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Guest Post: Nicholas Taleb Against Establishment Economists

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Submitted by Pater Tenebrarum of Acting-Man blog,

Throwing Down the Gauntlet

Nicholas Taleb is making waves again – and in a good way, as we will explain below. It began with an altercation between him and a few mainstream economists on Twitter (what is apparently called a 'Twitter brawl'). Here is a post from Taleb's Facebook page that he put up in the wake of said brawl – Taleb announced that he will go with a fine comb through the papers of one Karl Whelan, one of the countless 'monetary economists' who are writing papers for the Fed and are thereby providing justifications for its meddling with the markets. Here is his post:

“We Can Start Exposing Economists:


I just finished a very rough draft of *Fat Tails & (Anti)Fragility* (~100 pages).


PART I provides a mathematical toolkit to detect anything that is bullshit in economic modeling (particularly macroeconomics), figure out which papers are flawed from a scientific standpoint, etc. When I mean flawed, it is on the basis that the math used impresses nonmathematicians but does not support the stated policy conclusions.


So I start by putting one Karl Whelan "scientific" work under severe mathematical scrutiny. I select him to start as he worked with central banks, the perfect profile of the person supported by the taxpayer against the taxpayer's own interests. I also had a disgraceful encounter with him and his macro peers on twitter. Mr Whelan's papers can be found here: We can progressively expose mathematized social science that way, as I am refining the text, adding words and examples.”

(emphasis added)

Then Taleb followed that up with a tweet that makes abundantly clear what he sees as his mission:




Mr. Taleb of course needs to continually market himself, since he is a book author and economic and financial pundit on television and various financial media. Courting controversy is a good way of staying in the limelight. In this case though, we think he has picked an excellent fight. We will explain below why that is so and why we wish him success.


Maverick economist Nicholas Taleb – challenging the establishment


Modern-Day Macro-Economists – Who Needs Them?

We are certainly not against people trying to advance economic science. We are also vehemently disagreeing with those who assert that 'there are no economic laws' or that economics is somehow not a science. What these people fail to grasp is that economics – a branch of the larger science of praxeology (the science of human action) – is a social science, not a natural science. It therefore requires a methodological approach that is different from that employed in the natural sciences. It therefore is also different in terms of what we can and what we cannot know. We will return to this point further below. 

What once used to be a field in which men of towering intellect tried to establish, discuss and lay down the tenets of what was widely considered an entirely new science as recently as the late 19th century, has become a field in which a great many rather mediocre intellectuals are mainly serving the interests of the State. The classical economists such as Ricardo, for all their flaws, did humanity an invaluable service by showing that there are in fact economic laws and that a ruler cannot suspend them, just as he cannot suspend gravity. The era during which the classical economists dominated the new science was one that saw the implementation of a fairly enlightened economic policy – as close to 'laissez faire' as we ever got – which led to an  enormous spurt in the growth of real wealth and prosperity between the late 19th and early 20th century. We owe a huge debt to this era of capital accumulation and the men who made it possible – without it, the world may be a lot poorer than it actually is.

Economic science advanced in great strides with the independent discovery of the principle of marginal utility by Carl Menger, William Stanley Jevons and Leon Walras in the 1870s. The Austrian subjectivist school which Carl Menger founded, advanced value theory, price theory, capital theory and monetary theory enormously. However, as many of the most important works were originally published in German language and not translated into English in a timely fashion, it never gained the influence in the English-speaking world it would actually have deserved (ironically, today the Austrian School enjoys far greater support and popularity in the US than in the German-speaking world).

One 'problem' is of course that the Austrians advocate the adoption of an unhampered free market economy. This is not based on 'right wing ideology',   but on a value-free assessment of economic laws. It is a 'problem' only because there would be fairly little, if anything, to do for macro-economists in a truly free market economy. Only exceptional men of great intellect could hope to get enough support to be able to pursue their scientific interest in economics as their main job. In today's era of unbridled statism, a great mass of people are by contrast employed by the State in one form or another, and their output is therefore, as Hans-Hermann Hoppe points out, as a rule both mediocre and “viciously statist”. To quote him more fully:

“Intellectuals are now typically public employees, even if they work for nominally private institutions or foundations. Almost completely protected from the vagaries of consumer demand ("tenured"), their number has dramatically increased and their compensation is on average far above their genuine market value. At the same time the quality of their intellectual output has constantly fallen.


What you will discover is mostly irrelevance and incomprehensibility. Worse, insofar as today's intellectual output is at all relevant and comprehensible, it is viciously statist. There are exceptions, but if practically all intellectuals are employed in the multiple branches of the state, then it should hardly come as a surprise that most of their ever-more voluminous output will, either by commission or omission, be statist propaganda.”

To put some numbers on this by way of an example: The Fed's board of governors in Washington employed a staff of 220 economists and the 12 regional banks employed another 171 as of 2004 (the most recent number that could be ascertained). The Fed doles out several hundred million dollars every year in research grants and for statistics gathering, so that at any given time, an estimated 500 economists are working on the Fed's behalf in addition to its staff. Some 1,600 economists across the US had listed "domestic monetary and financial theory and institutions" as either their primary (968) or secondary field (717) of study as of 1992. The most influential editors of prominent academic journals are as a rule on the Fed's payroll and provide a 'gate-keeper' function as to what does and what doesn't get published. An article that describes in detail how the economics profession was 'bought by the Fed' can be found here.

This is why most economists, who otherwise largely agree that monopolies and price controls are a bad thing, somehow all seem to support the idea that an exception to this rule should be made in the case of money. They simply won't bite the hand that feeds them so generously.

Of course, if an economist rejects interventionism and supports the establishment of an unhampered free market, then there is obviously no role for him as an 'economic planner' and 'adviser to policymakers' (except for advising them to stay the hell out of the economy and stop meddling with it). 


Economics and Mathematics

As Ludwig von Mises pointed out, there is no statement in economic science that can be made only by mathematical means and cannot be stated quite clearly in verbal form as well. In his early years, Mises' criticism of mathematical economists was still confined to such fairly innocuous and polite statements. His position on the topic hardened later, and  he eventually called the use of mathematics in economic science utterly 'barren' and a 'vicious method'. We have often pointed out that the econometric approach of gathering statistics, torturing them with mathematical formulas and then deriving hypotheses from them that form the basis for 'economic predictions' and 'policy advice' is as erroneous as it is dangerous (these predictions have a record of constant abysmal failure, and in light of the economic and market upheaval of recent years it should be obvious to all that the same holds for the policy advice given to the 'planners').

For one thing, as Oskar Morgenstern and many others have pointed out, the measurement of the data themselves is fraught with insuperable difficulties. In fact, in most cases there is actually nothing to 'measure', at least not anything that it would be sensible to measure. Economics is not physics, even though modern-day economists are beset by 'physics envy' and are trying to make it more akin to physics by couching their theories in mathematical gobbledegook. That may make many otherwise quite nonsensical papers appropriately incomprehensible to the layman, something that is probably held to imbue them with the necessary 'scientific gloss', but it represents mainly a case of 'garbage in, garbage out'.

Economics deals with purposeful, goal-oriented human action – with human beings who possess volition. It analyzes the means to achieve these goals. It is not a science studying inanimate objects. One would think that it should therefore be rather obvious that there must be a clearly delimited methodological difference between economic theory and the natural sciences. As Murray Rothbard writes on this in the foreword to Ludwig von Mises' work 'Theory and History':

“At the heart of Mises and praxeology is the concept with which he appropriately begins Theory and History, methodological dualism, the crucial insight that human beings must be considered and analyzed in a way and with a methodology that differs radically from the analysis of stones, planets, atoms, or molecules.


