Alan Greenspan's Modest Proposal: Fix Broken Economic Models By... Modeling Irrational "Animal Spirits"

Tyler Durden's picture

Ten days ago, we showed that sometimes even the great maestro is powerless to fight deflation, particularly when it comes to the prevailing equilibrium price of his just released book "The Map And The Territory" where it seems there is a bit more supply than demand.

So when even cutting prices doesn't work what is a former Fed chairman, his ramblings roundly ignored by everyone when it was freely dispensed, and certainly now, when one has to pay for it, to do? Why condense the entire book in an essay and publish it for free in the Council of Foreign Relations Foreign Affairs website, of course.

But while we leave it to everyone's supreme amusement to enjoy the Maestro's full non-mea culpa essay, we will highlight Greenspan's two most amusing incosistencies contained in the span of a few hundred words.

On one hand the former Chairman admits that "The financial crisis [...] represented an existential crisis for economic forecasting. The conventional method of predicting macroeconomic developments -- econometric modeling, the roots of which lie in the work of John Maynard Keynes -- had failed when it was needed most, much to the chagrin of economists."

On the other, his solution is to do... more of the same: "if economists better integrate animal spirits into our models, we can improve our forecasting accuracy. Economic models should, when possible, measure and forecast systematic human behavior and the tendencies of corporate culture.... Forecasters may never approach the fantasy success of the Oracle of Delphi or Nostradamus, but we can surely improve on the discouraging performance of the past."

So, Greenspan's solution to the failure of linear models is to... model animal spirits, or said otherwise human irrationality. Brilliant.

It is good to know that at least the man who unleashed the biggest credit bubble on the world has learned from the lessons of the past three bubble bursts. Oh wait. He has not learned a single thing.

And then some wonder why the general public no longer has any faith in either the economy or the markets: with central planners - full of hubris and lacking any ability to learn and process historical events - like this one, an epic crash, one that is bigger than all previous ones combined, is absolutely assured.

By Alan Greenspan, posted in Foreign Affairs

Never Saw It Coming

It was a call I never expected to receive. I had just returned home from playing indoor tennis on the chilly, windy Sunday afternoon of March 16, 2008. A senior official of the U.S. Federal Reserve Board of Governors was on the phone to discuss the board’s recent invocation, for the first time in decades, of the obscure but explosive Section 13(3) of the Federal Reserve Act. Broadly interpreted, that section empowered the Federal Reserve to lend nearly unlimited cash to virtually anybody: in this case, the Fed planned to loan nearly $29 billion to J.P. Morgan to facilitate the bank’s acquisition of the investment firm Bear Stearns, which was on the edge of bankruptcy, having run through nearly $20 billion of cash in the previous week.

The demise of Bear Stearns was the beginning of a six-month erosion in global financial stability that would culminate with the failure of Lehman Brothers on September 15, 2008, triggering possibly the greatest financial crisis in history. To be sure, the Great Depression of the 1930s involved a far greater collapse in economic activity. But never before had short-term financial markets, the facilitators of everyday commerce, shut down on a global scale. As investors swung from euphoria to fear, deeply liquid markets dried up overnight, leading to a worldwide contraction in economic activity.

The financial crisis that ensued represented an existential crisis for economic forecasting. The conventional method of predicting macroeconomic developments -- econometric modeling, the roots of which lie in the work of John Maynard Keynes -- had failed when it was needed most, much to the chagrin of economists. In the run-up to the crisis, the Federal Reserve Board’s sophisticated forecasting system did not foresee the major risks to the global economy. Nor did the model developed by the International Monetary Fund, which concluded as late as the spring of 2007 that “global economic risks [had] declined” since September 2006 and that “the overall U.S. economy is holding up well . . . [and] the signs elsewhere are very encouraging.” On September 12, 2008, just three days before the crisis began, J.P. Morgan, arguably the United States’ premier financial institution, projected that the U.S. GDP growth rate would accelerate during the first half of 2009. The pre-crisis view of most professional analysts and forecasters was perhaps best summed up in December 2006 by The Economist: “Market capitalism, the engine that runs most of the world economy, seems to be doing its job well.”

