Archive for the Category NGDP futures targeting


Seven hundred $100 bills are lying on the sidewalk. Pick them up!!

I have wonderful news for everyone.  The prize money for two Hypermind NGDP markets has soared to $70,000, which includes $35,000 in prize money for the 2017:Q1 to 2018:Q1 contract (currently trading at about 39, or 3.9% NGDP growth), and another $35,000 for the 2018:Q1 to 2019:Q1 contract.

Update:  This announcement triggered a lot of interest in the contract. Hypermind sent me a better link to the two markets.

Remember that this is free money.  You do not have to invest any of your own money to participate.  You can win money, but you cannot lose.  Our hope is that this prize money will lead to more trading in the NGDP markets, more liquidity.

Once again, NGDP growth expectations are the single most important market price, the single most important measure of the performance of the macroeconomy.  It’s a scandal that the economics profession has ignored this issue, but the Mercatus Center and Hypermind have cooperated so that we will have a real time measure of the public’s NGDP growth expectations.  (Here is the Mercatus announcement.)

Participating in this market can result in free money, thousands of dollars worth of free money for the more talented/lucky (pick one) participants. But the more important reason for participating is that this will tend to shine a spotlight on expected growth in aggregate demand.  Progressives should want that to happen.

And there’s something for conservatives too.  I hope that the financial press will eventually start reporting current NGDP futures prices.  This will gradually put more pressure on the Fed to pay attention to market forecasts, and move from a discretionary policy approach to a more rules-based approach.  Thus NGDP targeting has something for both progressives and conservatives, which is why it’s an increasingly popular idea among economists on both the left and the right.

PS.  I’m also a believer in the “watched pot never boils” theory, so I believe this market makes it less likely that a recession will occur before 2019. (Making this the longest expansion ever.) Recessions only occur when NGDP expectations fall sharply, and I believe the Fed will not want to see NGDP expectations fall sharply. Please file away this prediction, and remind me of it if I am wrong.

PPS.  David Beckworth has a very interesting podcast with Larry Summers.

In this Econlog post I comment.



NBA GMs and Fed Governors

Here is Nate Silver, discussing the growing accuracy of NBA mock drafts:

Mock drafts — and rumors/reporting about who would go where — were shockingly accurate this year. There aren’t a lot of dumb teams in the NBA anymore, and it’s getting harder to find picks that come out of nowhere.

I suppose one could think of mock drafts as sort of like “the market” and NBA general managers as sort of like the Fed.  Are the mock drafts getting more accurate because mock drafters are getting smarter, or because (As Silver hints) NBA GMs are getting smarter?  Or maybe GMs are realizing the market is smarter than they are.

My hope is that the market will become increasingly accurate in predicting monetary policy, because monetary policymakers will increasing take their lead from the market.

Gabe Newell contributes to Hypermind

I’d like to thank Gabe Newell (President of Valve Software) for very generously agreeing to directly contribute $10,000 to the Hypermind NGDP prediction market. You may recall that Mr. Newell made a similar contribution a few years ago, in our previous effort.  Note that some of the recently donated money is still working its way through the bureaucracy, but rest assured it will get there.  I hope to be able to announce a much larger prize total in the near future.  The goal is to boost trading volume.

In this previous post, I explained how you can also assist the prediction market project by contributing to the Mercatus Center.  I believe that this sort of contribution has tax advantages due to the non-profit status of Mercatus.  However I recently learned that Mercatus has a policy where researchers don’t publicly thank donors, as research and fundraising are kept separate.  Sorry about that misunderstanding.  That does not apply to direct donations to Hypermind, but AFAIK those are not tax deductible.

PS.  As I get older, things just seem to get more complicated.  But I’m working hard to simplify my life.  Last month I owned two rental properties. Now I have one.  Next month I’ll have zero.  Never become a landlord.

A major donation to boost the Hypermind NGDP market

I am very pleased to announce that Kenneth and Jennifer Duda have agreed to donate $50,000 to the Mercatus Center to help support the Hypermind NGDP prediction market project.  Ken Duda is the CTO of Arista Networks, a major Silicon Valley tech company.  Back in 2014, the Dudas supported the original NGDP prediction market, and more importantly were very generous donors to the Mercatus Center, which allowed for the creation of the Program on Monetary Policy. This is the program that supports the work that David Beckworth and I are engaged in.

As far as I know, Ken and Jennifer are the world’s leading philanthropists in promoting research on monetary policy reform–an area where technical improvements could be worth trillions of dollars (just watch how global stocks react to bad monetary policy decisions), as well as millions of jobs.

The earlier post initially left out some necessary information as to where to donate–apologies for that.  We have added options such as Bitcoin and PayPal, which were requested in the comment section.

I am very excited about this market.  The Dudas’ donation will eventually result in a big jump in the prize level, which should motivate more trading.  (If not, the few people who do trade will be very lucky.)  I anticipate more donations are coming in as well—I’ll keep you posted.  I’ll provide more specifics on prize money when the donation process is completed.

Relatively soon, there should be lots more $100 bills lying on Hypermind’s sidewalk. I don’t think I need to tell you guys what to do.  Pick them up!

PS.  I have a new Econlog post that responds to questions raised in the comment section of the previous request for donations post.

Requesting donations for a new Hypermind NGDP prediction market

Several years ago, I raised money for two experimental prediction markets, one at Hypermind and the other at iPredict. The iPredict market ran into problems and was unable to continue. The donated money was returned. Based on what I learned from that experiment, I’m ready to try again.

This time there will be only one market—Hypermind—and only one contract, a one-year growth rate contract, the growth rate of nominal GDP from Q1 2017 to Q1 2018. Because the one-year contract is of more macroeconomic interest, this time around I’d like to focus all our resources on that single contract. It will be called “U.S. Nominal GDP: Trump’s 1st year”, as it will be one way of thinking about the “reflation trade”, that is, the idea that Trump’s policies would boost both RGDP growth and inflation.

Mercatus has a bit over $10,000 to start the ball rolling. This will be sufficient to pay $5,000 to Hypermind to set up the prediction market, with the remaining $5,000 going to a prize fund to incentivize people to participate.

Our goal is to have many, many more participants than last time in order to really boost liquidity in what is an admittedly niche market. I think that a significant prize pool would bring people onboard, and would establish this kind of market as a credible mechanism going forward.

This is where you come in. The more money raised, the bigger the prizes offered to winners, and the more liquidity in the markets.

We need to raise money for this project because Hypermind traders cannot invest any of their own money. That aspect of the prediction market allows it to avoid running afoul of either SEC or anti-gambling regulations. No money is gambled, and no money is invested. Instead, money is donated, and through successful predictions, traders are able to win money. And the more money we can raise, the more and bigger prizes we can offer to participants.

People interested in donating money can send it to the (non-profit) Mercatus Center at the following address:

Mercatus Center at George Mason University
Attn: Dan Butler
3434 Washington Blvd, 4th Floor
Arlington, VA 22201

And of course we’ll accept wire transfers and the like. If people want to give online, they can go to and put “POMP” in the “Gift Instructions” box. Paypal donations can be made by making a gift to the email Bitcoin donations can be made through the button below.

Donations will be invested in this Mercatus project with Hypermind. All contributions are tax-deductible, and you will receive the appropriate receipt for your records. Note that a donation is not required to participate in the Hypermind market, nor does a contribution confer any special privileges. But you would be helping us attract more traders, hopefully leading to a more efficient and dynamic market.

Thank you in advance for your support.

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