Fed Economist: Bloggers are Stupid

[Rajiv]

Re: Fed Economist: Bloggers are Stupid

Athreya needs to read Jeff Schmidt's "Disciplined Minds"

Radio Reading of Disciplined Minds

[ThePythonicCow]

Re: Fed Economist: Bloggers are Stupid

Eh - means little.

Mr. Athreya speaks as a fairly young PhD graduate (he got his degree in 2000) with a specialist research job at a premier institution. He is not speaking here for that institution or its leaders or the rest of us. One hires such people for their speciality training and skills. Sometimes such people confuse their specialty with larger issues bearing similar names. Such confusions merit little notice or concern, so long as his management chain does not suffer similar confusions.

His bio, papers, publications and a video in which he introduces himself can be found on the Richmond Fed site at http://www.richmondfed.org/research/...threya_bio.cfm. In this video, he encourages us all to think about economics .

[ThePythonicCow]

Re: Fed Economist: Bloggers are Stupid

Athreya needs to read Jeff Schmidt's "Disciplined Minds"

Radio Reading of Disciplined Minds

I don't know of Mr. Athreya is ready for Schmidt yet, but yes, excellent suggestion.

[Rajiv]

Re: Fed Economist: Bloggers are Stupid

Ambrose Evans-Pritchard on this very topic in the Telegraph

Time to shut down the US Federal Reserve?

Like a mad aunt, the Fed is slowly losing its marbles.

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).
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I hold my hand up Dr Athreya and plead guilty. I am grateful to Bruce Krasting’s blog for bringing this stinging rebuke to my attention.

However, Dr Athreya’s assertions cannot be allowed to pass. The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.

Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.

They ran ever-lower real interests with each cycle, allowed asset bubbles to run unchecked (Ben Bernanke was the cheerleader of that particular folly), blamed Anglo-Saxon over-consumption on excess Asian savings (half true, but still the silliest cop-out of all time), and believed in the neanderthal doctrine of “inflation targeting”. Have they all forgotten Keynes’s cautionary words on the “tyranny of the general price level” in the early 1930s? Yes they have.

They allowed the M3 money supply to surge at double-digit rates (16pc in the US and 11pc in euroland), and are now allowing it to collapse (minus 5.5pc in the US over the last year). Have they all forgotten the Friedman-Schwartz lessons on the quantity theory of money? Yes, they have. Have they forgotten Irving Fisher’s “Debt Deflation causes of Great Depressions”? Yes, most of them have. And of course, they completely failed to see the 2007-2009 crisis coming, or to respond to it fast enough when it occurred.

The Fed has since made a hash of quantitative easing, largely due to Bernanke’s ideological infatuation with “creditism”. QE has been large enough to horrify everybody (especially the Chinese) by its sheer size – lifting the balance sheet to $2.4 trillion – but it has been carried out in such a way that it does not gain full traction. This is the worst of both worlds. So much geo-political capital wasted to such modest and distorting effect.

The error was for the Fed to buy the bonds from the banking system (and we all hate the banks, don’t we) rather than going straight to the non-bank private sector. How about purchasing a herd of Texas Longhorn cattle? That would do it. The inevitable result of this is a collapse of money velocity as banks allow their useless reserves to swell.

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.
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