Comment by cherryteastain | Hacker News Reader

Comment by cherryteastain | Hacker News Reader

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> The crash itself: not super cinematic, said Smetters. No flashing red letters, no skull and crossbones, no lightning bolt, just a few words that make a macroeconomist’s blood run cold:

> Model not converging.

> “The model's trying to find what's called a fixed point where everything just adds up, everything's consistent, and it's not able to do that,” Smetters explained.

In other fields like physics or engineering, if your model (which is usually a partial differential equation etc) blows up it can mean one of three things:

1. Your code has a bug

2. Your numerical scheme is unstable

3. Your model is unphysical

Assuming the authors are competent we can rule out the first 2. Which brings us to the 3rd point; the article does not mention what the model is or what it assumes. Why should we assume that the economy is exploding and the model is right, instead of the opposite (economy is OK and the model is wrong)? Or even both or neither?

I am not even saying that the economy is doing well or anything, just putting my journal reviewer hat on.

Economists have no humility.

When the real-world disproves the models of a physicist, the physicist proclaims he has assumed some variables, or maybe the model doesn't apply at all. Newtonian physics, which is very real and constantly "proven" in the real world, doesn't work at a quantum level.

When the real-world disproves the models of an economist, the economist proclaims we must be living in an alternate reality.

How many variables are influencing the US economy right now? Trillions, I'd say, on the low end. Some aren't even measurable - like trust or happiness.

Did this economist track all these variables? Of course not. He assumed a value for 99% of them. He assumed so much he doesn't even know what he assumed.

I need to know way more about this model before taking it at face value that some economists got their math and software correct. Especially since the author talks it up like they came up with a unified model for the entire US financial system. Might as well use it to make billions with that precision.

You have to remember that macroeconomic research is so incredibly hard to do that it is closer to truth telling or philosophy than to actual science. I believe it's called "astrology, but with fancy graphs".

I'm not trying to be mean to economists, just reminding everybody how reliable macroeconomic claims are (try looking for the concepts 'confidence interval' and 'randomized controlled trials' in macroeconomic papers).

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