The Fed Has Lost It; Publishes Essay Bashing Bloggers

[Rockclimber]

They're getting desparate. I bet they can't wait for Kagan to get the nod so that they can ban and arrest everything that stands in their way

   and  
Source: http://www.zerohedge.com/article/fed-ha ... to+zero%29

The Fed Has Lost It; Publishes Essay Bashing Bloggers, Tells General Public To Broadly Ignore Those Without An Econ PhD
Submitted by Tyler Durden on 06/28/2010 07:32 -0500

Citigroup Federal Reserve Krugman Paul Krugman Purchasing Power Robert Reich Unemployment Unemployment Benefits


Some Fed economist (with a hard-earned Ph.D mind you) named Kartik Athreya (who lasted at Citigroup as an associate Vice President for a whopping 7 months before getting sacked in 1998 only to find solace for his expiring unemployment benefits in the public sector) has written the most idiotic "research" piece to come out of the Federal Reserve since 1913, and the Fed has written a lot of idiotic research since then - after all you don't destroy 98% of the dollar's purchasing power in 97 years with non-idiotic research. But this just takes the cake. In "Economics is Hard. Don't Let Bloggers Tell You Otherwise" Kartik says: "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." Alas, all Kartik achieves is to convince the general public that feeding Fed "economists" alcohol after midnight and letting them directly upload their resultant gibberish to the Fed's broad RSS feed the second they think they have a coherent thought , is generally a disastrous idea. In his piece, which has no other intention than to discredit and outright malign bloggers such as Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich, Athreya says: "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." Instead in what follows, the Fed presents 4 pages of thoughts so meandering, that the author's blood alcohol level must have certainly been well above the legal norm for the duration of the writing of this ad hominem pamphlet.

Amusingly, the Fed shows that it also enjoys cannibalizing its own most vocal defenders:

The list of those exhibiting this zest also includes, in addition to those mentioned above, some who might know better. They are the patron saints of the "Macroeconomic Policy is Easy: Only Idiots Don't Think So" movement: Paul Krugman and Brad Delong. Either of these men will assure their readers that it's all really very simple (and may even be found in Keynes' writings). Lastly, before you dismiss me as a right- or left-winger, I am not. I'm simply less comfortable with ex cathedra pronouncements and speculations than the people I have named. (Somewhat strangely, in an earlier era Paul Krugman very effectively took the same sort of "accidental theorist" to task, so what I'm saying is really a bit of a rehash of his arguments.)

Here are some of the pearls of wisdom contained in this stunning paper:

Before I continue, here's who I am: The relevant fact is that I work as a rank-and-file PhD economist operating within a central banking system. I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems.
Why should anyone accept uncritically that Economics, or any field of human endeavor, for that matter, should be easy either to process or contribute to? To some extent, people don't. Would anyone tolerate the equivalent level of public discussion on cancer research? Most of us readily accept the proposition that Oncology requires training, and rarely give time over to non-medical-professionals' musings. Do we expect advances in cell-biology to be immediately accessible to anyone with even a college degree? Science journalists routinely cite specific studies that have appeared in specific journals. They generally do not engage in passing their own untrained speculations off as insights. But economic blogging and much journalism largely does not operate this way. Naifs write books, and sell many of them too. People as varied as Matt Ridley and William Greider make book-length statements about economics. I've never done that, and this is my job. This is, to say the very least, bizarre.
So far, I've claimed something a bit obnoxious-sounding: that 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.
You might say, "you're telling us to leave everything to the experts, so why should I believe you are adequately policed?" This is a fair question, but as someone who has worked for a decade to publish in leading academic journals (with some, but hardly overwhelming, success), I now have the referee reports to prove that I live in a world where people are not falling over themselves to believe my assertions. The reports are often scathing, but usually very insightful, and have over the years pointed out all manner of incoherence in my work. The leading journals have rejection rates in the neighborhood of 80%, and I've had my share of them.
How can this be changed? A precondition for the market delivering this is a recognition by the general public that they are simply being had by the bulk of the economic blogging crowd. I hope to have alerted you to the giant disconnect that exists between the nuanced discussion that occurs between research economists and the noise (some of it from economists!) that one sees in the web or the op-ed pages of even the very best newspapers of the US. As a result, my hope is that the broader public will ask for a slightly higher bar when it comes to economics, rather than self-selecting into blogs that merely confirm half-baked views that might have been acquired from elsewhere.
And this punchline:

For my part, seventeen years after my first PhD coursework, I still feel ill at ease with my grasp of many issues, and I am fairly confident that this is not just a question of limited intellect.
We disagree.

