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24 December 2017

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I would refer to the stock market as a dog track rather than a glorified casino. In the past two years take a look at franchising in the retail sector and the corporate impiety involving 7-Eleven, Domino Pizza and most recently RFG.
Its chthonic executives are no better than many of the untermensch found at a local dish lickers track.

Worth a read:

http://wir2018.wid.world/files/download/wir2018-summary-english.pdf

The great secret of economics is that no-one actually knows what the economy is, much less how it really works.

The so-called "dismal science" is, in fact, not a science at all. It is simply a branch of history, whose practitioners struggle to understand how something so fantastically complex as "the economy" actually works.

Economists have developed a few algorithms that explain things like money supply or the relationship between supply and demand and they have invented useful if sometimes misleading concepts like Gross Domestic Product. These merely create the illusion of science, not the reality.

The true test of any science is that its theories can be used to predict future events, not simply explain the past.

For example, the standard theory in quantum mechanics, a branch of physics, has been unfailingly successful in predicting how things should work at the sub-atomic level and repeatedly demonstrated its value in many areas of scientific endeavour.

In a similar way, Newton's Laws have proven to be extremely reliable in predicting how objects in motion will behave.

There are no equivalents to be found in the economics. Economists are today's equivalents of alchemists, forever engaged in the search of the proverbial Philosophers Stone that will explain everything.

Politicians have compounded the disaster that is economics by laying claim to the notion that they somehow have control over the economy. They are quick to claim the credit for any apparently beneficial economic development and equally quick to explain how anything bad has nothing to do with them.

The ugly truth is that politicians never have, don't now and never will control or manage the economy. Their claims to do so are "maus wara tasol".

At best, they can exert some influence by manipulating the money supply through budgetary or taxation policy or even by simply printing more money (disingenuously called "quantitative easing"). This can produce short term changes but the long term impacts are invariably difficult if not impossible to predict.

We are now routinely subjected to a barrage of supposedly informed opinion about the state of the economy that frequently is about as useful as a form guide at the races.

The state of the stock market, which all too often is nothing more than a glorified casino, has somehow come to be regarded as an important predictor of the economy's health. This is despite the fact that history shows that the stock exchange is invariably the last place to realise what is actually going on in the economy.

If you want evidence of this just read "The Big Short" by Michael Lewis, in which he graphically describes how the so-called experts in the world of finance completely failed to understand the true origins of the Global Financial Crisis until it was far too late to save themselves without massive government intervention.

So, whenever you hear a politician opining about the state of the economy, you can be pretty confident that he or she is basically clueless but wants to create the opposite impression.

The only certainty in modern, neo-liberal economics is that it is the little people who end up being screwed when the proverbial hits the fan. Then we are all called upon to dig deep to rescue the big end of town from yet another disaster perpetrated in the mindless pursuit of wealth at any price that we call capitalism.

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