The Most Reliable Recession Indicator of the Past 50 Years Has Started Blaring

Re:The Most Reliable Recession Indicator of the Past 50 Year... by bsaul on Wednesday July 03, 2019 @05:47PM (#20349185)

Economic field is a complete pseudo-science disaster. This is another example of it : « the most reliable indicator » is something that has happened 7 times in 50 years, nobody understands why this is an indicator, and the only explanation they give starts with « the market thinks ».

They should probably go back to reading tea leaves, or ask octopusos to choose a box like they do in football. They’ll be more honest.

Europe is seeing negative interest rates for months now, which is supposed to be an anomaly. And there’s still no inflation, which is also abnormal with those interest rates. New monetary theory explains that debt doesn’t matter, and an internet company with 2 billion users is launching its official currency together with visa.

I think now would be a good time for people in the field to start to be honest with themselves and publicly declare what in their work is science, and what isn’t.

[ Parent | on HN ]

Re:The Most Reliable Recession Indicator of the Past 50 Year... by mercutio2 on Wednesday July 03, 2019 @08:03PM (#20350269)

I’m as happy as anyone to grant that economics is not a hard science.

But saying our only explanation for this predictor is “the market thinks” seems pretty off base.

- Yields are based on demand

- Yield inversion indicates heightened demand for long term safe stores of value, reduced demand for short term stores of value

- This pattern maps well to our understanding of investor psychology

- Recessions generally happen when investors are gloomy about short to medium term prospects, leading to a reduction in investment, leading to a reduction in aggregate demand

[ Parent | on HN ]

Re:The Most Reliable Recession Indicator of the Past 50 Year... by krageon on Thursday July 04, 2019 @03:22AM (#20352362)

Your reasoning sounds really seductive, which is on point for economics. The next step is actually giving solid reasoning (preferably backed by hard evidence - this means numbers) for why this is the truth and not some other equally seductive line of reasoning. Without this, you're just reading tea leaves and explaining them well.

[ Parent | on HN ]

Re:The Most Reliable Recession Indicator of the Past 50 Year... by kpU8efre7r on Thursday July 04, 2019 @11:19AM (#20355301)

This post is a good example of the kind of arrogance you find on this site- it's fittingly the top post as of right now. Yes, economics is not a "hard science" and that's OK. Neither are plenty of other respectable fields such as history, sociology, etc. It's disingenuous and arrogant to proclaim that any field that is not a hard science is akin to reading tea leaves.

[ Parent | on HN ]