This report was originally published by Adam Taggart at PeakProsperity.com
Economists are supposed to monitor and analyze the economy, warn us if risks are getting out of hand, and advise us on how to make things runs more effectively — right?
Well, even though that’s what most people expect from economists, it’s not at all how they see their role, warns CFA and and behavioral economist Daniel Nevins.
Economists, he cautions, are modelers. They pursue academic lines of thought in order to make their models more perfect. They live in a universe of equations and presumptions about equilibrium states and other chimerical mathematical perfections that don’t exist in real life.
In short, they are the wrong people to advise us, Nevins claims, as they have no clue how the imperfect world we live in actually works.
In his book Economics For Independent Thinkers, he argues that we need a new, more accurate and useful way of studying the economy:
However far you go back, you can find economists who had a more realistic approach to how humans actually behave, than the way that mainstreamers assume they behave in the models that the Fed uses to pick winners and losers.
You mentioned credit cycles, business environment, and behavioral economics. What I’ve done is to say, “Okay. We know that the modeling approach, the systems of equations approach doesn’t work. But instead of starting completely from scratch, what can we find in the economics literature that is maybe more realistic?”
And the interesting thing is that if you look at the work that was done, the state of the profession before the 1930s, before Keynesianism took hold, you can find a lot of work that was quite sensible.
I think where that points is towards this notion that when we think about economic volatility, there are really three things that we need to bring together:
One is the behavioral side. And we have to be realistic about the way that people really process information, the way that they truly make decisions.
The second has to do with the way businesses operate and all the challenges that businesses face to gain and retain profitability. That’s something that economists were intently focused on before Keynesianism and then it became kind of sidelined afterwards because all of these models assumed that businesses didn’t have any challenges.
If you pick apart the standard models that the Fed uses that are taught in PhD programs, they assume that business are always profitable, they always sell all of their output instantaneously, and they know exactly what their customers want, and businesses don’t struggle. So, that’s another thing we need to correct that you can find a lot of useful research if you know where to look (before Keynesianism and at the nontraditional schools that have continued in the older approaches).
And then the third thing is the credit side where mainstream economics is just so off-target, especially in their models that exclude any role for banks. Effectively, mainstream economists have made assumptions about the way money works and the way banks work that just flat do not match how they actually work in real life. That’s something that’s hugely critical to understanding economic volatility and understanding financial crises. But even regular business cycles have a lot to do with the ebbs and flows of bank lending. And banks just aren’t included in standard macroeconomic models(…)
Until you understand that the economic profession is really not doing anything like what I would say they should be doing—studying these things that go wrong, the recessions and depressions and crises—you might not realize that we shouldn’t really be relying on mainstream economists to tell us how policies should be crafted, to tell us what risks might be out there. We need a different approach.
Click the play button below to listen to Chris’ interview with Daniel Nevins (46m:19s).
For the transcript of this recording, please click here.
Seems to me that most institutionalized economists, educators and theorists, really need to learn to actually perform some real-world task for a living. Rather like a priest giving advice on marital relationships; or, an Amish man counseling on fuel-injection. If I’ve learned anything coming from an engineering background, it is to beware architects. Cute, novel, aesthetic ideas that just haven’t a chance in hell of being built as dreamed up, lasting very long or being efficient.
Hey Rellik,
Watch the cost overruns on Rail on Oahu and the state DOT projects like the CONRAC at the Kahului airport with the steel tarrifs, ALL the rebar is foreign…. AND ALL those concrete projects are using literal boatloads of rebar and structural steel
H.R.5087 ASSAULT WEAPONS BAN OF 2018
This bill bans all semi-automatic weapons along with detachable magazines!!!
https://www.congress.gov/bill/115th-congress/house-bill/5087/text
And the companies that dissed the NRA are eating shit now!
ht tps://morningconsult.com/2018/02/28/firms-see-negative-responses-to-cutting-business-ties-with-nra/
I don’t give a shit about the NRA ever since dickhead Wayne promoted gun free danger zones. My NRA membership card is a four pointed suppository now. Wayne can stick it in his ass.
Im not a member either but I use them as a guide as to who is antigun. If someone thinks the NRA is bad they would really hate my beliefs!
FTW, With the mountains of backlash politicos and companies are getting and more of it every day, I doubt that bill has a chance in hell of passing.
“I doubt that bill has a chance in hell of passing.”
