Monday, December 3, 2007

Why Economists Can't Predict Anything

People are always dogging on economists for their inaccuracy in predicting recessions. However, the problem isn't economist themselves, it's the dynamic nature of economics. Unlike the weather, economies change based on information. If companies knew for sure that a recession was coming, they would start laying off workers and cutting material orders now. Therefore, by the time you know a recession is going to happen, it's already happening. All that economists can do is say what MIGHT happen, not what WILL happen. This is also why you shouldn't take any ones economic predictions that seriously. I use prediction markets like Intrade to guess what will happen, you should too.

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