What went wrong? Why was virtually every economist and policymaker of note so blind to the coming calamity? How did so many experts, including me, fail to see it approaching? I have come to see that an important part of the answers to those questions is a very old idea: “animal spirits,” the term Keynes famously coined in 1936 to refer to “a spontaneous urge to action rather than inaction.” Keynes was talking about an impulse that compels economic activity, but economists now use the term “animal spirits” to also refer to fears that stifle action. Keynes was hardly the first person to note the importance of irrational factors in economic decision-making, and economists surely did not lose sight of their significance in the decades that followed. The trouble is that such behavior is hard to measure and stubbornly resistant to any systematic analysis. For decades, most economists, including me, had concluded that irrational factors could not fit into any reliable method of forecasting.

Financial firms believed that if a crisis developed, the insatiable demand for exotic products would dissipate only slowly. They were mistaken.

But after several years of closely studying the manifestations of animal spirits during times of severe crisis, I have come to believe that people, especially during periods of extreme economic stress, act in ways that are more predictable than economists have traditionally understood. More important, such behavior can be measured and should be made an integral part of economic forecasting and economic policymaking. Spirits, it turns out, display consistencies that can help economists identify emerging price bubbles in equities, commodities, and exchange rates -- and can even help them anticipate the economic consequences of those assets’ ultimate collapse and recovery.

(Ib Ohhlson)


The economics of animal spirits, broadly speaking, covers a wide range of human actions and overlaps with much of the relatively new discipline of behavioral economics. The study aims to incorporate a more realistic version of behavior than the model of the wholly rational Homo economicus used for so long. Evidence indicates that this more realistic view of the way people behave in their day-by-day activities in the marketplace traces a path of economic growth that is somewhat lower than would be the case if people were truly rational economic actors. If people acted at the level of rationality presumed in standard economics textbooks, the world’s standard of living would be measurably higher.

From the perspective of a forecaster, the issue is not whether behavior is rational but whether it is sufficiently repetitive and systematic to be numerically measured and predicted. The challenge is to better understand what Daniel Kahneman, a leading behavioral economist, refers to as “fast thinking”: the quick-reaction judgments on which people tend to base much, if not all, of their day-to-day decisions about financial markets. No one is immune to the emotions of fear and euphoria, which are among the predominant drivers of speculative markets. But people respond to fear and euphoria in different ways, and those responses create specific, observable patterns of thought and behavior.

Perhaps the animal spirit most crucial to forecasting is risk aversion. The process of choosing which risks to take and which to avoid determines the relative pricing structure of markets, which in turn guides the flow of savings into investment, the critical function of finance. Risk taking is essential to living, but the question is whether more risk taking is better than less. If it were, the demand for lower-quality bonds would exceed the demand for “risk-free” bonds, such as U.S. Treasury securities, and high-quality bonds would yield more than low-quality bonds. It is not, and they do not, from which one can infer the obvious: risk taking is necessary, but it is not something the vast majority of people actively seek.

The bounds of risk tolerance can best be measured by financial market yield spreads -- that is, the difference between the yields of private-sector bonds and the yields of U.S. Treasuries. Such spreads exhibit surprisingly little change over time. The yield spreads between prime corporate bonds and U.S. Treasuries in the immediate post?Civil War years, for example, were similar to those for the years following World War II. This remarkable equivalence suggests long-term stability in the degree of risk aversion in the United States.

Another powerful animal spirit is time preference, the propensity to value more highly a claim to an asset today than a claim to that same asset at some fixed time in the future. A promise delivered tomorrow is not as valuable as that promise conveyed today. Investors experience this phenomenon mostly through its most visible counterparts: interest rates and savings rates. Like risk aversion, time preference has proved remarkably stable: indeed, in Greece in the fifth century BC, interest rates were at levels similar to those of today’s rates. From 1694 to 1972, the Bank of England’s official policy rate ranged from two to ten percent. It surged to 17 percent during the inflationary late 1970s, but it has since returned to single digits.

