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you have it all figured out -- until you don't

An interesting quote from an article in this week's Economist:

Inflation used to be described as too much money chasing too few goods. In a world where the supply of goods is more elastic—either because of technological advances or new sources of supply such as China—inflation becomes too much money chasing too few assets.
In the last couple of decades, most of science has been bent on accelerating the reinvention curve. Everything from Physics and Mathematics to Biology and Medicine has increased its rate of advance. But with Economics, save for some movement in the area of complex systems, we seem to have become content with the idea that market-based economies are really the ultimate solution. There are small "experiments" in various countries that are timidly moving in different directions, but no broad discussion of alternatives that I'm aware of. I remember some puzzlement in recent years as to how growth rates could be maintained without sparking widespread inflation.

So, are we to believe that when everything else in the world has changed drastically economics should remain unchanged? We already know the answer to that. The real question is whether economists will start seriously questioning the assumptions and techniques for analysis of our economies before or after difficult problems arise.

Categories: geopolitics
Posted by diego on February 26 2005 at 6:43 PM

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