69 Responses to “How did we geeks become experts on (macro)economics?”

1. February 9th, 2009 at 9:56 am

   Rob Sayers says:

   Interesting post. Like many geeks apparently, this topic has recently become very interesting to me. I do however realize it’s complexity but would like to understand it more.

   Short of changing my major, what resources would you recommend to understand the topic better?

2. February 9th, 2009 at 10:10 am

   Paul says:

   I’d love you to revisit that last paragraph in about a year’s time when the US economy has collapsed and few of the country’s essential services work any more.

3. February 9th, 2009 at 10:13 am

   Kyle Lahnakoski says:

   Yes, please provide some links to those who are experts. Certainly there are a few macro economic experts that also write publicly.

4. February 9th, 2009 at 10:18 am

   Hal says:

   Great post. You might also be interested in Why Smart People Believer Weird Things, which does a good job at explaining this f’cked up shit.

5. February 9th, 2009 at 10:33 am

   Steven G. Harms says:

   It’s unny you should mention this, perhaps it’s in the gestalt at the moment, but your comments are definitely on the wavelength with Paul Graham’s latest essay: http://www.paulgraham.com/identity.html

   Graham asks why religion and politics get so much vitriol from everyone (including the generally laconic programmer). As you say, no one can say you don’t know enough about religion or politics; provided you “feel” deeply and strongly enough, you’re beyond doubt. Ditto geeks on the gold standard.

6. February 9th, 2009 at 10:33 am

   Steven G. Harms says:

   Arg: s/unny/funny

7. February 9th, 2009 at 10:33 am

   Hal says:

   Yes, please provide some links to those who are experts.

   Dude, if you can’t google them yourself, then that pretty much explains the problem, don’t it?

8. February 9th, 2009 at 10:39 am

   Jake says:

   Yay, rant with no data and no point.

   The reason that (some) geeks are so confident about monetary issues is that if you are on the correct side of this argument, it is not a complicated issue. Addition and multiplication are not that hard, honest, even when you throw in compounding interest.

   If anybody with more of a brain than the author of this article is interested in reading real research and academic work on these theories lookup Hayek, Mises, and Rothbard.

9. February 9th, 2009 at 10:40 am

   George Glass says:

   Fuck you! Ron Paul 2012!!!!!

10. February 9th, 2009 at 11:06 am

    MrvnMouse says:

    I agree with you fully. However, as RAW said, “What the thinker thinks, the prover proves.”

    Sadly, no matter how much evidence you provide to the contrary, a large number of armchair economists won’t be dissuaded by your post. Most probably won’t read beyond the first paragraph.

    However, if someone were to take your post and turn it into a snappy crappy Youtube film with animations and a voiceover talking down to you, you may turn a few more minds.

    Good post though.

11. February 9th, 2009 at 11:33 am

    louis says:

    @steven,

    I actually read PG’s essay after I wrote mine and the similarities are pretty uncanny. His first few paragraphs mirror mine pretty well. I dealt with the more practical reasons and he dealt with the more psychological ones. It was a good read.

12. February 9th, 2009 at 11:49 am

    Gustavo Duarte says:

    Good old Bertrand Russel: “The degree of one’s emotions varies inversely with one’s knowledge of the facts- the less you know the hotter you get.”

    Macroeconomics is messy though. It is complex and so tainted with self interest and value judgements, it is by nature far removed from x86 internals. Kyle makes a good point above, which experts should we trust? Friedman or Krugman?

    The fact that (Nobel laureate) experts in the field disagree so completely is an indication of the inherent difficulties in the subject.

    You have a point insofar as most of online discussions are uninformed in _any_ schools of mainstream economics. There’s a ton of nuttery going on, sure. But I don’t agree with the ‘trust the experts’ take on it. Maybe ‘get off the f*king boards and go learn something’ is a better message

13. February 9th, 2009 at 12:01 pm

    djc says:

    First of all, you don’t know what anyone knows except yourself, and that goes for everyone. I can’t even really say that, since I don’t know that someone maybe CAN read other people’s minds.

    Second, the fact that parts of our economy appear confusing and mysterious is at least partly because of secrecy (The Fed, for example).

