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Lagarde against the economists: “a closed and self-referential group, and therefore incapable of understanding reality.”

Lagarde against the economists: “a closed and self-referential group, and therefore incapable of understanding reality.”

European Central Bank President Christine Lagarde's attack on economists from the Davos forum went somewhat unnoticed, but it was extremely harsh. “They are a tribal group, they quote each other, but they are unable to transcend that world, the only world they feel.” […]

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1 euro for the first month


It went somewhat unnoticed, but the attack from the ECB president was quite harsh Christine Lagarde According to economists, start from a stage Davos Forum. “They are a tribal group, They cite each other But they are unable to transcend that world, the only world in which they feel comfortable, and so they end up with their models, in which they have Blind faith“It has nothing to do with reality,” he said. Said by those who should those models Use it every day To make choices that affect the lives of all of us, There is something to worry about. It is only the latest, albeit particularly reliable, testimony of A A retreat from orthodox economic thought The situation is going on in a particularly noticeable way in the major central banks. After all that, What about when he gets out of the search If he confirms one thing, then it is so Lead economist Do the majority of colleagues agree with this, and when a “dissenting” voice says exactly the same thing, do most colleagues consider it inaccurate?

Therefore, Lagarde denounced the almost complete lack of penetration of economic “sciences” into other disciplines, which leads to their development. Theories are ideal on paper but completely incompatible with reality. “If there were more conversations with Epidemics science, If we had climate change scientists to help us decipher what's happening, if we consulted them a little better I am geologistfor example, to appropriately evaluate which ones and how many there are Rare earths and resources are thereThe ECB President continued: “I think we will be in a better position to really understand these developments, make better plans and thus be better economists.”

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As some observers point out, financial markets are the only ones that still take these models seriously. Not necessarily because they believe it But why do they even think they use it? The European Central Bank and the US Federal Reserve Thus being able to anticipate its movements. But central banks, in turn, use indicators coming from the markets to determine their expectations. The recent short circuit appears to have generated a surplus of optimism on inflation and interest rates with markets continuing to anticipate six successive cuts in the cost of money from March onwards. However, Lagarde warned that although interest rate cuts are likely to be implemented by the summer, crucial wage data used to determine monetary policy will only be available in “late spring.”