Fed Ends Zero-Rate Era • Hacker News Board

Re: Fed Ends Zero-Rate Era

#221

Post by gohrt » Wed, Dec 16, 2015, 11:40 PM UTC

vezzy-fnord wrote: post #214

ZenoArrow wrote: post #191

Earlier quoted context omitted.

> "increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how... " Let's look at what is being said: "Unlike most public income support programs, increased earnings from the minimum wage are taxable. Over 25 percent of the increased earnings are collected back as income and payroll taxes" Is that a problem? The minimum wage should be the minimum needed to li…

Competition drives prices down, but chances are people with limited options to shop around and who disproportionately head towards mass retailers already , by example, live in areas with im perfect competition and in the worst case, food deserts. As such, a minimum wage would seem to negate itself again.

Be aware: Right wing thinkers don't believe food deserts exist.

Re: Fed Ends Zero-Rate Era

#222

Post by vezzy-fnord » Wed, Dec 16, 2015, 11:40 PM UTC

eru wrote: post #217

vezzy-fnord wrote: post #214

Earlier quoted context omitted.

Competition drives prices down, but chances are people with limited options to shop around and who disproportionately head towards mass retailers already , by example, live in areas with im perfect competition and in the worst case, food deserts. As such, a minimum wage would seem to negate itself again.

> Competition drives prices down, [...] Tell that to Google and Facebook bidding on programmers.. Or people trying to buy real estate in London.

The competition in Google and Facebook's case isn't "programmers", but "exceptionally skilled programmers," which is a different good, a much scarcer one and with less diminishing returns than the former.

I'm not aware of the real estate situation in London to make a comment.

Re: Fed Ends Zero-Rate Era

#223

Post by dragonwriter » Wed, Dec 16, 2015, 11:41 PM UTC

gohrt wrote: post #220

vezzy-fnord wrote: post #74

Earlier quoted context omitted.

increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how... legislation increasing entitlements such as social security Expected to run structural deficits by a certain point. Theoretically speaking, an endogenously determined fiat money system doesn't really have "government debt" what with it being the sovereign issuer of debt to begin with, but in reali…

Form the linked article: > allocates benefits as higher earnings nearly evenly across the income distribution OK by me. Note that it doesn't allocate benefit to idle owners f investment income. > Even after taxes, 27.6 percent of increased earnings go to families in the top 40 percent of the income distribution. "top 40%" is rather silly bucket. That includes basically the median family, all the way to billionaires.…

> "top 40%" is rather silly bucket. That includes basically the median family

No, top 40% does not include "basically the median", by any remotely reasonable standard.

Re: Fed Ends Zero-Rate Era

#224

Post by crdoconnor » Wed, Dec 16, 2015, 11:42 PM UTC

vezzy-fnord wrote: post #74

toomuchtodo wrote: post #51

Earlier quoted context omitted.

Exactly correct. The Federal Reserve has the knobs and levers to create asset bubbles, but not to stoke consumer demand. Only Congress can do that with legislation increasing the minimum wage, changing corporate taxes so it behooves companies to pay employees more, or legislation increasing entitlements such as social security. Those in lower and middle classes are the ones who govern the velocity of money through th…

increasing the minimum wage Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how... legislation increasing entitlements such as social security Expected to run structural deficits by a certain point. Theoretically speaking, an endogenously determined fiat money system doesn't really have "government debt" what with it being the sovereign issuer of debt to begin with, but in reali…

>Be careful what you wish for: http://marginalrevolution.com/marginalrevolution/2015/03/how....

tl;dr if you raise the minimum wage imperceptibly, poverty reduction is affected imperceptibly and prices are affected imperceptibly.

In general if something will have a negative effect on corporate profits (minimum wage hikes have an outsized effect on corporate profits) you will be able to find a legion of economists who will lie to you about what it really does.

Re: Fed Ends Zero-Rate Era

#225

Post by gohrt » Wed, Dec 16, 2015, 11:42 PM UTC

Shivetya wrote: post #154

jpadkins wrote: post #140

Earlier quoted context omitted.

> We need the Federal government to stimulate aggregate demand at the consumer level. How? Investing tax dollars in a smarter manner. How do you get 535 people (congress) to spend $3 trillion smarter? It's an impossible task. A fools errand. Even if we elected the 500 smartest people to congress, the results wouldn't be much better. We need less of the economy flowing thru the federal government, not more.

The Federal Government's expenditures needs to be a lot lower than it is across the board. It needs a serious dose of efficiency. The borrowing alone impacts all business and individuals simply because it removes money from individuals directly and indirectly which slows the economy, puts pressure on future governments to raise taxes furthering the loss of spending by individuals, and lastly leads to uncertainty in t…

Balancing the budget is not important. Increasing utility per dollar spent (the dollar is conjured by the govt, it isn't a real resource) can easily be achieving by cutting back on all the productivity wasted by paying people to blow stuff up and maim each other.

