Lunatics (still) in charge of the economic asylums

Global financial markets are crashing, even as the impact is momentarily softened through massive injections of artificial money – which will serve only to extend the pain while numbing us to its virulence. 

But how about us here in little old New Zealand?  No worries:  We’re all going to be okay say the Pollyannas at the New Zealand Institute of Economic Research who “predict,” based on their “models,” that a “pick-up in consumer spending” will “haul” the local economy out of recession “in the first half of next year.”

Clearly these are people who have no conception that their “models” are bad enough at the best of times – and “the best of times” is not the phrase one would use when the fundamentals of the world’s economic structure are creaking like the opening scenes of a Saturday afternoon disaster movie. The world’s money is broken, yet the NZIER and the like continue myopically churning out their “predictions” as if they meant something.

Economics gives no man a crystal ball.  And with “models” as simple as this,* and “predictions” as risible as the one above, it’s no wonder their so-called profession is derided as being so dismal.

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* George Reisman points out the standard Keynesian model of GDP, on which the morons at NZIER rely for their risible claim, "is literally playing with half a deck.”

It purports to be a study of the economic system as a whole, yet in ignoring productive expenditure it totally ignores most of the actual spending that takes place in the production of goods and services. It is an economics almost exclusively of consumer spending, not an economics of total spending in the production of goods and services.