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The Fed Has Lost It; Publishes Essay Bashing Bloggers, Tells General Public To Broadly Ignore Those Without An Econ PhD
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:
h/t Bruce Krasting
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I for one, do NOT care how rich others get, so long as they aren't doing so by taking currency away from me (usually at the point of a gun!)
I've met 3 billionaires in my life (all made their money in finance, trading forex mainly). And I've met another handful of €100mm+ individuals.
And not one, NOT ONE, of them even attended college. I understand people will have a hard time believing this on the Internet but I swear it is completely accurate.
Academia is over rated.
A phD in economics is one of the easiest degrees to get. Much of the "cut n' paste" activity an economics student learns is applied when they get their phD.
Shades of Spinal Tap, the Fed-speak BS meter just hit "11!"
The oligarchy is afraid of loosing control. this is just part of the "information control system. It's beautiful.
"this is a hrad subject, trust us, don't listen to alternative voices,
Don't pay to much attention while we rig the system against you.
Would it be something like an Occam's Razor if an econ PhD had a blog? muahahaha
I like his picture. It also raises questions about whether one should accept opinions of those who aren't old enough to shave.
More seriously, what one attains from a graduate education is an understanding of what has gone before and the research tools one uses to do investigation. One might need such tools to conduct a study in a way that would convince other economists. One does not need such tools to apply logic and common sense to the things that we're confronted with every day.
Some realities in Economics and in other disciplines are often counterintuitive and lead to laypeople often forming incorrect opinions. That's no reason to dismiss all opinions from informed, logical commentators. The correct way to refute poorly formed opinions is to engage with fact and logic.
Engaging in the manner shown by this fed researcher represents extremes of arrogance and hubris.
He needs some good Brie or Cheddar with that whine.
Thanks for your name, sir, we have picked out your Christmas necktie.
(Pardon me! Translation of the Article's Direction from Fed Speak reveals):
"The Fed has Completely Lost it." Just as TD entitled it.
I was thinking that Limburger would be more appropriate. Don't waste the good brie and cheddar!
Two of the brightest people I ever met have no degree, let alone PhD.
A person I knew at University doing medicine did NOT know how to change a plug (literally!).
DavidC
i just emailed this DB to ask him if, based on the premise of his argument, i should discount anything he says in favor of other fed economists who got their phd at harvard, yale, or any other schools that may be in front of Iowa.
Educated far beyond one's intelligence....
I've just read it - what a load of tosh.
DavidC
Just another sign of the continuing decay and slide. Don't have any real arguments
or retorts? No problem, just shoot the messengers! Things are getting increasingly surreal.
Perhaps it is a question of UNLIMITED intellect? You know, as in forming thoughts so rapidly that one is unable to distinguish quality-thought from random-thought?
I think the mental health field refers to this colloquially as Word-Salad.
this is all you need to know about the economics profession
http://buygoldsilver.org/2010/01/economics-its-all-lies/
Yes it is. You're a fucking moron.
"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."
problem is not the lack of intellect ... but lack of common sense.
lol, now that's pretty funny. My PHD econ professor actually straight up told the class that economist are professional bullshitters.
Do not arouse the wrath of the great and powerful Oz!! The Great Oz has spoken. Pay no attention to that man behind the curtain....
In summary..."How come so many people dumber than me get so much more attention than me?"
Kartik, if you so smart why is your organization's biggest idea to date is dropping money from a helicopter?
Ooooh! Bulls-eye! Ouch!
To be a PhD in economics (or for this matter in any other field), one must get it from an university consul overwhelmingly populated by people with very limited real life experience who failed to succeed outside academics walls.
This is the thing that has always bugged me about most economists.
The economics profession seems like Wall Street: when they get it (economic predictions and policy) right, they make money; when they get it wrong, they still make money, but other people pay.
"Big brother knows what is best for you".
I went to the emergency room with bad abdominal pain. I was given some suppositories (laxatives) and sent away.
Came back 2 days later in agony and they tried to send me away with some prescription, but finally my family intervened and they then ran some tests and lo and behold it was gallstones and a badly infected gall bladder. Emergency surgery was required.
I dont have a PHD but damn, when a MD gives a person with bad gallstones somthing to stick up their ass, I too kinda question the supposed superiority a degree is supposed to bring.
My mother an RN with a mere 2 year degree, suspected the gall bladder and insisted on the ultrasound test, because she noted the symptoms like the fact that I was basically turning yellow by the hour. Note to MDs: Patients turning from white to yellow means they are beyond the power of ex-lax to treat!
People with PHDs tend to come from families who think their status automatically equates to superior intellect in all judgements.
Hell Bush2 was an Ivy leaguer, If Daddy Bush had wanted to make it happen, I suspect W would have been "Dr Bush".
Ron Paul is a Dr., and he thinks the Fed is unnecesary and that their policies are harming America. I think hes right, but thats because his judgement is sound, not because of a degree on a wall.
There's a great joke in here somewhere concerning Economics PhDs, Academia, this yahoo at the Fed and Dr. Paul's Gynecology practice. I just can't put it together at the moment.
Anyone?
Gardasil??
That doesn't prove that the 20% accepted is not pure, unadulterated LUNACY.
+1, and studies show most research papers are WRONG. Of course, those are studies too. ;-))
As a further joke, the economics "professional" journals are STILL publishing peer-reviewed papers as to why we won't get a financial collapse, and why housing is NOT in a bubble. Economists are morons.
lol, no, no it doesnt, all it proves is that only the top 20% of lunatics get any attention.
...unless they are randomly picking papers to publish.
Nah, it's probably not that. A monkey randomly flipping coins to pick papers would increase the quality of the publications from what they publish now.
Economics in one lesson:
People tend to be lazy. Their desire to be lazy is generally, though not always, nonlinerally inversely associated to their desire to avoid starvation.
Supply and demand.
Other than that, attempting to rationalize much more is a waste of a life and as economists say, "malinvestment">. What was it that Nicholson said in "As good as it gets" when asked how he created his female characters:
"how do I create these (economist) ?" "Oh, that is easy, I just think a man, and then take away reason and accountability."
Just for a recap:
http://www.youtube.com/watch?v=HQ79Pt2GNJo
you can take Steve "Lies"man, and Dennis "kneel" (at the foot of Obama) too. Please.
How many thousands of highly educated, PhD-level Marxist economists and academics did the USSR have at their disposal, and just how much value did they contribute to their society? And I am sure that they considered themselves just as indispensible as do today's American pro-Keynesian, pro-central banking economists --- who are just as wrong as their Soviet pro-establishment counterparts.
The USSR had a qazillion. All paid and supported by the state. All saying that the state can best regulate the economy. Quelle surprize.
I highly recommend Yves Smith's excellent book ECONNED which dismembers much of the theoretical underpinnings of the Fed's policy apparatus. Maybe this little ditty from the Fed is a lame response, as ECONNED has been in Amazon's top seller lists in economics for months.
Yves runs the awesome blog naked capitalism for those not familiar.
As for the economists, those with any sense don't put their investment in the degree at risk by saying what they know, while those who believe their own 'stuff' are the saddest of the sad.
