a lagging economic indicator – in other words, its “signal to noise” ratio makes it utterly useless, even if one erroneously ascribes a lot of meaning to economic statistics describing the past.

 

Monthly non-farm payrolls

Change in monthly non-farm payrolls in 1000ds, via Saint Louis Federal Reserve Research, click to enlarge.

And yet, this utterly devoid of informational content data point is what the central planning bureaucrats are held to need to decide on their next steps in terms of interest rate manipulation! We are continually surprised by the fact that people can discuss this obvious nonsense with a straight face.

In this context we have recently come across an interesting article at Forbes, by sound money and free market advocate Ralph Benko. It is entitledIf The Fed Is Always Wrong How Can Its Policies Ever Be Right?and is well worth the read. As Mr. Benko points out, the Fed’s economic forecasts leave a lot to be desired, primarily because they tend to be dead wrong with unwavering regularity.

He proceeds to ask how a bureaucracy that couldn’t forecast its way out of a paper bag can possibly know what policies it should implement. It seems totally absurd to expect it to be able to ever get it right, except perhaps by sheer accident.

 

2014-Interactions-Main_0

 

Mr Benko inter alia quotes from F. A. Hayek’s famous Nobel Prize speech “The Pretense of Knowledge” (a speech that may have made his hosts regret their decision to award him the prize):

“We have indeed at the moment little cause for pride: as a profession we have made a mess of things. It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences — an attempt which in our field may lead to outright error.

 

It is an approach which has come to be described as the “scientistic” attitude — an attitude which, as I defined it some thirty years ago, “is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.” I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error.”

(emphasis added)

 

FriedrichHayek

Friedrich Hayek, critic of “scientism” in economics

 

Hayek simply reminded everybody that economics is not akin to the natural sciences and that the attempt to apply the methodologies of the natural sciences to economic problems is therefore bound to lead to nothing but error. We term this tendency “physics envy” – economists want their science to be as “precise” as physics, and are employing mathematical models in the attempt to attain this precision. It seems to us that all of this is based on a fundamental misunderstanding of what economic science actually is.

We certainly do not agree with those who say that economics is a “pseudo-science”, i.e., that it isn’t a science at all. It has become fashionable for critics of the current economic dispensation to make statements to this effect, but they err. Economics is a social science, and as such is certainly fundamentally different from the natural sciences, but that doesn’t mean it isn’t a science. If one insists on averring that economics isn’t a science at all, one implicitly denies the existence of economic laws. However, economic laws do exist, and it can be shown that they do.

Hayek was critical of the “pretense of knowledge” as evidenced by the methods modern-day economists employ to determine the proper course of “economic policy”. He surely didn’t mean to indicate that there is nothing for economists to know, only that what they actually can know is vastly different from what they   nowadays pretend to know. As Murray Rothbard noted in his foreword to Ludwig von Mises’ great work on methodology, Theory and History:

“Mises saw that students of human action are at once in better and in worse, and certainly in different, shape from students of natural science. The physical scientist looks at homogenous bits of events, and gropes his way toward finding and testing explanatory or causal theories for those empirical events. But in human history, we, as human beings ourselves, are in a position to know the cause of events already; namely, the primordial fact that human beings have goals and purposes and act to attain them. And this fact is known not tentatively and hesitantly, but absolutely and apodictically.”

(italics in original)

In other words, economists in a sense have an advantage over natural scientists, in that they have apodictic knowledge of the cause of economic events from the outset – they don’t need to conduct (and indeed, cannot conduct) falsifiable experiments to “test” the laws of economics. On the other hand, they are also at a disadvantage, as the uniqueness and complexity of every slice of economic history makes historical statistics and data entirely useless for the formulation of economic theory. As Rothbard said ibid. on the problem with “empiricism”:

Is the fact of human purposive action “verifiable”? Is it “empirical”? Yes, but certainly not in the precise, or quantitative way that the imitators of physics are used to. The empiricism is broad and qualitative, stemming from the essence of human experience; it has nothing to do with statistics or historical events. Furthermore, it is dependent on the fact that we are all human beings and can therefore use this knowledge to apply it to others of the same species. Still less is the axiom of purposive action “falsifiable.” It is so evident, once mentioned and considered, that it clearly forms the very marrow of our experience in the world.”

(emphasis added)

 

rothbardsmile

Murray Rothbard – the empiricism of economics is qualitative, not quantitative

 

Socialism as Institutional Aggression Against the Free Exercise of Human Action

If you look at the comments section at the Forbes article mentioned above, you will inter alia find a brief comment by us. We made the following remark:

“[…] the very notion that there should be a “policy” is already mistaken. It is just as mistaken to assume that the science of economics is about making “predictions”. It isn’t, and it will never magically get better at this task.”

Regular readers are no doubt aware that we believe central planning by a monetary authority to be superfluous and harmful. As we have pointed out on numerous occasions, central banks represent a special case of the socialist calculation problem (see e.g. “Sell ’em All! Central Banks and the Socialist Calculation Problem” for some background on this).

This is based on an idea first formulated by Jesus Huerta de Soto as far as we are aware, who has proposed to broaden the scope of the socialist calculation problem originally presented by Mises. In his own work on socialism – ‘Socialism, Economic Calculation and Entrepreneurship’ – de Soto makes the case that one should actually broaden the scope of what the term socialism itself means.

While Mises defined socialism very narrowly – namely as a system in which the State is the sole owner of the means of production – de Soto tries to incorporate the ideas of Hayek, Kirzner and others on the topics of economic calculation, knowledge and entrepreneurship to arrive at a definition that probably has more practical applicability in modern times, i.e., the era after the collapse of the communist system. He writes:

“Our expressed desire to apply subjectivism with the greatest possible rigor and consistency to the analysis of socialism manifests itself, above all, in our definition of this social system. Indeed, we have already stated our view that the core, or most characteristic feature, of human nature is the ability of all people to act freely and creatively. From this standpoint, we consider that socialism is any system of institutional aggression on the free exercise of human action or entrepreneurship.”

(italics in original)

 

entrevista_a_jesus_huerta_de_soto_por_luis_figueroa

Jesus Huerta de Soto: a broader definition of socialism

One can certainly agree that central banks fall within the scope of this definition: their actions do represent a form of “institutional aggression on the free exercise of human action or entrepreneurship”, as they manipulate interest rates which would otherwise form freely in the market.

 

Economics and Prediction – Historians of the Future

However, we want to briefly focus on the second part of our comment at Forbes, concerning economics and “prediction”. Modern critics of economics are very much focused on this point, as it can be shown again and again that economists as a group are almost uniquely unable to make correct economic forecasts. They are on average worse at predicting the future course of the economy than house wives (there actually exists a study conducted by the Economist magazine that has compared the economic forecasts of house wives to those of professional economists over a period of ten years and has come to the same conclusion).

And they have to grin and bear the critique, because they themselves have invited it with their “scientistic” approach to economics. The original motto of the US Econometric Society was “Science is Prediction”. By implication, if economic science is incapable of furnishing correct predictions, it cannot be a science. Hence the widespread accusation that “economics is not a science”. In this case however, it is the motto that is mistaken.

 

etrica3

Economic theory cannot be “advanced” by the application of mathematics and statistics.

