Shock: Bloomberg Admits Models Don’t Work – Economics, Government Turned Upside Down?

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

thedailybell.com / By Staff Report / Thursday, April 11, 2013

Beware of Economists Peddling Elegant Models … Mathematics can be beguilingly elegant. So it can be Dangerous When people mistake its elegance for truth. Albert Einstein’s theory of general relativity might be the best example of elegant math, capturing a wide range of subtle and surprising phenomena with remarkable simplicity.Step toward the practical, though, and physics Quickly moves away from elegance to makeshift usefulness. There’s no pretty expression for the Operation of a nuclear reactor, or for how air flows past the swept wing of an aircraft. Understanding demands ugly approximations, or brute-force simulation on a large computer. - Bloomberg

Dominant Social Theme: Hail the economists. We can indeed “model” our way to prosperity.

Free-Market Analysis: What the hell is happening at Bloomberg? How did statism to article like THIS ever did get published by august purveyor of, and rational planning “experts”?

Actually, we do know why.

Authors in the modeling camp only write articles like this very rarely – when there are replacements at hand. In this case, the author Would certainly seem to be someone who believes in economic modeling, Often called econometrics . Nothing has been more disastrous in the past 100 years than econometrics – except for central banking from us on a kind of econometrics itself.

The reason we say the author seems like someone of the modeling persuasion is Because of his background, Described thusly: “Mark Buchanan, a theoretical physicist and the author of ‘The Social Atom: Why the Rich Get Richer, Cheaters Get Caught and Your Neighbor Usually Looks Like You, “is a Bloomberg View columnist.”

Certainly this is on article written by a theoretical physicist, a confident screed penned by someone who has a better idea at hand. That makes it easy to reject previous models as primitive. The fault, you see, is not with the premise but with the execution. Here’s more:

In one very practical and consequential area, though, the allure of elegance Exercised has a perverse and lasting influence. For several Decades, economists have sought to express the way millions of people and companies interact in a handful of pretty equations.

READ MORE

Thanks to BrotherJohnF

Source: