After the Crash
By John Schroy, on July 25th, 2009 | 
The financial crisis of 2008 caused many to suspect that something is wrong with ‘Modern Economic Theory’. That economists are not, in fact, ’scientists’ is generally recognized. In July 2009, the Economist magazine ran a front-page story, reporting widespread disenchantment with mainstream economic thought.
Strictly speaking, modern economics is not a science, but rather a belief system, like a religion.
Nobel prizes in ‘economic science’ for work not based on the scientific method are like giving Nobel peace prizes to terrorists.
Watching the Fed
By John Schroy, on July 21st, 2009 | 
Despite massive government spending programs, without a clear plan for financing the deficit, Ben Bernanke continues to promise low interest rates for an extended period.
This suggests that Ben doesn’t understand that, even in inflation, there are ups and downs in employment and the business cycle. Low interest rate encourage the ‘Carry Trade’, not domestic employment.
So, what is Ben’s ‘exit strategy’ that will avoid the inflation that is being set up by Obama’s spending?
How long will it take?
By John Schroy, on July 17th, 2009 | 
Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the ‘deficit’ is all in dollars, the United States has no problem in ‘paying it off’.
One way this ‘deficit’ could ‘go away’ would be for US exporters to sell $16.8 trillion more in goods abroad than Americans import from abroad.
Another would be for foreigners to use their dollar balances to buy non-financial assets in the United States, like real estate.
Still another way, would be for Congress to engage in deficit spending to a degree that the dollar inflates and becomes worthless.
The Obama administration may be moving towards the last alternative.
Topics: 
Popular Articles