Fed Economist: Bloggers are Stupid

Bruce Krasting's picture

A Richmond Va. Federal Reserve Economist, Kartik Athreya wrote a paper
recently that trashes economic bloggers. Mr. Artheya has a PhD from the
University of Iowa. I’m not so sure a few years in corn land gives him
the right to take cheap shots at the new media. I am absolutely
convinced that this type of thinking should not be expressed by Fed
officials. It proves to me that the Fed is an elitist organization that
is out of touch with America in 2010. The full report from Athreya is here.
Some of the more offending comments:

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.

So we have to go
to school for two years to be able to write about the issues of the day.
That would exclude me and a lot of others. The fact that I worked on
Walls street for 30 years does not qualify me to say a word.

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.

Taking on
Elizabeth Warren is a big mistake Mr. Arthreya. You will regret this
choice of words.

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.

Everything that
comes from the Federal Reserve is incoherent and misleading.

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 only
people you should listen to is Federal Reserve economists? I take a
different view. The last people you should trust in this matter is FRB

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

The general public is being had. But
not by the bloggers. They are being had by the folks who make the
choices for us at the FRB.

views expressed are my own, and do not necessarily represent those of
the Federal Reserve Bank of Richmond, or Federal Reserve System.

the views expressed are a perfect representation of the mind set at the
FRB. Narrow minded, elitist and just plain wrong.

I would suggest that Mr. Arthreya do some additional research. He should
look up the word “hubris” (extreme haughtiness or arrogance).
After he understands that concept he should write an apology, that or
he should resign from the FRB.

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Bruce Krasting's picture

You might find this interesting, Pritchard is a very well respected guy. Look halfway down for a link to this blog.


RichardP's picture

From Athreya:

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.

From Pritchard:

Actually, Greenspan never got a Phd. His honourary doctorate was awarded later for political reasons.

Is it possible that Athreya was actually taking a shot at Greenspan rather than the man on the street?


Voodoo Economics's picture


To even comment about this pathetic academically justified nitwit isn't worth the electrochemical neurological piss that is wasted while thinking about it. 

The imbicile is probably still justifying his 19th century ecomomic theories while writing on a blackboard and trying to make calculations with his abacus.

I would proffer that many of us "untrained" experts with "sophomoric" ideas are individuals with more letters behind our names than this jerk has and have had to make direct ultimate decisions dealing with much more money than this guy. 

They need to replace his Phd => SOB.


bIlluminati's picture

I was a pricing actuary for 16 years, and a computer programmer for most of that, plus another 16 years as a pure computer programmer, and one thing I never sold was group stop loss, or in the present terminology, perfect storm insurance for black swans.

There was always some idiot who thought that next year's medical inflation would be the same as the inflation from two years ago. This will get you a job feeding the black swans.

Right now, I am testing diversification models, so I can correctly advise clients on how much they should invest in 70% sure things. Rule of thumb would suggest (70%-30%) / 3, or about 13.3%. On average I can find about three of these at a given time, so before commissions, make 40% of 40% per year, or 16%. I feel like I'm leaving something on the table, which is why I'm digging a bit deeper. This would imply a minimum of about $25K before making more than a typical mutual fund.

Flipsie: my investments are so contrary to most traders, it'll probably scale up nicely.

Are we headed for depression? Likely. But more like the 19th century, where the railroads went bust. We still have lots of physical and intellectual wealth in these United States and over the world. All we really need is cheap and abundant energy. Fusion would do it; solar power satellites are technically feasible, and we've had the technology since 1977, and the technology is only getting better. All we need is the financial will to do it.

Bruce Krasting's picture

Thanks for all these comments. A special hat tip to the PhDs who spoke up. This was a hot button issue for me. No one "owns" the answers. I think the academic community has failed us in the area of economics.

I got this "important" off the grid response from the academics. Enough said.


 to me show details 10:06 PM (41 minutes ago)

Hi Bruce - perhaps intentional but I think its Wall Street not Walls Street

Withdrawn Sanction's picture

Macro is only difficult because one has to spend so much time and effort keeping the truth separated mentally from the drivel and outright falsehoods.

One small example from the National Income and Product Accounts:  Y = C + I + G + NX, an equation every first year student has drilled into them.  It looks deterministic, but it's not.  It's dispositional.  "Y" (national income or product, take your pick) is not determined by the levels of C, or I, and definitely not by G.  This equation merely accounts for the which sectors demanded the product produced.  Thus, one cannot raise GDP, for example, by increasing "G" because Y is not determined by G.  To assert otherwise is to fall into a logical trap that has ensnared more than one Ivy League economist.  And yet, what is US economic policy today predicated on?

