A Disgraced Profession

Economist Jamie Galbraith in testimony to the US Subcommittee on Crime, Senate Judiciary Committee, May 4, 2010:

"I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis."

False "monetary" beliefs (some call them theories) have misdirected public policy decisions for decades, with devastating effect! Errors of Concept, methodology and factual errors led to disastrous outcomes... Consider the present insane calls for austerity. Economists have allowed the idea to prevail that a government has to be run the way a shopkeepers runs his store. These times call for greater care and some heroism among economists; and cowardice is no longer tolerable among those who do understand.

...The privatization of our monetary system [results in] control over public policy being in unelected hands, for whoever controls the money system, over time will control the nation. And look what they have done with that power:

How Economists Facilitated the Crisis

rare exceptions, those in control of the World's monetary/economic agenda and the theories supporting it have helped bring the world to its knees.

Shouldn't they (and their theories) be held accountable? The challenge will be for "youngsters" like yourselves, to bring your chosen profession to its senses...

Regulation alone will not work in a money system which unfairly concentrates wealth to obscene levels because... concentration of money and power, can and will eventually overcome the regulators.

Economists have not understood or appreciated the difference between money and credit. That using credit for money is dangerous, harmful and unnecessary... Many economists have falsely concluded that "all money is debt," and while most money in our particular misstructured system is debt, this attitude ignores the possibility and necessity to define a better system based on government money, not private debt. This failure to understand the concept of government money as opposed to private credit, has had immense and deadly repercussions.

[The] special privilege to create money to some... has led to an obscene concentration of wealth and a corresponding poverty! This has encouraged lawlessness and corruption among the privileged; pushing them to diseased excess for acquisition, and ignoring those among us in great need.

[These privileged have] turned economics into a primitive religion, and worshipped the "market" as a god, despite all evidence to the contrary. A primary tool they use is to denigrate and ignore evidence. "Anecdotal" was the description Greenspan used for real evidence that challenges their theories. A fundamental sin of poor methodology.

They have placed an unnecessary ball and chain on the leg of every producer by having the money supply itself bear an unnecessary interest cost to society.

They've foisted a "fractional reserve" system on us prone to periodic collapse. Credit will collapse during a crisis. Money does not collapse.

In our present system most of what we use for money - more accurately purchasing media - comes into existence as an interest bearing debt, when banks make loans. In that sense, most money in our fractional reserve system - is debt. But economists can't seem to grasp that those rules can and must be changed. Afraid to confront their paymasters, who are benefitting from the injustice, they can't conceive of practical ways we can use real government issued money for money instead of substituting private debt for it.

The country faces an existential threat. Either the legal system must do its work, or the market system cannot be restored. There must be a... radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case.