 

Unfortunately, human beings are not “predictable”. They continually soak up new knowledge as it emerges, their value scales are in no way “fixed” and their actions are based on future states of knowledge that are simply not known yet. A physicist can tell us precisely where a rock we have thrown will land, provided he is made aware of all the necessary data – all of which can be precisely measured. He doesn’t have to worry that the rock will change his mind in mid-flight, mainly because the rock has no mind. Human beings – most of them, anyway – do have minds.

The premise that economics should be based on some variant of positivism – i.e., that it should employ “data” and “statistics” and use them to make “predictions” is fundamentally erroneous. Not only is this simply impossible, it is not even the task of economics. As Mises noted, economics is essentially the best elaborated part of the broader science of human action – which used to be called “sociology” before Mises renamed it praxeology (he didn’t do this lightly) due to the anti-economics stance embraced by most sociologists in his time.

 

einstein

Einstein stumbles on an economic law by accident

As such, the task of economics is to elaborate economic laws. This is done by logical deduction based on the action axiom. Within reason, it is not only legitimate, but necessary to employ models in economic theorizing. These allow economists to create a simple world with numerous so-called “ceteris paribus” conditions, to which new conditions are then added in a step-by-step process. For instance, the model of the evenly rotating economy (an economy in “equilibrium” that can never exist in the real world) is extremely useful in explaining how savings, investment and interest rates affect the economy’s structure of production.

Economic theory, i.e. the body of economic laws, can be used to explain economic history – but the reverse cannot be done, i.e., economic history cannot possibly serve to construct economic theory. Economic predictions are in a way akin to the task of a historian rather than that of an economist. The study of history requires that the historian employ the known data, as well as the knowledge provided by other scientific theories, but it ultimately goes beyond that.

Mises referred to this as the “understanding” of the historian. When e.g. discussing important historical personalities such as Julius Cesar, it won’t be enough to merely consider the documentary evidence from Cesar’s time. What were Cesar’s motives? Why did he act the way he did? This is where understanding comes in. When economists make predictions, they are no longer wearing the hat of the economist – instead, similar to speculators in the stock market – they become “historians of the future” as Mises put it.

 

crossing the rubicon

Alea iacta est – Cesar crosses the Rubicon – but why did he do that?

To be sure, economists should have an advantage over others when engaging in economic prediction. As long as they are aware of sound economic theory, they can use their theoretical knowledge as a constraint on their predictions. In that sense, economic predictions are certainly not a completely useless effort (we are obviously not speaking of popular guessing games such as whether next month’s CPI reading will be “0.2%” or “0.3%”). However, economists should be aware that when making predictions, their knowledge of economic theory can at best help them to exclude certain outcomes and refine those that remain.

Thus they can at most hope to make correct qualitative forecasts, but not quantitative ones. An example would e.g. be the following: “We predict that the suppression of interest rates and the enormous amount of money printing instigated by central banks will eventually lead to a major bust, because we know with certainty that it has led to massive capital malinvestment.” An example of a completely useless (and likely wrong) forecast based on the same data points would be: “We predict that GDP will contract by 4.3% in Q2 2017”.

Most modern-day economists are primarily making forecasts of the second kind these days, a result of the “scientism” error discussed above. It is no wonder that they are continually ridiculed for this. They deserve it.

 

Conclusion

If one considers that the next major interest rate manipulation by the Fed appears to hinge on a notoriously unreliable report about a lagging economic indicator, it should immediately become clear on what a flimsy foundation modern central economic planning rests. How much more ridiculous can it possibly get?

Incidentally, it also serves to demonstrate how far off the reservation economists have veered in their desperate and laughable attempts to transform economics into a discipline akin to the natural sciences. They have swallowed Milton Friedman’s arguments on positivism in economics hook, line and sinker. This is one area of economics in which Friedman couldn’t have been more wrong.

The debate over proper economic methodology and the epistemological problems of economics deserves to be revived (readers interested in these problems should take a look at this collection of essays by Mises on the topic). Economics is an aprioristic science, not an empirical one. For all their sophistication, the makers of the DSGE models on which the central planners base their decisions are ultimately simply “groping in the dark”.

 

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Sat, 09/05/2015 - 08:48 | 6512825 Physicist
Physicist's picture

Bullshit. The scientific method is self correcting.

Sat, 09/05/2015 - 08:48 | 6512832 JungleCat
JungleCat's picture

In December 2012, the Fed said they would hike rates when unemployent fell below 6.5%. We are now at 5.1%.

Why even pretend to be intellectually honest anymore, Mr. Yellen?

Sat, 09/05/2015 - 08:54 | 6512841 AlaricBalth
AlaricBalth's picture

A mathematician, a theoretical economist, and an econometrician are asked to find a black cat (who doesn't really exist) in a closed room with the lights off. The mathematician gets crazy trying to find a black cat that doesn't exist inside the darkened room and ends up in a psychiatric hospital. The theoretical economist is unable to catch the black cat that doesn't exist inside the darkened room, but exits the room proudly proclaiming that he can construct a model to describe all his movements with extreme accuracy. The econometrician walks securely into the darkened room, spends one hour looking for the black cat that doesn't exits and shouts from inside the room that he has caught it by the neck."

Sat, 09/05/2015 - 08:57 | 6512845 nmewn
nmewn's picture

lol...so true.

Sat, 09/05/2015 - 09:17 | 6512882 Headbanger
Headbanger's picture

Yeah but science is a religion.

And look where that got us.

Sat, 09/05/2015 - 09:31 | 6512911 Stuck on Zero
Stuck on Zero's picture

The Fed simply uses the pseudoscience of economics as a cover story for theft of the nations wealth by the banks.

Sat, 09/05/2015 - 10:04 | 6513001 MalteseFalcon
MalteseFalcon's picture

1.  Bankers can never be completely truthful.  If people knew what the FED was going to do, the people would adjust their behavior and render the FED's policy ineffective.  So expect lots of kabuki.

2.  In a more general sense the FED is not your friend.  Does the FED release bogus data?  Yes, but don't think for a moment that they use that data for decision making.  Or that you'll ever see the revealing data.

The FED doesn't give a fuck about investors or citizens.  You can expose their "duplicity" a billion times.  Congress can, too.  It won't make any difference.

Sat, 09/05/2015 - 10:30 | 6513064 Oracle of Kypseli
Oracle of Kypseli's picture

I say that economics resembles the 4 dimensional orderly chaotic morphing of swarming insects. 

Sat, 09/05/2015 - 11:03 | 6513171 El Vaquero
El Vaquero's picture

Economics is a pseudo-science because the vast majority of economists don't employ the scientific method.  When their models are wrong, they deny, then cry about how nobody could have seen it coming.  They don't ever look at what might possibly be wrong with their models.  They think that the real world should follow their models, when, in fact, it is the other way around. 

Sat, 09/05/2015 - 12:08 | 6513300 Element
Element's picture

Maybe science is self-correcting, over a long enough timeline, but on the scale of time of a human career in science, it generally isn't self-correcting.

Rather, it becomes self-perverting.

There is no way you could call economics empirically based and developed - it isn't.

Empiricism has never been about a toss-up between quantities and qualities, it is about evidence supports a proposition, or does not support a proposition. It is either right, or it is wrong.

Economics is not part of the structure of physical exploration that science and engineering is concerned with.

