Forecasting in an age of uncertainty
“Over 40 years the authors have watched the bright optimism of a new, rigorous approach to economics — which they shared — dissolve into the failures of prediction, [former Bank of England governor Mervyn King and former Financial Times columnist John Kay] write, arguing that the modern community of economists and policymakers needs to accept radical uncertainty and rethink its models.”
USAGOLD note: And radical uncertainty ought to be a psychological underpinning for any rational, modern day investment portfolio. As Nicholas Taleb of black swan fame once said: It is just as important to prepare for what we cannot foresee as for what we can. One short cut to achieving that goal, in our view, is to own gold – and enough of it to make a difference.
“Having been mugged too often by reality, forecasters now express less confidence about our abilities to look beyond the immediate horizon. We will forever need to reach beyond our equations to apply economic judgment. Forecasters may never approach the fantasy success of the Oracle of Delphi or Nostradamus, but we can surely improve on the discouraging performance of the past. – Alan Greenspan, The Map and the Territory, 2013
Repost from 3-24-2020