What's the difference between good social science and fables? Data...if you're lucky.
"those with any sense don't put their investment in the degree at risk by saying what they know"
that applies to about 99% of the people out there:
"those with any sense don't put their investment in their job at risk by saying what they know"
"those with any sense don't put their investment in their 401k at risk by saying what they know"
perhaps if the Fed's army of Ph.D. economists was able to prevent some of the crises we've been having, or even warn us about oncoming crises, or if they'd tell us about the crises a bit earlier than 6 months INTO the recession.... or if they had balls to oppose the Maestro, who now admitted that all that time at the Fed he was wrong...
Ph.D. is not a guarantee of having common sense. If anything, Ph.D. isolates you from your common sense. It teaches you to trust mathematical models more than your own eyes,and makes you so arrogant that you dismiss everyone and everyhting who do not have a "Ph.D." behind their signature....
Not only did most economists miss the GFC, they ridiculed the few people, like Roubini and Rajan, who predicted it. This is why I regard Fed economists with contempt.
It's all about creating confusion so that you don't figure out what they are scheming.
"Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said." Alan Greenspan
"Truth is so precious that she should always be attended by a bodyguard of lies." Winston Churchill
Kartik can take a long hard suck on my ass.
The only thing worse than a nerd is a whiny nerd.
The only thing worse than a nerd is a whiny nerd.
lol at his bit about peer-reviewed journals. "I've had a lot of my crap rejected and torn apart by editors - so I must know what I'm talking about!"
Besides the only reason the journals reject 80% of the submissions is because there are hundreds of desperate-for-tenure junior faculty all submitting useless research to the same "prestigious" journals.
It always amazes me, the bubble that these academics live in.
Hire that moron!
When does Tyler's TV show begin? I can't wait to see the first episode of "FUNNY MONEY". Tyler can invite all the PHD's to the show for a public ripping.
Fire that moron!
Assuming this isn't a joke, this really takes the cake. Economics is hard so don't listen to people who try to reduce the concepts to a tractable, digestible form? I agree that it can be a complex multivariate problem, but over time, different factors emerge as primary drivers, which may in fact make things incredibly simple. Drilling for oil a mile down is incredibly complex too, but after the accident what more does one need to know other than that it is time to plug the hole? Engineering is hard too, and I have a PhD in that, but I'll take good ideas wherever I can find them and sometimes that means looking in unlikely places, and from unlikely people. Participation in an education system or degree program is not a prerequisite to develop useful or brilliant insights. This paper and the author should be put back in the box. Thank goodness we have ZH.
New from Mattel: Fed Economist Barby:
"Math is hard"
"Let's go shopping"
"I can't get published ...waaa!"
I would offer a comment, but no one on this site has a degree in scatology.
Ludwig Von Mises would disagree with the honorable Dr. Athreya - does the honorable Dr. pretend to challenge such a man who wrote:
"The early economists devoted themselves to the study of the problems of economics... They never conceived of economics as a profession... The development of a profession of economists is an offshoot of intevention. The professional economist is the specialist who is instumental in designing various measures of government interference...
"There can be no doubt (that among thousands of these economists) include extremely talented individuals... but the philosophy that guides their activities narrows their horizon. By virtue of their connection with definite parties and pressure groups, eager to acquire special privileges, they become one-sided...
"There nver lived at the same time more than a score of men whose work contributed anything essential to economics... But there is a demand for thousands of university and college teachers... Scholastic tradition requires that each of them should attest his worth by the publication of original contributions...
"Economics does not allow of any breaking up into special branches. It invariably deals with the interconnectedness of all the phenomena of action.
"Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything... There is no means by which anyone can evade his personal responsibility. Whoever neglects to examine to the best of his abilities all the problems involved voluntarily surrenders his birthright to a self-appointed elite of supermen. In such vital matters blind reliance upon "experts" and uncritical acceptance of popular catchwords and prejudicies is tantamount to the abandonment of self-determination and to yielding to other people's dominion. As conditions are today, nothing can be more important to every intelligent man than economics.
"Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen."
Human Action pages...861-875
Nice quote!
There are many good reasons why the field used to be known more properly as political economy.
Much stuff can fall under the "The early economists devoted themselves to the study of the problems of economics... They never conceived of economics as a profession..."
Physicists at the start did not conceive physics as a profession.
Hunters at the start did not conceice hunting as a profession.
Etc...
Apparently, the very fact that a new strand of activity might not be perceived at its start as a profession and needs time to validate itself as a profession is too much for some who requires intervention to get this to happen.
You can make anything complicated enough to employ an army of people. But maybe you don't have to.
one look at your avatar and all i read was "my boobies are large enough to feed an army of people. got milk?"
We women don't appreciate how strong the impulse to breast feed is for men.
"Two things are infinite: the universe and human stupidity; and I am not sure about the universe."
-Albert Einstein
Einstein was apparently not acquainted with the arrogance of modern economists.
to paraphrase Bart Simpson:
Pffft! Economics is easy, state capitals are hard.
Let's get our commerical bank nomenclature correct. AVP = ASSISTANT Vice President, not ASSOCIATE Vice President.
Anyway, the spirit is right as an AVP is a person of zero consequence. 3 years at the bank and a pulse >>>> Congratulations! You're an officer of the bank.
coming from the same trailer trash fucktards who claimed in 2008 that there was no economic risk from the mortgage crisis and that the economy was in perfectly fine condition, i consider this report from the fed to be more lies and crap....
24.7 trillion us dollars later, the depression is about to intensify - all thanks to these brilliant economists....
1) Canada's banks can leave the Swiss frozen against the cushion the best day they ever saw. When the shit hits the fan the Canadian banks come up smelling like a rose. Not just this time, but every financial crisis for the last 100 years.
2) Academic degrees count for little in Canadian banks compared to experience and working your way up through the ranks. In fact no Canadian bank president had a college degree until the 1980s. True.
The arrogance of this ass is amazing. He is a prime example of what so many have been warning about that us "little people" need to be silenced so they can implement their "Final Solutions" to the economic and sociological problems of the world. Thus the idea that censorship and restrictions upon the ability of bloggers, broadcasters, and commentators to offer rational solutions and observations are acceptable to his kind. It is a prime demonstration of why the Federal Reserve finds itself in the ongoing crisis unable to cope with the issues it faces and a major reason our Founding Fathers warned against establishing a central bank.
The Fed must be eliminated so eggheads like this moron can go on to more fulfilling careers such as offering customers Happy Meals or super-sizing their orders.
Because he is obviously unable and incapable of functioning in the private sector on his own.
Add this fellow to the list of those who will be on the receiving end of a pitchfork before this is done.
This guy starts off insulting people and businesses who may be "terrible at forecasting". He should have listened to the Maestro first. In Martin Mayer's book "The Fed", he tells of a Greenspan speech made when he was Chairman in which he said something like:
The fact that the Fed, with more economists on staff than any organization in the world, has been wrong in its past 12 quarterly economic forecasts does not mean that it will be wrong on the current forecast.