We would comment on this if it had any merit, and central point worth arguing or even debating, but since this whole thing sounds like the ramblings of a deranged lunatic, we will just leave it out there for your comedic enjoyment.

Full must-laugh at essay:

Economics is Hard

http://www.scribd.com/doc/33655771/Economics-is-Hard

[zapoper]

This guy's EGO has just made my LCD screen explode. Unbelievable. He is certainly on the payroll.
 

So far, I've claimed something a bit obnoxious-sounding: that 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.

    I mean come on! :lol:

Do we really need a PHD to figure out that printing too much money will lead to hyperinflation? This guy is clearly working for the dark side of "the force" :lol:

    BTW, college degrees and PHDs are good for only one thing in our days. Stabilizing wobbling tables. If he were telling the truth he would be affirming that. FUCK HIM! :lol:

[MikeWB]

Fun fact: Adam Smith didn't have a PhD.

[jai_mann]

This guy's EGO has just made my LCD screen explode. Unbelievable. He is certainly on the payroll.
 

So far, I've claimed something a bit obnoxious-sounding: that 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.

    I mean come on! :lol:

Do we really need a PHD to figure out that printing too much money will lead to hyperinflation? This guy is clearly working for the dark side of "the force" :lol:

    BTW, college degrees and PHDs are good for only one thing in our days. Stabilizing wobbling tables. If he were telling the truth he would be affirming that. FUCK HIM! :lol:

Agreed. I wonder if this guy came up for air at all during that ass-kissing session? I can't stand assholes who think that critical thinking can only be demonstrated by someone with a higher degree. How the hell did humans make such progress over time if "higher degrees" were required before critical thinking was considered to be demonstrated? These assholes are in every field. They're the ones who are smart enough to get the topic and to know who BUTTERS THEIR BREAD, and are unscrupulous enough to lie to those who they perceive as being beneath "their intellect". Hang these fuckers with the rest of the propagandists who know EXACTLY what they are doing. Fuck them for selling out their fellow man. "Appeal to authority", one of the CHEAPEST propaganda ploys. Oh we dumbs folks sho' iz lucky to have people like this looking out fo us! Lawd Yes!

[Christopher Marlowe]

"We brought the world into this economic nightmare, so trust us; we know what we're doing."

I have a question though: If the Treasury/Fed buys back all its own debt with negative interest, then wouldn't that REDUCE the amount of money?

Example: Normally $1Billion dollars issued; Treasuries sold at auction to represent currency issued, say 5%. (Simple, not compounded.) Next year $1.05 Billion due on Treasuries.

BUT, say there are no bidders, as was the case last spring. Treasury/Fed buys back its own debt by simply printing money.

BUT, say in addition to buying back its own debt, the Treasury/Fed jumps through the same hoops as before, i.e. printing bonds to represent the new money at NEGATIVE INTEREST.

The market has actually dictated negative interest on short term treasuries. The 3 month treasury rate was bid into negative territory when Lehman tanked, and again in late 2009:

The last time Bill yields turned negative (in essence investors paying the Government to hold their money for them) was in the days after the Lehman bankruptcy, when the entire world was about to blow up. So why did Bill yield for January maturity just turn negative once again? In other words, why are investors suddenly running for the hills? As Dow Jones reports, January and February bills hit a yield of -0.03% earlier. Some explanations have to do with Bill scarcity, as nobody wants to be exposed to anything beyond 3 months down the curve, let alone 1 year. However, the fact that bond investors may not be buying into the whole recovery BS (or just realize that there is nobody willing to roll near-dated treasurys into longer-tenor pieces of paper) and are once again running scared and willing to pay Ben Bernanke to hold their money for them should be very, very troubling. Additionally, could there be something more pressing and/or catalytic? We have not heard peep from any of the big banks in a while...

If the Fed issues new bonds at negative interest, when those bonds come due the money owed will be less than originally issued. That would effectively REDUCE the amount of money in circulation.  
 
I don't have a PhD, but this seems like a good idea.  I would like to ask Mohamed Rafiq about this.