So what are budding economists being taught in class?
If the problems with the current system of unpayable interest are clear to non-economists (like myself) then I can assume that either
a) I don’t fully understand the situation and should stick to that about which I am most knowledgeable.
b) Economists are not being presented with the glaring facts
So which is it? I have read a lot about the intellectual establishment in the west, and how it is primarily organised to remain loyal to the status-quo, but clearly there are economists who ARE well aware of the flaws in the current system and I appreciate them speaking out.
I just wondered how your average run of the mill economics class would cover the problem of perpetual interest-debt when folks like me, with a predominantly non-academic background, are being taught the critical elements of the system via sources like this site. On other forums I have seen people say things like "go get a degree in economics and come back and spout the same conspiracy crap", as if to suggest that I need "deprogramming" to not be able to see the BLATANT flaws of the current system.
I suppose what I’m asking is, does a degree in economics help to critique system better?
I think that you will be teached how the system is working today, which doesn’t mean you get any insight of what’s wrong. Maybe you are better prepared to profit from advantages you didn’t know about before, but if you question the system now and try to get a degree in economics, then you either leave this site or don’t finish studying. The system itself is wrong as far as I can tell. I can very well arrange with it, but we got beyond a point where it has to fail in order to reestablish basic values.
After repeatedly watching the chapter in the Crash Course over and over again to get an understanding, i found some other ressources, that covered that topic. One is the animated movie "Money as Debt" that you can find on the internet, the other is german professor Bernd Senf, who points to the problem of interest since some time now. He does it even more clear than Chris does (He also takes more time, though)
Both sources claim, that the problem is neither taught at school or at university of economics.
I talked with persons in another forum, who seem to have an economic background, but they talk about supply and demand on the credit market, and go into central banking details i really dont understand, but i believe they dont get the point. I think, the problem is so deep at the base, that its invisible for them. They put so much energy on complicated theories and mathematic models that they dont see the forest behind the trees.
The main root causes of this particular problem are approximately as follows:
People who are interested in mathematical accuracy tend to study mathematics or one of the associated sciences, such as computer sciences or physics.
People who are interested in making lots of money tend to study economics, business administration, or one of the associated fields. As a result of that, the mathematical skill of an average economist is far below the mathematical skill of an average physicist. These economists then simply lack the necessary skills; what they produce is at best guesswork rather than science. They make grieve errors, do not notice those, and their similarly underskilled peers do not notice those errors either, and might even bless those collections of mistakes and miscomputations with a Nobel prize.
This is then aggravated by the fact that for many problems in physics and chemistry, one can run long series of (almost) strictly reproducible tests in a controlled lab environment to verify models and assumptions. We don’t have that for economical models, we only have limited, unreliable and sometimes fake data on the past. So those economists create lots of models which correctly "predict" the past, but yet their future predictions turn out to be wrong, especially in times of change, such as right now.
As a consequence of that, the bulk of existing economical models is, from a mathematical point of view, somewhere between obviously false in a disastrous way, a complete fake, or the private opinion of a small circle of inadequately skilled people.
Here some examples of approaches that are taught to economists:
The "economic man". The assumption that participants in a market are fully informed, and act perfectly rational. This assumption is obviously far from reality. People have only partial information, they forget things, they make mistakes, they sometimes act out of anger, or to punish somebody. Yet, the "economic man" is the basis of many economic models because it is a simple assumption that somebody with the limited mathematical skillset of an average economist can understand.
"ceteris paribus": the assumption that while one parameter in a model is changed, all other parameters stay the same, and thus the impact of each parameter can be studied in isolation. This assumption is true for everything that is completely linear, and untrue for everything else, where "everything else" includes pretty much all of economical reality. There exist many linear or almost-linear economical models which then are used to model reality which is non-linear, and frequently chaotic. (The weather is an example for a natural system that is chaotic. Predicting next month’s weather is so hard, it is far beyond the capacity of the largest currently existing supercomputers.)
A classic example for a linear economical theory is Marx’ labor theory of value. Indeed if the economy were completely linear, then a so-called Perron-Frobenius eigenvalue/eigenvector pair might exist, and that Perron-Frobenius eigenvalue then would be the value of one unit of labor. Only, the economy is evidently non-linear (producing the original version of a new movie or a piece of software is far more expensive than producing any additional copies), and from a mathematical point of view the labor theory of value then falls apart.
For a great look at what a degree in economics consists of and why it is mathematically inacurate, logically unsound and morrally corrupt, see Keen: Debunking Economics