Why? Because, quite simply, it is the essence of human beings that they act, that they have goals and purposes, and that they try to achieve those goals. Stones, atoms, planets, have no goals or preferences; hence, they do not choose among alternative courses of action. Atoms and planets move, or are moved; they cannot choose, select paths of action, or change their minds. Men and women can and do.

Therefore, atoms and stones can be investigated, their courses charted, and their paths plotted and predicted, at least in principle, to the minutest quantitative detail. People cannot; every day, people learn, adopt new values and goals, and change their minds; people cannot be slotted and predicted as can objects without minds or without the capacity to learn and choose.”

As Rothbard explains further:

“Mises saw that students of human action are at once in better and in worse, and certainly in different, shape from students of natural science. The physical scientist looks at homogenous bits of events, and gropes his way toward finding and testing explanatory or causal theories for those empirical events. But in human history, we, as human beings ourselves, are in a position to know the cause of events already; namely, the primordial fact that human beings have goals and purposes and act to attain them. And this fact is known not tentatively and hesitantly, but absolutely and apodictically.”




“Is the fact of human purposive action "verifiable"? Is it "empirical"? Yes, but certainly not in the precise, or quantitative way that the imitators of physics are used to. The empiricism is broad and qualitative, stemming from the essence of human experience; it has nothing to do with statistics or historical events.


Furthermore, it is dependent on the fact that we are all human beings and can therefore use this knowledge to apply it to others of the same species. Still less is the axiom of purposive action "falsifiable." It is so evident, once mentioned and considered, that it clearly forms  the very marrow of our experience in the world.”

This is in a nutshell why economic statistics and mathematics should have no place in economic science. It is of course different in the field of business economics and entrepreneurial activity, where economic calculation, even though it lacks precision, is an indispensable tool.



Ludwig von Mises, the father of 'praxeology'; his thoughts on the methodological and epistemological problems of economics remain a bone of contention – however, he was and remains right.

Nicholas Taleb is himself a trained mathematician and statistician, so he may well tackle the papers he intends to critically examine by employing his knowledge in these fields (at least that is what it sounds like in his Facebook announcement). That is certainly a legitimate approach, on account of the above mentioned 'garbage in, garbage out' phenomenon. Most of the models used to support specific policy conclusions are constructed in a manner that ensures that they will spit out the desired results. They simply employ certain assumptions as 'given' and beyond debate, when those assumptions can by no means be considered indisputable facts (as a good example for this  'GIGO' phenomenon, consider this critique of the infamous Blinder-Zandi 'stimulus study').

Presumably it is this aspect that Taleb will focus his critique on. However, it should be noted that in spite of his employment of 'mathematical tool kits', Taleb is mainly known for his 'black swan' theory, which states that in financial markets, events that are considered extremely rare from a purely statistical standpoint (so called 'fat tails'), are in fact anything but rare.

In our opinion this is so because in the course of boom-bust cycles there is always a threshold, a 'tipping point' if you will, where the boom turns into bust.  It is the point at which a critical mass of investors realizes that the boom is no longer sustainable. By acting in concert on this recognition, they tend to produce rather outsized market moves, such as for instance the stock market crash of 1929.

Anyway, even if Taleb is not an 'Austrian' – at least he has to our knowledge never declared himself to be one – his assessment and analysis of the flaws of modern policy-making and central economic planning as well as the fractionally reserved banking system is quite often spot on. We therefore wish him success in tackling the handmaidens of statism and their pseudo-scientific output. Anyone criticizing the producers of fig leaves for interventionism deserves our support.


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Thu, 05/02/2013 - 18:40 | 3524323 Tinky
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DJ Nicky T, as he's known in the clubs, knows his shit. So pay attention y'all.

Thu, 05/02/2013 - 18:48 | 3524341 Say What Again
Say What Again's picture

I would pay big money to watch Taleb & any one of the central bankers have a face-to-face "debate."  He would rip them to shreds!

Thu, 05/02/2013 - 19:19 | 3524413 negative rates
negative rates's picture

It's not difficult to discern the difference between inherited, and behavioral, sciences. It's black and white.

Thu, 05/02/2013 - 19:22 | 3524429 Say What Again
Say What Again's picture

Do you recall a recent press conference where someone aligned with ZH was asking difficult questions?  Let's have someone in the audience at the next FED press conference ask the bernank (or one of his cronies) to debate Taleb.

Thu, 05/02/2013 - 20:18 | 3524617 chumbawamba
chumbawamba's picture

When I saw the photo in the summary I thought this was going to be an article about Steve Jobs.


Thu, 05/02/2013 - 21:17 | 3524854 Manthong
Manthong's picture

“human beings who possess volition.”

But if you are doing God’s work or are richer than you and have fundamental transformation on your side to assure compliance from muppets, it may end up being a case of volition V coercion..

That is when it gets interesting.

Fri, 05/03/2013 - 07:23 | 3525834 Boris Alatovkrap
Boris Alatovkrap's picture

Taleb, Rothbard, Von Mises, Von Hayek, Fekete,...

Gods of Modern Economics.

Dr. Paul Krugman,...

If break face, good for economy.

Thu, 05/02/2013 - 18:47 | 3524325 sunaJ
Thu, 05/02/2013 - 18:55 | 3524353 Pareto
Pareto's picture

I never looked at probability distributions the same since I've read his stuff.

Thu, 05/02/2013 - 19:23 | 3524415 Say What Again
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Nonetheless, those Bi-Modal distributions do conjure up a favorable image.

Fri, 05/03/2013 - 07:25 | 3525837 Boris Alatovkrap
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Boris is enjoy angry Taleb rant.

Thu, 05/02/2013 - 19:39 | 3524466 The Second Rule
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I've watched dozens of his pods including a one of these. But isn't "economic science" an oxymoron?

John Nash possible exception

Fri, 05/03/2013 - 00:59 | 3525429 olto
olto's picture

A 'sage' is too honest to be an Austrian---probably 'non-aligned' is more appropriate

Thu, 05/02/2013 - 18:40 | 3524331 kaiserhoff
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"Mathametised Social Science"

Just so.  Where is the evidence that Keynesians have ever been right?

Thu, 05/02/2013 - 18:41 | 3524332 hapless
hapless's picture

I suppose Robert Merton and Myron Scholes would make good candidates for the next Fed chairman.  Snort.

Thu, 05/02/2013 - 19:06 | 3524334 Yen Cross
Yen Cross's picture

  I respect the Mans' intellect. Isn't the intellect a bit passe'?   "Cart-horse><horse-Cart"?

Thu, 05/02/2013 - 18:46 | 3524338 logicalman
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Just had to post this SOMEWHERE!

Financial traders turn to lasers for faster deals


Thu, 05/02/2013 - 18:47 | 3524339 css1971
css1971's picture

events that are considered extremely rare from a purely statistical standpoint (so called 'fat tails'), are in fact anything but rare.

The statistics being used make the assumption that the event is random... i.e. it happened by chance like the throw of a dice. This simply isn't the case when it comes to human beings. So the statistics being used are being applied invalidly.

Thu, 05/02/2013 - 19:04 | 3524381 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

^^ This is rhetoric. 

  The indeterminable factor or the human element is oftentimes represented in mathematical or physics based models as a static variable, hence, it is accounted for.

