National Public Radio is reporting on a conference of "top" economists that is now going on at M.I.T.
If you want to learn why the economy is so screwed up, you need to listen to these economists.
The report contains a clip by Harvard economist and top economic textbook salesman, Greg Mankiw. His take on the recent financial crisis is that the reason mainstream economist didn't forecast it was because it was an outlier event. Says Mankiw, economists weren't thinking about such an event because it would be like thinking about an Asteroid landing in M.I.T's Central Square.
The levels of the absurdity of this comment are mind boggling. First, and foremost, Mankiw completely throws down the memory hole those economists who subscribe to the Austrian theory of the business cycle and who do not see the recent crisis as a unique black swan event, but the result of central bank monetary policies that cause recurring crises in economies both here, and around the world. These economists far from being surprised by the event correctly forecasted the crisis.
Secondly, even if say, for argument's sake, that the crisis was an outlier "asteroid"event, this does not mean you can't see the asteroid when it has entered the atmosphere and about to crash on your head. Plenty of non-economists also saw the crisis coming becasue of the size of the asteroid heading at them.
The truth of the matter is that mainstream Keynesian economists use incorrect tools to understand the economy and will regularly fail in their forecasts.
From there, in the report, NPR takes us to another mainstream fiction, that the Fed has driven rates to zero. I have discussed this, recently, in a post, Note to Economists: The Fed Funds Rate is NOT 'Essentially at Zero'
Rates are not at zero and it is again mind boggling to think about the poor quality of thinking by economists who think the interest rate is at zero. Yet, in the NPR report this is exactly what Northwestern professor Bob Gordon states. He goes even further and sates that because of this, "The Fed has run out of bullets." This I remind you, he is saying while the Fed is in the process of implementing QE2, which is dumping hundreds of billions of new dollars into the economy, which is creating a new manipulated boom in the stock market and economy.
Most bizarre, NPR reports that M.I.T grad students are leaving other thesis topics to study zero bound interest rates, when the phenomena doesn't exist!
The NPR report closes with a clip from the former chairman of President Obama's Council of Economic Advisers, Christina Romer, who has admitted she didn't have a clue as to how bad the economy would get. In this NPR clip, she now tells us that she "can't sound too optimistic." Yet, if nothing else, the Bernanke money printing will increasingly make the economy look bright in terms of the data that Romer, and other mainstream economists will look at. So not only did she miss the crisis, she's missing the Bernanke manipulated rebound.
NPR says there were a thousand economists at this mad show. When Girls Go Wild on South Beach during spring break, there's a pretty good bet a lot of that is alcohol fueled. I have no idea what fuels these economists to go stupid, other than that they have a total inability to think for themselves and speak out against the ruling regime. Their statements are so out of touch with reality that, in comparison, it makes the girls during spring break on South Beach appear like modest and cerebral women who are contemplating choosing life in a convent.