Central banks should have listened to Eliezer Yudkowsky
By Scott Sumner
Eliezer Yudkowsky has a great post over at Less Wrong, presenting an imaginary dialogue with a central banker:
Frequently Asked Questions for Central Banks Undershooting Their Inflation Target
I recall reading this dialogue years ago, but I am not sure where it was originally posted, or when. The original date of the post would be especially helpful, as it’s turned out to be quite prophetic. For instance, at one point the imaginary central banker keeps saying that his (her?) experts insist that inflation is likely to be two percent, and that TIPS market forecasts predicting sub-2% inflation are flawed. Yudkowsky replies that deep and liquid markets provide the most efficient forecast. How’d that dispute work out?
Yudkowsky has a rare ability to look beyond all the noise, all the framing effects, and get to the heart of an issue. The post is rather long, but it’s engagingly written and I hope readers will persevere to the end—where they’ll find a pleasant surprise (well, pleasant to me.) It’s probably the best single introduction to the market monetarist way of thinking in the entire blogosphere.
PS. Off topic, I was intrigued by this post comparing data mining in the social sciences to what might be called “theory mining” in particle physics. But I don’t feel qualified to evaluate the claims. I wonder if someone who does (Yudkowsky, David Deutsch, Scott Aaronson, Robin Hanson, etc.) has expressed a view on this issue.
HT: Anon, Razib Khan