Time preference also affects people’s propensity to save. A strong preference for immediate consumption diminishes a person’s tendency to save, whereas a high preference for saving diminishes the propensity to consume. Through most of human history, time preference did not have a major determining role in the level of savings, because prior to the late nineteenth century, most people had to consume virtually all they produced simply to stay alive. There was little left over to save even if people were innately inclined to do so. It was only when the innovation and productivity growth of the Industrial Revolution freed people from the grip of chronic starvation that time preference emerged as a significant -- and remarkably stable -- economic force. Consider that although real household incomes have risen significantly since the late nineteenth century, average savings rates have not risen as a consequence. In fact, during periods of peace in the United States since 1897, personal savings as a share of disposable personal income have almost always stayed within a relatively narrow range of five to ten percent.


In addition to the stable and predictable effects of time preference, another animal spirit is at work in these long-term trends: “conspicuous consumption,” as the economist Thorstein Veblen labeled it more than a century ago, a form of herd behavior captured by the more modern idiom “keeping up with the Joneses.” Saving and consumption reflect people’s efforts to maximize their happiness. But happiness depends far more on how people’s incomes compare with those of their perceived peers, or even those of their role models, than on how they are doing in absolute terms. In 1995, researchers asked a group of graduate students and staff members at the Harvard School of Public Health whether they would be happier earning $50,000 a year if their peers earned half that amount or $100,000 if their peers earned twice that amount; the majority chose the lower salary. That finding echoed the results of a fascinating 1947 study by the economists Dorothy Brady and Rose Friedman, demonstrating that the share of income an American family spent on consumer goods and services was largely determined not by its income but by how its income compared to the national average. Surveys indicate that a family with an average income in 2011 spent the same proportion of its income as a family with an average income in 1900, even though in inflation-adjusted terms, the 1900 income would represent only a minor fraction of the 2011 figure.

Such herd behavior also drives speculative booms and busts. When a herd commits to a bull market, the market becomes highly vulnerable to what I dub the Jessel Paradox, after the vaudeville comedian George Jessel. In one of his routines, Jessel told the story of a skeptical investor who reluctantly decides to invest in stocks. He starts by buying 100 shares of a rarely traded, fly-by-night company. Surprise, surprise -- the price moves from $10 per share to $11 per share. Encouraged that he has become a wise investor, he buys more. Finally, when his own purchases have managed to bid the price up to $30 per share, he decides to cash in. He calls his broker to sell out his position. The broker hesitates and then responds, “To whom?”

Classic market bubbles take shape when herd behavior induces almost every investor to act like the one in Jessel’s joke. Bears become bulls, propelling prices ever higher. In the archetypal case, at the top of the market, everyone has turned into a believer and is fully committed, leaving no unconverted skeptics left to buy from the first new seller.

That was, in essence, what happened in 2008. By the spring of 2007, yield spreads in debt markets had narrowed dramatically; the spread between “junk” bonds that were rated CCC or lower and ten-year U.S. Treasury notes had fallen to an exceptionally low level. Almost all market participants were aware of the growing risks, but they also knew that a bubble could keep expanding for years. Financial firms thus feared that should they retrench too soon, they would almost surely lose market share, perhaps irretrievably. In July 2007, the chair and CEO of Citigroup, Charles Prince, expressed that fear in a now-famous remark: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Financial firms accepted the risk that they would be unable to anticipate the onset of a crisis in time to retrench. However, they thought the risk was limited, believing that even if a crisis developed, the seemingly insatiable demand for exotic financial products would dissipate only slowly, allowing them to sell almost all their portfolios without loss. They were mistaken. They failed to recognize that market liquidity is largely a function of the degree of investors’ risk aversion, the most dominant animal spirit that drives financial markets. Leading up to the onset of the crisis, the decreased risk aversion among investors had produced increasingly narrow credit yield spreads and heavy trading volumes, creating the appearance of liquidity and the illusion that firms could sell almost anything. But when fear-induced market retrenchment set in, that liquidity disappeared overnight, as buyers pulled back. In fact, in many markets, at the height of the crisis of 2008, bids virtually disappeared.