Thu, 05/02/2013 - 19:36 | 3524477 The Second Rule
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There's a physicist named Frank Tippler who's using differential equations to prove the existence of God. Hella ambitious.

Thu, 05/02/2013 - 20:07 | 3524571 Spacemoose
Spacemoose's picture

i read tipler's book many years back.  i can't remember much now but i do recall thinking "NICE TRY, DUDE".  maybe i'll pull it off the shelf tonight.

Fri, 05/03/2013 - 01:49 | 3525497 NaN
NaN's picture

" that are considered extremely rare from a purely statistical standpoint (so called 'fat tails'), are in fact anything but rare."

This is simplified beyond recognition... Allow me to summarize one of The Black Swan's major points: many financial models assume that event probability distribution is gaussian. This assumption makes the math easier, just like Newtonian physics for balls on an inclined plane can be assumed to have no friction. Physicists know that the errors from this assumption actually are gaussian and can derive reasonable error bounds when finding the acceleration due to gravity, but economists went out on a limb and sawed it off. 

The point Taleb makes about measuring people's height versus measuring something like their net wealth gets to the heart of the matter: if height had the same distribution as net wealth, some people would bump their head on the moon! 

When a distribution is unknown, the only way to determine it's shape is to sample it. By definition, the rare aspects (the tails) are rare and thus infrequently measured. The total number datapoints needed to know the tails of a distribution is quite large. Consider that examining thousands and millions of bank accounts at random would be unlikely to find a single billionaire.

So when a model variable is assumed gaussian with only 100 or 1000 actual datapoints, then the tails are only guesses. The further assumption of independence is another big guess that is unlikely to be always true.

Examples of popular models with hazardous distribution and independence assumptions: Black–Scholes and VaR (Value at Risk).

Thu, 05/02/2013 - 18:49 | 3524343 Pairadimes
Pairadimes's picture

Taleb is the Amazing Randi of academic economics. Wields a formidable cluebat.

Thu, 05/02/2013 - 18:59 | 3524359 Miss Expectations
Miss Expectations's picture

Destroy Paul Krugman.

Edit:  Very pleased to see a man on a moral mission. 

Thu, 05/02/2013 - 18:58 | 3524364 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

I'd love to pick his brain on DSGE

Thu, 05/02/2013 - 18:58 | 3524365 fonzannoon
fonzannoon's picture

Give Taleb another year and he will be advising to BTFD. this is endless.

Thu, 05/02/2013 - 19:04 | 3524382 Yen Cross
Yen Cross's picture

 Just watch those 2 year German and Swiss bonds Fonz.

Thu, 05/02/2013 - 19:10 | 3524395 fonzannoon
fonzannoon's picture

will do Yen. I am real curious to see how the market would react to a shit sandwich NFP

Thu, 05/02/2013 - 20:16 | 3524606 optionsman
optionsman's picture

you dont have much longer to find out. surely you have a view on what the markets will do.

personally, unless the NFPs are an unambiguous disappointment to even the statist economist, the equities will rise and bond yields will decline.

Thu, 05/02/2013 - 19:11 | 3524386 Aurora Ex Machina
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"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better"


Dude: learn some fucking ecology already, and the theory of evolution. You're describing the basic tenets of it as if you're a fucking wizard. The sad fact that this sells books just shows you how ignorant the economic community is.


Seriously: this stuff is basic.


Nature is fractal - turtles all the way down.

Thu, 05/02/2013 - 19:12 | 3524398 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Woot +1 -- for those of you who are confused, Aurora is critquing the cannon fodder, not Taleb.

Thu, 05/02/2013 - 19:38 | 3524435 Aurora Ex Machina
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I'm critiquing Taleb as well, just for the record.

Black Swan = OCP.

Outside Context Problem is stuff like a meteor smacking into your world, or mass Siberian vulcanism destroying the climate, or bacteria churning out oxygen, or strange people on horseback with strange long cylinders that can magically kill you turning up to destroy your civilization or the introduction of rats and cats to an island ecosystem.


Taleb isn't original, he just marketed it to an intensely stupid and insular group in terms they could understand. It's shameful these wankers are running the world, because they're so far behind current thinking, it's painful. Kinda like the Catholic Church and the Enlightenment, if you know what I mean.



There's a reason why the RAND group and cybernetics got ecology so wrong. But that's a different story...


“The usual example given to illustrate an Outside Context Problem was imagining you were a tribe on a largish, fertile island; you'd tamed the land, invented the wheel or writing or whatever, the neighbours were cooperative or enslaved but at any rate peaceful and you were busy raising temples to yourself with all the excess productive capacity you had, you were in a position of near-absolute power and control which your hallowed ancestors could hardly have dreamed of and the whole situation was just running along nicely like a canoe on wet grass... when suddenly this bristling lump of iron appears sailless and trailing steam in the bay and these guys carrying long funny-looking sticks come ashore and announce you've just been discovered, you're all subjects of the Emperor now, he's keen on presents called tax and these bright-eyed holy men would like a word with your priests.” [Iain Banks - Excession. A good man now dying of cancer - if I could give a portion of myself to save him, I would]

Thu, 05/02/2013 - 19:51 | 3524523 tip e. canoe
tip e. canoe's picture

“field set a weird mixture of olive and purple, which she seemed to remember indicated Awe.”\


Thu, 05/02/2013 - 21:49 | 3524963 Zer0head
Zer0head's picture

Aurora = ZH's resident genius

should be a contributor


Thu, 05/02/2013 - 19:54 | 3524532 prains
prains's picture

and that's why my boys have the HAKA !! you form a wedge, stare them in the eye and after the first shot you eat them. HAKA BITCHEZ! it's the new secret sauce, drink it!

Thu, 05/02/2013 - 20:29 | 3524666 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

"It's shameful these wankers are running the world, because they're so far behind current thinking, it's painful. Kinda like the Catholic Church and the Enlightenment, if you know what I mean."

  Exhibit A: Taleb isn't running the world, he's an academic trying to account for randomness and uncertainty by drawing metaphor into macroecon from various scientific fields, none of which he claims to be an expert in and are used as simply a metaphor, not a substitute of logic.  What he is an expert in, is economic black hole theory: tearing about the mathematical endeavors of rodeo clowns who posit bogus math to justify printing as an experiment, kind of like Steven Hawking trying to prove there isn't a god with his handicapped math.

  Exhibit B: I'd stop obsessing over the obscure fantasies of Outside Context Problems, and smelt your focus down to variables that have exponential factoring into economics.  While you build good and long-term thinking romantic examples of how these things can catastrophically impact current models or equations, they aren't really relevant.

  I find Taleb's courage and adversarial stance to the bogus math of economic stooges refreshing.  While he doesn't get everything right, I think he's a good proponent of truth.

  The Enlightenment -- sure -- it created a lot of problems.  As for the Catholic Church, I think you might be out of your element, Donnie.

Thu, 05/02/2013 - 20:59 | 3524779 shovelhead
shovelhead's picture

Like Taleb?

You'll like Tom too. Oldie but goodie.

Fri, 05/03/2013 - 06:04 | 3525673 Aurora Ex Machina
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Since you've answered in good faith, I'll give you a serious answer. You've dissected the joke part of my post, and missed the actual barb, which is fine, but I'll focus on the important parts.

