The Gabe Newell funded Hypermind NGDP market is up and running

Before discussing the new Hypermind NGDP futures market, let me mention that the donations to iPredict are now coming in.  As I mentioned in earlier, there was a glitch in the process for a few weeks due to the fact that (for tax reasons) donations in the US must go through several layers of bureaucracy.  If you planned to donate and were frustrated a few weeks back, please try again.  All the information including the correct contact address are included in this post.  I plan to complete the donation process in mid-January, and start the program with whatever funding we have received by that time.

Gabe Newell (CEO of Valve) has generously donated $10,000 to Hypermind, and they plan to run 5 markets, 2 of which are now up and running.  The plan is to have 4 quarterly GDP prediction markets, 2014:4, 2015:1, 2015:2, 2015:3, and one annual market; 2014:4 to 2015:4.  The first quarterly market currently trades at 43, which means 4.3% expected (annualized) NGDP growth in Q4.  The annual market began just minutes ago, and is the one I’m most interested in for monetary policy evaluation purposes.  For that reason, the total prize money in the annual market is 4000 euros (about $5000), whereas each quarterly market offers prizes of $1000 euros (about $1250.)

Update:  Actually all five markets are now running.

This is not gambling, as you do not put up your own money.  Thus it is perfectly legal for Americans, but you do need to go through a brief registration process. You can’t get rich doing this, but I’m told the winnings are skewed, with some individuals winning much more than the average.

Here is the way Hypermind describes the payoffs:

Cash rewards are based on a fixed EURO amount and translated in US Dollar according to the current exchange rate.

A contest’s cash reward is split among the participants pro rata of their performance in the contest. For instance, if Jane achieves twice Joe’s performance, then Jane receives a share of the reward that is twice as large as Joe’s. Only the participants who made a profit in the contest can share in the reward. The sharing formula is detailed in Article 7 of the rules.

Your cash earnings are cumulative across contests. You can request a payment at any time in the form of Amazon Gift Certificates. The amount is of your choosing, with a minimum of 20 USD.

So you can win money, but you can’t lose.  And you would be helping to save the world economy by supporting a demonstration project for NGDP futures.  Note that this market is not intended for the general public, but rather for people who are well informed on the issue.  Readers of this blog are some of the most well-informed individuals on NGDP.

PS.  I’d like to thank Emile Servan-Schreiber at Hypermind for helping to create the market.



22 Responses to “The Gabe Newell funded Hypermind NGDP market is up and running”

  1. Gravatar of TallDave TallDave
    16. December 2014 at 07:34


  2. Gravatar of Kevin Erdmann Kevin Erdmann
    16. December 2014 at 08:15

    What is different about NGDP that prevents it from being traded in the US like any number of contracts at CBOT & CME?

  3. Gravatar of Sam Sam
    16. December 2014 at 08:23

    Yes indeed, congratulations. But (as a user of Hypermind and other PMs) I’m pessimistic that you’ll see a lot of liquidity. Something like Robin Hanson’s market-maker technology would help a lot.

  4. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    16. December 2014 at 08:25

    ‘So you can win money, but you can’t lose.’

    And it’s said that there’s no such thing as a free lunch.

  5. Gravatar of Sam Sam
    16. December 2014 at 08:50

    @Kevin Erdmann: In principle you could trade NGDP futures on a regulated exchange, if the exchange were to get regulatory approval and list such a project. In fact, Goldman Sachs introduced a product they called “Economic Derivatives” in the early 2000s, which were in fact essentually futures on economic indicators like NGDP (although I don’t know if they actually had a contract linked to NGDP). This market never really took off; they eventually sold the market to the CME group, and eventually it was abolished due to lack interest. So, yes, in the past the CFTC has permitted this sort of thing to trade on a regulated exchange, but people just weren’t that fired up about it.

