Friday, September 16, 2005
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The subfield split on the dollar
Brad DeLong has a very good post up detailing the split among economists at a Jackson Hole conference (poor Brad) about what will happen when the dollar falls in value:
Read the whole thing.
Because the problems go into how large numbers of people (many grouped into institutions) would react to extreme events. This isn't minor shifts in a supply/demand curve, it's things which would radically alter the value of investments and the terms of trade throughout the world.posted by: Barry on 09.16.05 at 11:57 AM [permalink]
Wasn't it Harry Truman who wished for a one-armed economist so he didn't have to hear "But on the other hand" anymore? The fact that people that smart can't agree on the best model to predict the future doesn't give me a lot of confidence, given the government (both parties) by and large falls short of demonstrating overwhelming intelligence. Perhaps the devastation of Katrina and its revelation of the fragility of our social structure carries lessons for the world economy as well. We're not nearly as strong and stable as we'd like to think we are.posted by: Bob on 09.16.05 at 11:57 AM [permalink]
Perhaps it is based a bit on the tendency of all humans, even very smart and accomplished ones, to avert their eyes from dysfunction and impending failure within organizational/social structures of which they are a part.
I was once in the sad position of watching a family fall apart as the parent slowly succumbed to an illness that was socially unacceptable (at that time) but which had an inevitable outcome. Seeing the children (ranging between 7 and 15 years old) working as hard as they could to support the parent and maintain some sense of normalcy in their lives, while the extended family and community averted their eyes, was horrifying. But it was amazing how well they were able to do that right up until the last few months when the final stages occured and the inevitable outcome ensused.
Personally, I believe that is where the US economy stands at the moment: no adults in charge, most citizens averting their eyes (not excluding academics), and a few essentially powerless people trying to bail out the boat with baby spoons.
Crankyposted by: Cranky Observer on 09.16.05 at 11:57 AM [permalink]
Complete this for 40 points:
The only thing I truly remember from college is this: "If you laid end-to-end all the economists in the world, you still wouldn't reach a conclusion."posted by: rastajenk on 09.16.05 at 11:57 AM [permalink]
With that in mind, my picks are Astrology and Astronomy.posted by: rosignol on 09.16.05 at 11:57 AM [permalink]
It all depends on how quickly it happens.
The US dollar has already declined dramatically.
For example, relative to the Canadian Dollar (Canada was until last month the USA's largest trading partner), the dollar has declined from 1.60 USD/CAD in Jan 2002 to 1.17 USD/CAD in Sept 2005. That's a decline of 27%.
Has it caused catastrophe? I didn't think so.posted by: M1A1 on 09.16.05 at 11:57 AM [permalink]
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