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Dr. Kalinda Rose Stevenson
Money Making Blind Spot. Why Economists Couldn’t See The Financial Crisis Before It Happened.
Welcome back!
Money Making Blind Spot. One of the most disturbing elements of the current financial crisis is that so few people saw it coming. This is especially true of people who spend their entire lives studying economics and financial markets.
This is why a statement, such as the one by the former Chairman of the Federal Reserve, Alan Greenspan, is such an astonishing admission. In testimony before the House Oversight Committee in October 2008, Greenspan admitted that that he was shocked at the economic crisis. He never saw it coming,
The 82-year-old Mr. Greenspan said he made “a mistake” in his hands-off regulatory philosophy, which many now blame in part for sparking the global economic troubles. He quoted something he had written in March: “Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief.”
He conceded that he has “found a flaw” in his ideology and said he was “distressed by that.” Yet Mr. Greenspan maintained that no regulator was smart enough to foresee the “once-in-a-century credit tsunami.” Greenspan Admits Errors to Hostile House Panel
Why would people who devote their lifetimes to studying economics and finances be so blindsided by what has happened recently?
Robert J, Samuelson raises the question about why economists simply didn’t see these problems coming.
One intriguing subplot of the economic crisis is the failure of most economists to predict it. Here we have the most spectacular economic and financial crisis in decades—possibly since the Great Depression—and the one group that spends most of its waking hours analyzing the economy basically missed it. Oh, a few economists can legitimately claim some foresight. But they are a handful. Most were as surprised as the rest of us.
Economists Out to Lunch
Samuelson finds the answer to his question in Niall Ferguson’s upcoming PBS documentary, “The Ascent of Money.”
The most significant part of this explanation concerns money itself.
The creation of money was a seminal historic event; so was the subsequent invention of finance—the saving and investing of money. Without them, we could never have moved beyond barter to a modern economy based on specialization and building for the future. But these advances came interwoven with bubbles, crashes, swindles and hyperinflations. Finance has been a wellspring of both progress and instability. Economists Out to Lunch
The point of the article is that money itself is the root of the financial crisis, but very few economists have paid enough attention to money itself, and so never saw the problems coming.
The crisis originated in financial markets (the markets for stocks, bonds and many complex securities), and yet finance occupies a peripheral position in mainstream economics.
Economists Out to Lunch
This is the blindspot that lies behind the crisis. We want to make money, but we don’t think enough about what those words mean. What does it actually mean to “make money?”
The people who created the financial crisis understood all too well how to make money. One of the most basic causes for the financial crises that have wracked the world is that economists let money-makers make money without any limits.
The real secret to making money is to understand what the words, “make money,” really mean.
Find out what it means to make money at
http://www.makemoneyinsight.com/
“The greatest limit to money is the belief that money is limited.”
For your abundant success,
Kalinda
Dr. Kalinda Rose Stevenson
Author of: No Money Limits For Real Estate Investors:
Discover The Money-Making Secret In The Real Estate Game
That Transforms Your Money Struggles Into Financial
Abundance.
Award Winner of National Best Books Award
Business: Real Estate Category
And Finalist in Business: Personal Finance
Category
Kalinda@nomoneylimits.com
http://www.nomoneylimits.com/
http://www.makemoneyinsight.com/
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