    Finally, since so much money hangs in the balance, the current system relies on people remaining confused and thinking it is beyond their comprehension.

    Whatever the current system, I think we can all agree, it *should* be less mysterious, yes?

14. February 9th, 2009 at 12:05 pm

    JOEY says:

    The assumption you’re making is that the Fed / Regulators understand what they’re doing. Go back 2000 years. Replace the Fed with Gaius Julius Caesar. This is why you are wrong. This is an extreme example.

    In 400 years your primitive beliefs will be wrong. Some of us are stumbling around, looking for the lightswitch.

    EMACS4LIFE

15. February 9th, 2009 at 12:14 pm

    Matt W says:

    Let me let you, dear writer, in on a little secret: you don’t know jack about statistics!

    “99.9997% of those who remain have absolutely no idea what they are talking about”
    Oh really? 3 out of a million know what they are talking about? I’d believe 3 out of a hundred, but then you wouldn’t have a case for dismissing everybody.
    By the way, of those 80% of drivers that think they’re above average? More than half of them are right.

16. February 9th, 2009 at 12:46 pm

    louis says:

    @matt,

    Yes. My obviously-made-up-numbers might not be correct. Excellent deduction. I’m not really “dismissing” anyone. I’m dismissing the bullshit false expertise that comes with every discussion of economics.

    @everyone else

    My point has little to do with “trust” or anything else. In fact, you should be allowed to hold opinions and argue all you want. My point is that economic discussion inevitably come with false sense of expertise. We do not approach these conversations with the same careful open-minded-ness that we approach other issues.

    @gustavo,

    Your blog rocks.

17. February 9th, 2009 at 1:08 pm

    louis says:

    Also, before having a spaz attack about the last paragraph, read the whole thing. The last paragraph was a joke people!

18. February 9th, 2009 at 1:08 pm

    lk says:

    Bravo! I actually am a professor of economics, and I want to thank you for standing up for us. What is it about programmers and economics? I still remember being shocked by the vitriol I faced when I tried to explain to a CS major that trade deficits are essentially determined by the gap between savings and investment in a country.

    For those who want to learn something about economics, I would suggest reading a basic ‘Introduction to Economics’ textbook. Greg Mankiw has a good one (right of center), so does Paul Krugman (left of center). If you won’t read a standard textbook, ask yourself, how are you different from creationists?

19. February 9th, 2009 at 1:24 pm

    Jack Black says:

    Fiat currency is superior to the gold standard.
    –>Fiat currency is inferior to goods and services by definition.

    Bankers are not evil.
    –>Depends on the bankers.

    The Federal Reserve does a half decent job.
    –>We may want something better than half-decent when it comes to the well-being of everyone in our country and many people outside the country.

    Money is not debt.
    –>You’re an asshole for making a statement like this, because it’s obviously not debt itself, but it is an IOU nothing.

    Debt isn’t even bad — the vast majority of it can be healthy.
    –>Indebtedness is always bad. Taking a loan to build a factory may be a good idea, taking a loan to buy DVD players from China is bad. Either way owing someone goods and services is a bad thing.

    If you disagree with me, you are wrong, and a nutjob.
    –>Fuck you.

20. February 9th, 2009 at 1:38 pm

    RickTruocchio says:

    Just because you know very little doesn’t mean we all do not. I studied econ in college, graduated with a finance degree and do self study consistently. Your conclusions are weak and disingenuous. By your own admission you are the majority that knows very little and yet you still make conclusions based on your “basic” knowledge and expect other to believe them. You are as bad as those you are ranting against. True most do not understand the inner workings of money and credit. However you don’t need a weather man to know which way the wind blows, to quote Bob Dylan. The FED is obviously no doing and OK job as is evidenced by this economic collapse. The purpose of the FED is to stop the constant boom and bust, or at least this was the initial justification. I am going to stop now because I don’t have time to educate you but you should read competing theories (Mises, Rothbard, Friedman, evn dumbass Krugman) and then say somethin rather tha troll with your blog. Good luck

21. February 9th, 2009 at 1:46 pm

    louis says:

    @ the previous two,

    Wow. You guys sure suck at reading. The last paragraph was a joke meant to display the exact kind of behavior I was criticizing in the actual article. The best part is you two didn’t bother to read the article and decided to come to my blog and post the exact kind of vapid, emotion-laden, certain rhetoric that I’ve criticized.

