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The brilliantly complex models designed by Fed PhDs which failed to foresee the greatest...

The brilliantly complex models designed by Fed PhDs which failed to foresee the greatest macroeconomic event of our lifetimes continue to guide central bank policy, writes Jon Hilsenrath. Currently the models are giving the thumbs up to ZIRP and massive asset purchases until headline unemployment hits 6.5%. Somewhere Nassim Taleb is banging his head against a wall.
Comments (3)
  • the taleb line is money.
    31 Dec 2012, 10:54 AM Reply Like
  • The models didn't know anything about mortgage underwriting standards, which were non-existant leading up to the financial crisis.

     

    Very possibly there is something equally tacky going on right now that the models don't know anything about.
    31 Dec 2012, 11:06 AM Reply Like
  • Sounds nice in theory - but as the article states (today's WSJ, p A2), the Fed's models are consistently overly optimistic.
    31 Dec 2012, 11:06 AM Reply Like
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