J. Bradford DeLong's Blog, page 262
December 21, 2018
Binyamin Appelbaum: "As the old saying goes, there are no...
Binyamin Appelbaum: "As the old saying goes, there are no efficient market hypothesists in foxholes. They gave a guy a Nobel Prize for writing that financial markets are efficient. I'll never find that not funny." Noah Smith: "EMH is the best investing advice you or most people will ever receive."... Brad DeLong: EMH is a reasonable theory of short run returns. It is a lousy theory of values. And it is an even lousy her theory of price movements. Fans and co���s inability to distinguish between those three at all was what convinced me they were morons...
...Also Merton, Scholes, and Fama���s pretending that there was an EMH explanation for Black Monday in 1987. Also their trying to do macro.
Noah Smith: No disagreement from me!
Brad DeLong: Perhaps this is best explained by resorting to Isaiah Berlin���s metaphor of hedgehogs and foxes:
Foxes are useful and valuable to listen to because they know a lot about a complicated world.
Hedgehogs know one thing, and have negative knowledge of the rest of the world.
Hedgehogs are poisonous morons who corrupt your mind. Hedgehogs can be useful in the information ecology���if and only if the one thing they happen to know is underweighted In the intellectual portfolio.
But that they can be useful does not make them smart.
And it definitely does not make them wise
#shouldread #twitter #economicsgonewrong #finance
December 20, 2018
Ernie Tedeschi: Unemployment Looks Like 2000 Again. But W...
Ernie Tedeschi: Unemployment Looks Like 2000 Again. But Wage Growth Doesn���t: "Trying to solve an economic mystery: This is, to put it mildly, a mystery. If workers are as scarce as the unemployment rate and many other measures suggest, employers should be raising wages to compete for them...
#shouldread #labormarkets #equitablegrowth
Karl Smith is correct: to solve the "skills gap", create ...
Karl Smith is correct: to solve the "skills gap", create an economy in which companies have an incentive to solve the "skills gap": Karl Smith: @karlbykarlsmith: "Meh. Turn demand up to 11, watch gap solve itself..." Noah Smith: @Noahpinion: "YESSSSS..." : Joe Nocera: How to Turn a Community College into an Economic Engine: "Bridging the skills gap starts with a conversation between community colleges and employers...
#shouldread #labormarkets #equitablegrowth
The Fed ought to pursue a symmetric 4%/year inflation tar...
The Fed ought to pursue a symmetric 4%/year inflation target. It cannot even successfully communicate and pursue a 2%/year symmetric inflation target. And Tim Duy is an unhappy camper: Tim Duy: Fed Hikes Rates, Market Tumbles: "The implication here is that there is substantial downside risk to the economy. So much that the Fed is reducing its forecasts across the board. So much so that the Fed anticipates they will fall short of their inflation target yet again. And yet they continue to hike rates and signal more rate hikes to come. It is an unnecessarily and explicit hawkish message that is an artifact of a communications strategy that only made sense when you could reasonably promise zero rates for an extended period...
#shouldread #monetarypolicy
Josh Chafetz: "Never tweet is looking better and better a...
Josh Chafetz: "Never tweet is looking better and better as life advice: "'The entire party supports Trump, which is why we are considering canceling a party primary to make sure he doesn't lose it.' https://www.washingtonexaminer.com/news/campaigns/south-carolina-gop-could-scrap-2020-primary-to-protect-trump. Special shout-out to all the people who thought... [this] was a sincere statement of my own views. Keep doing what you do. You make this website the wondrous place. Never tweet is looking better and better as life advice...
#shouldread #journamalism #orangehairedbaboons
Popehat: Alan Dershowitz Is Lying To You: "Trading on his...
Popehat: Alan Dershowitz Is Lying To You: "Trading on his reputation as a legal titan, he's offering normative views (what the law should be) as descriptive views (what the law is.)... Alan Dershowitz, in describing the Special Counsel investigation, is posing as a subject-matter expert but acting like an advocate���and a dishonest one...
#shouldread #orengehairedbabooons
It was a huge mistake for the Federal Reserve to nearly i...
It was a huge mistake for the Federal Reserve to nearly invest the yield curve in 2007. In fact, I cannot think of any reason why a central bank with inflation not well above target would ever seek or tolerate such a near-inverted yield curve: Joe Rennison: Yield Curve Hits New Cycle Low in Wake of Fed Meeting: "The difference between two- and 10-year Treasury yields, a common permutation of the so-called yield curve, sank below 10 basis points for only the second time this year, and hit 9.87 basis points in morning trading on Thursday. It���s the lowest level for the measure since June 2007...
...An inverted yield curve���where short-dated Treasury yields rise above longer-dated ones���has preceded every US recession since the second world war. The drop comes after the Federal Reserve on Wednesday raised interest rates Wednesday and forecast a two (versus their previous forecast of three) rate increases for 2019.... The prospect of a slowdown in the economy also hit the US stock market as investors adjusted to the increased pressure on corporate profits...
#shouldread
Narayana Kocherlakota: The Fed���s Risky Plan to Boost Un...
Narayana Kocherlakota: The Fed���s Risky Plan to Boost Unemployment: "The Fed is planning to raise its interest-rate target above its long-run level of around 2.8��percent. We can actually see this happening in the Fed���s rate forecasts for the next three years.... The Fed is planning to eliminate over a million jobs �����and put millions more at risk �����in order to avoid a tiny deviation from its inflation target. I���ll leave it for readers to judge whether this is a desirable gamble...
#shouldread #monetarypolicy
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