Financial firms could have protected themselves against the costs of their increased risk taking if they had remained adequately capitalized -- if, in other words, they had prepared for a very rainy day. Regrettably, they had not, and the dangers that their lack of preparedness posed were not fully appreciated, even in the commercial banking sector. For example, in 2006, the Federal Deposit Insurance Corporation, speaking on behalf of all U.S. bank regulators, judged that “more than 99 percent of all insured institutions met or exceeded the requirements of the highest regulatory capital standards.”

What explains the failure of the large array of fail-safe buffers that were supposed to counter developing crises? Investors and economists believed that a sophisticated global system of financial risk management could contain market breakdowns. The risk-management paradigm that had its genesis in the work of such Nobel Prize–winning economists as Harry Markowitz, Robert Merton, and Myron Scholes was so thoroughly embraced by academia, central banks, and regulators that by 2006 it had become the core of the global bank regulatory standards known as Basel II. Global banks were authorized, within limits, to apply their own company-specific risk-based models to judge their capital requirements. Most of those models produced parameters based only on the last quarter century of observations. But even a sophisticated number-crunching model that covered the last five decades would not have anticipated the crisis that loomed.

Mathematical models that calibrate risk are nonetheless surely better guides to risk assessment than the “rule of thumb” judgments of a half century earlier. To this day, it is hard to find fault with the conceptual framework of such models, as far as they go. The elegant options-pricing model developed by Scholes and his late colleague Fischer Black is no less valid or useful today than when it was developed, in 1973. But in the growing state of euphoria in the years before the 2008 crash, private risk managers, the Federal Reserve, and other regulators failed to ensure that financial institutions were adequately capitalized, in part because we all failed to comprehend the underlying magnitude and full extent of the risks that were about to be revealed as the post-Lehman crisis played out. In particular, we failed to fully comprehend the size of the expansion of so-called tail risk.

“Tail risk” refers to the class of investment outcomes that occur with very low probabilities but that are accompanied by very large losses when they do materialize. Economists have assumed that if people acted solely to maximize their own self-interest, their actions would produce long-term growth paths consistent with their abilities to increase productivity. But because people lacked omniscience, the actual outcomes of their risk taking would reflect random deviations from long-term trends. And those deviations, with enough observations, would tend to be distributed in a manner similar to the outcomes of successive coin tosses, following what economists call a normal distribution: a bell curve with “tails” that rapidly taper off as the probability of occurrence diminishes.

Those assumptions have been tested in recent decades, as a number of once-in-a-lifetime phenomena have occurred with a frequency too high to credibly attribute to pure chance. The most vivid example is the wholly unprecedented stock-price crash on October 19, 1987, which propelled the Dow Jones Industrial Average down by more than 20 percent in a single day. No conventional graph of probability distribution would have predicted that crash. Accordingly, many economists began to speculate that the negative tail of financial risk was much “fatter” than had been assumed -- in other words, the global financial system was far more vulnerable than most models showed.

In fact, as became clear in the wake of the Lehman collapse, the tail was morbidly obese. As a consequence of an underestimation of that risk, financial firms failed to anticipate the amount of additional capital that would be required to serve as an adequate buffer when the financial system was jolted.


The 2008 financial collapse has provided reams of new data on negative tail risk; the challenge will be to use the new data to develop a more realistic assessment of the range and probabilities of financial outcomes, with an emphasis on those that pose the greatest dangers to the financial system and the economy. One can hope that in a future financial crisis -- and there will surely be one -- economists, investors, and regulators will better understand how fat-tail markets work. Doing so will require better models, ones that more accurately reflect predictable aspects of human nature, including risk aversion, time preference, and herd behavior.

