Every time I see an investment product, like a stock or mutual fund, they always list the past earnings (always positive, of course) as a selling point. But if you notice, they are always sure to put in: "past performance does not guarantee future results." This is good advice, however. The economy consists of millions, billions even, of autonomous actors making their own decisions in an ever-changing environment. It would be foolish to look exclusively to the past to see into the future.
That is why I hate when people like Christina Romer, chairwoman of Barack Obama's Council of Economic Advisers, point to empirical evidence from the Great Depression to justify the policy of today as if it will have the same effects. But what I hate even more is when the empirical evidence doesn't even support the claim. Romer thinks it was a reduction in deficit spending that caused "the depression within the Depression" of 1937. Luckily we have Mises.org, where a great man like Robert Murphy can post an analysis of this claim. Click the link to find out why Romer's Keynesian fallacy is wrong. Hint: the empirical evidence is ambiguous and contradictory.
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