The paper is right here: http://arxiv-web3.library.cornell.edu/pdf/1410.1231v1.pdf
The quotes are from here: http://newsoffice.mit.edu/2014/mit-computer-scientists-can-predict-price-bitcoin
Devil’s Advocate: So MIT Guy. I bet you are a billionaire now. I mean, knowing the future and everything. You must have sold your house and borrowed every last penny you could get your hands on, the better to invest it in bitcoins using your fool proof algorithm.
MIT Guy: Give me your money and I’d be happy to invest it for you.
DA: Did any Austrian Economics go into making up your computerized predictor? You know, trying to actually understand the humans who are buying and selling, and what makes them tick?
MIT Guy: Can we explain the price variation in terms of factors related to the human world? We have not spent a lot of time doing that.
DA: One thing AE says about all these computer predictions is that they work perfectly until they don’t. So I’m sure you tested your gizmo in all kinds of situations, bitcoin going up and down, over a long, long time period, to make sure you weren’t being stupid and cherry picking one tiny interval, say two months, where bitcoin was going in one direction only.
MIT Guy: Let me show you a summary in graph form:
See? The blue line is the price of bitcoins, and the black line is how much money we made. So 50 days
DA: Oh, I see. 50 whole days. And I notice the ups were huge and the downs were slight.
MIT Guy: Hey, it’s not my fault we picked the one time this whole year bitcoin was going up. And I resent you calling that cherry picking. Give me your money and I’d be happy to invest it for you.
Smiling Dave: What’s worrisome is not that the guy doesn’t know how to do statistics. Plenty of statisticians don’t know their job. What’s worrisome is that he thinks statistics is where to look in the first place.
DA: Take your articles, for instance, Dave. With zero statistical data, using sheer logical reasoning from first principles, Mises and Timothy Terrel and Peter Schiff and others have predicted that bitcoin is going to die, and explained why it was doomed from the get go. And you summarized their work right here at https://smilingdavesblog.wordpress.com/2012/08/03/bitcoin-all-in-one-place/
SD: Yes, the current state of mainstream Economics is sad indeed. But hey, it always has been. I mean, the whole idea of having universities teach economics in the first place was to make sure the students learned govt propaganda. Read up on what happened to Say and Bastiat.