Forecasting will always be somewhat of a coin toss. But if economists better integrate animal spirits into our models, we can improve our forecasting accuracy. Economic models should, when possible, measure and forecast systematic human behavior and the tendencies of corporate culture. Modeling will always be constrained by a lack of relevant historical precedents. But analysts know a good deal more about how financial markets work -- and fail -- than we did before the 2008 crisis.

The halcyon days of the 1960s, when there was great optimism that econometric models offered new capabilities to accurately judge the future, are now long gone. Having been mugged too often by reality, forecasters now express less confidence about our abilities to look beyond the immediate horizon. We will forever need to reach beyond our equations to apply economic judgment. Forecasters may never approach the fantasy success of the Oracle of Delphi or Nostradamus, but we can surely improve on the discouraging performance of the past.

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Number 156's picture

Darth sez:
"Your Failure is now Complete".

nope-1004's picture

<-- Bought the book

<-- Would rather read the truth elsewhere


This liars' days are done, and so is Bernocchios.  Couple of social misfits with book sales proving public acceptance.  Ya... stock market irrationality causes economic turnarounds, friggin' idiot..

InjectTheVenom's picture

<<<<<  Greenspan King Douchebag

<<<<<  Premier 20th/21st Century Economist

superflex's picture

At least Tyler didn't put a picture of that dried up raisin in the story.

Vampyroteuthis infernalis's picture

I have an easier answer. How about fair, transparent markets? (I apologize for such simple remarks since educated idiots will never do the right thing.)

flacon's picture

The ONLY thing that Keynes said that is actually true:


"The Market Can Remain Irrational Longer Than You Can Remain Solvent" ~ John Maynard Keynes

jcaz's picture

Al- just so you're clear on this-  history WILL show you to be SINGULARILY responsible for this mess,  and the biggest fucktard that ever chaired the Fed.....

knukles's picture

Oh my....
Model irrationality.

Ranks right up there with Christopher Hedge's "There are no Absolute Truths"
Which in and of itself is an...  Absolute Truth....

Model irrationality

We don't need no stinkin' new irrational models, we already got all the models don't work we needs

SDShack's picture

"Irrational Exhuberance" that couldn't be anticipated by anyone, was the problem before. So let's model it for the future. Can anyone say "Circular Logic"?

NihilistZero's picture

Can anyone say "Alan Greenspan is one of the few people in the history of humanity to be worthy of death by flaying"?

Overfed's picture

Ah..but I disagree. JM Keynes also gave great advice on where to find young boys who had been forced into sex slavery for consumption  by the deviants of his ilk.

Panafrican Funktron Robot's picture

Interesting to me when the Fed head can't effectively interpret their own data/charting, despite the clear and obvious warning signs.  Tells me once again that it's far more likely he's just blowing smoke out of his ass, and claiming ignorance/"nobody could have seen this coming" when the simpler/more rational answer is just that he's a straight up corrupt bastard that intended for everything that did happen, to happen.

Another way of thinking of this:  Look at the Fed funds rate starting in 2005 - 2007.  Look at how strongly and quickly that moved up.  Then consider the subsequent results.  You would have to be a complete idiot not to rationally consider that moving the rate from 1% up to 5.25%, when the vast majority of the economic growth during that time was due to a real estate boom (which is very strongly tied to that rate) would probably crash and burn that boom.  

Panafrican Funktron Robot's picture

Note the very strong increases in the Fed Funds rate, and the subsequent recessions.  Gee, what's the trend there??!!!


NihilistZero's picture

+1 Panafrican Funk

I've often quoted the phraise "Never ascribe to malice that which can be acurately explained by stupidity."

