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Sunday, February 19, 2012

The Pillars of American Ideology

From the blog Triple Crisis:

“Many professional economists now find themselves answering questions from their students, friends, and relatives on topics that did not seem at all central until a few years ago, and we are collectively scrambling to catch up. (p.1, emphasis added).”
Note how damning of mainstream macroeconomics this statement is: the key dynamics of the crisis – massive leverage and credit expansion, fed by the shadow banking system, that contributed to a housing bubble and crash – all elements of a macroeconomic dynamics well known to more than one generation of economists trained in the economics of Keynes and Minsky. They have studied many of these topics for decades, which to the mainstream are topics that “did not seem at all central until a few years ago”, that is after the meltdown and crash!...

I believe there is a reason for this: the mainstream never changes its underlying theory which is based on the erroneous ideas that financial markets are, by and large, perfectly self-governing and efficient and that the market economy has strong self-equilibrating forces that always bring the economy back to full employment...  Since they won’t change their basic framework, they have no where to put the new information they get after each crisis...  The tragedy is that it is these same economists who still control the elite economics departments, the main economics journals and hold the key policy making and research positions in our public institutions such as the Federal Reserve. Their stranglehold must be broken if we are going to break the Memento syndrome that is hindering sensible economics and economic policy.

A mind-set of Empires is an ideology of Perfection, no matter how inept it may be in reality. Even though only a few people ardently believe in American Exceptionalism, the Cold War and its aftermath has led the country into a facile acceptance of less stringent forms of that idolatrous worship of the State.

Perfect Markets are one of the Pillars of American Ideology.

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