What economics is, is subjective and a hopelessly incomplete comprehension of human activity, that has been wasting everyone's time by it pretending to be a form of science, and is based on discrete invariant laws.

It isn't, not even close.

Sat, 09/05/2015 - 13:21 | 6513517 DavidAKZ
DavidAKZ's picture

It's done pretty well in the medical field- cost aside.

Sat, 09/05/2015 - 16:41 | 6513907 August
August's picture

I am Hari Seldon!

Sat, 09/05/2015 - 09:01 | 6512855 Teh Finn
Sat, 09/05/2015 - 09:28 | 6512899 Stox
Stox's picture

And the NORMAL human being will walk into the room, glance around, then TURN ON THE LIGHT, immediately turn around and say "there is no cat."

It is very much like the parable of the engineers:

 

Some years ago, there was an Engineering Convention in San Francisco.

This was only for people who had an IQ of 140 or higher.

 

Several of the members went out for lunch at a local cafe.  When they sat down, one of them discovered that their salt shaker contained pepper, and their pepper shaker was full of salt.

 How could they swap the contents of the two bottles without spilling any, and using only the implements at hand?  Clearly this was a job for engineering minds.

The group debated the problem and presented ideas and finally, came up with a brilliant solution involving a napkin, 2 spoons, a straw, and an empty saucer.  They called the waitress over to dazzle her with their solution.

“Ma'am," they said, "we couldn't help but notice that the pepper shaker contains salt and the salt shaker contains pepper."

But before they could finish, the waitress interrupted them. "Oh, sorry about that." She  leaned over the table, unscrewed the caps of both bottles, and switched  them.

There was dead silence at the table.

Sat, 09/05/2015 - 11:18 | 6513210 Stox
Stox's picture

There was a time, not so very long ago, where there was little data, and more thought.

Now we have mountains of data (of questionable accuracy) and little thought.

Which has been better?

Sometimes it is better to not know, when you KNOW that you don't know, and KNOW that your guesses are just that.

 

 

 

Sat, 09/05/2015 - 12:42 | 6513417 Trucker Glock
Trucker Glock's picture

"A good guess is better than a poor measure." - unknown to me

Sat, 09/05/2015 - 09:38 | 6512932 negative rates
negative rates's picture

Once outside and in the light, the cat seems to spit the hook and split the scene.

Sat, 09/05/2015 - 09:06 | 6512866 agent default
agent default's picture

The scientific method yes.  Cargo cult pseudoscience dressed up with equations that don't really describe anything, tends to be self reinforcing.

Sat, 09/05/2015 - 09:45 | 6512956 nickels
nickels's picture

Economics ends at trading excess productivity. Beyond that you enter political psychology, in hieroglyphics, done with bad hand writing. By accepting 250K for giving a speech, Bernanke demonstrated that "Economics" is not real.

Sat, 09/05/2015 - 09:30 | 6512909 Urban Redneck
Urban Redneck's picture

The scientific method is about as self correcting as a high rise foundation...

A dung heap is more self correcting than the scientific method (if only because of decomposition).

 

Sat, 09/05/2015 - 10:41 | 6513094 MSimon
MSimon's picture

If science doesn't work for engineers why do you trust your GPS?

Sat, 09/05/2015 - 11:20 | 6513215 Urban Redneck
Urban Redneck's picture

Science is a blind and deaf man wandering in a foreign land.  Occasionally, he finds himself back where he was previously (when he thought he was at a dead end).  Backtracking to the nearest fork and following another path, is not self correction.

Nice logical fallacy BTW, but I'd stick to science (which is certainly capable of being correct) and avoid rhetoric.

Sat, 09/05/2015 - 13:14 | 6513360 Element
Element's picture

Nah, Engineering is about logic of quantities and their mechanical interrelation. That does not require theories it just needs observations and measurements, to define mechanical properties and forces.

Science uses that as well but needs to invent ideas to explain observations of unknowns, to make measures that define and characterize partly 'knowns', and keep testing from there to remake and re-confirm the definitions and interpretations, via on-going empiricism.

The thing with science is some things remain undefined and untestable, but scientists are effectively told today that they must believe in these.

For instance, black-holes. No one has or ever will see one, directly, and same for the big bang. But we are effectively 'told' we must accept the lack of direct observation and testing, and just believe these things are real, and have occurred, via INDIRECT inferrence only.

Well, strictly speaking anything not testable is not actually science, anyway, in the correct and strict sense.

But there are human repercussions if you don't accept the demand of what calls itself 'science', to believe, so people (like me) end up seeing science as a subjective human belief system, that is pretending to be an objective empirical dis-interested system of surely 'knowns'. But it certainly isn't known directly, nor directly testable.

i.e. it remains a theory, but the theory ends up being treated as a known!

Well it isn't. That is completely unacceptable. The correct response is, "I do not know. I wish I did. But it is unknown and may remain unknowable."And be OK with that being the actual truth. Not be told to fill it with interested and untestable proxy-beliefs.

Increasingly big science institute professors and blowhards simply act like not believing them, as an authority, is a lack of faith in their practice of the 'science method'. If you don't believe their indirect unknowns interpretation to equal being theoretically a 'known', you're effectively telling the prof that you think he's a shit scientist (which actually he is, if he expect his opinion to be the authority, rather than data). Which goes down poorly, they take it personally as a slight.  Well that too is bullshit, it is either known, or it is unknown.

Data is the authority.

But big science 'interprets' the data, and is the gate keeper of publication, so all proposed interpretations must be consistent with the belief - or it isn't getting published, any time soon.

Data itself is being perverted in this way, and that is also unacceptable.

And since when does the cosmos revolve around institutes or particular professors opinions?

 

This crap is not science at all, but it is how 'science' tends to operate.

 

Sat, 09/05/2015 - 19:09 | 6514176 August
August's picture

String Theory, like God, explains everything.

Sun, 09/06/2015 - 02:19 | 6514678 Element
Element's picture

Spot on.

Because we can grasp the process of fertilization and fetus gestation, we think we understand life - we don't. We think because we can built CPUs we understand the electron - we don't.

We have no capacity to know how you and I can be a naturally emergent continually transforming property of weather rock detritus, i.e. life is implicit to rock crystallography, or rather to the atoms and sub-particles that make up those crystals.

So life and therefore sensation and comprehension is an innate part of matter, and matter is a transitional part of energy, and energy is simply the movement of space with respect to itself.

We take 'stars' which make the rocks, to be 'dead', in a dark 'cosmos', where there is 'nothing', and science supposes it will 'end', but also that it's apparently open euclidean, infinite, and infinitely regenerative.

So on all counts science fails to 'know' anything more than its own limited definitions and logic, for logic only works in limited applications where bounds are defined (wherein it works perfectly). But it can not and does not work when applied to infinity, so logic is not going to tell us anything about what actually is fundamentally true about existence - ever.

 

That comes a better way, DIRECTLY and ACTUALLY via the organism that we are itself. So why are we even a little bit surprised or doubting that this would, or could occur, in such an infinite cosmos, where life is an implicit aspect in the very fabric and dynamics of space, energy and matter expression? 

 

Science is limited, but what the organism can be, and is, is not limited. Only the logical mind imposes these limits on the definition of organism, or human. But those definitions are entirely irrelevant, we are what we are, and it cannot be defined or reduced into a string of words.