Keynes's effort to bifurcate economics was an attempt to put demand (in particular, consumption) in the driver's seat.  Before there can be one jot of consumption, however, "Y" must first be produced.  Production precedes consumption, both logically and economically.  Say was right, Keynes was wrong.


macroeconomist's picture

Basics: Say argues supply creates its own demand.

If Say were right, there would never be any lack of demand, or in other words there would be no overproduction, no inventories! Then no firm would ever care about their inventories and slow down production, firms would continuously operate at/close to 100% capacity utilization. Inventory build-up shows Say was wrong..Produced but not consumed. Simple as that. 

Reason for this: Existence of profits which are re-invested. (You produce goods worth 100$, distribute 80$ as wages and capital share, re-invest 20$. So unless there's constant deflation, there will not be enough demand to buy the goods produced)

First person to talk about this: Marx (This is precisely why he argued as capitalism progresses, it will inevitably run into the same crisis of overproduction)

Marx's argument: This will inevitably lead to the destruction of the system

Follower of this argument: Keynes 

Keynes solution: Government spending to compensate for this lack of demand.

Problem: Massive government deficits in the postWW2 era.

Solution after 1980s: Encourage spending on Credit

Problem: Massive Private Debt Overhang (sounds familiar?)

Solution : None as of now (Unless they encourage aliens to consume the overproduced goods)

Whoever finds a solution to this is the next Nobel Laureate. 

How amazing that you are so sure you have solved one of the biggest controversies in the history of economic thought..I can't help thinking this FED guy has some validity in his arguments when I read such comments..

Withdrawn Sanction's picture

So many errors, so little time.  I'll focus on just one:  the oversimplification of Say's Law that "supply creates its own demand."  The actual statement of the law is more closely along the lines of there can be no such thing as a generalized overproduction of goods per se', else they would cease would being goods (i.e., things that are not valued are not goods).

Of course it is true, as you point out, that any one particular firm can overproduce and thus earn losses instead of profits.  That, however, is not a weakness of the capitalist system but its fundamental governor.  Profits are a signal to entrepreneurs that their (profitable) goods are in most urgent demand, while losses are a contrary signal.  (This is why incidentally detractors of Says Law frequently reduce it to the crude over-simplification that supply creates its own demand.)

Real demand comes first, last, and always from furnishing something of value to your fellow men and women; in other words, from production.  Workers furnish labor services, capitalists furnish capital, and entrepreneurs furnish organizational and monitoring skills among other things.  Each person's productive capacities (i.e., their values to and as perceived by others) determines, in turn, each person's ability to demand things.

BTW, thanks for the ad hominem.  Nice touch.


Quinvarius's picture

What he is really saying is that at the Fed they have the tools to create a particular reality.  Any attempt at speculation on what might happen as a response to a Fed action is fruitless because they can create any reality they want on any particular day.  So he is laughing at anyone trying to make sense of what is going on.

That is what he is really saying.

blindman's picture

bloggers do tend to shy away from some of the more

important functions / anti-accomplishments of the fed and economics.


one thing the fed does that gets little attention is

by opaquely managing global fiat currency creation through

"sovereigns",  they facilitate otherwise impossible fiat finance of hyper militarization and

weapons distribution,  the effect is to cower populations into submission,

for one thing;  kill, maim and starve  millions for another  and pave the way

for further essential "sustainable economic growth".  it also gives politicians

power or the power of the illusion of power,

along with like minded citizenry.   always ends with the owners

of the central banks in control, owning, the armies, (and all they

fight over)  so all is right

and well in the world?   not yet.  they need another century or two

to get it, right. ?

mr. arthreya, thank you for your input but please get back to

work, not thinking about or observing the "world"  but

completing your assignments and leave this shredded democracy /

republic with it's incompetent masses

in the "intellectual" gutter where you found it/us.  some day you can thank

the blogs, we can only hope. 


"pretending to love, i hear it pays well".  t.w.



John_Coltrane's picture

If he's complaining about bloggers now, just wait until we start the biggest bank run in history.  We want all our "cash"  deposits now.  Then he'll learn firsthand about the problems of fractional reserve banking!

grunk's picture

The keynesian oncologist:

We gave the patient a dose of radiation and chemo and it didn't work.

Up the dosage.

We gave the patient a larger dose of radiation and chemo and it didn't work.

