Having worked with the Conference Board's numbers for many years, this is one Greenspan comment with which I fully agree. The series shouldn't have been handed over to them.
The service is expensive and constantly under revision. In my opinion, it no longer has any predictive value.
MP, I agree. I believe that the numbers are useless and I found myself agreeing with Greenspan on this issue.
Of course Greenspan made some other comments in 2000 on future budget surpluses, on continued business investment, and on the health of the economy. Those predictions weren't so good!
The problem is that any indicators have the potential to be "priced in", i.e. in cybernetic terms influence the system that they are only supposed to measure. That is true even if the indicators are not directly observable to the system (e.g. there are attempts to keep them secret), but something that is strongly correlated to them is.
For example, a major player devises a predictive indicator and uses it to take proactive and undisclosed (counter)measures, but due to its significance it cannot hide the measures. The "market" will then over time figure out and "price in" the link between indicator and countermeasure, devaluing this theory and forcing the player to come up with another one.
As the system has only so many "macro" dimensions, at some point you run out of independent relationships that the market does not know yet.
Then you start covering your tracks, e.g. by hiding "secondary" indicators that expose your meddling (M3, CPI, ...).
Having worked with the Conference Board's numbers for many years, this is one Greenspan comment with which I fully agree. The series shouldn't have been handed over to them.
The service is expensive and constantly under revision. In my opinion, it no longer has any predictive value.
MP, I agree. I believe that the numbers are useless and I found myself agreeing with Greenspan on this issue.
Of course Greenspan made some other comments in 2000 on future budget surpluses, on continued business investment, and on the health of the economy. Those predictions weren't so good!
Best Wishes.
The problem is that any indicators have the potential to be "priced in", i.e. in cybernetic terms influence the system that they are only supposed to measure. That is true even if the indicators are not directly observable to the system (e.g. there are attempts to keep them secret), but something that is strongly correlated to them is.
For example, a major player devises a predictive indicator and uses it to take proactive and undisclosed (counter)measures, but due to its significance it cannot hide the measures. The "market" will then over time figure out and "price in" the link between indicator and countermeasure, devaluing this theory and forcing the player to come up with another one.
As the system has only so many "macro" dimensions, at some point you run out of independent relationships that the market does not know yet.
Then you start covering your tracks, e.g. by hiding "secondary" indicators that expose your meddling (M3, CPI, ...).