[batista]

>Economics is clear when explaining its foundation: Markets are only as efficient as its participants are rational and fully informed.

Plus even more assumptions: that participants cannot game the system (by influencing laws, abusing power or monopoly, bribing others participants, controlling public opinion by friendly or owned mass media, forming cartels, etc).

Oh, and "rational" doesn't just mean "clearly thinking and clever", but also perfect calculating actors in a game-theoretic way.

Oh, and there are no factors outside of direct market control, from natural disasters and resources, to foreign country policies and such.

So all those hold even remotely true only in some magic unicorn land.

[yummyfajitas]

You really need to go learn some economics.

All of the topics you mention are popular topics of study. For example, gaming the system by influencing laws was studied by (picking a famous name here) Hayek. Monopolies/monopsonies are well studied and generally believed to be inefficient.

Information asymmetries and actors with bounded rationality are extremely popular topics to study today.

The paper we are discussing here is a perfect example describing the microfoundations of bounded rationality, for example.

[batista]

>You really need to go learn some economics.

I'm talking about the assumptions about market efficiency and the supposed superiority of the mythical "free market" here.

Hayek, since you mentioned it, was a western "free market" lackey, imposing his dogmas on the Chilean people --and lots of others-- (and through a dictator at that), with dire consequences. This kind of "policy advice" is 80% percent catering to interests and 20% ideology. No more scientific than Stalinist economics.

A science doesn't need a dictator (or an elected official) to enforce that "earth is round" or "water will boil at 100 degrees under the right conditions".

Heck, even hard science fails when there are economic interests (e.g big pharma, releasing BS half-baked drugs, or physicists making big BS claims to get funding).

Economy is all, and solely, about economic interests, so all public (non academic) use and discourse of it is inextricably tied to those.

As for the "popular topics to study today", those, while interesting from a math/game theory standpoint, are turned to shit as soon as they enter the political / economic policy field.

On my 25 years of following the stuff, I've haven't seen anything but BS, special interests, spin, greed, failed predictions and bad advice on all fronts. Which is always touted as "scientific" and "based on state of the art models" by the policy advisors.

If you take out the "cater to special interests" bias factor, the rest of economists performance can be had with any random walk methodology.

[tatsuke95]

Meanwhile, an enterprise with hundreds of trained economists (read: The Fed) used this magical unicorn training and prevented the Great Recesession from becoming the Great Depression II. All using economic theory. And if it wasn't for political interference/inaction, we'd be even further ahead, thanks to them.

I know people hate to hear that, and it's en vogue to rip on the field of economics, but it's true.

[yummyfajitas]

How do you know that absent fed intervention, the result would have been GDII?

[ucee054]

Of course, the problem was also created by "hundreds of trained economists" in the first place.

If geeks weren't trading MBS and selling NInJA loans as AAA rated assets to the insurance companies, would the blowup have happened?

If the Fed hadn't pumped easy credit, first during the dotcom bubble, then into the housing bubble, would the blowup have happened?

This is kind of like saying "Look how smart I am, I saved my leg from needing amputation after I shot myself in the foot!"

[batista]

>Meanwhile, an enterprise with hundreds of trained economists (read: The Fed) used this magical unicorn training and prevented the Great Recesession from becoming the Great Depression II.

Really? So where were these "hundreds of trained economists" when the Great Recession came about? Out there, causing it.

As for "being saved from becoming Great Depression II", well, let's wait and see.