4 ms·

I’m not an economist, but as a data scientist, these models always seem way too simple to me to actually predict anything about the economy.

JackFr 4y ago
Well you need to consider what treasury yields represent. They are the market response from thousands of participants with hundreds of billions of dollars of skin in the game to the question “What will you pay today for a dollar in 3 months? What will you pay today for a dollar in 10 years?” That market consensus captures a lot of information and boils it down to its essence.
- malfist 4y ago
  Is mob wisdom a good indicator though?
  - kmonsen 4y ago
    Mob wisdom and informed people betting with their money are two different things. Not saying the matter is 100% accurate, but better than what is normally called mob wisdom.
  - TuringNYC 4y ago
    Yes, if you have money on the line (as GP says.) We assume rich people/orgs are making decisions in their self-interest, which is a good assumption.
  - s1artibartfast 4y ago
    Yes, when the entire value of the economy is predicated on mob sentiment.
  - sb057 4y ago
    It's the foundation of our economic system, so we better hope it is!
  - stonemetal12 4y ago
    All the social science papers on the subject say it is.
- yalogin 4y ago
  Isn't this very similar to the betting market for sports for example? The betting markets are knee jerk themselves, who know how their mindset in general changing over time, they may be becoming more short sighted and so react on yesterday's news. IMO, Just because there is money involved doesn't make it accurate.
  - rory 4y ago
    What? If anything, sports betting markets are getting less "knee jerk" over time.
- zackmorris 4y ago
  I think you've hit the nail on the head. Also you've inadvertently proven that a pillar of objective US economic policy is the subjective experience of wealthy people. Politicians appease the rich to keep the economy afloat. That's how it's always worked throughout history, that's how it works now, but I would argue that it must not be allowed to continue working that way in the future. Unless we want to keep waiting for a handout from the rich under trickle-down economics. The solution to all of this of course is to examine the opposite choices that were available to us at any point in the last 40+ years. Some low-hanging fruit is stuff like Who Killed the Electric Car, or when Bill Clinton caved to Newt Gingrich and dismantled social programs and let the The Gramm–Leach–Bliley Act happen which created/exacerbated these 10 years boom-bust cycles, or when Ronald Reagan took Jimmy Carter's solar panels off the white house and set renewable energy in the US back 30+ years, or when we kept Cold War military spending levels after the Berlin Wall fell in 1989, just on and on and on and on and on. An infinitude of unforced errors which ran up a bill that Gen X and younger now has to pay. That was a bit of a rant sorry, but I almost can't believe we're talking about yield curves when a modest 3 bedroom home costs half a million dollars and working people are making $15/hr if they're lucky. If I were a young person today listening to an older person gaslight me that nobody wants to work, I mean, I don't see how I could do anything but laugh at them. Just outright laugh at that level of cognitive dissonance.
  - chasd00 4y ago
    there's a 1k sqft house in my neighborhood renting for $6,500/month, I live in Dallas TX. That is the clearest indication of economic insanity i have ever seen.
spywaregorilla 4y ago
As another data scientist I find that sentiment baffling. Everything I build is a lot of complexity nuancing some otherwise simple trends that do 80% of the work.
deleted 4y ago
[deleted]
chewz 4y ago
You got it wrong as data scientist. This model isn't predicting anything about economy. It is the economy. Markets cost of money is shaping the economy more then the other way around. (Well, almost but there is enough of feedback loops)
snake_doc 4y ago
The US treasury yield curve is not a predictive model. It’s a fundamental component of the global economy. It is in the “ground truth” for market demand and supply for cash flows across time horizons, at a point in time.

JackFr 4y ago

Well you need to consider what treasury yields represent. They are the market response from thousands of participants with hundreds of billions of dollars of skin in the game to the question “What will you pay today for a dollar in 3 months? What will you pay today for a dollar in 10 years?” That market consensus captures a lot of information and boils it down to its essence.

malfist 4y ago
Is mob wisdom a good indicator though?
- kmonsen 4y ago
  Mob wisdom and informed people betting with their money are two different things. Not saying the matter is 100% accurate, but better than what is normally called mob wisdom.
- TuringNYC 4y ago
  Yes, if you have money on the line (as GP says.) We assume rich people/orgs are making decisions in their self-interest, which is a good assumption.
- s1artibartfast 4y ago
  Yes, when the entire value of the economy is predicated on mob sentiment.
- sb057 4y ago
  It's the foundation of our economic system, so we better hope it is!
- stonemetal12 4y ago
  All the social science papers on the subject say it is.
yalogin 4y ago
Isn't this very similar to the betting market for sports for example? The betting markets are knee jerk themselves, who know how their mindset in general changing over time, they may be becoming more short sighted and so react on yesterday's news. IMO, Just because there is money involved doesn't make it accurate.
- rory 4y ago
  What? If anything, sports betting markets are getting less "knee jerk" over time.
zackmorris 4y ago
I think you've hit the nail on the head. Also you've inadvertently proven that a pillar of objective US economic policy is the subjective experience of wealthy people. Politicians appease the rich to keep the economy afloat. That's how it's always worked throughout history, that's how it works now, but I would argue that it must not be allowed to continue working that way in the future. Unless we want to keep waiting for a handout from the rich under trickle-down economics. The solution to all of this of course is to examine the opposite choices that were available to us at any point in the last 40+ years. Some low-hanging fruit is stuff like Who Killed the Electric Car, or when Bill Clinton caved to Newt Gingrich and dismantled social programs and let the The Gramm–Leach–Bliley Act happen which created/exacerbated these 10 years boom-bust cycles, or when Ronald Reagan took Jimmy Carter's solar panels off the white house and set renewable energy in the US back 30+ years, or when we kept Cold War military spending levels after the Berlin Wall fell in 1989, just on and on and on and on and on. An infinitude of unforced errors which ran up a bill that Gen X and younger now has to pay. That was a bit of a rant sorry, but I almost can't believe we're talking about yield curves when a modest 3 bedroom home costs half a million dollars and working people are making $15/hr if they're lucky. If I were a young person today listening to an older person gaslight me that nobody wants to work, I mean, I don't see how I could do anything but laugh at them. Just outright laugh at that level of cognitive dissonance.
- chasd00 4y ago
  there's a 1k sqft house in my neighborhood renting for $6,500/month, I live in Dallas TX. That is the clearest indication of economic insanity i have ever seen.

spywaregorilla 4y ago

As another data scientist I find that sentiment baffling. Everything I build is a lot of complexity nuancing some otherwise simple trends that do 80% of the work.

deleted 4y ago

[deleted]

chewz 4y ago

You got it wrong as data scientist. This model isn't predicting anything about economy. It is the economy. Markets cost of money is shaping the economy more then the other way around. (Well, almost but there is enough of feedback loops)

snake_doc 4y ago

The US treasury yield curve is not a predictive model. It’s a fundamental component of the global economy. It is in the “ground truth” for market demand and supply for cash flows across time horizons, at a point in time.