According to classical economic theory, prices will always be 'correct' from moment to moment, markets will never overshoot, trend-following behavior cannot occur, and the concept of active asset management will be meaningless. But none of this is true in reality. Why? I shall answer this by drawing upon the new theory of Rational Beliefs developed in the 1990's by Mordecai Kurz at Stanford University. This new theory brilliantly reveals why markets behave as they actually do.

- H. "Woody" Brock

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Testimonials

"With rigorous logic, American Gridlock identifies five major problems confronting the nation. These range from salvaging today's "lost decade," to the unequal distribution of wealth, to preventing bankruptcy from "entitlements spending," and to preventing future financial market crises. Woody Brock does not simply offer his opinions about these crises. Rather, he deduces win-win solutions to each of these from First Principles. It is high time for such a book, especially during a presidential election year." - Dr. Nouriel Roubini, Chairman and Co-Founder, Roubini Global Economics

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"Woody Brock's new book, American Gridlock is going to force everybody to think through their views on the critical issues of public policy facing America today. It is not just a question of a failure of leadership. It is also a question, as he puts it, of a failure of thought and analysis. He focuses on this in order to overcome what he terms "the Dialogue of the Deaf;" the shouting match between the Left and the Right and its inevitable manifestation as gridlock. Agree or not, this is the kind of book to which everybody should pay attention." - Mortimer Zuckerman, Editor-in-Chief of U.S. News & World Report; Chairman and Co-Publisher of the New York Daily News

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"Woody Brock is a brilliant economic thinker and we should heed his call for an Infrastructure Marshall Plan to lift our national economy. This book should be required reading for everyone who cares about America's future, particularly our elected officials." -

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Joseph Dear, Chief Investment Officer, California Public Employees Retirement System (CalPERS)

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"The world is bogged down by incremental thinking and yearns for some "big ideas" to liberate us from the serial crises that confront us. Over the years "Woody" Brock has proven himself as an original thinker whose solutions to problems often turn out to be right. Now, in this book, we have a set of recommendations that may put us on the right course." - Byron R. Wien, Vice Chairman, Blackstone Advisory Partners LP

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"If Woody Brock did not exist, God would have had to invent him. He is a unique, challenging thinker who makes most conventional economic forecasters look like trend-followers. Serious investors and students of public policy should be delighted that he has finally written a book in which his renowned analytical approach focuses on public policy. This is badly-needed fresh air in a seriously polluted environment." - Don Coxe, Chairman, Coxe Advisors LLP

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"Strategic Economic Decisions is the single best source of macroeconomics integrated with political fundamentals and a unique understanding of social psychology. Their work is invaluable."-Mortimer Zuckerman, Editor-in-Chief of U.S. News & World Report; Chairman and Co-Publisher of The New York Daily News; and Chairman, Boston Properties

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"Your May 2006 issue may have been the best ever, and that is saying a lot! I guess I am so enthusiastic because I learned so much-in particular about the distribution of net worth, the yuan strategy, and the Corrigan Commission. Your emphasis on endogenous risk is crucial and adds great power to your arguments. I wonder why so few people understand that simple idea. I read one forecast after another based on flows of funds... and want to scream back at those observers that they are way off base."-Peter Bernstein, Founding Editor and Consulting Editor of The Journal of Portfolio Management

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"Woody Brock is a brilliant scholar, endowed with the gift of intellectual integrity and complete commitment to study the deeper dimensions of any problem. His ability to distinguish content from form is refreshing. Interaction with him is a source of original thinking, insight, and discovery."-Mordecai Kurz, Joan Kenney Professor of Economics, Department of Economics, Stanford University

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"Woody Brock is an extremely able economist, with a very strong background in economic theory and in mathematics, but also with very broad social and economic interests. He is one of those rare people who manage to combine a first-rate analytical and technical training with a very wide cultural and humanistic education, and with a very sharp and enquiring mind... a very effective public speaker." -John C. Harsanyi, former Professor of Economics, University of California, Berkeley, co-winner of the Nobel Prize in Economics in 1994 with the legendary John F. Nash, Jr.

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"Brock (Chapter 18) shows how the Bayesian analysis in terms of states of nature can be used to estimate distributions of future prices. He correctly holds that in behavior under uncertainty, single-valued expectations are insufficient. Further, economic analysis makes price derivative from more fundamental supply and demand factors. Hence, a true Bayesian distribution of future prices must be a transformation of the joint distribution of these basic factors."-Kenneth Arrow, winner of the Nobel Prize in Economics in 1972, written in response to Dr. Brock's essay, "Arrow-Bayes Equilibria: A New Theory of Price Forecasting,"appearing in Arrow and the Ascent of Modern Economic Theory.

