I don’t spend enough time here talking about the things I get wrong. Which is a big problem because one of the best ways to become smarter and more well-rounded is to look at your past mistakes and try to figure out why they were mistakes. I like the quote that goes something like “there are no mistakes, only lessons”. I think that’s true if you approach your mistakes and treat them as lessons. And as I like to say, it’s only in being wrong that we can learn to be right.
Anyhow, here are some whoppers for me:
1) I’ve been way too hard on Ben Bernanke over the years. I haven’t agreed with a lot of what Ben Bernanke has done over the years, but I think I failed to understand how hamstrung the guy has been. The Fed’s been pretty limited in what it could do to help the economy and Bernanke deserves credit for working with Treasury and Congress to get things done where he could. Now, he doesn’t deserve an ounce of credit for totally whiffing on the credit crisis and saying that it was “contained” in 2008, but I don’t realistically think he could have stopped the crisis either. So I have probably been a bit hard on him. Unfortunately, I’d still be shocked if history treats him much differently than his predecessor. The big lesson for me here is that I need to be a bit more fair in my criticism of other people and try to better understand the situation someone else is in before harshly judging.
2) I stayed way too bearish through all of 2009. I was pretty bearish in 2008, but I stayed bearish for all of 2009. I was convinced that the crisis hadn’t run its course and I didn’t really alter my views until the macro data really started to improve in 2010. The big lesson for me was that I needed to create an approach to the world that didn’t rely on me being “all in” on a particular view of the world and left more of my perspective up to a less biased and far less emotional approach.
3) I was way too skeptical of Abenomics. I’ve been a big critic of Abenomics. And it looks like it’s working at least to some degree. So far so good. I know this has a long way to play out, but I’ve definitely been wrong on it so far. The big lesson to me is that I need to approach alternative policies with a bit more of an open-mind. Abenomics is a pretty well-rounded and sophisticated approach to policy that has a lot of things that a lot of different theorists could like (it’s part fiscal, part monetary, etc). Just because they’re implementing a piece that I am skeptical of doesn’t mean I should say the whole thing’s bad. I threw the baby out with the bath water.
4) I went way overboard promoting MMT for about an 18 month stretch during the middle of 2010 and 2011. I don’t regret learning MMT for one second. In fact, it was crucial in helping me form my understanding of the monetary system and it should be required learning for everyone who is trying to understand the monetary system. But I probably went a bit overboard in my belief that it was totally accurate before fully understanding the complexity of certain components of it. I have a tendency to really throw myself into something when I put my mind to it and this was a case of getting in a bit too deep. I think I fell for my natural biases and became a bit too zealous about the theory before eventually realizing that parts of it might not be entirely accurate. The big lesson for me is to be careful about labelling yourself or feeling the need to run with a crowd. It’s okay to be an independent thinker.
Sorry for the me, me, me post, but the point is that we should all reflect on our mistakes at times and really try to figure out why they were mistakes. You’ll be glad you did when the next time you confront a difficult situation you navigate it with a much more pragmatic approach.