Central banks Need Engineers Not Economists!
(3 min read)
Own goals from the ECB and FED this past week highlight yet another secular trend in the current paradigm shift: the rise of the engineer and the fall of the economist. While both deploy a mathematical toolkit, economists are ideologues and engineers are pragmatists. Only the latter is consistent with the scientific method. The problem is not unorthodox policy, which is only a reflection of the new reality of structural spare capacity, low growth, and the threat of deflation. Rather, it is the lack of sufficient skills at Central Banks for dealing with the challenges of implementing these new and unfamiliar policies. As the plumbing of the system has become dramatically more important, a different blend of skills and training is required to appropriately structure and risk manage policy...
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