How did economists get it so wrong, asks Paul Krugrman in a recent NYTM article. He examines several fallacies of these dismal professionals who, until everything exploded, were slapping each other on the back for having achieved something like the superstring theory of money. Oopsies.
- Home prices always go up. (Nope)
- Assets price themselves perfectly according to available information. (Unless there’s more many to be made another way)
- Individuals are foolish but the market is rational. (But what if the market is completely made of fools?)
Check it out