    However, market monetarism has grown much more prominent since then. If the Fed were ever to commit to subsidizing an NGDP futures market (making it +EV for smart traders), that would signal their interest in using its price signals for policy purposes. This alone would probably make it a popular, heavily-traded market, albeit subject to some amount of manipulation concerns and hence would probably be under extraordinary regulatory scrutiny from the CFTC.

  6. Gravatar of Brian Donohue Brian Donohue
    16. December 2014 at 09:39

    Anyone else struggling to send an e-mail to the iPredict folks in New Zealand?

    Delivery to the following recipient failed permanently:

    Technical details of permanent failure:
    Google tried to deliver your message, but it was rejected by the server for the recipient domain by [].

    The error that the other server returned was:
    550 5.4.1 []: Recipient address rejected: Access denied

  7. Gravatar of ssumner ssumner
    16. December 2014 at 10:01

    Sam and Kevin, It’s true that a NGDP futures market could be set up in the US, but it would fall under SEC regulation. Obviously I am in no position to do something like that; I don’t have 100 lawyers working for me, and a billion dollars in liability insurance.

    I suspect that a NGDP futures market would need a subsidy even if the Fed was focused on NGDP.

    Brian, I think you forget the dash between US and Friends.

  8. Gravatar of Major.Freedom Major.Freedom
    16. December 2014 at 10:07

    “And you would be helping to save the world economy by supporting a demonstration project for NGDP futures.”

    FYI, the world cannot be saved with monetary socialism. Some parties benefit at the expense of other parties in the short run, and everyone suffers in the long run from opportunity costs as compared to a free market in money.

    Socialism is a destroyer of civilization, not its savior.

  9. Gravatar of Brian Donohue Brian Donohue
    16. December 2014 at 10:21

    Thanks Scott. FYI, the iPredict post has one place where the dash is missing from the e-mail address.

  10. Gravatar of ssumner ssumner
    16. December 2014 at 13:18

    Thanks Brian, I fixed it.

  11. Gravatar of Kenneth Duda Kenneth Duda
    16. December 2014 at 13:56

    Congratulations Scott, and thank you Gabe.

    A bit off topic, I find Krugman’s latest post so frustrating. Why is Krugman stuck on the idea that there’s no way for the Fed to make any commitments about the future size of the monetary base? If the public believed the Fed was targeting NGDP, they would surely believe that monetary base expansion needed to hit the Fed’s target was permanent. Krugman is so smart and such a good writer, I just can’t figure this out. Does he have a blind spot? Or is it willful blindness? Am I missing something?



    Kenneth Duda
    Menlo Park, CA

  12. Gravatar of James in London James in London
    16. December 2014 at 14:30

    Don’t worry. PK is just logic chopping as usual. A 100% increase in the monetary base doesn’t lead to 100% increase in prices, therefore monetary policy doesn’t “work” at the ZLB. And then, as usual, he says it’s worth increasing the monetary base as it might “work” and fiscal policy is so stymied. He’s hopelessly vague about what he really thinks, as usual.

    My guess is that he knows monetary policy has been effective at the ZLB, it’s a blindingly obvious fact after all, but he can’t admit it openly or his long campaign for fiscal spending solutions would lose credibility. So he just hops about saying nothing concrete or testable – in a desperately smug, know-it-all sort of way.

  13. Gravatar of Brian Donohue Brian Donohue
    16. December 2014 at 14:31

    Kenneth, my suspicion is that the consensus on the left thinks accommodative monetary policy is good for Wall Street, not so much for Main Street. He wants fiscal policy (note: deficit currently running $480 billion), but, if monetary policy can do the work, there’s no seat at the table for fiscal policy.

    Hilarious hedge in his final paragraph though. Dude is slippery.

  14. Gravatar of Adam Platt Adam Platt
    16. December 2014 at 15:01

    Kenneth, I was baffled by the exact same thing. His article is supposedly claiming that monetary policy is ineffective, but then he inadvertently stumbles upon the reason it was relatively ineffective, because of a lack of a coherent target (such as higher inflation or NGDP), but ignores that to simply say that monetary policy must be ineffective at the ZLB. I’ve never seen him be so intellectually lazy as he is on this point.

