Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
If you are telling me that the root of the problem is the crazy finantial system coming from an stupid non-scientific mythology regarding the long-term neutrality of money and the fact that the economy is not studied as a complex system in accademia but as a marginalist super-strucutre.. do you think I can disagree?? (I still remember reading with incredulity the macro and micro books of Krugman..are they stupid? I think the new versions are going to be a huge improvement)

And still, macro has a very useful tool to get the general structure, you have mean field models like Say, Keynnes or Friedman which offer you a clue about the general dynamics of the systems. More specifically, they tell you about the fixed points of the system. Getting in the mesostructure with mean field models is, by definition ,stupid nonsense and dangerous, but even smart people like Sagro here never heard about that fact (if your read carefully what he writes). Scientifically speaking they are ignoramus: plain narrative-builders of hot-air, people who do not know anything about what a complex system is. They do not know what a bifurcation is, they do not know what is a slave variable, a manifold.. I doubt they have ever solved numerically a chaotic dynamical system ... they are stupid and they think they are smart.

Yes, the problem is that the present financial system is a crazy mess, and it should be dismantled... the second problem is that there is no scientific model of the main equations which relate fluxes and variables at the mesosocopic model of the economy with hard-tested differential equations for the different sectors of production (some people in MMT try to do it at least, with more or less success, but they try at least!!!), and even less for the main flows of money and assets-type money. So, we do not know which financial system would produce a better outcome in the process or increasing the number of goods which can be "copied at zero cost" as the marginalist would say.

But there is a hope: in a lot of corners of the academia,  people like Krugman, Delong, etc.. who knew that mean-field theories were reliable but the detailed model were not (though harmless- and still they think that the best science is econometrics coupled with mean-field models at each scale), now realize that micro-based macro models are dangerous. They realize that when you construct a model that is clearly wrong on its premises, when you do not understand that the whole is more than the sum of its parts, these models can be published at will depending on political interests because it is "a model"  even if it assumes nonsense (DSGE anyone?). I think they will take more seriously the idea that they should teach mean-field models as they are to students, eliminating all the neo-classical  shit microfoundations. Now there are, at long last, pushing for other ways to approach the system. In 20-30 years we may get a proper scientific insight on financial and monetary policy.

Now, we have history and well-tested mean field theories. It is enough to know what this a crisis due to panic fly to monetary assets reducing the demand for present consumption. We know that financial markets panic and destroy money. So, even taking into account of the fact that the way textbooks teach how banks create money is bullocks (we all create money, you only need three people, Mig repetition!!!), we know enough to predict exactly what will happen, given the fix points of the system. Bu we do not know enough about how to tell the fundamentalists and ignoramus of the ECB that they are dumb, crazy and shitfull, and make it stick. We do not have enough media, adn we can not treat them like wackos as we treat the global-warming is a hoax, AIDS is not a virus and the second law of thermodynamics goes against God's will type of people. And on fundamentals, they are the same kind of people.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Jun 19th, 2011 at 09:14:28 AM EST
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