[MadMarketScientist]

Great post from the Casey Report ...

In this newsletter, we've often called Ben Bernanke an idiot, dumb, ignorant, and a whole other variety of adjectives to demean his intelligence and understanding of the economy. Though these words are convenient ways to label a nemesis, they are completely inaccurate.

Ben Bernanke is an extremely intelligent man. Few morons can graduate from the MIT Ph.D. economics program. Perhaps some graduates are dishonest or idiot savants, but in sheer brain power, they are on the far right tail of the IQ distribution.

However, what Bernanke lacks is not intelligence - it is a much more basic human characteristic: humility. The Fed chairman's intelligence has deluded him in to believing the economy can be centrally planned through complex equations and statistics. This isn't his failing alone. Many highly intelligent people, especially in physics, chemistry, and mathematics, lack the same humility when it comes to social issues. Researchers in these fields solve extremely complex systems, and as a result, become deluded in to thinking economic problems can be solved in the same way.

Unfortunately for them, society is vastly more complex than a controlled lab experiment; the economy is pure chaos with millions of forces shaping it.

Scientists and mathematicians often falsely believe the world is just another equation to solve. Usually the smarter the individual, the more they believe in man's capacity to plan and shape the world (even Einstein had communist tendencies). If we get the equation right, we can take the economy to some perfect equilibrium.

Yes, human beings are highly intelligent. We can build skyscrapers, fly planes, cure diseases, and even explore outer space. With these accomplishments achieved, why not centrally plan society through mathematics and the scientific method as well? Unfortunately for us, it just doesn't work that way. The economy is a far too complex system. Several equations cannot capture the simultaneous reactions of six billion people around the world to a million different economic events.

Society doesn't need smarter central planners. If we need any at all, they should be central planners with greater humility and a better understanding of their own limitations.

Thoughts?

[Tams]

nobody climbs to his position because his is an idiot, dumb, or ignorant.

having said that, it definitely takes a special personality to want that job.
anybody with half that brain could make 100 times in the outside world.

[SIUYA]

while the article criticizes him, so far not many others seem to have been able to give alternative solutions, apart from the let it fail and see where the chips lie.....well that is exactly what happened in the Great depression, Bernakes specialty....arguably the New Deal was what helped stop the depression worsening was similar to the current pump priming (maybe without the infrastructure build). Now depending on if he is successful or not will be a matter of history. I wonder if the Casey report is as critical of the free market zealots who helped cause the current situation? they certainly had no humility.

[MadMarketScientist]

Originally Posted by Tams »

nobody climbs to his position because his is an idiot, dumb, or ignorant.

having said that, it definitely takes a special personality to want that job.
anybody with half that brain could make 100 times in the outside world.

agreed ... but the only thing more intoxicating than money is POWER (and sex but thats for another forum! )

[MightyMouse]

If you would like to amuse yourself further with Bernanke type humor, do a search on " the Great Moderation"

And, anyone who thinks they can control a market so that a bubble does not form does not know much about markets and should not meddle with them.

[Cory2679]

Unfortunately for them, society is vastly more complex than a controlled lab experiment; the economy is pure chaos with millions of forces shaping it.

Good/interesting point...I suggest people do a search for "chaos theory"...

First paragraph from Wikipedia (emphasis added by me):

Chaos theory is a field of study in applied mathematics, with applications in several disciplines including physics, economics, biology, and philosophy. Chaos theory studies the behavior of dynamical systems that are highly sensitive to initial conditions; an effect which is popularly referred to as the butterfly effect. Small differences in initial conditions (such as those due to rounding errors in numerical computation) yield widely diverging outcomes for chaotic systems, rendering long-term prediction (or planning!) impossible in general. This happens even though these systems are deterministic, meaning that their future behavior is fully determined by their initial conditions, with no random elements involved. In other words, the deterministic nature of these systems does not make them predictable. This behavior is known as deterministic chaos, or simply chaos.

[calsprdr]

Originally Posted by MadMarketScientist »

agreed ... but the only thing more intoxicating than money is POWER (and sex but thats for another forum! )

Usually these guys already have the money. Power is the next step up the ladder.

[biko77]

none of the above. Seriously, Bernanke was a tenured professor at Princeton University and was chair of the Department of Economics there from 1996 to September 2002.

Is it more likely that HE is the idiot, or the are the morons who attack him the idiots? (a la Sarah Palin)