“Any student of financial history would have to conclude that financial crises and the volatility created by the instabilities of finance in recent years are an organic and harmful element of our social system. Wars and financial crises are time and again the greatest sources of disruption of the social order. Since the power of finance and the disruptive forces of our financial system are so pervasive, it is perhaps surprising that the prevailing economic paradigm since the 1920s tended to model the financial sector as either nonexistent or as a finely tuned seer who can anticipate anchored expectations infinitely far into the future to render they system stable.
This is a Panglossian fantasy rather than science. Stability is assumed instead of being derived from scientific observation. In essence, the prevailing economic paradigm…”