Fri, 09/11/2015 - 15:55 | 6537387 lasvegaspersona
lasvegaspersona's picture

As a sciencetisticish kinda guy I have to respond to your hypothesis with a huge....'huh?'...

Sat, 09/05/2015 - 09:32 | 6512912 orez65
orez65's picture

Central banks have nothing to do with economic theory and science, what a bunch of sh.t!

It is plain and simple a SCAM!

They legally falsify savings (capital).

That it the root cause of all of our economic problems and most of our social problems.

 

Sat, 09/05/2015 - 10:34 | 6513074 MSimon
MSimon's picture

How do you predict that some one will change their mind? How do you correct for it?

Sat, 09/05/2015 - 11:21 | 6513216 quartshort
quartshort's picture

A gun you jackass.

Sat, 09/05/2015 - 11:21 | 6513218 Turin Turambar
Turin Turambar's picture

^^ moron.  It's people who think like you that have caused the problem with their "scientistic" approach to economics.  SMH

Sat, 09/05/2015 - 08:44 | 6512826 trader1
trader1's picture

This ridiculous:

 

Gazprom, European partners sign Nord Stream-2 deal

 

http://www.reuters.com/article/2015/09/04/russia-forum-nord-stream-idUSL...

Sat, 09/05/2015 - 08:47 | 6512828 JungleCat
JungleCat's picture

In December 2012, the fed said they would hike rates when unemployent fell below 6.5%. We are now at 5.1%.

Why even pretend to be intellectually honest anymore, Mr. Yellen?

Sat, 09/05/2015 - 08:49 | 6512834 silverer
silverer's picture

That's just the problem.  Unemployment really isn't at 5.1%.  Your point is well taken.  Numbers no longer have meaning to the policy makers.

Sat, 09/05/2015 - 09:03 | 6512857 ToSoft4Truth
ToSoft4Truth's picture

Exactly.  In one ear we are being lied to and in the other asked to participate using their 'sound' information.

Sat, 09/05/2015 - 09:08 | 6512871 Bay Area Guy
Bay Area Guy's picture

I've been saying all along, I expect to get lied to about the statistical numbers like unemployment, inflation, and GDP.  But when the fools themselves start to believe their own numbers and base their "economic" policy decisions on it, then they've gone full retard.

Sat, 09/05/2015 - 11:09 | 6513188 dizzyfingers
dizzyfingers's picture

With all sorts of adjustments, isn't it around 40%?

That's economic free-fall.

Sat, 09/05/2015 - 08:52 | 6512837 ToSoft4Truth
ToSoft4Truth's picture

Look! Kids are washing up on beaches.

That's a take-off of "Look, Squirrel!"

Sat, 09/05/2015 - 09:41 | 6512939 autofixer
autofixer's picture

In the communist state all things are political, even numbers.  

Sat, 09/05/2015 - 08:47 | 6512830 silverer
silverer's picture

The myriad of 'experts' have become adept at producing all types and forms of data and numbers.  The people who are tasked with policy decisions seem to choose them the way people pick their favorite colors.  It gets worse over time, because the producers always tend to present what they believe to be the favorite color.

Sat, 09/05/2015 - 08:49 | 6512831 Batman11
Batman11's picture

The UK's aristocracy has seen social systems come and go, but they all provide a life of leisure and luxury with someone else doing all the work.

Feudalism - exploit the masses through land ownership

Capitalism - exploit the masses through wealth

The system itself provides for the idle rich.

The entitlement culture started at the top and has worked its way down.

 

You would think Austrian Aristocrats like Hayek would be only too aware of the idle rich in Europe.

Did they just come up with a set of ideas based on their own self-interest?

 

The freedom to spend your money as you choose is a rich man’s freedom.

I am rich, I’ll stick with that.

 

Sat, 09/05/2015 - 11:02 | 6513163 wolframm
wolframm's picture

You should read Hayek before concocting up any more of your brain farts.

Capitalism - the organization of society based on the private ownership of the means of production.

The means of production also include labor services, for which the entrepreneurs have to outbid one another on the free labor service market, just as they must bid for any other productive resources, such as land or machinery. As long as you cannot show that all entrepreneurs and all businesses have their interests precisely aligned and see no room of competing with each other, businesses cannot form a labor service buying cartel. Hence, prices for labor services rendered are determined by voluntary interactions on the market. Hence, there is no exploitation.

But you will probably use the old Marxist trick of saying that I cannot think otherwise, since I am a member of the capitalist (or aristocrat) class and therefore I must be wrong be definition, Marxman11.

Sat, 09/05/2015 - 11:02 | 6513164 wolframm
wolframm's picture

You should read Hayek before concocting up any more of your brain farts.

Capitalism - the organization of society based on the private ownership of the means of production.

The means of production also include labor services, for which the entrepreneurs have to outbid one another on the free labor service market, just as they must bid for any other productive resources, such as land or machinery. As long as you cannot show that all entrepreneurs and all businesses have their interests precisely aligned and see no room of competing with each other, businesses cannot form a labor service buying cartel. Hence, prices for labor services rendered are determined by voluntary interactions on the market. Hence, there is no exploitation.

But you will probably use the old Marxist trick of saying that I cannot think otherwise, since I am a member of the capitalist (or aristocrat) class and therefore I must be wrong be definition, Marxman11.

Sat, 09/05/2015 - 13:00 | 6513457 Batman11
Batman11's picture

Global demand is going down the plughole due to the wealthy keeping so much for themselves - look at commodity prices.

 

Bankers have demonstrated why un-regulated free markets are a utopian fantasy.

We de-regulated banks and trusted bankers and they rigged every market they could.

We removed the 1930s legislation designed to prevent another 1929 and they did it again in 2008.

We can thank the bankers for reminding us of the necessity of legislation and why it was enacted in the first place.

There is lots of financial regulation because bankers are incompetent, unscrupulous and entirely without morals.

 

Honest bankers and businessmen are as rare as rocking horse shit.

The profit orientated businessman uses slavery and child labour until Government's pass regulations to stop him.

 

 

Sat, 09/05/2015 - 08:55 | 6512842 lordbyroniv
lordbyroniv's picture

An A priori world view does not help the statists in their will to power.  The veneer of positivism allows meddling and the agglomeration of power.  It is no accident that economics as a profession has chosen the easy route over the hard route.  No one is interested in truth anymore anyways.

Sat, 09/05/2015 - 08:57 | 6512850 TuPhat
TuPhat's picture

Economics is a natural science or maybe it's an abbynatural science.  The problem is that too many economists believe in the rainbows, smoke and mirror effects used to perpetuate fraud.

Sat, 09/05/2015 - 09:11 | 6512862 Tinky
Tinky's picture

Some may be tempted to argue that this is off-topic, but Lalo Schifrin's Bullitt soundtrack is masterful:

opening score:

https://www.youtube.com/watch?v=EhU7WnBQNa8

more:

https://www.youtube.com/watch?v=0WQMZFFkx6Y

 

Sat, 09/05/2015 - 09:24 | 6512869 TeamDepends
TeamDepends's picture

The Federal Reserve is the capstone on the biggest ponzi pyramid in history. What are they, if not the brains behind a series of economic disasters which have only enriched themselves and their cronies? Who elected them? And now, when the petrodollar falls, they have the nerve to tell us we need yet moar socialism/communism central planning in the form of IMF, BIS, World Bank One World currency. The only structure which can work is free-market capitalism reigned in by a Constitutional Republic run by moral leaders kept in check by an ethical, hard working, informed public. Death to the moneychangers!
"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President (Woodrow Wilson) signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill.
-Charles A. Lindbergh

Sat, 09/05/2015 - 09:14 | 6512876 withglee
withglee's picture

The debate over proper economic methodology and the epistemological problems of economics deserves to be revived (readers interested in these problems should take a look at this collection of essays by Mises on the topic). Economics is an aprioristic science, not an empirical one. For all their sophistication, the makers of the DSGE models on which the central planners base their decisions are ultimately simply “groping in the dark”.