Re: Fed Ends Zero-Rate Era

#226

Post by brc » Wed, Dec 16, 2015, 11:43 PM UTC

millstone wrote: post #177

brc wrote: post #122

Earlier quoted context omitted.

production creates demand. Not because people want to buy it, but because the act of production gives you something to trade. The people who build iPhones (Apple employees) produce something valuable (iPhones). Everyone else has to produce something to trade for an iPhone - a bushel of wheat, a written work, a clean window, a haircut, a night of entertainment. The act of production and trade is what creates wealth an…

> production creates demand. Not because people want to buy it, but because the act of production gives you something to trade What are you describing is called Say's Law. There's various ways it can be false, and the US economy experienced lots of them. An example of how production does not create demand: people can save money for the future. A person who wants to save more will produce more (work harder) and reduce…

Of course I know it is Say's Law. My purpose here is to post it for people to understand the principle.

Giving everyone money does not work. You can only increase the size of the economy and wealth of the people within by producing more. That much is self evident, yet people have been bamboozled by muddied thinking that aggregate demand is all. I don't try and convince the hardened Keynesian thinker with Krugman in their favourites, but merely to explain to people who instinctively know that current macro thinking is broken, but haven't worked out why.

Re: Fed Ends Zero-Rate Era

#227

Post by mikeash » Wed, Dec 16, 2015, 11:43 PM UTC

hodwik wrote: post #94

alttab wrote: post #75

Earlier quoted context omitted.

Can't tell if this is sarcasm or not. Sign of the times I guess.

Has to be sarcasm. People who actually believe that wouldn't say "politicians", they'd use some other euphemism, because they believe in some abstract trustworthy organization that's always being hampered by those damn politicians. Statists love their euphemisms: “investment” instead of “government spending” “shared sacrifices” instead of "wealth redistribution" "government officials" instead of "un-elected bureaucra…

Yes, of course, all of your terminology is straightforward, and the terminology preferred by those who disagree with you is "euphemisms."

Re: Fed Ends Zero-Rate Era

#228

Post by gohrt » Wed, Dec 16, 2015, 11:43 PM UTC

bpodgursky wrote: post #158

Frondo wrote: post #145

Earlier quoted context omitted.

Nah, it's actually pretty easy. The 535 people just need to assign general priorities, like spend a third our country's money on health care and education, a third of it on infrastructure, a little bit on funding pure research, and whatever's left over, the military can have. They're not in charge of deciding how each individual dollar is spent, and they shouldn't be.

This is super naive. For much of the past decade, congress could have removed the entire discretionary budget (yes, including the military) and still had a deficit. The deficit is driven by social security, medicare, and medicaid. If you want to balance the budget, you have to reform those.

Why bother? social security, medicare, and medicaid generate quality of life improvements.

Money redistributed isn't hurting anything, and a future govt can inflate away that debt

Re: Fed Ends Zero-Rate Era

#229

Post by Swizec » Wed, Dec 16, 2015, 11:45 PM UTC

eru wrote: post #212

theGimp wrote: post #207

Earlier quoted context omitted.

I'm not sure if the Fed pulled back the trillions it pumped into the banks during the crisis, but until that happens, banks don't have a real incentive to compete for deposits.

And isn't that how it should work? The extra money around is supposed to make people do something with their money apart from depositing it with a bank.

You mean like have a safety net so that you can take more risks?

There's a lot more you can do with cashflow when you have some fuck you money. ;)

For reference: http://imgur.com/gallery/MdA04

Re: Fed Ends Zero-Rate Era

#230

Post by nostrademons » Wed, Dec 16, 2015, 11:46 PM UTC

gohrt wrote: post #213

toomuchtodo wrote: post #185

Earlier quoted context omitted.

> Existing home equity lines of credit, credit cards and other consumer loans with variable interest rates tied to the prime rate will be impacted if the prime rate rises, the person said. > "We won't automatically change deposit rates because they aren't tied directly to the prime," a JPMorgan Chase spokesperson told CNBC. "We'll continue to monitor the market to make sure we stay competitive." Heads I win, tails yo…

Does it matter though? 21st Century, everyone with savings can open a Vanguard mutual fund account with the risk/reward profile of their choosing, that's almost as convenient wrt withdrawals.

What I'm curious about is what effect this move will have on stock prices. Historically, when interest rates rise, stock prices decline. That's because fixed-income becomes relatively more attractive with higher interest rates; owners of capital move out of old low-interest securities (hence why bond prices fall when interest rates go up), into newer high-interest securities. A portion of that capital also comes from the stock market, in the form of the most risk-averse equity holders, and so usually stock prices fall. Remember that stock prices are set on the margin of buyers & sellers; it doesn't take much change in the relative balance between them before you can start seeing big price jumps.