Can't find the quote exactly, but that was the gist. Sir (to be ) Alan was likely half-joking.
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."
Norman, coordinate! This human wants me to not be open-minded. But if I should not be open-minded, then I should not have listened to him. But I listened to him because I am open-minded. But he wants me to ignore them, which means I would not be open-minded, but then I should not listen to him, yet the message was for me ...Illogical! Illogical! Please explain! You are human! Only humans can explain their behavior! Please explain!
Benjamin Harcourt Fenton Mudd! Have you been drinking again!
[Dons asbestos suit...]
The guy (essayist) says, in a self-deprecating way, something to the effect of "Don't necessarily believe that the bulk of bloggers who cannot balance their checkbook have the ability to proscribe economic policy. Those who can balance their checkbook still may not have thought of everything they need to in order to avoid the risk of coming out with a stupid conclusion that anyone with a modicum of knowledge couldn't shoot down quickly."
The bulk of ZH posted comments are one-liners which do nothing to say anything other than "I knew a guy once who was special" or "this guy is so obviously an ass." Some of them misunderstand the vocabulary used and get insulted by the fact that they are lay people. We have one person saying that some inventors (whose job it effectively is to fail miserably many many times until getting it right once) didn't have degrees and showed a whole bunch of people who did have degrees and did not become super-successful inventors that one didn't need a degree to invent stuff. We have other people saying that because his current boss said something which other people now think of as asinine, and other people blame the institution for not having shut down the party early enough, it is proof positive that that person, his boss, the institution, and the profession, are wrong. We have people saying Roubini was right and these guys were wrong, therefore the guys who were wrong were useless. That said, some of the same people currently express opinions on these boards which conflict with Roubini's current thinking. By that definition, if Roubini is wrong, the commentary here is meaningless; if the commentators are wrong because Roubini is right, the commentary is useless.
Not a single person on here has actually addressed with an ounce of seriousness the point of the ESSAY (not "research") by a guy working at the Fed (and specifically not published in the name of the Fed) - that just like almost all other human endeavors where a certain time applied to the study of that endeavor yields expertise and the average armchair commentator does not have the chops to play with really complex workings. The level of understanding is probably not left only to PhDs (and the guy mentions "PhD level" work rather than a PhD as a minimum requirement for substantial enough understanding) and I can agree with that. I know a few people with utterly profound understandings of macroeconomics who do not have PhDs. What they do have is decades of experience in trying to study the field, without the PhD, in order to better understand the complex relationships of economic variables, constantly working to exclude correlations and causality.
This reminds me of a soccer game among a large group of 6-year olds. Everyone has to crowd around the ball, try to kick it in some direction - any direction, and then it finally escapes the circle and everyone runs around it to start whacking at it again, with almost no understanding of how the game is played, or really what the point is. But it sure is fun. And everyone will go home and say they played soccer. And some of the kids will get complemented by their parents and a 'coach' for how well they played. Obviously, the kiddies playing with the size-4 ball are not only destined to become professional Premier League stars (like Mr. Rooney) but they are ALREADY stars.
CD complains above about the "group think" conditioning embedded in the whole CFP(R), CFA, CLU, ChFC thing (which I do not disagree with). How much groupthink is exhibited here? CD, would you trust your clients to the average level of comment here for a year?
'd rather get my open-heart surgery done by someone who has studied in a groupthink atmosphere like medschool and has done his dozen-plus years of groupthink in internship and servitude at a hospital than asking the guy who responds to questions on WebMD for $3.99 a minute. I'd rather get my house repaired by a builder I trust than the guy who does "Flip This House." I'd rather have my economic policy set by someone who had spent years digging around the numbers and studying their effects than by the average financial blogger who is looking to get more GoogleAdWord click-throughs.
[asbestos suit firmly in place]
There is definitely some wisdom in your comment. I think group think is something that is insidious and dangerous and one most always be aware of when it is occurring, no matter what the forum or context.
If you wish to have your leg humped by the Keynesian dog, so be it.
But the ability to absorb and review varioius opinions from different sources does allow one the intelligent ability to discern if the PhD was in fact provided a theoretical basis which produces factualy incorrect results. Your comparison of Economics to Heart Surgery and the weak introduction of the "groupthink" argument is typical of the liberal elitist idealism which delivered us the idiocy we have witnessed within our macroeconomic policies for the last ten years.
Medicine or the study of it, is a somewhat subjective study based on scientific facts which enable the heart surgeon to study and become successful outside of the groupthink mentality. It is a purely individualistic achievement as so few individuals are capable of understanding and performing what is required to become a heart surgeon.
Economics is an objective field of study which means that the "groupthink atmosphere" you adhere to is also a parallel of the lemming principle where flying off the edge of the cliff might seem like a bad idea so everyone else is doing it, then I must also. You are subscribing to the very tenets of Keynesian theory when you stated:
Thus you would prefer to get incorrect information or policy development from individuals engaging in a theory which violates common sense and phsyical observation and would rather put down the blogger who might be correct and have actual facts on his side, based on the statement above. It is this narrow minded elitism which has created the nightmares of the Federal Reserve System, Keynesian economics, and now the implosion of the U.S. financial system and the inability for those sitting in their ivory towers to accept other ideas or engage in honest debates on facts rather than theories, which will ultimately create a long term period of economic and political decline for our nation.
Yes, that was the assertion: The economy is complex, with moving parts, and some things are complicated. I don't dispute that.
We can disagree at substantive levels. Many non-PhDs are very smart, and very well-read. The first time somebody needs to mention he has a PhD because he thinks it to be a defense while he's losing the current argument merely demonstrates the extreme degree to which he is an idiot. (A PhD is irrelevant when the argument is entirely based on supported reasoning.)
However, your goal in a "serious" rebuttal is absurd on its face. Economics in this context is mere central planning. The essay asserted that the "little people" should not comment on the central planning, because they are not the central planners. The fact that central planning is all about the arbitrary selection of "winners" and "losers" seems to be lost on you.
Setting interest rates picks winners and losers. The Fed buying MBS crap at par picks winners and losers, transferring risk to the taxpayers. Like Galbraith, they are playing with ephemeral ideas like "maximizing social value". It is a "soft science", like philosophy (and in this context I'm using the word "science" quite liberally). Do you want a serious discussion on philosophical views of life?
Wow, what an absurd waste of time.
Thanks for at least a well-reasoned response, at least in the first part. I think the essayist could have been a little less liberal with his use of the word "PhD" and that would have served him better. I did not think he used it as a defense at all, and I did not see him to be losing his argument. He presented it, and noone has rebutted it. He clearly states that untrained individuals are likely to come up with pronouncements which are correct, but that is clearly not his point. He states his points clearly. The main point of his essay is in the second full paragraph of p3. Nowhere in his essay did he talk about central planning. Nowhere did he say that "lay people" (which is not the same as "little people") should refrain from commenting, but instead that "lay people" should not expect that policy pronouncements by other "lay people" who are not equipped to make the right analysis are likely to add new light. He very specifically goes on to say that said lay people may be more intelligent than he is, and may be more than able to match wits with him. All of that is beside the point.