A typical Mises Monk article. Starts out by discussing the obvious ... that the Fed, our delegated manager of our MOE (Medium of Exchange), the dollar, is clueless.

But they never seem to be able to describe the proper MOE management process in their articles. We're left with a reading assignment.

As long as they are aware of sound economic theory, they can use their theoretical knowledge as a constraint on their predictions. In that sense, economic predictions are certainly not a completely useless effort (we are obviously not speaking of popular guessing games such as whether next month’s CPI reading will be “0.2%” or “0.3%”). However, economists should be aware that when making predictions, their knowledge of economic theory can at best help them to exclude certain outcomes and refine those that remain.

When you know that money is "a promise to complete a trade"; that it is created by traders getting their promises certified; that is is destroyed by traders returning the certificates on delivery; that defaulted certificates are immediately recovered by like interest collections; and that in the mean time, the certificates circulate as the most valued object of simple barter exchange, you know exactly how to manage the MOE. Money allows simple barter to take place over time and space.

A proper MOE management process requires no more prediction than a process for managing an insurance portfolio. As with insurance where premiums must perpetually total to claims, with money, interest collections must perpetually total to defaults. This guarantees zero inflation by the relation:

INFLATION = DEFAULT - INTEREST = zero.

The process can be enhanced using actuarial science to predict defaults and make interest collections in anticipation ... but overall, they must equal each other ... all the time and everywhere.

And the process only requires monitoring of defaults and some simple addition and subtraction. No predictions are necessary. No complicated "basket of goods" must be priced. No LIBOR process sets rates.

All machinations they go through, as described in this article, are a smoke screen for the capitalist myth that claims someone must first save before someone else can make a trading promise ... and the capitalist is to be the keeper of those savings ... and is to have the privilege of loaning 10x the amount he holds, thus magnifying his profit by a factor of 10.

Rothschild said it straight out: "Give me control of the money and I care not who makes the laws".

Get a clue people! And Mises Monks, describe your process rather than taking these continuous potshots from the peanut gallery and handing out reading assignments.

Sat, 09/05/2015 - 12:13 | 6513332 PoasterToaster
PoasterToaster's picture

There isn't supposed to be a "process" of controlling and monopolizing money, that's the whole point.  That's why we are in the shit we are in; control of things that should be free.

Sun, 09/06/2015 - 10:57 | 6515192 withglee
withglee's picture

There isn't supposed to be a "process"

"Everything" is a process.

Sat, 09/05/2015 - 13:49 | 6513596 RaceToTheBottom
RaceToTheBottom's picture

I am more concerned with the Store of Value aspects than the Medium of Exchange aspects.

Sat, 09/05/2015 - 09:11 | 6512877 Sudden Debt
Sudden Debt's picture

Economics is easy.

You sell something other people want. And if they don't buy it you need to change or make way for the competition.

And as soon as the first subsidy was given by the government, the slide down to nanystate was created.

Every dollar that is given by the state to a group comes from another group that is succesfull so success is punished by more taxes.

 

To define a great economy, you need to look at their laws and rules. If it all fits on a napkin, you've got pure capitalisme.

If you need to chop a forest a week to keep on printing the extra additions you failed.

 

Has anybody ever seen how much text new laws contain? It's a bureaucratic nightmare!

And you can only change all that if there was first a complete breakdown.

 

And I just can't forget that 70k of income of unemployed woman with 2 kids... 

That 70k came from people that are actually doing something, not the super rich, those'live taxfree, but the people just between.

And then the 100 million out of the workforce in the Us... it's nothing to be proud about.

Sat, 09/05/2015 - 10:10 | 6512887 swmnguy
swmnguy's picture

The $70k meme isn't true.  That's based on accepting a lot of things at face value that aren't actually that valuable.  The woman with 2 kids isn't getting any $70k.  Her landlord may be claiming $2500 per month for her roach-infested hovel, which would total $30k off the bat.  The value of every service available to her, if taken at face value and it is assumed that she takes advantage of every penny of it, might total up to $70k, but if she had a job that paid her $70k, her life would be very much different.  I know.  

I have known people without jobs, with  kids, on public assistance.  And I've made $70k a year, while raising 2 kids.  My life was exponentially better and more comfortable than theirs.  There's no comparison.

We might even be able to stretch a point and say  that this hypothetical woman and her kids are costing society $70k per year to maintain, but even that accepts overvaluations galore.  The median household income in America right now is about $50k.  That's 2 adults working, as the median wage from a job is about $35k.  There is no way on God's Green Earth that people on welfare in America are making 1.5x the national household median income, or the equivalent of 2 full-time median wage jobs.  It's simply not possible.  

There are plenty of good arguments against welfare, but this $70k meme is absurd on the face of it.  Drive through a slum area and try to find that $70k.  It's not there.  It may have moved through there and been skimmed off by crony interests, but the unemployed single mother with 2 kids never saw it.

Sat, 09/05/2015 - 10:42 | 6513099 adr
adr's picture

Sorry but not only is the $70k meme true, but it can be seen every day.

I made $65k and lived in a decent middle class town in Ohio. I paid $135k for my home, $120 a month for internet and TV, $120 for utilities, etc.

Across the street from me was a girl that lived off social programs with four kids. My mortgage was $960 with taxes. She paid the max $200 a month to rent a house that was larger than mine. The landlord was paid $800 to cover the rest of the rent. Just because she doesn't pay $1000 a month herself doesn't mean she loses the benefit of living in a $1000 per month home.

So she pays $2400 a year for rent. Added benefit is $9600.

I had to pay for whatever energy, gas, and water I used. She had utilities capped at $20 though the HEAP and other assistance programs. No matter how much power she used, she paid $20 a month. I didn't use my AC hardly at all, in the winter the thermostat was set at 68. Her house was constantly cooled and set at 80 in the winter. If you're not paying for it, why not.

On average for the year my utility bills were $200 a month. $2400 for the year. Her max was $240, pretty good benefit.

WIC, food stamps, stipends from the food banks. Thousands of dollars of benefits. Let's also not forget about free preschool for each kid instead of $140 a month for each.

Internet and cable TV was seen as necessary for learning by the government. So while I paid $120 a month for the basic home package, she paid $10 a month for the same exact thing.

Obamaphones saved $150 a month.

All of those things add up to quite a lot. So much that even on her "meager" government transfer she could afford to drive a two year old Jeep Grand Cherokee. Because what is also great is that even if you are on welfare with no credit, Ally financial will give you a car loan.

All in all she may have been on welfare, but pretty equal to my life on $65k. Let's also not forget I had to work 50 hours a week.

