Fed Economist: Bloggers are Stupid

[blazespinnaker]

http://brucekrasting.blogspot.com/20...re-stupid.html

Original paper here: http://www.scribd.com/doc/33655771/Economics-is-Hard

Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.

The response of the untrained to the crisis has been even more startling. I listen to Elizabeth Warren on the radio fearlessly speculating about the nature of credit market dysfunction, and so on.

The real issue is that there is extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.

The sophomoric musings of auto-didact or non-didact bloggers or writers is instructive. For those who want to really know what the best that economics has to offer is, you must look here.

The general public are simply being had by the bulk of the economic blogging crowd.

You can't make this shit up!

[D-Mack]

Re: Fed Economist: Bloggers are Stupid

AEP wrote something on it

http://blogs.telegraph.co.uk/finance...deral-reserve/
And now the Fed tells us all to shut up. Fie to you sir.
The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.
The root error of the modern academy is to pretend (and perhaps believe, which is even less forgiveable), that economics is a science and answers to Newtonian laws.
In any case, Newton was wrong. He neglected the fourth dimension of time, as Einstein called it, and that is exactly what the new classical school of economics has done by failing to take into account the intertemporal effects of debt – now 360pc of GDP across the OECD bloc, if properly counted.
There has been a cosy self-delusion that rising debt is largely benign because it is merely money that society owes to itself. This is a bad error of judgement, one that the intuitive man in the street can see through immediately.

[c1ue]

Re: Fed Economist: Bloggers are Stupid

I was going to respond with: The feeling is mutual, sir. (To Mr. Athreya)

However, what is more amusing is that a number of the statements in the paper are simply tunnel vision.

It is therefore not surprising that the majority of the training of new PhDs in their macroeconomic coursework is giving them a way to come to grips with the feedback effects that are likely present.

Oh really? So why is it that Fed policy seems to be focused on only 1st order effects? Is it perhaps that the 'Old Guard' which actually leads the Fed Reserve Banks and Fed system are not sufficiently trained? Or are just willfully stupid?

And where is the voice of the 'new' PhD economist bringing light into the wilderness?

The punch line to all this is that when a professional research economist thinks or talks about social insurance, unemployment, taxes, budget deficits, or sovereign debt, among other things, they almost always have a very precisely articulated model that has been vetted repeatedly for internal coherence.

1) What the ***k does internal coherence have to do with reality?
2) Why are these models worth wiping a**es with when they consistently are wrong? Not just in detail, but even in broad strokes

Why should anyone accept uncritically that Economics, or any field of human endeavor, for that matter, should be easy either to process or contribute to?

Why should anyone accept uncritically that Economics PhDs, or any other 2 or 3 letter academics, for that matter, have anything worthwhile to contribute when their output is useless anywhere but in their own minds and models?

---------------------------------------------------------------

The bloggers are there because there is a deficiency.

The void created by "professional research economists" and their useless and wrong pronouncements is such that the unprofessionals, the charlatans, the nut cases, and so forth all look equally good (or bad).

[ASH]

Re: Fed Economist: Bloggers are Stupid

Only an Expert

...

Ms. ANDERSON: (Speaking) Just because all your friends were fired and your family's broke and we didn't see it coming doesn't mean that we were wrong. And just because you lost your job and your house and all your savings doesn't mean that you don't have to pay for the bailouts, for the traders and the bankers and the speculators. 'Cause only an expert can design a bailout and only an expert can expect a bailout.

(Singing) 'Cause only an expert can deal with the problem. And only an expert can deal with the problem. And only...

Seems to me the proof of one's expertise is in the ability to make predictions, solve problems, or design things that work. Sometimes, there is a pretty good correlation between professional education/certification and useful ability; I'm not sure that I see much evidence of that correlation for economics. At the same time, if someone doesn't have basic factual knowledge of how things work operationally, they are unlikely to reach reasonable conclusions. Clearly, opinions about most anything tangible aren't of much value unless they are informed by some knowledge, whether the result of formal study or otherwise.

[unlucky]

Re: Fed Economist: Bloggers are Stupid

If I was just finishing high school now, I would seriously consider a career in economics. It would be very exciting to work in a field that has just experienced one of the most spectacular intellectual collapses of all time.

What's peculiar is that so many economists seem to be confused about whether they got something wrong, or not.

[sunskyfan]

Re: Fed Economist: Bloggers are Stupid

When thinking about academia I always think of Occam's Razor: all things equal the simplest explanation tends to be the correct one. Finding the appropriate level of complexity for useful understanding of phenomena is the tough part. Too simple and you are ignorant. Too complex and it sounds like a conspiracy.