#1 Economics is currently "running the world". The dominant ideological battles at the moment are all about economics (neo-liberal or otherwise), and no-one would be reading ZH unless they were interested in the macro-economics of the current crisis. I agree that Taleb is being truthy, the point was that his ideas are common in other parts of Science: if Economics is not just "the dismal science", then it needs to be considered that it's functioning on old paradigms. At the heart of the current situation are Economists (via GS) running democratic countries: this is fine, if they know what they're doing. My use of "wankers" might not be describing Economists, by the way, but the people employing them.

#2 Catholic Church / Enlightenment - it was reverse snark. If you've been keeping up with the new Pope, he's doing some very interesting politics, and appears to be at least attempting to kick-start the entire Church to do what it's supposed to do. Whether or not he survives or is successful is a different matter. I also happen to be a great fan of the Enlightenment, and view the muppetry of American politics with horror at this point. I'll say this: if a large % of candidates are not being chosen as deliberate trolls to crash the system, then you're more fucked than I thought. If they're being bred as trolls[1], which I strongly suspect, then the 0.01% who are creating them need a spank.

#3 The Iain M Banks quote was just a tribute to a great writer, and a literary joke: Excession was published in 1997; Taleb's The Black Swan was published in 2007. 10 years ahead of the game. You should also read the book - I chose it deliberately for the title and content, hint hint.


However, you missed the important part. RAND and cybernetics shaped the Cold War policies of the USA, and are still hugely influential[2]. Oh, and if you missed it: RAND was so massively wrong over Ecology, it took 30 years for the Science of it to fix the indocrinated errors. Sound familiar? They also believed exclusively in "orderly systems", and in many ways, Economics is stuck in the same rut they were over Ecology. The fact we're still discussing Keynes and other early 20th Century writers (Hayek, Mises etc) as defining Economic theory should worry everyone: to make a trite-but-true analogy, even Einstein has been surpassed now.  Every single Economist de jour should be up to date with modern Ecology; I suspect (reading BIS papers, for example - in fact, there's direct quotations of them being unable to think non-linearly), that they're woefully ignorant of modern thinking, and are stuck in the RAND trap where they still view economics as an orderly system.



Which is why it's going to break, and people will die (and already are).




[1] Note: you can be a troll and not realise it, which is the worst type of troll. Anne Coulter, for example, is a deliberate troll. Certain Congressmen? Not so sure.

[2] I'd throw Behaviouralism in here, but we'd be off on a tangent about really dodgy methods of controlling populations, the CIA and so on. Suffice to say, RAND =! positive influence on development of the USA; you can make the case it won the Cold War, but you can also make the case it created it.

Thu, 05/02/2013 - 20:48 | 3524739 shovelhead
shovelhead's picture


Next revelation:

The Earl of Sandwich really did not invent the sandwich.

Fri, 05/03/2013 - 00:00 | 3525332 YC2
YC2's picture

Did you know Gogurt is JUST yogurt?!?

Fri, 05/03/2013 - 04:40 | 3525682 Aurora Ex Machina
Aurora Ex Machina's picture

Like the snark, +1

Fri, 05/03/2013 - 05:50 | 3525723 GoldBricker
GoldBricker's picture

Was the Russian bond default of 1997 out of context? How about Fukushima? How about the Internet or the discovery of the New World by Europeans? Or maybe the Black Death that killed a third of Europe's population.

You're making your argument by assuming that any 'black swan' event is an extreme event for the human race. Taleb's black swans in economic life are simply those events that are relatively rare, that is, they have too few data points for us to be able to predict them or even to know if they fall into a known distribution.

Collectively we know that, say, a big earthquake is possible in Tokyo or L.A., but it's off our radar. We know that a large sovereign debtor may collapse at any time, but we continue to bet the other way by buying bonds. To analogize such events with a meteors or martian invasions is an easy out that does not bear even momentary scrutiny. I'm lazy too, so I know the symptoms.

As for originality, my guess is that you haven't read Taleb's books, especially not Antifragile, where he positions himself squarely among the ancient stoics, particularly Seneca.

I agree that a devil's-advocate critique is a good thing, but it takes a certain amount of work and a body of knowledge to draw upon to make it useful.

Fri, 05/03/2013 - 07:08 | 3525794 Aurora Ex Machina
Aurora Ex Machina's picture

To analogize such events with a meteors or martian invasions is an easy out that does not bear even momentary scrutiny.


I'll fess up to not having read Antifragile yet; as such, I'll go find a copy & commit to non-snark on Taleb until I have. However, I'll leave you with this:


All art is an imitation of nature. - Seneca the younger



p.s. ZH comments section taking an interesting & thoughtful turn? Moar of this please!

Fri, 05/03/2013 - 11:39 | 3527134 Jekyll_n_Hyde_Island
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Aurora, I think I'm going to have to read Infinite Jest again as a one time code pad to decrypt your snark; which if I understand correctly is epic and pervasive and might be like a 30 year old Laphroig with which it is virtuous to become acclimated.

 I hope I'm not giving you to much credit; you'll have to forgive my skepticism, since many Gen x and y postmodernists have so much snark that they lose all bearing on philosophical and cross-scientific truth. 

  Anti-fragile seems to be of the same fold as genuinely smart and equally confused *which is a grievous crime to be sure * quantitative easement labellings and sequestration and the such.  These seem to be very simple concepts given a shower and a shave and dressed up in an evening tux.

  I'd be interested to hear a non-snark correlation you may find by applying Thomas Kuhn's work to our understandings of popular macroecon, especially this anti-fragile gibberish.  I think there's a remarkable correlation between molecular phylogenetic evolutionary microbiology, intraspecific replicatory inheritance and lateral gene transfer, in how the market behaves and evolves like an organism, because of the organic components that channel and focus its energy.

  Off to read Infinite Jest.

Fri, 05/03/2013 - 14:00 | 3527658 Aurora Ex Machina
Aurora Ex Machina's picture

I see what you did there. Ouch, consider me spanked, and I claim no such credit due.

I'm always willing to be a Piñata to learn things and get comments like that.

"I want to convince you that irony, poker-faced silence, and fear of ridicule are distinctive of those features of contemporary U.S. culture (of which cutting-edge fiction is a part) that enjoy any significant relation to the television whose weird pretty hand has my generation by the throat. I'm going to argue that irony and ridicule are entertaining and effective, and that at the same time they are agents of a great despair and stasis in U.S. culture, and that for aspiring fictionists they pose terrifically vexing problems." DF Wallace, who tragically hung himself.

It'd be nice if TPTB came out and announced something like "We've turned to the WLCG to model ACE to sort this crisis out, and are proceeding to focus all our energy on the endeavor" much akin to the "getting a man on the moon" speeches of the 60's. Instead we see interminable meetings, projections that fall totally flat in the face of reality, and no plan B. I'm left hoping that there are busy teams behind the PR facade grinding through data to make it all work.

However, I'm going to need a PHD to get through those biological references, as the papers on them are enticing. As an upshot, I agree that the biological organic viewpoint of relations seems not to exist in our current systems (or at least, the reporting of them). As a purely intuitive take, the issue seems to be that the Apex Predators (largest Corporations / Governments) have out-grown (or at least, severely depleted) their ecologies (SME / middle classes of developed countries), and we're left without any of the complexity between them and the lowest levels (the proletariat, to approximate Marx, or worse still, the destroyed fragments left in Iraq, Libya or failed states and extractive colonialist behaviors): to harp on about fish, I see a lot of similarity between the state of the oceans and the state of modern Capitalism (which works nicely, as human agency is at the bottom of both of them). Being an Apex Predator is useless if you starve (and the question then becomes: the only logical reason for current behaviors is deliberate genocide; both in the oceans and in global terms; if the behavior is emergent, then you have to change the agents).