Sat, 09/05/2015 - 11:20 | 6513196 wolframm
wolframm's picture

The govt practically made you her cuckold slave. She fucks some useless guy(s) and you get to pay for their brood with your tax dollars. Makes you feel real good, no?

Once you really realize what this means, you will be getting on the next flight to some country with less "social security". There, you might make less money, but at least you won't be forced to pay for spreading other men's genes.

 

Sat, 09/05/2015 - 11:45 | 6513277 NoPension
NoPension's picture

What really irks me. It's not so much the useless pieces of shit being taken care of by the state. They are raised like zoo animals. Breed and eat.

It's the motherfuckers that line up and tell me I'm cruel because I desire to deprive them of their natural birthright to consume just because they exist.

I understand compassion for my fellow humans, but there has to be a limit. I feel we have reached and far exceeded it. To many on both ends. Too many zoo animals and too many zoo keepers.

I for one, am compassioned out. These cheerleaders need to start opening their homes to the useless. And it's all over the world now. I see Germany and Austria just opened their front doors wide. Do they think this first wave will be it? They are insane. They are about to be over-run. Fuck this shit.

What's right anymore?
You might be a chump if;
You don't work for the government.
You work extra to try to get ahead.
Your heterosexual .
You don't collect a government check.
You try to maintain your property.
You expect your school to educate your child.
You go to church.
You pay taxes.
You think college will give you an edge.
You expect your elected official to have your back.
You try to follow the law.
You think voting matters.
You think we are a nation of laws. ( haha!)
You think being born HERE matters.( it does, your less significant)

And about 100 more.

Sat, 09/05/2015 - 13:56 | 6513617 RaceToTheBottom
RaceToTheBottom's picture

Lets all fall prey to the divide and conquer.....

And above all don't focus on the .01% who take more of the table than the enabled welfare specialist.

The Banksters have welfare skills that the listed welfare queen cannot even fathom.  And also, apparently, neither can you.

Sat, 09/05/2015 - 11:32 | 6513247 swmnguy
swmnguy's picture

I wouldn't trade lives with her and neither would you.  Your premise is that you hate work.  I do not hate work.  I also don't hate self-determination, which that lady most surely did not have.  I would not live at the whim of a social worker, and she would.

Could she borrow against her house?  Could you?  The comparisons are galling indeed, but not accurate.  She cannot get ahead, by design.  She's getting nowhere near the benefit from that money as you from yours.

The real problem is indeed moral.  There's a strain of American moralism that holds that virtue is rewarded by wealth, so therefore those with wealth are virtuous, and those without are not.  This is of course not always true.  But rules are put in place to make sure that those who need assistance cannot better themselves through work.  If that lady were to have taken a job, her benefits would likely be reduced, dollar-for-dollar.  And then she'd have to pay for the daycare, as you say.  That's not possible on even the median income from a wage-paying job.

This is supposed to ensure that people can't get ahead by being on Welfare.  But it in fact guarantees that people can't get ahead on Welfare.  It's not "The Liberals" buying votes.  That could be done much more cheaply.  This is maintaining a false moral structure.  The real problem is that financialization has made it too expensive for most of us to live what used to be a normal life with a shot at the middle class.  The fact that it's costly to maintain people at an acceptable level in a First World country applies whether you work for a living or not.

Besides, the money spent on these people is peanuts.  Cut a 0 off the war-machine budget, so it's tied for largest in the world, and stop running a Trillion or two dollars a year through the corpse of the banks, and none of our social problems, infrastructure problems, financial problems etc. are even hard to deal with, much less impossible.  And the consequences of turning these people out into the streets is worse.

Sat, 09/05/2015 - 11:59 | 6513307 NoPension
NoPension's picture

S-guy,
Your a perfect example of what I described. Ready to jump up and make excuses for the downtrodden.
And if we would only divert more money from our massive and bloated military, we could do so much more good....blah, blah, blah, puke!

Fuck these motherfuckers and the fucking politcal class that pander to them to stay in office. And fuck pandering useFULL idiots like you, that are always there to be sooooo compassionate.

The problem is, our economy is a sham. A fiction. An illusion. And when the curtain goes up, soon... These " poor people" are going to be like lions and tigers let out of a zoo. They are going to want to eat. And the rest of us are going to die at their hands, or have to kill them. That's what it is coming to.

Fuck em. Fuck em all to hell. Fuck their bloodlines. Fuck their DNA. Every politician and every useless eater needs to be sent straight to hell.

Now, maybe that makes me a bad man. Taking out the garbage is dirty work. Cleaning puke is nasty. Unclogging a shit stuffed toilet is unbearable. But it needs to be done.

This will probably put me on a list. Or at least get me an asterisk .

Sat, 09/05/2015 - 16:18 | 6513865 Mr.Miffed
Mr.Miffed's picture

Look in the old days I would give voluntarily to a church the amount I felt was a surplus keeping in mind that it could be me on the receiving end at some point. That surplus would be handed out to those who could show need and with some oversight to make sure it wasn't foolishly wasted. And no luxeries, food and shelter. This has gotten totally out of control.

Sat, 09/05/2015 - 10:16 | 6513025 withglee
withglee's picture

To define a great economy, you need to look at their laws and rules. If it all fits on a napkin, you've got pure capitalism.

And the first law of capitalism (pure or otherwise) ... that someone must first save before someone else can make a trading promise and get it certified ... is bogus on it's face.

Remove that law and you get by with a much smaller napkin. The rules can actually fit on a wrist band.

INFLATION = DEFAULT - INTEREST = zero

Sat, 09/05/2015 - 11:46 | 6513283 Sparkey
Sparkey's picture

I don't believe the $70,000.00 story, perhaps it is true, I'm sure there are many women with two children getting a $70,000.00 paycheck from a Govt. job their 'connections' made them eligible for who don't do much to deserve it, but amoung the 'poor' not so many I think, at least I don't see them!

Sat, 09/05/2015 - 09:14 | 6512880 swmnguy
swmnguy's picture

Economics is the study of various systems humans make up to take care of various tasks and situations.  It's psychology, applied to a set of situations and transactions.  You can define the situations and transactions, but we can't define and objectivize the human emotional element.  Otherwise people would never do things that went against their own interests.

Actually, that's what makes economics interesting.  Otherwise it would just be an actuarial exercise.  The problem comes in when people try to impose mathematical certainty on human emotions and behavior.  It might appear to explain some things, if the focus is broad enough.  But given more time, or a more specific focus, such attempts will always fail.  It's not a failure of the model, or of the definitions of terms (though both might be wildly inaccurate); it's that human responses contain an element of emotion that is very hard to quantify.

There's nothing wrong with pursuing a goal which can't be attained.  It's good for people.  It should keep us humble and encourage us to be more perceptive, and it keeps intellectuals off the streets which is always a good thing.

The problem comes when people pretend to be able to definitively explain human behavior, and when that attempt fails, to fudge their formulae to retroactively explain the behavior.  Cheating, in other words.  And it seems that cheating in Economics has ocurred to the point that  the entire thread of the argument is lost and irrelevant.  We need data points to have any kind of verifiability and basis of comparison.  When we stop counting most people without jobs as Unemployed, then the Unemployment number is meaningless, since we used to count people without jobs as unemployed.

At that point one is better off junking Economics and dealing with Psychology, straight up.  It's still an effort to quantify the unquantifiable, but it's politicized differently.

