The Quackery of Economists!

25th of March, 2017

There is an old saying “..if you lined up all the economists in the world you would have enough to reach the moon and back but not enough to reach a conclusion!”

It astounds me how, as a profession, economists have such a woeful history of performance! I can think of no other industry that is so consistently wrong, yet is able to make excuses and explanations in hindsight that the public not only accept but continue to hold them in a position of prestige?

Imagine if the same low standards were applied to Civil Engineers? Oh another bridge fell down!, well that’s Ok, we didn’t account for the overall span of the bridge. Or in Medicine? Woops we misdiagnosed your illness as we neglected to consider the need to take bloods…

Yet economists use phrases like “Black Swan event” or “Too Big to Fail” to justify their position. They persuade the general population that their theories have merit despite their dismal practical application.

In my opinion, the quackery of most economists is no more scientific or likely to be correct than an old fashion witch doctor or the charlatan snake oil salesman.

So I’m not sure why it is a Black Swan Event to most, when a paper released by 3 German academics in the American Economic Review titled “No Price Like Home: Global House Prices, 1870-2012” Stated in their Abstract:

“Based on extensive data collection, we are able to show for the first time that house prices in most industrial economies stayed constant in real terms from the 19th to the mid-20th century, but rose sharply in recent decades. Land prices, not construction costs, hold the key to understanding the trajectory of house prices in the long-run.”

Woha! What a revelation…..

You see, there has been little growth in housing construction costs when adjusted for inflation since the 1970’s but housing prices have gone sky high!

The study shows that Australian house prices have risen faster than anywhere else in the world, with the driving factor being LAND COST.

Our business at Calnan Flack is based upon this economic truth. It is the basis of our thinking and creates the framework for all our investment decisions, that is for both Shares & Property. Quite frankly it is what David Ricardo and Henry George have been saying for centuries, but who bothers to understand these masters when the press is pumping us with the easy answer, that “it’s all about supply”. Just ask our Prime Minister.

Calnan Flack is here to help investors take advantage of this ECONOMIC and MARKET truth. It is why we help people invest in the share market, the property market and show them how to use leverage, (that is the banking system) to their financial advantage.

The problem for economists is that they just don’t understand how the economy and financial markets actually work. But don’t be too harsh on economists, as its pretty hard to foresee economic and investment activity if you completely ignore the keys to understanding the trajectory of house prices in the long-run……

See reference: American Economic Review