Quote from: ZeroNominal on March 29, 2014, 02:33:14 PM

Quote from: markm on March 29, 2014, 01:47:07 PM

Algorithms are predictable though so basically you seem to be arguing that you want some kind of central bank or central committee or something.

They have to be unpredictable so the manipulators cannot predict and thus incorporate into their attack/manipulation the actions of the magic fairy dust scatterers who are to scatter fairy dust to make it all magically act how you want it to?

Actually it kind of seems you ultimately are arguing that manipulation is needed thus you want to be the manipulator or to specify the manipulations that are to be done.

No. I'm not saying what you thought I was saying... Removing predictable components of prices has no effects on welfare. Removing unpredictable components has a beneficial effect. But the unpredictable components can be removed via a very simple, entirely deterministic algorithm. In fact the simpler, more transparent, and less random the algorithm is, the better it is for welfare. For example, in "traditional" economies, central banks can use the Taylor rule https://en.wikipedia.org/wiki/Taylor_rule to stabilise prices.

That rule references target inflation rate without seeming to actually prescribe how that target should be calculated...

-MarkM-