The Fed Has Lost It; Publishes Essay Bashing Bloggers, Tells General Public To Broadly Ignore Those Without An Econ PhD

Tyler Durden's picture

Some Fed economist (with a hard-earned Ph.D mind you) named Kartik Athreya (who lasted at Citigroup as an associate Vice President for a whopping 7 months before getting sacked in 1998 only to find solace for his expiring unemployment benefits in the public sector) has written the most idiotic "research" piece to come out of the Federal Reserve since 1913, and the Fed has written a lot of idiotic research since then - after all you don't destroy 98% of the dollar's purchasing power in 97 years with non-idiotic research. But this just takes the cake. In "Economics is Hard. Don’t Let Bloggers Tell You Otherwise" Kartik says: "I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contribute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public." Alas, all Kartik achieves is to convince the general public that feeding Fed "economists" alcohol after midnight and letting them directly upload their resultant gibberish to the Fed's broad RSS feed the second they think they have a coherent thought , is generally a disastrous idea. In his piece, which has no other intention than to discredit and outright malign bloggers such as Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich, Athreya says: "In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why." Instead in what follows, the Fed presents 4 pages of thoughts so meandering, that the author's blood alcohol level must have certainly been well above the legal norm for the duration of the writing of this ad hominem pamphlet.

Amusingly, the Fed shows that it also enjoys cannibalizing its own most vocal defenders:

The list of those exhibiting this zest also includes, in addition to those mentioned above, some who might know better. They are the patron saints of the “Macroeconomic Policy is Easy: Only Idiots Don’t Think So” movement: Paul Krugman and Brad Delong. Either of these men will assure their readers that it’s all really very simple (and may even be found in Keynes’ writings). Lastly, before you dismiss me as a right- or left-winger, I am not. I’m simply less comfortable with ex cathedra pronouncements and speculations than the people I have named. (Somewhat strangely, in an earlier era Paul Krugman very effectively took the same sort of “accidental theorist” to task, so what I’m saying is really a bit of a rehash of his arguments.)

Here are some of the pearls of wisdom contained in this stunning paper:

  • Before I continue, here’s who I am: The relevant fact is that I work as a rank-and-file PhD economist operating within a central banking system. I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems.
  • 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? To some extent, people don’t. Would anyone tolerate the equivalent level of public discussion on cancer research? Most of us readily accept the proposition that Oncology requires training, and rarely give time over to non-medical-professionals’ musings. Do we expect advances in cell-biology to be immediately accessible to anyone with even a college degree? Science journalists routinely cite specific studies that have appeared in specific journals. They generally do not engage in passing their own untrained speculations off as insights. But economic blogging and much journalism largely does not operate this way. Naifs write books, and sell many of them too. People as varied as Matt Ridley and William Greider make book-length statements about economics. I’ve never done that, and this is my job. This is, to say the very least, bizarre.
  • So far, I’ve claimed something a bit obnoxious-sounding: that 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.
  • You might say, “you’re telling us to leave everything to the experts, so why should I believe you are adequately policed?” This is a fair question, but as someone who has worked for a decade to publish in leading academic journals (with some, but hardly overwhelming, success), I now have the referee reports to prove that I live in a world where people are not falling over themselves to believe my assertions. The reports are often scathing, but usually very insightful, and have over the years pointed out all manner of incoherence in my work. The leading journals have rejection rates in the neighborhood of 80%, and I’ve had my share of them.
  • How can this be changed? A precondition for the market delivering this is a recognition by the general public that they are simply being had by the bulk of the economic blogging crowd. I hope to have alerted you to the giant disconnect that exists between the nuanced discussion that occurs between research economists and the noise (some of it from economists!) that one sees in the web or the op-ed pages of even the very best newspapers of the US. As a result, my hope is that the broader public will ask for a slightly higher bar when it comes to economics, rather than self-selecting into blogs that merely confirm half-baked views that might have been acquired from elsewhere.

And this punchline:

  • For my part, seventeen years after my first PhD coursework, I still feel ill at ease with my grasp of many issues, and I am fairly confident that this is not just a question of limited intellect.

We disagree.

We would comment on this if it had any merit, and central point worth arguing or even debating, but since this whole thing sounds like the ramblings of a deranged lunatic, we will just leave it out there for your comedic enjoyment.

Full must-laugh at essay:

Economics is Hard

h/t Bruce Krasting

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Wynn's picture

Thank you Dr. Durden

mephisto's picture

Taking 7 years between a BSc and a PhD - including 6 months as a junior lunch collection monkey at Citibank - does indeed suggest that economics is hard. At least for Kartik.

