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Have Keynesians learnt nothing?

Niall Ferguson, Financial Times

Published 11:39 AM, 20 Jul 2010

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3 Comments


Annony Mouse wrote:

Austrian economics never gets mentioned. Yet if you followed its concepts the start of the GFC was bleedingly obvious and to those of us that heeded the warning signs so well posted by the Austrian theories you made heaps and heaps of money out of the GFC.

Any classically trained (especially Keynesian) economist that says no one could have predicted the GFC needs to read "Human Action" by Ludwig von Mises and re-educate themselves as to what real economics is all about.

Same too with our government. Both treasurers and finance ministers are clueless - still listening to Keynesian "animal spirits". They need to be made aware of Austrian economic theory. Trouble is it requires hard choices. Margaret Thatcher and Ronald Reagan were forced to make hard decisions. People will be out of work. It has to happen. Until the economy kills the deadwood industries and mal investment the festering uncertainty will delay the eventual recovery.

And if you want to stop inflation (really a devaluation of our currency by credit creation) we also need to get rid of fiat currency and the control central banks have over it.

Somehow I think flying pigs have a better chance of being seen than any of the above.

20 Jul 2010 5:24 PM

John Sells wrote:

Silly me!

I'd been believing the US financed the wartime debts from the interest plus capital returns from the UK and other countries they 'assisted' (materially and financially)!!

I'm not sure that in the present day that debt has been fully re-paid (See Have Keynesians learnt nothing?, July 20).

20 Jul 2010 7:55 PM

Annony Mouse wrote:

In science one or more theories are proposed to explain a set of observed data points that already exist. Then the competing theories are used to extrapolate or predict new data points (See Have Keynesians learnt nothing?, July 20).

The theory that comes the closest to predicting the new data points is then accepted as being valid and usable (at least until new data points are observed that don't fit the theory – see the unexplained drift of the Pioneer space craft trajectories: Newton and Einstein have some explaining to do).

So why are classically trained economists still woefully wrong with their predictions and without a model that works? Dare I say their theories are wrong?

This then puts them in the same category as charlatans, shysters and believers in a flat earth.

It's time to put the Keynes zombie to rest. Somebody needs to kill it for good so economists can unlearn their skill and rebuild their models – starting with credit creation and fiat currency. Then maybe their models will be able to predict a whole lot better than they do now.

I mean, would you trust what most economists say as the basis of your investment decisions? I certainly wouldn't.

21 Jul 2010 2:29 PM



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