The Return of the Great Depression
It can quite reasonably be said that at no point in economic history has technical knowledge ever been less relevant to being a good economist than today. Mainstream economics is in complete disarray. In the UK, economists are reeling in shock as their predicted third-quarter recovery has failed to appear, while in the USA, Nobel-winning Keynesians are first calculating the need for a $600 billion stimulus, then turning around and declaring a $787 billion stimulus is insufficient. A report from the Kiel Institute entitled The Financial Crisis and the Systemic Failure of Academic Economics has concluded that a “reconsideration” of the “basic premises” of standard macro and finance models is required due to their inability “to provide any insight into ongoing events.” And even the venerable Economist has been wondering aloud where economics went wrong.
Garbage in, garbage out. The truth that is known to every computer programmer is finally beginning to penetrate the economic elite. Keynesian models have failed. Monetarist models have failed. Neo-Keynesian and Post-Keynesian models have failed. The only known concepts that have not completely failed – yet – are the financial instability hypothesis of Hyman Minsky, Richard Koo’s concept of a balance-sheet recession, and the credit-focused cycle theory of the Austrian School.
Mr. Rockwell, the chairman of the Mises Institute and a great champion of both Austrian economics and human liberty, was kind enough to ask me to personally introduce RGD to his readership. This is an article I wrote specifically lewrockwell.com for the official launch of the book today, and I’d encourage you to check it out. I have to admit, I was a bit taken aback to hear the host quote the opening sentence of it during my interview on The Rob Johnson Show.