Wall Street Shorts Economists – Bloomberg.
A hilarious article highlighting that real-world investors do not find the “dynamic stochastic general equilibrium” theory useful in their investment strategies. This shows a stark contrast between the (possibly more rational) thinking of economists and how the market is truly structured.
I do not think it works so well, either. There are likely some simplifying assumptions that do not apply, perhaps the number one reason is that the players in the market are not quite rational, and that even if they were rational, their intelligence bounds prevent them from making near-optimal decisions.
Another key, and more important point is that the economy has no equilibrium to speak of. In my experience, the global market is ever expanding, and becoming ever more complex. That is not just an outcome of speculation as some think, although speculation plays a serious role in the chaotic behavior. In other words, it is evolving, the solution of which I will have to leave as an exercise to the reader presently.
