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View Diary: Math is Hard: Or why everything we know about debt and deficits is wrong (84 comments)

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  •  If as you say (4+ / 0-)
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    katiec, Justus, psyched, whoknu

    they treat the currency and the unused capacity as mostly irrelevant, then their models are unrealistic in that manner.  Generally, when a model discounts certain real-world features of a complex system in order to simplify the calculations, you need to look at that omission very carefully.  Often a value can be discounted under certain circumstances corresponding to stable areas under the curve, but a change in other factors  can make those values suddenly become relevant.  There is also a tendency of economists to discount what they WANT to ignore, which doesn't necessarily  mean that it is unimportant.

    The classic Austrians were writing nearly a century ago, and the world financial system has undergone a great deal of change since then.  You also need to remember that despite its popularity among the Libertarian fringe today, the Austrian school was academically rejected IN ITS OWN TIME as being unscientific and outmoded.  It was revived for political purposes by those who benefit from its prescriptions, i.e. those who already hold large supplies of specie and other commodity capital.

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