Newsrooms everywhere are consulting economists to get insight into the economy. Sounds logical, but is it realistic? The study of economics is not a science. It can be grouped in with other college classes like Fine Arts and Psychology. There is a quasi-science part to it that is similar to fire department forensics where the cause of a fire is determined after the fact. Economics is basically the study of theoretical models and by using them, try to determine what may be in store for us in the future by studying history. What it boils down to, an economist can explain what happened to the economy in the past using models and defend their argument. That is the only real part about economics, it explains the, who, what, why, when and where of past events.
The words “economy” and “economist” seem intertwined and they are not. The economy is the “here and now of how life is treating us.” Today’s economist is trying to figure out how to predict successful financial pursuits and avoid the black holes that are out there; and if he was any good at it, he would be fantastically rich.
When Congress decides to curb coal burning or the addition of alcohol to our gasoline, an economist can explain why China is buying our coal and why beef prices are rising. Notice however, economists do not have any real insight into the future. It is a little like a chess game, neither player is going to move into danger intentionally, the errors will be made from a lack of foresight into what other unknown items may be in play.
Our economy is in a state of flux, moving and connecting in different ways and changing imperceptibly to where it is barely noticed. The people in charge, Congress, collectively as a group, have an economic IQ of zero. They are all dependent on local groups in their State getting them reelected. So keeping the economy going, involves very little if any economic theory. A Congressman’s job is to spend your tax dollars and give his voters the most bang for their buck.
The real issue for the reader is to realize that there are three different outlets for information on economic theory that will be important to your future; the government, the news sources, and blogs. I severely question government sources, for one reason, governments always paper over bad news for the simple reason, the public reacts negatively to bad news. As for the news sources, there is a time lag, they only print what has already happened. The third group, blogs also have issues, you can shop for a point of view that agrees with your own.
Of the three, blog reports seem to be able to connect the dots that involve economic theory. If I use the Real Estate bubble as an example, I was considered dead wrong for 6 years and friends I knew avoided that topic with me. It’s very hard to be wrong for 6 years only to be proven right later.
So let’s boil it down to its essence. Economists as a whole, pretty much agree that the present government deficit spending cannot continue for much longer; it is a bubble. Printing money, whether done by a counterfeiter or the US government produce the same result. Product was consumed with no work effort. Congress has no real conceptual view of economic theory relative to butter or guns; all they want are satisfied voters.
So when you see some Economist being interviewed on TV, think to my example of a forensic arson investigator being asked about the future fires he may be investigating. He is an expert only on the fires that have happened that he has examined.
Remember the joke about three economists in one room with 5 different opinions? It’s not the 5 opinions that bother me, it’s the one that the media chooses to print— the nation is starved for good news and good news sells. Fortune tellers are a dime a dozen and they have a knack for telling you what you want to hear, it puts bread on their table.
Below is something that has nothing to do with the above, but having a picture or two in the blog adds a little color
While cleaning my desk, I found an old 1928 one dollar bill and thought I might share this old silver certificate with you and match it up with a newly printed note.
The newly printed dollars make no reference to being backed by silver or gold. I guess the "In God we Trust" on the back of the "newer" dollars was added as a hope and a prayer that all of this doesn't go up in smoke.