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Economics can't predict what should be one of the most important and fundamental property of markets: inflation (aka how prices move) https://www.nytimes.com/2

• daedrdev 1y ago
  The three body problem means that we cannot predict the future of orbits of planets. Clearly astronomy is a science anyway. Since the economy is made up of individuals who make chaotic choices, I think anyone claiming to be able to predict inflation perfectly is a charlatan. Especially since businesses and consumers react to the inflation predictions themselves which make them obsolete the moment they are published.
  • bigbadfeline 1y ago
    > The three body problem means that we cannot predict the future of orbits of planets. Only an economist could write something so far from the truth. Astronomers do predict how everything moves, with great precision. The 3-body problem is unsolvable IN GENERAL aka "it has no general closed-form solution, meaning there is no equation that always solves it" However, all specific REAL cases are solvable, each with their own equations, not by substituting in one general equation. I could say a lot more about it but I know economists only pretend to understand math and I'd be wasting my time. Besides, the contemporary economists specialize in gaslighting shamanism, an example of which is bringing up the 3-body problem into a discussion of the absolute impotence of academia economics compared to "we can do everything" technology fields.
    • daedrdev 1y ago
      My point is orbits of planets are not calculable. In only 5 million years in fact they are chaotic! https://en.m.wikipedia.org/wiki/Lyapunov_time https://en.m.wikipedia.org/wiki/Lyapunov_time Thus its easy to imagine inflation not being predictable, especially since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
      • littlestymaar 1y ago
        > In only 5 million years When economics will be able to give meaningful forecasts just 5 weeks in advance that would be a very massive step forward though. > since the prediction is invalidated when it itself is released since people change their behavior chaotically in response. That's exactly the problem the study of all dynamic systems face, including the n-body problem you mentioned above! Yet with proper models you can get very good approximation as you acknowledge yourself.
        • daedrdev 1y ago
          Let me put it like this: The stock market has a big impact on inflation, since it changes the value of people savings and thus how much they spend. It is impossible to predict what the stock market will do. If you think it is predictable, please go ahead and lose all your money trying to do so. Since the stock market is not predictable, alongside many other things in our economy, and there is inherent error in the economic data collected since we only spend so much on surveys and continuously revise the data as new information arrives, and since we aren't running an authoritarian state that big brothers our citizens, expecting perfect inflation predictions is unrealistic.
          • littlestymaar 1y ago
            Funny how every debate about economics ends up with people dropping a variation of “go beat the stock market if you think you are clever”. It's not an argument, it's just a bad faith shot. Neither you or I can predict the hydrodynamic behavior of gas in a jet engine, but it doesn't mean it isn't doable with the right modeling tools, as all the jets flying above your head right now prove. Also, your claim that the stock market has a big influence on inflation is unsubstantiated. Finally, you're fighting a strawman when talking about “perfect” inflation prediction or limited precision in data: nobody is asking for a .1% precision in inflation forecasts (though most economics seem to have a problem understanding the concept of significant figures and keep producing numbers with a ridiculous amount of details relative to the underlying error in the data), but the fact that nobody can predict a surge in inflation before it starts poses serious questions on the usefulness of the models. And don't tell me it was the stock market …
• lanfeust6 1y ago
  > inflation (aka how prices move) How prices rise, decreasing purchasing power. Notwithstanding that "science" isn't about forecasting, this is a Social Science, which shares the same pitfalls as Sociology and even Nutrition in most cases. What you have to work with is large datasets and logic, not observing and measuring material properties. Obviously that doesn't mean useful information can't be gleaned, nor that the scientific method isn't applied to research. Ideas that we take for granted as a given now, like supply and demand, were not always. Data reflects it's a highly predictable effect. It's a moot point whether you want to call it science or not: data quality and interpretation matters. Your use of science here is just a thought-terminating cliche meant to say "nooooooo don't pay attention to the facts!"
• throw0101d 1y ago
  > Any "science" whose theories aren't falsifiable and cannot make useful predictions of future behavior isn't a science. Economics makes all sorts of falsifiable statements, including (recently) on tariffs, and in the past, tax cuts and "expansionary austerity": * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment * https://en.wikipedia.org/wiki/Expansionary_fiscal_contraction https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio... There were predictions in the 2010s where some folks said QE wouldn't be a big deal, but others were giving dire warnings: > 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://www.hoover.org/research/open-letter-ben-bernanke https://www.hoover.org/research/open-letter-ben-bernanke The real difficulty in economics is predicting what humans will do: Feynman once joked "Imagine how much harder physics would be if electrons had feelings"—or free will . Well, that's just the situation that economists are in. For your inflation example, we know of causes such as demand-pull, cost-push, and expectations: * https://en.wikipedia.org/wiki/Inflation#View_post-2000_to_present https://en.wikipedia.org/wiki/Inflation#View_post-2000_to_pr... The US saw demand-pull from the COVID recovery funding (to help kickstart the economy) and inflation was expected: * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in... What wasn't expected was a simultaneous effect of cost-push factors due to energy and food prices spiking due to human actions: * https://en.wikipedia.org/wiki/Russian_invasion_of_Ukraine https://en.wikipedia.org/wiki/Russian_invasion_of_Ukraine There was also a change in human behaviour between services demand and goods demand that had a long tail: * https://www.frbsf.org/research-and-insights/data-and-indicators/supply-and-demand-driven-pce-inflation/ https://www.frbsf.org/research-and-insights/data-and-indicat... * https://www.frbsf.org/research-and-insights/publications/working-papers/2025/04/demand-versus-supply-which-is-more-important-for-inflation/ https://www.frbsf.org/research-and-insights/publications/wor... * https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/06/is-demand-or-supply-more-important-for-inflation/ https://www.frbsf.org/research-and-insights/publications/eco... The difficulty is not in the predictions, but in accepting accurate ones from accurate models and living life and making policy based on them. Some folks simply do not wish to "accept" them, or wish to ignore them to pursue their own interests. Climate change models are not inaccurate because people reject their accuracy and smother the findings.
