https://fee.org/articles/5-of-the-worst-economic-predictions-in-history/ 5 of the Worst Economic Predictions in History by Luis Pablo de la Horra Not knowing what’s going to happen in the future creates a sense of unrest in many people. That’s why we sometimes draw on predictions made by leading experts in their respective fields to make decisions in our daily lives. Unfortunately, history has shown that experts aren’t often much better than the average person when it comes to forecasting the future. And economists aren’t an exception. Here are five economic predictions that never came true. 1. Irving Fisher Predicting a Stock Market Boom—Right Before the Crash of 1929 Irving Fisher was one of the great economists of the first half of the 20th century. His contributions to economic science are varied: the relationship between inflation and interest rates, the use of price indexes or the restatement of the quantity theory of money are some of them. Yet he is sometimes remembered by an unfortunate statement he made in the days prior to the Crash of 1929. Fisher said that “stock prices have reached what looks like a permanently high plateau (…) I expect to see the stock market a good deal higher within a few months." A few days later, the stock market crashed with devastating consequences. After all, even geniuses aren’t exempt from making mistakes. 2. Paul Ehrlich on the Looming "Population Bomb" In 1968, biologist Paul Ehrlich published a book where he argued that hundreds of millions of people would starve to death in the following decades as a result of overpopulation. He went as far as far as to say that “the battle to feed all of humanity is over (…) nothing can prevent a substantial increase in the world death rate.” Of course, Ehrlich’s predictions never came true. Since the publication of the book, the death rate has moved from 12.44 permille in 1968 to 7.65 permille in 2016, and undernourishment has declined dramatically even though the population has doubled since 1950. Seldom in history has someone been so wrong about the future of humankind. 3. The 1990s Great Depression that Never Happened Economist Ravi Batra reached the number one on The New York Times Best Seller List in 1987 thanks to his book The Great Depression of 1990. From the title, one can easily infer what was the main thesis of the book, namely: An economic crisis is imminent, and it will be a tough one. Fortunately, his prediction failed to come true. In fact, the 1990s was a period of relative stability and strong economic growth, with the US stock market growing at an 18 percent annualized rate. Not so bad for an economic depression, right? 4. Alan Greenspan on Interest Rates In September 2007, former Fed Chairman Alan Greenspan released a memoir called The Age of Turbulence: Adventures in a New World. In the book, he claimed that the economy was heading towards two-digit interest rates due to expected inflationary pressures. According to Greenspan, the Fed would be compelled to drastically raise its target interest rate to fulfill the 2 percent inflation mandate. One year later, the Fed Funds rate was at historical lows, reaching the zero-lower bound shortly after. 5. Peter Schiff and the End of the World Financial commentator Peter Schiff became famous in the aftermath of the 2007-2008 Financial Crisis for having foreseen the housing crash back in 2006 (even a broken clock is right twice a day). Since then, he has been predicting economic catastrophes every other day, with very limited success. There are many examples of failed predictions from which to draw upon. For instance, in a 2010 video (see below), Schiff foretold that Quantitative Easing (the unconventional monetary policy undertaken by the Fed between 2008 and 2014) would result in hyperinflation and the eventual destruction of the Dollar. Unfortunately for Schiff, the average inflation rate per year since the onset of QE has been 1.68%, slightly below the 2% target of the Fed.
The permabear predictions on here the last 13 years have often been hilariously bad. And they keep on coming. Nobody in their right mind would forecast a revisit of March 2020 now based on real numbers but emotional day traders and cynics keep doing so.
%% Ravi B book is a good read anyway , full of good charts. NOT a prediction, not insured by any federal agency.
Add Krugman to the list...dozens of examples. And Bernanke in May of 2007: Bernanke: Subprime Mortgage Woes Won't Seriously Hurt Economy (cnbc.com)
I honestly have no idea how that could happen. Every time people fight me on the crash that never happened after 2007, I always point to the fact that most in the industry probably didn't realize how far the government would go to print so much money, and how low the interest rates would go and how long they would be there for. In the entire history of economics, I don't think these two factors were ever in play. So it is my belief that the catastrophe was averted because these two mechanisms were enacted and were somehow wildly successful. Going forward, what other tools do the officials have to keep the party going? The problems now are much worse, such as an over-inflated RE market along with equity markets. Could the balance sheet grow another 10 trillion? Sure, but its kind of like pushing on a string at this point. Any extra money the government prints is just going to inflation, so the citizens are screwed. And most of what will be necessary going forward, like energy and food, cannot be printed, so the printing press will be of limited benefit. Clearly interest rates are just coming off their lows, but still historically pretty much at the bottom, unless you want to talk negative rates. So this tool is no longer available as well. So the point is that back in 2007 the officials were able to pull a rabbit out of a hat via the two extraordinary tools, and now I don't think they have anything left. I almost believe that at this point, the officials want to kill the economy, take a much bigger role in running things, get everyone dependent on the government, and rule through authority. If they don't seize more power now, then when society breaks down even further, it will be all out anarchy. How does the equity market keep rising in this environment, unless of course its simply a crack-up boom in response to a monetary collapse of the USD?
Ask him to put some skin in the game--like leave ET if the S&P 500 isn't up X percentage points by a certain time. Or have him add a signature block (if you can do that here) about you being a trading god and him being an idiot. I seriously doubt he will take you up on it.