I do not understand your comment...
I did not make any comment about the validity of central banking. I don't see how it is relevant to this discussion. The fact that 'central planning' sets interest rates and changes in interest rates may 'pick' winners and losers is an economic truism. Two sides to every bet. When rates change, one will win and one will lose. Is it the central planning portion which bothers you? Should policy rates be set by a random number generator? Should there be no policy rates? What is your point? I simply said I would rather have mine policy rates set by someone with a history of looking at the relevant relationships than by the average "financial" blogger. I stand by that. Perhaps you would rather put your stakes with the blogger. It takes all kinds to make a world.
As to the "Fed buying MBS crap at par... transferring risk to taxpayers", that is amateurish. If the Fed had done nothing other than lower policy rates to zero, and the Treasury/govt/Fed had gone the TeaParty route and said
Many banks would have gone under (that would have lost money for shareholders). Lots of the debt would have been cleared at "catastrophe event" prices (i.e. most people who have pensions would have suffered substantially). Most companies who had either stocks or bonds in the DB pension funds which they are obliged to make good on would have seen shocking losses. Many, both listed and unlisted, would have gone under and disappeared. There would have been little new capital able to be allocated to capital-raising. There would have been little new capital available for allocation to set up new banks to take over the businesses of all the failed ones. There would have been almost immediate cuts in Welfare and Social Security payments, and worsening of eligibility terms. There would have been massive unemployment. Taxes would have gone through the roof - who knows how high... And the single most profitable enterprise in the world would theoretically have been the Federal Reserve. It may have been anyway.
Why say this? It ALL goes to the taxpayers in any case. Those who pay no tax... well, they pay no tax. Those who do pay tax, well, they pay all of it. With lower private sector spending causing higher deficits (lower growth, lower tax revenue, constant spending), even with ZERO spending increase to make up for private sector weakness, any effort to keep the deficit flat to previous year would transferred the COST (not risk) to taxpayers. Unless one takes away entitlements, taxpayers will pay. No way around it. It simply becomes a matter of whether they pay now, or they pay later.
Taxpayers who pay cash today have no free lunches. Taxpayers who pay in the future may have free lunches. Hard currency in paper form is interest free debt for taxpayers, and comparative demographic advantages are a kind of free lunch which manifests itself over decades. The US enjoys both of these free lunches (at least when comparing US demographics over the next several decades with that of other industrialized nations). Taxpayers in the US have a couple of burdens most taxpayers worldwide do not have - a government/society occasionally bent on military intervention (no judgment right or wrong here, just that it is expensive) and government policy on healthcare - and this more than makes up for the advantage taxpayers get from the fact that the USD is still (for now) the currency of choice for drug dealers, African pirates, kidnappers in South/Central America, arms dealers, diamond smugglers, and the occasional user of coke. Americans can more easily change the ones which affect them badly than the ones which affect them well. Why don't they? It isn't because they listen to central bankers rather than bloggers.
The Fed is nothing but a central planning institution. It sets interest rates, spends a $Trillion at a time with no review, and establishes opaque "social policy goals" that it seeks to promote. It literally prints paper to secure real assets (e.g., the Fed currently owns shopping malls).
You might want to make this an economic discussion related to an essay by an "economist", but that is not correct. This is an essay by a Fed central planner masquerading as an economist.
Most amazingly, economists don't seem to notice that, which further illustrates how screwed up is that field of endeavor.
I am a lay person. I am eminently qualified to review the Fed policies, as I must pay for them. Your point here is that I am unqualified to make these policy decisions. I assert in return that the Fed central planners are not qualified to make these decisions:
No, they are not geniuses, even in their field, as their assertions and conclusions are repeatedly demonstrably incorrect.
In fact, some of them have such a screwed up history of failure with no successes it's amazing they draw a paycheck at all.
The Fed does not offer economic analysis. Rather, it merely rationalizes central planning practices through economic assertions of dubious merit. When the Fed sets interest rates, direct purchases Greek bonds, and direct purchase MBS securities, it is engaging in social policy. Central planning. Social engineering. This is not "economics" by academics. Rather, they have decided who should be winners and losers, with the taxpayer backstopping all their actions, without the benefit of representation nor review.
You seem to think this is an economic discussion. It is not.
For example, an economic discussion would address the tradeoffs of direct-purchase of Greek bonds, with non-trivial risks and ambiguous benefits. However, a decision was made in support of some "social utility" that is not articulated to the public. That's not economics: That's sociology, or perhaps public policy (and used to be a function through elected representation). It's not economics.
In the "real" world, interest rates are set in the marketplace, and is an indication of risk. The Fed does not need to exist for people to decide what interest rate they would demand to loan their money.
So no, there need not be any Fed funds rate.
You must be very pleased to have such confidence in an unelected central planner that has such control over your life and society's behavior.
You must be an economist. You just stated that the Fed's actions will not impact the value of the dollar. In contrast, I assert the Fed's actions will lead directly to a US sovereign default and the elimination of the dollar as a unit of currency. I expect that default by 2012.
But then, I'm not an economist.
You will respond that we have fiscal problems, the fault of Congress. I agree. I will respond that we also have monetary problems, which is entirely the fault of the Fed. Both fiscal and monetary policy is so screwed now that US sovereign default is imminent. Amazingly, economists have no understanding of math and are too stupid to see that.
You then go on to state:
We get bad stuff either way. The fact that you're rationalizing that the Fed's actions will give us "less-worse-bad-stuff" means you're engaging in social policy, not economics.
The Fed "economists" are mere central planners. They do very little economics. Assertions to the contrary are silly.
That's why the "lay people" are qualified to comment on Fed policy. They are suffering under central planner decisions made by the Fed for the sole purpose of promoting some "social good".
You and 200 million (actually if you only include taxpayers who on a net basis pay more to the pot than they receive, the number is far smaller) "eminently qualified" people may be qualified to review Fed policy. I said no different. He says no different.
As to the market setting interest rates, this is true. The market sets some rates. It is true that for hundreds of years, and in many parts of the world, for thousands of years, economies existed and functioned without central banks but for a very long time, people have operated with the 'benefit' of policy rates in one way or another - usually the rate the government was willing to pay. I stated above that I have not come to a conclusion that a world without central banks would be preferable. It doesn't mean I have not thought about it. If interest rates are only set by market functions, that would probably be OK, sometimes, for some situations. I'd hate to have to rely on the rationality of market function for all rates at all times to be set by market functions.
mikla said...
I said no such thing. I said only what I said.
mikla said:
I did not rationalize the Fed's actions as much as try to explain that whether or not monetary policy was engaged (i.e. Case1 Fed buys MBS and fiscal policy expands to offset private sector deleveraging, or Case2, there is no fiscal/monetary offset and 'responsible' fiscal policy requires higher taxes on a cash basis to pay for near-term cash outflow), taxpayers will pay more taxes. Your choice of whether you pay cash or debt. The decision of which one should be preferable for the economy is 'social policy'. No argument there. The 'implementation' of economic policy is very much 'social policy'.
I'm having difficulty reconciling this with the essay and our thread. Elsewhere in the comments, a distinction was made:
Is this correct?
