What happens when you let academics influence the real world...

[Whisper66]

Isn't that the same thing?

Maybe just a difference of how we use words, but I wouldn't think that is the same thing. At least it didn't mean the same thing to me in my job and the models I made. When I made models that didn't seem to result in reasonable results as I understood the "real world", my first step was to start over and challenge the whole basis of my model. Only if I couldn't find anything wrong there would I spend the time to explore all the ins and outs of why the model got various results. Maybe something different to the folks that predicted negative oil prices....don't know.

 

[LARS]

For those with too much time on their hands, apparently like me, here is a link to the paper I referenced.

https://www.stlouisfed.org/on-the-e...flation&utm_content=oteblog&utm_campaign=2542


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[redduck]

I wish. I could've had an equally lucrative career in the movies, which would've been more fun... ;-)


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Not your fault. This often happens when one doesn't receive proper occupational guidance. Who knows, you still might be happily working if you had chosen a career in the movies.

And, there's no chance that you would be reading this now (see directly below).

For those with too much time on their hands, apparently like me, here is a link to the paper I referenced.

https://www.stlouisfed.org/on-the-e...flation&utm_content=oteblog&utm_campaign=2542

Lars, Lars, Lars, ah, what might have been...

 

[VFK57]

Current monetary policies were clearly described by Jim Rickards in his best selling book "Currency Wars" in 2012.
http://www.amazon.com/Currency-Wars...&qid=1457997697&sr=8-1&keywords=currency+wars
It is hard not to notice that all major economies Central Banks are involved in it (ECB, Japan, China and US at least till last December). Unfortunately above mentioned Central Banks do not have any other solution but "Easing". Where in the End you think it is going to lead to?

 

[LARS]

Not your fault. This often happens when one doesn't receive proper occupational guidance. Who knows, you still might be happily working if you had chosen a career in the movies.

And, there's no chance that you would be reading this now (see directly below).



Lars, Lars, Lars, ah, what might have been...

Clearly all traces back to a misspent youth studying...

 

[LARS]

Current monetary policies were clearly described by Jim Rickards in his best selling book "Currency Wars" in 2012.
Currency Wars: The Making of the Next Global Crisis: James Rickards: 9781591845560: Amazon.com: Books
It is hard not to notice that all major economies Central Banks are involved in it (ECB, Japan, China and US at least till last December). Unfortunately above mentioned Central Banks do not have any other solution but "Easing". Where in the End you think it is going to lead to?


Central Banks, at least those pursuing NIRP for the moment, seem hell bent to ride this policy train to its conclusion. And as always as you barrel down a dark tunnel you have to ask yourself is that faint light you see coming at you daylight or another train heading your way?

I fervently hope the US Central Bank is smart enough to continue to take the spur it has started to follow (lifting rates) and avoids the temptation to veer back onto the main track of NIRP. IMHO nothing good will come of it.

As recent commentary is emerging, the good news is that the insanity of NIRP indeed may have real world practicable boundaries that will keep it in check. One can only hope so

 

[marko]

Who knows, you still might be happily working if you had chosen a career in the movies.

Lars, Lars, Lars, ah, what might have been...

Or a highly satisfying career as a Hollywood parking valet.

 

[haha]

Or a highly satisfying career as a Hollywood parking valet.

Even so he'd get to park the occasional Ferrari. Everything is more grand in LA!

Ha

 

[redduck]

Even so he'd get to park the occasional Ferrari. Everything is more grand in LA!

Ha

Those Ferrari guys, they don't tip as well as you might think.

 

[redduck]

Or a highly satisfying career as a Hollywood parking valet.

Uh, a little too close to home . You try parking cars when you're 70. Those private parties are killers--running up and down the street retrieving cars for people.
p.s. turns out that Lars is a pretty good tipper

 

[LARS]

Those Ferrari guys, they don't tip as well as you might think.

One of the side perks of my misspent youth on Wall Street is I owned my first Ferrari when I was 29.