Up the dosage.

The patient died of radiation and chemo poisoning.

You see, it worked! The patient did not die of cancer. 

markar's picture

I'm sending back my diploma from the University of Iowa.

Mr Lennon Hendrix's picture

So we should all be judged by the books we read and the knowledge we have.  Fair enough, fair enough.

I want to know one thing:  Has "Dr." Whateverthef*^% read this book?

I bet the answer is no.


Verbal Kint's picture

Athreya clearly demonstrates a lack of economic understanding. Maybe he should have gone to a first class school instead of Iowa. In any case, I can't believe tax payer funds are used to pay for this nonsense. I don't mind him expressing his obscure views, as long as it's not at the expense of tax payers and does not involve illegitimately using the FED to advertise his insane views.

In case the FED does agree with this insanity (very likely) this fact should be properly disclosed.

This "paper" somehow evokes memories of Germany in the 30s.

Pez's picture

Fed Phd = Paralyzed (from the) Head Down.

Troublehoff's picture

It's true! I am an ignorant blogger.

When I was musing to myself about the sudden uptake of credit card debt at seemingly unsustainable levels several years ago.. that was silly, I have no degree in economics - the FED knows better.

When I wondered how people would be able to pay their mortgages if interest rates returned to levels seen in the 1980's.. I was just being silly. The FED knows better.

When I pondered on how it could be fair that bankers with the power to create money out of thin air and lend at interest, who collected bonuses inconceivable to the majority of people could have their bad investments taken off their hands at fantasy values after capsizing the global economic system and then continue to receive even larger bonuses I was being a little naive.... because If we don't pay these bonuses they will all bugger off to Singapore and do god's work there instead.

When I wondered how a world with finite resources but a debt based money system that collapses without permanent growth could not ultimately result in outright monetization I was being silly because the FED has it all in hand.

Kartik Athreya can suck my uneducated Dick


optimator's picture

He's right!!!  After all, he's an expert.

Definition of an expert?  Someone who knows more and more about less and less until he knows everything about nothing.

ZackAttack's picture

Whenever someone invokes expert status, I use this pre-WWII oldie from my dad.


When we decompose the word 'expert', we find:

x = the unknown factor


spurt = a drip under pressure

onlooker's picture

Democracy must have a well educated and well informed population. However, that information and education is a problem for the elite and those who hold power. A population that is educated to well serve the government and business machinery is what is desired, but certainly not a population that thinks and uses information to form opinions that are counter to the ruling elite. HENCE this statement------


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.

Lucky Guesst's picture

Obama was at the G28 being rejected globally for the idea that the world can just borrow and spend their way out of it. Do they really think that everything is fine people just need to go to the mall? Throw caution to the wind, don't save for a rainy day, and a penny saved is not a penny earned? My granny didn't have a PHD but she knew how bad the depression sucked, and was prepared if times ever got tough again.

What scares me is that they do have a PHD so they just can't be this stupid. There is an ulterior motive. Plan B just can't be to ignore that plan A has failed.

pragmatic hobo's picture

but it is also true that most bloggers/financial web-sites are stupid, ignorant, and inept ... that's why we come to ZH, no?

False_Profit's picture

expert (also x-spurt)
def: an unknown quantity under pressure.

False_Profit's picture

expert (also x-spurt)
def: an unknown quantity under pressure.

ZackAttack's picture

Aw, man, I didn't read before I posted the same thing. My bad.

Good one, though!

Amish Rake Fighter's picture

Who is this clown and where do I send the box of scorpions ?

Sherpro's picture

I've just read this whole thread and boy, are there some pretentious wankers out there!!  Although there are some rational and useful comments, most simply state how many PhD's and what heroes people think they thyemselves are.


I agree - albeit for different reasons - that bloggers are stupid!

Windemup's picture

Henry George had no PHD but his discussion on Political Economics is one of the best I have ever read. Our politicians today could use some "Progress and Poverty" reading.

macroeconomist's picture

I posted this article under Tyler's comment on the same issue, I am sorry for those who have already seen it.

"Noone Saw This Coming: Understanding Financial Crisis Through Accounting Models"


Remington IV's picture

Fed Governors , Presidents and economists have done this country proud ??????????


chimp city

Paul Bogdanich's picture

This is what yu get when the bias is to hire young people.  It's all by design mind you as it allows the well position old people to steal more and by the time the 10% of the youngens with any tincture of social conscience left in them figure it out it's too late.  That and they load these socally deprived nerds up with puss and booze and white and then keep all the records for future use.  Kind of like Hearst used to have all the homo pictures of the leading actors to keep the studio heads in line.  Remember Goldman releasing that guys e-mails immediately before the congressional hearing?  I bet there were a few missing here and there that the corporation and Fabrice found conspicuously absent.  Like Heydrich used to say, "We have more than our share of thugs."    

