Political Herding, One More Time

One more time, as few people are making this observation—from our earlier post today on unemployment claims (bold added):

Despite appearances, almost every single member of Congress (and policymaker in Europe!) believes in the same highly questionable macroeconomic principles, specifically the loanable funds market and the intertemporal government budget constraint [pdf] in a fiat monetary system. [7/28/2011 - Add in the money multiplier as well.] This means that despite the rancor and election-related jockeying, we are actually witnessing an episode of massive ‘mimetic isomorphism’ or herd behavior. And in complex adaptive systems like financial markets and economies, such behavior dramatically increases [pdf] the risk of severe dislocations.

To paraphrase from an October 2009 post:

Unanimous agreement over the existence of a severe fiscal crisis in the U.S. is indeed unusual. But economists and politicians question the existence of a crisis at their peril.

As a result, political leadership in the U.S. (and around the world!) is starting to look something like this:

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