I'll leave you with this, from a paper on ACE, which is perhaps sobering.

The most immediate, dramatic, and humbling revelation flowing from the ACE modeling of macroeconomic systems is the difficulty of constructing economic agents capable of surviving over time, let alone prospering. When firms with fixed costs to cover are responsible for setting their own production and price levels, they risk insolvency. When consumers with physical requirements for food and other essentials must engage in a search process in an attempt to secure these essentials, they risk death. Every other objective pales relative to survival; it is lexicographically prior to almost every other consideration.


Then again, a nasty thought strikes me: looking at the market at the moment, perhaps the organic has been removed deliberately because it can't be modeled. Infinite jest / infinite growth, what a mix. 



(and yes, I usually post totally shit-faced)

Fri, 05/03/2013 - 14:08 | 3527762 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

I have hope for the DSGE modeling in circumscribing some of this, even if it still is beta. If we can make a Cosmic Background Radiation Telescope map of the entire universe seconds after the big bang, I think it's possible for us to describe all the elements necessary to understand macroecon.  I just don't like a working DSGE model in the wrong hands.

  The more we introduce the emergent properties we understand about our universe through quantum mechanics into macroecon -- the better we'll understand human nature and the markets and the forces that be and the puppet strings et al.-- The system, man - the pattern --

  The real scary thing is when the quantum computing starts analyzing real time data -- knee deep in a glass of scotch I've wondered, what if blackrock or others already have a quantum computer and have used it to crunch global econ data -- what if they've been able to apply principles of quantum entanglement into computational finance?  It's the meta-fix that drive the ZH'ers to quote the matrix all the time, you know, the thorn in your side.

  And I digress.


Fri, 05/03/2013 - 14:54 | 3527882 Aurora Ex Machina
Aurora Ex Machina's picture

The Utah data centre has a power draw of 65 mw (yes, there's no decimal missing). Titan (#1 non-military supercomputer) uses 8.2 mw. Google total global usage for data centres is 260 mw (this article places Google using 2billion kilowatt hours in 2010, and Facebook 532 kilowatt hours, so I suspect that 260mw figure is draw, for multiple centres - getting figures for individual ones is much harder, as the info is seen as confidential). I'd have to do some proper research to check the usual mw usage / petabyte of data centres to get an idea of how much Utah is attempting to store, or whether they're sneaking in a tier0 as well. Logically, any large Soverign State should have their own by now (you'd think!), or perhaps the public networks simply are theirs.

/tangent The gallows humor inside states that if we ever "reach the singularity", the next picosecond the AI will suicide due to the horrors of humanity. I'm pretty sure I unintentionally stole that from Douglas Adams.


Then again, we can't even seem to produce decent infographics in 3/4D yet, and companies seem stuck on power-point (snark deliberate). The tech must exist, given it's being turned towards entertainment, ffs. (Note the project title, of course).


And the lesson from the life of Pi isn't quite what it says on the tin; but that's a different conversation. Ever stopped a car's engine with your mind? Who would believe such nonsense?

Thu, 05/23/2013 - 18:35 | 3593927 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Have you read Neil Stevenson, AEM?

Thu, 05/16/2013 - 22:41 | 3571597 Ctrl_P
Ctrl_P's picture

+1 for any reference to a fine single malt.


edit: oh and one of the finest minds we have ever seen, Mr D. Adams.

Thu, 05/02/2013 - 23:16 | 3525213 Dealyer Turdin
Dealyer Turdin's picture

Bbut!  New Word!  Antifragile! Just a new bullet for the next gunfight mon!  The wordsmiths are as thin as 

IPadsunderabulldozer, know whaddamean?

Thu, 05/02/2013 - 19:15 | 3524393 Yen Cross
Yen Cross's picture


  Germany 1.170 1.241 1.153 0.004 0.34% 0.000 -0.454




Name    Yield    Prev.    High    Low    Chg.    Chg. %    Time
     Switzerland Overnight    -0.150    -0.170    -0.150    -0.170    0.020    11.76%    22:15:04
     Switzerland 1-Week    -0.100    -0.170    -0.100    -0.170    0.070    41.18%    23:10:00
     Switzerland 1-Month    -0.100    -0.100    -0.100    -0.170    0.000    0.00%    23:10:00
     Switzerland 2-Month    -0.100    -0.100    -0.100    -0.150    0.000    0.00%    23:05:17
     Switzerland 3-Month    -0.080    -0.050    -0.050    -0.120    -0.030    -60.00%    17:00:00
     Switzerland 6-Month    -0.050    0.050    0.050    -0.060    -0.100    -200.00%    23:10:00
     Switzerland 1-Year    0.060    0.150    0.150    0.060    -0.090    -60.00%    23:10:00
     Switzerland 2-Year    -0.079    -0.079    0.083    -0.120    -0.135    -241.07%    15:16:37
     Switzerland 3-Year    -0.074    -0.044    0.030    -0.104    -0.030    -68.18%    18:35:03
     Switzerland 4-Year    -0.013    0.064    0.089    -0.035    -0.078    -120.31%    18:35:01
     Switzerland 5-Year    0.035    0.105    0.105    0.012    -0.069    -66.67%    18:35:02
     Switzerland 6-Year    0.162    0.211    0.238    0.142    -0.049    -23.22%    18:35:06
     Switzerland 7-Year    0.282    0.326    0.355    0.266    -0.045    -13.50%    18:35:22
     Switzerland 8-Year    0.375    0.392    0.443    0.365    -0.017    -4.34%    18:36:18
     Switzerland 9-Year    0.486    0.494    0.531    0.479    -0.007    -1.62%    15:50:15
     Switzerland 10-Year    0.553    0.553    0.622    0.544    -0.052    -8.60%    15:18:39
     Switzerland 15-Year    0.903    0.929    0.969    0.903    -0.026    -2.80%    18:35:02
     Switzerland 20-Year    1.051    1.051    1.095    1.046    -0.014    -1.31%    15:18:39
     Switzerland 30-Year    1.095    1.095    1.132    1.092    -0.009    -0.82%    15:29:23

Thu, 05/02/2013 - 19:16 | 3524406 billwilson
billwilson's picture

Love Taleb ... the Austrians not so much. "An unhampered free market" would be a recipe for an unmitigated disaster. 

Thu, 05/02/2013 - 19:48 | 3524514 i-dog
i-dog's picture

Fear of the unknown is a bitch, ain't it? The central planners have you right where they want you. Wimp.

Thu, 05/02/2013 - 19:53 | 3524529 billwilson
billwilson's picture

You do realize that the internet (you know that thing we are using now) was NOT created by free markets, it was a product of the government!

The LAST thing I want is everything run by faceless unethical rapacious corprorations. That would be true slavery.

Thu, 05/02/2013 - 20:24 | 3524574 Turin Turambar
Turin Turambar's picture

Are you really so obtuse?  Do you realize that government doesn't "do" anything.  The same goes for your bogeyman, corporations.  Individuals make decisions (human action) which impact their lives and oftentimes the lives of others, whether working in a governmental capacity or a corporate capacity.

I find it laughably ridiculous that you prefer to get down on all fours and worship at the altar of the single biggest, force-wielding, unavoidable, criminal organization on the planet (US government) because you are afraid of a significantly smaller group of individuals working in a corporate capacity producing a service or a product that you may voluntarily choose to purchase or avoid.