    Thanks for proving my point.

22. February 9th, 2009 at 1:57 pm

    Ryan says:

    Fiat currencies spawn investment where Gold does not. A currency has to slowly inflate (money losing value) otherwise there is no driver to invest. If you have a bunch of gold and just hold onto it, then no more gold is added to the rotation, then you just sit there getting richer as population grows poorer and poorer and there is less money to go around. Actually a big part of the problem and the scandals recently is because there was too little money and they got really creative.

    Gold currencies were in the days of feudalism. Where there was no reason for a rich king to invest. Why take the risk? But if you have money that is consistently losing value at 4% annually over time then you NEED to invest.

    That is what fiat currency and inflation do for you even though they are scary terms and ideas if you do not research then thoroughly. Essentially a fiat currency is a fail-over and evolution from gold backed currency where there was nothing a treasury could do but crash hard back in the day.

    Now as far as the FED I think we pay wayy too much interest on the money from the fed, also I think their power is unchecked. They are not really part of the government and would you want them part of it the way they would just keep printing no matter what. It is bad enough that lots of int’l bankers do it. But it is in their best interest to keep the value of money solid (it is their product). So really it is the best case scenario for what we currently know as the best way to run the markets.

    There may be something better but going backwards and not learning from history is a bad idea.

23. February 9th, 2009 at 2:14 pm

    Matt McKnight says:

    The larger problem is that Macroeconomics as a subject is one we haven’t figured out yet, at least to the point of making predictions in a complex system, where the existence of the predictions can affect the system. However, I think that it is certainly possible to discuss rationally. Perhaps Mr. lbrandy could be a little more accommodating: since politicians are claiming far more understanding of macro than they could possibly have, and since their actions so clearly will cause massive inflation under many macroeconomic models, it is the geeks that the world needs to get a lot smarter on macro, so that we can start to make a useful contribution to the conversation. The depth of conviction that many people are bringing to the argument is likely to be unrelated to our depth of understanding, but a vigorous opposition to the current plans is necessary, because no one really knows what is going to happen, and the world is betting or selling the future on some shaky assumptions to save a little bit of pain today.

24. February 9th, 2009 at 2:18 pm

    Mark says:

    The replies really back up your point, though I don’t think their egos will allow them to realize it. Good post.

25. February 9th, 2009 at 2:52 pm

    Pattern says:

    Author — if nobody is ‘getting it’, or most people aren’t, it’s not them. BTW, if you don’t understand the economic schools of thought and how the differ (and they differ profoundly) the arguments of others will always seem opaque. You should have written this entry in your diary instead of publicly.

26. February 9th, 2009 at 3:00 pm

    louis says:

    @pattern, that would be a good point only if the people in question actually read the entire thing. Anyone who has come here to argue about the last paragraph, in particular, obviously hasn’t done so. Even still, the vast majority of people “get it” judging by how few, as a percentage, seem to take the last paragraph seriously.

    Your second point makes even less sense, because, again nowhere have I said the arguments are opaque. They are quite transparent, actually. You don’t need to be an expert in a field to understand that a particular discussion has gone “religious”.

    I find it incredibly amusing to have you questioning my competence in discussions of economic theory. That is, after all, the point. People like you walking around pretending to know more than the next guy. Thanks for being the guy I’m talking about.

27. February 9th, 2009 at 3:13 pm

    Amby Merlin says:

    It appears that you don’t know Jack shit either.

    And yet you claim everyone else don’t know Jack shit, without explaining why.

    And don’t monger cheap excuses about your last two paragraphs. Don’t write shit if you don’t know Jack Shit.

28. February 9th, 2009 at 3:20 pm

    louis says:

    *facepalm*

29. February 9th, 2009 at 3:32 pm

    Katherine says:

    While there are no possibilities of experiments, one can learn from history. And I know that previous to the economic collapse, there was a strong drive to re-adopt neoclassicalism as major policies in most major governments( including the US), France and other more socialistic democracies and were benefiting immensely from it.

