Remember a while back when I made the claim that economics is the purview of crazed voodoo wizards?  Well, it seems I was wrong.  Apparently, it’s run by drunks having blackouts.

Link

Jesus, no wonder oil prices jump arbitrarily.

EDIT
Fixed a spelling error.

Holy s**t!!!

Hilarious, but deeply disturbing and not that hard to believe.

BTW, I notice you’re a Ren and Sitmpy fan by your sig…. excellent I don’t like it either,no sir I don’t like it one bit!

mid atlantic - 29 September 2012 03:44 AM

BTW, I notice you’re a Ren and Sitmpy fan by your sig…. excellent I don’t like it either,no sir I don’t like it one bit!

I’d been planning the sig switch for a while and that article just prompted me.  So hilariously unsettling.

And I have loved those two psychotic cartoon characters since I was a kid.  Hell, I just love work of John K in general.

Dead Monky - 28 September 2012 04:28 PM

Apparently, it’s run by drunks having blackouts.

This makes me remember Lennon when he said “our society is run by insane people for insane objectives”.

Scarey but also significant. Anyone who thinks oil price has to do solely with supply and demand is sadly mistaken.  And we can do all the conserving we want, the speculators will find a way to “compensate” for their losses.

True.  If our society consided of only computers rather than humans, supply and demand would be a rational economic balance.  However, a much more accurate balance is that price is the result of the maximum profit allowed by demand. 

Occam

Occam. - 08 October 2012 12:14 PM

True.  If our society consided of only computers rather than humans, supply and demand would be a rational economic balance.  However, a much more accurate balance is that price is the result of the maximum profit allowed by demand. 

Occam

That’s not necessarily true, Occam.  Economists have run purely experimental economies within computers and found that anomalies like price bubbles and the like still occur.  No one’s really sure why.

Dead Monky - 09 October 2012 08:24 AM

Occam. - 08 October 2012 12:14 PM

True.  If our society consided of only computers rather than humans, supply and demand would be a rational economic balance.  However, a much more accurate balance is that price is the result of the maximum profit allowed by demand. 

Occam

That’s not necessarily true, Occam.  Economists have run purely experimental economies within computers and found that anomalies like price bubbles and the like still occur.  No one’s really sure why.

I find that hard to believe. Economics in the real world is a human/emotional endeavor that can’t be modeled using computers. Just because economists want to feel good about their craft by making it seem like a “science” amenable to computer modeling doesn’t mean it is. I’m sure somewhere in the code some randomness was introduced that just had the artifical effect of producing bubbles and such. But nothing corresponding to reality.

Depending on how one defines a “price bubble”, computers might well produce price bubbles: because learning algorithms tend to overweight the recent past, and tend to overweight apparent patterning. So these computers might well be programmed this way: if prices have gone up recently, they will likely continue to go up. And so too, if prices have gone down they will likely continue to go down.

It would be trivially possible to design a computer that would not produce price bubbles: have it behave randomly. (Well, there would still be volatility anyhow, but it would occur as random chance, and I wouldn’t term such occurrences true “price bubbles”).

I was just using bubbles as an example.  Several kinds of ‘anomalies’ have cropped up.  I’ve just always chalked it up to the fact that humans programmed the things so there are bound to be screw ups on occasion.

But even in Occam’s hypothetical computers only system I’d bet anomalies and randomness would still be present.  Coding errors, hardware faults, degradation and so on would see to it.  Entropy inevitably destroys all.