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?

#41

Post by postingawayonhn » Tue, Apr 14, 2020, 10:54 AM UTC

oDot wrote: post #19

The only school that has any explanation for this is the Austrian School of Economics. Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. Mises and Hayek wrote big and hard to read books about it, but two that explain this to the layman are "Meltdown" b…

I don't think the Austrian School explains what's happened so far, but may help explain some of what is to come. Everything we've seen so far is simply the result of people not being able to operate their businesses. What we will soon see is businesses closing down and probably mass default on debt.

I do believe that the Keynesian economics that has been practiced for the last few decades has left the global economy woefully unprepared and venerable. Low interest rates have fuelled massive asset price inflation and encouraged governments, businesses, and individuals to take on far more debt than is prudent.

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

#42

Post by oDot » Tue, Apr 14, 2020, 10:55 AM UTC

ace32229 wrote: post #36

oDot wrote: post #33

Earlier quoted context omitted.

It definitely is. The Austrians are very prepared for this crisis, and it seems like it was useful to some people shorting in 2006-2008.

The Austrian school predicted a disease-related economic crisis?

The Corona virus is just a pin to a bubble that's there for years. See my other comment explaining this.

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

#43

Post by oDot » Tue, Apr 14, 2020, 10:56 AM UTC

ace32229 wrote: post #34

oDot wrote: post #19

The only school that has any explanation for this is the Austrian School of Economics. Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. Mises and Hayek wrote big and hard to read books about it, but two that explain this to the layman are "Meltdown" b…

> they successfully predict every crisis to the tee (except for timing What does this mean?

They describe the source of the problem, the way it will affect the market, and the extent of the effect, usually.

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

#44

Post by toshk » Tue, Apr 14, 2020, 10:57 AM UTC

rjtavares wrote: post #31

IAmGraydon wrote: post #28

Earlier quoted context omitted.

> Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. A prediction without timing is no prediction at all.

Also, I fail to see how an economic theory can predict a depression caused by a pandemic...

Isn't that the whole essence's of Nassim's Taleb work? He actually makes the opposite claim, that a model that doesn't takes extreme events into the equation is not worth anything at all.

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

#45

Post by IAmGraydon » Tue, Apr 14, 2020, 10:57 AM UTC

oDot wrote: post #33

IAmGraydon wrote: post #28

Earlier quoted context omitted.

> Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. A prediction without timing is no prediction at all.

It definitely is. The Austrians are very prepared for this crisis, and it seems like it was useful to some people shorting in 2006-2008.

In what ways are they more prepared for this crisis than anyone else?

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

#46

Post by postingawayonhn » Tue, Apr 14, 2020, 10:58 AM UTC

oDot wrote: post #39

rjtavares wrote: post #31

Earlier quoted context omitted.

Also, I fail to see how an economic theory can predict a depression caused by a pandemic...

This crisis was not caused by the Corona virus. It is only the pin that burst a bubble that was already there, and if no virus would have happened, something else would have burst it. Austrians see the depression as a necessary correction, and the bubble as a problem. I actually sat down for a few hours to calculate what would have happened if this pandemic happened in the 50s, and no one could work (especially true…

This pandemic is more like a cruise missile than a pin.

I've been saying for a few years that a recession is coming but I'm not going to pretend I thought it would be started by an event like this. Recessions are simply a natural part of the business cycle and after such a long 'boom' period there was certain to be one eventually.

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

#47

Post by postingawayonhn » Tue, Apr 14, 2020, 11:01 AM UTC

brainpool wrote: post #27

Definitely Keynes. Much of the fundamentals hasn’t made much sense earlier, but it does now. https://en.m.wikipedia.org/wiki/John_Maynard_Keynes

I'd argue the Keynesian response to the last crisis is what has left us so overleveraged and poorly prepared for this one.

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

#48

Post by IAmGraydon » Tue, Apr 14, 2020, 11:01 AM UTC

oDot wrote: post #39

rjtavares wrote: post #31

Earlier quoted context omitted.

Also, I fail to see how an economic theory can predict a depression caused by a pandemic...

This crisis was not caused by the Corona virus. It is only the pin that burst a bubble that was already there, and if no virus would have happened, something else would have burst it. Austrians see the depression as a necessary correction, and the bubble as a problem. I actually sat down for a few hours to calculate what would have happened if this pandemic happened in the 50s, and no one could work (especially true…

We are de facto not in a bubble. Market growth over the last decade has been steady and healthy. A long term bull market does not define a bubble.

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

#49

Post by sametmax » Tue, Apr 14, 2020, 11:02 AM UTC

IAmGraydon wrote: post #28

oDot wrote: post #19

The only school that has any explanation for this is the Austrian School of Economics. Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. Mises and Hayek wrote big and hard to read books about it, but two that explain this to the layman are "Meltdown" b…

> Their theory of the business cycle is the reason they successfully predict every crisis to the tee (except for timing, no one can do that), while other economists are just blown away in surprise that it even happened. A prediction without timing is no prediction at all.

I predict it will rain after a sunny day.

Some day.

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

#50

Post by bosky101 » Tue, Apr 14, 2020, 11:02 AM UTC

wanted to share an offbeat method a friend shared the other day. he started plotting the weight of the local newspaper. lesser weight meant lesser advertisers.