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PhD in econometrics speaking, here's my handy guide to macro-economics: - The main variables of interest are (aggregate) real production / income (GDP/GDI), un

by em500 5y ago

PhD in econometrics speaking, here's my handy guide to macro-economics: - The main variables of interest are (aggregate) real production / income (GDP/GDI), unemployment and inflation (arguably in that order) - Nobody knows much wrt the causes, effects and future trajectories of any of these. Not professional Ivy League economists who publish in journals like AER, QJE, JPE or Econometrica, nor traders getting paid millions at hedge funds or prop trading desks, nor fringe bloggers, gold/crypto-bugs or neophytes from different fields (traditionally from physics, but probably increasingly from CS/AI/ML). Especially beware when they sound very sure of themselves, often using correct wonky economic jargon or details like the plumbing of money flows. Top academic economist are at least (usually) somewhat honest that they know very very little. - Even if someone did know anything, 3rd parties like you or I can't distinguish the Real Truth from quackery. - The root cause of this knowledge deficiency is the inability to run proper controlled experiments. Pretty much no theory about macro-economics is convincingly testable/falsifiable, except banal trivialities like we can't make everybody rich by sending everyone a $10M check. This will not change in our lifetime, if ever. - All the writing on macro-economics is story-telling and catering to their specific audiences. Academics write foremost for other academics to gain a position at a prestigious faculty (and incidentally to influence politics). Crypto-bugs write to sell you crypto-coins. Fringe bloggers like Shadowstats write to get newsletter signups and ad-dollars. Most of them employ the effective mechanism that the reader is initiated to advanced/semi-hidden knowledge, which makes the reader feel better about themselves. Given this, the answer to your question is: maybe, maybe not, who knows?

mvdwoord 5y ago
Thank you. This should be understood by more.
deleted 5y ago
[deleted]
khaki54 5y ago
From my perspective, the truism of > we can't make everybody rich by sending everyone a $10M check isn't so self-evident. A lot of policy and draft legislation is just a watered-down version of this with more steps. What if we... - just send unemployed $23.4K check (CARES act $600/wk unemployment kicker) - just send most people a $3.2K check (stimulus) - just send everyone an average of $42K check (overall covid relief) - just send those with unpaid student loans a $20K - $400K check (college debt cancellation idea) - just send those with distressed mortgages an average of a $150K check (2008 mortgage crisis) There are many more of these that seems to have no strategic value or incentivize the opposite behavior that we need at the time. It's also probably a safe assumption that the money generally finds its way to the wrong people considering the $5T in billionaire wealth growth during the pandemic, or record executive bonuses during the mortgage crisis.
bradstewart 5y ago
I've had a similar feeling about economists and their writings--that there's absolutely no way to glean "truth" or "fact" from them. They always seem to have reasons upon reasons why their predictions didn't pan out, and it's never their fault. And yet they still seem to have authority? But I always think I must be missing something because they're so often cited and discussed and employed and and and. I am a computer person, and did not study econ beyond intro-level micro. In your mind, do macro-economists provide any actual value? If so, what is it?
- sparkie 5y ago
  "Why Did Almost Nobody See Inflation Coming?" [https://tinyurl.com/marfwtsm https://tinyurl.com/marfwtsm] > "Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark." I recall reading this headline and laughing, because virtually everyone in the circles I associate with was warning very vocally about what would happen when it was announced in early 2020 that governments and central banks would be greatly increasing the money supply to pay for people to stay at home (and pay for "other" things), with no obvious sign of how productivity would be increasing. All signs were that productivity would also decrease (and it did), due to draconian lockdowns which prevented people from producing. So why was the Austrian school exactly right about the inflation, and the Keynesians wrong again? The reason is quite simple. Those who are the beneficiaries of new money have a motive to continue gaslighting you about the causes of price inflation.
throw0101a 5y ago
> - The root cause of this knowledge deficiency is the inability to run proper controlled experiments. There have been a number of experiments over the last few years. For example, tax cuts don't pay for themselves (or, in the most positive interpretation: we're on the left-hand side of the Laffer curve): * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment * https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises https://www.npr.org/2019/12/20/789540931/2-years-later-trump... Expansionary austerity was also tried and found not to work (as predicted by Keynesians): * https://en.wikipedia.org/wiki/Expansionary_fiscal_contraction https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio... * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... Then there's the whole anti-QE thing: > 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.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Most economic ideas put forward by the political right seems to have been found not to work over the last decade.
- dragonwriter 5y ago
  > There have been a number of experiments over the last few years. Neither laboratory experiments nor even ones with decent statistical controls for confounding factors, and rarely, on any large-scale policy, ones with more than single digit N (and quite often, that's true even in binary, much less decimal, notation.)

