|Last Updated: Jul 3rd, 2017 - 15:54:31
Thought for the Day
A science has a number of defining features. An hypothesis is tested by experiment and if no one finds an error then the hypothesis becomes a theory. A theory is of use if it can predict what will happen in the future or in different circumstances.
An example might be Newton's hypothesis about bodies attracted by "gravity" and this is what causes an apple to fall to Earth. (The Earth would also move slightly towards the apple!) This led to the theories about the motions of the planets.
Physics is a science where continual experiment has built up precise knowledge about our physical world. This is expressed mathematically and the models based on this thinking gives us a very clear picture of the world around us.
Economics is not such a science and the mathematical models built up to explain the economic world around us are not based on experiment. They are based on perceived relationships, not proven emperical ones.
This explains why economists, in 2007, predicted growth of 2% (plus or minus about 0.6%) for 2008. Their projections would waver back and forth as 2007 went by. Only now at the end of the SECOND quarter of 2008 can they PREDICT that we had NEGATIVE growth of 0.3% for the FIRST quarter of 2008. (As reported in the DomPost this week).
Their predictions were totally wrong. One might very well ask, "What is the purpose of the economic models?"
Only economists seem to be unconscious of the irony of predicting the past!
Jun 25, 2008, 14:28
Spectre of Inflation Over Global Economy
Trouble in the US of A:
"Charles Holliday, chief executive of the chemical giant DuPont, warned of rising inflationary pressures in the corporate sector. "Inflation is here big-time," he said."
"Andrew Liveris, Dow's chief executive, said the decision to raise prices on the company's products by up to 25 per cent - the biggest hike in company history - were aimed at offsetting a "staggering" increase in costs."
So we see that Chief Executives of two major US companies are working with severe inflation.
At the same time housing is in a slump: "A closely watched housing index showed house prices in 20 of the biggest US cities posting a record 15.3 per cent year-on-year decline in April."
The biggest brains in the US are working on the problem. They want to raise the Federal Reserve interest rates to reduce the money supply (currently running at 17.3% in the US) thus choking off producer price inflation and at the same time they want to reduce the federal Reserve interest rate so that consumers can afford their mortgages and pay for the groceries.
Do they not understand how all this comes about?
We shouldn't scoff - it is also happening here!
The answers are contained in the last four years' newsletters.
Jun 25, 2008, 14:15
Can We Trust Government Statistics?
Things are getting so far out of kilter in the US of A that John Williams has set up Shadow Stats to provide a more REAL set of statistics than the government agnecies.
Ignorance is bliss, so they say, but when it all turns to custard the bliss stops. Have a look at shadowstats.com to see what is happening at the centre of money in the world today.
Have a look at the section titled "Hyperinflation". Fascinating reading!
[ Visit Website ]
Jun 24, 2008, 13:06
Taking Money Back
Money is very important. It is amazing that we know so little about it or about how the government and the banks defraud us diligent workers and savers.
Ever wonder how the people who borrow millions and buy property end up very wealthy - although sometimes they end up very bankrupt?
This is a complete article about how it all happens and an answer to our problems. When the money supply is booming along at 15% we don't seem to have problems but this happy state cannot continue forever.
What will happen when the central banks can't any longer inflate their way out of trouble? Is this happening now? Is it inevitable? Just how does the banking system work anyway? Why is it a fraud?
Read what Murray Rothbard has to say:
[ Visit Website ]
Jun 16, 2008, 13:34
TIME for Socialism
For those of you who think that socialism is dead you may need to think again. Apparently TIME magazine is advocating a good dose for the American public.
Think about that - China and America changing ideologies!
[ Visit Website ]
Jun 12, 2008, 15:25
Scotiabank Brings Shanghai The Year Of The Golden Derivatives
In this morning's DomPost (10th June) Mr Mark Johnson, an oil analyst of OMFinancial is quoted as saying, "To a certain extent oil and gold are being traded like a currency in their own right."
Paper money is showing its limitations and people who want money with REAL value must look elsewhere. The American banks are trying hard to suck the Chinese into the never never land of paper inflation but I suspect that the Chinese are much too smart for them. They remember "Fly away money" from 1000 years ago. They are opening up their borders to selected precious metal traders. In a few years we may find that the Chinese (and the Russians) have a large supply of the world's gold and silver.
Jun 10, 2008, 09:54
Quote for the Week
"It is dangerous to be right when the government is wrong."
Voltaire - [François Marie Arouet] (1694-1778)
Jun 9, 2008, 11:16
Creating Wealth and Keeping it
The New book by Phil Scott, President of the Foundation for Economic Growth.
"This book is good, damn good and no statistics!" Lindsay Gordon, MA, MSC, PHD.
Every serious economics student should have a copy and read this ground-breaking foundation of clear economic thinking. Real Economics explains how human actions shape our world and why so much seems to be going wrong for Western economies. This book will bring enlightenment for the general reader who will see why a few very wealthy are becoming exceedingly rich and the middle classes are on the road to serfdom.
See more: www.realeconomics.co.nz