Met up with a Financial Planner last night. A good guy and we had a great conversation. He spoke quite confidently about the ongoing ‘economic recovery’. As I listened, my mind couldn’t help but think of US stocks being hammered on Monday, with benchmark indicators falling…heightening concerns about the economy before Friday’s monthly jobs report.
I know the economy is such a fragile, intangible entity and although we tend to look down on China and Argentina for playing with their government numbers, we should remember that Western nations do it too. Just ask shadowstats.
I think all the way back to my time in High school in the 1980s and being introduced to Economics for the first time. Now I look at how Economics PhD’s dominate the Fed. The Federal Reserve is full of PhDs. An article in the Harvard Business Review noted that the Federal Reserve System is almost certainly the nation’s largest employer of PhD economists, with more than 200 at the Federal Reserve Board in Washington and what is likely a similar number scattered among the 12 regional Federal Reserve Banks.
Looking at MF Global, Libor, foreign exchange rigging, the 2008 crash etc, I hope you would forgive me for thinking that economics sometimes overlooks the “real world” functioning of markets. As Prof Chossudovsky noted on the Global Research website –
“…theoretical constructs centered on mathematical models serve to represent an abstract, fictional world in which individuals are equal. There is no theoretical distinction between workers, consumers or corporations, all of which are referred to as “individual traders”. No single individual has the power or ability to influence the market, nor can there be any conflict between workers and capitalists within this abstract world. 1040 US Singapore
By failing to examine the interplay of powerful economic actors in the “real life” economy, the processes of market rigging, financial manipulation and fraud are overlooked. The concentration and centralization of economic decision-making, the role of the financial elites, the economic thinks tanks, the corporate boardrooms: none of these issues are examined in the universities’ economics programs. The theoretical construct is dysfunctional; it cannot be used to provide an understanding of the economic crisis.”
So we live in a time when it is imperative that we critically evaluate everything that is put in front of us. We must be unafraid to constructively challenge everything…