Sat, 09/05/2015 - 09:30 | 6512910 SMC
SMC's picture

Thirty years ago, I first heard the joke “Economists must control policy so their predictions will come true”, I laughed but did not understand.  

Unfortunately today, I understand all too well.

 

Sat, 09/05/2015 - 11:15 | 6513202 WOAR
WOAR's picture

I understand as well, and I continue to laugh.

I think that...well, let the Joker explain it. We're all about to have a bad day.

Sat, 09/05/2015 - 09:34 | 6512915 Haole
Haole's picture

Let's see, manipulative sociopathic controlmongers hell bent on fleecing the herd day in and day out coupled with a braindead, programmed population that has been trained to beg and cheer for their own slavery and this is going to go on for the rest of my lifetime certainly.

 

What ever happened to economics devoid of academics, might be worth a try..?

Sat, 09/05/2015 - 09:54 | 6512924 dizzyfingers
dizzyfingers's picture

Conversations with Tyler: A Conversation with Luigi Zingales: http://mercatus.org/events/future-capitalism-conversation-between-tyler-cowen-and-luigi-zingales   Can capitalism be saved?

Sat, 09/05/2015 - 09:38 | 6512931 CosmicDebris
CosmicDebris's picture

No one is going to get it right as far as fixing anything, economically speaking. It is too late for that. It was too late probably even by 2008, though the sensible thing to do then was to let the chips fall where they may then and there and be done with it. Instead, 7 years of can kicking and prolonging the inevitable.

It boils down to simple math (well, convoluted math, really).

Articles like this amuse me.

Friends on Facebook still amuse me, with their complete unwillingness to look at reality on any level. I gave up on them long ago. You either see it or you don't at this point. 

 

Sat, 09/05/2015 - 12:02 | 6513295 anonymike
anonymike's picture

"No one is going to get it right as far as fixing anything, economically speaking. It is too late for that. "

Actually, nobody ever has, or ever will, "get it right" for anyone other than their self, and that is even unlikely for most folks it seems. Indeed, the inevitable bust has been delayed while enough capital remains to be consumed for this purpose by the criminal gangs that call themselves "central government" or "the state" all over the world.

The math does indicate that this is unsustainable. That and history show that it won't be sustained.

It's good to see this article, so that maybe more will learn and understand that the only real solution has nothing to do with central government actions, other than allowing them to self-destruct. That event is going to be extraordinarily unpleasant, because of what central governments have done to destroy the intrinsic value of what people use as a medium of exchange, money. If commodity backed non-government money doesn't re-emerge quickly (very unlikely), economic exchanges will be severely hindered after the self-destruction by the return to barter for the most part. Supply chains will collapse, and then a large majority of the populations of people whose survival depend entirely on the supply chains will perish in a few months.

When, not if, the central governments self-destruct, we need as many people as possible to remember these few simple facts:

All of the societal pain will be because of what central governments did to consume the resources of society and destroy its money, while enslaving the majority to dependence upon it's stolen and counterfeit money. The pain will NOT be because of the absence of central governments. The return of the state will only assure that future generations will experience this pain again.

...Life, Liberty and the Persuit of Happiness. To secure "these rights", governments are instituted AMONG men, not over them. No form of "government" beyond, possibly, the most local level is needed to secure "these rights". Anything more, will only serve to violate "these rights". Central government is unnecessary and only serves to violate these most basic rights.

For those of us who survive the pending calamity, and all future generations, we must do everthing in our power to prevent the return of central governments after they soon self-destruct. No other lesson for the future of mankind is more important.

To learn more about this, start with Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html

Sat, 09/05/2015 - 12:53 | 6513446 CosmicDebris
CosmicDebris's picture

It's gd depressing. 

Sat, 09/05/2015 - 09:46 | 6512960 dizzyfingers
dizzyfingers's picture

"...hinge on a notoriously unreliable report..."

Thank you for confirming the emperor's missing clothes!

Sat, 09/05/2015 - 09:47 | 6512962 Stox
Stox's picture

And what do we KNOW?

1)  The Fed is engaged in defacto tightening via running off the size of their balance sheet.

2)  While jawboning about further tightening in the form of a rate hike, whereby the jawboning alone is having the behavioral effects of tightening without any rate hikes.

Thus raising the question as to whether the market crash is intentionally induced, or the result of poor formulas and policy?  in simple terms, crazy, stupid, malicious, or intentionally applying unpleasant medicine / chemotherapy?  And these questions about intent are merely a sideshow.  What matters is, "what IS."

 

 

 

Sat, 09/05/2015 - 10:58 | 6513151 Stox
Stox's picture

And, what we know is:

1)  There is an ongoing global crash in commodity prices;

2) Inducing significant recessions / depressions in the producing regions domestically and around the globe;

3) With implications for fiscal budgets as well as political instability (in oil producers in particular);

4) Which is causing a great sucking sound of cash out of global cash flows in financial markets, as cash is coming out to pay for what have become fiscal deficits in budgets that previously ran a surplus.

5) Healthcare sectors have levitated the US markets, courtesy of Obamacare.  But now with the Dem side in disarray the markets seem to be frontrunning a Rep victory, with every candidate taking the pledge to repeal and replace Obamacare.  With no floor under the market in the healthcare sector and the commodity / oil sectors in depression mode, no new source of strength and bubble momentum is apparent yet (to me), and thus the market rotation to cash until new themes are indentified.

6)  The Fed is silent on the GDP effects of oil strength in fracking regions, and now collapse, and ignoring effects as they jawbone about rate hikes. 

7)  The US is finally BEGINNING to say "enough is enough" about the currency devaluation wars that play the US for the patsy that it is. 

8)  The populations of strong developed countries are saying "enough is enough" in absorbing migrants into their social safety net programs and job markets, even while the politicians for the most part have remained silent to date.  That this politcal silence is just beginning to change ... barely beginning ... is "new", with unknown implications.

 

Sat, 09/05/2015 - 10:49 | 6513122 JamaicaJim
JamaicaJim's picture

I'm waiting for the big cut-off.

TPTB cuts off ALL welfare, aid - everything....riots ensue....thousands dead....a thinning of the herd....self-inflicted....with elitist swine sparking it

Sat, 09/05/2015 - 11:06 | 6513179 wolframm
wolframm's picture

Great article!!

If anyone wants to read more without forking out for Mr. de Soto's 1.9 lbs book, you can just download Hoppe's Theory of Capitalism and Socialism, which probably does the same job, only Hoppe was first and needed less ink.

Sat, 09/05/2015 - 11:47 | 6513285 damicol
damicol's picture

I know his, socialism is for the cunts, the most fucking vile evil creed ever invented by man.

So fucking evil I would rather have my fucking ears chewed off by a fucking ranting half witted jihadist nut-job as long as he straps the bombs to his fucking runts far enough away from me.

Fucking lying slimy  parasitic scum, socialists deserve to be fucking butchered like rats and cockroaches.

And that in a nutshell is how I see every fucking so called economist form the airy fairy fucking garbage peddling dangerous socialist cunt krugshit, to every other variety.

Lying parasitic thieving assholes, full of shit and bollox and think they have the right to peddle their garbage to the extent it is forced down your throat.

If people would just wake the fuck up and get rid of these shit for brains shamans and witch doctors and their fucking voodoo bollox the world might just start to get on fine.