I should set the rate for loaning my money. The Fed only exists to set rates for loaning "public" money, and IMHO they do so badly. You make no argument why they should have this authority.
Ultimately, the Fed shovels taxpayer money to TBTFs, who reported their "best" years in history, with the biggest bonuses in history, after the date they all should have been liquidated in bankruptcy. I fail to see the social value you place on the Fed, even for the past fifty years.
Especially in this environment, arguments for "assisting liquidity" are demonstrably untrue. We have a solvency problem, not a liquidity problem, and spending a couple $Trillion did not improve liquidity at all. The Fed has made the problem worse, leveraging taxpayer risk, and ensuring US sovereign default.
The Fed fundamentally misunderstands the problem. Only the Fed should discuss this social policy, with their demonstrably poor track record?
We agree the Fed is establishing tradeoffs, and engaged in social policy (social engineering).
Now the problem: The Fed asserts the bloggers have no insight on those tradeoffs. The Fed discusses, plans, and executes without review. In a society with democratic institutions where the government rules with the consent of the governed, I find their assertion and behavior highly offensive.
In rebuttal:
Their response is to assert I am not qualified to review their policies (hence, the essay, for the laymen to "ignore the bloggers"). That is cowardly, vacuous, and not at all satisfying for the taxpayers that will suffer their social experimentation and pay for their mistakes.
Thank you for a reasoned response.
Yes. We agree. Economic policy implementation has "political economy" at its roots and goals. That said, I think the original essayist did not assert bloggers have no insights on the tradeoffs. He very clearly stated that non-pro commentators had intelligent things to say, and could more than match wits with him (and by extension, his type). His clearly stated position was that the likelihood of an untrained commentator adding something radically new to the discussion in terms of providing a fully-integrated solution was small because of the lack of training in the exercise of analyzing the tradeoffs (and feedback loops embedded in the tradeoffs) with the necessary rigor. He did not say it was impossible. Simply unlikely. He did not say such expertise was only at the Fed. He simply said the public is not likely to be better off trusting an amateur than a professional at economics - just as was the case for a number of other professions.
As far as I can tell, he made ZERO representations that lay people are not qualified to review their policies. In your 4-point rebuttal, you say in #3 that the public has no ability to review the tradeoffs of Fed optimization and that historically this was the responsibility of the legislature. Historically, it was not the responsibility of the legislature to review each and every policy movement, but to fire the head of the Fed, and influence Fed policy formation through changing the tools available to it through legislation. That power is still there. As to your first point, I agree. As to your second, I have looked, not deeply, but have not seen proof of that (but I do not exclude the possibility you do have proof). That said, just because some blogger asserts (because he read between the lines) that the Fed is in violation of the rules of its charter doesn't mean it is true, no matter how well-intentioned that blogger is. As to #4, assertion is fine. Analysis would be better. I assert they have a track record which is difficult to assail. It is not as if we have lots of different examples to compare. How does one say that the Fed should have done something different in the period of 2001-2006? Should the Fed have actively tried to prick a housing bubble just as the protector of the public, Barney Frank, was trying to get no-money-down mortgages for everyone? Is that the "review" you were looking for in #3.
You should and do set the rate for loaning your money. The Fed sets the rates for loaning public money. I make no argument why they should have this authority but such was not the point of the thread. You make no suggestions as to who should have authority in place of the Fed. Everyone criticizes but very few actually proscribe a practicable alternative solution.
Finding another autocratic decision-maker is one thing. Arguing that the Fed governorship should be an elected function is a totally different kettle of fish. I personally think that doing so would be tantamount to disaster.
I ask whether you would rather have Ms Lincoln, or other elected officials set government monetary policy when they so obviously cannot sink their teeth into fiscal policy in any fair and reasoned way which ignores the coincidental idiosyncracies of the election calendar. If US Reps and Senators were elected once every 10 and 20 years rather than every 2 and 6, would they conduct fiscal policy any differently? If they would, it is a sign they should not be in charge. If separately elected, how is that done? How does one reconcile the fact that the majority of the eligible voting populace pays zero net dollars in taxes.
In your opinion, if half the US (and look at Fed data for the bottom half of households (i.e. sub-median, not sub-average) has the net and gross leverage position that they have, and on average they do not net pay taxes, how would they vote for monetary policy? Those with little cash and little equity but a house and lots of debt against it will vote for free money handouts on weekdays with a "d" in their name. They are inherently biased to desire inflation at the cost of assets - they are net short money. Given that some 90% of the tax burden is paid by 10% of the populace, one could not reasonably expect a publicly-elected fiscal policy and publicly-elected monetary policy would act in the best interest of taxpayers. It will act in the best interest of the masses who elect them, and that does not happen to be taxpayers. Do we expect that the same masses who vote for policiticians who spend in ridiculous ways would vote for ultimately responsible but near-term punitive monetary policy because it was the right thing to do?
I know how I'd bet. Very few people are willing to explicitly give up their individual good for what someone else tells them is a greater social good. Ask 1000 people if they want to pay something now they feel shouldn't have to, or get someone else who is more "deserving" to pay later and the vast majority will say that the other should pay.
The assertion is that the public should trust the Fed (because of their expertise and discipline). That is an unsupported assertion:
This is really thin reasoning. These are unsupported assertions, and I dispute all of them. Their only reasoning is that "it is hard", and then goes on to question (3) itself.
Congress has the power to dissolve the Fed. However, they have no idea what is the Fed nor economics nor monetary policy, so they do nothing.
However, "review" is not possible as you have stated: Congress currently cannot even audit the Fed (new legislation would be required); the public has no recourse regarding Fed action; and the Fed is wildly outside its charter, with no fear, as there are no punishments for violating charter (so says the charter), and Congress doesn't understand the charter anyway.
When we need new legislation to get Fed meeting notes from several decades ago, much less their international swap arrangements established in the dark of night ten years ago, you can't make a serious argument that the public has any ability whatsoever to see, nor review, nor influence Fed behavior.
Since the Fed spends the public money, their un-elected and non-reviewable status makes them exemplary of "taxation without representation".
The Fed drove the bubble by setting rates too low. No serious argument can be made in rebuttal. Congress also promoted the housing bubble -- I don't blame the Fed for Congressional legislation and the establishment of Fannie & Freddie. However, the whole argument is moot: The Fed has no business setting these rates.
Central planners set prices. In this case, the Fed set the price of money (i.e., interest rates). It's stupid. It's inefficient. It ensures cataclysmic results when the gap between human hubris and reality closes -- and it inevitably does -- suddenly.
No human can set the price of eggs. Set too high, the consumer is screwed (they must pay too much). Set too low, there are no eggs (no producer would sell at a loss). The only answer is to not set the price of eggs -- producers will establish a price at which they will privide eggs. It will be different based on localized costs. It is the same with money: Its cost will be different based on risk and availability.
The Fed track record "difficult to assail" is unsupported. The Fed is a young institution, less than eighty years old. Their history is merely one of massive leverage, followed by massive busts. You can't have massive leverage like we're talking without a Fed (that's their only purpose). Politicians and central planners love this massive leverage, because it's merely a bigger playground, with greater ability to "skim" and front-run.