Before you come back with a retort about how there are some things that can't be avoided, I would suggest that you get back down on your hands and knees and ask your great criminal god "government" why it has made it so.  A free market doesn't coercively prevent free individuals from providing wanted products and services.  That's the goal of the criminals immorally wielding force against and expropriating individuals.  You know, your beloved government.

Thu, 05/02/2013 - 20:11 | 3524590 Umh
Umh's picture

Even a blind hog can find an acorn once in a while.

Thu, 05/02/2013 - 20:33 | 3524684 tip e. canoe
tip e. canoe's picture

me neither.   but you do realize corporations are and always have been creatures created by governments, yes?   and the worst abuses of said golems have happened with government participation, yes?   if not, would you like some examples, cuz there are plenty.

the hydra is multi-headed my friend.    but every head's got a curtain behind it.   feel free to pick your illusion to battle, but beware of using as a weapon another illusory head that comes from the same rotted heart.

Thu, 05/02/2013 - 23:07 | 3525189 Col_Sanders
Col_Sanders's picture

It was a product of government that they really didn't see a use for.  They linked up colleges and universites and government institutions to share academic data.  It was slow, tedious, and horribly unreliable - so much so that it was almost a joke.  Most students, faculty, and government employees used it to little more than trade porn stories and photos using ARCHIE, FTP and USENET.  And for the entire twenty-some-odd years they held control over it, it couldn't grow outside the bounds of these organizations because of federal regulations that controlled the use of the PSTN for computer networking.

They eventually removed the regulations and finally sold off the last government-owned chunks of infrastructure (which they pretty much considered worthless) sometime around 1993.  At which point, the global Internet was born. And it managed to grow large enough to cover the entire developed world with high-speed reliable access in less than seven years.

So yeah - They "invented" a "product" they didn't really have a use for and then let it flop around while they sank millions of taxpayer dollars into it for twenty some-odd years before finally deciding it was worthless enough to dump on the public market.  At which point they sold it off for an amount that was likely a fraction of the effort and spending that was put into it.

This is called a "government success story" only by statist morons and politicians.


Fri, 05/03/2013 - 00:21 | 3525367 angel_of_joy
angel_of_joy's picture

You do realize that the internet (you know that thing we are using now) was NOT created by free markets, it was a product of the government!

Algore would be truly hurt by your insesitive presumption.

Thu, 05/02/2013 - 19:55 | 3524535 Turin Turambar
Turin Turambar's picture

"An unhampered free market" would be a recipe for an unmitigated disaster.

Yes, the horror of free individuals establishing voluntary relationships and making non-coerced, voluntary transactions according to their own interests.  THE HORROR!

Thu, 05/02/2013 - 20:29 | 3524669 ForTheWorld
ForTheWorld's picture

If you could remove greed, then yes - it would be great.

Thu, 05/02/2013 - 20:54 | 3524725 Turin Turambar
Turin Turambar's picture

Greed?  Talk about a subjective, perjoratively loaded word.  In a free society with a free market, nobody holds a gun to your head to make you purchase something - like Obamacare.  I'm perfectly fine with making my own decisions, voluntary relationships and voluntary transactions.  In hindsight, will I wish I had made a different decision at times?  Sure, but that's life.

What are you so afraid of?  Other people making too much money, which is not any of your business?  Or are you just so incompetent that you'd rather seek the "protection" of a criminal organization that will gladly expropriate you ostensibly to provide you protection from your very own dumbarse self?  Go for it if you want Einstein, just don't go directing your criminal "protectors" to expropriate me because of your own personal incompetence. 

Fri, 05/03/2013 - 00:21 | 3525375 angel_of_joy
angel_of_joy's picture

Greed is good !


Fri, 05/03/2013 - 18:39 | 3528789 e-recep
e-recep's picture

if greed is so good, wall street is the greediest and bends the rules to maximaze profit. so why the hatred then? i hate hypocrisy.

Thu, 05/02/2013 - 19:16 | 3524408 Racer
Racer's picture

He is lucky he is not hung drawn and quartered as a heretic

Thu, 05/02/2013 - 19:22 | 3524426 perelmanfan
perelmanfan's picture

Love the pic of Von Mises. Radiates intelligence, competance and humility. Exact opposite of Krugman, who always looks like the bilious statist douchebag he is, and who seems tormented by the fact that he's not quite dumb enough to believe the solution to a crisis caused by debt is much, much more debt.

Fri, 05/03/2013 - 06:26 | 3525741 Prairie Dog
Prairie Dog's picture

That's what I like about Austrian economists and their follows. They're so rational, and not easily swayed by subjective psychological factors like most people.


Thu, 05/02/2013 - 19:28 | 3524449 Hohum
Hohum's picture

Isn't Taleb an advocate for infinite growth on a finite planet?  Enough said.

Thu, 05/02/2013 - 19:48 | 3524473 The Second Rule
The Second Rule's picture

It does sound a bit like that from this article. I'd never heard this tone from him before.

Thu, 05/02/2013 - 23:17 | 3525215 Mike in GA
Mike in GA's picture

How did you guys get that from this article?  I didn't, and I even went back and did a quick reread to search for something I'd missed.  Still don't see anything.  Help me and point it out to me.

Fri, 05/03/2013 - 13:57 | 3527718 Dry end of the ...
Dry end of the Titanic's picture

In the post-industrial service economies of the western world, economic growth comes from achieving more output from less resources. i.e. efficency gains through innovation. Growth will be infinite because human inginuity is infinite.

Thu, 05/02/2013 - 19:29 | 3524453 The Second Rule
The Second Rule's picture

'Twitter Brawl' has all the intellectual gravitas of a UFC brawl.

Thu, 05/02/2013 - 19:31 | 3524463 Jason T
Jason T's picture

Stay and Fight .. I like it.  

Thu, 05/02/2013 - 19:39 | 3524481 WhiteWolf
WhiteWolf's picture

At least he got one thing right in the last decade. Most of the previous Economic Advisors to Obama have flown the coupe and their estimates of GDP, U3,U6,U???, US Deficit, Interest Rates, etc...have been spot OFF>

Thu, 05/02/2013 - 20:10 | 3524583 The Second Rule
The Second Rule's picture

GDP and inflation numbers have been manipulated since Jack Kennedy. He is the first president, I believe, who demanded to see the GDP and inflation numbers before they were public. Every president since then has done the same. The GDP, inflation, and U numbers are now so twisted and gerrymandered as to be Through The Looking Glass, I believe in at least six impossible things before breakfast, USELESS.

Thu, 05/02/2013 - 19:54 | 3524516 Floodmaster
Floodmaster's picture

Capitalism is about getting people to work for you, Capitalist economy do not fit with a modern economy;autonomous industrialization, a.i., robotics... Technology will revolutionize industry beyond the need for human hands,it's a game changer and it will be own by the people, not by a few ultra-rich bastards,same thing for energy :: every homes and cars should already be solar powered. Everything is already in surplus and extremely cheap, you just don't know it.

Thu, 05/02/2013 - 23:21 | 3525225 Mike in GA
Mike in GA's picture

Sir, put down that bong.

