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Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

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Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#71

Post by matt4077 »

VHRanger wrote: post #15
jbmorgado wrote: post #9

Earlier quoted context omitted.

Why not? Minimising these impacts it's about finances, not economics. I.E Economics is about predicting these things (which they absolutely didn't), finances is about putting mechanisms in place so that if they happen they will be minimised.

Economics is not about predicting, it's about understanding things. It's basically impossible to do the former at scale for time periods over 6 months, we're slowly getting better at the latter. One big reason economic forecasting is so hard is that agents in the system you are forecasting are taking your present period forecast into account when acting in future periods.

> One big reason economic forecasting is so hard is that agents in the system you are forecasting are taking your present period forecast into account when acting in future periods.

Meh, that's not terribly convincing, as far as excuses go. For GDP predictions, for example, there are many competing institutions publishing forecasts for any number of countries, sectors, etc. It'd be impossible to take them all into account, especially when they don't agree.

I'm also not sure if "taking it into account" wouldn't actually lead to the opposite: self-fulfilment of those prophesies. After all, the prevalent reaction to an expectation of high growth would be to invest, thus creating that growth.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#72

Post by mathieutd »

FullMtlAlcoholc wrote: post #39
thinkling wrote: post #31

If economists did come to a broad consensus, many politicians would still ignore that consensus if it didn't happen to fit their worldview or the interests of their major donors. See: climate science.

One could scarcely call the field of Economics a science though.

Why? They formulate theories and test them against data to understand how the world works. Is that not the definition of science?

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#73

Post by matt4077 »

ThomPete wrote: post #55
AnimalMuppet wrote: post #51

Earlier quoted context omitted.

Yes millions lost their jobs, houses, and business. And yes it was a minor blip. If you think otherwise, you don't grasp how bad the Great Depression was. Think about 35% unemployment for years . The majority of mainstream economists didn't see it coming. That's a totally valid criticism. But they did a much better job of handling it than in 1929, and the damage, while major, was still nothing like the Great Depressi…

I think you owe it to yourself to look up how the US defines a job. Most jobs created since 2008 are trmp jobs not actuallu structurally solid jobs so sure there is less unemployment but the employment there is is way more fragile.

The actual criticism is the US not counting people not actively looking for a job as unemployed, thus dismissing those who have given up/gone back to school/retired early/found their calling as a stay-at-home dad.

Still: if you believe today's troubles are in any way comparable to the 20s, you owe it to yourself to read up on that period. Check for "starvation" in the index.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#74

Post by seoguru »

makosdv wrote: post #50
josephlord wrote: post #30

Earlier quoted context omitted.

Firstly there are two ways that money is printed. 1) Government/central bank spend more than they take in taxes. 2) Private banks make loans to private sector (biz or individuals). Money is destroyed by government running a surplus or by loans being repaid. Note also that for the government to run a surplus the private sector must run a deficit (decrease savings or increase borrowing) in most circumstances. The quest…

Why does money need to be managed and controlled? Real money inherently has a limited supply, so there is no need for it to be managed or controlled; the market does that on its own. However, the fiat currencies that are used by central banks around the world are not real money. The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country is what lea…

what is "real money" to you? Fiat currency is real money to me. It's the only thing I can pay my taxes with.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#76

Post by Gibbon1 »

josephlord wrote: post #30
gozur88 wrote: post #28

Earlier quoted context omitted.

The mistake there is thinking printing money brings you growth. Where has this worked?

Firstly there are two ways that money is printed. 1) Government/central bank spend more than they take in taxes. 2) Private banks make loans to private sector (biz or individuals). Money is destroyed by government running a surplus or by loans being repaid. Note also that for the government to run a surplus the private sector must run a deficit (decrease savings or increase borrowing) in most circumstances. The quest…

Money-Debt also expires via bankruptcy and gets eaten away via inflation.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#77

Post by Gibbon1 »

gozur88 wrote: post #45
thatfrenchguy wrote: post #41

Earlier quoted context omitted.

In all western societies, looking at the great lifestyle differences between the 1970s and now.

Is that growth, or does that fall under "eating the seed corn"? I agree the money supply has to expand when the economy expands, but that's not the same thing as printing a bunch of money and spending it during a recession.

In theory in a properly managed recovery from a recession bad debt is eliminated via loan restructuring and new more productive debt is created to replace it. And income insurance programs[1] are used to support demand. Austerity during a recession works poorly because instead of replacing unproductive debt with new more productive debt, austerity attempts to subsidize the owners of bad debt by taxing demand.

[1] Unemployment insurance, welfare, state run retirement, pensions, etc.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#78

Post by VHRanger »

the_why_of_y wrote: post #18
VHRanger wrote: post #12

Earlier quoted context omitted.

Nobody takes Steve Keen seriously. He doesn't even have a university job anymore.

Are you sure about that? http://fass.kingston.ac.uk/faculty/staff/cv.php?staffnum=104...

Check his patreon.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#79

Post by FullMtlAlcoholc »

mathieutd wrote: post #72
FullMtlAlcoholc wrote: post #39

Earlier quoted context omitted.

One could scarcely call the field of Economics a science though.

Why? They formulate theories and test them against data to understand how the world works. Is that not the definition of science?

>

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#80

Post by VHRanger »

matt4077 wrote: post #71
VHRanger wrote: post #15

Earlier quoted context omitted.

Economics is not about predicting, it's about understanding things. It's basically impossible to do the former at scale for time periods over 6 months, we're slowly getting better at the latter. One big reason economic forecasting is so hard is that agents in the system you are forecasting are taking your present period forecast into account when acting in future periods.

> One big reason economic forecasting is so hard is that agents in the system you are forecasting are taking your present period forecast into account when acting in future periods. Meh, that's not terribly convincing, as far as excuses go. For GDP predictions, for example, there are many competing institutions publishing forecasts for any number of countries, sectors, etc. It'd be impossible to take them all into ac…

Right. What I said is generally true for Central Bank forecasts, because they have an effect on interest rates (which they set). But the expectation of change in interest rates changes lending and borrowing behavior now, etc.

That said, it's generally doable to do serious forecasts for a few months in advance, but the error bars explode after that.

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