• lanfeust6 1y ago
  Re predicting inflation in particular: we are in a global system with tons of factors which are themselves unpredictable. That doesn't mean that key factors like money supply don't have an impact! We don't know what global policymakers will decide and we don't know whether a pandemic is about to break. The global powers spent a fuck-ton and inflation followed, that's about as predictable as it gets. What isn't predictable is how and when that subsides. Milei's policies curbed hyper-inflation in Argentina. Is that because he's a wizard? Is that because it's impossible to predict that drastically reducing deficit spending would reel in inflation? And if it's so fucking obvious that it would, what's the significance of denying those data points be scientific? They're either valid or not. The theories that last e.g. supply-and-demand have lasted because they work. Guess what 20th century experiments didn't work?
• ryandv 1y ago
  This is absurd. An opinion column in the NYT does not constitute an authoritative reference on the matter. Try some Milton Friedman [0] on for size: Now the first step towards understanding the cause of inflation is to recognize that it is always and everywhere a monetary phenomenon. It's always and everywhere a result of too much money - of a more rapid increase in the quantity of money than in output. [...] inflation in the United States is made in Washington and nowhere else. [...] We have evidence for the United States for over a hundred years; for Great Britain, for two hundred years; for Sweden, for two hundred years. There has never in history been an inflation that was not accompanied by an extremely rapid increase in the quantity of money. There has never in history been an extremely rapid increase in the quantity of money without an inflation. Or otherwise, "inflation is a printing press phenomenon." There is very clearly a falsifiable hypothesis here: inflation increases if and only if the monetary supply increases. The induction is based on decades of empirical data, and Friedman presents a series of charts to illustrate the correlation. This, to me, sounds at least like an attempt at science - falsifiable hypothesis verified against empirical data, and clearly predicts that inflation will result if the monetary supply is increased. We may quibble over the specifics and the numbers, just as one may quibble over what the exact percentage probability of rain is on any given day. Given that both economics and weather are chaotic systems, it is inherently difficult to make precise predictions in either domain. That does not mean that we cannot observe basic patterns and causal relationships. More broadly, I dislike this form of modern journalism because I would rather read the source directly instead of having someone pre-digest the ideas for me which are thereafter coprophagically consumed. People read the headline, which is an oversimplification of an article which itself already oversimplifies, misrepresents, or misunderstands the source material, and all they repeat are the clickbait titles without bothering to look into the actual details. I in fact looked up the book referenced in the opinion piece, and the reality of what the book asserts is far more nuanced than what the article quotes, to the point where I consider it a deliberate misrepresentation of the material: [...] we have no compelling theory of inflation dynamics that would allow us to understand the Phillips correlation — or the historical shifts in the Phillips curve — on anything like a deep level,” he writes. What is surreptitiously omitted is the next sentence: What this means is that we also have no good way to explain the two most important changes to the inflation process that have taken place over the past fifty years; namely, the near-constancy of inflation’s stochastic trend after the mid-1990s, and the reduced sensitivity of price inflation to real activity. ... which is a far more technical claim than the article would have you believe. This sleight of hand is repeated again: The fact that “we simply don’t know what caused the U.S. economy to transition into an inflation regime” like the one of 2021 and 2022 [...] ...which leaves out an important qualification from the full sentence: What all this implies is that we simply don’t know what caused the US economy to transition into an inflation regime where inflation became a mean-reverting process and the price Phillips curve flattened. This kind of mis-representative op-ed journalism is exactly what brings mainstream media and the progressive cathedral into disrepute. Rudd is not even talking about 2021 and 2022 in the preceding passages, he is talking about inflation expectations in the late 20th century and flattening of the Philips curve in the 90s. This is not a collage, where you cut out passages from magazines and books and paste them together onto bristol board for artistic effect or political messaging. As a technical discipline the surrounding context and the integrity of the entire idea, as a whole, are important too. [0] https://www.youtube.com/watch?v=B_nGEj8wIP0 https://www.youtube.com/watch?v=B_nGEj8wIP0