–The end of mainstream economics

The debt hawks are to economics as the creationists are to biology.

Recently, in an economics blog, someone claiming mainstream economics had become a branch of math, infuriated a person code-named “Calgacus,” who wrote:

“As a math guy, I feel insulted by calling USA mainstream economics a branch of math. It is less scientific than astrology or alchemy and attracts the terminally stupid, who then become tenured professors at top ranked universities. What mainstream economics deserves is a vicious attack as the pseudoscience it is from other branches of academia. Soon enough, no one will teach and learn it, and it will be consigned to mouldering books and journals in libraries, and forgotten uncited papers in databases”.

My feeling was: Wow, what a blistering attack by Calgacus. But, of course, he (she?) is correct — mostly. In what other science can the most “respected” speakers ignore plain fact, and still retain respect? Consider that most “economists” believe the federal debt is unsustainable (whatever that means), when factually, the federal government has the capability to service any size debt. In what other science could the debt be referred to as a “ticking time bomb, ready to explode for 70 years (!) — yet nothing happens and the predictions continue.

Consider that most mainstream economists seem not to have changed their world hypotheses since the Great Depression, despite the absolute fact that economics changed dramatically in 1971, the end of the gold standard.

Consider that most mainstream economics writers and bloggers, as well as columnists and editors, discuss federal financing in the same terms as personal financing, despite the enormous differences between the two. Consider that these same writers seem not to understand the differences between state and local government financing vs. federal financing.

Consider the nearly unanimous opinion among mainstream economists that federal deficits cause inflation, despite the undisputed fact there has been no relationship between the two since that fateful year, 1971. Even more telling is the blind eye turned toward the present, where deficits have been unprecedented, yet we not only do not have inflation, but are most concerned about deflation.

In what other science could wrong predictions be ignored in favor of gut-feel hypotheses? In what other science could predictions be based on zero facts, yet given respect and consideration by the media? Consider predictions that our children will pay for federal deficits, despite the absolute fact that the federal spending of a monetarily sovereign nation is not dependent on taxes, and there is no mechanism for our children to pay for today’s spending.

In what other science could there continue to be a widespread belief without facts, that a large debt/GDP ratio causes inflation and economic chaos, despite the living proof of Japan that this is not so?

In what other science could so many people be so wrong about so much — could so many people ignore absolute fact — while the results of their beliefs cause so much demonstrable harm?

Yes, mainstream economics is broken — more than broken — it is a fraud. Calgacus is right to be insulted, because so much of the math in economics is twisted and misinterpreted to justify obsolete hypotheses. The very foundation of our economy rests on monetary sovereignty, yet seemingly few mainstream economists even know what that term signifies. Visualize a physicist not knowing what “atom” means or a biologist not know what a cell is. That’s mainstream economics.

Thus today, mainstream economics has devolved into some strange mixture of Freud, Marx, sociology, psycho-babble, historical misreadings, perverted data, unsupported opinion and wild-ass prediction. The result: One recession every five years. We’re fortunate it hasn’t been worse.

Federal deficits supply money to the economy. That is an undeniable fact. Yet today, when our economy is starved for money, we hear mainstream economists, media writers and politicians all telling the public that federal deficits should be reduced. It’s no different from telling the starving people of Mauritania, their food supply should be reduced.

Readers of this blog are familiar with my $1,000 offer, which by the way, still is unclaimed. In what other science could such a challenge to mainstream thought — a challenge easily faced if facts existed — go unmet?

When I encounter an editorial or opinion piece or blog claiming that federal deficits are too large, I write to the author asking for proof. On no occasion has proof ever been forthcoming. Nor will you find any such proof on the numerous debt-hawk web sites, debt clocks and other similar nonsense you will find on the web. The reason: Such proof does not exist.

My only hope is that enough people will join me in challenging the popular faith. Demand proof. Perhaps if there are enough of us, sanity will return to economics, the current recession can end, and we won’t have to endure that one recession every five years.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity

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