Bad Economic Theory caused the financial collapse along with greed, corruption and leverage says new book

Last week in Economists Prove Einstein’s Theory About Repeating Behavior And Expecting Different Results I was talking about how mainstream economists have earned their dismal reputation because I’ve been searching for a better model of how the economy actually works. Now a new book explains just how the current mainstream economic theory of ‘Rational Expectations’ not only is wrong but in fact is one of the leading causes of the financial collapse. Better yet the author explains why the new economic model which is based on game theory is better  for understanding the financial world but additionally offers a way to avoid future collapses.

American Gridlock: Commonsense Solutions to the Economic Crises

I have read in numerous places recently about how the profession of economics has failed to deliver real benefits because the mainstream theory is built on the wrong assumptions. I and I’m sure you also have experienced the downside of this but these pieces until now have only been able to point out the problem not the solution which would be a new model of the economy and what it would teach us to do differently. Well now we have a better model and what needs to be done to move forward with the economy, the country and our personal searches for financial well-being. Oh and by the way how to fix our domestic political issues and preserve our position in the world order.  The Book is Called “American Gridlock: Why the Right and Left Are Both Wrong – Commonsense 101 Solutions to the Economic Crises” and you can find it in our ‘On Our eReaders Now’ section in the far right column of this page. Clicking on the book there will take you directly to the American Gridlock page on Amazon.

For a sneak peak at the book check out John Mauldin’s Outside The Box post called ‘American Gridlock, Part 2’. John is well connected to a wide range of worldly and deep thinkers who are kind enough to share their thoughts on his blog. Mostly around finance and the economy but inescapably bringing politics and world affairs as they intersect with the first two. And as Woody Brock says in American Gridlock political theory and political science should be more on our minds than economic theory or finance.

Ironically while Woody’s consulting clients typically make up the top 1% of the 1% he is one of the leading thinkers on distributive justice! With good reason of course and with his witty style you will enjoy his goring of the ‘other side’s’ ox … at least until it’s our turn for a run down the street in Pamplona 😉 Not to worry, his main points demonstrate that with new theories in place the old divisions melt away when it comes to solutions.

About the author from Amazon’s Page: Dr. Horace “Woody” Brock, one of the world’s foremost economists, is the author of the new book, American Gridlock – Why the Right and Left Are Both Wrong, Commonsense 101 Solutions to the Economic Crises. More than 50 leading chief executives, academics, journalists and investors endorsed the book, published in January 2012 by John Wiley & Sons, Inc. As the founder and president of Strategic Economic Decisions, a renowned economic think tank, Dr. Brock has spent more than 25 years counseling global corporations and other institutions who benefit from his in-depth analysis of ongoing structural changes in the global economy.

Dr. Brock earned his B.A., M.B.A. and M.S. from Harvard University, and his M.A. and Ph.D. from Princeton University (mathematical economics and political philosophy). He studied under Kenneth J. Arrow, Stanford University, and the late John C. Harsanyi, University of California, Berkeley, both winners of the Nobel Prize in Economics.

As a celebrated public speaker, he is well known for his ability to take complex and counter-intuitive concepts and make them easily comprehensible to a broad range of people. His speaking engagements have included audiences such as the World Economic Forum in Davos, the CIA, The Aspen Institute, board of directors of corporations and banks, high net-worth family offices, private equity groups, and hedge funds. In addition to speaking and authoring SED’s periodic publications and numerous publications in professional journals, Dr. Brock is also the author of a series of Op-Ed pieces in the New York Times and the International Herald Tribune.

Brock’s institute specializes in applications of the modern Economics of Uncertainty, originally developed and championed by Professor Arrow, to forecasting and risk assessment in the international economy and its asset markets. Dr. Brock authored Interest Rate Insight, the first Expert-System developed for financial markets. In 1976, he was elected an Andrew Mellon Foundation Bicentennial Fellow. In its research, SED has focused on apprehending ongoing structural changes in the economy and markets to help clients avoid the pitfalls of illegitimately extrapolating the past into the future. In this regard, Dr. Brock has worked closely with Professor Mordecai Kurz of Stanford University in developing the new theory of Rational Beliefs that is now replacing the classical theory of “Efficient Markets.” This theory explains for the first time the way in which history rhymes but does not repeat itself.

Dr. Brock is an avid collector of fine arts and has written extensively on the topic of esthetics. His contributions to the field of Distributive Justice are widely recognized and he developed one of the first mathematical theories applied to the concept of social justice.

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