Thu, 05/02/2013 - 20:16 | 3524517 Aquarius
Aquarius's picture

Establishment Economists and wannabee establishment Economists are no more that no-nothing" defense line bureaucrats that criminalize everything and everyone that is perceived to challenge "their" reign. Here Taleb is correct. But do not underestimate the destructive power of the whole damned cult particularly in education and industry,

Yes, Economonics is a faith-based Cult founded in over 30 Sects of superstition and worship; an institutional religion founded in opinion and expressed as political expediency that justifies the theft of public productivity and wealth energies.


In the financial sector where Risk is computed uncertainty,

Economics is really only refined Risk assessment


Ho hum

Fri, 05/03/2013 - 00:01 | 3524531 Der Wille Zur Macht
Der Wille Zur Macht's picture

This was a great piece. I had noticed the connection between Taleb's ideas of robustness/antifragility and their similarity to the epistemological underpinnings of the Austrians.

E.T. Jaynes also wrote what is perhaps the most enlightening book on logic and its relationship with probability. Therein he wrote from a Bayesian perspective in which the physical laws that govern our universe are objective whereas probability and perceived randomness are really just subjective "states of knowledge" among observers.

Nassim picked up on this and is exposing not only why numbers are often quite ineffective at predicting future events, but also why people are inclined to believe (due to Platonicity) that they understand how impossibly-complex systems behave. This type of incorrectly assumed causality is particularly destructive in the fields of finance and economics due to their inherent link with socio-political advocacy.

Love this kind of stuff. Keep it up doods.

Thu, 05/02/2013 - 20:04 | 3524558 The Second Rule
The Second Rule's picture

I don't think the mathematics is flawed. I think the way in which it's applied is flawed. For example, if you look at the FOMC meetings you would assume that the 90 day T-Bill rate follows the FED. False correlation. On closer inspection, it is actually the FED which follows the 90d T-Bill rate. The temperature on hot summer days is not a result of ice cream consumed.

Thu, 05/02/2013 - 20:16 | 3524608 Umh
Umh's picture

The problem with their math is the assumptions. I can prove anything if no one will challenge bullshit assumptions; like Keynesianism works.

Thu, 05/02/2013 - 20:20 | 3524619 Turin Turambar
Turin Turambar's picture

Mathematics is not flawed.  It is a very different thing to say that the utilization of mathematics in economics is a misapplication of mathematics due to human action.  Think of it this way:  How accurate would calculations in physics be if the various natural forces were sentient and could change their magnitudes on a whim?  Not very.  Different people buying gasoline at $4/gallon is not the same as the odds of a spin on a roulette wheel.  The latter is a member of a homogenous class of events, not so of the former.

Thu, 05/02/2013 - 22:21 | 3525048 verum quod lies
verum quod lies's picture

So are you saying the Fed has no effect on the short rate? That today's negative real rate has nothing to do with government intervention?

Fri, 05/03/2013 - 00:09 | 3525347 Dealyer Turdin
Dealyer Turdin's picture

Cows.  Methane.  Global Warming.  Have some Koolaid.  (It's methane but not Glycophosphate (Roundup) Free.Sheesh.

Get More Observant. >/snark

Thu, 05/02/2013 - 20:06 | 3524565 monad
monad's picture

Economists are as flaky as psychologists, and both are equally perverse in their abuse of statistical modeling. Its just nice to hear someone else say it. But you give a muppet a title and honors and the rest of the muppets just won't listen. This is why I won't permit my ways and means to be politically chained to muppets. They don't deserve it, and neither do I.

Thu, 05/02/2013 - 20:07 | 3524570 Dapper Dan
Dapper Dan's picture

Taleb liked Mendelbrot, enough said. 


The Misbehavior of Markets: A Fractal View of Financial Turbulence  

Review by

Nassim Nicholas Taleb
“The deepest and most realistic finance book ever published.”



Dapper will tell you it is a hard book to read but as the Germans say "a book that is not hard to read is not worth reading"

The book’s criticism of Modern Portfolio Theory, another idealistic creation of economists that neglects real world data is excellent.

Thu, 05/02/2013 - 20:38 | 3524702 monad
monad's picture


Thu, 05/02/2013 - 20:17 | 3524611 q99x2
q99x2's picture

Taleb Vs. The Wizard of OZ

The bankers know the way things work. They make it work for them and no one else. That is their job. That's what banksters do. They only say what they say because it lets them steal more money. They are crimminals. If Taleb took two police officers with him to a debate with Bernanke and said "You are being placed under arrest Mr. Bernanke. Your lawyers can explain just what it was that you were doing as FED Chairman" then I might be interested in watching the two of them. Otherwise it doesn't make sense to see them in a debate because Bernanke would not be addressing the issues of economics. 

Thu, 05/02/2013 - 20:39 | 3524685 THE DORK OF CORK
THE DORK OF CORK's picture

Fuck Mises 


Fuck  fuck  fuck  fuck.

Tear the asshole out of the dead cunt.


Mises is a classical whore.

Talks Shit  and spews shit.


A product of banking incest.


Military fucking fiat.

Thu, 05/02/2013 - 21:11 | 3524831 akak
akak's picture

Dork, I think you may have had one too many pints this evening.

Thu, 05/02/2013 - 20:58 | 3524775 indio007
indio007's picture

Feynman on the Social Sciences

Thu, 05/02/2013 - 21:07 | 3524810 Ih8u
Ih8u's picture

The DEGREE system has reached total failure. Idiots are given priority everytime because they toed the line to a failed proffessor. The RULE OF LAW IS EVIL


Thu, 05/02/2013 - 21:14 | 3524844 Downtoolong
Downtoolong's picture

The Fed's board of governors in Washington employed a staff of 220 economists and the 12 regional banks employed another 171 as of 2004.

I find the whole idea of so many economists working towards some common goal or consensus  ridiculous. I’ve never seen two economists agree on everything. I’ve never seen more than two agree on anything.


Thu, 05/02/2013 - 21:24 | 3524878 Apostate2
Apostate2's picture

Interesting. Shall look forward to his critiques.

Thu, 05/02/2013 - 21:25 | 3524883 hazenyc
hazenyc's picture

Heterodox economics (as opposed to neo-classical) is largely frowned upon by their peers in both academia and by companies looking to hire. Only a handful of Universities in the world, and an even staggeringly smaller percentage in the USA openly and proudly teach and label themselves as heterodox economic institutions.  If Taleb is correct (and he certainly brings up food for thought whether or not he is right or wrong), then perhaps those following the heterodoxy will be seen in a brighter light...

Thu, 05/02/2013 - 21:25 | 3524887 Jim B
Jim B's picture

Where is video?  I am chilling, drinking my third beer and I don't want to read the long post.  I like Taleb, Where is the video?

Thu, 05/02/2013 - 21:54 | 3524982 Zer0head
Thu, 05/02/2013 - 21:40 | 3524932 Captain Willard
Captain Willard's picture

The takeover of the monetary economics profession by the Fed is a relatively recent phenomenon. 

As recently as 20 years ago, we had a vibrant "Shadow Open Market Cmte." led by the Carnegie-Mellon professors, which was often quite publicly critical of the Fed. As they retired and died out, a new generation did not emerge to take their place.

The Fed System and Wall St. instead co-opted the next generation and spread the orthodoxy of interventionist monetary policy. Those of us taught by old Chicago School profs can recall being instructed that a computer programmed to print money at potential GDP growth was a better potential Fed Chairman than any human could be.

The simple fact is that there is big money to be made in Interventionist monetary policy. So the professors fell into line. I have seen this first hand.

Thu, 05/02/2013 - 21:54 | 3524980 Nassim
Nassim's picture

What wrong with calling this guy by his name ... Nassim Nicholas Taleb ?

