How economists got it all wrong

Lengthy, readable, excellent article by Krugman:

Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.

Short version:

I. MISTAKING BEAUTY FOR TRUTH
II. FROM SMITH TO KEYNES AND BACK
III. PANGLOSSIAN FINANCE
IV. THE TROUBLE WITH MACRO
V. NOBODY COULD HAVE PREDICTED . . .
VI. THE STIMULUS SQUABBLE
VII. FLAWS AND FRICTIONS
VIII. RE-EMBRACING KEYNES

This seems, however, like a good time to recall the words of H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”

A translation?

If you don't understand there are tectonic shifts going on in the field of Economics and you are still investing like you did "in the past", you risk losing far more than you realize. Not being negative. Just sayin'.