Astrology

Jeff Harding is excited about Beranke’s admission that economic forecasting has it’s limits. In the process, Jeff gives a nice summary of the difference between conventional and Austrian economic thinking. Perhaps Bernanke is moving in the direction of Austrian thinking? I’m not nearly so optimistic.

Current macroeconomic theory and econometrics strike me as similar to astrology. Even the practitioners admit that forecast reliability isn’t that great but – hey! – it’s better than no forecast at all. And sometimes it seems to work, so unless you have a better way to predict the unpredictable, we’ll keep using our models, thank you very much. I think it’s very unlikely that the Chief Astrologers will renounce astrology.

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