That's never happened before...
August 10, 2010
– Comments (14) |
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I like how the only guide we have to our immediate future is the past. If someone predicts something for the stock market, or for commodities, or for inflation, every response you will see is based on history. Little to no thought is given to cause-and-effect.
You want history? Go back and find how many times there was hyperinflation in the Weimar Republic. Just once? Do you think when the Austrian economists were warning about inflation they had historical examples of hyperinflation to point to in the Weimar Republic? People laughed them out of the public debate, and they are still derided, even though their predictions came true. Their predictions have always come true, in fact, because they are not limited to historical example, but rather have a clear, accurate understanding of cause-and-effect.
Is there any intelligent reason to expect the U.S. stock market to beat inflation in the next 3-5 years? If so, what causes and effects do you see leading to that? Aren't the most reasonable, most lucid, most successful economists predicting high inflation, low stock returns, lower bond returns, and the commodity bull market to continue, for at least another 3-5 years (perhaps longer, depending on government policy)?
I'm not presenting evidence of my own here. You might think that discredits me, but I just want you to think about your epistemology. You evaluate data, regardless of whether or not you ever think about your methodology for evaluating data. Give some thought to what you consider to be reliable, and why. People are told that FDR pulled America out of the Great Depression, and they blithely take that for granted, even though FDR was the first president to preside over a depression that long and deep. So why give him credit for doing what may have happened faster and better without his help? Too few people ponder such a question.
If government expenditures (even nonmilitary spending) and regulatory agency employment and the length of federal regulation all grew under George W. Bush, why is he considered a free market president? How is free market defined? Is it defined by those who believe in it, or by those with a vested interest in making a straw man out of it?
If Obama's policies (foreign and domestic) are almost indistinguishable from Bush's, why expect different results? Is there some magic to having a (D) after your name for two years on C-Span? Do his mellifluous words (or his melanin) imbue his policies with power that those same policies lacked under Bush?
My basic contention is this: just because some predicted economic calamity is unprecedented is no reason to believe it couldn't happen. For everything that happens, there's a first time. Why be unprepared?
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