91–100 of 116 posts
Because economics has always been utterly useless in any practical sense. It makes no testable predictions and is no more scientific than any theology. Only because it clothes its dogmas in symbolic notation is it accorded even the slightest bit of respect. The sooner we jettison it from our epistenic frames, the more quickly we will return to something that at least partially resembles sanity.
Are you talking about the Austrians whom try to prove their ideas with praxeology?
It seems that people are too hurried to read the article and are commenting the title and economics on general level. Basic macroeconomics did fine. Austerity side Alesina/Ardagna/Reinhart/Rogoff camp was utterly wrong. Spreadsheet errors in their studies that became basis for political action etc. Even after the austerity approach has been shown to be baseless in academia it continues to live in politics. Politician…
The IMF actually apologized to Britain after attacking it about cuts.
It was Krugman that was horrible wrong on the US for example, anybody remember the "fiscal cliff" in 2013? Krugman and friends went large and issued dire warning, he even called it a "test for market monetarism". Not a single blip in GDP was observed and then Krugman promptly denied everything.
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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.
People who criticize what is and is not counted and don't specify which unemployment number are uninformed.
Many monetarist (and others) have correctly point to these the drop-off in demand in 2008/2009 and said if it continued it would be bad.
The large error that happened, was actually the professions believe in the liquidity trap. Those like Krugman and DeLong who wrongly believed that 'the central bank was out of ammo' and the central bankers who ran around like headless chickens when their New Keynesian models failed at the ZLB. It took smart central bankers like those in Switzerland and others (and eventually the US) to overcome that and simply go back to what is now called 'unconventional monetary policy'. It is of course only called that because New Keynesian labeled it that (its not in their models so it can't possibly be a normal thing to do).
The Fed for example was so convinced that they needed to control the interest rate (because of New Keynesian thinking), they sterilized (selling bonds to prevent the balance sheet from growing) all their bad asset purchases and once they were unable to sustain that and started growing the balance sheet (labeled QE1 after the fact), they switched to paying interest on reserves with the express purpose to not allow the new money to 'get out'. At the same time they are doing this, NGDP is falling of a cliff. Its economic madness and the reason is a false believe in New Keynesian models and specifically the liquidity trap. It is insane to use a model that practically fails when the crisis hits.
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I believe that Economics should be a subset of Psychology. It mystifies me how Psych or Sociology classes arent required for a major. One would think that practitioners of a field essentially about human behavior would have insight into actual human behavior. And you would be wrong. Humans are replace by the mythical rational agent You are correct though. Economists are so proud of their elegant equations that they w…
Psychology students aren't required to study physics, despite most psychologists believing that psychology is basically just physics at an abstraction
A deeper knowledge of psychology and/or sociology can help you predict someone's behavior. Instead of assuming utility maximizing "rational" agents, you may be able to more accurately model human behavior.
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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.
Plenty of people I know were predicting the crash of 2008 at least a year out - sometimes more. Fortunately, none of them were qualified economists. Macro is actually pretty straightforward to do. But economics is politics by other means. It is not a science - it's a branch of rhetoric and persuasion (i.e. propaganda) and is used to disguise and rationalise purely political decisions that would otherwise be impossibl…
Everyone knows economists say what they're paid to say, which is why they're so often ignored. Oddly, the people who tend to understand that best are often the ones derided as the "uneducated" voters and the people who continue to cling to their faith in economic modelling despite all the evidence it's worthless are often the "educated".
It seems that people are too hurried to read the article and are commenting the title and economics on general level. Basic macroeconomics did fine. Austerity side Alesina/Ardagna/Reinhart/Rogoff camp was utterly wrong. Spreadsheet errors in their studies that became basis for political action etc. Even after the austerity approach has been shown to be baseless in academia it continues to live in politics. Politician…
If you look now, you will see that this is simple not true. Countries with independent aggressive monetary policy did the best. Countries one the Euro that did Austerity did better then those that increased taxes. Maybe in Krugmans fantasy land you can do neither, but most people live in the real world. The IMF actually apologized to Britain after attacking it about cuts. It was Krugman that was horrible wrong on the…
In the case of the "fiscal cliff"/sequester, there was indeed fiscal tightening in the federal government, but it was offset by less tightening at the state level. Does that mean it was wrong to warn against cuts at any level of government? Of course not.
Here is Krugman, acknowledging why this situation might be confusing. https://krugman.blogs.nytimes.com/2015/06/22/2013-and-all-th...
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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.
Fiat currencies do not have a limited supply and are therefore not a store of value (i.e., inflation constantly lowers the value of fiat currencies). The main reason that fiat currencies are still used as a medium of exchange is for the exact reason you mentioned: governments mandate their usage to pay taxes.
As an example, gold and silver have been used as money for 1000s of years because they meet all of those requirements.
There was another article on academic incentives today that referenced a wonderful quote: "When a measure is used as a target, it ceases to be a good measure." My impression is that economics as a whole does not understand this. When you target GDP for example, GDP ceases to be a good measure of anything. The trouble with economics as a science is that its results are used to guide the economy. This creates a feedbac…
That's true if what you measure is only a proxy for some other reality that you actually want to affect, but that is harder to measure. Cholesterol, for example, has long been targeted because it had shown a high correlation to cardiovascular health and life expectancy. The result was a long series of medications that successfully lowered cholesterol, with occasional death as a side effect. GDP is pretty close to wha…
What we want is productivity, development, and innovation. Those are primary things that like "good science" in the academic case are not easily distilled into simple measures that can be set as targets.