Somebody who keeps being right is going to publish an article on this Yeldub, the is a clip from it:
Start "The Queen of England famously asked her economic advisors why none of them had seen “it” (GFC) coming."
Investors that saw this crisis coming over recent years increasingly turned to gold. We all saw it coming however the trick was to get in early and articulate the reasons. Understanding and adjusting for the evolving market dynamics is apparently beyond modern economics. Otherwise the Queens economists would certainly have seen “it” coming.
I have had frustrating arguments with those that believe that standardised metrics like GDP and unemployment used the world over are still valid. The methodology is flawed in my opinion and thus you get false signals for Central Bank and government intervention. Just because their metrics are standardised does not make them any more useful. For instance GDP also includes government spending, debt funded or not, go figure.
Keynes never stated that continual deficits were acceptable, his theory has been misused and he has also been misquoted on gold. The problem is that his radical idea that governments should spend money they don’t have passed its use by date long ago. He came along in the 1930’s at the beginning of the long wave debt cycle and spearheaded the idea of stimulus and government intervention in the business cycle. His thinking has permeated modern economics and herein lays the problem.
The theory worked in the world of the 1930’s at the beginning of the debt cycle and now we are at the end of the debt cycle, in a debt bubble. Governments became addicted to ‘big’ government and spending. He did not anticipate that governments would not succumb to the intoxicating urge to seek re-election by cherry picking his theory and would be constantly stimulating via deficits for popular effect. The Queens economists were trained in a theory that worked on an old model.
Economists are great people this is not personal however many are so transfixed with measuring and categorizing within their complex specialty that they failed to see the model gradually change. So they have tried to adjust the Keynesian theory, with its old roots in out-dated (thought) paradigms to a new world and vastly different circumstances. The Queen had no hope of their prediction to assist her in 2007. Economists lack trading ability, however hope springs eternal there are some great economists, just not mainstream.
Hyman Minsky tried to tell the other economists. From Wikipedia: “Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets.” In other words he took greater notice of the business cycle, investor sentiment and crisis. This is more akin to market trader’s tools. He later argued against excessive debt accumulation and deregulation – if only he had been more closely followed, yet the main stream still persists. END
PS don't need to post source as I wrote it and will publish it across the WWW tonight.
And so do idiots that post that people who can see the bleeding obvious are idiots are they? LMAOROTF
