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Fed Economist: Bloggers are Stupid
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:
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.
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.
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.
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.
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 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
economists.
The
general public are simply being had by the bulk of the economic blogging
crowd.
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.
The
views expressed are my own, and do not necessarily represent those of
the Federal Reserve Bank of Richmond, or Federal Reserve System.
Actually
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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To my good friend Johnny Bravo:
Oh, you're back! I missed you. Last time we talked you accused me of being good at making babies and bad at investing. I am egregiously guilty of both. However, I plan to have two out of two now that I have hedged my dollar holdings with physical precious metals. I also bought a few firearms, lots of ammo and a shortwave radio. I have good shoes, too, because I believe in being prepared. I like Merrells.
I think you must be very young and excitable, but not to worry, these are both possible to overcome given time and experience. It is fun to take on the big boys on this forum isn't it? A few pointers, though:
1. Never insult. It makes you look bad. It also lowers the level of discourse specifically by distracting from the issues at hand.
2. Never rise to the bait of an insult. Same reason as above.
3. Avoid age-specific non-English like "lol." Again, same reason.
4. Think. You are good at writing, and quick to jump into a debate, garnering lots of attention for yourself, but your arguments aren't so good. Give them some thought, do some research, then jump in.
5. Stick with a persona. I happen to follow the Leo Kolivakis school of avatar, and use my real name. Maybe not so trendy as it could be, but when you dumped "Master Bates" and became "Johnny Bravo" you took the coward's route out of a sticky situation. You made enemies and then did the sociopathic dance of changing your name. Weird.
I really am glad you are back. Why aren't you trolling a gold thread, though?
Is that pylon really back? I had fun running his ass over on occasion.
I normally wouldn't even bother to respond to such drivel.
But really. What a tit.
If the Fed wants to prove its economists are useful, how about they reconstruct the BLS to show representative data of how the economy is actually performing. Grassroots bottom up observations might help to show whats really happening.
Very well then, with that little bit of housekeeping out of the way we now present to you our latest officially sanctioned FRB white paper entitled:
EVEN MORE COWBELL!
Is that the sequel of: THE BOY THAT CRIED WOLF PRINT MORE
Kartik Athreya's bio also says before going to the Fed, he worked for Citi. Seriously. You can't make this shit up.
From Athreya's essay (below site) on p. 11:
"In the interim, some investors, e.g., so-called
structured investment vehicles (SIVs) and conduits, had
arranged for backup lines of credit from banks."
http://www.richmondfed.org/publications/research/annual_report/2009/pdf/ar.pdf
And Citi, of course, created the SIV construct back in 1988.
(And the essay was idiotic, as one would expect.)
I have a PhD, have worked in academia for 14 years before going into quant finance. I have found theories and models to be a useful tool if used in moderation and with huge amount of "common sense" and "critical thinking". Fine academic theories like EMH and CAPM are partly responsible for the mess we are in now, as they gave people the illusion that the economy was becoming a scientifically controlled process. However, extreme arrogance coupled with lack of "real world" knowledge has turned many PhD economists and mathematicians into "idiot savants". I have fought a long (losing, I am afraid) battle against the majority of finance quants and economists because they apply their models with the zeal of fanatics. To understand economics, you need to hear stories like my grandfather who had to run a business during the '29 crash.
There is no question that economic and quantitative training is needed, but there is no substitute for "common sense", something most academics and technically trained PhDs lack in spades. This article is the last straw.
I disagree with the common sterotype that an academic must lack common sense, and non-academics are automatically endowed with great common sense.
On my block alone are many examples of very non academic people that missed the common sense boat entirely. Watch any episode of "cops"for futher proof.
Plenty of tenured professors out there that can and do in fact change their own oil.
The two arent mutually exclusive; Ive always thought of wisdom as both knowledge and common sense combined.
Excellent points, or to phrase it another way:
There is little to no connection between free enterprise and American economics, or fantasy finance.
DrDre,
Excellent comment and you are bang on here:
There is no question that economic and quantitative training is needed, but there is no substitute for "common sense", something most academics and technically trained PhDs lack in spades. This article is the last straw.
An important post, Bruce.
Fear is some measure of their desparation. This is the best evidence yet that they don't have a clue what they are doing, and there is no plan B.
If all economic Ph.D candidates were required to spend a 3 month internship standing in the center of a trading pit with their entire net worth at risk on a one standard deviation move, the efficient market hypothesis would never have even been considered.
Exceptionally well put!
to b honest, I have learned more in last six months reading blogs like zh, boombustblog(Reggie Middelton), seeking alpha than I have being in school(I do have a pretty good gpa though). Plus phd, wat the hell..even a kid does phd..these days.
wat was her thesis though? must be ,How easy it is to manipulate public offices,. .. jus look at the fed...
I'm from Iowa, my daughter went to UofI- they think Karl Marx was a conservative.
Bloggers unite. I say take the top 10 bloggers out there and the top 10 FEDERAL RESERVE ECONOMISTS* and put them on the same stage. Let the debate begin. THe losers go home and never open their mouths again. The FED REserve will be aqfully quite after.
* - understood to be contradiction in terms
http://www.philstockworld.com/2009/09/09/priceless-how-the-federal-reserve-bought-the-economics-profession/
http://www.marketoracle.co.uk/Article13509.html
The Fed has stocked academia with its disciples for more than a generation.
With this truth observed, Federal Reserve Economist Kartik Athreya has no valid argument other than: "We are right, you are wrong" Therefore, the debate continues.
Tim Iacono has documented how Magoo's Fed was disastrously wrong at every important turn as well. When faced with a problem, he just flooded the system with liquidity. Big effin' whoop.
I guess the last guy who did anything right was Volcker. The problems are completely different, but his voice is still important.
