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Why You Should Ignore Economists

If economists are so smart, why are they always wrong?

When I took Econ 101 and 102 as a young college student back in antediluvian times the textbook we were assigned was Paul Samuelson’s Economics: An Introductory Analysis. This book is the all-time best selling economics textbook and is still around today (19th ed.).

I had the 1961 edition. In it, Samuelson, a prominent Keynesian economist who won the Nobel prize in economics, predicted that the economy of the Soviet Union would overtake the U. S. economy in 23 years (by 1984). Even as late as the 11th edition (1980), Samuelson stood by his prediction. (more…)

The Dispirited Class

Bankrate.com’s most recent survey on savings reports that only 41% of Americans had enough savings to cover a $500 unplanned expense. Which means 59% didn’t. Before you jump off a cliff, this doesn’t mean they can’t pay their bills—many have access to credit in one form or another. And, it doesn’t necessarily mean these people are poor—but they are spending more than they make and are struggling to maintain their lifestyle.

The issue here is not wealth inequality. There always has been and will be “inequality”. The fact that some people are wealthier than most people is not relevant. If the top 1% are living fabulously well that doesn’t mean they are doing so at the cost of the rest of us. It means they are better at creating wealth and jobs than the rest of us. This is about how bad economic policies are hurting Main Street.

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Is More Debt the Key to the American Dream?

Some lawmakers think that the way to the American Dream is to load up on more debt at the top of the housing cycle.

Consider H.R. 898, the Credit Score Competition Act introduced into Congress by three Congressional Representatives. It would direct Fannie Mae and Freddie Mac, the two government sponsored entities (GSEs) that guarantee 90% of the mortgage loans in the United States, to lower credit standards for mortgage loans.

“Alternative credit score consideration by the GSEs is a win-win: it opens up the market in a responsible manner for those qualified to buy a home and eliminates the government-backed monopoly in credit scoring. That’s why the Credit Score Competition Act has garnered such strong bipartisan support,” said sponsor Rep. Ed Royce.

“Alternative credit score” is just a misleading obfuscation of the term “low credit standards.” Kind of like “alternative facts”. (more…)