Three-quarters of polled economists predicted that the Fed would hike rates today. This was despite markets giving it only a one-in-four chance (and the bleedin’ obvious).
We might ask how “economists” got it so very wrong (again). It could be safety in numbers, that is it is better for a career to be wrong with the pack than wrong on you’re own. It could be the old closed loop of logic that sees so many economists looking at the central bank rather than the respective economy. It could be mainstream monetarist economics itself, which really doesn’t have much of a clue.
But there is another explanation captured in an age old joke from The Economist that takes the cake today:
When Albert Einstein died, he met three people in the queue outside the Pearly Gates.
To pass the time, he asked what were their IQs.
The first replied 190. “Wonderful,” exclaimed Einstein. “We can discuss the contribution made by Ernest Rutherford to atomic physics and my theory of general relativity”.
The second answered 150. “Good,” said Einstein. “I look forward to discussing the role of nuclear-free legislation in the quest for world peace”.
The third mumbled 50. Einstein paused, and then asked, “So what is your forecast for interest rates?”