And if we plunge down the rabbit hole of negative interest rates I may be buying more in my old age. Not such a bad side affect of NIRP now that I think about it...

 

[VFK57]

Yet another warning from a prominent man in Finances
Mohamed El-Erian: We've reached the end of the road - Business Insider

 

[M Paquette]

Welcome to a biased chaotic system.

You're traveling through another dimension -- a dimension not only of money and monetary flow but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop: the Bifurcation Point!

 

[LARS]

Welcome to a biased chaotic system.

You're traveling through another dimension -- a dimension not only of money and monetary flow but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop: the Bifurcation Point!

I am sorry, but are you talking about monetary policy or the presidential election? (Mods feel free to interpret this as veering off into Porkyland and shut the thread down...)


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[M Paquette]

I am sorry, but are you talking about monetary policy or the presidential election? (Mods feel free to interpret this as veering off into Porkyland and shut the thread down...)


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Eh? Nothing to do with elections in an individual country.

Economic systems tend to be mathematically chaotic systems. We can apply pressure on a system to try and steer it a bit, but often the chaotic 'noise' overwhelms the steering pressure that poking a single variable (e.g. Overnight interest rate) can have. A sudden loss of confidence in a market (Tulip Mania crash) or a misstep in fiscal policy (e.g. "Austerity economics" in Europe recently) can have a much larger effect than tinkering with a handful of variables available to a central bank.

Monetary policy is just one tool, and not a particularly powerful one. It is often compared to "pushing on a string" in terms of effectiveness.

You can google "chaotic systems" and "bifurcation point" for more information on those terms.

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[LARS]

Eh? Nothing to do with elections in an individual country.

Economic systems tend to be mathematically chaotic systems. We can apply pressure on a system to try and steer it a bit, but often the chaotic 'noise' overwhelms the steering pressure that poking a single variable (e.g. Overnight interest rate) can have. A sudden loss of confidence in a market (Tulip Mania crash) or a misstep in fiscal policy (e.g. "Austerity economics" in Europe recently) can have a much larger effect than tinkering with a handful of variables available to a central bank.

Monetary policy is just one tool, and not a particularly powerful one. It is often compared to "pushing on a string" in terms of effectiveness.

You can google "chaotic systems" and "bifurcation point" for more information on those terms.

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My comment was (apparently) a poor attempt at humor. Your reference to traveling through alternate dimensions/chaotic systems struck a chord as equally descriptive of current state of US presidential politics. Hence, my "joke"...


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[M Paquette]

My comment was (apparently) a poor attempt at humor. Your reference to traveling through alternate dimensions/chaotic systems struck a chord as equally descriptive of current state of US presidential politics. Hence, my "joke"...


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*SIGH*

Listen to the original Twilight Zone opening. There's this dude named Rod Serling who says some stuff that might be familiar. Oh, and mathematics and chaotic systems predate the 'current state of US presidential politics' by a few years. Just a few...

http://youtu.be/zi6wNGwd84g

It's a joke.
http://youtu.be/KTwnwbG9YLE




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[Gone4Good]

And yet . . . IMF's Lagarde Says Negative Rates Have Helped Global Economy

If we had not had those negative rates, we would be in a much worse place today, with inflation probably lower than where it is, with growth probably lower than where we have it,” Lagarde said. “It was a good thing to actually implement those negative rates under the current circumstances.”

Meanwhile, the Business Insider article linked in the OP concludes with this recommendation . . . "the step that comes after zero ought to be fiscal stimulus — government spending — not negative monetary stimulus."

And that's precisely what "The Academics" in general and Ben Bernanke in particular had been arguing for at least 5 years now. But after that recommendation fell on deaf ears, and with Central Bankers repeatedly undershooting their growth, inflation and unemployment mandates, they've resorted to the second best options available to them. What should they have done instead?

 

[marko]

*SIGH*

Listen to the original Twilight Zone opening. There's this dude named Rod Serling who says some stuff that might be familiar. \

FWIW I got the reference.

(...kids these days....)