    We all have an opinion, because a major event happened showing that something went wrong with mainstream theory, so everyone has their two cents about. I get to say my stuff because my major was Economics and at the very least, I remember the stories of the absolutely stagnant economies created in Japan, France and Sweden from too socialistic policies.

    That said, I appreciate you writing this article, as I’ve felt the same exasperation discussing the economy with many people who feel that they’re entitled to speak up about what they would do to fix the problem who have little to no grasp that their ideas have been done before in history, and had far worse consequences. But, I doubt they’ll read this article. =\

30. February 9th, 2009 at 3:34 pm

    Anonymous says:

    The approximate probability of you being wrong is..?

31. February 9th, 2009 at 3:52 pm

    louis says:

    18%, in general

32. February 9th, 2009 at 3:55 pm

    Jeo says:

    The problem is, economists don’t appear to understand macroeconomics either. If they did, they wouldn’t have been telling us two years ago that everything was fine.

    There was an article in Scientific American last year, saying that macroeconomics models were based on analogies to physics that actual physicists say make no sense at all.

    I’m fully aware that I know very little about economics. But since I have savings to protect, I have a strong incentive to learn more. Given that, so far this decade, the predictions of conventional economists were completely wrong, and the predictions of the Austrians were right, I’m leaning towards Hayek and Mises for my reading list, along with a smattering of experimental economics.

33. February 9th, 2009 at 3:55 pm

    Marco says:

    @all who want links:
    http://www.amazon.com/Principles-Economics-Student-Gregory-Mankiw/dp/0324224729/ref=pd_bbs_1?ie=UTF8&s=books&qid=1234212553&sr=8-1
    Buy a used version, can be an older edition.

    And please do the math also, it’s pretty basic stuff and should be no problem for geeks. It is very well written, by the way.

    Then read and work this one:
    http://www.amazon.com/Microeconomics-Behavior-Robert-H-Frank/dp/0071263497/ref=sr_1_1?ie=UTF8&s=books&qid=1234212754&sr=1-1

    Here do the math also. Best microeconomics book I read. Ok I only read four in university, but it far beyond average I think.

    Rockin regards,
    Marco

34. February 9th, 2009 at 4:00 pm

    Preston says:

    louis – here’s a hug for you.

    seems like you need one judging from the facepalms.

    Maybe add a line at the bottom of the post “EDIT: apparently irony eludes some.”

    Ok, a few points:

    * there are those of us uber-geeks who know enough to be able to smell something rotten. it’s easy to smell when shit stinks — it doesn’t mean you have to understand the molecular underpinnings that result in attacking your nose/tastebuds

    * when you say “macroeconomics” – are you referring to the study of it in schools & higher education circles, or actually what’s going on right now out in the world? (because, I learned all kinds of great stuff getting a CS degree, but it doesn’t help me too much when my boss tells me to build a fucking login page in 15 minutes, oh, and it better scale to 20+ million users)

    At least it sounds like you know enough to know that you don’t know everything. HOWEVER, I do not think this is something like quantum physics that is a law of the universe. The game will constantly be changing (as interest rates change, new kinds of securities emerge, if the Fed is abolished / etc, how China’s doing, what our trade deficits / surplus may or may not look like, etc). That is, “macroeconomics” IRL is not NP Complete.

35. February 9th, 2009 at 4:17 pm

    Anonymouse says:

    Wow, if you needed experimental evidence to back up your claim, the responses to this post are it.

36. February 9th, 2009 at 4:17 pm

    Shane says:

    I do think the people you are talking about are only 50% of those trying to understand Economics. And it is easy for someone like you to say ‘no, everything is fine the way it is’ because it is the most common opinion.

    Unlike programming languages, in Economics, you have ‘experts’ who say exactly the opposite of each other. (Hayek and Krugman have both won Nobel Prizes) How can someone like yourself just say ‘the system is fine like it is, shut up’, when a Nobel Prize Winning economist (Hayek) says central banking is not something that is advantageous to the average citizen?

