Don't Trust Economists Over 30

The new issue of The Economist magazine has a cover showing a book titled “Modern Economic Theory” melting into a puddle of what looks like chocolate-coated vanilla ice cream, and with the caption “Where it went wrong – and how the crisis is changing it,” which refers to how nobody in their right mind trusts any egghead “economists” anymore, and even Paul Krugman, one of the worst of the worst of them, now admits that the last 30 years of macroeconomics as practiced by these econometric, computer-head lunatic savants was “spectacularly useless at best, and positively harmful at worst” which is still sugar-coating it, as far as I am concerned, and it has been disastrously, cataclysmically harmful in a huge inflection-point kind of way and the future will be dramatically different, as in Much, Much Worse (MMW).

The artist in me is attracted to the cover of the magazine this week, and I loved the clever way that the artist had the book melting into something runny-yet-yummy that looked like puddles of chocolate and vanilla ice creams, which wordlessly explains why Modern Economic Theory was so popular in the first place.

My refined artistic instinct, however, would have had the book rotting at the bottom and melting into millions of disgusting cockroaches all swarming out, which is a lot more repulsive and thus artistically descriptive of the results of the monetary ministrations of the loathsome Federal Reserve, lo these last several decades, which created a constant deluge of money which, single-handedly, made all the weird Congressional insanities possible, all the economy-distorting government spending possible, all the crushing debts public and private possible, and our “We’re freaking doomed!” future so pathetically predictable and indeed inevitable that, just as predictably and inevitably, gets me started on how this “predictable and inevitable” thing is the Exact Freaking Reason (EFR) why it is imperative that you buy gold, silver and oil! It’s all so easy!

The Economist magazine, also predictably and inevitably, does not comment on this Gem Of Mogambo Economic Wisdom (GOMEW), which is to buy gold, silver and oil on the advice of the last 4,500 continuous years of the world’s economic history, particularly as it pertains to fiat currencies and the trustworthiness of governments.

Instead, they admit that “There are three main critiques; that macro and financial economists helped cause the crisis, that they failed to spot it, and that they have no idea how to fix it,” which are all only true in the broadest sense, although because The Economist magazine is filled with these same kinds of neo-Keynesian of guys, they are completely unaware that there are lots and lots and lots of economics people out here who did NOT cause the crisis and, in fact, the Austrian school of economics (see: to learn the only true economic theory!) has been insistent all along that the whole Federal Reserve modus operandi of creating excess money and credit was (to paraphrase into Mogambo-ese, which is to heap scathing disdain and utter contempt upon a wide range of people and things), a big, stinking load of bankrupting inflationary stupidity.

And since you mentioned it, these same Austrian school of economics guys had it spotted with laser-like precision the Whole Freaking Time (WFT), too!

And this does not even get into the unbelievable $2 trillion Congressional budgeted deficit-spending thing, which is enough to make you poop in your pants and exclaim “Yikes!” which is not as comical in real life as it seems when you simply read it on the page like this.

So you can see how I am predictably nervous and trigger-happy, and when The Economist article said that “macroeconomists also had a blind spot: their standard models assumed that capital markets work perfectly,” you can actually hear me in the background as I immediately jumped to my feet and exclaimed, “No! No, you blockheads! Their blind spot WAS their stupid Keynesian models! The whole thing was one stupidity piled on top of another one! Hahaha!”

You have to pay particular attention, but if you look really close at the video surveillance tapes, that’s me in the lower left corner in the background, demonically waving a pair of silk women’s bikini underwear (which I did to attract attention, which it did, but not, unfortunately, in a “good way”) and if you turn the volume up, you can hear me yelling, “How in the hell can you manage monetary policy on such pillars as, for example, ‘the consumption function,’ which is just the notion that you get some money, you spend some money, you have some money left, but each expressed, in percentages of total income, to three decimal-place precision? And which are then used as inputs to myriad subsequent equations of equal worthlessness, compounding and compounding the inherent errors with each iteration? Hahahaha! Morons! You’re all morons to believe any of this silly crap!”

Suddenly, the security tape goes blank, and thus my summation was lost to history, although I fortunately remember what I said. I continued, in my usual sarcastic way, “In fact, people are morons if they expect that this time, after all the times in history when it has been tried and failed, the government will – for the first time in history! – finally be able to buy its way out of bankruptcy by printing a lot of fiat money and, through some Absolute Freaking Miracle (AFM), a ruinous hyperinflation will miraculously not destroy the economy, the people will surprisingly not riot in the streets, and you won’t hear The Fabulous Mogambo (TFM) predictably laughing and saying, ‘I told you to buy gold, silver and oil because – Whee! – this investing stuff is easy when the government is acting so irresponsibly, ya morons!’ and instead everything will be just fine after a gigantic deus ex machina occurs where some omnipotent supernatural being presses some kind of Cosmic Reset Button (CRB) to set everything aright, where everybody’s losses are made up, everybody gets rich and everybody finds true love and lives happily ever after. Hahahaha!”

Or, for the less optimistic, buy gold, silver and oil, which WILL come true, unlike that “true love” thing! Hahaha!

Until next time,

The Mogambo Guru
for The Daily Reckoning

The Daily Reckoning