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Economists’ projections of interest rates and unemployment have proved too high

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Re: Economists’ projections of interest rates and unemployment have proved too high

#41

Post by oppositelock »

joycian wrote: post #24
tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

Could you point me to resources where I could learn about this?

The BLS is completely nuts with computing CPI. What the previous poster is referring to is called "hedonic adjustment" [1]. For example, the CPI contains a TV, and adjusts its price [2]. As an example, say that you put a 19" CRT TV in there in the 1980's, and it cost $400 at the time. Over time, as televisions got better, and it became impossible to buy that specific TV, the BLS started adjusting the price of the original tv down, because it's clearly inferior to anything available today. At the end of those adjustments, you end up with a situation where the TV may "cost" $100 post-adjustment, but it's impossible to buy any $100 TV today because that would be the price of something which doesn't exist. This type of adjustment happens in many categories, and it biases the CPI downwards. It's a giant sham.

1: https://www.bls.gov/cpi/quality-adjustment/home.htm 2: https://www.bls.gov/cpi/quality-adjustment/televisions.htm

Re: Economists’ projections of interest rates and unemployment have proved too high

#42

Post by qubex »

DanTheManPR wrote: post #16
koheripbal wrote: post #12

Earlier quoted context omitted.

Bingo. Money is only a useful medium of exchange if it is stable, and deflationary currencies are inherently volatile.

Double bingo. Money is only useful insofar as it has velocity. If speculators are just sitting on it, it's not facilitating economic activity.

I’d never thought of it that way but I wholeheartedly agree.

Re: Economists’ projections of interest rates and unemployment have proved too high

#43

Post by seiferteric »

drcode wrote: post #18
qubex wrote: post #10

Earlier quoted context omitted.

Satoshi got it extremely wrong, to the point that if he had any economic background at all I’d suspect the first wave of crypto currencies to be a sick joke: artificial scarcity (and more generally, inflexible money supply) of the kind engendered by bitcoin and its ilk are the exact embodiment of what money must not be if one is to not artificially crimp the economy’s growth. There’s a very good reason why we came of…

Satoshi used his/her economic theories to create a 100 billion market cap asset from literally zero... what would they have to do to convince you folks that they were on to something with their ideas? Also cure cancer?

Wouldn't that be true of someone who created a ponzi scheme also? Do you consider Madoff a success?

Re: Economists’ projections of interest rates and unemployment have proved too high

#44

Post by seibelj »

joshuaellinger wrote: post #2

Except for the MMT people. They mostly got it right but they don't count as 'real' economists to the WSJ.

Their theory may work but I understand it's predicated on having control of a global reserve currency and being able to dynamically change income tax rates (and all tax rates?) on a daily basis. This is not possible so the theory can't be tested.

Re: Economists’ projections of interest rates and unemployment have proved too high

#45

Post by drcode »

oblio wrote: post #32
drcode wrote: post #18

Earlier quoted context omitted.

Satoshi used his/her economic theories to create a 100 billion market cap asset from literally zero... what would they have to do to convince you folks that they were on to something with their ideas? Also cure cancer?

There's been fads bigger than Bitcoin that no one remembers anymore. The true test of Bitcoin is longevity.

No, there has never been a "fad" that had a 100 billion dollar market cap.

Re: Economists’ projections of interest rates and unemployment have proved too high

#46

Post by [deleted] »

tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

[deleted]

Re: Economists’ projections of interest rates and unemployment have proved too high

#47

Post by logicchains »

qubex wrote: post #10
martindale wrote: post #6

Satoshi got it right; "Chancellor on Brink of Second Bailout for Banks" — 10 years and running strong. Seems the Austrians are winning back a century of lost ground!

Satoshi got it extremely wrong, to the point that if he had any economic background at all I’d suspect the first wave of crypto currencies to be a sick joke: artificial scarcity (and more generally, inflexible money supply) of the kind engendered by bitcoin and its ilk are the exact embodiment of what money must not be if one is to not artificially crimp the economy’s growth. There’s a very good reason why we came of…

>Satoshi got it extremely wrong, to the point that if he had any economic background at all I’d suspect the first wave of crypto currencies to be a sick joke

...

>coming off [the Gold Standard] heralded the greatest period of economic growth in Western history.

You got this extremely wrong, to the point that if you had any economic background at all I'd suspect your comment to be a sick joke. The US saw average growth rates of over 4% in the 19th century as it industrialised. By the time the Gold Standard was abandoned, most of the west was already thoroughly "developed", and could not grow as fast as before due to there being fewer lower-hanging fruit. This is the same reason places like China and India see growth rates of 6-8% in recent years (compared to 2-3% in the west): there are many more low-hanging fruit in a developing economy (e.g. moving the 50%+ of the population engaged in subsistence farming into more productive factory or service work).

As an aside, such language is unbecoming of anyone who wishes economics to be considered a real science. Even in physics, where it's possible to craft exact, repeatable experiments that can prove a statement true with 99.999% accuracy, practitioners still try to avoid bombast and smuggery because of how easy it is to make mistakes. Yet in economics, a field where it's difficult to even repeat the same experiment twice, and no model can predict the future anywhere near as accurately as a simple model such as Newton's laws can in physics, many practitioners seem quite comfortable making grandiose, bombastic and mocking statements with complete confidence in their own correctness. To me this smells like a consequence of economists never having been exposed to the humbling experience of having to validate their models' predictions against the real world, and not being held accountable for bad predictions.

Re: Economists’ projections of interest rates and unemployment have proved too high

#48

Post by neilk »

drcode wrote: post #18
qubex wrote: post #10

Earlier quoted context omitted.

Satoshi got it extremely wrong, to the point that if he had any economic background at all I’d suspect the first wave of crypto currencies to be a sick joke: artificial scarcity (and more generally, inflexible money supply) of the kind engendered by bitcoin and its ilk are the exact embodiment of what money must not be if one is to not artificially crimp the economy’s growth. There’s a very good reason why we came of…

Satoshi used his/her economic theories to create a 100 billion market cap asset from literally zero... what would they have to do to convince you folks that they were on to something with their ideas? Also cure cancer?

Be able to buy something with it

Re: Economists’ projections of interest rates and unemployment have proved too high

#49

Post by bpt3 »

aishvar wrote: post #34
tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

That's just flat false. Look at the latest CPI report: https://www.bls.gov/news.release/pdf/cpi.pdf It includes the list of items, weightings, and price changes. All 3 of those (shelter, medical care, and education) are on there.

The parent poster didn't say they weren't there, but that they are under-weighted, and I'd agree with that assessment personally.

Re: Economists’ projections of interest rates and unemployment have proved too high

#50

Post by dv_dt »

gonational wrote: post #25

If you can find me economists that have predicted economic activities/results with any level of accuracy (e.g., greater than 50% even), then I will find you ~10 times as many prominent economists who have predicted the opposite. Economists probably predict things accurately at a rate lower than throwing a 20 sided die into the air and guessing which number will be facing up when it lands. Does that matter? Well, if t…

Businesses only become profitable in a almost completely artificial human made financial landscape. There is really no reason to believe much more than a successful businessman is someone who was smart, sure, but also lucky at some very particular niche. And as bad as economists are, they're the few which are studying how that landscape's construction affects how businesses and people grow within them. That isn't to say we should blindly follow their advice, but to throw out all economists in favor or successful businessmen is looking to implement cargo cult surviorship biases.
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