|Note How Fear Is 3X More Powerful than Greed|
He was in print predicting the crash would happen in 2015, and the article was published in March 2015, which was pretty brave for an academic economist.
Generally you try to predict so far in the future that no one is likely to remember your prediction.
This rule is violated by the people (like Reuters) who publish a forecast of the job numbers on the first Friday of every month, up to an hour before the job numbers are released, leaving themselves open to contradiction within minutes.
Another rule is:
- If you give a date, don't give a number.
- If you give a number, don't give a date.
I believed Gaffney when I first read his article in April 2015. I sold out all my stake in the China fund at Fidelity on April 21, 2015. Not quite at the top of the market, but as Bernard Baruch once said, "the only people who buy at the bottom and sell at the top are liars."
Gaffney is eager to let people know about his successful forecast, because it is evidence of the validity of his underlying views, which give more emphasis to land values than mainstream economists.
I am writing about Gaffney's prophetic skill for two reasons:
- The idea that land values should play a bigger role in economic analysis resonates with me. The history of the American Revolution, especially why the southern states joined with New England, history would be more understandable with more emphasis on land values in the territories claimed by Virginia and then made part of Quebec by George III.
- His article saved me from heartache over the dropping Chinese stock market. (I cannot attach his full article, but I can forward it on request. Contact me at firstname.lastname@example.org.)
Here is his email, in bold face to set it off from the rest of this post.
In March 2015 I published a forecast (attached) that China’s economy would crash in that year. China promptly did so in July, around our Independence Day, while our press was obsessing over threats from ISIS kamikazes and the drama of Greece, a tiny nation next to China. I am indebted to Cliff Cobb, Editor of The Am. J. of Ecs. and Sociology for letting me go out on a limb in his journal.
Cliff also let me give both the analysis and the evidence behind the forecast. You will find my essay heavy reading because analysis usually is, so I don’t expect all or even most of you to clamber up its hills and down its ravines. Please do notice, however, that:
|Prof. Mason Gaffney, UC Berkeley|
2. It gives a central role to land markets as leading autonomous factors in the cycle, building on while varying in important details from Henry George’s pioneering observations in 1879 (call it “exegesis”).
3. It incorporates the reverberations between land pricing and deposit expansion by commercial banks.
4. It incorporates the “Austrian School” emphasis on the role of capital turnover, but without the narrow focus on central banking found in most Austrian works, and without the philosophical anarchism.
My aim in circulating this information widely is not to play the Donald Trump, but rather in the hope that the success of its risky forecast will lead to a wider acceptance of the role of land and its pricing in economic analysis.