Ask HN: What are you reading to make sense of the economy? • Hacker News Board

Re: Ask HN: What are you reading to make sense of the economy?

#311

Post by eru » Mon, Apr 20, 2020, 5:04 AM UTC

ghastmaster wrote: post #198

eru wrote: post #157

Earlier quoted context omitted.

How do the assets lock up money? The stock market, no matter how enormous it's market cap, doesn't lock up any money. When I pay through the nose for Tesla stock, the other fellow then has some money that he either has to spend or park somewhere.

Leverage and subsidies. The money did not exist to begin with, hence the FED balance sheet and gov't debt. The money is funneled into these assets by regulatory incentives 401k, HUD, federal student loans, etc. The seller's money goes toward that as well.

I still don't understand. After all those assets have increased in price, the money is still not 'locked up'.

Re: Ask HN: What are you reading to make sense of the economy?

#312

Post by eru » Mon, Apr 20, 2020, 5:05 AM UTC

ghastmaster wrote: post #290

eru wrote: post #157

Earlier quoted context omitted.

How do the assets lock up money? The stock market, no matter how enormous it's market cap, doesn't lock up any money. When I pay through the nose for Tesla stock, the other fellow then has some money that he either has to spend or park somewhere.

I forgot to mention that China sells us consumer goods at a very low price, keeping CPI down. With the dollars we give them for their goods they purchase US companies, bonds, and real estate. This pushes up prices of the assets they purchase. If the Chinese did not devalue their currency, americans would not be able to afford their products and we would see a rise in the CPI.

Cheap Chinese goods are indeed a boon to the rest of the world. Very nice of China.

Re: Ask HN: What are you reading to make sense of the economy?

#313

Post by elamje » Tue, Apr 21, 2020, 4:04 AM UTC

The Fed gets a lot of hate, and heck, even economists get a lot of hate, but a good place to start learning about macroeconomics is by understanding what the Fed is doing and why they are doing it. The Age of Turbulence and the Courage to Act are autobiographies written by two former Fed Chairmen, which is the highest rank in the Fed. Greenspan and Bernanke likely get negative publicity, but they wrote books for the layman to understand their decisions. The Courage to Act goes into detail about what Bernanke and co did during the Great Recession and at least gives you context for the decisions which can help you determine if what they did was for “Wall Street”, “Main Street” or everyone.

You’ll likely be surprised at what facilities are at the disposal of this pseudo public institution, and it’s certainly interesting. The Fed collects inordinate amounts of data from each of its branches, and in times of crisis, as the books elaborate on, it seems they mostly go off the cuff with custom solutions to large scale solutions. Anyways, it helped me understand the US economy better. Greenspan’s book has more info on global policies.