The Endgame. Clarity On Macro-Economic Delusions.

“A man’s ignorance sometimes is not only useful, but beautiful — while his knowledge, so called, is oftentimes worse than useless, besides being ugly. Which is the best man to deal with — he who knows nothing about a subject, and, what is extremely rare, knows that he knows nothing, or he who really knows something about it, but thinks that he knows all?”

Henry David Thoreau (July 12, 1817–May 6, 1862) 

Alasdair Macleod has provided a brilliant explanation of the source of so many problems – Macro-Economists.

“today’s macro-economists are a failure on the one subject about which they profess to be experts: economics. Their policy recommendations have become the opposite from what logic and sound economic theory shows is the true path to economic progress.”

“Ill-founded beliefs in the magic of unsound money have been shattered on the altar of experience. Macro-economists are discovering that the failure of monetary and fiscal planning are becoming a policy cul-de-sac that has generated a legacy of unsustainable debt. Those of us aware of a gathering financial crisis are discovering that governments have tamed only the statistics and not what they represent.”

“The starting point for today’s errors is the belief that markets sometimes fail, and that monetary and/or fiscal policies can steer markets towards a better outcome.”

“There can be no net stimulation into the private sector economy by the state, because everything has to be paid for, one way or another.”

“Keynes’s motivation was partly driven by his belief in the honest intentions of democratic government, and as we can glean from his writings, his emotional dislike of savers, the usurious rentiers who rake in interest without soiling their hands through honest work.”

“His General Theory is proof that Keynes despised markets, and did not understand prices (see Chapter 21). With his ignorance of this most fundamental element of economics and all the other half-truths that follow, the true purpose of this propaganda is revealed: the justification for state intervention and the end of free markets.

“Upon this unsound basis, layer upon layer of further untruths have been built. When an economist conjures up a course of action based on these fairy-tales, the honest critic is at a loss where to start, because the thread of errors leading to the economist’s judgement has become so long and convoluted. Few are prepared to listen to a lengthy critique on this matter, so it is far easier for the layman and politician alike to assume that a scion of Oxford and Harvard must know what he is talking about.”

“The root of the problem is in a misunderstanding of the nature of economics itself, and in the application of modern analytics.”

“Mathematics is appropriate for the physical sciences, but wholly inappropriate for social sciences, such as economics.”

“A businessman who fails to distinguish between mathematics as an accounting tool and its lack of predictive value will not remain in business for long. Yet there is no limitation, seemingly, on the employment of mathematics in the less certain world of a national economy.”

“Statistics are continually amended to show monetary and fiscal policies in the best possible light.  The result is the statistics have themselves been tamed, not what they represent. Meaningless averages are routinely invoked as evidence to support state intervention and planning.”

“It was George Canning, nearly two centuries ago, who said he could prove anything with statistics, except the truth. The attraction statistics confers for the slow-witted analyst is they avoid him having to apply original thought. It means he or she never feels the need to consider the underlying motivations of economic actors.”

“Ignorance in academic circles over price theory, which after all is the bedrock of economics, is staggering. It is as if Carl Menger, who convincingly proved the full subjectivity of prices back in the 1870s, never existed. This is despite the fact that for all of us the exchange of the fruits of our labour, in the form of money, for the things we individually decide we want, is our most important daily activity.”

“When yields on government bonds rise above an as yet unknown level, central banks will have a decision to take. Are they prepared to support the entire financial system at the ultimate expense of their currencies, or do they preserve the currency? The choice has become that binary, and any fudging of this choice is unlikely to prolong the survival of the global financial system.”

“A likely culprit is the accumulating effect of monetary debasement on the finances of ordinary people. Monetary inflation transfers wealth from savers to debtors, debtors who then generally invest it inefficiently. Government spending, financed by high taxes, also destroys private wealth. Monetary inflation reduces the purchasing power of ordinary people’s wages as well, an effect which limits their ability to consume. Governments of advanced nations are simply running out of their citizens’ wealth.”

“Growing evidence of price inflation and stagnant production can be expected to materially increase the risk of a global banking and currency meltdown. The best escape-route is ownership of anything other than purely financial assets and fiat currency deposits. No wonder the price of gold, which is the soundest of moneys, appears to have entered a new bull market.”

The Endgame







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