Economics has met the enemy, and it is economics

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That is the title of a feature in the Canadian newspaper The Globe and Mail that a correspondent has just brought to my attention. It’s not an earth-shattering article, as my correspondent observed, but it is remarkable to see articles like this turning up in the mainstream media. The author Tra Basen observes at one point:

While the protesters occupying Wall Street are not carrying signs denouncing rational-expectations and efficient-market modelling, perhaps they should be.

Economics has met the enemy, and it is economics

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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20 Responses to Economics has met the enemy, and it is economics

  1. The Peak Oil Poet says:

    ah yes

    the Magicians are weaving new spells as the old spells loose their potency



  2. ken says:

    One of the problems is that these seem to work well enough on a small scale, but fail the larger the economy. What has happened is that we then attempt to fix the global problems by putting in a lot of regulation on the smaller scale, and it just doesn’t work out. It doesn’t matter how many processes you set up, a 95% home loan in an economy with huge amounts of debt is a dodgy loan.

  3. ken says:

    I have a nice example. I was looking at previous sale prices for a property. They were
    2002 $220,000
    2006 $260,000
    2010 $330,000
    2011 $270,000

    At least one of these sales was not rational. We seem to have decided that if lots of people do it, then it must be rational.

  4. helgenome says:

    Interesting article.
    We should know that alternating fear and greed in the market place will hardly lead to rational behavior!

  5. peterjbolton says:

    ” One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge ~ even to ourselves ~ that we’ve been so credulous. So the old bamboozles tend to persist as the new bamboozles rise.” – Carl Sagan –

    “economics” is not the enemy; we are!

  6. alainton says:

    @steve some tips here on becoming a global research brand

    The lavish parties…the groupies…the bling 🙂

  7. alainton says:

    Swiss complex systems theorists produce global map of capitalism and how this creates system instability – the headline is rubbish–the-capitalist-network-that-runs-the-world.html

  8. peterjbolton says:

    Fabian Stealth and Deception fall back tactics for the defence of Fascism for increased Taxation in Australia.

    “LEADING media organisations have rejected a proposal from the federal government for a protocol to limit reporting of sensitive law enforcement and security information. However, they have agreed to facilitate communication with police and security agencies in the interest of public safety.

    The proposal by the Attorney-General, Robert McClelland, for a national security media protocol was sharply criticised by media organisations as counter-productive, unworkable and disproportionate.

    The Australia’s Right to Know coalition, which includes Fairfax Media, expressed concern that the proposed protocol would have “a chilling effect on freedom of speech”.

    Read more:

    The Default Bogan agenda with High Court Judge Julia Gillard

  9. peterjbolton says:

    “Foxes guarding the Chickens” Fabian Fascism at Play

    “”The most powerful entity in the United States is riddled with conflicts of interest,” Sen. Bernie Sanders (I-Vt.) said after reviewing the Government Accountability Office report. The study required by a Sanders Amendment to last year’s Wall Street reform law examined Fed practices never before subjected to such independent, expert scrutiny.

    The GAO detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves.

    “Clearly it is unacceptable for so few people to wield so much unchecked power,” Sanders said. “Not only do they run the banks, they run the institutions that regulate the banks.”

    Sanders said he will work with leading economists to develop legislation to restructure the Fed and bar the banking industry from picking Fed directors.

    “This is exactly the kind of outrageous behavior by the big banks and Wall Street that is infuriating so many Americans,” Sanders said.

    Only question is: What took him so long? And you can bet those “leading economists (Rubin, Summers… ?) will carry on the grande traditions of their Religion er, Profession.

    Saving the Defenceless.

  10. Lyonwiss says:

    @ Peterjbolton

    Secrecy in the name of national security is used to cover up government lies.
    Had the people known that there were never any “weapons of mass destruction”,
    they would not likely have supported the invasion of Iraq. No one was ever held
    accountable for the unnecessary deaths. WikiLeaks, or the possibility of similar exposure, provides some protection for democracy against more and more blatant lies by those in government.

    We are not the enemy; the institutions we create are the enemies: corporations, governments, unions, lobby groups etc. All sorts of crime have been commited by institutions, which cannot be put in goal, or be adequately punished. Understand Gresham’s Law for institutions: bad people drive out the good.

  11. peterjbolton says:

    @ Lyonwiss October 20, 2011 at 11:14 am | #

    “We are not the enemy; the institutions we create are the enemies: corporations, governments, unions, lobby groups etc. …”

    May I assume that you refer to my comment:

    @ Peterjbolton October 19, 2011 at 3:47 pm | #

    ““economics” is not the enemy; we are!”

