The Angry Economist is Born
When the topic of economic policy is brought up, most people…
a. Continue what they were doing, even if it was nothing
b. If watching TV, hit the mute button
c. If reading things on the internet, immediately call up the next story
d. All of the above
If you chose (d), you are entirely rational. If you pay any attention to the business/financial press and “talking heads”, it is very unlikely that you will be provided with any useful information. There are two primary (but many other) reasons for this.
1) There is really just an underlying agenda, whether it is political or trying to sell something. For example, consider someone like Larry Kudlow, President Trump’s chief economic advisor. Many years ago, I worked at the same Wall Street firm as him. Personally, I respect him because he overcame serious substance abuse issues and reestablished himself. Professionally, he is nothing but a political hack. For decades he and other so-called “supply-siders” have continually argued that the solution to every economic problem is tax cuts and market deregulation. The contention that personal and corporate income tax and capital gains tax cuts “pay for themselves” with additional growth and investment/productivity gains has proven time and again to be nothing but b.s. There is no doubt that there can be serious overregulation, but that is overshadowed by the results of market failure such as water/air pollution, our failure to deal with climate change in a systematic way, and not to mention the continual financial and media fraud that is perpetrated on the public. For example, can anyone read the disclaimers on drugs/drug supplements and financial products like mortgages that are routinely advertised on television? Can anyone really explain the terms on their personal credit cards? Just look at all of the adds from financial service companies that show happy couples in retirement traveling and living so comfortably. This can be yours if your hand over your savings to them. Right.
2) The “talking head” business and economic analysts are constantly providing forecasts of everything from the stock market to interest rates to grocery prices. I have only one question to ask you. If you really knew anything that was going to happen in the future, would you tell anybody? Of course not because you would simply sit and make a pile of money based on your knowledge. So they all just sit around their desks pontificating about things of little or no value. No one ever checks their accuracy.
The advent of 24/7 news has been a disaster because there is not real news 24/7. This is particularly relevant to business/financial news. The so-called experts are simply not. Just look at their credentials or lack thereof. Where do we go from here?
The objective of these missives is to cut through the absurdities that exist in discussions of economic policy and business/financial commentary. In each missive I will try to focus on a topic or two. This is particularly relevant with the forthcoming election, when the inaccuracies and outright lies will no doubt reach new heights.
The obvious question is why should you bother reading anything that I write about. I do have a Ph. D in economics. I have been an academician for over 12 years. I worked in the finance industry in New York for 28 years. Therefore, I have been directly involved in economic/financial research and bond and stock trading/portfolio management through many business cycles and unique events. The current situation certainly stands out, and I along with you need to try and understand what is being done by whom and for whom. In other words, who benefits and who gets screwed. I have nothing to gain financially and never will. It is already clear that those in the lower income brackets are getting hammered while the stock market reaches new highs. Who benefits from that? Those well-off will have their groceries and take-out delivered, their lawns mowed, and other “necessities” done. If they have jobs, those doing the deliveries and generally maintaining our lives are barely scraping by. This is nothing new. It happens in virtually all economic recessions/depressions.
I hope to bring a reality check to all of this. Head over to the blog for more.