Thursday, November 29, 2012

BTW: Krugman Did A Nice Bashing of a Skull & Bones Econometrician

In the same post where Paul Krugman made his absurd attack on Peter Schiff, he got serious and honest for a moment and had this to say:
Here’s an example of a ludicrously wrong forecast that didn’t touch the fundamentals: in 1929 the great American economist Irving Fisher famously declared that stocks had reached a permanently high plateau; worse yet, he attributed this rosy future to the productivity gains resulting from Prohibition. He ended up looking like a fool, because, well, in some ways he was.
Fisher was at the beginning of a lot of bad trends. He received the first Ph.D. in economics granted by Yale. He was a member of Skull & Bones. In 1930 he founded, with Ragnar Frisch and Charles F. Roos, the Econometric Society, of which he was the first president.

Of course, there can be no mathematical constants in the field of economics, so an econometric society is absurd. It was probably Fisher's absurd econometric thinking which caused him to be so off in his view of stocks in early 1929, when at the same time the great Austrian economists, Ludwig von Mises and Friedrich Hayek were warning of trouble ahead.

All future economists should keep in mind that buying into econometrics leaves you very vulnerable to an attack, by even Krugman, of being a fool, because in a way you would be.

1 comment:

  1. I'm with Hoppe. We've gotta stop calling Hayek a true libertarian. He seems to be the Rand Paul of the Misesian era.