The Blind Spots of Economic Theories

The video discusses the build-up to economic crises, focusing on the Keynesian framework and the historical nature of economics. It highlights financial system imbalances, particularly in the late 90s and early 2000s, and the predictions of Wynne Godley. The discussion extends to asset booms and leverage, drawing parallels with past crises like the Great Depression. The video concludes with insights from theorists like Kindleberger and Minsky, emphasizing the recurring patterns in financial markets.

What is a key limitation of economics as a science, according to the video?

• It cannot predict past events.

• It is not considered a science.

• It is not based on historical data.

• It struggles to predict future events.

Who was noted for warning about the unsustainable nature of household borrowing?

• Charles Kindleberger

• Hyman Minsky

• Wynne Godley

• John Maynard Keynes

What economic pattern was observed during both the 1929 crisis and the 2000s mortgage events?

• Decreasing household debt

• Rising asset prices and increased borrowing

• Stable leverage levels

• Decreasing asset prices

Which economist is more associated with writing about financial market dynamics?

• Hyman Minsky

• Charles Kindleberger

• John Maynard Keynes

• Wynne Godley

What was a common reaction to the evidence of financial imbalance before the crisis?

• It was widely publicized

• The evidence was largely ignored

• Immediate action was taken

• It was considered a minor issue