Modern Economics Has Failed Us, Says Economist Graeme Maxton

The problem is morality, or lack thereof. From the Wall Street crooks to the liars that faked their income to buy houses they couldn't afford, America is corrupt top to bottom. Those of us who are honest and live within our means get punished with low interest rates on our savings and bailing out greedy fools.

We have not had a capitalist system in this country for decades.

We have a corporatist state where government and business are intertwined and work to benefit each other while protecting each others' interests - at the expense of consumers and taxpayers.

First of all, let's get rid of the notion that economics is a science like chemistry, physics, or legitimate engineering. Economics is simply the study of how monetary and fiscal systems function, so to say it has "failed us" is not appropriate. What certainly has failed us is the consistent mis-application and misinterpretation of economic principles by politicians more interested in their own agendas than in reality.

Well-thought-out theories from Adam Smith to John Maynard Keynes and Hegel and been distorted and cannibalized for selfish purposes. For example, while Keynes proposed deficit spending as a temporary remedy to mitigate the lows of the normal business cycles, he meant it to be short-term (2-year duration maximum) and for the deficit to be repaid once the business cycle topped out. The massive decades-long deficit spending our current politicians engage in was never in his proposal. So it is not economics that has failed us, it is deceitful economists and politicians (perhaps "deceitful politician" is redundant).

I recently read a study guide for the AP Economics exam. It pretty much explained what was going on in today's economics.

The reason modern economics failed us is that people thought they could ignore fundamental economic rules that are being taught at the high school level. Old economics didn't fail us - in fact, it pretty much spelled out that something like this would happen!

When you are in debt to another, you enter into a slave/master relationship with your creditor. (Proverbs 22:7) Its not rocket science people the concepts have been around for a long time.

If we used "antique" economic theory like the one proposed by Adam Smith instead of the modern economic theory proposed by John Maynard Keynes we would not be in this financial mess. Free markets are self-correcting, Keynesian markets require excessive government structure and spending in order to correct even minor problems.

The problem is our CORRUPT politicians no exception

The invisible hand touched me in an inappropriate manner.

As someone who's actually read Wealth of Nations, I can tell you that this yahoo article is packed full of lies and misdirection. No where did Adam Smith say that raising taxes to 50% would heal an economy. Nor have we even come close to following the teachings of Adam Smith in the last 50 years. If you want to see the economy recover, you have to let the market clear of all the failed institutions and individuals being propped up by government.

Most of us did not spend our money like there was no tomorrow. The banks/Fed/Treasury complex spent our money like there was no tomorrow.

Economics is only true when you produce something
if you are moving money around (stealing from each other)
it doesn't, and all the rest of the theories are irrelevant.

Max is confused about the invisible hand. The invisible hand which is the free market doesn't work because it doesn't exist. We have a managed market and the medium of gauging that market is fiat currency. The market managers are the issuers of fake money, the counterfeiters, and those that benefit from the free market manipulations. That's why we have debt. Between funny money and non-existent fractional reserve requirements we (you and me, the middle class) are doomed to sink into oblivion.

We need a free banking system. A banking system not subject to corruptible government regulation but rather a banking system regulated by the free market where banks go bankrupt without the benefit of mismanaging their affairs at the taxpayers expense. A system where the rule of law states that fraud is punishable, no exception.

Not one of the criminals involved in the 08 meltdown has faced charges, not one, that is a travesty.

Free markets is a lie in reality, I see "Invisible handOUT" from governments everywhere, FUNDS (in the trillions) that are unaccountable for or missused. Also "Visible handOUT" in the name of campaign fundings.

"I hope we shall crush in its birth the aristocracy of our moneyed corporations which even now dare to challenge the government to a trial of strength and bid defiance to the laws of their country!"
-Thomas Jefferson to George Logan, 1816

You have to be without money before you start to worry about it.....I keep saying over and over... Buy only American made things and it will cure it's self.. For every man who gets a Dollar he didn't earn,,There is another man who earned a dollar and didn't get it...

You don't get perpetual handouts if you are on welfare. You should perform some kind of community service if you collect unemployment. Even if it is 10 hours a week.

The economic failures are the result of governments guaranteeing debts (Fannie Mae - Freddie Mac in the US / government bonds - Greece - Italy - Spain) to provide social equality. It's nice when poor people have houses (US) or can retire at age 50 (Greece) but someone productive has to pay for that largess. Sadly, there just aren't enough rich people to do that for very long.

How does inflation transfer wealth to the rich?

Actually, the problem is we DON'T have true free markets and there is no invisible hand when you have government intervention. The housing bubble occurred because the government got into the mortgage business via fannie mae and freddie back. If we had true free markets, banks would not have been bailed out. Subsidies to other industries would not be given out. We don't have true capitalism. We have corporatism. The problem is due to the privately owned Federal Reserve System which tries to control prices because it thinks it can do better then the invisible hand. The problem is Keynesian economics. The problem is due polititians on both sides that have been bought and paid for by the establishment elite. Only Ron Paul did not sell out, which is why he's getting the media black out. Sadly, most OWS protesters are Obama supporters and refuse to achnowledge that his adminstration is packed with Wallstreet insiders, and he would bail out bankers again in a heartbeat.

Maxton is right. Capitalism ( or any other system) when divorced from morality, decency and legality eventually destroys itself. Communism went the same way as did Nazi fascism.