Predicting Economic Trends From Nostradamus to Ben Bernanke
History is littered with flawed forecasts on economic trends. And where some have proven to have been surprisingly accurate in their glimpse into the financial and economic future, these projections have usually been scorned, until too late. Our current global economic crisis is a case in point.
In my view, the most accurate long-term economic forecast of all time was provided by the legendary Renaissance French seer, Nostradamus, usually more renowned for his prophecies on the end of the world. In 1548, Nostradamus predicted, “From Albion’s shore shall come a marvellous contrivance: a carriage of silence bearing the arms of Rolles de Roi.” Apparently, Nostradamus saw the creation of the Rolls Royce motor car in England, and its reputation for silent and prestigious personal transportation, more than three centuries before the invention of the internal combustion engine.
In contrast, one of the most inaccurate and inept economic forecasts of all time was delivered relatively recently, by the Chairman of the U.S. Federal Reserve, Ben Bernanke. In October 2005 Bernanke, who had recently succeeded Alan Greenspan as chairman of the Fed, issued a confident prediction that the unprecedented rise in U.S. home prices did not constitute an asset bubble, and was based on sound economic fundamentals. Oh well.
Forecasting economic trends is both highly difficult yet absolutely essential. Operating complex economies and businesses without accurate trend analyses is like flying blind without instruments. A major difficulty with many recent economic forecasts is that they are mired in ideology.
In the near future, I will be offering my own long-term economic forecast. It should be finalized within a few weeks. Readers of my blog should stay tuned for further information.