What does 'understanding the economy' mean? Routinely economists point out missed opportunities which the market then exploits (IIRC one of the standard examples was a paper which discovered a small average rise on Mondays), or simple models outperform the economists' predictions of the future.
By "understand", I mean have a sufficiently good model to make high quality predictions about what key economic variables are going to do. And I wouldn't call papers like the one on the Monday effect routine, though they do happen.
This is our monthly thread for collecting these little gems and pearls of wisdom, rationality-related quotes you've seen recently, or had stored in your quotesfile for ages, and which might be handy to link to in one of our discussions.