economic theory stuck in a rut

Discussion in 'Economics' started by morganist, Feb 17, 2009.

  1. economic study for the last 300 years has been based on peoples opinions of mechanisms that are still the same as 300 hundred years ago. the interest rate mechanism, the credit and equity market, bonds and government borrowing.

    as it stands you have a few schools of thought that have different opinions on how these mechanisms should control economies. this is where the economic thought has been invested. however is that just outspoken people with opinions or justifiable research.

    my opinion that the evolution of economics is not based on opinions but progression of mechanisms and tools. other methods of generating capital and controlling that capital within an economy. this is real innovation rather than opinions and research and should be the future of economics.
  2. May I add a little bit of history to those 300 years???

    1913- The Fed
    1914-18 WWI
    1929-1939 Great Fed Depression
    1941-1945 WWII
    1946-1990 A convenient cold war
    1990-2007 The bubble age.

    Hope that helps in your 300 year history.
  3. This post is spot on, we need to get out-of-the-box thinkers in place, the same old school (good old boys club) thinking will not work any longer.
  4. W4rl0ck


    Economic theory works pretty well.

    For instance, the US economy is now in a "liquidity trap" of the Feds making.

    This may be followed by a "deflationary spiral" and economic depression since the Fed and gov't idiots are trying to ignore economic theory and market mechanisms.
  5. LOL it's working well for them.
  6. Acumen


    I have an out of the box economic theory that provides a concrete source of the main factor in the business cycle. I know how to fix it, or how to profit from manipulating it. I started researching when I noticed that certain things were not happening that should have been as the recent downturn took place, and I followed it through to the source.

    However, I don't have a PHD or a name, so even though I have written it up in a paper, I will never be able to get it published in a credible journal. If I do release it, I am sure the idea will be stolen by some economist who does have a name. They will read it, and convince themselves they thought of it because it is simple, straightforward and correct. I have had this happen in the past, and it is extremely frustrating.

    So for now, I am just going to sit on it. If I ever do go back to school I have my dissertation ready to go. If I become the chairman of the FED I can fix this countries monetary policy. If I become the CEO of a member bank, I can suck the money from all of you.
  7. my point being if another mechanism was used to get capital you would not be concerned about credit it would be irrelevant. this would answer the question if there is another way of generating capital businesses would be able to operate and the stimulus package would be effective as there would be no constraints to expansion of aggregate supply.

    however as money supply is controlled by credit mechanisms (omo's, reserves and discount rate) it would not be possible to stop using credit unless a new money supply mechanism was created.

    at the moment it is argued that the debt created is due to governments having loose monetary policy to reach money supply goals to stimulate growth over the last decade or so. this means that the governments, the fed (boe), and other financial bodies turned a blind eye to credit to stimulate growth without appreciating the damage it would do to the credit market.

    effectively if you control to economic functions with one mechanism the interest rate when those function conflict in there goals the mechanism (interest rate) can only meet one target even that. when this occurs recession is inevitable.

    to the poster who put the post about the fed and other banking notes over the last three hundred years. yes there have been events but they are all based on the same banking model of capital generation through debt, money supply control through interest rates or fiscal policy and investment in bonds.

    the same all sh1t there is no difference.

    to the poster who said they will do what is best for them. you are right but if it is too out of hand riots will occur and they will be hit too. all you have to do is look at war months and see what happened in russia when people get desperate. i know it is a long way from that but if people feel they do not get listened to they will react.