Federal Reserve's terrible track record on predicting GDP since 2007.

[Madison320]

Since 2007 the Fed has been predicting the GDP for the coming year. They missed EVERY year but one on the low side. And the one they got right was at the low end of their estimate. Why in the hell do people still listen to them????

http://www.europac.com/commentaries/...t_transparency

"In the eight years that the Fed has issued GDP forecasts in the prior Fall, only once, in 2010, did the actual economic performance come in the range of its expectations (referred to as its "central tendency.") And even in that year, Fed forecasters did not manage to put the ball through the goal posts. Instead it just hit the upright (the low end of its range: 2.5% in actual growth vs. a central tendency of 2.5% to 3.5%). In all other years the Fed missed the mark completely on the downside. The tale of the tape tells the story:"

*************Central Tendency (The Fed)*******Actual Growth (BEA)

2007**************2.4% - 2.5%********************1.8%

2008**************1.8% - 2.5%********************-0.30%

2009**************-0.2% - 1.1%*******************-2.80%

2010**************2.5 % - 3.5 %******************* 2.50%

2011**************3.0% - 3.6%********************1.60%

2012**************2.5% - 2.9%********************2.30%

2013**************2.3% - 3.0%*********************2.20%

2014**************2.8% - 3.2%*********************2.40%

[phonetic lee]

[TheCount]

I'm just sitting here enjoying the irony of Peter Schiff saying that other people's predictions are inaccurate.

[Brian4Liberty]

INB4 Zippy...

[phonetic lee]

I'm just sitting here enjoying the irony of Peter Schiff saying that other people's predictions are inaccurate.

Yes, I did detect a whiff of hypocrisy from Peter, but that's why we love him

Let's recap his possible explanations for Fed forecasting errors:

(1) the economy has been unlucky ("black swan" events)
(2) the Fed mistakenly believes its policy tools are beneficial
(3) the Fed biases its forecasts to boost confidence ("cheerleading")

Recently the San Francisco Fed furnished its own assessment:

http://www.frbsf.org/economic-resear...deral-reserve/

Possible explanations for this pattern include [1] missed warning signals about the buildup of imbalances before the crisis, [2] overestimation of the efficacy of monetary policy following a balance-sheet recession, and [3] the natural tendency of forecasters to extrapolate from recent data.

So they acknowledge that they overestimated their own efficacy, but Peter's explanation #3 is not considered. I guess they reject any suggestion that they behave "politically."

[DevilsAdvocate]

I'm just sitting here enjoying the irony of Peter Schiff saying that other people's predictions are inaccurate.

He's just a guy. Whereas they are a massive organization with real power, and a huge academic establishment behind them. They are setting policy for the entire country. Now, both of them have been inacurrate, but guess who I'm more concerned about?

-------------------------------------------------------

The main problem with economics, is they have this massive pyramidal structure of people in academia passing down these theories as if they are inarguable mathematical fact. Despite years of data directly disproving their assertions. This is incredibly dangerous.

I remember getting in an argument with my economics teacher over the minimum wage law. He was explaining this mathematical reasoning behind how it was a good thing, and how it helped people. I asked him how it was any different at all from Price Controls, which he had previously explained were harmful. He just looked at me, no answer. I continued to explain that every single argument he just made to support the minimum wage, he could have used to support price controls on anything, such as food, or energy. Again, blank stare, no answer. This is the kind of broken logic that goes on.

It's like remember what Theodore Roosavelt tried to do. His logic was that people weren't getting enough to eat, so the governement went out and started slaughtering thousands of pigs to diminish supply and raise the price of meat. Totally backwards, ridiculous logic that doesn't make any sense.

Try and follow this:
-We need to increase the supply of meat.
-If we raise the price of meat, there will be more meat producers, and therefore more meat.
-To raise the price of meat, we can reduce the supply of meat.
Therefore: We can increase the supply of meat, by reducing the supply of meat

I've noticed that sometimes when people get caught up in a mathematical wonderland, they slowly start to achieve liftoff, and pull away from objective reality.

a=b
ab=a²
ab-b²=a²-b²
b(a-b)=(a+b)(a-b)
b=a+b
b=2b
1=2

It's a mathematical fact!!!

What's really going on of course is that acedemica is an entire ecosystem of competing ideas swirling around. The successful ideas get rewarded, the unsuccessful ones die off. Unfortunately, because the economics profession is so entertwined into government and policy making, the ideas that get rewarded are the ones that support what goverment naturally wants to do anyway. So eventually, after a few generations, the ecosystem of ideas mutates into something horrible and mangled.

[Madison320]

He's just a guy. Whereas they are a massive organization with real power, and a huge academic establishment behind them. They are setting policy for the entire country. Now, both of them have been inacurrate, but guess who I'm more concerned about?

I agree although I'd argue that Schiff gets a lot more right than wrong. The dollar hasn't collapsed yet but he called the dot com crash in 2001, the housing crisis in 2008, the rise of China, student loan crisis, the Fed doing QE over and over and keeping rates at 0%.

[oyarde]

The Fed reserve sucks and should be abolished , along with the USDA , Dept of Ed , CIA , FBI ,BATFE,DHS and the rest of those diseases .Schiff is a person, none of these $#@!ers are people , they are a plague .