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We do it with charts, we do it with theory, and we do it with history.

Forecasters at the Fed and the blue chip echo chamber are practicing Ptolmeic astronomy, elaborate mathematics to make their theories work. What is necessary is a change in perspective. The economy operates from the demand side. Demand is the constraint. The proof is in decades of growing excess capacity and an economy in shambles (if it means prosperity, security, healthy infrastructure, education, services, social insurance and some kind of forward look at challenges in the environment and poverty).

That demand is the constraint, not supply, has been known since the days of John Maynard Keynes. Effective demand side programs got us out of the Great Depression and led us through the Second World War into the unprecedented prosperity of the 1950s and 1960s. The concepts and development of Demand Side was defeated in a political battle, not in theory or practice. Economists such as Keynes, Truman COE chair Leon Keyserling, John Kenneth Galbraith, Hyman Minsky, James K. Galbraith, Steve Keen, and others developed a straight line of Keynesianism that evaded the “Neoclassical Synthesis,” and the return of the error of classical economics. But no matter how frequently its rivals, the Monetarist and market fundamentalists produced failure, their schools were well-sponsored and their remedies favored in politics and business. Academia became a ritualistic and hypothetical expression of what could happen if absurd assumptions held. Now it has become irrelevant, not coincidentally during the greatest economic challenge of the times.

So it is not our brilliance that has let us predict with accuracy, but the ineptness of the orthodox, particularly the Monetarist orthodox who hold such power at the Fed and the Wall Street orthodox whose business is the short-run bottom line and whose constituency is the supply side.

We invite you to look for and tell us about anybody else not directly in the demand side line who has predicted more accurately the experience of the last dozen years. And we invite you to make use of these forecasts (all are copyrighted). No charge. Only please cite us at demandsideforecast.net if you use extended narrative, charts, or graphs.

Our hope is to change understanding and policy before more damage is done.

Alan Harvey
Demand Side Economics

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