37. February 9th, 2009 at 4:28 pm

    colinnwn says:

    As a trained economist and wannabe geek, I mostly agree with you. But economics can be so hideously complex even educated people disagree. I would like to provide a counterpoint to your summary.

    “Fiat currency is superior to the gold standard.”
    Probably. The disadvantage though is all governments that have switched to fiat currency have shown an inability to manage money creation and divorce it from politics over the long run.

    “Bankers are not evil”
    Not evil at all. But C-level bank leaders, like other industries, have a genuine apathy for how their actions affect others if it puts more coin in their pocket.

    “The Federal Reserve does a half decent job”
    Maybe. But even Greenspan has come out and said some of his previous actions were with hindsight unfortunate, and he disagrees with some of Bernake’s actions.

    “Money is not debt. Debt isn’t even bad — the vast majority of it can be healthy”
    If you mean printing more money creates debt then ok. But printing money by definition causes inflation which is a hidden tax on everyone. It will usually increase interest rates which makes investment more expensive. Government debt crowds out more marginal private investments. When government debt gets too high it increases the perceived default risk, causing borrowing both public and private to get more expensive.

    “If you disagree with me, you are wrong, and a nutjob”
    Maybe.

38. February 9th, 2009 at 4:29 pm

    Dank says:

    Well,

    Thinking about economics is something everyone does to some degree. It is an important element in all our lives and currently it more of a religion than a science.

    Some people get stuck in the weird sects and that is where they stay. Gold! Barons! The Fed!

    I am pleased that amateur economists are coming out of the woodwork. The subject is arcane only because it is not widely discussed and only fragments of the working theories are provable.

    Like most issues, proponents of any given belief system usually have a political agenda.

    Put another way. If the US economy was a programming language would you be satisfied with it?

    I never get tired of people’s interesting thoughts about things that matter, and economics really, really matter.

39. February 9th, 2009 at 4:36 pm

    xoc says:

    Its because economics boils down to a political ideology for many people. To greatly over-simplify, those on the right believe in the magic of the market to make all things work as well as they possibly can and those on the left believe invisible hands are not to trusted. “Faith-based” thinking is particularly prevalent in the USA. People hitch their wagon to whichever ideology their gut likes the best and then act like their gut is smarter than everyone else’s. Nerds in particular like to simplify things down to hard-and-fast rules. That’s great for engineering, but it doesn’t work so well in psychology and therefore economics.

40. February 9th, 2009 at 4:38 pm

    louis says:

    @preston,

    I resisted at first, but now I’ve caved and added a note to the bottom.

    I just don’t feel like having the comments fill up with econ-talk when I’m trying to have a meta-discussion about the mindsets of its participants.

41. February 9th, 2009 at 4:51 pm

    economist says:

    This article is full of lies and misinformation.
    I have a degree in economics and have been in the field for over 30 years.

    We are being systematically worked over by the fiat money system.

42. February 9th, 2009 at 5:18 pm

    Steve says:

    I agree with you but it seems important to state that the only reason the system has to be so “complex” is because transparency would let the people see how bad they’re getting fucked and they wouldn’t have it. If you tell them, “See, it’s too complicated and you’d better just let us handle it!”, they will believe… And now for a little Lamb Of God to close the comment: “Now you’ve got something to die for!”

43. February 9th, 2009 at 5:38 pm

    Tom Human says:

    “The last 0.0003% actually do know what they are talking about but are impossible to discern from the rest.”

    You haven’t actually proved the existence of these people at all, have you?

    “This article is full of lies and misinformation.”

    So you believe that most people ARE good at macro-economics?

    “We are being systematically worked over by the fiat money system.”

    Sigh. There simply isn’t enough gold in the world to run a functioning modern economic system. It’s strongly beneficial to society to discourage “hoarding gold” from being an economically viable strategy and increase the free flow of capital.

44. February 9th, 2009 at 6:20 pm

    EM says:

    Most may not be aware that Economics was called Political Economy until around 1900, when some genius at Cambridge or somewhere got us to pretend it is a science.

    That should answer the why question. Everyone’s an expert on macro, since it’s politics masquerading as a science.