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"Woody Brock has been coming to Australia and talking with me for over 20 years. He always raises questions which are not normally to be found in most of the other economic forecasting documents. Anyone who is making a decision in international business needs to ask the questions which Woody raises so that they do not make significant strategic mistakes. I recommend Woody's services-Strategic Economic Decisions- to all senior executives in major international companies."-Sir Roderick H. Carnegie, the former Chief Executive and Chairman of CRA Limited and the Founder of the Australian practice of McKinsey & Company

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"Dear Woody, I got your review and have circulated it widely. It makes sense and explains our recent experience better than any other theory I've heard-we should spend and cut taxes in accord with it."-Bill Clinton, 42nd President of the United States of America, written in response to Dr. Brock's 1995 memo, Resolving the US Productivity Paradox.

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"Woody Brock imparts powerful insights based on facts and sound critical thinking... he adds immeasurable depth to our understanding of issues and improves our decision making process that impacts the bottom-line results for our investment and business clients."-Richie Lee, Lee Financial Corporation

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"I have more fascinating thoughts for readers from Woody Brock, the economist who should be required reading for those within government and outside who want to keep new Labour new and pro enterprise. Brock's essay is a brilliant piece of contrarian thinking. At a time when markets hang on every Delphic utterance to emerge from Alan Greenspan, Brock writes of the marginalization of Alan Greenspan-the overstated importance of monetary policy."-John Jay, columnist for The London Times.

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"For more than a decade as part of the leadership team of the World Bank, I would always make time for a careful reading of each SED issue, no matter how busy I was. I can vividly recall most of SED's landmark articles, especially those in which Woody would summarily replace the prevalent muddled thinking about an issue by stunning substitute explanations written up in the clearest prose. Over the years, I became in fact an avid fan and user of Woody's deceptively simple looking, yet in fact intellectually demanding and fearless decompositions of even the most complex puzzles of the economy and the markets... No research I know comes close."-Jean-Francois Rischard, Former Vice-President of the World Bank, Author

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"Woody has spoken at many of the ICBI's financial conferences over the years and remains a firm favorite amongst our delegates who represent many of the top investment banks, fund management companies, hedge funds, and private equity houses. Often challenging assumptions, never afraid to go against the grain, impeccably well founded in his research material, he always has something new and interesting to say. In addition, his unique and compelling speaking style serves to make him a memorable presenter on all occasions."-Rosalind Oxley, Managing Director, ICBI

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"I would like to thank you for your brilliant speech. Listening to what audience members have been telling us, your discourse contributed a lot to the general success of the whole event as you enticed many audience members to start thinking about active management in a whole new way."-Henri Reiter, Managing Director of Fund Market, Banque du Luxembourg

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"I want to congratulate you and thank you for the conference. I was impressed and proud to be there. Proud to be one of your clients for more than seven years now. What you are doing is different, thoughtful, stimulating, challenging, and inspiring. This is helping us very much to get an edge in what we do and stay ahead of the curve."-Erik Giasson, CIO, Montrusco Bolton

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"Woody Brock of Strategic Economic Decisions, and a former student of Kenneth Arrow's, maintains that the inability to make exact forecasts should no more indict economics than physics should be indicted for the inability of physicists to predict the path of paper falling from a desktop. What it does imply, he believes, is that economists should build uncertainty into their models and use their own and other people's subjective judgment to make forecasts that at least tell decision makers what the odds are on any outcome."-Leonard Silk, Economics columnist for The New York Times

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"Periodically I feel compelled to write to you to express my admiration for the depth of your thinking, and the incisiveness of your analysis. Best of all, your work is couched in understandable (though elegant) prose. I have always believed it required a great mind to explain complex concepts in relatively simple terms. I suspect those who hide behind a curtain of jargon and mathematical sleight-of-hand do so to conceal their lack of understanding of their subject matter. I never sense that is the case with you." - William Bengen, President of Bengen Financial Services

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Mr. Bernanke has argued that the world is awash in a global savings glut that holds bond yields down. Nevertheless, as Woody Brock recently pointed out in the February 2006 issue of his excellent publication, Strategic Economic Decisions, a glut of saving in Asia and parts of Europe is different from a world awash in global savings. Remember the low savings rate in the U.S.?"-Peter Bernstein, Founding Editor and Consulting Editor of The Journal of Portfolio Management