Harry,
I think it was entirely a matter of luck that Fred Foldway forecast
the 2008 Crash so precisely. Whenever there's an economic crisis, or
the rumblings of one, then there'll be wide variety of
prognostications and time-scales for its fulfilment. In retrospect,
some of them are bound to have been right. And some of them will have
been right for entirely accidental, or even spurious, reasons.
Indeed, even the Austrian School's century-long forecast has only
been partly right in that a great deal of our present problems are
due to government-printed money and the way that governments have
also allowed banks to get into the debt-making act. While credit
should be given to A.S. economists for this currency insight, there
were other matters which are also turning out to be important in the
overall scheme of things. The three that are uppermost in my mind
are: 1. World overpopulation and consequent resource shortages, of
which recyclable freshwater for agriculture has been the first to hit
us; 2. Increasing automation of mass consumer goods and services
(these being 70% of our modern economy); 3. The 'locked-in'
urbanized way of life in advanced countries with a largely stabilized
standard range of goods and services.
Keith
At 17:46 08/10/2011, you wrote:
Keith (and Ed and Arthur)
If you want to see how "scientific" economics really is, the
attached paper from Mason Gaffney will open your eyes.
Georgist/Austrian economist Fred Foldvary forecast the 2008 crash
back in 1997 in a published paper (probably written in 95-96). He
got it right on the nose, so when a contest for the best forecaster
was opened, he was nominated. He wasn't even included in the
final group from which the winners were chosen. None of the winners
forecast the crash and the best they could do was to point to the
economic problems that were developing.
At the moment, nobody anywhere seems to know what to do. As you
know, I call it "Let's try this" economics, where they try things
that don't work, whereupon they try something else - which doesn't work.
Anyway for an interesting look at the a problem of modern economics
- check the attachment.
Harry
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On Sat, Oct 8, 2011 at 2:12 AM, Keith Hudson
<<mailto:[email protected]>[email protected]> wrote:
There's a three-party race going on right now as to who can preach
world-wide doom and disaster the most persuasively. Presumably, when
the financial disaster actually occurs, they all want to take credit
for warning us. One party is comprised of the three credit ratings
agencies, Fitch, Standard & Poor and Moody's, which are steadily
downgrading both nation-states and banks. Another party is composed
of senior politicians such as Obama, Sarkozy, Merkel and Cameron.
Because their pessimism is normally so uncharacteristic of
politicians, we can only presume that they are feeling extremely
exposed and desperate. The third party is the most venerable of them
all -- central bankers such as Chairman Ben Bernanke and Governor
Sir Mervyn King -- who now have the chutzpah to publicly blame
politicians for the present mess. (A year or two ago they'd have
been immediately sacked for saying these things. Not now. They're inviolable.)
And, of course, there's a raggle-taggle of individuals right at the
back of the race who really don't count very much because they are
saying so many different things. There are hundreds, if not
thousands, of economists in academe and financial institutions who
want to embellish their CVs for possible future career use. Then
there are tens of thousands of bloggers on the Internet, such as
your own humble servant, who are flourishing theories ranging from
the bizarre to the passably sane.
However, there's a relatively small group of runners who are already
at the winning post, patiently waiting for the others to arrive!
They've been there for about a hundred years. And they've been
saying the same thing fairly consistently for the whole of that
period. And they've not only been forecasting the present financial
disaster but also have the solution. They are known, often
pejoratively, as the Austrian School, deriving from a brief
intellectual ferment in Vienna a hundred years ago which
kick-started many new ideas in physics, psychology and the arts as
well as economics. At present they tend to cluster around the
Ludwig von Mises Institute website, but there's also a small group
within the economics department of George Mason University,
Virginia, others are scattered around Western academia in ones and
twos, and there is even one US Senator, Ron Paul (a Presidential
contender at present).
What they are saying is that it's OK for a country to print money ad
lib if it is in physical peril from another country. This way, there
can be sufficient money to pay for armaments, at least for a while.
For example, when England went to war against Germany in 1914 it was
paying for its armaments with real money, gold. However, within a
few weeks, the Bank of England realized that the Great War (as it
was known then) was going to continue for much longer and it would
soon run out of gold. So it had to start printing additional gold
promissory notes (banknotes) on the strict understanding -- be it
known to every Englishman and every English arms supplier -- that
the new banknotes wouldn't be redeemable with gold until after the
war. Soon, all the European countries (and America, a late joiner)
were at it, friend and foe alike.
The problem really started in 1922 at a conference in Geneva, eight
years after the war was over, when the countries (including America)
tried to get back onto the gold standard as it was before 1914. But
by that time governments were already addicted to the idea of
printing money and they ended up with a half-cocked scheme of trying
to retain gold as the basic currency discipline but also being able
to print money whenever they got into debt. The result? Bursts of
inflation in all sorts of places. But the Grandaddy of them all was
inflation in America, followed by a sub-prime-type house-building
boom and the Wall Street Crash of 1929. The subsequent Great
Depression only came to an end in the 1940s with yet more inflation
as the co-partner of rearming for World War II.
Well, that's where we are again today, waiting for Wall Street Crash
II. This time, however, there are a few small voices still echoing
from the Austrian School. Central banks all over the world, despite
their official propaganda against gold, are now quietly buying gold.
(This is why the price of gold has already gone up five-fold in the
last ten years.) Gold mines in Russia, China, Central Asia, South
Africa, Brazil and elsewhere are mining gold as fast as they can.
The Chinese have started the Pan Asia Gold Exchange in order to
stimulate gold buying and selling, and this will be extended soon to
sales points and vending machines in Europe (and even in America if
Congress let's them). We can but hope that this time, when printed
currencies such as the dollar and the euro have finally fizzled into
decimal points, that there's a chance of a sensible, stable currency
again. A new Geneva Conference is required, though it might be in
Beijing this time.
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2011/10/>http://allisstatus.wordpress.com/2011/10/
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Content-Disposition: attachment; filename="GaffneyMay2011_2.pdf"
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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