The Philadelphia Inquirer, June 14, 2019, by Joseph N. DiStefano.
Is economics science? If so, why is there so much confusion over the basic causes and effects of prosperity and decline? [……]
Richard Vague, the mass-marketing mogul turned Philadelphia investor-philanthropist-policy scholar, convened a team of researchers to measure economic downturns in the United States and the largest countries of Western Europe and East Asia, and found a pattern you might not recognize from college textbooks or cable-TV debates: Private debt — consumer and business borrowing — tends to surge before economic decline. [……]
It’s not a unique view. Vague notes the economist Hyman Minsky, who died in 1996, made similar observations about overlending and recession. But the mainstream of American economists and other moralizers — for example, ex-Federal Reserve chief Alan Greenspan in his recent book Capitalism in America — have tended to treat private debt explosions and bankruptcies that bring real-life pain to millions as mere symptoms, resulting from higher-level problems. These include changes in the money supply (whether based on gold or central-bank fiat), bad leader policies (like high tariffs or too many wars), or natural variations in credit supply and demand. [……]
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