The thing to keep in mind is that academics, like all "experts", have no interest in a simple explanation except when they are characterizing their competition.

[jimmygu3]

Re: Fed Economist: Bloggers are Stupid

When thinking about academia I always think of Occam's Razor: all things equal the simplest explanation tends to be the correct one. Finding the appropriate level of complexity for useful understanding of phenomena is the tough part. Too simple and you are ignorant. Too complex and it sounds like a conspiracy.

The thing to keep in mind is that academics, like all "experts", have no interest in a simple explanation except when they are characterizing their competition.

I disagree with Occam's Razor. First of all, all things are never equal. But even when they are, correct solutions are most often extremely complicated. Until a few hundred years ago, the complicated theory that disease was caused by tiny invisible creatures that self-replicate inside our bodies was easily trumped by the simpler explanation of disease caused by witchcraft.

-Jimmy

[ASH]

Re: Fed Economist: Bloggers are Stupid

I disagree with Occam's Razor. First of all, all things are never equal. But even when they are, correct solutions are most often extremely complicated. Until a few hundred years ago, the complicated theory that disease was caused by tiny invisible creatures that self-replicate inside our bodies was easily trumped by the simpler explanation of disease caused by witchcraft.

-Jimmy

Jimmy -- "All things being equal" means that competing theories explain and predict the facts equally well. Occam's razor doesn't say that the simplest theory is the right one -- but that the simplest theory consistent with the facts is probably right. (I guess the key part of the original phrase is the use of the word "necessity", which is taken to mean that complexity beyond what is necessary to explain the facts is to be avoided.) So if things aren't equal, then Occam's razor doesn't apply, and the theory that best explains the facts is probably the one to go with. If two theories are equally predictive, then the less complicated one is more likely. Obviously, Occam's razor is a rule of thumb, and not some grand statement of what MUST be true.

[oddlots]

Re: Fed Economist: Bloggers are Stupid

Thankfully an understanding of economics is not the sole preserve of academics, and I'm not thinking of bloggers per se. There's a huge group of economic literates that are employed running money who are both literate and far more engaged with the economy because they are making calls that must be more right than not more often than not in real time.

There's one that comes particularly to mind: would it be too cruel to wish Hugh Hendry on this guy's ass? If he can be that obnoxious to Stiglitz and Jeffrey Sachs I can only imagine the puddle he would make of this guy.

Love to see it.

[jtabeb]

Re: Fed Economist: Bloggers are Stupid

The phrase "Pompous-Idiot-Fucktard-Windbags" comes to mind when I am describing economists (save for Mike Hudson and Dean Baker) .

Note to FRED, I DID NOT SAY F$%K! (only fucktard)

[reggie]

Re: Fed Economist: Bloggers are Stupid

Technorati.com, which is a primary service provider to the blogger community, tracks over 112 million bloggers (there are actually many more). So, from a public relations perspective, why would the Federal Reserve go out of its way to deliberately provoke that community?

[housingcrashsurvivor]

Re: Fed Economist: Bloggers are Stupid

And to think I had to read an economics blog to learn about that article...

[jtabeb]

Re: Fed Economist: Bloggers are Stupid

Well, you do know WHO the "Bad Bank" is right? ;)

[oddlots]

Re: Fed Economist: Bloggers are Stupid

Ha ha ha. That says it all. Score one for us plebes. Nicely done.

[jimmygu3]

Re: Fed Economist: Bloggers are Stupid

Jimmy -- "All things being equal" means that competing theories explain and predict the facts equally well. Occam's razor doesn't say that the simplest theory is the right one -- but that the simplest theory consistent with the facts is probably right. (I guess the key part of the original phrase is the use of the word "necessity", which is taken to mean that complexity beyond what is necessary to explain the facts is to be avoided.) So if things aren't equal, then Occam's razor doesn't apply, and the theory that best explains the facts is probably the one to go with. If two theories are equally predictive, then the less complicated one is more likely. Obviously, Occam's razor is a rule of thumb, and not some grand statement of what MUST be true.

Thanks ASH, for the explanation and wiki link. After reading the information I will amend my statement to say, "I disagree with the common (mis)usage of Occam's Razor." The actual theory, properly applied, appears to have some value.

The other things in question are the evidential support for the theory.^[35] Therefore, according to the principle, a simpler but less correct theory should not be preferred over a more complex but more correct one. It is this fact which gives the lie to the common misinterpretation of Occam's Razor that "the simplest" one is usually the correct one.
For instance, classical physics is simpler than more recent theories; nonetheless it should not be preferred over them, because it is demonstrably wrong in certain respects.