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darawk

https://twitter.com/paulkrugman/status/1573649995290628096

The iron law of Krugman strikes again. I really need to start trading on this.

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Paul Krugman is probably the most consistently wrong popular economist I can think of.

They are all wrong. You just never heard of them.

Taleb loves making fun of economists. One of his jokes:

Trader comes to manager and told him he lost 10 mil because he bought treasuries since the bank economist said they would go up. Manager fires him. Trader asks why, is he required to always win? Manager says no, I didn't fire you because you lost money, I fired you because you listened to the bank economist.

Neoclassical economics can't be correct, the obvious problem is the lack of liquidity costs/taxes as a way to balance out liquidity benefits. The system breaks down if you do the right thing, so you must do the wrong thing all the time.

Taleb is in a poor position to be making fun of others' predictions.

Do you mean as a columnist/tweeter or in his work as a profesisonal economist in academia, textbooks etc?

Judged by peers he's still quite valued eg by this ranking: https://ideas.repec.org/top/top.person.all.html (rank 36/3255) - but of course in academic research you don't necessarily aim to be right as often as possible, it's a search and exploration of ideas and testing what works.

You're being far too charitable here - the idea that Krugman has a history of being wrong has nothing to do with anyone trying to evaluate his track record in an objective manner, but everything to do with those who disagree with his political viewpoints trying to take him down a notch, especially to counter his stellar academic career. This is of course silly - Krugman is obviously highly knowledgeable about economics and his understanding of and ability to explain sophisticated economic phenomena are rivaled by few, but the nature of economy is such that anyone that makes lots of predictions publicly is going to have a long track record of being wrong.

Clearly we need a predictions tracker for benchmarking popular forecasters. I wonder if there are any already in existence. There's things like https://www.focus-economics.com/about-us/best-economic-forec... but they don't count talking heads type stuff.

If Krugman doesn’t want people to judge him by his forecasts and predictions, maybe he should stop making them, especially on a widely read public platform?

That seems only fair to me. If he doesn’t want his predictions to be judged by lay people, he can do what most academics do and stick to writing for their peers.

This is a complete non-sequitur - Krugman isn't here complaining about him being judged. And this is a strange reply given that you do not seem to have the ability to correctly judge Krugman. As I had mentioned, GBP/USD has hardly moved since Krugman's tweets, yet you came here to talk about how Krugman is consistently wrong.

I have a lot to say about Krugman, specially when he talks about Argentina, but he is not wrong here.

It's not a crisis to have a devaluation.

It's not not a crisis either, though. Crisis doesn't really have a formal definition, it's just an extreme devaluation. I agree that what's happened so far is not quite yet a "crisis", but it certainly seems like Krugman was attempting to predict that not-this would happen.

That tweet was 2 days ago and the pound has barely moved against the dollar since then. It lost a few cents, but that's hardly a crisis.

It is a crisis when you already have an inflation crisis. People already can’t afford to keep warm this winter. Therefore, the government is capping energy bills, if there is a currency devaluation the government has to borrow more to maintain the cap...

Thanks for the link, it was really interesting. But what is the iron law exactly?

the perception/meme that krugman is always wrong as exactly the wrong time (a similar meme exists for Cramer).

It's Jim Cramer from CNBC (USA media) for those out of the loop.

Yes, sell whatever Cramer tells you to buy, to make bank.

Got it.

But he is wrong? No one expects an economic argument to call the exact bottom to the date. If the sterling keeps weakening for two weeks more, I'll call him wrong. The other things he said, about the foreign debts and the likelihood of not paying, seem obviously correct to me.

The iron law of hristov strikes again. It merely says that twitter is a terrible platform to publish anything that isn't short and idiotic.

That's hilarious, but is it a currency crisis or is it just trading down a bit?

There's no real formal definition of crisis, but being fair to him it's not yet a crisis. It is however a sharp devaluation, and appears to be the opposite of what he was predicting.

I don't know how you got that.

He's saying that a devaluation won't kill the country because the debt is denominated in Pounds.

That seems like a strange clarification. If he's predicting the Pound wouldn't decline - he'd say that.

Not say that if it does decline, it won't be a problem...

That implies it's a possibility. It just won't cause a crisis if it happens.

He says it most clearly right here:

https://twitter.com/paulkrugman/status/1573656086716071937

"The moron risk premium has now been priced in". That is, he believes the currency depreciation is substantially over.

He is also saying the thing you're reading him as saying too though.

GBP/USD hasn't moved substantially in either direction since Krugman's tweets.

I feel that's a fairer reading of what he's saying.

But you can just feel his ego through his tweets "I'm supposed to know something about currency crises — I did invent the academic field!"