Predicting better than John Hicks

"While commentators bemoaned America’s lost respect around the world, investors from Argentina to New Zealand snapped up Uncle Sam’s bonds in the $9.34 trillion market, driving yields on 10-year notes -- a benchmark for everything from mortgage rates to corporate debt -- to the lowest levels since November. U.S. government debt returned 1.83 percent in July, about three times more than the rest of the global sovereign bond market, Bank of America Merrill Lynch index data show."  Bloomberg

Krugman says and Brad annotates:

So once again the usual suspects — the people who predicted runaway inflation from Fed expansion and soaring interest rates from federal borrowing — are being proved wrong, while [Hicksian] textbook macroeconomics is continuing to work just fine.

How did foreign traders beat John Hicks?  Likely the exchange rate dynamics of the dollar was a better signal than domestic liquidity. Note that during this time contango betting on the oil trade also began again.

Entropy betters beat Hicks and his smooth calculus every time.