Thursday, 19 December 2013

For 20 years I thought an economist was incapable of seeing what was coming and could only explain an event ex post. I was wrong on both.

Until I discovered that many of the economists and so-called "financial economists" I learnt from, and studied, was not real economists at all. Rather, they were historians or econometricians and sometimes more statisticians than anything else.

If your mind has been confused about cause and effect (or the other way around!) through endless correlations exercises and long-winded mathematical formulae in all shapes and forms and how the government and central bank can fine tune the economy through manipulating GDP and velocity and most other more or less useless statistics...puh, then take a breather straight away.

If you are genuinely interested in economics, don't do the same mistake I did so start reading about Austrian Economics straight away. If you are not familiar with this particular branch of economics, you might just find studying it to be a real eye opener. You can take your first step with a simple introduction here.

But don't get tricked into thinking that the many on the web who claim to be "Austrian economists" actually are. Most are not. An excellent way to really learn Austrian Economics, in my opinion, is by studying the books and articles by the masters themselves, Ludwig von Mises and Friedrich Hayek, who both built on the work of the initial founders of the school. Only then can you learn the way of thinking that might just make you accomplish both to see what is coming down the road and being able to explain what happened.