"In so far as the statements of mathematics refer to reality, they are uncertain; and in so far that they are certain, they do not refer to reality." - Einstein (1921) "Geometry and Experience"

"In so far as a scientific statement speaks about reality, it must be falsifiable; and in so far as it is not falsifiable, it does not speak about reality." - Popper (1933) The two basic problems of the theory of knowledge

At the end of his life Popper wrote this: What impressed me most was Einstein's own clear statement that he would regard his theory as untenable if it should fail in certain tests. … Thus I arrived, by the end of 1919, at the conclusion that the scientific attitude was the critical attitude, which did not look for verifications but for crucial tests; tests which could refute the theory tested, though they could never establish it."

Or, as Einstein himself put it,"A theory can thus be recognized as erroneous [unrichtig] if there is a logical error in its deductions, or as incorrect [unzutreffend] if a fact is not in agreement with its consequences. But the truth of a theory can never be proven. For one never knows that even in the future no experience will be encountered which contradicts its consequences; and still other systems of thought are always conceivable which are capable of joining together the same given facts." - Induction and Deduction in Physics

The difficulty for those of us who indulge in a taste for political economy is that almost all the "facts" are inductive constructs, whether from surveys or government statistics. We are tempted to find empiricism where there is none and to find insights in tautologies. As Popper himself once put it, it is not philosophically legitimate "when prices of goods fall throughout the economic system, to ask whether 'in reality' the value of money has increased or the value of the goods has decreased." On the other hand, as the pros and talented amateurs on the list have both observed and proven, there is a great deal of money to be made in having the supreme lenders come flex their muscles in your financial gym while pondering the deep questions about inflation and deflation.


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