Queen Elisabeth’s query

When the financial crisis hit in the fall of 2008, the British monarch Elizabeth II asked with astonishment why none of the experts, especially at the central bank and in the ministries, had foreseen it (“but why did nobody foresee this?”). – Obviously, the financial crisis exposed the hitherto unseen shortcomings of economic model theory. In exceptional situations such as crisis developments, the expectations of economic agents are demonstrably not rational. Rather, their actions are driven by fear of the unknown and the behavior of others. Social psychology, sociology and anthropology have taught this since 1930 at the latest; and experimental research on the formation of wills in socio-economic systems (behavioral interactions of individuals and groups in socio-economic systems) also revealed this. However, these findings did not penetrate into the field of economics. Therefore, economists in central banks could not understand the “operational reality” (the course of actions in the financial market and its motivational structure) of the modern financial system and thus the financial crisis. To this day, it is argued, economists cling to models that do not explain the actual course of events. – See domino effect, Financial Crisis Inquiry Commission, financial market, growth significance, financial market collapse, herd behavior, Lehman bankruptcy, models, monetary policy, Murphy’s law, debt bomb, systemic conflict, financial market.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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