[T]here are three main reasons for predicting inflation, in defiance of
both market expectations and recent past experience. These are 1.
Commitment to a research paradigm, 2. Emotive expressions of political
and personal anger, and 3. Cynical affinity manipulation. None of these
things is likely to respond to any amount of data in the short term.
None of these depends on correctly predicting or understanding Extant
Reality. They are, rather, artifacts of a different kind of reality than
the kind that moves the planets in their orbit, lands men on the Moon,
and propels cannonballs in nice parabolic arcs into the walls of
Constantinople. They are artifacts of Tribal Reality, the kind of
reality created by human beings repeating the same words back and forth
to each other in order to confirm membership in a group. The war between
Extant Reality and Tribal Reality has been raging for millennia, and it
will not be resolved by a few years of low inflation.
---Noah Smith (HT DeLong)
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