Why Economists Are Always Wrong

No matter what School of Economics one subscribes to, they are all wrong. People treat the social sciences like they are a true science which they are not. When we hold the theories they espouse up against history, we see how they all fail miserably.

Unfortunately, the world of cryptocurrency is infected with the cancer. People know very little, it seems, about money, capital flow, and what makes an economy productive. Instead, they adopt a theological outlook at is both lazy and incorrect.

Nevertheless, we have people all over the world parroting to these people, few who will ever listen enough to learn. Alas, we can only start to poke holes in their obvious ineptitude.

Over the last century, we saw a flood of ideas that all stem from one central premise: governments can affect the business cycle.

This has been proven repeatedly to be false yet we have academics like Klaus Schwab who continually promote this idea. It is why the Great Reset will fail miserably.

Ironically, this is also what led to the equally flawed Austrian School of Economics, which is as invalide as Keynesian.

Source

Economics Is Not Reality

We have a situation where the three primary schools of economics are Keynesian, Chicago (who tend to be monetarists), and Austrian. All are religions with their ardent supporters.

In the end, they all are outdated and obsolete as we end 2022.

Keynesian

This was a direct affront on the business cycle and the idea of the invisible hand as put forth by Adam Smith. Many of Keynes ideas stemmed from Karl Marx. Hence we see the basis of Marxist thought.

Marx believed that the business cycle could be averted. Through the idea of government control, equality could be achieved by restricting the booms and busts, something that he saw as benefiting the wealthy. He even went so far as to exhibit, and rightly so, how deflation was a burden that was felt disproportionately by the working class. For this reason, the elimination of the business cycle was paramount.

Keynes, early in his career, promoted this idea. Ironically, he spent the later half of his life fighting against it. He realized the economy is a lot bigger along with more complex than any single entity.

Monetarist

This is similar to the monetarist in the belief that manipulation of the economy is possible. Instead of redistribution (direct), they opted to view the altering of interest rates as the ability to control the economy. Central banks have repeatedly shown how this is a total failure.

Another problem is monetarists look at every problem through the lens of the money supply. Considering the fact that money is ever changing, even identifying it is impossible.

For example, today money is basically currency that pays interest. This is due to the fact that government debt is used as collateral. Therefore, any increase on intrest rates has no effect because governments are the largest debtor. This only serves to increase the cost of debt servicing since politicians do not cut spending. Hence, interest rates have no impact in this regard.

Austrian

Global capital flow is not on the radar of the Austrians. They pack their theology with neatly honed ideas that are obliterated simply by the flow of capital.

We hear a lot of reasons for the 1920s boom and insame speculation. The reality is that was caused by World War 1. Capital also flees danger and seeks safety. Thus, when WWI started, where do you think the money in Europe went? It all fled to the US.

A century later, what do you think is happening? We have capital from all over the world fleeing into US dollar denominated assets. When capital flows into a country, it increases the domestic money supply. It has nothing to do with fiat currency, Fed money printing, or any of the other reasons people give for the increase in assets.

Capital flow tells the entire story.

Economic Power

A currency is backed by the economic power that supports it. This was the case dating back to the Roman times. Many want to romanticize about sound money and commodity backed. If that was the case, immitation money would have excelled.

Currency was put out by dominate empires. Efforts were made to ride that by other countries (empires) producing immitations such as with the Floral. In some cases, the metal content was the same or even higher as the original. Yet it was valued less.

The reason for this is that, as Empires conquered lands (whether it was the Romans or the British centuries later), they were able to increase economic productivity. Trade, commerce, and other forms of production took over.

If we go back over the last 150 years, we see the same thing. The British Pound was the reserve currency. This coincided with Britian being the financial capital of the world. WHen that title moved from London to NYC, things changed completely.

The USD is so powerful not because of oil like so many claim but because the economic power supporting it is unrivaled. Each time China, or any other country) buys US Treasuries or writes debt denominated in USD, it is only feeding into this proposition. Banks offer more favorible rates on USD denominated debt because they can hedge by selling it to Wall Street. This is only due the financial might that is presently in place with the dollar.

China is a dollarized economy. It is the world's top exporter with its largest customer being the US. That country pays in USD. At the same time, China is a major importer of food and energy, also prices, for the most part, in dollars. This makes the #2 economy basically dependent upon this currency.

That is the economic power of the USD. It is something overlooked by most since they only want to think in terms of these archaic, outdated Economics models that academia put out a century ago.

It is why the economists are always wrong. Unless they managed money globally, they do not follow the capital flow aspect to this. Hence why we get so many absurd claims that do not come true even after decades of screaming.

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