Thu, 05/02/2013 - 22:31 | 3525043 MagicMoney
MagicMoney's picture

Establishment creates mythological theories. It's a religion. They literally invent market failures. For example if a housing market collapsed, that's a market failure, the assumption is that the housing market shouldalways be going up, not down. Market failure theory creates jobs out of useless economist who otherwise wouldn't have their job. Market failure theory can be created out of everything, why isn't housing cheap enough, why are there poor people, why is there income inequality, why isn't there enough consumption,, etc, etc. The list goes on. Establishment economics is very well tied to the political system, but a politicial system is basically the will power of ignorant people. Maybe housiing prices come down, because they were too high in the first place? Even central banks around the world preach about not having enough inflation, deflation is bad, so we must try to create inflation. Establishment economics seeks out to ignore fundamental workings of a spontaneous free economy, and more so like state run communism. They reject basic market mechanisms that allow markets to evolve, and grow efficiently as possible in the long term. These people are more like Soviet bureaucrats than true scientist who study economics plainly. This is why they always hang around the political system, because government wants more control, and their theories advocate government power to intervene. Basically mainstream economist like to preach about what things should be, instead of what things are, why they are. They are totalitarians, no so much economist.


Another thing is, establishment likes to think they can create false-ible models of human action. You can't create a model that tests, measures, or false-iable that Joe traded his own video games for credit at video game store for other games, or simply sells his games back. That's not false-iable.

Thu, 05/02/2013 - 22:52 | 3525153 proLiberty
proLiberty's picture

Moral courage is first knowing what is right and what is wrong. Second it is the determination and willingness to do the right thing. Third, it is the determination and willingness to not do the wrong thing. (There is a difference) Fourth it is the unwillingness to not tolerate those fellow citizens and professional cohorts who are doing evil.

Fri, 05/03/2013 - 01:31 | 3525318 Radical Marijuana
Radical Marijuana's picture

I repeat my kind of general bla, bla, blah about this topic:

The oldest and best developed social science was warfare, whose success was based on deceits. In order to have a good political science, one has to begin with the concepts of SUBTRACTION and ROBBERY, whereby one perceives that "economics" is always necessarily organized systems of lies, operating organized systems of robbery. There is no way to have a better political science which does not make the problem of deceits backed by destruction become its central feature.

Actual history has developed War Kings, which made sovereign states, whose powers were taken over by the Fraud Kings, the private banks. All of economics is based on the power to rob, backed by the power to kill. However, being the best at doing that depended on being the best at lying about what one was doing. Thus, the "science" of economics is an aspect of militarism, wherein the most successful economists are the best professional liars, and immaculate hypocrites.

Everything we are doing operates through Bizarro Mirror Worlds! To fully understand that, one has to understand how profoundly backwards are the ways that we think about everything. The deepest of those that I am aware of is that our concept of entropy is backwards. Since all of our thermodynamics and information theory is BACKWARDS, in the basic ways that it understands itself, of course, all of our theories of economics are BACKWARDS!

It is theoretically possible to have a better science of economics, but not unless that is understood within the context of militarism, which is the supreme ideology, and the most problematic of human sciences, since its success was based on being the best at deceits about itself! In all human sciences, there are tremendous benefits to be gained from being dishonest, and being able to back up that dishonesty with violence. There cannot be any genuine progress in human sciences unless we were to collectively become more able to understand and agree upon that. However, our current society is already almost totally dominated by the people who were the best at tricking other people in the past. Furthermore, those biggest bullies have been able to operate for many generations, in order to brainwash the vast majority of people to agree with their bullshit.

Again and again, profound paradigm shifts in sciences such as physics and biology have already happened, and thereby enabled technologies which are trillions of times more powerful than ever before in human history. Thus, the philosophy of science is the most important thing for a society based on advancing technologies. However, that philosophy of science must also go through its own profound paradigm shifting, and the greatest need for that is in the area of political science. The paradoxical  limits to measurement are indeed nowhere more intense than with respect to attempting to do science about human beings! That conclusion then loops back to all of the points which I just made above ... We need to understand ourselves better as energy systems, BUT, that requires a profound paradigm shift in the way that we understand the concept of entropy, because the biggest bullies' bullshit has deliberately inverted the meaning of that, by inserting an arbitrary minus sign in the entropy equations.

The basic mathematics itself reveals that all power and information have NEGATIVE values, not positive values. That is the deepest way that I am aware of regarding how we think about everything BACKWARDS. From that root mistake about how we understand all energy systems spreads out mistake after mistake, throughout every other understanding of every other energy system, and their fractal evolution! That loop closes back on itself through the ouroboros of incorporated robberies, where the science of economics manifests in a Bizarro Mirror World, where pretty well everything that the so-called science of economics says is deliberately backwards, since its success as a monetary system was achieved inside the context of the success of a murder system, through the ways that militarism evolved and operated ...

Fri, 05/03/2013 - 02:57 | 3525589 rayban
rayban's picture

N. Taleb never disappoints. His intellectual honesty makes him the only qualified person to run the FED and stop the current monetary nonsense.

Fri, 05/03/2013 - 03:27 | 3525620 Iam Yue2
Iam Yue2's picture


Feb. 4 2010 (Bloomberg) -- Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.


Fri, 05/03/2013 - 05:15 | 3525700 Prairie Dog
Prairie Dog's picture

Why the minus votes? These are the sage's own words. How's that trade worked out?

Fri, 05/03/2013 - 05:14 | 3525699 Prairie Dog
Prairie Dog's picture

"The era during which the classical economists dominated the new science was one that saw the implementation of a fairly enlightened economic policy – as close to 'laissez faire' as we ever got – which led to an enormous spurt in the growth of real wealth and prosperity between the late 19th and early 20th century. We owe a huge debt to this era of capital accumulation and the men who made it possible – without it, the world may be a lot poorer than it actually is."

I think if you examine the period between the early 20th century and the early 21st century objectively, you will have to conclude that there has been extraordinary economic progress, notwithstanding world wars, depressions and the even greater horrors (for zerohedgies) of state planning and central banks. The average common person lives a far better, freer life today than he could ever have dreamed of during the utopian laissez-faire past extolled here.


Fri, 05/03/2013 - 09:20 | 3526327 Euro Monster
Euro Monster's picture

Unfortunately, after reading some of these posts, I conculde that Austrian school became a religion itself. IT'S TOO BAD!

Fri, 05/03/2013 - 23:26 | 3529467 honestann
honestann's picture

Economics deals with purposeful, goal-oriented human action – with human beings who possess volition.

Well, there's one problem.  Those who wish to practice something akin to honest thought processes start from a premise such as the above, while everyone in government and other fictitious entities change the last word, creating a very similar-sounding but fundamentally different premise.

Economics deals with purposeful, goal-oriented human action – with human beings who possess obedience.

Who first said "the devil is in the details"?  Well, there is one detail that changes everything.  And in the world of today, these details litter just about every important topic like land mines, every step of the way.

Perhaps some must read the second formulation carefully to discover that the "goal-oriented human action" being talked about (in the second formulation) is "the predators-that-be and their goals (control others)", not "each individual and their individual goals (control self)" as presumed in the first formulation.

This one change in premise leads to entirely different bodies of work.  Each human being must choose his premises.  Both premises led to essentially separate bodies of work, both moderately consistent with their premises.  But true enough, one was quite a bit more honest in execution than the other.

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