Why I Dont Put Any Stock In The Phillips Curve
The Phillips Curve is being watched by the Fed and this is what is primarily pushing their decisions. For those unaware, the Phillips curve is a model using the rate in change in unemployment and inflation (actually wages to be fully accurate although I think the Fed is focusing upon PCE instead of just wage growth).
In this video I dicuss how this model uses two flawed metrics to come up wtih some pretty useless conclusions. Keep in mind, this is what the Fed is basing their decisions upon.
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The numbers have never really made sense and we all know those experts will find whatever numbers fit their narrative and there are plenty of ways to play around with words and numbers.
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we must use more video recording since how you say it is of better understanding for all those who see us
Summary:
In this video, Task discusses the Phillips curve, a model that shows the purported relationship between inflation and unemployment. Task expresses his skepticism towards the model, labeling it as "mythology" due to the lack of correlation between inflation and unemployment rates. He highlights factors like technological advancements, demographic shifts, and the effects of the global economy shutdown on inflation. Task also questions the validity of traditional economic statistics, such as unemployment rates, arguing that they do not provide a comprehensive representation of the workforce's actual situation. He concludes by emphasizing the shortcomings of economic models like the Phillips curve and hints at exploring other flawed economic models in future videos.
Detailed Article:
Task delves into the Phillips curve, a concept in economics that attempts to link inflation rates with unemployment levels. He disparages the model, asserting that there is no observable correlation between inflation and unemployment, deeming it as mere "mythology." Task analogizes the dubious relationship between inflation and unemployment to a fictitious correlation between NBA All-Stars and orange consumption, emphasizing the absurdity of trying to model such conjectural associations.
Furthermore, Task dissects the flaws in the Phillips curve model by pointing out the real-world economic dynamics that are not adequately captured by it. He discusses the impact of deflationary money in the Eurodollar system, technological advancements, and demographic shifts on inflation trends, illustrating the inadequacy of the Phillips curve in explaining these complexities.
Task also challenges the conventional wisdom around unemployment statistics, particularly highlighting the decreasing workforce participation rate as a critical indicator that is often overlooked. He criticizes the narrow scope of traditional unemployment metrics, suggesting that they fail to account for individuals who are not actively seeking work or have been excluded from the calculations due to various factors like expired unemployment benefits.
Moreover, Task questions the validity of economic models that rely on unreliable statistics, arguing that they ultimately produce flawed and unreliable outcomes. He presents a skeptical view of the utility of such models, advocating for a more nuanced understanding of economic trends beyond oversimplified metrics like the unemployment rate.
In conclusion, Task stresses the limitations of the Phillips curve and hints at exploring other flawed economic models in subsequent videos. He cautions against placing undue trust in traditional economic theories and models, suggesting a more critical and comprehensive approach to understanding complex economic phenomena.