A Comment on VAR

The Vars are algorithms we run to estimate future economic trends, namely prices.

So, we are running these Vars, predicting the future flows of goods, hence minimizing inventory costs. Going in to 2005 and up, our estimating errors grew. Most var people got that, most consumers did, most employee groups. All of our Var error terms were growing, and we knew it.

So, how does the Var work when agents conspire to suddenly change the rules? We would have hidden our deflationary conspiracies; and we might even have planned, in stealth, for deflationary economies of sale. In doing so, we would have minimized switchover costs.