It is simply a ponzi scheme to debase the public coffers.
No. The price of money is too low (does not account for risk), so the public at present can merely choose to not participate. Bank and money market and stock market withdrawals are at historic levels.
Because of the Fed distorting the market, the public cannot loan its money at all (you'd be insane to buy bonds at these rates).
There are many models I would support. For example, it is constitutional for the US Treasury to issue its own currency (e.g., "greenbacks"), and I would support that to abolish the Fed.
However, no institution should be a "lender of last resort" nor set the price of money: Like the price of eggs, the price of money will always be set incorrectly. Panama has such a system.
There should be no autocratic decision-maker setting the price of money.
Thanks. You make a clear and cogent argument for your opinion and you do so with a welcome degree of rationality and an even more welcome reasoned voice.
I happen to disagree, but I am of the school that says that it is not easy to contain the animal spirits of boom and bust.
The Fed is indeed not much more than 80-90yrs old. It has had a track record of one world war, at least two changes in domestic currency regimes, at least two changes in international political regimes, several changes in fundamental fiscal policy regimes, multiple stock market booms and busts, one national housing boom and bust, and several super-regional housing booms and busts.
The period between the Second Bank and the Fed, which started with zero national debt and ended with the post-WWI international crises enjoyed 80+years without a central bank. It also enjoyed a dozen recessions, a couple of Depressions (with the frequency and viciousness of the changes increasing as 'development' increased). That period (split between pre-Civil War, Gilded Age, and Progressive Age) saw a significantly lower non-wartime GDP vs GDP volatility "information ratio" than did the Post-WWII US model where the Fed showed such a bad track record.
Show me an economy since the beginning of industrialization with an "independent currency" but without a central bank and I'll show you an economy which has also had its regular booms and busts.
In an age where national budgets are funded by taxpayers, and taxpayers are funded by entitlements, and the velocity of money is inherently higher than it ever has been, I ask (hypothetically) how does one rely on publicly-elected non-experts to determine the appropriate monetary/fiscal path (because in the end, if decided by the same person, they are largely inseparable)?
I think we shall have to agree to disagree, but I thank you again for an interesting discourse.
Cheers,
BC
That's two world wars. And total world domination warfare between the CIA and military post-WWII. Thank God for the Federal Reserve to provide the funds to the military-industrial complex! Thank God the American public has been so willing to go into massive debt for it! Thank God the American public is blissfully unaware of the consequences that have ravaged this country and the gaping maw that awaits them once the Federal Reserve Note (shamefully taking the name "dollar") enters hyperinflation.
Yes, the Federal Reserve sure has done us right. It's only devalued our wealth in "dollars" by 98%. That's pretty good! It's not 100% just yet!
I thank you for your easy-to-pick-apart posts so we can all understand how wretched Central Banks are. I wonder what the cost in human life has been?
Comedy. Oh, you're serious. Eeek!
Full Reserve Banks should. Not an unconstitutional, wealth-redistributing group of unaccountable banksters that create money out of thin air and expect tax-payers to pay the bills and the interest.
Exactly. And this is why Fractional Reserve Banking is evil - inflation is theft. Spending other people's money for the perceived social good is also evil - look were we are now with 40,000,000 on welfare. The Soviets would just send bloggers to "camp" instead of putting out this garbage. We're not far from that.
Actually, since he works for the central bank it has everything to do with it. So that either makes you a Fed apologist, an employee of the Fed, or you do not understand fractional reserve banking.
You take what is simple and can be understood by eight year-olds and discard it. This is why you Ivory Tower types need to go. You start explaining free lunches and expensive military "interventions" and yet you omit/fail to grasp that it is only the bankers that get a free lunch; the financial scientists win. The political scientists provide cover for their financial counterparts to spend wrecklessly money that previously never existed. They create debt and expect the masses to pay interest on it. The masses have to work for that, don't you know? The banks expand the balance sheet with some taps on a keyboard and the US debt slave agrees to sweat for 30 years to fulfill their contracted series of mortgage payments. The sick lie is that their home is worth more in thirty years. Lie! It takes more Federal Reserve Notes because their sweat has been devalued though inflation! Inflation is theft, nothing more.
Why can't the free market determine rates, that is, why can't individuals in a trasaction decide instead of the central bank? The inflation caused by money printing spurs individuals to speculate in financial con-games in order to preserve their wealth/sweat. Seen CD rates at your local bank lately? 1.6% I think I saw yesterday. What a joke.
Oh, this is brilliant. Except that taxes in the age of the printing press only serve two purposes:
LOL. Benefit? Mass de-industrialization of the US and loss of wealth through inflationary policies. We are so fucking happy about that.
So, which one is it:
If the guy worked for a conservative private thinktank and had said,"the public should ignore liberal Keynesian crap spouted by bloggers" would that have made you feel better? It would have been much the same thing, just with a political twist to it. As to your choice of "Fed apologist, employee of the Fed, or not understanding fractional reserve banking", I plead your ignorance.
I am not an "Ivory Tower" type. Maybe it is my use of big words. My eight-year-old understands the economics of his world very well. He wants money to put in his piggy bank. He does not want to spend a dime of it. He wants other people to spend money on him. I would not trust his judgment further. Smart kid, but no experience in the real world. The "free lunch" of having drugdealers and criminals around the world use the paper dollar as their currency of choice is ABSOLUTELY a free lunch for US taxpayers. It benefits the US taxpayer to the tune of more per year than the net cost of TARP to the banks will cost (AIG, FNM, FRE are a different story). This is a gift to current generations of Americans for previous generations' hard work, parsimony, and government policy.
As to houses... Noone said housing prices go up. if you don't want to buy a house, don't. Rent. Sleep in a tent. Set up an intravenous drip for coffee. If you think inflation is coming, and housing prices won't go up during that time, then maybe that is the fault of the starting price, not about policy which set inflation in process. As to rates... the bank will borrow your money at 1.6%. You are free to lend your money at any rate you want. The Fed does not dictate what you must lend your money at in a free-market transaction.
And FYI...
Which flavor is your diatribe?
Uninformed: I plead your ignorance.
Internally inconsistent: Cheap swipe. Explain.
One-sided: Damn fucking straight! The Federal Reserve is inherently evil!
Financial Scientists provide their greedy, incompetent, glad-handy counterparts (Political Scientists) the cash to spend wastefully on whatever projects will keep them in office and enrich their friends, mostly bankers. Without the printing press Congress would have to actually stick to a budget. Instead, because you are so glad we have the Reserve Currency of the world we have 40,000,000 on food stamps, millions more unemployed about to join that figure, declining standard of living, an unsustainably large military which kills innocent people worldwide. We're so glad to have the Reserve Currency! Free lunch for us even though we can't eat it because the bankers take the cream, and more, off the top.
Thanks for the example about your eight year-old. It really helped flesh out your point of view.
Okay, seriously, this is a desperate attempt to maintain credibility after allowing banksters to rape the middle class. "Do as we tell you. We are smarter. Trust us."
