The Blogger Manifesto

There is widespread blogosphere agreement on this point:

Information is good.

and the corollary

More information is better.

The logic is pretty simple.  If the information is not there, no one can get it.  We hunger for data, viewpoints, and alternative methods of analysis.

It creates a problem, of course, since there is too much to read.  We must then rely upon favorite sources to highlight key pieces.  Your choice of gatekeeper can dramatically affect your investment returns, but at least  you have a choice.

A Humorous Example

I tried a little test at the Kauffman Conference of Leading Economic Bloggers.  You have to keep in mind that this group is very diverse — academics, think tank guys, top journalists, entrepreneurs, etc.  They also cover the political spectrum from one wing to another.  They cover the economic waterfront from all shades of Keynesians to all shades of Austrians, including some of the "self taught" persuasion.  I cannot imagine a group with more diversity and savvy.

So I asked a few of them this question:

During the last year there was one topic where everyone in the economic blogosphere agreed.  No dissent!  What was it?

No one was able to answer correctly, but all remembered when I told them the correct answer:  Kartik Athreya.  In case you have also forgotten, he is the Richmond Fed economist who dared to suggest that economics is hard and that maybe you should have some knowledge before writing on the subject.  This proposition has a certain appeal, but Athreya reached a peak of snobbery that alienated everyone.  I could not find a single blogger who defended that position.

So there we have it.  Everyone is free to spout off on economic topics whether they know anything or not.  It is a case of caveat emptor.  This means that you do not need to have specific credentials or experience, nor a prestigious employment relationship. I see the principle in action scores of times each day.

Applying the Concept

The reaction against Athreya stemmed partly from our mutual feeling that someone was trying to quash dissent.  Let us keep this in mind while I raise the current issue.

Many bloggers, with an anti-Fed fixation, seem to think that less information is good.  Here are two recent examples.

  1. Fed press conferences.  Some of our blogging colleagues do not like this.  Why not?  We have more information and the opportunity for questions.  Most of us think that we are smart and wise enough to make use of this information.  If you are not, don't rain on the party – -just tune out.
  2. Fed papers.  The Fed encourages staff research reports on many topics.  There is plenty of disagreement and the papers are noted as not reflecting the view of the Federal Reserve System.

This healthy flow of scholarly work by Fed staff has allowed us to consider, for example, varying views about measuring inflation.  Most of us know about the Cleveland Fed and trimmed mean measures.  Dissent and discussion are good for all of us.

With this in mind I am astounded at the reaction of Cullen Roche to recent research from high-ranking staffers at the SF Fed.  The research findings are not consistent with his pre-conceived viewpoint.  That's fine.  I believe his criticisms are ill-founded, but I will return to the substance of the article on another occasion.  For those readers who do not follow him, Cullen is the top-ranked economics writer at Seeking Alpha.  He has about 70,000 followers, including me.  He often has interesting practical market advice.  His bio is a bit unclear about his expertise in statistical methods or formal economic training, but he often writes on these topics.

What disturbs me is Cullen's position that the article should not have been published.  This is simply wrong — not consistent with intellectual freedom, the quest for knowledge, or the Blogger Manifesto.

Here at "A Dash" my readers are smart enough to discern between staff comments with a warning at the bottom and official statements from Bernanke and other FOMC members.

If Cullen's readers are not up to speed on this distinction, I respectfully suggest that he educate them.  This is better than quashing information that the rest of us might find useful.

I'll return to the substance of this article later.  For the moment readers can check out my comment on his site — the basic lack of specific analysis on methodology and the incorrect use of the term "data mining."

Meanwhile, this constant Fed bashing is not productive.  It is causes you to take your eye off the ball — earnings, the economy, and risk.



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  • MarkS April 5, 2011  

    Dude, did you read the research? It was horrible. And the Fed isnt just another blogger. This is a government sponsored entity. We pay their paycheck. If they want to print this garbage then do it on someone else’s dime. Frankly, I hold the government to a higher standard than a bunch of bloggers. No offense, but you should know better than to have such a lax attitude regarding government research.

  • tom brakke April 5, 2011  

    “Meanwhile, this constant Fed bashing is not productive. It is causes you to take your eye off the ball — earnings, the economy, and risk.”
    I’m one of the bashers, because I think the Fed has put itself into an unnecessary and untenable position. You’re right that holding a belief (on any side) can get in the way of your ability to see clearly the challenge of investing, especially if you also write about the market.
    But your last word in the piece is “risk,” and that’s precisely where the Fed policy comes into play. Either the economic structure should be able to withstand the start of a move away from the truly extraordinary stance of the Fed or stocks don’t deserve the multiples at which they are trading today.
    If there’s too much risk to change policy at this point, there’s too much risk to work with traditional valuation notions when thinking about investment strategies. Investors must deal with this issue and take a stand, one way or another. It is the overarching risk that we face.

  • oldprof April 5, 2011  

    Mark — Of course I read the research note, and I assume that you did as well. I think it is a typical effort to use data to shed light on a difficult question. The principal author, a Princeton PhD economist with a long publication record, did not generate “garbage.”
    I am curious. What aspect of this research is horrible? Can you provide a specific criticism?
    I appreciate your passionate disagreement with the conclusion, and I hope you will elaborate with a critique of the paper.

  • oldprof April 5, 2011  

    Tom — You are discussing Fed policy. You do it effectively, using data, on your fine blog (where I read every entry). It is part of the debate. I find that many in the investment blogosphere, especially those who have been wrong about the market, have seized upon simplistic explanations, over-emphasizing the Fed. The examples I gave are the latest manifestations of this.
    I am not going to challenge your policy conclusions in the comments here, because this is an article about how we should all embrace free expression, wide-ranging views, and abundant information. Presumably you agree with that.
    I will write more about Fed policy, but prefer to do so in the body of an article where more people will see it.
    Thanks much for stopping by and joining in.

  • muckdog April 6, 2011  

    I’ve always enjoyed following Fed comments. FWIW. Everyone wants more transparency, and here it is. Now they don’t want it. LOL.