The Invaluable Work of Economic Scientists

Wolf, Stiglitz, Krugman – we love these guys!

They pushed the world’s governments to undertake huge “stimulus” programs. Of course, the stimulus programs didn’t work. They couldn’t work. All they could do was to disguise the facts and delay the necessary adjustments.

But these fellows don’t care about that. They are the technicians, scientists, and engineers of finance. They have measures of financial health – GDP, employment, inflation, etc. They may not be able to make anyone better off…but they can damned sure move those indicators. At least, they believe they can.

Spend enough money and you can move the GDP up. Hire enough people and you can get unemployment down. It’s not that complicated.

So, the engineers went to work two years ago. You know the rest of the story. That is how we got where we are. They turned valves. They connected wires. They adjusted dials and switches. They put at risk nearly an entire year’s worth of US GDP – on the idea that an economy can be controlled and managed, just as if it were a brewery.

How many cans do you want? Just work backward to figure out what inputs you need – how much grain, how much sugar, how many cans, how much electricity… It’s not rocket science, for Pete’s sake.

The trouble is…managing an economy is not science at all. And these guys are not scientists. They have no controlled experiments. They have no test panels nor test results. They have no peer reviews. They have no proper theories – none that can be disproven or confirmed. They just have crackpot ideas and quack treatments.

And now, Paul Krugman is on television in the US calling for another $800 billion program of boondoggles, bailouts and bumph. “Stimulus,” he calls it. Claptrap is what it is.


Bill Bonner
for The Daily Reckoning