Circumspice's picture

I left finance recently, and I'm currently getting an MS in Econ at one of the best schools in Asia, where due to the national system all courses are PhD-equivalent (i.e. PhD candidates have to get their master's first). I am very aware of what is being taught in school, and I'll say that I understand all of it and how to regurgitate the answers that less open-minded professors want. I pity those with no firsthand knowledge of financial practice who think what they're learning in school is right.

The fact is, I probably learned more in one month on the job in finance than all my years of school combined. At this point I have enough knowledge to hack away at research on my own, but that owes to my experience. Successful macro funds feed on incompetent central bankers. Soros and friends beat all the research economists at the BOE, Bank of Thailand and could have beaten the South Koreans, all on simple shit like the arithmetic of currency stability. Paulson did a hell of a job in the US.

Blogs, moreover, provide ultimate transparency and review. When Krugman says, "print, baby, print," he gets called out publicly. They aren't reviewed by gatekeepers, but by whether they provide relevant commentary that matches economic realities enough to satisfy very demanding readers. Dreck like portfolio optimization (irrelevant to practitioners due to masive model sensitivity to inputs) or Black-Scholes (already in effective use by practitioners for decades) doesn't but wins Nobel Prizes.

And seriously, he bashes Robert Reich for not having a PhD. Shit, I disagree with Reich's views plenty, but the guy was a Rhodes Scholar; Yale Law grad; Secretary of Labor; prof at Berkeley, Harvard and Brandeis; a frequent commentator in reputable economic fora; etc. If that's not enough for some guy who's main qualification after 17 years of work is his study of dead white men for 5 years in the cornfields, then he can fuck off. He rails on Elizabeth Warren (so what if she doesn't have an econ PhD; she's been studying econ for 30 years nonetheless?). And then there's Krugman and Delong. Say what you will about either, but damn, if they can't possess a coherent viewpoint I have no idea how any single person in the Fed can possibly articulate an informed view on monetary policy. (Wait, I kind of like that idea...)

Why should anyone accept uncritically that Economics, or any ?eld of human endeavor, for that matter, should be easy either to process or contribute to? To some extent, people don’t. Would anyone tolerate the equivalent level of public discussion on cancer research?

No, but then again, we generally have pretty good evidence that cancer research isn't this massively dysfunctional project that winds up blowing up the world financial system, whose previous best hit was creating 20 years of stagnation in Japan. People are likely satisfied with the progress of modern medicine over the last several decades. Take a wild guess how they feel about the guardians of economic knowledge.

Can they provide you, the reader, with an internally consistent analysis of a dynamic system subject to random shocks populated by thoughtful actors whose collective actions must be rendered feasible? For many questions, I and my colleagues can.

Comedy gold.

Here's a thought: if central bankers had the track record to validate their theories and insight into the financial marketplace, I'm sure most people would just trust them. If their most venerated academics who moved into finance proved they could run a hedge fund without blowing it up. When I hear a Fed/Bernanke/Paulson pronouncement, the first thing I do is check online to see if people heard the ridiculous shit that I just heard. You know, like "the problems in the subprime markets seem likely to be contained." Most who laughed at that, myself included (with meager work experience), didn't have a PhD from MIT, so the value of that accreditation.

My favorite recent event was a speaker who came from overseas to present his research. He spoke for an hour first on the theoretical foundation and threw equation after equation at his audience. After showing the results for his 100 firms, I saw the very last line: "Observations: 180." Less than 2 observations per firm. Listeners, oblivious to the relevance of this oversight, applauded. I'm 100% sure that if I showed that to a superior at a company I'd get laughed out of the office.

So, from someone who studies economics and heavily values that knowledge, financial bloggers provide an invaluable, practical perspective that is definitely lacking from academic discourse. And the attitude that only academic review and build on knowledge, that anything they ignore from practitioners is irrelevant, is the kind of blindness that produces the central bank stupidity we've seen recently.

Bruce Krasting's picture

C,Well-said. Thanks for the input.


Amish Rake Fighter's picture

nicely done, have you ever considered being a stupid blogger ?


Circumspice's picture

Appreciated, to all three of you.

