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Keynesian stimulus according to Taleb

Ryan Hahn's picture

I just realized that what is called "Keynesian stimulus" works differently when the government is starting off a situation of deficit. The math would produce different results, which makes me wonder why economists cannot spot it (I inject more perturbations and see massive fragility). In one case, to make an analogy to an individual, you can invest money you have on the side(assuming you've had suspluses [sic] from the past). In the other, you fragilize yourself by borrowing, and transfer the liabilities cross-generations. Patris delictum nocere nunquam debet filio. [A father should not leave liabilities to his son.]

But you can't expect economists to perturbate their models, or inject rigor in their arguments. They are the very same idiots after all who got us here.

That is Nassim Taleb, author of Fooled By Randomness, on Keynesian stimulus. Taleb was a keynote speaker at FPD Forum 2009. During his talk, he advised Bank economists to give up on regression analysis and take on jobs as taxi drivers. I suspect that economists only wish they had as much power to influence policy as Taleb gives them credit for. 

Comments

Ryan, if memory serves your very own Joseph Stiglitz (in his Globalization book) makes a case about economists' influence being very significant. Only in his version it's not individual economists, but rather the profession as a whole wielding that influence; and it seems to be a lot more effective when it comes up with recipes that are aligned with Wall Street interests.

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