132 Comments

A D is too good for the crypto folks. They're a stopped clock that's been predicting hyperinflation since there was crypto in the first place

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I would suggest an F+ for the Bitcoiners, because they actually made a prediction that was falsifiable. As you pointed out the chances of hyperinflation in the United States are vanishingly low. In fact, in my admittedly limited experience, Bitcoiners seem to be wrong about everything all the time.

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You should have mentioned the Housing Theory of Everything: housing has been one of the greatest contributors to recent core inflation, and this is magnified when you consider the second order costs of suburban sprawl like car dependency contributing used car price demand, another key driver of core inflation

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Jul 13, 2023·edited Jul 13, 2023Liked by Noah Smith

How do you rate market monetarists like Scott Sumner ?

Using something as basic as ngdplt they arrived at the correct policy response during COVID and, importantly in my view, started to suggest raising rates much earlier than most mainstream macro people. Had we listened, inflation may not have spiked quite as high.

They're 2 for 2 in the 2008 crisis and COVID response.

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Jul 13, 2023Liked by Noah Smith

Polycrisis is just a lazy mis-application of systems theory. Maybe deserves an F after all.

How is the new Industrial Policy likely to fare (as effective policy, not an explanation for inflation)?

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Brilliant article, only point I might disagree

on is that IMHO, Team bitcoin is as delusional as Team MMT and both deserve to be expelled from our lives forever!

Too much of the economic analysis nowadays seems to be of the kind where "experts" draw their conclusions first (depending on their political / social outlook) and then manufacture data/ arguments to support that. No wonder people are losing faith in economists as well as economic coverage (I'm thinking of your takedown of the New Yorker article on the success of price controls last week).

Thankfully there are people like you who call a spade a spade..

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Jul 13, 2023Liked by Noah Smith

This would be good to discuss on Hexapodia

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In partial defense of the WEF folks, all they did is stick a bunch of things together with some loose arrows and argue that these things "might create a polycrisis in 2030," which is a much weaker formulation than the Tooze version. The words don't really support the diagram.

https://www.weforum.org/reports/global-risks-report-2023/digest

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Why do you think the European economies, particularly Britain, have done so badly controlling inflation? Is this because we’re more exposed to the energy crisis in the wake of the Ukraine invasion, because we didn’t raise rates fast enough or what?

Britain’s economic outlook looks so crap at the moment, we can’t help but look jealously at the US’s success on inflation.

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Jul 13, 2023Liked by Noah Smith

Some of those D grades are awfully generous! You must have been a very popular TA with grading like that lol

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Jul 13, 2023·edited Jul 13, 2023Liked by Noah Smith

Great post, but are we missing some contestants, here? Your "mainstream macro" is actually old-style mainstream aggregate supply/aggregate demand macro. What about the "new-style" New Classical / RBC / DSGE / New Keynesian types? Just the fact that a new-style guru like Blanchard based his prediction on an old-style model suggests that there is something to say here about what DSGE models (to use a blanket term) are good for.

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Jul 13, 2023·edited Jul 13, 2023Liked by Noah Smith

Who had "The Fed is going to raise rates, inflation is going to come down, and we won't have a recession" on their Bingo card? I didn't, and I think most mainstream economists didn't either. But others did worse.

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Jul 13, 2023Liked by Noah Smith

Also deserving of a bad grade: the fiscal theory of the price level.

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Jul 13, 2023·edited Jul 13, 2023Liked by Noah Smith

You gave MMT an F, so I'm happy.

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That C- for the greedflation crowd is awfully generous. Team transitory was wrong, for sure, but their ideas were not ridiculous.

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Jul 13, 2023Liked by Noah Smith

You left out the John Cochrane hardcore inflation hawk/"only fiscal policy can stop it once it really gets going" view!

Seems like another C- since monetary interventions are apparently working, huh? Maybe a C since they were probably closer to correct than the Transitories?

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