Down With Economists

And Their Junk Science [The Daily Reckoning] July 10, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Down With Economists Annapolis, Maryland [Brian Maher] BRIAN MAHER Dear Reader, Here is the central difficulty of economists: They are not women and men of science. They believe they are. Yet they are not. “Science” binds back to the Latin scientia — knowledge — “to know.” The practitioner of the astronomical sciences, for example, is merely out to comprehend the universe he infests. He is not out to change or influence it. He is not out to engineer it. He is merely out to study it. What he is after is knowledge. Now consider practitioners of the economic “sciences.” Engineers, Not Scientists The heaping majority are not after knowledge for its own sake — unlike the astronomer. They are instead out to tinker… to meddle… to engineer… in pursuit of a cherished result. What is that cherished result? The answer is generally an expansion of the gross domestic product. “Growth, growth, growth!” is their eternal mandate. Thus the economic apparatus must hum perpetually at a very high pitch. If it slackens, if it sheds steam, if it wobbles, the economic engineers leap immediately to action. They will not permit the thing to go along on its own. Thus their skulls are scenes of dizzying and delirious neurological activity. They whir with prescriptions to elevate the economic level, to elevate consumption, to elevate investment. Financial Engineering To this end they suppress interest rates. They fabricate oceans of credit — that is, debt — from the great abysm of nothingness. They seek to bend economic law to their defiant and hubristic will. That is, they do not simply observe the economic laws at work upon the human subject. Thus they are not scientists. They are engineers. And their engineering is nearly always botchwork. Imagine converting a heavenly observer — an astronomer — to a heavenly engineer. That is, stuff his head with the economist’s aspirations. Here is what he will tell you: We have established that the gravitational constant is inadequate to our economic needs. If we can simply alter this so-called constant through wise, applied intervention, we could expect a 10% annual increase to GDP. We must therefore rearrange the gravitational constant to produce the desired economic result. Here you have the psychology of an economist. It is not the psychology of a scientist. [Offer Pending: Please confirm your address…]( Your name is on a list of people eligible to claim the [“most dangerous book in America.”]( We with only 500 copies left, we may run out of stock soon. Here’s how to claim your copy: - [Click this link to watch Jim's short message.]( - Review your account information. - Confirm you’d like to accept Jim’s offer. [Click Here To Learn How To Claim Your Copy]( They’d Wreck the Cosmos Now imagine that the astronomer acquires the tools of manipulation in his sphere… that the economist has acquired in his. He can distort gravity, he can alter the planetary orbits and the like. Within no time the planets would be veering from their courses, the stars would go plummeting, entire galaxies would be set upon collision courses. After all: Look what his economist counterpart has inflicted upon this world. Because of his counsel it is a world deluged by debt, financial fragility and related evils. We are infinitely fortunate that the means of astronomical manipulation remain beyond human reach. Here is a point the economist must consider… Intervention Changes the Original Thing When he ceases to merely observe a thing, in this instance an economy — and attempts to influence it — it is no longer the same thing. It is now an economy under intervention. The economist has transformed it from its original condition. It has become an instrument of politics — and the perpetual cry for growth. Yet must an economy be slave to growth? Nature runs to cycles. The tides wax and wane, animals hibernate, the seasons roll into one another. Left undisturbed, an economy likewise runs to the cyclical orientation. Why not let it? Economies Must Hibernate If an economy enters hibernation, permit it to enter hibernation. It will emerge with energetic vigor when the time is proper. It will be keen to get going. Meantime, the economy under habitual intervention is forever denied the rest and recuperation it requires. And so it can merely gutter along under chronic fatigue. Let us revisit — briefly — the Great Financial Crisis… The Federal Reserve intervened massively to cage the menace of depression after the 2008 wobbles. Quantitative easing, zero interest rates and the rest of the central banker’s emergency kit came to bear. The heroics “worked.” And the menace passed. What if the Fed Didn’t Intervene? Yes, the central bank may have saved the present with its emergency medicine. Yet its medicine worked a massive heist of the future. Absent gargantuan intervention, interest rates would have likely soared in the crisis’ wake. Many businesses reliant upon cheap debt and low interest rates would have died the death. Yet the pain — though acute — would have likely been brief. Sound business erected upon sound foundations would have endured. The economy would have entered the hibernatory state, yes. Yet higher interest rates would have encouraged savings… and gradually rebuilt the capital stock. 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Daily Reckoning contributor Charles Hugh Smith: Borrowing money to consume something in the present brings forward consumption and income… If we choose to consume now, we have less income to save for future consumption or investments. If we sacrifice consumption today, we have more money in the future for consumption or investing… Those who brought their consumption forward can no longer add to present consumption, as their future income is already spoken for… A“recovery” based… on cheap credit and an artificially stimulated “wealth effect” was inherently weak, for the stimulus effectively hollowed out the productive economy in favor of the financialized, speculative economy… stripping future demand to create the illusion of growth in a stagnating economy… Let us return to our scientific theme… Banish the Economists We propose that economists observe economies as the astronomer observes the celestial realms. They must abandon their engineering experiments at once. Is it irony you request? Then it is irony you shall have. Once economists assumed their exclusively observational role… the economic system would restore to a pink state of health… which the engineers claim is the very purpose of their interventions. That is because an independent economy is a self-repairing economy. It is not given to the fantastic imbalances and distortions of the economy under intervention. And the greater the intervention, the greater requirement for greater intervention to address the high distortions of the original intervention… And the greater the magnitude of the next crisis… which requires greater intervention yet. It is a cycle truly vicious. Thus it is time to banish the economists — and to the outmost darkness. Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Editor’s note: [July 31.]( Mark this date in your calendar. Why? 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Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Brian Maher] [Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. 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