Greenspan for all his sins is NOT stupid.  The evil members of "The Tribe" (and no I don't mean Jews :-) have gamed every economic boom/bust and war for however many centuries.  Diabolically evil.

Stoploss's picture

If Al has all the answers, then why not put his ass back in the FED chair to deal with his own shit???


Unprepared's picture

"The Easiest Way to Make Money" by Alan Greenspan:


1 - Go to the nearest B&N store

2 - Buy the book at a discount

3 - Set it in flames

4 - Take the ashes back to the store

5 - Show your receipt and ask for refund. If asked, say you didn't (have a chance to) read it, even though it looks kinda dusty. The cashier wouldn't be able to tell the difference

6 - Get full price refund

7 - Repeat from step #2

Tasty Sandwich's picture

What even motivates the guy at this point?

He's like 90.

I guess he's in denial.  Must be difficult to accept that your life's work is a sham.

Itch's picture

"What even motivates the guy at this point?"

Intellectual masturbation; doing it in public is always more of a turn on.

disabledvet's picture

As "Chief Liar Poker" he should have just stayed put in the book review section. His hand-picked "I've got an even better hand" has truly deceived them all...and now rides off into the "I just built the ultimate Financial WMD and just detonated it" sunset. The madness is To Be Continued like some "very important episode of a very unimportant television program."

Offthebeach's picture

I bought his bio, his first book.
I'm not formally well educated, and informally a over read train wreck. What struck me was that Greenspan was dumb. Clueless. A hack. And this was from his own writtings. A best he was/is a high functioning clerk.
Chauncy Gardner of finance.
Also, his wife, Andrea Mitchell is Riddler spooged face pancake ugly.

TheFourthStooge-ing's picture

<-- BTU content when burned
<-- written content when read

provides the greatest value that can be obtained from an Alan Greenspan book.

Atlantis Consigliore's picture

"Senile" index:  quick the ICON  cut and paste. 

aka Senility in Fed Reserve analysis and e-forecasting and regulation

aka "QE to Infinity....." give me the stooges,  Schmow, Yellen, and Berflunky....

lordbyroniv's picture



Greenspan always sounds like such a bull shit artist.


Do you think he knows he is a bullshitter or does he take himself seriously when he looks in the mirror?

GVB's picture

So Greenspan plays Tennis.

Ignatius's picture

God damn, anything to keep from talking about the inherant problems of a privately held debt based money system and shadow banking.

Might as well ask Alan who he likes in the Super Bowl.

Hedgetard55's picture

What a douchebag. The cocksucker caused the crash with his easy money policies and can't admit it. Fuck him.

disabledvet's picture

"we had to destroy capitalism before we could save it."

Panafrican Funktron Robot's picture

I would actually suggest that his easy money policies merely blew the bubble, which Bernanke subsequently popped, and then subsequently "saved", resulting in "man of the year".

Fucking comedians.  

Mercury's picture

Alan Greenspan's Modest Proposal: Fix Broken Economic Models By... Modeling Irrational "Animal Spirits"

Right.  Beacuse if you just switched column A with column F and divided both sums by the Krugman Reverse Reach-Around Multiplier your model would have predicted the Iphone.

Coming soon… Sex: a dynamic model with real-time spreadsheet analysis.

#REF! Go Fuck Yourself



Ignatius's picture

How about modeling debt as Keen suggests? *

* I may punch the next economist who mentions 'animal spirits'


disabledvet's picture

yeah you do that..."today we modeled the financial equivalent of the impact of Mt Fuji erupting on our balance and discovered this is GREAT!" The wise ones dug deep in those (hopefully now dormant) Volcanos and got the gold/silver/copper/ etc, etc out of there. I mean has this clown ever even heard of the term "cash flow" before? On the other hand great job being the discounting mechanism. "I can now price in the bankruptcy of pretty much Government itself into my financial calculations" you Randian Superhero you! He'd do better (along with all the morons jumping into this ongoing volcano...there has to be one virgin left somewhere! find her dammit! find her now!) hanging a Right onto LSD and pulling over to the Family that that single handely built the Park by the Lake with a sign and coffee can in hand and say "phuck you give me your money."

nickels's picture

Deep-six the Fed and let Fish&Game run the joint. Or an Iroquois Shaman. Either would do a better job.

