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9:00 AM EST, Monday, February 2, 2009: Is our present recession the cure or the problem? Ponder that one.

If it's the cure, we should not muck with it. Let it run its course. Otherwise, our meddling will lengthen or worsen the cure.

If it's the problem, we should muck with it. But how?

Economics has some ideas. There are two schools. The first says meddle with interest rates (also called monetary policy). We tried that in recent months. We got interest rates down to nothing. And still growth contracted, unemployment went up and the stockmarket went down. January was the worst January in eons in the market.

The second school is fiscal policy. The government spends oodles of money. That is called Keynesian economics. It's based on a book John Maynard Keynes wrote in 1936. His theory had two charms: First, it argued that government spending could replace drooping consumer spending (the magic cure). Second, spending appealed enormously to politicians who no longer felt guilty about pork. (Like crack to a crack addict.)

The biggest problem with economics as a "science" is that you can't do controlled experiments. We don't have that many financial crises. And every one is different. The best you can have in Economics is a good theory. Some economists believe Keynes. Some think he's total BS.

As we are about to embark on the biggest stimulus program in the history of the world, remember four things:

1. It's based on unproven theory.

2. If it doesn't get us out of the recession, it may give us vicious inflation, bloated government, and $1 trillion more in national debt.

3. Keynes said "The stockmarket can stay irrational longer than you can stay solvent."

4. Harry (that's me) and Todd (my friend) said, "When in doubt, stay out and solvent."

I continue to like gold.

My first degree was in Economics. In my dictionary, I define economics as:

Economics is called the dismal science. The standing joke is that an economist is someone who didn't have the personality to become an accountant. There is also a theory that God invented economists to make weather forecasters and astrologers look good. Economists are incredibly good at predicting the past. People claim "If you laid every economist end to end, it would not be a bad thing." Another variation, "If all the economists in the world were laid end to end, they still wouldn't reach a conclusion.

There are three types of economists: Those who can count, and those who can't. On the first day God created the sun; the Devil countered and created sunburn. On the second day God created sex; the Devil countered with marriage. On the third day God created an economist. This was a tough one for the Devil, but in the end, and after much thought, he created a second economist.

As we attempt to figure what we personally should be doing with our money, there is another complicating problem. The present administration has two goals for its stimulus package:

1. Fix the recession.

2. Fix (i.e. remake) the economy.

These two goals make predicting the outcome even more difficult.

The New York Times ran a cover piece on its magazine, The Big Fix. In it was:

TWO WEEKS AFTER THE ELECTION, Rahm Emanuel, Obama’s chief of staff, appeared before an audience of business executives and laid out an idea that Lawrence H. Summers, Obama’s top economic adviser, later described to me as Rahm’s Doctrine. “You never want a serious crisis to go to waste,” Emanuel said. “What I mean by that is that it’s an opportunity to do things you could not do before.”

In part, the idea is standard political maneuvering. Obama had an ambitious agenda — on health care, energy and taxes — before the economy took a turn for the worse in the fall, and he has an interest in connecting the financial crisis to his pre-existing plans. “Things we had postponed for too long, that were long term, are now immediate and must be dealt with,” Emanuel said in November. Of course, the existence of the crisis doesn’t force the Obama administration to deal with education or health care. But the fact that the economy appears to be mired in its worst recession in a generation may well allow the administration to confront problems that have festered for years. That’s the crux of the doctrine.

The counterargument is hardly trivial — namely, that the financial crisis is so serious that the administration shouldn’t distract itself with other matters. That is a risk, as is the additional piling on of debt for investments that might not bear fruit for a long while. But Obama may not have the luxury of trying to deal with the problems separately. This crisis may be his one chance to begin transforming the economy and avoid future crises.

In the early 1980s, an economist named Mancur Olson developed a theory that could fairly be called the academic version of Rahm’s Doctrine. Olson, a University of Maryland professor who died in 1998, is one of those academics little known to the public but famous among his peers. His seminal work, “The Rise and Decline of Nations,” published in 1982, helped explain how stable, affluent societies tend to get in trouble. The book turns out to be a surprisingly useful guide to the current crisis.