Fish Gone Bad's picture

There are people in life that find their calling, and are very very good at it.  Take Kobe Bryant, an absolutely brilliant basketball player who knew what he wanted to do at an early age and polished his craft.  I have worked around dozens and dozens of medical professionals and I can honestly say that there are less than a handful who live and breathe medicine.  For some it seems it is all they can do just to make it through the day.  Our gentleman here appears to be from the latter category.  Economics is a flawed calling, just like religious studies - Trying to answer the question of what happens after one dies?  So much time has been wasted on a glorified snipe hunt. 

brushfire's picture

not sure what you're trying to say about medicine here. care to clarify?

with respect to Athreya's verbal diarrhea, the comparison to oncology research is intellectually dishonest at best. bench cancer research deals in facts, to the extent that facts exist. economics is better compared to psychology, which is a field populated by crazy people trying to work out their own issues (with exceptions, of course). perhaps we should dispense with the medical analogies altogether and compare economics to meteorology, which is the only other field in which you can be wrong nearly half the time and still qualify as an expert.

WaterWings's picture

Santelli responds: "Stop spending! Stop spending! Stop spending! STOP SPENDING!"

EB's picture

Which is why we can rely only on experienced Fed economists to tell us like it is, such as this navel gazing speech by a NY Fed VP on the causes of the credit panic, which fails to mention the money supply, but does manage to reference the meat supply.  No, really.

akak's picture

Next thing you know, the political establishment will be telling us that politics is too "complex" and "difficult" for the average person to understand, and the ability to chose our leaders is too "important" to be left in the hands of the man on the street, and would be much better concentrated in a small cabal of unelected, unaccountable elites who are much more "qualified" and "educated" to make such decisions than Joe Six-Pack.

(Well, in fact that IS how things work in reality already, but at least they still pretend that it is not the case, unlike the economic decisions of our central banking oligarchy.)

Cathartes Aura's picture

I like your post akak. . .

once upon a time only the High Priests of Religion had access to "texts" that, once "interpreted," shaped the cultures. . . the printing press began a process of breaking down that monopoly of "unelected, unaccountable elites" who aspire to make all the decisions for their "flocks". . . amusing, but also profoundly sad that there are still those who seek worship for their "special knowledge".

StychoKiller's picture

[quote]

In his new book, In Search of Self-Governance, Rasmussen explains, In the clique that
revolves around Washington, DC, and Wall Street, our treasured heritage has been
diminished almost beyond recognition. In that world, some see self-governance as
little more than allowing voters to choose which of two politicians will rule
over them
. Others in that elite environment are even more brazen and see
self-governance as a problem to be overcome.
[/quote]

How can one be surprised when those in power have such attitudes?

doomandbloom's picture

when i was young, my mom asked me not to get into too much debt and to always spend my money carefully....

little did i know then that she did not have a Phd.....how stupid of me to trust her..!

Sudden Debt's picture

You can still make up for it and sell everything you've got and buy bonds ;)

MarketTruth's picture

Agree, never get into too much debt, BUT THE FED wants banksters to have 100% debt and ZERO reseves(!).

 

"Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system" -- Federal Reserve February 10, 2010

www.federalreserve.gov/newsevents/testimony/bernanke20100210a.htm#fn9

PS: And remember, Bernanke during very recent CONngressional questioning he told them he had no idea (per se) why gold is doing so well. The lies are getting thicker by the day as the Fed is trapped with their back against the wall. Like any trapped animal, they will do ANYTHING to break out/free to survive.

Short dollar, long gold imho.

PPS: Some REMINDERS about Bernanke and his wisdom, who as you know is the head of the Federal Reserve:

www.youtube.com/watch?v=7rmbiuEDKJU

www.youtube.com/watch?v=qj7ju-TV8bg

Rusty_Shackleford's picture

Bingo.  Will second both of these videos.  They are all you need to know about Fed economists.

 

www.youtube.com/watch?v=7rmbiuEDKJU

www.youtube.com/watch?v=qj7ju-TV8bg

Dicite justitiam's picture

Rusty, I get your point, but...these videos are not entirely relevant.  In fact, one of them is not even accurate.

The first video is decent.  I liked Eckman's revelation of BSB's emotional betrayal from his expression.  However, feeling scorn and anger in that situation is not surprising.  My gut tells me BSB was prevaricating in the clips that were shown.  But that's a big part of his job, to deceive those that wish to know the intention of the Fed.  I'm not saying BSB is all unicorns, ponies, and rainbows.  I'm not saying I <3 the Fed.  I don't.  But this video did not much inform me.

The second video was factually misleading.  BSB said that 'many foreign banks are short the dollar'.  The video is dramatically interrupted: "LIE.  There is no shortage of the dollar."  We shouldn't condone hysteria and ignorance like this.

I don't care much for the essayist, I don't care much for the Fed, but propagating these videos as essential source material does little to enhance the credibility of ZH.

MrTrader's picture

Please define "not too much debt". Is this a) 50 % of your anual income after taxes, b) 25 % of our absolute savings, c) 65 % of your monthly disposable income ????

A Nanny Moose's picture

"Neither a borrower nor a lender be"

ZERO sounds fine to me, but this is a personal matter, in the end, of Risk vs. Reward.

Leo Kolivakis's picture

"I work as a rank-and-file PhD economist operating within a central banking system. I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems."