Hi Bruce,
I understand the frustration but generally speaking that's how most are accepted and associated by [brand names, albeit cars, clothes, fashion, educations, careers]. The issue lies upon the structure of systems within our society [i.e. Athreya has the incentives to research/present on materials that are relevant (or benefits in anyways) to the source of his funding]
Athreya made a dumb move by openly criticizing bloggers with such weak and naive arguments.
I said this on the other, earlier post about this topic, but just to say it again . . .
This guy seems to be equal parts credentialed idiot, coddled bureaucrat, and ass-kissing sycophant.
Damn. Now that is a neat list of redundancies.
I'll bet you are equally skilled in oxymorons. Crank out a few.
You are my hero -- well, amongst others.
Duuuuuhhhh....what ecomomy mean?
Who has gotten more calls wrong than Larry Summers, Phd in Economics, Harvard?
Maybe, it would be Ben "there is no housing bubble" Bernanke, Phd in Economics, MIT?
a socialist/leftist capitalist?
Why didn't the Fed elitist discuss the track record of Big Brain Bernanke? 100% wrong, of course.
'cause it's the shortest way for a Fed official to become a blogger.
"The general public are simply being had by the bulk of the economic blogging crowd."
Given that most of the general public aren't aware of most of the financial bloggers but ARE aware of who Benni, Timmie, the Federal Reserve, CNBC (etc) are, his comment is strange to say the least.
The word 'tosser' comes to mind (apologies to those whose sensitivities are offended) - certainly educated but not knowledgeable.
DavidC
JB, the problem with your observation is that in several places, the teabag supported Republican has soundly beaten the "establishment" Republican candidate. I think instead of it being about party labels, the movement is about conservatism or libertarianism versus liberalism (I refuse to use the term "progressive).
Puuuuhhhhlease....let us upgrade the dialogue here, this site is far better than to be wasted with nonsense pertaining to Sarah the spacecadet Palin, Lady Gag Me, or Teabagging Teapartiers.
If I had to leave the country unexpectedly and needed to leave my children with a stranger and my choice was between a Teapartier or someone who works for the Federal Reserve, it would be a no brainer. If I were dying....... lets see, Sydney Palin or Sydney Bernanke? I'd tell her I loved her and to dress warm. Lady Gagme would be my absolute worst nightmare now that MJ is gone.
Don't waste your breath. Ole Johnny is over at the latest gold post Second Gold Price Intervention to leave a few steaming piles (like, "You can't eat gold!") in the wakes of the cogent comments. No time to waste here at this boring economics topic.
Back in 1983, Edward Leamer published a great paper, Let's take the Con Out of Econometrics. He needs to write a new one, let's take the cons, fraudsters and charlatans out of the economics profession.
but, but, but ---- You'd be gone then.
Get your head out of your butt. :)
Let's look at what actions the Fed has taken since the meltdown:
1) Buy up the Banksters' toxic assets
2) Give the Banksters our money
3) Loan the Banksters free money
4) Print more money
The Great Moderation lulled these overpaid jackasses to sleep, only to be awakened by the realization that the entire industrialized world is insolvent. Hell, they even 'forgot' about the impact on the commercial paper market post-AIG/Lehman.
Kartik Athreya sounds like Leo's new pen name.
This is a clear indication that the poisoned view of economics is being successfully challenged by common sense and sobering views of the truth.
All of the power held by our "officials" and "experts" is contingent on the premise that "they" know what is best and should not be questioned.
The awakening is bringing out a defensive posturing that is indicative of and endangered strangle hold on consensus..
I view these comments as good news and an implication of weakness.
University of Iowa? Seriously? Does that even count?
Yo, yo, they ain't as grand as Harvard's econ department.
After all, that's where the legendary Martin Feldstein teaches.
We all remember Martin, right?
He was a director of HCA when they were involved in the largest medicare/medicaid fraud in history.
Martin was a director at Eli Lilly when they paid the largest settlement for pushing bad drugs.
And let us never forget who was a director at AIG's Financial Products, when they pulled off the biggest insurance swindle in human history.
Goooooo Harvard.......
[BTW, Marty's a REAL economist of the sort the Fed Reserve boys oogle!]
I would guess that their economics department is about as good as my alma mater, UW-Madison. My freshman introductory macroeconomics professor, Marvin Johnson, infamously proclaimed on Day 1 that "utility is a meaningless measurement, because how can you measure happiness!?" Utility, of course, being one of the few useful concepts to ever come out of that academic profession. That event marked the end of my studies in the economics major.
http://www.aae.wisc.edu/facstaff/faculty/details.aspx?id=VVcwMTROODk3
Yes, he literally is that big of a douche.
Another UW econ alum here, yup I had an Ag econ class with him. He has long hair now, goddam hippy. (FWIW, UW Madison's undergrad econ regularly ranks in the top 5 or 10 lists.)
I think understanding utility as a theoretical abstract is much different than the facile attempts of modern econometrics to quantify subjective phenomena.
On a side note, I think you have to be somewhat insane to pursue post-graduate economics to begin with.
Isn't that where Sarah Palin graduated from cosmetology school?
They know a day of reckoning approaches. Not willing to accept any personal responsibility themselves, they will seek out scapegoats.
Which bloggers anyway? Yves, Karl, Tyler, Bruce (etc)? Or one of the millions of personal blog sites?
This is a set-up folks! The Fed intends to blame bloggers for the inception of the 2nd Great Depression. Gird your loins.
"we're going to need a bigger (girding)..."
For Larry Summers half a peanut shell and a rubber band oughta do it.
I certainly must have a right to speak about economics, I'm Jean Valjean, I ran a successful business before Napoleon came to power!
This guy is as dumb as a fence post