FYI, I do blog, but not regularly enough to plug my site with the confidence that it's of value to those here.

turds in the punchbowl's picture

The foolish speculations of the uniformed public are a direct consequence of the fact that the fed no longer conducts it's meetings in Latin.

bingaling's picture

Hey Bruce, good article .

definitions of phd from the urban dictionary(they usually get this stuff right:


Doctor of Philosophy and the highest educational degree. Typically confirmed upon those with the greatest of intellect, who, strangely enough, possess a vast reservoir of complex knowledge most suitable for the classrooms of higher education, but for reasons unknown, when placed into the real world, typically need a third hand to find their own ass

Acronym for "Post-Hibbs Dump."
Hibbs is the dining hall at VCU (Virginia Commonwealth University), a state school in Richmond, VA. As you can guess, the food there is pretty foul, and shortly after eating there, you often have to take a nasty shit. "Hey Jonny Z., how did that weird veggie lasagne treat you?"
"Let me put it this way dude - As soon as we get back to Johnson Hall, I'm gonna get my PHD."

Pimping Hoes Degree, its the degree that all pimps get to pimp whores.


A person who is basically trapped in college for the rest of his life. PhDs are also known to talk out of their asses and give long lectures about things not relevant to real life.


and finally

Acronym for Position of Head Disorder, related to cranial rectum inversion, but the specific disorder for those with advanced degrees


It is obvious the ph'd mentioned in your article is tired of being made an ass of by those who did'nt make their parents get a fifth mortgage on their house so their son could get an "education".

sgt_doom's picture

I keep forgetting that outstanding youtube clip from C-SPANN showing Rep. Grayson interviewing the hopelessly ignorant and clueless (officially speaking, that is) Inspector General of the entire Federal Reserve System, who claimed she didn't know what became of those trillions of dollars they Fed gave away (oopsy, I mean "loaned").

An audio technical analysis was later done on that clip, and the female advisor who kept leaning over the IG's shoulder (also a female) was actually "advising" the IG to tell Grayson:

"Just tell him even though you're sitting on your hands, you still can't find your butt."

Perhaps the most sound advice to ever come out of the Fed.

Apostate's picture

There are plenty of econ PhD bloggers that savage the Fed. Maybe this is a love-letter to Mish? I'm sure he'll be overjoyed. 

All that they have left are

1. Argument from authority.

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.

2. Ad-hominem.

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.

steve from virginia's picture


Lessee ... I never went to college, I dropped out of high school.


As an economic blogger I predicted (hyper)inflation in China beginning this time last year:


I never hear the word 'energy' come out of any Fed official's mouth. Weird, since we are in an energy crisis, not so much a credit crisis.


So far, none of the Fed children have a) caught on to the hard- money regime that is resulting from declining oil availability and b) that it makes the Fed impotent. (Bernanke knows what's going on, he's another 'Dr. Evil').





I know i suck but I suck less badly than the Fed ...



Snidley Whipsnae's picture

One possibility: To squech bloggers they must first come out with some 'father knows best' baloney, which is what this bombast amounts to. When bloggers fail to shut up then they can say 'we tried to get you to tone it down but you wouldn't listen and you are scaring the beejesus out of the sheeple, so we are turning you off.'

This is an admission by 'professional economists' that they are losing the battle for hearts and especially the minds of the sheeple...or, the sheeple that are reading blogs instead of watching their tv baloney.

I think this attack on bloggers, given the timing, was discussed at the G20 along with an attack on gold...which happens to be making their fiat paper look like...well, fiat paper. 

Close 2 the Edge's picture

Very well put.

Love hearing us Independents are Repubs in disguise.

Res ipsa loquitur's picture

When words fail to describe the staggering level of Mr. Artheya's hubris and stupidity, there is always the facepalm:


williambanzai7's picture

This moron is paid with your taxes. Does this make you feel better folks?

Snidley Whipsnae's picture

Bruce... I am not a Denninger fan but he does have a pretty good come back for the economics profession and this guys stupid assertions in particular... Worth a full read.

"I propose a seminal test for all such papers: Those that fail to account for the fundamental principles of mathematics, including the law of exponents and the fundamental principles of thermodynamics as applied to the economic field - that is, that all process involves loss and there is no such thing as a free lunch or even managing to break even, must be discarded."




Snidley Whipsnae's picture

And now we know two things that were discussed at the G20...1) gotta take gold down a notch if we can...2) gotta take the bloggers down a notch if we can...

These guys are as subtle as a turd in the punch bowl.