Financial Reality posted an article with a quote from Economic Cures Are Like Booze for an Alcoholic: Caroline Baum

The Baum commentary addresses a number of financial and economic issues in a very readable article. She points a finger at several guilty parties. She explains the current mess and how we got here. It sheds some light on the problems and addresses the only viable solutions – stop spending, stop expanding credit. The “fix” is long, drawn-out and painful. Until the government get’s that and takes the appropriate measures, things will continue to get worse, not better.

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Economics, 17th Edition by Paul A. Samuelson and William D. Nordhaus is the “gold standard” in Economics textbooks to the point where nobody even questions the basic premises. Originally written in 1948, and revised periodically, it is now in its 17th edition. Think about the real sciences – Physics, Chemistry, and how much has been learned and discarded in that time. But not Economics.

Samuelson’s Economics is Keyesian. What’s not to love about it? It is convenient and fits well with the popular belief that all the men are good looking and all the children are above average [1]. Tax and spend your way to prosperity is a politician’s dreams come true. Let the good times roll. There is a free lunch.

Keynesian economics was adequate until the wheels started to fall off the economy. But now, there are cracks and fissures appearing. The explanations in the book don’t explain what is going on around us. Important highly-visible and powerful Economists are saying that they are surprised by the current situation. So the fix must be to apply more of “it” – whatever it is. The notion that the previous actions might have caused the problem in the first place are not being examined. Real experience and data are discarded as anomalous as they don’t fit the Keynesian theories.

Even the award is wrong – Nobel did NOT award a prize for Economics as he didn’t think the subject merited this recognition. Paul A. Samuelson was awarded …

In today’s financial times, it is becoming increasingly clear that, maybe, there ought to another economic worldview. Emperor Samuelson has no clothes…

Make way for citizen academics. Just like citizen journalism, there is a new wave of academic work being done and distributed via the internet by folks without doctorates and accreditation. This is their field of interest. Many have other lives – successful businesses, Engineering degrees, and a real world perspective of world markets and the global financial system. In other words, excellent sources of information.

The Other Economics

There is another explanation that has been put forth and does a much better job of describing a predicting the current outcomes. Though not as high profile, Austrian economics has been studied in parallel with Keynesian theories.

… more to follow

Friday is the end of the month, so I do the record keeping. That means
downloading the transactions from all the accounts – checking,
savings, visa, brokerage – into Quicken. All but one can be done
electronically. Some start from the bank site and select download.
Others can be “Updated” from Quicken so Quicken logs into the bank as
me, and downloads the new transactions. Same result, different
process.

There is a bit of work to review every transaction and make sure that
it is allocated to one of the expense or income accounts in Quicken.
The first time is tedious, but after that, Quicken remembers that
Safeway transactions are Food expense.

I pay most bills online. They are easier to include in the electronic
updates. We almost never write checks any more.
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Don Coxe thinks basics like food and energy are the places to be. For food, he suggests farm-equipment. A friend was telling me that her financial adviser had her back in Caterpillar CAT. She has been in and out of the stock over the years, each time with significant returns. She is sure that this time is no different. So, maybe it is time to add some Caterpillar. It isn’t exactly into food productions, but roads and infrastructure are pretty basic, and in need of maintenance and repair. Dividends are currently over 4% so this is in the income asset class.

Good old John Deere DE could be poised for good things. Now that is your basic food production bet. We visited Landmark Winery in Napa. The great grand children of John Deere are the owners and still in the agra-business. They have the best assortment of John Deere merchandise – napkins and key ring for first brother who is restoring a vintage Deere tractor. Some John Deere stock for me. The dividend yield around 3.4% isn’t too wonderful, but this is the stock equivalent of comfort food.