How fitting, a pseudo-Nobel Prize for a pseudo-science.
Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
41–50 of 84 posts
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#42Earlier quoted context omitted.
> 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.
Bernanke has his fingerprints on every large central banks' response in the wake of the 2008 Global Financial Crisis. He flooded the system with liquidity to prevent what he observed in the Great Depression. Was he successful? Yes. We didn't suffer from a recession anywhere near the magnitude of the depression. Did you like how he did it and what happened as a result? I'm guessing you didn't.[1] Part of the fun of ec…
> Was he successful? Yes. We didn't suffer from a recession anywhere near the magnitude of the depression.
So he diagnosed the problem, set the goal (avoid recession), and the time frame (no immediate recession) and judged his success (no recession so yesss!).
Sounds a bit arbitrary to me, especially as now it becomes evident even to his disciples (Yellen, Kashkari, Powell) that the thing was merely postponed and aggravated.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#43Earlier 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…
Economics is politics dressed up as science.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#44> Their discoveries improved how society deals with financial crises > This year’s laureates in the Economic Sciences, Ben Bernanke, Douglas Diamond and Philip Dybvig, have significantly improved our understanding of the role of banks in the economy, particularly during financial crises. An important finding in their research is why avoiding bank collapses is vital. > Modern banking research clarifies why we have ban…
> These dangerous dynamics can be prevented through the government providing deposit insurance and acting as a lender of last resort to banks.
Not really. The https://en.wikipedia.org/wiki/Diamond%E2%80%93Dybvig_model argues that a better way of preventing bank runs is *deposit insurance* backed by the government or central bank. Such insurance pays depositors all or part of their losses in the case of a bank run. If depositors know that they will get their money back even in case of a bank run, they have no reason to participate in a bank run.
So, not necessarily the government. In practice it's always one of the central banks, either US or Europe. In the US it's the Federal Deposit Insurance Corporation.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#45Earlier 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…
> Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market
Really? Because post-GFC there was all sorts of economic experimentation with regards to austerity:
* https://www.weforum.org/agenda/2015/09/how-does-austerity-af...
Also:
* https://www.businessinsider.com/austerity-has-damaged-europe...
* https://www.theguardian.com/business/ng-interactive/2015/apr...
* https://www.researchgate.net/figure/The-Impact-of-Austerity-...
There have been all sorts of experiments with regards to tax policy:
* https://en.wikipedia.org/wiki/Kansas_experiment
Every time there are tax cuts "that will pay for themselves" an experiment is run:
* https://www.npr.org/2019/12/20/789540931/2-years-later-trump...
When post-GFC QE was enacted one group of people (Keynesians) said no inflation would occur, and another (right-leaning) group said all sorts of things would happen:
> We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
* https://economics21.org/html/open-letter-ben-bernanke-287.ht...
Which group was right?
Seems that lot of experiments have been done in "the real market".
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#46Bernanke, really? This has to be a joke.
What about his 1980s work on bank runs and the Great Depression do you find so objectionable?
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#47Bernanke maybe wrote some nice papers. I remember him being called the "scholar of the Great Depression" but when it was time to use his research and to recognize the 2008 bubble he completely failed. I still remember him proclaiming how everything was just fine while things were already falling apart. And his response was to shovel even more money at the banks and wealthy people while they let regular people lose their houses left and right. And let's see how the current credit bubble that got started by Bernanke will end.
In my view Bernanke was a total failure when it counted. This is almost as bad as giving the Peace Prize to Obama.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#48Earlier 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…
I would argue that Marx’s process-based description of the dynamics of Capitalism have proven to be much more valid (e.g., coercive law of competition, declining rate of profit) than those of neoliberal economics. Are either a science? No. They are schools of thought within political economy. Are they useful? Well, I’ve just stated my opinion above. YMMV.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#49Bernanke, really? This has to be a joke.
What about his 1980s work on bank runs and the Great Depression do you find so objectionable?
His works was useless in recognizing the 2008 bubble. He may have written some nice papers but when he was in charge he failed completely. He is simply not a good economist and his work didn't help with making good decisions.
Re: Nobel Prize in Economics Awarded to Ben Bernanke, Douglas Diamond, Philip Dybvig
#50Earlier quoted context omitted.
> 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…
> 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.
Some places can raise taxes and others can lower them, and we can see what happens: