FED Economist: Ignore Bloggers and Non-Econ PhD's

[TheState]

From Zerohedge (http://www.zerohedge.com/article/fed-has-lost-it-publishes-essay-bashing-bloggers-tells-general-public-broadly-ignore-those-w)


I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contribute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public.

Read the whole piece, it will drive you nuts.

[low preference guy]

Paying for these report was a wise use of taxpayers' money.

[Travlyr]

Man, if they could just go back to the "good ole days" of banning and burning... the commoners would be so much easier to control. :rolleyes:

[Dr.3D]

I have to wonder how long it's been since anything even remotely resembling real economics has been taught at the college level.

The educational institutions have been funded by people who don't want anyone to know the truth about economics for so long, it's a wonder anybody remembers anything about it.

[HOLLYWOOD]

The FEDERAL RESERVE just the Racketeering Monopoly FIAT Counterfeiters protecting their turf... and schemes.

[erowe1]

I haven't read the whole letter. But what I read I really liked, and so did Art Carden at the libertarian Independent Institute blog.
http://www.independent.org/blog/?p=6763


The Richmond Fed’s Kartik Athreya takes the commentariat to task for its habit of making pronouncements on economics that they (we) aren’t qualified to make (HT: Greg Mankiw). Athreya makes several interesting comparisons of economics to oncology, seismology, and cell biology. People who have little or no training in these fields usually refrain from making confident pronouncements about them. Ignorance doesn’t stop those who would opine on economics, and indeed, it is sometimes seen as a sign of even greater credibility. As a regular contributor to the blogosphere and public commentary, I saw Athreya’s piece as a refreshing and re-centering reminder about what I’m qualified (and not qualified) to say.

Despite the inherent problems with central banks, economists who work for the Fed sometimes come out with pretty good stuff. What's supposed to be so bad about this piece?

The two economic pundits he aims his objections toward most directly are Paul Krugman and Brad Delong, so we should all at least like that part.

Edit: Here's a list of essays Art Carden has written, btw, just so you can see that he's really coming from a free market perspective when he recommends the letter in question.
http://www.independent.org/aboutus/staff-articles.asp?id=1163&pid=2

[TheState]

What's supposed to be so bad about this piece?



Should the economic advice of someone like Peter Schiff be ignored just because he hasn't gotten a PhD (I'm sure another qualifier would be that it'd have to be from a school of the author's liking)?

As someone who is currently working on a PhD, I can assure you that just because someone has a high academic background that doesn't mean they are above criticism from the "lay" person.

Having the attitude of "trust me, I'm the expert" is extremely dangerous and often times counter-productive b/c, as the field of economist shows, you can get so stuck in the thinking of the day that obvious problems (like massive deficits, robbing people through inflation, etc) can totally escape your thinking.

[low preference guy]

What's supposed to be so bad about this piece?

Taxpayers paying a guy to write a paper whining about bloggers?

[tremendoustie]

Lol, it's so funny to watch them flail about, desperately trying to restore their control over information.

Sorry lords, the printing press is built and the serfs aren't under your thumb anymore.

Now go get a real job.

[low preference guy]

Lol, it's so funny to watch them flail about, desperately trying to restore their control over information.

Sorry lords, the printing press is built and the serfs aren't under your thumb anymore.

Now go get a real job.

The secret thought this guy didn't write probably is


I WANT TO DESTROY THE INTERNET!!!!!!!!!!! DESTROOOOYYYYY IT!

[Eroberer]

Considering the only place to work with a PhD in Economics is at a university or at the FED, it would be wise to avoid them. I have read, that in order to become a doctor in economics, you basically have to accept the FED's policies and methods.

[erowe1]

Should the economic advice of someone like Peter Schiff be ignored just because he hasn't gotten a PhD (I'm sure another qualifier would be that it'd have to be from a school of the author's liking)?


I don't think the letter actually makes holding a PhD a requirement for being able to talk about economics. It just rails against pundits (including ones with PhDs and Nobel Prizes) for oversimplifying economics in their blogs and columns.

[erowe1]

Taxpayers paying a guy to write a paper whining about bloggers?

Where do you get that tax payers paid him to write that?

[low preference guy]

Where do you get that tax payers paid him to write that?

Well, the document starts as follow:

Economics is Hard. Don’t Let Bloggers Tell You Otherwise
Kartik Athreya
Research Department
Federal Reserve Bank of Richmond

It's a document from the Research Department of Federal Reserve Bank of Richmond. Did Kartik Athreya just volunteer for them?

[erowe1]

Well, the document starts as follow:

Economics is Hard. Don’t Let Bloggers Tell You Otherwise
Kartik Athreya
Research Department
Federal Reserve Bank of Richmond

It's a document from the Research Department of Federal Reserve Bank of Richmond. Did Kartik Athreya just volunteer for them?

I just read that as identifying the author, not saying that he was paid by the Fed to write it. Maybe I'm wrong, but that's pretty common practice. When you read a journal article, they have something at the beginning that says where the author works. But that doesn't mean that that university or whatever had anything to do with the article or that they paid him for the time he spent writing it. The fact that this is a Google document and not something on a Fed website suggests to me that it's not an official Fed document.

[erowe1]

Having the attitude of "trust me, I'm the expert" is extremely dangerous and often times counter-productive b/c, as the field of economist shows, you can get so stuck in the thinking of the day that obvious problems (like massive deficits, robbing people through inflation, etc) can totally escape your thinking.

What part of the letter exhibited that attitude in your eyes?

It looked to me like the opposite. The examples it upheld as those to be taken seriously were articles that the author notes their "careful work with
its explicit, careful reasoning, its ever-mindful approach to the accounting for feedback effects, and its transparent reproducibility," not simply trusting something someone says because they're experts. Meanwhile, one of his chief targets is PhD holder and Nobel Prize winner, Paul Krugman, the quintessential economist who expects people to take him seriously solely because he's an expert, and thus free from any obligation to be able to back up his assertions with the kind of clear reasoning and accounting for myriad complex facts that the author of the letter claims is necessary.

[low preference guy]

I just read that as identifying the author, not saying that he was paid by the Fed to write it. Maybe I'm wrong, but that's pretty common practice. When you read a journal article, they have something at the beginning that says where the author works. But that doesn't mean that that university or whatever had anything to do with the article or that they paid him for the time he spent writing it. The fact that this is a Google document and not something on a Fed website suggests to me that it's not an official Fed document.

But he is paid by the Fed, isn't he?

[erowe1]

But he is paid by the Fed, isn't he?

Sure. But that doesn't mean the Fed paid him to write that essay. I didn't see anything that suggests to me that they did.

[low preference guy]

Sure. But that doesn't mean the Fed paid him to write that essay. I didn't see anything that suggests to me that they did.

In my book, it does mean that the taxpayers pay him. If we didn't pay him, maybe he would've gotten a less profitable job (who pays useless economists in the private sector?). So maybe he wouldn't have that leisure time to write this paper. It's that the taxpayers pay him such a good salary what allows him to write this crap. The food that sustains him and the lighting and the electricity of his computer is probably paid by with the money he receives from taxpayers as part of his salary at the Fed.

[erowe1]

In my book, it does mean that the taxpayers pay him.
Yes, taxpayers pay him. But that doesn't mean they paid him to write that essay.


If we didn't pay him, maybe he would've gotten a less profitable job (who pays useless economists in the private sector?). So maybe he wouldn't have that leisure time to write this paper.
I don't know how profitable his job is. But I didn't see anything in that essay that he couldn't have written with a less profitable one. For that matter, had he been unemployed entirely, he would have had even more time to write it (and it doesn't look like it took much time anyway).

Furthermore, your reasoning would apply to everything he (and every other government employee) ever writes, or even does, while drawing a government paycheck. When he takes a vacation where he gambles, you could say that tax payers are paying him to gamble, even though that's not what they're paying him to do. You can criticize the government job itself, but only for what it actually entails, not for every single thing the government employee is able to do in his free time thanks in part to having that job.


It's that the taxpayers pay him such a good salary what allows him to write this crap.
Sorry, but again, what part of it was crap? I honestly didn't see the problem with it.

[low preference guy]

I don't know how profitable his job is. But I didn't see anything in that essay that he couldn't have written with a less profitable one.

I think it's intended to stop bloggers and some economists that criticize his employers from having much influence, so although I didn't investigate, it seems plausible to me that he wrote the essay during working hours.

As a side point, we shouldn't even have these employees payed by taxpayers at all. These economists advisors shouldn't even be hired, as the Fed shouldn't even try to affect interest rates at all.

[newbitech]

here is this guy on video talking about economics.

this guy... lol

http://www.richmondfed.org/flashvideo/player/common/meet_an_economist.cfm?play=common/meetaneconomist_kartik_athreya

he acts like no one else has the ability to come to these conclusions without a PhD.

Give me a fucking break.

[low preference guy]

here is this guy on video talking about economics.

this guy... lol

http://www.richmondfed.org/flashvideo/player/common/meet_an_economist.cfm?play=common/meetaneconomist_kartik_athreya

he acts like no one else has the ability to come to these conclusions without a PhD.

Give me a fucking break.

Never seen an Indian who was this stupid.

[erowe1]

I think it's intended to stop bloggers and some economists that criticize his employers from having much influence, so although I didn't investigate, it seems plausible to me that he wrote the essay during working hours.

And Paul Krugman and Brad Delong are among the economists who criticize his employers that tax payers are ostensibly paying him to stop?

Besides, it doesn't really matter if it's plausible that he wrote this during working hours? Sure it's plausible. But if we don't really have any reason to believe it actually happened, we can't just throw out there that tax payers paid him to write it, as though that's a fact.


As a side point, we shouldn't even have these employees payed by taxpayers at all. These economists advisors shouldn't even be hired, as the Fed shouldn't even try to affect interest rates at all.
That's absolutely true. But it's really a separate issue. There's no need to dismiss everything that every Fed economist ever says just because he's a Fed economist. They do put out good things from time to time, including things that are very free market, and sometimes anti-Fed.

[low preference guy]

Besides, it doesn't really matter if it's plausible that he wrote this during working hours? Sure it's plausible. But if we don't really have any reason to believe it actually happened, we can't just throw out there that tax payers paid him to write it, as though that's a fact.


I'm still not sure about that. If you're defending your employer from criticism and aren't paid, wouldn't that be some sort of explotation, not being paid for extra hours?

[erowe1]

I'm still not sure about that. If you're defending your employer from criticism and aren't paid, wouldn't that be some sort of explotation, not being paid for extra hours?

Where in the essay does he defend his employer from criticism? As I read the essay it applies equally to pundits from all persuasions, whether they attack the Fed or defend it.

But to answer your question, no it wouldn't be that. Just as all those bloggers he criticizes aren't being exploited by whichever institutions they defend in any given blog that they write without getting paid by those institutions to write it. This guy could have just as easily written this exact same essay while not being a Fed employee, and the header would merely list whomever his employer was in that scenario.

[EndDaFed]

I am not going to talk about the article but this topic in general. If someone works for the government there is an incentive to bend the truth because their job depends on it. If there were no government they wouldn't have a job. It would be against their self interest to challenge government power. So it's a valid claim that anyone who works for a government institution should have extra scrutiny about their ideas when it comes to government policy or economics. Would you trust someone who works for B.P when they say their policy on worker safety is excellent? Would you then be uncritical of B.P when they propose some form of regulation on oil? If there is a conflict of interest it's best to toss out everything they said that can't be backed up by evidence, prior knowledge, or logic. With that being said people should be critical of everything anyone says, but to further step up that skepticism when their is a possible corruption by incentives.

[K466]

Our good overlords know exactly what they are doing, let's stop questioning them, even if they tell us that 1+1=5.

^*sarcasm*

I think I'll stick with Peter Schiff and Austrian economics, thank you.

[EndDaFed]

Our good overlords know exactly what they are doing, let's stop questioning them, even if they tell us that 1+1=5.

^*sarcasm*

I think I'll stick with Peter Schiff and Austrian economics, thank you.

But if they do tell you 2 + 2 = 4. You shouldn't question that.

[bobbyw24]

This essay by Kartik Athreya criticizing the economics blogosphere is making the rounds, and I am late commenting on it (links to other comments at the end), so here are a few quick responses.

Let me start by noting that the essay is not even digitized in a convenient form -- it is a pdf -- and to me that says a lot about the writers knowledge of how the digital world works. Why not make it available in a convenient form (unless the goal is to overcome the fact that federal reserve work cannot be copyrighted by making it difficult to reproduce)? (This is an irritation more generally, and the Kansas City Fed is the worst. Even the president's speeches are offered only as pdfs -- and they are locked to prevent copying -- rather than in a more convenient digital form. Are they trying to discourage this information from more general circulation? If so, why?) [Update: I added a few follow up comments on pdfs at the end of the post.]

OK, on to the essay:

Economics is Hard. Don’t Let Bloggers Tell You Otherwise, by Kartik Athreya, Federal Reserve Bank of Richmond: The following is a letter to open-minded consumers of the economics blogosphere. In the wake of the recent financial crisis, bloggers seem unable to resist commentating routinely about economic events. It may always have been thus, but in recent times, the manifold dimensions of the financial crisis and associated recession have given fillip to something bigger than a cottage industry. Examples include Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich. In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why.

Hmm. I wonder what he thinks about the fact that Greg Mankiw -- someone he cites approvingly later as an example to emulate -- sends people to read Robert Samuelson and John Stossel regularly? (See here for just one example. The post has two links, one to Samuelson and one to Stossel.)

Before I continue, here’s who I am:

http://seekingalpha.com/article/212256-don-t-let-a-fed-economist-tell-you-otherwise?source=feed

[sailingaway]

From Zerohedge (http://www.zerohedge.com/article/fed-has-lost-it-publishes-essay-bashing-bloggers-tells-general-public-broadly-ignore-those-w)



Read the whole piece, it will drive you nuts.

This, and the FEC attack on C4L, and the DISCLOSE Act to inhibit citizens petitioning government....

...sounds like someone is worried that the rules might change.

[Dr.3D]

Time to shut down the US Federal Reserve? (http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006729/time-to-shut-down-the-us-federal-reserve/)

By Ambrose Evans-Pritchard Economics Last updated: June 29th, 2010

Like a mad aunt, the Fed is slowly losing its marbles.

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).


http://blogs.telegraph.co.uk/finance/files/2010/06/adam-smith.jpg
Adam Smith didn't have an economics PhD

“Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.”

Don’t you just love that throw-away line “decent”? Dr Athreya hails from the University of Iowa.

“The response of the untrained to the crisis has been startling. The real issue is that there is an extremely low likelihood that the speculations of the untrained, on a topic almost pathologically riddled by dynamic considerations and feedback effects, will offer anything new. Moreover, there is a substantial likelihood that it will instead offer something incoherent or misleading.”

You couldn’t make it up, could you?

“Economics is hard. Really hard. You just won’t believe how vastly hugely mind-boggingly hard it is. I mean you may think doing the Sunday Times crossword is difficult, but that’s just peanuts to economics. And because it is so hard, people shouldn’t blithely go shooting their mouths off about it, and pretending like it’s so easy. In fact, we would all be better off if we just ignored these clowns.”

I hold my hand up Dr Athreya and plead guilty. I am grateful to Bruce Krasting’s blog for bringing this stinging rebuke to my attention.

However, Dr Athreya’s assertions cannot be allowed to pass. The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.

Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.

They ran ever-lower real interests with each cycle, allowed asset bubbles to run unchecked (Ben Bernanke was the cheerleader of that particular folly), blamed Anglo-Saxon over-consumption on excess Asian savings (half true, but still the silliest cop-out of all time), and believed in the neanderthal doctrine of “inflation targeting”. Have they all forgotten Keynes’s cautionary words on the “tyranny of the general price level” in the early 1930s? Yes they have.

They allowed the M3 money supply to surge at double-digit rates (16pc in the US and 11pc in euroland), and are now allowing it to collapse (minus 5.5pc in the US over the last year). Have they all forgotten the Friedman-Schwartz lessons on the quantity theory of money? Yes, they have. Have they forgotten Irving Fisher’s “Debt Deflation causes of Great Depressions”? Yes, most of them have. And of course, they completely failed to see the 2007-2009 crisis coming, or to respond to it fast enough when it occurred.

The Fed has since made a hash of quantitative easing, largely due to Bernanke’s ideological infatuation with “creditism”. QE has been large enough to horrify everybody (especially the Chinese) by its sheer size – lifting the balance sheet to $2.4 trillion – but it has been carried out in such a way that it does not gain full traction. This is the worst of both worlds. So much geo-political capital wasted to such modest and distorting effect.

The error was for the Fed to buy the bonds from the banking system (and we all hate the banks, don’t we) rather than going straight to the non-bank private sector. How about purchasing a herd of Texas Longhorn cattle? That would do it. The inevitable result of this is a collapse of money velocity as banks allow their useless reserves to swell.

And now the Fed tells us all to shut up. Fie to you sir.

The 20th Century was a horrible litany of absurd experiments and atrocities committed by intellectuals, or by elite groupings that claimed a higher knowledge. Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.

The root error of the modern academy is to pretend (and perhaps believe, which is even less forgiveable), that economics is a science and answers to Newtonian laws.

In any case, Newton was wrong. He neglected the fourth dimension of time, as Einstein called it, and that is exactly what the new classical school of economics has done by failing to take into account the intertemporal effects of debt – now 360pc of GDP across the OECD bloc, if properly counted.

There has been a cosy self-delusion that rising debt is largely benign because it is merely money that society owes to itself. This is a bad error of judgement, one that the intuitive man in the street can see through immediately.

Debt draws forward prosperity, which leads to powerful overhang effects that are not properly incorporated into Fed models. That is the key reason why Ben Bernanke’s Fed was caught flat-footed when the crisis hit, and kept misjudging it until the events started to spin out of control.

Economics should never be treated as a science. Its claims are not falsifiable, which is why economists can disagree so violently among themselves: a rarer spectacle in science, where disputes are usually resolved one way or another by hard data.

It is a branch of anthropology and psychology, a moral discipline if you like. Anybody who loses sight of this is a public nuisance, starting with Dr Athreya.

As for the Fed, I venture to say that a common jury of 12 American men and women placed on the Federal Open Market Committee would have done a better job of setting monetary policy over the last 20 years than Doctors Bernanke and Greenspan.

Actually, Greenspan never got a Phd. His honourary doctorate was awarded later for political reasons. (He had been a Nixon speech-writer). But never mind.