Re: Re: So… Are we all agreed that the Euro is here to stay?

#106683
Chopera
Participant

@flosmichael wrote:

@Chopera wrote:

The thing with economics is that it isn’t an exact science (in fact it isn’t a science at all) so you can have two people with all the qualifications in the world saying completely the opposite thing and there is no way of conclusively saying who is right and who is wrong. So you need to make up your own mind as to which ideas you think are good ideas and which ones you think are bullshit. Reading CVs doesn’t get you anywhere.

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Economics is an exact science. It is based on assumptions and has very well tested mathematical models. The main problem is that the Quants (i.e. brilliant ex-scientists from Harvard, Princeton, Berkeley , you-name-it, who have switched into finance) have made it much harder to
follow and understand. A degree in Economics is not enough to understand the current markets.

There is a big difference between knowing what IS happening and knowing what IS GOING TO happen. Only science can offer models which predict what is going to happen. This is why the hedge funds owners, the employers of sharp minded quants, are getting filthy rich while everyday investors are losing their shirts.

Testing a mathematical model ain’t the same as testing a theory in the real world. With economics there are no controlled experiments that you can perform to test whether the theories being suggested really do produce the results they predict. The theories are not falsifiable in the real world. Of course you can draw up a simulation, feed it some input data, and analyse the output data. But the conclusions only apply to the simulation. That’s not to say you can’t draw some extremely useful insight from performing such experiments, which might give you an advantage in playing the markets, but that’s about as far as it goes.