“[T]here is no shortage of historical examples to support the idea that even those who nominally subscribe to an empirical approach don’t hesitate to abandon their empiricism when the data doesn’t support their theories.” – Vox Day, The Return of the Great Depression
The first tipoff as to the inadequacy of the current economic models should have been the inability of any of the mainstream economists to detect the economic crisis that hit the US at the end of 2007 . It’s not true to say that no one predicted it; among others, Peter Schiff certainly did. But it is true to say that both the neo-Keynesians and the monetarists were caught completely unawares. Throughout 2007, the economic advisors of both parties continued to offer reassurances to the captain’s of the economy, blissfully oblivious to the coming iceberg.