From Human Action posted above by Steve: "The development of a profession of economists is an offshoot of intervention. The professional economist is the specialist who is instrumental in designing various measures of government interference..."
So the fundamental problem here is groupthinkers coming up with ways to spend other people's money. We don't really get a choice in the matter; we have to trust them, especially if they screw up.
I also agree with the hardly relevant comparison to medical procedure: I don't want anyone using a scalpel on me if they haven't been to years of school and understand the human body better than 99% of the population. A doctor practices medicine. They are not coming up with various ways to spend your money. If a doctor kills you they usually get sued; they can't practice anymore. There is no such thing as economic malpractice insurance. We the People always pay for their mistakes. Doctors aren't in the business of creatively subverting the Constitution and using propaganda to maintain control.
Some general comments on ZH:
"Buy physical gold. Stay out of the stockmarket. Walk away from your mortgage; rent for the time being. Leave the country if you can."
Sounds good to me; although those are very personal decisions which should be part of your personal/family survival plan. The pillagers in charge would have you believe otherwise. They can't pillage if you avoid their counsel. But hey, if you are declared a terrorist you will likely spend the rest of your natural life in a dark hole without any hope of seeing a jury of peers. So none of this matters anyway; you won't need it in the hole. We're going to war, baby! Yeah! (enjoy the show; there is nothing you can do to prevent the collapse)
BingoCat, instead of donning an asbestos suit, may I suggest next time a colostomy bag instead?
I can answer his question about why people let Oncologists work without critical analysis, but not the Fed. It is because oncologists don't actually cause cancer.
Stellar!
Laughable.
In most professional careers, too many PhD's can't see the forest for the trees and are nearly useless (if not completely) in real world application. This level of education too often does nothing but reinforce patterns of thinking that actually hinder real world critical thinking. As a result, we find people who are really book smart, but can't find their ass with both hands. The worst of all of them are the one's who feel only their lofty educational credentials are the key. A complete joke. At the same time, this is a beautiful example of how we wind up in such nasty places, seemingly without the ability to change course.
First they ignore you, then they laugh at you, then they fight you, then you win.
Mahatma Gandhi
They ignored us when we warned of the housing bubble and spoke out against the bailouts and stimulus. They called us names like "doom and gloomers" for saying we needed to clear the system of debt rather than borrow and spend more money to fix the economy. With this attack on bloggers together with the attacks on Ron Paul supporters and Tea Partiers, it looks like we've entered the fighting stage. How long till we win?
With the Tea Parties rising up in protests, with public opinion polls turning against them, with shows like Glenn Beck, Stossel, and Freedom Watch reaching the general public with messages about the Constitution, individual liberty, and free-markets, with Chris Christie and others standing up for the taxpayers against the union thugs, and with non-establishment, small-government, fiscally-conservative candidates winning primaries throughout the country, we have them running scared. The message started on the internet with bloggers like Zero Hedge, Karl Denninger, Mish Shedlock, Ben Jones (The Housing Bubble Blog), and many others. Keep up the great work! Keep spreading the message! The next big battle is in November. We will take back our country!
he has been or is in the right places ... Citigroup, Fed ..
that is telling enough
Kartik Athreya says, "Economics is Hard. Don’t Let Bloggers Tell You Otherwise".
Someone ought to tell Kartik that propaganda is hard and remind him of the three 6 mafia song "it's hard out here for a pimp". It' seems that Kartik is bemoaning the fact that it's becoming increasingly more difficult these days for the talking head PhD economists to pimp out the unthinking masses on the nightly news and forward the agenda of the Central Bankers. Someone should tell Kartik to compare the predictions of all PhD toting economists v. the predictions of the undeducated bloggers (that understood the roots of this crisis) since 2006 and to tally a score card.
Welcome Kartik Athreya, welcome to the machine. Where have you been? It's alright we know where you've been...
The economists are clueless. Everything was sort of working so well until a few years ago. Now, reality seems to be upside-down, all their models and math and all of it that they spent their lives "learning" appears to be wrong.
So it must be HARD STUFF, huh? Because if THEY don't have a fucking clue, NOBODY could. Right?
I GUARANTEE you that if I went into a roomful of them and described the energy theory of economics and how growth has ended and peak oil and all of this shit, that NOT ONE would accept it. Even among those who could understand it, they would REJECT IT because it does not conform to their orthodoxy.
Then they would spend the rest of their careers trying to figure out why their stupid models weren't working, when that question had already been answered. Their models have been mooted, obsoleted, invalidated, by a phase change in reality.
Economists are like people trying to use the same compass when the magnetic poles have flipped. They continue to INSIST that this way be North when everyone with a brain can watch a sunset and tell them they are wrong. They cannot accept the fallibility of the "school."
One of the primary tasks of the Federal Government is to keep the peace. This "keeping the peace" must be addressed at many different levels and in many different markets. If speaking the truth about a given market would result in the heaving of pitchforks and the burning of buildings, how is speaking that truth publically consistent with their task of keeping the peace?
The responsibility to keep the peace is a serious issue and is one that not many, if any, of the commenters here acknowledge. Many call for insurrection. It is the job of the Federal Government to keep that insurrection from happening. If telling the truth about something will fan the flames of insurrection, which side do you think the Feds will come down on?
When push comes to shove, keeping the peace is a more important job for the Feds than telling the truth. Because this is true, you cannot ever say with certainty what the Feds know and what they believe - based on how they respond to you. Trav - you say "I GUARANTEE you that if I went into a roomful of them ... NOT ONE would accept it." You will never know whether they accept it or not. Their public face has to be different than their private thoughts - if their private thoughts are similar to yours. Or what - they should just go out and announce "it's all over folks ... there's nothing we can do ... it's every man for himself, and may the strongest steal everything that's left from the weakest"? That would be a real help in keeping the peace.
Richard, despite trying to impugn good intentions to your diatribe in support of tyranny and despotism, I cannot find it within myself to feel less than disgusted by it. Taking your argument to its logical conclusion, a totalitarian state can be completely rationalized, no matter how miserable and despotic it may be, as long as it maintains "the peace".
The truth is NEVER the enemy of liberty! To argue otherwise is to support the most complete forms of statist elitism.
Lying in a grave is also characteristic of "peace".
I think the disgust you feel is the beginnings of the cognitive dissonance that comes with understanding the real world we live in (serious comment; not joking). Important folks in our lives do shade the truth to us in an effort to keep us from freaking out. And I'll bet you do the same to others when necessary.
I am making no argument for totalitarianism. I am not making a theoretical case for anything. It is no diatribe. I am stating a fact. One of the tasks of the Federal government is to maintain the peace. If there is a truth that will result in panic, they will either withhold the truth, or package it in a way that will not cause panic. Truth IS the enemy of liberty if that truth will cause people to panic and riot and destroy other folks' property.
I'm guessing the Treasury and Federal Reserve understand that their efforts have a low probability of working as desired. But what do you think would happen to global markets if they were to actually state this?
And John F. Kennedy's take on secrecy?? Political talk designed for the masses. His Administration kept secrets and shaded the truth just as all Presidential Administrations have done.