Doubt it as well … but … what I find disturbing about it is – how is a Bill such as that, have those types of intrusions in it?
Who or what thinks that would be a good idea?
(a) Douchebag Politicians
(b) Israel
(c) Mexico/Latin America
(d) All Of The Above
[Note] – There is no WRONG answer – (d) is the appropriate answer
Don’t know where you are going with this. Every Israeli of age is military trained and issued an automatic weapon. Same as Switzerland.
FTW – if passed, if they try to enforce it….. there will be the Civil War they so desperately want.
We live in a life of Illusion, all concocted by a few. Its all part of their Con Job to stay in power. Stop paying taxes is a good start. Starve the Beast. Cut the Cable Cord and get off their Greed Grid ASAP.
Subject: Treasury Department reports $1.2 TRILLION loss in 2017 | The Daily Bell
ht tp://www.thedailybell.com/news-analysis/treasury-department-reports-1-2-trillion-loss-in-2017/
***This is why we pay Federal Income Taxes, that Robs us of our productivity to help pay for the Incompetence of the Feds and endless Wars. FACT: The Pentagon cannot account for 25% of their annual Budgets. With a nearly $700 Billion Budget, they somehow loose $175 Billion every year. Poof Gone!!! So every 4 years, an entire 1 Year Defense Budget amount is lost in the wind. Nope, no idea where it went. No Accountability, Nobody is in jail, No investigation, just ask for more money each year.
However if you or I fail to pay Federal income taxes, or miss a tax payment, they want to place liens and levy our property to steal more assets, which their only interest is, the theft of our productivity. Living The American Dream. How wonderful..
Starve the beast.
Here is What’s Happening in South AFRICA: However you don’t want to be a White Property owner in Africa. The whites help end Apartheid, then the Blacks took over over the Government, and here is what they just voted on in their congress.
Zimbabwe 2.0: South Africa Votes to Confiscate White Minority’s Land Without Compensation
ht tp://www.informationliberation.com/?id=58012
The South African parliament voted on Tuesday to move forward in amending their Constitution to allow for the confiscation of land from their white minority without compensation.
The move has come just twenty-four years after apartheid officially ended. Whites ended the apartheid system only with the explicit constitutional guarantee that their land would never be stolen, but now that they’ve become a small minority with rapidly dwindling political power that’s all gone out the window.
From News. com.au:
SOUTH Africa’s parliament has voted in favor of a motion that will begin the process of amending the country’s Constitution to allow for the confiscation of white-owned land without compensation.
According to Bloomberg, a 2017 government audit found white people owned 72 per cent of farmland in South Africa. Whites own the land because they colonized it and built it from nothing starting in the 1600’s. They literally “drained the swamps” covering many parts of South Africa and built giant farms in their place.
Despite being “colonial oppressors,” millions of Africans from all over the continent eventually moved to the whites’ prosperous colonies in South Africa to share in the bounty they created.
We’ve already seen what happened in Zimbabwe after Mugabe and his goons moved to steal white people’s land:
**Give it a few years, after the Blacks move onto the White people property in South Africa, it will turn into another Big Black Ghetto Shithole.
***This Assault on the EURO White Man, continues in Europe, and why the Democrats here in the USA want to flood America with Brown Illegal people to Vote and take over the congress and turn America into another 3rd World Country Shithole like Africa.
Wait till the minorities controll politics in the FUSA,,,
Its going to be a bumpy ride,
Interesting though, in a morbid, slow motion train wreck sorta way,
Any time any race other than European caucasians take over everything sorta goes to shit
Dad burn uppity naggers agin’
The Pentagon has two sets of books. The first is what they show and the second is the actual expenditures. They’re just not bothering to account for the missing 25%. If we knew where this money was being spent, we wouldn’t sleep at night!
It’s derivative of a state monopoly. Successful businessmen banked on guarantees, were not gamblers.
The problem was originally caused by Oxford University, when they gave Keynes the job of editor in chief of what was then the world’s most influential publication on economics. He had an agenda of saying whatever the people in power wanted to hear, and no articles about economics that disagreed with what Keynes wanted to say could get published. Keynes was a charlatan and a fraud who prevailed in this way for decades. He did not even have a degree in economics. It’s another example of the fact that universities –who are primarily supposed to be teachers– are vulnerable to being misguided by persons with political motives.