 

Sat, 09/05/2015 - 11:55 | 6513299 fritskrach
fritskrach's picture

A theory and a Nobel Prize for every situation.

Charlatans, swindlers and central bankers are happy for that.

Use the power of your common sense: experience, logic and observation.

Do not let them fool you. As they will constantly try.

 

 

Sat, 09/05/2015 - 12:01 | 6513305 anonymike
anonymike's picture

It's good to see this article, so that maybe more will learn and understand that the only real solution has nothing to do with central government actions, other than allowing them to self-destruct. That event is going to be extraordinarily unpleasant, because of what central governments have done to destroy the intrinsic value of what people use as a medium of exchange, money. If commodity backed non-government money doesn't re-emerge quickly (very unlikely), economic exchanges will be severely hindered after the self-destruction by the return to barter for the most part. Supply chains will collapse, and then a large majority of the populations of people whose survival depend entirely on the supply chains will perish in a few months.

When, not if, the central governments self-destruct, we need as many people as possible to remember these few simple facts:

All of the societal pain will be because of what central governments did to consume the resources of society and destroy its money, while enslaving the majority to dependence upon it's stolen and counterfeit money. The pain will NOT be because of the absence of central governments. The return of the state will only assure that future generations will experience this pain again.

...Life, Liberty and the Persuit of Happiness. To secure "these rights", governments are instituted AMONG men, not over them. No form of "government" beyond, possibly, the most local level is needed to secure "these rights". Anything more, will only serve to violate "these rights". Central government is unnecessary and only serves to violate these most basic rights.

For those of us who survive the pending calamity, and all future generations, we must do everthing in our power to prevent the return of central governments after they soon self-destruct. No other lesson for the future of mankind is more important.

To learn more about this, start with Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html

Sat, 09/05/2015 - 12:05 | 6513318 PoasterToaster
PoasterToaster's picture

Incidentally, it also serves to demonstrate how far off the reservation economists have veered in their desperate and laughable attempts to transform economics into a discipline akin to the natural sciences.

That's why Mises stuck to deductive reasoning and rejected the mathematical arguments of the Neo Keynsians, which had no empirical foundation.

Sat, 09/05/2015 - 12:36 | 6513395 ucde
ucde's picture

Its so depressing to see the living human world chopped up into a garden salad of concepts du jour, and to see the attitudes of people which implicitly believe that a re-ordering of these concepts will rebuild the empathetic, loving society which we long for. 

My view says that we can't analyze our way back into wholeness. We can't calculate our way back into love. It may be a comforting viewpoint to think that societies are not based on love, but I think its wrong. You dont need a working intellectual model of how the world works that foresees each eventuality and accurately predicts the behavior of large systems: what we do need is the empowerment of people whose motivations are fundamentally heart-based. Then we will create a world that is heart-based. 

Intellectualism is already so alienated that it is halfway towards totalitarianism/insanity, no matter what stripe it hails from. Even strains like libertarianism which aims at freedom, fails to be heart-based, and celebrates submission to a heartless intellectual discipline ("its just the free markets, baby!") which supposedly, we are told, can regenerate society based on first principles. But these people don't understand first principles, in my opinion, the first principle is the heart. As weird or uncouth as that sounds, until its truth is known, there is no purpose to 'ism's or anything else. Intellectualism is a form of conceit, and dishonesty which holds the world at arms length to be analyzed. A 'religious' system, however misguided, would have a big psychological legs up over this current system, and the various, scattered, one-man-armies of bigheaded solution finders who each develop their own strain of 'How a perfect world would exist in my mind'... cannot agree or unite because unity and harmony are not of the mind. That is why intellectualism is a never-ending, individualized chaos.

Sat, 09/05/2015 - 12:52 | 6513440 I Write Code
I Write Code's picture

OK already, the article starts well, then turns into a rant about hard science and social science yada yada.  Sure everyone should read this kind of stuff, like once. 

The point is the Fed should not pretend to take all this stuff so seriously, economics when all is said and done uses only blunt instruments, and the Fed's actions decoupled interest rates from any fine-grained econometric model from the start.  Saying, "Oh, we need 20 points more of this or 30 points less of that before we can move the needle" is garbage.  The Fed owes the economy, the people, and themselves a much more proactive *recovery* from the crap they've already laid on us.  As I think has become obvious to all.

Now, on the precise philosophical differences between physics and economics, well, they might not be quite as severe as this skeptical essay makes out.  Maybe both at the core are stochastic and dynamic, or at least all the interesting stuff is.  Empiricism applies to both equally, or else it fails equally to apply to either.  Good science of any kind is hard, but when you get into this kind of meta-science, that's even harder, and the good stuff is even rarer.

The End.

Sat, 09/05/2015 - 13:25 | 6513519 Ghordius
Ghordius's picture

"Mises referred to this as the “understanding” of the historian. When e.g. discussing important historical personalities such as Julius Cesar, it won’t be enough to merely consider the documentary evidence from Cesar’s time. What were Cesar’s motives? Why did he act the way he did? This is where understanding comes in. When economists make predictions, they are no longer wearing the hat of the economist – instead, similar to speculators in the stock market – they become “historians of the future” as Mises put it. "

besides the various motives Caesar had for crossing the Rubicon, consider this perhaps less known story of how he got there, with plenty of legions in Gaul

one of the choicest industries of the Roman Republic was wine. and Roman Senators were only allowed to own land, and forbidden to commerce

production of wine was based on land, increasingly slaves, and knowledge, logistics, etc.

commerce of wine with Gaul picked up, the Gaulish populations were not used to alcoholic beverages, the social structures they had included the possibility of senior group members to sell junior group members to slavery, and one amphor of Roman wine was traded against one Gaulish slave, including sisters of warriors

the Gauls were driving themselves to destruction with this trade, or at least their chieftains thought so and closed the frontiers

then the Roman Wine Lobby sponsored plenty of money for the political campaigns leading to the nomination of Gaius Julius Caesar's as Proconsul in Gaul, with the mandate of convincing the Gauls to reopen their markets. and this he did, including the capture of huge masses of new slaves

more wine, more slaves, more trade, more profits. it often comes back to this unphatomable quantity: more

Sat, 09/05/2015 - 14:39 | 6513593 Palladin
Palladin's picture

 

From the National Bureau of Economic Research, written in 2012, is a working paper written by Harrison Hong and David Sraer, who I'm sure took this very seriously.

 

Take a look at this from about Page 6, and tell me how it doesn't get more ridiculous than this. They have since pulled the article from the web site, but I had saved a copy and it's presented here for your viewing pleaure.

They conclude their abstract with this:

Our analysis also suggests the potential usefulness of a taxonomy of bubbles. Here we offer a first attempt at a taxonomy of bubbles that distinguishes between loud equity bubbles and quiet credit bubbles. Future work elaborating on this taxonomy and providing other historical evidence would be very valuable.

https://drive.google.com/file/d/0B51-74tGswAXWHVJVEV2dU1vSXM/view?usp=sh...

Sat, 09/05/2015 - 14:21 | 6513664 Benjamin123
Benjamin123's picture

Economists never try to act like scientists. Scientists are impartial while economists brag about not being impartial. They claim to want to help people rather than studying economics. They see themselves more like doctors than biologists.

Real Science is neutral and can either help or destroy people.

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