by em500 5y ago

mvdwoord 5y ago

Thank you. This should be understood by more.

deleted 5y ago

[deleted]

khaki54 5y ago

From my perspective, the truism of > we can't make everybody rich by sending everyone a $10M check isn't so self-evident. A lot of policy and draft legislation is just a watered-down version of this with more steps. What if we... - just send unemployed $23.4K check (CARES act $600/wk unemployment kicker) - just send most people a $3.2K check (stimulus) - just send everyone an average of $42K check (overall covid relief) - just send those with unpaid student loans a $20K - $400K check (college debt cancellation idea) - just send those with distressed mortgages an average of a $150K check (2008 mortgage crisis) There are many more of these that seems to have no strategic value or incentivize the opposite behavior that we need at the time. It's also probably a safe assumption that the money generally finds its way to the wrong people considering the $5T in billionaire wealth growth during the pandemic, or record executive bonuses during the mortgage crisis.

bradstewart 5y ago

I've had a similar feeling about economists and their writings--that there's absolutely no way to glean "truth" or "fact" from them. They always seem to have reasons upon reasons why their predictions didn't pan out, and it's never their fault. And yet they still seem to have authority? But I always think I must be missing something because they're so often cited and discussed and employed and and and. I am a computer person, and did not study econ beyond intro-level micro. In your mind, do macro-economists provide any actual value? If so, what is it?

sparkie 5y ago
"Why Did Almost Nobody See Inflation Coming?" [https://tinyurl.com/marfwtsm https://tinyurl.com/marfwtsm] > "Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark." I recall reading this headline and laughing, because virtually everyone in the circles I associate with was warning very vocally about what would happen when it was announced in early 2020 that governments and central banks would be greatly increasing the money supply to pay for people to stay at home (and pay for "other" things), with no obvious sign of how productivity would be increasing. All signs were that productivity would also decrease (and it did), due to draconian lockdowns which prevented people from producing. So why was the Austrian school exactly right about the inflation, and the Keynesians wrong again? The reason is quite simple. Those who are the beneficiaries of new money have a motive to continue gaslighting you about the causes of price inflation.

throw0101a 5y ago

> - The root cause of this knowledge deficiency is the inability to run proper controlled experiments. There have been a number of experiments over the last few years. For example, tax cuts don't pay for themselves (or, in the most positive interpretation: we're on the left-hand side of the Laffer curve): * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment * https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises https://www.npr.org/2019/12/20/789540931/2-years-later-trump... Expansionary austerity was also tried and found not to work (as predicted by Keynesians): * https://en.wikipedia.org/wiki/Expansionary_fiscal_contraction https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio... * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... Then there's the whole anti-QE thing: > 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.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Most economic ideas put forward by the political right seems to have been found not to work over the last decade.

dragonwriter 5y ago
> There have been a number of experiments over the last few years. Neither laboratory experiments nor even ones with decent statistical controls for confounding factors, and rarely, on any large-scale policy, ones with more than single digit N (and quite often, that's true even in binary, much less decimal, notation.)