7 MAJOR FALLACIES OF ECONOMIC THEORY
1. An economic model based on market economics cannot work. For a simple reason. The market is a competition where there are winners and losers. This is the answer why the model does not work in post-communist countries even after 33 years of reforms. And the reason why IMF reforms don't work in developing countries.
2. Reducing interest rates does not stimulate economic activity. With a bad project, even negative interest rates won't help. Money cannot replace creativity. The proof is the quantitative easing of central banks, which has not produced any results.
3. The cause of inflation is not money printing but scarcity. Lack of resources, goods, services. And also lack of competition.
4. Banks have stopped giving interest on deposits. At that point, they became warehouses and lost the right to handle the deposits of savers. NOBODY realized this fact. This fact raises legitimate doubts about the expertise and capabilities of the economic community. It is they who greatly influence the actions of all governments and determine the shape of the world economy. The incompetence of these people is why the world economy is not working.
5. Debt is a societal trauma, not a panacea for economic growth.
6. Housing and commodities cannot be the subject of speculative investment.
7. Stock markets are a gamble. But pension funds cannot be based on gambling. Moreover, the rise in stock prices is not generated by the performance of the economy but by the inflow of money into the markets. And this is all too reminiscent of a Ponzi scheme.
Author : Jozef Stasík, Slovakia
E-mail : info@belgof.com
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