“Trusting souls who accept economic assurances that markets are efficient are unlikely to fare any better this time when the Bull gives way to the Bear.”

— Steve Keen

Source: Debunking Economics - The Naked Emperor Of The Social Sciences (2001), Chapter 10, The Price Is Not Right, p. 215

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Steve Keen 27

Australian economist 1953

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“Our performance, relatively, is likely to be better in a bear market than in a bull market … in a year when the general market had a substantial advance, I would be well satisfied to match the advance of the averages.”

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“The proposition that markets drive economic efficiency is central to much of economics. Adam Smith illustrated that the “invisible hand” of the market drives efficient allocation of resources in a system of division of labor. Friedrich Hayek illustrated the central importance of the price system as an information processing mechanism more powerful than any centrally planned system could ever be. Kenneth Arrow and Gerard Debreu illustrated that complete and perfect markets deliver a Pareto-efficient equilibrium, in which no one person can be made better off without making someone else worse off. And the development of the efficient- market and rational- expectations hypotheses suggested that financial markets are in fact efficient, and that the conditions required for efficiency and for rational and stable equilibria apply even in contracts between the present and the future, which financial markets provide.”

Adair Turner, Baron Turner of Ecchinswell (1955) British businessman

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“If stability and efficiency required that there existed markets that extended infinitely far into the future — and these markets clearly did not exist — what assurance do we have of the stability and efficiency of the capitalist system?”

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“Real economic efficiency implies including all resources that affect sustainable human well-being in the allocation system, not just marketed goods and services. Our current market allocation system excludes most non-marketed natural and social capital assets and services that are critical contributors to human well-being. The current economic model ignores this and therefore does not achieve real economic efficiency. A new, sustainable ecological economic model would measure and include the contributions of natural and social capital and could better approximate real economic efficiency.”

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“Whenever the investor sold out in an upswing as soon as the top level of the previous well-recognized bull market was reached, he had a chance in the next bear market to buy back at one third (or better) below his selling price.”

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“Market power and externalities are examples of a general phenomenon called market failure—the inability of some unregulated markets to allocate resources efficiently. When markets fail, public policy can potentially remedy the problem and increase economic efficiency. Microeconomists devote much effort to studying when market failure is likely and what sorts of policies are best at correcting market failures. As you continue your study of economics, you will see that the tools of welfare economics developed here are readily adapted to that endeavor. Despite the possibility of market failure, the invisible hand of the marketplace is extraordinarily important.”

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Steve Keen (1953) Australian economist

Source: Debunking Economics - The Naked Emperor Of The Social Sciences (2001), Chapter 10, The Price Is Not Right, p. 216

“The Coolidge Bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.”

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“Trusting souls who accept economic assurances that markets are efficient are unlikely to fare any better this time when the Bull gives way to the Bear.”

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