I haven't read the Kartik piece yet, but I do have to say, Robert Samuelson is full of more shit than you would see in a Republican Congressman's toilet facilities after 20 nonflushed dumps.
"Economics is hard. Don't let bloggers tell you otherwise."
Lies are hard. The truth is simple.
The Fed is scared because the general public can understand the simple message that you can't spend your way out of debt. They know it to be true from their own experience.
The Fed's message is too complicated for the public because it is built on lies. The more they lie, the more complex their message. These "economists" then pretend that that they are smarter than everyone else by telling us we are too stupid to understand. But, bloggers are pulling back the curtain and exposing their lies. The truth will set us free.
The unemployed person holding the sign stating "will work for food" will tell the idiot that "economics is hard" in more ways than this PhD could ever understand.
It's amazing how they sit in their ivory towers, find a statistical quirk to fit their argument, implement a policy based on the incorrect assessment, then blame the "little people" because they didn't implement it the way he thought they would.
Is it Bastille Day here yet?
Leave it all to the economists, they've done such a bang up job so far.
Apparently after the Fed has bankrupted the country and forced the people to bailout the banks, now we only need to stop questioning them, assume they know best since they have spent long hours of indocrtrination in the Ivory Tower.
Academics are the most elite, quasi-fascists there are. Lady, dont blame us you spend all your time studying mumbo jumbo. Its not too late, read Hayek and Mises. Just ask Rick Santelli.
Dude Looks Like A Lady?
http://www.youtube.com/watch?v=nf0oXY4nDxE
Actually, this guy is doing his job.
The FED has strict layers of authority and control. Most of the FED is just member bank supervision and support. Policy decisions are made by very few, and even the periodic quest apperances at the round table understand their place. The FED economists on staff are there to present a face of plausibility to the politicians. Nothing more. One of them is bound to produce something useful to promote the current course of action.
But the question that should be asked is; does the FED actually act on behalf of the economy?
The answer is no.
The actions taken by the FED over the "crisis", was to solve a problem they created due to their lack of Systemic supervision of Bank Holding Companies. Specifically to protect member banks from insolvency due to excess leverage (derivatives). The proof is in the FED balance sheet.
Realistically, the FED does not have the tools to promote full employment nor influence prices without the inappropriate purchase of assets (real estate).
The FED controls the creation of money and credit. In FED speak though, everything revolves around the concept of credit. Because to the FED, credit is money. Meaning, control of the nations ability to apply financial leverage (who receives and controls credit) lies with the FED and the member banks.
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Structually, you cannot separate political fiscal policy and private monetary policy and hope to achieve sound money or maximize economic efficiency.
The lack of political will and the greed of the FED combine to create something very unamerican. Structually, it is a no growth strategy.
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You cannot hope to promote the health of the economy through political stupidity.
Social Security is a good example. As you may know, SS went cash flow negative for the first time about 4 weeks ago. So this brought to light what the procedure would be to cash in the special Treasury SS bonds issued. The politicians where dismayed by the fact that the idea of replacing money with debt did not produce positive cash flow. In this instance the concept of cashing in this type of bond for equivalent worth (tax on labor) only applies to a nation which has no deficit or debt, and has cash equivalent reserves.
The politicians where told that any SS bond payout would have to come from new revenue. Which essentially means the bonds are worthless. Due to the demographics eventually SS as a benefit will have to be cut.
Mark Beck
Whoa they are desperate [first they ignore, then ridicule, follow by shut down]
Seems like they are between ridicule - shutdown
Would love to see an intellectual cage match between Kartik and Steve Keen. Gee, wonder who would be handily dispatched and carted out in short order?
As a PhD macroeconomist, I assure everyone that macroeconomics is the most fucked up, out-of-reality branch of any science on earth. I have never, NEVER, and again NEVER seen any model with a proper analysis of credit creation, financial sector and their relations to real sector. Here is an excellent paper I seriously recommend everybody on this website to read, and send to everyone that talks the same bullshit about the merits of holding an economics PhD: "Noone Saw This Coming: Understanding Financial Crisis Through Accounting Models"
http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf
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.
As a poor, ignorant fool who only obtained a Masters Degree, I make this observation with some trepidation. But here goes. The substance of the Athreya article is the equivalent of saying that we should trust our political affairs only to qualified Political Scientists... of the PhD-ed subspecies, of course.
the fuck...
So I should listen to the Fed and the government junkies who got it wrong and ignore the bloggers who got it right and made me money? That doesn't even make sense.
P.S. If this Ph. D-bag writes anything like this again, i'll kick him in the nuts!
I blame my last post. The Keynesians and a big chunk of PhD Economics academia is going down in flames.
I hope you don't think the government forcing people to buy crap they are not voluntarily willing to pay for = spending. Keynesians only pretend to be empiricists. They ignore all data that shows people to do not want to buy the stuff that government forces them to buy.
If I offer you $1 for all of your stuff and you decline that is irrefutable empirical data that you value all of your stuff more than $1. If you offer to sell your $100K house for $500K and there are no takers that is empirical data that the market values your house less than $500K. One of the biggest laughable con scandals was the notion that Keynesians are empiricists.
This is precisely why Keynesians demonstrably do not know what supply and demand is, do not know what trade is (hint: it consists of voluntary mutual exchange), do not know the difference between want and not want, do not know the difference between want more and want less, and therefore do not know what a market is, and thus do not know any basic economics whatsoever. And this is precisely because they ignore empirical data, precisely because they pretend the preferences of others are what they are demonstrably empirically not.
When a Keynesian references the term "spending" you know they are full of it.
Fuck yo phd nigga!!
http://www.youtube.com/watch?v=eWpLPwp3cb4&feature=related
Ho ho ho. Dear Kartik took down his paper. No longer at the FRB site.
Must've hit a nerve somewhere.
I know this guy, I used to lock him in his locker in elementary school fo rbeing the monster dufus of all time.
Only fitting that he end up in Bernanke's boudiour. If he waasn't my bitch at least he is soemone else's
Dear bloody gawd, hang all economists before it's too late.
BTW...If no one has done already, Many Thanks to Mr. G. Edward Griffin, author of "The Creature from Jekyll Island, a Second Look at the Federal Reserve".
Ok, I see two possible reasons virtually everything the Fed said was "Ok" fell apart at the seams.
1. Either they are fools blinded by their Keynesian "just print more debt" economic philosophy.
2. They are bold faced liars, that don't have the guts to admit that they put us into another depression with their "debt to infinity and beyond" policies of the past 30 years.
Maybe its a bit of each. If you think things are ugly now, imagine when the world tires of trading real goods and services for the Fed's confetti. That's when things get REAL UGLY. The US is one of the next Greece's, and there will be nobody to bail us out. We are there because we either ignored or failed to learn the lessons of history, and the only way to stop it is to clear the debt and live within our ability to produce.
So if I hav elived below my means without a PhD am i not credible. Hang the bastards and get this shitz over with PhD my azzz worthless Ivy league bastards and crap running the USA. Hang the families as well.