The field of economics is corrupted by large financial institutions, government agencies and trade organizations. Most economists employed in by these bodies have an institutional bias they have to promote in their writings. The government has to paint a positive picture of the economy and lend credibility to policies that favor whichever party is in power at the time. Trade organizations like the National Association of Home Builders and the National Association of Realtors want to spin economic news in a way that creates more business for their members. Wall Street economists, of course, are the worst of all, consistently urging the public to buy when their firms want to sell and to sell when their firms want to buy.

The polite explanation for the inaccuracy of economic forecasts is that economics is an inexact science, but I believe the truth is that economics is inexact by design. The Nobel Prize in Economics typically goes to an individual or team that does a very good job of rationalizing why rich people must be rich and why poor people must be poor. University economics departments tend to go along with the status quo because of a revolving door with industry and a need to help lead graduates into jobs with corrupt institutions. There are certain, unwritten rules of politeness that prevent “respectable” economists from telling things like they really are.

Economic analysis is not especially difficult, and it is not surprising that a vast number of websites have sprung up on the web attempting to give better analysis than that which is given by the economic establishment. Many individuals and organizations have created websites that call it like they see it, and this blog fits into that classification. These opinions are often branded as “gloom and doom,” “fear mongering,” “conspiracy theories” or with other derogatory terms in an attempt to discredit the views expressed, although the arguments are seldom countered in a rational manner.

Having observed and followed the “Economics Underground” (as I choose to call it) for several years, I find it to be a valuable source of information, but also susceptible to a form of groupthink that often leads to false conclusions. Indeed I started this blog because I feel the Economics Underground is totally missing the story of the Rebalancing process.

Economic Undreground sites tend to focus entirely too much on Austrian Economics, the Gold market, and manipulative actions by major financial institutions. While the Austrian school offers much to the understanding of economic conditions, we are now living in a Keynesian world, and the rules of the game have been altered. Booms and busts are still very much a part of the landscape, but credit contraction and deflation are not the dominant forces that Austrians tend to predict. Many in the underground elevate gold to a standard that is not realistic in the modern world. The actions of financial institutions are two often assumed to be manipulative or part of a larger conspiracy.

In general I think the Underground looks for clues in the right places, but does not view events in the proper degree or with an open enough mind. To the extent that members of the underground seek to gain attention with radical claims the educational goals of the underground can be undermined. To the extent that the underground fails to thoroughly debate its claims and accusations, it fails to improve its message and arrive at a better understanding of the economic landscape.
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