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Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
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Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#32Earlier quoted context omitted.
Its the prize from the central bank of Sweden for bailing out banks with tax money and giving them clear sign they can leverage and risk as much as they want, if anything goes bad tax payers will have to pay for it.
You are right in spirit but, technically, the central bank does not use tax money.
QE could be seen as indirect taxation.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#33Maybe this will remind people what the Fed of former years was like. I suspect Powells tenure will eventually be looked upon with scorn. I deeply suspected the market was overvalued in 2018. They should have been raising interest rates well before the pandemic. Then they wouldn’t have had to do quite as many unprecedented things, most likely. You do not want a Fed simply trying to time the market cycle around electio…
> They should have been raising interest rates well before the pandemic.
Should have, but could not. They did not let the recession of 2008/2009 play out, and the whole system has since only been propped up by the fed. They knew that a recession would commence the second they took their foot off the gas.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#34Economics is not a science. Most papers in finance/economics are not repeatable or even applicable in real life - as was displayed when the worlds number one hedgefund started the process of reading published financial papers and trying to apply them [1] [1] https://www.goodreads.com/book/show/43889703-the-man-who-sol...
do they use the scientific method? yes. it's science. is it good science? that's of course a bit subjective, but the trend in looking for clever natural experiments is, IHMO, a good direction. of course there is a long way to get there as you point out, replication, due to confounders and whatnot is still a big issue.
>do they use the scientific method? yes. it's science.
"The scientific method is the process of objectively establishing facts through testing and experimentation" [1]
But economics does not objectively establish facts, it establishes subjective facts.
Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market - it pretends to investigate reality when in fact all it experiments with is pick-and-choose model of that reality. That picking and choosing is a very subjective process, hence why we can have chicago and marxists economists both claiming each their "scientific" correctness.
Take a look at the papers that just won the nobel prize. Not a single one of them is a repeatable experiment, because such a thing is impossible in real-market economics. The market changes at all times, and is unique at all times. Economics can only be a science if we accept that science does not have to able to produce repeteable experiments, merely the attempt of doing so is enough to qualify as science.
[1] https://www.techtarget.com/whatis/definition/scientific-meth....
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#35No post body was provided.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#36Maybe this will remind people what the Fed of former years was like. I suspect Powells tenure will eventually be looked upon with scorn. I deeply suspected the market was overvalued in 2018. They should have been raising interest rates well before the pandemic. Then they wouldn’t have had to do quite as many unprecedented things, most likely. You do not want a Fed simply trying to time the market cycle around electio…
>They should have been raising interest rates well before the pandemic.
The Fed in fact tried to tighten during the 2015 - 2018 period but in 2018, politics interferred.
https://en.m.wikipedia.org/wiki/History_of_Federal_Open_Mark...
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#37You can feel however you feel about Bernanke during his tenure as Fed Chair. He was certainly hard to like at times, perhaps sometimes too smug. But his work laying out the pernicious effects of deflationary feedback loops as as an academic is probably one of the most influential works of monetary economics out there. I suggest people actually reading his papers before making a knee jerk reaction.
The policies created by his research have created some really interesting real-world results.
This is from another post currently on HN
https://www.lynalden.com/october-2022-newsletter/
Bernanke is part of the reason we haven’t seen a correction in the market since 2008. The needed correction didn’t happen and now we have a debt bubble and instead of wealth being redistributed it was centralized. I largely think Bernanke's research is fine, but the policy decisions based on the research didn’t take into account second order effects.
Now we will have a very difficult time.
The theory that the fed (and treasury) can actual impact real market decisions seems generally not to be true given all evidence. Nature eventually calls, so to speak.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#38You can feel however you feel about Bernanke during his tenure as Fed Chair. He was certainly hard to like at times, perhaps sometimes too smug. But his work laying out the pernicious effects of deflationary feedback loops as as an academic is probably one of the most influential works of monetary economics out there. I suggest people actually reading his papers before making a knee jerk reaction.
> pernicious effects of deflationary feedback loops Serious question: were those results really put to the test? Apart from looking back at the New Deal era and getting from there whatever it's politically convenient at any one point.
Serious answer: you can't properly test anything in macro-economics. Just think about it, we can't implement rigorous (randomized controlled) experiments and we can never observe the counterfactuals. The only thing we have are observational data with tons of endogeneity problems (fiscal/monetary policy makers react to movements in the economy as much as that the economy reacts to policy). So all validation comes from comparisons with other countries (or states within the US) and/or prior historical episodes, but there is an endless and unresolvable debate on how comparable other countries or history actually are.
So I identify when people who question if (macro-)economics should be considered a science or even has anything useful to say at all. Especially when the commenter shows that they've done some grad level econ courses / understands published academic journal papers, rather than regurgitating pop-sci articles / blogs. But I also sympathize with academic and central bank/ministry of finance macro-economists, who are faced with questions of huge social impact, that are probably unresolvable at a fundemental level.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#39Earlier quoted context omitted.
do they use the scientific method? yes. it's science. is it good science? that's of course a bit subjective, but the trend in looking for clever natural experiments is, IHMO, a good direction. of course there is a long way to get there as you point out, replication, due to confounders and whatnot is still a big issue.
>do they use the scientific method? yes. it's science. "The scientific method is the process of objectively establishing facts through testing and experimentation" [1] But economics does not objectively establish facts, it establishes subjective facts. Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market - it pretends to investigate reality when in fact all it experim…
If we didn’t know the rules of chess or go and merely watched the games of various skill levels might we come up with something similar? Eventually we’d get the rules, I think.
But with people and money there are few rules written down and even the goals of the decision makers are as varied as the decision makers themselves. The things used to facilitate trade themselves vary over time and nature.
Probably why Econ theory tends to better characterized as Econ philosophy. It might need/probably has to be studied with something like science but modified to be able to study the phenomena of scarce resource allocation.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#40Maybe this will remind people what the Fed of former years was like. I suspect Powells tenure will eventually be looked upon with scorn. I deeply suspected the market was overvalued in 2018. They should have been raising interest rates well before the pandemic. Then they wouldn’t have had to do quite as many unprecedented things, most likely. You do not want a Fed simply trying to time the market cycle around electio…
>They should have been raising interest rates well before the pandemic. The Fed in fact tried to tighten during the 2015 - 2018 period but in 2018, politics interferred. https://en.m.wikipedia.org/wiki/History_of_Federal_Open_Mark...
18 is when then president Trump appointed Powell after not re-appointing Yellen. I don’t see that pointed out in your link.