Spungo's picture

Irrationality? What irrationality? When you set the interest rate to 1%, it's completely rational to borrow as much as possible and try to make money with it. It's also rational to panic sell when your huge pile of debt goes from 1% interest to 2% interest. It's also a completely expected outcome that it would crash the stock market when everyone is panic selling at the same time. He attributes this to irrational human behavior when it really just means he's an idiot who doesn't understand incentives.

NotApplicable's picture

Oh, he understands them. His job is to discredit them under the guise of irrationality, in order that this sideshow continue on another day.

One does not become "The Maestro" in ignorance.

Bernanke, OTOH...

Cacete de Ouro's picture

And I thought animal spirits was something else ->

You and me baby we ain't nothin' but mammals
So let's do it like they do on the Discovery Channel

disabledvet's picture

He wants to have babies and be called Loretta. Move along....

A Nanny Moose's picture



Our so called leaders speak
With words they try to jail you
They subjugate the meek
But it's the rhetoric of failure

putaipan's picture

the tendencies of corporate culture .... are totally rational 'animal spirits' - lust and greed. he has admitted as much. he's still sucking at the dry withered teat of ayn rand.

SDShack's picture

Exactly, a few years ago he railed against "Irrational Exhuberance" and now he wants future economic models to include "Animal Instints". LOL! You can't make this shit up! And these are supposed to be the smartest people in the room according to the talking heads on tv. It's precisely why I don't buy into conspiracy theories about the Fed. It's obvious these people just don't have a fucking clue, and are just sociopaths. They are only capable of knee jerk reactions towards anything that is a perceived as a threat to their own insane world. Like a true sociopath, they continually grasp at straws that will sacrifice everything that a real world needs to survive and thrive, in a selfish misguided attempt to protect their illusionary world.

GrinandBearit's picture

Why can't someone end him?

FieldingMellish's picture

The Holy Grail: Predicting the outcome of random events and their effects on free thinking individuals.


I have a better one. Why not simply let the Fed and a few "onside" buddies control all markets everywhere? There. Predictable markets.

Tinky's picture

Animal spirits? Economists would be able to build more accurate models if they plied a human animal with spirits and, after his blood alcohol level reached .20%*, asked him to predict what the economy will look like in one, three, and five years' time.

*according to the Clemson campus guide, at .20% "You may feel confused, dazed or otherwise disoriented. You need help to stand up or walk. If you hurt yourself at this point, you probably won’t realize it because you won’t feel pain. Even if you are aware that you’ve injured yourself, you probably won’t do anything about it. At this point you may experience nausea and start vomiting. Your gag reflex is impaired, so you could choke if you throw up. Since blackouts are likely at this level, you may not remember any of this."

A Lunatic's picture

If you really want to fix the centrally planned economy, simply model it after the one party two party political system by taking away the people's right to choose anything other than the choices preordained by the Bankster Elite. The banksters and politicians can decide what goods and services that 'we the peons' "really" need and the peons can viciously debate the subtle differences between the products and have yet another outlet to satisfy their insatiable desire to define, label, and divide themselves. MOAR WINNING.........

Lordflin's picture

I have another solution... put the economists to breaking rocks... perhaps a decade of such 'spirited animal effort' may help to give some perspective...

fijisailor's picture

the Maestro's full non-mea culpa essay = senility

suteibu's picture

So economic modeling doesn't work, huh? 

And yet we are supposed to buy into the climate change modeling?

Modeling of large, complex systems, proof that just because you can do something doesn't mean you should.

fxrxexexdxoxmx's picture

If you speak about the religion of climate be prepared for zealots. Sorta like the irrational faith healers of economics.