45. February 9th, 2009 at 6:44 pm

    Marc says:

    Author – I must confess, I am one of those computer geeks who likes to talk about economic conditions as a hobby. I am not particularly interested in economic theory and, consequentially, know little about it. I am interested in the real economy as well as geopolitical events in the present & past insofar as I can try to forecast a picture of the future. Having said this, I am keenly interested in how sub-average, average and elite folks view the real/theoretical economy.

    In my opinion, you like order, you like categories, you like a pecking order…. In my opinion, the Internet may not be the right medium for you to express yourself (Don’t worry, the Internet cannot kicking you off…unless it becomes ordered, categorized and structured).

    I thrive on how *I* judge information.

    And as a “witty” last paragraph: Fuck You!

46. February 9th, 2009 at 6:48 pm

    kiwiserg says:

    Macro economics is not physics. Physics is a sciense, while economics is (half)ideology. Physicists are paid to discover the truth, economists are paid to distort the truth.

    Since mainstream physics is not distorted, everybody agrees on simple things and doesn’t understand complex things. So there is nothing to argue about.

    While mainstream macro economics is distorted. The level of distortion is above average Joe’s lelel, but below average geek’s level. So the geeks spot the lies the rest of people don’t. Geeks know where the problem comes from, they know how to fix it, but they could do it because they are minority. No wonder they get so emotional and frustrated about it.

    It’s like dissident’s at USSR: there were official lies, designed for an average Ivan, so intelligent people could spot the lies. Yes, the dissidents weren’t great expert in economics and sociology, but they were expert enough to see that communism is not the way.

    P.S. Situation is changing is physics: climate change stuff has huge vested interests, there are billion of dollars involved, so there are some physicist paid to distort the truth. So you can’t trust climatologists anymore.

47. February 9th, 2009 at 6:58 pm

    dan says:

    Because, of course, people who read and educate themselves about a field other than which they hold a degree from could never give a worthy analysis or opinion.

    I’d classify us ‘geeks’ into those who actually know something, and those who are bullshit spewers. Frankly, some of us ‘geeks’ can act pretty arrogant, and pretend like they know things we don’t.

    That is where the line must be drawn. Either the geek makes a salient point that contributes to the discussion, and is based off facts and educated reasoning, or he continues to spread the bullshit and hold a viewpoint regardless of opposing facts because he is an arrogant asshole who must be right.

    This is just one topic of many in geekdom where the bullshit is thick.

48. February 9th, 2009 at 7:02 pm

    Bill Mill says:

    1) For people asking for macro information: Mankiw blogs, Krugman writes at the NYT, Brad DeLong blogs, Econtalk frequently has excellent macro discussions, Larry Summers and others write for ft.com often, Suroweicki writes in the New Yorker, Marginal Revolution and Calculated Risk are both great blogs.

    Look them up, there’s plenty of good macro info on the web. I’ve tried to cover a wide range of ideologies with the above writers. Read their books.

    2) I think part of the problem is that macroeconomists really dropped the ball by being clueless that this crisis was coming. Why should we expect them to know what will happen with any plan now, when they clearly weren’t aware of what was going to happen *then*?

    The fallacy comes when people assume that, because economists didn’t know *then*, that they are suddenly qualified to throw out a lot of their cockamamie theories. Many of which are, as you point out, nonsense for a whole host of reasons.

    Nonetheless, I don’t think it’s valid to claim something like “unless you know what is, you’re unqualified to judge the current crisis”.

    In judging commentators of this crisis, I value practical experience in the financial markets and deep understanding of world trade far more highly than I do an excellent understanding of macroeconomic theory, which I believe to have proven itself mostly useless in analyzing the modern economy.

49. February 9th, 2009 at 7:04 pm

    Bill Mill says:

    Your comment system stripped out words from my previous post, I wrote “unless you know what [insert moderately sophisticated macro theory] is”, but used carets instead of brackets.

50. February 9th, 2009 at 8:10 pm

    Jeo says:

    “There simply isn’t enough gold in the world to run a functioning modern economic system.”

    At current prices. If the demand goes up, the price goes up, now there is enough gold. Isn’t supply and demand, like, the first thing you learn in econ?