    Please note in my defence and support for my observation and position here, and I note that you also make it abundantly clear, is that it is “we” that not only create these institutions but populate them by electing uneducated and inexperienced “popular” morons to the highest offices and not only allow these feral and Bogan to apply Gresham’s Law, but rally to protect their lies and their right to lie to us, ad nauseum ad continuum.; and we scream Hooray!

    I have never heard anything so sick, informed and essentially so outrageously criminal than the Australia Main Stream Media in their outrage of Wikileaks and the Australian Assange for having the audacity to press transparency and accountability for the circles of our “leadership”. There were US politicians calling for the “messenger’s” death, murder, killing, execution so as to protect the rights for politicians and all that hangs off them, to lie to the people for whom they draw salary. They are not insane as they rape their employers, “we” – it is “we” that drop our trousers so that they can have their ways and pleasures with us. We are insane.

    There is no need – at all – for secrecy – in governance; however, in crime there is always need for secrecy.

    I must also say that thingy that “we” call “economics” is essentially a failed, false and fraudulent illusion – a consensual conspiratorial schema – of false scientific respectability,which is utilized to divert attention from the Recursive Scam though Policy by “leadership”; the whole idea should be wiped off the economic record so that we can begin again with real fundamentals and encapsulated within scientific Principles. Economics today just cannot be taken seriously.

    And again, your point is well received.

    The diversion scenario below; Please note the pocket being picked; this is called “economics”: the conjurer.

  12. koonyeow says:

    Title: The Seen and The Unseen

    Fear-of-death-and-desire-to-survive is the enemy. More concretely, our (biological) nervous system is the enemy. If we can create institutions, can we not uncreate them?

  13. peterjbolton says:

    @ Koonyeow October 20, 2011 at 2:34 pm | #

    “More concretely, our (biological) nervous system is the enemy. ”

    With respect I object strongly to the above comment: Within our biological nervous system resides as an integral component the Autonomous Nervous System where one has a choice to either function on the Sympathetic mode or the Para-sympathetic mode, the latter being the mode preferred for intellectual and human activity; this mode is for the spiritual and intellectual development of the human species.

    Fear, or the induction of fear is the preferred tool of “leadership”, for the unwashed such as we and as such maintains the ANS in Sympathetic mode which captures, a priori, all the the bodies resources including cognitive processes in ‘fight and flight’ mode and maintains it so, in perpetutity. Its an old trick; well worn; where in this mode, it is impossible to consider matters on an intellectual and or reasoned foundation.

    “If we can create institutions, can we not uncreate them?

    Being maintained in the Sympathetic mode of the ANS allows the manipulation and transfer of all basic rights to “leadership” through spiking the fear and WMD scare components and hence, the suggested and accepted need for greater protection from unknown shadow threats and allows for greater taxation collection, tighter controls, greater skewed education propaganda to keep the game going and afoot, while enriching those of “leadership” through the inability by the removal of individual thought and analysis by induced fear, while building bigger Fabian tools that can maintain control of the centre.

    Therefore fear becomes the tool that prohibits challenges of “leadership”.

    You may notice that we in Australia now needs and approve of the US Military occupation of Australia so that we may confront the belligerent China (who just happens to be our major trading partner and without which, we would be at the top of the Global Bankrupt Nations – I didn’t say Sovereign Nations as Australia remains a Crown Colony, the Head of which arrive today in Canberra).

    Fear trumps all as it leverages stupid.

    There is always a choice!

  14. koonyeow says:

    Title: Need Further Clarification from Peterjbolton

    From Peterjbolton:

    “Within our biological nervous system resides as an integral component the Autonomous Nervous System where ONE has a CHOICE to either function on the Sympathetic mode or the Para-sympathetic mode, ”

    Who or what is that ‘ONE’ referring to? It seems to me that that ‘ONE’ implies the existence of a non-physical entity that is independent of the nervous system and that entity can make a CHOICE.

    From Peterjbolton (continued):

    “the latter being the mode PREFERRED for intellectual and human activity; this mode is for the spiritual and intellectual development of the human species.”

    Preferred by whom or what? Can you point me to any scientific articles (or books) which say the para-sympathetic mode is for the spiritual and intellectual development of the human species?

  15. peterjbolton says:

    @ Koonyeow October 21, 2011 at 3:28 am | #

    “Who or what is that ‘ONE’ referring to?” The potential is in all of us to become that which we are.

    “Preferred by whom or what?” Preferred by one’s-self.

