PeakTrader.com

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PeakTrader:

Coberly, mainstream economics, i.e. the Scientific Method of NeoClassical Economics, contributed enormous value to society, for the masses, not just the rich, particularly in the 20th century, in fields e.g. Macroeconomics, Microeconomics, International Trade, Money & Central Banking, Econometrics, etc., even spilling over into non-economic fields.

Mathematical models supported by rigorous empirical models explain reality, and often proved conventional wisdom wrong.

The free market is the core of moral philosophy that made Western civilization wealthy and raised living standards for the masses. The alternative is the social philosophies of the old Soviet Union, Cuba, North Korea, Venezuela, etc..

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Coberly, just because you can’t see invisible forces, like mathematics and economics, don’t mean they don’t exist. Try to use some logic (another invisible force, particularly in your case).

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Mathematical models explain how variables interrelate and empirical models explain how those variables interact.

The same variable can be used in many mathematical models, e.g. in partial equilibrium models, input-output models, optimization models, contemporaneous models, etc. to see how that variable fits in multidimensions and there are data for that variable for empirical models.

Coberly could’ve failed, e.g. up to 99.99…% of the time, based on his statement (and his response to my statement lacks logic and makes false assumptions), because he may have mostly been attempting to create a general equilibrium model, e.g. to completely explain a large macroeconomy or measure the effect of climate change caused by humans. However, no one can think in hundreds of dimensions, simultaneously.

Nonetheless, you can tie-together partial equilibrium models for a crude understanding and still make appropriate choices (the Fed does that all the time, e.g. beginning an easing cycle in 2007, while oil prices continued to rise and peaked in mid-2008).

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Edward says: “…economics is a social psychological science.”

That’s a very limited view.

American mainstream economics has made substantial progress over the past hundred years in understanding how economic variables interrelate and interact using mathematical and empirical models.

There are real, although invisible, forces.

And, American mainstream economics has contributed enormous real value at every level, not only on a social level, over the past hundred years.

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Bruce, the definition of “middle class” varies between states and regions or cities.

For example, I know, from personal experience, although it’s not scientific, my standard of living would be at least twice as high in Colorado than California based on my labor hours, and there are differences between regions, e.g. Alameda county and Orange county in California.

Moreover, there are budget constraints and trade-offs. Spending to comply with costly regulations, particularly for the “middle class,” means finding ways to reduce spending elsewhere, e.g. being forced to buy cheaper, and lower quality, inputs for production, which may have undesirable effects.

Also, it should be noted, the comparisons of those variables between 2007 and 2011 can skew the results, because there may be more variability in some states than others when the economy is doing well and when it’s doing poorly.

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Dan, I think, the housing boom took place mostly in four states – California, Nevada, Arizona, and Florida. And, I think, three of those states were GOP states. Yes, the housing market is still in bad shape. Chart:

https://research.stlouisfed.org/fred2/series/HSN1F

It’s unfortunate so many homeowners are becoming renters.

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