  15. Gravatar of Justin Irving Justin Irving
    16. December 2014 at 15:19

    4.3% is about a percentage point too high according to my market-informed forecasting system. I hope they send me an invite so I can go short and win some of Gabe’s generously donated money! (which I would promptly put into iPredict…:/ )

  16. Gravatar of TravisV TravisV
    16. December 2014 at 15:48

    Christopher Mahoney:

    “Houston, We Have A Problem”

  17. Gravatar of TomG TomG
    16. December 2014 at 16:12

    >> “Thanks for applying to join Hypermind. Our panel is limited in size, but we regularly disqualify the worst performers to let in new entrants. You are now on our waiting list. You will receive an email inviting you to join the panel as soon as a spot becomes available.”

    Just now registered.
    I suspect more like 3.5%, too. Ready to bet my free money it (worth twice the price! or more.)

  18. Gravatar of Matt Waters Matt Waters
    16. December 2014 at 19:48

    It would seem like a fairly complicated arbitrage is possible between this, TIPS and the stock market, or maybe just NGDP and the stock market. Might be an interesting thing to research.

    An NGDP market is something difficult to get going because it’s hard to see a hedging usefulness for it. All other derivatives have some end-use functions, even if most trading is between pure traders. Perhaps the interest in Market Monetarism will carry enough people to do pure zero-sum trading.

    I commented on the PK post, FWIW. In defense of Krugman, I also find it hard to see the “concrete steppes” at the zero-bound. Expectations are tough to wrap one’s mind around. The concrete steppes do need to be expansionary enough in themselves for the central bank to create those expectations. Market expectations are also not instantaneous and market irrationality can certainly happen. You look at what Bill Gross wrote contemporaneously about shorting Treasury yields, but he also changed his mind after the market moved against him. So markets do move to align with the correct distribution of future events, eventually, and the Fed has to have that credibility.

    Would QE up to monetizing the entire Treasury and Agency MBS debt be enough concrete steppes or not? That’s the difficult question that PK and myself have. I offered up negative IOER while restricting cash printing in the comments. Short of printing money to buy NGDP futures, I have no idea at what point the Fed can be credible in their power to reach NGDP. Especially if we have a banking panic like 2008 without all the government backstops and bailouts.

  19. Gravatar of Matt Waters Matt Waters
    16. December 2014 at 19:54


    It’s hard to see where he distinguishes between the supply-side and demand-side in that article. That’s why centering the discussion around NGDP is so important.

    One thing that’s interesting is the dollar going from $1.35 to $1.25 against the Euro. I assumed the Euro has remained near-deflationary, but the Euro also has lower-growth than the US. How growth factors into interest rates and therefore arbitrage with currency markets makes my mind hurt.

  20. Gravatar of ssumner ssumner
    17. December 2014 at 08:15

    Matt, You’ve just got to stop thinking about “concrete steppes” that’s not going to help you understand monetary policy. With the right target no concrete steps are needed, with the wrong target a massive amount are needed. It’s all about the target path. What is the trend rate of NGDP growth? That’s what you need to focus on.

    No one should ever say “but what should the Fed do now?” That’s not even a coherent question. There are two questions: what should the target be, and what instruments should they use to hit the target?

  21. Gravatar of Wimivo Wimivo
    17. December 2014 at 18:17

    Praise GabeN! (This is a Valve and thus video game related joke that I don’t suspect many here will get… sorry.)

  22. Gravatar of Ray Lopez Ray Lopez
    29. December 2014 at 08:25

    Sumner: “No one should ever say “but what should the Fed do now?” That’s not even a coherent question. There are two questions: what should the target be, and what instruments should they use to hit the target?”

    Riiiigggghtttt. So you are replacing the discretionary rules of the Fed with the Rational Expectations Confidence Fairy? That’s not even a coherent answer.

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