LOL, this is where I stopped reading...what nonsense! The problem with some economists is that they start believing their gibberish and do not acknowledge the fraudulent foundations of their "scientific" methods. A little more humility will do this guy a lot of good.

Catullus's picture

I'm Ron burgundy. I'm kind of a big deal. I have many leather bound books and my apartment smells of rich mahogany.

fajensen's picture

My sisters husband is an economist. He ranted all the way up from 2000 to 2008 on how it was better to borrow money against their home than earning them based on some long-winded arguments; He went quit er when he got sacked the first time and totally silent after 2009.

The whip teaches.

inflation.studentloan--0's picture

I agree that the whip teaches, but she works in the public sector.  So the only place she's seen a whip is at the office parties.

Trundle's picture

Then the entire state of California is a Ph.D. economist.

Racer's picture

And I suppose we are supposed to listen to someone who said 'sub-prime is well contained' when it most definitely was not.

Sudden Debt's picture

They've right so many times but never noticed the light at the end of the tunnel was a raging train :)

demsco's picture

Stop questioning our power and expertise, damn it! We are the ones who have successfully maintained order within the financial system... oh wait, never mind.

akak's picture

Tiny Timmy Geithner does not have a PhD in economics (only a masters, the horror!), and Obomba has NO degree in economics at all --- does this mean that we can safely disregard anything that either of them have to say regarding the economy?

WaterWings's picture

Yeah, Timmay can't handle his own tax preparation even though he is head of the IRS and Hussein keeps violating the Constitution because he's a Constitutional expert.

We're in trouble.

HelluvaEngineer's picture

Hmmm...I'm gonna go out on a limb and guess this wasn't a co-op student.

Tipo anónimo's picture

He saw the emperor w/o clothes.  That would be enough to explain anyone's intoxicated mid-day ramblings.

Hansel's picture

Open-minded people should ignore everyone without a PhD?  Whatever.

FEDbuster's picture

Wash your blue pills down with this kool aid and go back sleep.

Paul E. Math's picture

That was the line that jumped out at me too.  With double-speak like that, Kartik can teach Greenspan and Bernanke some new tricks!

Cistercian's picture

 The appeal to credentialism was hilarious.The whole paper was an epic fail.

  To say his abilities are marginal is to give him far more credit than he deserves.

 Pay no attention to the man behind the curtain, Economics is hard.

 FAIL

akak's picture

Fully agree, although it hardly even really needs to be said.

I picture him saying it like George Bush would have, in a whiny, petulant tone: "This economics stuff is hawrd!"

LoneStarHog's picture

Examples Of Top Inventors/Researchers With NO Degree!

 

> Preston Tucker

> Vivien Thomas

> Robert Kearns

> Temple Grandin

> Orville & Wilber Wright

 

Just five of thousands who with NO DEGREE proved to those WITH DEGREES how things SHOULD be done.

Shut Down The Damn Federal Reserve And Use Its So-Called Economists For Speed Bumps!

Djirk's picture

Yeah they have done a bang up job of preventing market bubbles and smoothing out the economic cycles since their creation. Hmm 1929 great depression was 16 years after the Fed creation?

When I was in economics you would get thrown out of class if you did not agree with the premise that markets were rational. Anyone who has spent time on a trading floor with all the snot nosed money lovers knows that fear, greed and envy rule the markets.

Whoa Tyler, I got thrown out of my Phd studies can you lighten up on the math problems for comments?

LMAO's picture

 

Yet another fine example of how the FED redefines the word "Research" to suit their own purposes.

 

LMAO

TheClub55's picture

Wow just anther example of our tax dollars being wasted away by stupid governmental employees... she really instills zero confidence in the Fed (not that I had any to start w/).  I am betting if forced to work in the private sector and forced to actually do something "productive" her wage would be somewhere in the neighborhood of $7 per hr plus tips.

Pinky's picture

The Federal Reserve IS in the private sector. It's not a government agency, it's privately owned. I thought everyone who reads ZH knew that. Guess not?

and . . . "she?"

MarketTruth's picture

Exactly, and here is a list of the PRIVATE PEOPLE/MEMEBERS who own the Federal Reserve:

www.save-a-patriot.org/files/view/whofed.html

FEDbuster's picture

The research on FED ownership needs updating.  I would like to see the names and ownership interests as of 2010. 

My understanding is member banks own the FED and the largest members own the controling interest.  I would think the CEOs of the six major US banks have the most to say about extracting wealth from America and bailing out their broke ass banks.

MarketTruth's picture

Agreed it probably needs some updating, yet it is not like one can simply ask the Fed who are the actual owners. Still, the above link provides some insight.

grunk's picture

His CV:

http://www.richmondfed.org/research/economists/bios/pdfs/athreya_cv.pd

 

 

You think he uses these lines to pick up a woman in a bar?

Sudden Debt's picture

I'd sure like to read one of her papers :)

“Unsecured Debt with Public Insurance: From Bad to Worse”, joint with N. Simpson Journal of Monetary Economics, 53 (2006)