From an interview with ex-IMF economist Gunnar Tómasson:
Does this mean that generations of students have been brought up on nonsense ideology? For this is ideology, of course.
Yes, nonsensical ideology. The root of the problem goes back to a point made in the mid-19th century by John Stuart Mill, one of the sharpest minds of all time, in an overview article on unresolved methodological aspects of economics. Mill viewed economics as a branch of logic and noted that the least error in the premises of any logical argument would infect with like error the whole superstructure built thereon. A seemingly small error is embedded in the premises of modern monetary economics. Paul Samuelson noted it very briefly in his Ph.D. thesis in 1942 and said it didn’t matter. Today, this small error is destroying the world’s monetary system.
via The End of Mainstream Economics: An Interview with Gunnar Tómasson – Gunnar Tomasson – Mises Institute . The small error infecting today’s mainstream system of economic thinking from its foundations — the error which has caused this crisis — is an inadequate understanding of the source of interest.
Tags: Austrian School, economics, Keynes, Money