Economic Ignorance

Reuters’ Edward Hadas asks economists to open their minds and admit their ignorance. “Four years after being blindsided by Lehman Brothers’ collapse, the profession is still stumbling in the dark. Policymakers and pundits still make confident pronouncements, but the conclusions are radically different. The expert disagreements give away the truth: ignorance reigns.”

He asks six simple questions that economists can’t answer:

1) What creates retail inflation?
2) How do financial asset prices affect the real economy?
3) Do big fiscal deficits damage the economy?
4) What does quantitative easing actually do?
5) How much leverage is too much?
6) How to deleverage without damaging the economy?

Policymakers rely on pseudoscience and witch doctors to make decisions. This will not end well.

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