    (I know this is really more a meta discussion, but this statement was so silly I couldn’t help myself.)

51. February 9th, 2009 at 10:04 pm

    Chris says:

    Pure win post!! Except I’m an expert on this, no really, I am…

52. February 9th, 2009 at 11:09 pm

    lk says:

    Bill Mill, good list of ‘real’ econ sites, ie. those written and read by economists with PhDs. However, the group as a whole is a little right leaning. Suggest reading Economists View for a little more balance:
    http://economistsview.typepad.com/economistsview/

    To those who suggest economics is not a science, please pick up a copy of the AER (or any other economics journal) have a read through, and see if you can understand the math.

53. February 9th, 2009 at 11:21 pm

    Andy Dabydeen says:

    In addition to your theory, I submit the following:

    Geeks also don’t want to think that they couldn’t comprehend something an accountant could. Accountants are after all, economists. And accountants took pretend math in college. Accountants do your taxes, for crying out loud!

    And accountants are running and ruining the good times for us all. Who left the accountants in charge?

54. February 9th, 2009 at 11:23 pm

    Trevor says:

    I assume this was kinda written in jest? Ya, I understand your last part was joking, but your assertion that almost no one understands macroeconomics?

    I can maybe see you coming to this conclusion from talking to over-enthusiastic people who have just come upon the subject, but there are people that actually understand this subject quite well, it really isn’t that complex. Most things can be figured out with simple mental experiments.

    And as for the emotionalness of it….human beings can’t screw up quantum physics, all they can do is observe it. They can screw up an economy though, which can result in extreme hardship, and literally death, ie: suicide. There really is a difference.

    I would say that you are as guilty as those you criticize. You’ve observed people who judge themselves as competent to discuss macroeconomics, and you call them idiots, because it is essentially “un-understandable”. But how do you know this?

    I think you have a bit more reading to do if you think that what is happening in washington right now is a reasonable, well thought out response to the current situation.

55. February 10th, 2009 at 2:13 am

    Jon says:

    I’ve always liked economics even in my college days. I’m no expert but I love reading and discussing points of view, from Krugman to Mises. I can agree on a few premises of our current economic situation, but it’s hard to say one economic theory is better or worse (Keynesian vs Austrian). The more I read about our money supply M0 and derivatives, the more I understand why they are trying to inflate their way out of the economic mess. Understanding the views of both sides is one way to learn more and understand what’s going on. Understanding economics is useful in personal finances and personal freedom — have a lot savings, avoid costly (consumer) debt, never buy a new car, have a backup plan in case you’re layed off, keep building your skills as an asset, learn more, etc.

56. February 10th, 2009 at 2:17 am

    Joe D. says:

    Fixing the Economics System
    ============================

    1. Economy runs on food/fuel/energy required to create all other goods and services. The economic system is not very complex as the banksters would want us to believe.

    2. Currency is simply a token, if we don’t follow standard practice for issue and redemption of tokens the system is broken. However much the banksters try to hide this fact through their control of media, this fact is obvious to all of us now.

    3. Gold when used as currency(token) need an agency to ensure redemption against food/fuel/energy required to sustain life else it is a ponzi scheme. At times of resource scarcities like famine, exchange value of gold goes down drastically, this is why it is a ponzi scheme. The trick of becoming rich with gold currency was to hold on to it for minimum amount of time, exchange it to buy and store food grains (wheat, rice can be stored for 20 years), when food grain scarcity hits the market sell the food grains to get back all the gold. Market manipulation was very easy with gold currency, this is the major deception of Austrian gold economics. Hence backing paper currency with gold is double whammy.

    4. The economic system can be easily fixed by defining currency as token that need redemption against food/fuel/energy by the issuers of currency to be valid token and medium of exchange. Redemption obligation against food/fuel/energy will act as market regulation mechanism keeping the price of essential commodities food/fuel/energy steady.

    5. When currency becomes a real token the banks has to reconcile their accounts on a short term basis say 90 days, this will take away their power to create money through book entry and cheque issue. This was not practically possible 30 years back but today with computer networks and near 100% computerization of the banking system it is very much possible.

