Macroeconomics Has Lost Its Way

By Alasdair Macleod – Re-Blogged From Silver Phoenix

The father of modern macroeconomics was Keynes. Before Keynes there were macro considerations, which were firmly grounded in human action, the personal preferences and choices exercised by individuals in the context of their own earnings and profits. In order to give a role to the state, Keynes had to get away from human action and devise a positive management role for central planners. This was the unstated purpose behind his General Theory of Employment, Interest and Money.

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Will Macro-Economists Ever Learn?

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

As we lurch through successive credit crises, central bankers and economists believe they learn valuable lessons every time, and that the ultimate prize, the suppression of business cycles through monetary policy, will be achieved. Enormous effort is put into computer models to enable economists to predict the future, and no doubt, the modellers are now working with artificial intelligence to improve their accuracy.

We saw, over Brexit, how wrong the Bank of England’s and the UK Treasury’s models were, and these errors were also evident in the OECD’s model. Brexiteers smelled conspiracy, but in the absence of evidence, perhaps we should give them the benefit of the doubt and assume the errors were genuine. If so, all computer economic modelling has been a waste of time.

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Why Bad Economic Theories Remain Popular

By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com

Ludwig von Mises and Friedrich Hayek, the most prominent “Austrian” economists of the time, anticipated the 1929 stock market crash and correctly predicted the dire consequences of government attempts to artificially stimulate economic growth in the aftermath of the crash. John Maynard Keynes, on the other hand, was totally blindsided by the stock market crash and the economic disaster of the early 1930s. And yet, Keynes’s theories gained enormous popularity during the 1930s whereas the work of Mises and Hayek was largely ignored. Why was it so?

Keynes became popular because he told the politically powerful what they wanted to hear. In particular, he provided power-hungry politicians with intellectual support for the schemes they not only already had in mind, but in many cases were already putting into practice. Despite being riddled with errors, Keynes’ theories also appealed to many economists because the implementation of these theories would confer a lot more influence upon the economics fraternity. The fact is that in a free economy there wouldn’t be much for an economist to do other than teach economics. He/she would certainly never have the opportunity to be involved in the ‘management’ of the economy.

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December FED Rate Hike?

cropped-bob-shapiro.jpg   By Bob Shapiro

It looked as if the FED had decided to go all in with money printing. And, it looked like the FED officials were lying through their teeth with all the jawboning since Janet Yellen became FED Chief. Not only was the FED continuing with ZIRP and QE money expansion, but also Negative Interest Rates. But something may have changed the last couple of weeks.

Since a month ago, interest rates have gone up. It’s not enough to call it a spike, but up nonetheless.

US Treasury Yields 110815

Short rates – on 3 month T-Bills – went from a low of -0.04% to a recent high of 0.06%, although they have settled back a little to 0.04%. However, over the rest of the yield curve, from 6 mo and 2 year up to the 10 and 30 year maturities, yields are up by a quarter percent or more.

The odds of the FED actually raising rates “officially” at their December meeting, are starting to look good.

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How Keynes Almost Prevented the Keynesian Revolution

By Mark Tovey – Re-Blogged From http://www.Mises.org

October 30, 1929. A brisk autumn’s day in Manhattan. The Savoy-Plaza Hotel’s thirty-three stories cast a long shadow over Central Park. At the base of the hotel a financier lies freshly fallen, motionless, while his last breath, wrenched from the lungs by force of impact, is now a red mist of gore in the air.

Sirens and uniforms. The suicide spot quickly becomes crowded by spectators, who form a vision-impairing ring-fence of backs, much to the annoyance of elbow-throwers at the periphery. Winston Churchill stands at his hotel window looking down on the mess. To nobody’s surprise, the police will find an empty wallet and five margin calls in the dead man’s pockets.1

Churchill’s curtains flutter shut, and we are left to wonder whether anyone — Churchill included — can yet see his clumsy, cigar-wielding hand in it all; whether anyone realizes that, had Churchill as Chancellor of the Exchequer only restored the gold standard at a lower exchange rate, as Keynes had recommended, the Wall Street Crash of 1929 could have been averted (or at least ameliorated).

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An Interview Worth Watching

cropped-bob-shapiro.jpg   By Bob Shapiro

Michael Pento is an stock market money manager who follows the Austrian School of Economics (as do I). For those of you unfamiliar with what that is, Austrian Economics is Free Market Economics, as opposed to Keynesianism and other names for Socialism.

Michael was interviewed recently, and I’d like to share the video with you. It’s one of the few lucid, straightforward pieces that I’ve seen recently. But, understand that some of what he says is scary, so if you have a bad ticker, you’d better take a pill before watching.

 

Fed Statement: Not Dovish, Not Hawkish—-Just Gibberish

David Stockman   By David Stockman – Re-Blogged From http://davidstockmanscontracorner.com

Call it 529 words of gibberish and be done!

All of the FOMC’s platitudes about the economy “expanding at a solid pace”, labor market conditions which have “improved further”, household spending which is “rising moderately” and business fixed investment which is “expanding” are not simply untruthful nonsense; they are a smokescreen for the Fed’s actual intention. Namely, to keep the Wall Street gamblers in free money in the delusional hope that ever rising stock prices will generate a trickle down of “wealth effects” in the main street economy.

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Cargo Cult US Policy

cropped-bob-shapiro.jpg   By Bob Shapiro

Melanesia includes island countries like Vanuatu, the Solomon Islands, Fiji, and Papua New Guinea. During World War II and other colonization eras, there developed what is called the Cargo Cult.

One main idea of the Cargo Cult was that it was the building of runways for airplanes which brought all the planes, which brought all the riches from the outside world. They believed that the cause of the planes coming was the existence of the landing strips.

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555 TRILLION Reasons Why The Fed Won’t Let Rates Normalize

Guest Post By Graham Summers

The biggest question for investors today is that whether or not rates will rise in 2015.

The Fed may raise rates a token amount this year, but the move will be largely symbolic. With over $100 trillion in bonds and over $555 TRILLION in interest rate derivatives trading based on interest rates, the Fed will not be normalizing rates at any point in the future.

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