THE BIGGEST CRASH OF THEM ALL ..
Posted by PrestoPundit on 11/03/2008
the truly massive and ongoing crash in the reputation of the macroeconomists.
As recently as six months ago, the consensus was that it was sufficient
for monetary policy to engage in inflation targeting or to follow a
Taylor rule. Now, Brad DeLong refers to this view contemptuously as
If you look closely, you will find that there is no consensus now.
Olivier Blanchard’s triumphal history of the last thirty years of
economics is exactly wrong.
What will emerge? What the public wants is a theory of control. That
is, the demand is for a theory that includes ways for policymakers to
control booms and busts. To satisfy that demand, my guess is that the
economics profession will put most of its effort into rationalizing or
tinkering with the consensus. The leaders of the profession have too
much invested in New Keynesianism to be able to back away or
acknowledge that it has been refuted.
I would not be surprised to see unorthodox theories of control gain
traction. Perhaps, to justify current policy trends, a theory that
socialized investment is necessary for stability.
To me. the logical thing for the economics profession to do is admit
that we are nowhere near understanding what is happening. However,
taking that position will not get you invited to panels.
Modern macroeconomics is a pseudo-science run by a band of “idiot savant” math-game playing “jocks”, as out to sea as a Medieval guild of astrologers. The profession is intellectually utterly compromised by deep and overwhelming ties to the massive purse strings and professional prestige offered by the Federal Reserve and other branches of the Federal government.
If it were a union, the government would rightly jail its members on a RICO prosecution, if it were a corporation, the government would rightly smash it. But as a pretend “science” the profession possesses special immunity — most especially immunity from competition in a true and open marketplace of ideas.