Starring: Paul Krugman As ‘The Idiot’ & Justin Wolfers As ‘The Hack’

Submitted by Thad Beversdorf via FirstRebuttal.com,

Well this election certainly clarified a few things for the people of the world.  Most notably is that the experts are clueless. 

Paul Krugman, notable ‘expert’ on all things economic has almost 2 million followers on Twitter and an op-ed with the NY Times.  This means he has a platform of great influence.  And yet, time and time again, he does well to prove he’s an idiot.  The following piece posted on election night.

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Well “Never” or by noon.  So he overshot by eternity.  None of us are perfect eh?  Now I shouldn’t single out Mr. Krugman as almost every market pro and economist on Earth has predicted that a Trump victory results in complete financial and human obliteration.  At least that was the message leading up to the election.

In a piece by Justin Wolfers, for the NY Times, titled “The Markets Are Afraid of Donald Trump“, written just over a month ago the message is clear from his conclusion.

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So while over the past 130 years markets tend to react well to Republicans, Justin concludes it will be different with Trump, in fact, worse than the market reaction to the greatest tragedy ever to take place on American soil.

Now if you get a chance to read the full article you’ll see that Justin gives you a glimpse at the fancy math economists use to extrapolate predictions.  It’s just enough to make you believe, “Wow this guy really knows some fancy math, he must know what he’s talking about”.   But this is the very reason economists like Justin have tragic forecasting records.   Now don’t get me wrong the math has its limited place and I’ve sat through all the same fancy math classes as Justin.   But the difference between most economists and most good economic and market analysts is understanding that markets and economics have almost nothing to do with math.

Economics and markets are studies about human behaviour and societal constructs, that is the bilateral relationships between humans and the logistic economic and financial environments.  And if you don’t understand that there is no math in the world that will help your forecasting.  Just look at Justin and Krugman.

Now I write this piece obviously in reaction to the massive clusterf*ck that occurred when Trump’s victory failed to ignite financial Armageddon as all the PhD’s predicted it would.  I can’t tell you how many calls I received yesterday from risk managers, traders, money managers, etc. trying to figure out why the market wasn’t collapsing.  And frankly, I expected it might simply as a self fulling prophecy.  That is, because everyone had been told it would so it would.  But the market, while giving a short head fake, decided that low corporate tax rates, improved breadwinner job market in the US and a bit of fiscal stimulus may be good for the economy.  Go figure.

I guess my point is that guys like Krugman and Justin are false authorities yet are major players in setting and selling economic policy.  This phenomenon of appointing idiots and hacks to roles of policy setting is a true mystery.  Until we begin to replace the policy  making industry (and it is an industry) with people who actually understand the subjects for which they are setting policy we will continue to find ourselves waking up wondering what in the hell went wrong.


Source: ZeroHedge