    “Can you point me to any scientific articles (or books) which say the para-sympathetic mode is for the spiritual and intellectual development of the human species?”

    Astonishing Hypothesis by Sir Francis Crick

    Biology of Belief,
    Spontaneous Evolution, Bruce Lipton

    Much, much more – try Google as I don’t have access to my Library any more.

    I remember that the ancient Egyptian’s were also well aware of this switching mechanism of choice, over 5,000 years ago.

  16. peterjbolton says:

    Poor white trash and the Global Death Machine – from another Australian Heretic:

    Son of Africa: “national security of the United States” – John Pilger

    Shows what Australia has to look forward to with Gillard’s US Military Occupation of Australia:

    This is HOW real “Economists” work!

  17. peterjbolton says:

    @ Lyonwiss et al, perhaps you could summon a comment here please?:

    I decided to go back and look at this subject:

    ***************************$600Trillion to $1.4Quadrillion (1000 x$1.4T) Derivatives

    (just a sampling for reference)

    … and note that really nothing has been done or said about this recently despite the need to and while we are about that, we must also consider such things as leverage and posting margins to meet requirements.

    What are these “leaders” thinking? Nary a word?

    This is nigh impossible for the lesser mortals but here we have: G14 (or Group of 14 dealers that dominate derivatives trading including Bank of America-Merrill Lynch, Barclays Capital, BNP Paribas, Citi, Credit Suisse, Deutsche
    Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, RBS,
    Societe Generale, UBS and Wells Fargo Bank)

    I believe I have seen these names elsewhere this evening – what “entanglement” you have here ^^? All worthless!

    I can see no way that this stuff will ever be acceptable to anybody sane and yet, it has to go but to where? Anybody with a hotline to Alpha Centauri?

    $1.4QT / 14 companies = ~$100T per company

    Global GDP =~$<100T (~$70T)


    Unleash this on J6P and the guilty will need a fortress on some rock in a far away Galaxy to save the very essence of his soul!

    There is only one choice and that is find, locate, identify and value this stuff: and whatever the cost, burn it!

    Put the above companies in Bankruptcy and the Executives in the dock for trial and break up what is good and sell it off!

    Then you get a choice; Nationalize the Banks at very small scale (and this is probably the best solution) or allow them to operate in the free markets at full risk but under Glass Steagall type regulation.

    Their is no way that confidence can ever be returned to this lot and their rotten system and besides that system has already changed beyond recognition; surely very few comprehend the Big Picture today as Ben helps BoCA and tries to buy MBS; is this desperation and insanity or something else?

    From QED Principles I have been modelling this situation cognitively and I see that there are numerous, I repeat numerous separate core problems and none of them are really related systematically, but they are all dependant, overall. In other words, one solution will not fix anything.

    This is far too complex to be left in the hands of economists, politicians and or bureaucrats and we all know damned well, you just can't trust the Bankers, so we need another approach.

  18. koonyeow says:

    Title: Thank You, Peterjbolton


    Thanks for the books recommendation. I reckon that you are familiar with Antonio Damasio’s works too.

  19. peterjbolton says:

    @ Koonyeow October 22, 2011 at 2:48 am | #

    I also highly recommend to you ‘The Origin of Consciousness in the Breakdown of the Bicameral Mind’ by Julian Jaynes RIP A Monumental Work.

    As regards Antonio Damasio’s, I am aware but only now, through you – I will follow it up!

    Thank you

  20. peterjbolton says:

    @ Derivatives Post above:

    Coincidentally, the following post at Zero Hedge ~3 hours ago brings up the same issues and ends its editorial as follows:

    “When “the house” goes “bust”, everybody loses. The governments of the world could step in and try to bail everyone out, but the reality is that when the derivatives market comes totally crashing down there won’t be any government on earth with enough money to put it back together again.

    A horrible derivatives crisis is coming.

    It is only a matter of time.

    Stay alert for any mention of the word “derivatives” or the term “derivatives crisis” in the news. When the derivatives crisis arrives, things will start falling apart very rapidly.


    The consensual silence is deafening.

    Through the murder or execution of Gadaffi and its global celebrations led and cheered on by our so illustrious “Leadership”, we see or devolved humanity for that which has become; a genocidal predator which lusts as a cannibal upon itself in its hiatus of the final feeding frenzy known as ‘extremis’. There is no music here only cancer.

    “Victory no cause for rejoicing.
    If you rejoice in victory, then you delight in killing;
    If you delight in killing, you cannot fulfill yourself.”
    – Tao te Ching – Lao Tzu – chapter 31

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