In Olson’s telling, successful countries give rise to interest groups that accumulate more and more influence over time. Eventually, the groups become powerful enough to win government favors, in the form of new laws or friendly regulators. These favors allow the groups to benefit at the expense of everyone else; not only do they end up with a larger piece of the economy’s pie, but they do so in a way that keeps the pie from growing as much as it otherwise would. Trade barriers and tariffs are the classic example. They help the domestic manufacturer of a product at the expense of millions of consumers, who must pay high prices and choose from a limited selection of goods.

Olson’s book was short but sprawling, touching on everything from the Great Depression to the caste system in India. His primary case study was Great Britain in the decades after World War II. As an economic and military giant for more than two centuries, it had accumulated one of history’s great collections of interest groups — miners, financial traders and farmers, among others. These interest groups had so shackled Great Britain’s economy by the 1970s that its high unemployment and slow growth came to be known as “British disease.”

Germany and Japan, on the other hand, were forced to rebuild their economies and political systems after the war. Their interest groups were wiped away by the defeat. “In a crisis, there is an opportunity to rearrange things, because the status quo is blown up,” Frank Levy, an M.I.T. economist and an Olson admirer, told me recently. If a country slowly glides down toward irrelevance, he said, the constituency for reform won’t take shape. Olson’s insight was that the defeated countries of World War II didn’t rise in spite of crisis. They rose because of it.

The parallels to the modern-day United States, though not exact, are plain enough. This country’s long period of economic preeminence has produced a set of interest groups that, in Olson’s words, “reduce efficiency and aggregate income.” Home builders and real estate agents pushed for housing subsidies, which made many of them rich but made the real estate bubble possible. Doctors, drug makers and other medical companies persuaded the federal government to pay for expensive treatments that have scant evidence of being effective. Those treatments are the primary reason this country spends so much more than any other on medicine. In these cases, and in others, interest groups successfully lobbied for actions that benefited them and hurt the larger economy.

Surely no interest group fits Olson’s thesis as well as Wall Street. It used an enormous amount of leverage — debt — to grow to unprecedented size. At times Wall Street seemed ubiquitous. Eight Major League ballparks are named for financial-services companies, as are the theater for the Alvin Ailey dance company, a top children’s hospital in New York and even a planned entrance of the St. Louis Zoo. At Princeton, the financial-engineering program, meant to educate future titans of finance, enrolled more undergraduates than any of the traditional engineering programs. Before the stock market crashed last year, finance companies earned 27 percent of the nation’s corporate profits, up from about 15 percent in the 1970s and ’80s. These profits bought political influence. Congress taxed the income of hedge-fund managers at a lower rate than most everyone else’s. Regulators didn’t ask too many hard questions and then often moved on to a Wall Street job of their own.

In good times — or good-enough times — the political will to beat back such policies simply doesn’t exist. Their costs are too diffuse, and their benefits too concentrated. A crisis changes the dynamic. It’s an opportunity to do things you could not do before.

England’s crisis was the Winter of Discontent, in 1978-79, when strikes paralyzed the country and many public services shut down. The resulting furor helped elect Margaret Thatcher as prime minister and allowed her to sweep away some of the old economic order. Her laissez-faire reforms were flawed in some important ways — taken to an extreme, they helped create the current financial crisis — and they weren’t the only reason for England’s turnaround. But they made a difference. In the 30 years since her election, England has grown faster than Germany or Japan.

You may also enjoy an NPR Planet Money podcast on Obama Tests Keynes. Planet Money January 30.,

"'I want you to eat regularly for two days, then skip a day, and repeat this procedure for two weeks. The next time I see you, you should have lost at least five pounds."

When the Irishman returned, he shocked the doctor by having lost 60 lbs.

'Why, that's amazing!' the doctor said, 'Did you follow my instructions?'

The Irishman nodded...'I'll tell you though, by jaesuz, I t'aut I were going to drop dead on dat 3rd day.'

"From the hunger?" asked the doctor.

"No, from the friggin' skippin."

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.