Sorry for the rant, but...
I've slowly been coming to the view over the last few years since the crash that the whole intellectual basis for modern day economics is deeply flawed, and that is the root cause of the economic problems we see around the world.
Take GDP for instance. Does anyone really believe all of the needs/wants/labour/trades of the 65 million people in the UK can be distilled into a single number with a pound sign in front of it?
I remember even as far back as A-Level economics being told that GDP (or might have still been GNP back in the mid-90's) was not considered an accurate measure of the economy and has many flaws. Yet the GDP figure is what is used to determine whether the economy "grew" or "shrank" and even a figure of -0.1% is enough to get politicians hot under the collar and enact policies to try and grow that number - policies that will have unintended consequences like everything politicians do.
GDP does not distinguish between voluntary economic activity between willing participants to produce things that they actually truly value, or government spending to get labourers to dig holes and fill them in again. Though the former is real economic activity boosting prosperity and the latter is not.
And as for the money supply BobRocket above seems to have hit the nail on the head in his strangely downvoted post. Money supply is debt, which is a multiple of "base money" which is itself a fiction in the minds of the people as it is just paper or binary digits.
Mr Worstall mentions the dread the economists have of "deflation" (which I believe he is using in the correct fashion - the reduction in the supply of money), and that this can happen when banks go bust. But that only happens when banks go bust because the money supply is all a load of hot air!
If gold was the basis of the money supply (and was not used in a fractional reserve system), there would be no reduction of the money supply because it would all be real, physical stuff sat there in the vaults. You can't reduce the money supply of gold unless it is destroyed or lost.
So our economists and politicians are all working off a false premise, and manipulating the economy in order to tweak the virtual dials. Why do they do this? I suspect it is because the false narrative of GDP in a fiat currency system is actually very helpful to their political aims. They can manipulate GDP by borrowing and spending more on crap before the election, whether that boosts real prosperity or not, and GDP will rise ("Ooh look GDP up we are all rich - horray!"), despite the fact that prices have risen commensurately with GDP so people can't actually buy any more real stuff with the extra cash in their pockets.
To illustrate the smoke and mirrors the central banks and politicians use we actually have three separate measures of inflation. Most of us have heard about the CPI and the RPI (with RPI including housing and energy if I remember correctly and is therefore higher than the CPI, which is why G.Brown got rid of it to hide his real inflation). But there is the little known "GDP deflator" as well, which is used to convert absolute GDP "growth" to real GDP adjusted for the fact prices are going up as well.
Except of course this GDP deflator is invariably lower than both the CPI and RPI, making it look like the economy grew when in fact it shrank - smoke and bloody mirrors.
We seriously need to have a good hard think about how the economy is measured, or in fact if it even needs to be at all. We could do worse than take a leaf out of Sir John Cowperthwaite's book, the Financial Secretary of Hong Kong in the 60's:
"As for the paucity of economic statistics for the colony, Cowperthwaite explained that he resisted requests to provide any, lest they be used as ammunition by those who wanted more government intervention."
Worth taking a few minutes to read his quotes as well, a real free market hero: https://en.wikiquote.org/wiki/John_James_Cowperthwaite