    6. In a real free market system the wealth will be distributed much more evenly than today, when 7% of the people own 80% of the wealth, this is enough proof that the current economic system is broken and is not sustainable.

    7. The common question people ask: In a currency system based on food/fuel/energy redemption what happens when food/fuel/energy production exceeds “global” demand? The answer: interest rates will become negative to establish equilibrium in a short period.

57. February 10th, 2009 at 3:41 am

    One Salient Oversight says:

    Like many, I am not a trained Economist who has firm opinions on the subject of economics.

    Unlike many, I read econ-blogs. Occasionally I get published and discussed at these sites by real economists. Click on this link for one example:

    http://tinyurl.com/6howov

58. February 10th, 2009 at 3:48 am

    Julious says:

    There is one thing that bloggers forget:

    If there are hundreds of people watching, someone will know better than you. Example: I’m teacher of economics in university,I came here almost by accident(news site), and never will be back. I have my university MS degree and I don’t agree with you: I think intelligent people CAN understand economics, and they MUST, if not they will be fooled.

    I have geeks on my class (engineers to be) that could understand economics better than some colleagues because they understand mathematical concepts better(naturals). Some of them will study economics later and will be very well considered.

    You do an attack AD HOMINEM, thoughts should be considered as thoughts. If they are right, they are right.

    PS:There are a lot economic experts that think Fed doesn’t work as it should, and a lot of money is debt you wanting it or not.

59. February 10th, 2009 at 5:31 am

    The Pageman says:

    @Rob Sayers (comment#1) – http://www.mises.org/

60. February 10th, 2009 at 8:02 am

    Mark Herpel says:

    Hey, even a broken clock is correct twice a day.

    Buy gold.
    Mark

61. February 10th, 2009 at 8:12 am

    Jeo says:

    Julius wins.

    ls: Math doesn’t make something a science. It just makes something look like a science. Google “cargo cult.” If your starting assumptions are wrong, all the math in the world won’t help you. A small example: Mandelbrot wrote last year that part of the reason for this mess is that models assumed market movements had a bell curve distribution, when actually they’re fractal.

    Everybody: A currency backed by gold is not necessarily the best idea. Nobel economist Hayek advocated competing currencies issued by private parties, with no legal tender laws. Since most people will soon be carrying powerful internet-connected computers in their pockets, this will soon be practical.

62. February 10th, 2009 at 8:59 am

    louis says:

    I appreciate the group of you who came here to post comments, links, and other ideas. This includes those who came here and promptly missed the entire point. I especially appreciate those of you read the last paragraph and decided to argue with various points in it. Normally, I’d erase off-topic stuff (including the trolls) but in this case they serve the useful purpose of proving my point.

63. February 10th, 2009 at 9:04 am

    Bill Mill says:

    @lk by my count it went RLLRCCRL and so dead even, but CR is another excellent blog I enjoy reading.

64. February 10th, 2009 at 7:14 pm

    Jeo says:

    Citizens in a democracy aren’t supposed to leave everything to the experts.

65. February 10th, 2009 at 8:35 pm

    Wave Geek says:

    Economists don’t know SFA about the economy either. Their predictions are worthless. On average economists predict a recession by approximately -6 months. That’s minus 6 months. On average they realize we’re in a recession about 6 months into it.

    The only economists worth a pinch of dust are those who know what they don’t know – Adam Smith, F A Hayek, Ludwig Mises.

66. February 11th, 2009 at 4:39 pm

    Astronoid says:

    THANK YOU!!!

67. February 13th, 2009 at 7:52 pm

    psiborg says:

    Thanks for this, you rock.
    Oh, and you idiots suck. You know who you are.

68. February 15th, 2009 at 7:33 pm

    Marley says:

    It will take a few days before the force majeure is apparent and the economic collapse hits the news. Banks will have closed before anyone even realizes it. Gold, silver, hunting, gardening, and bartering will prevail. All the macroeconomic opinions and “expert” dribble will fade as the US dollar fiat paper money blows in the breeze…and people grow hungry…
    silence will grow among all the nutjobs.

69. July 6th, 2009 at 3:20 pm

    feshu says:

    money is debt from the perspective of the central bank it is considered a part of their liabilities…

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