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Why I Dissented

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Re: Why I Dissented

#61

Post by generj »

chad_strategic wrote: post #58
chad_strategic wrote: post #36

The premise that government should dictate the interest rates and not let the market determine rates through price discovery is absurd. 100 of Phd's couldn't predict the housing bubble and the financial crisis of 08 and if you think we are safe from that again, good luck. http://amzn.to/2mGM5hA

I'm starting to take great pride in getting downvoted here at "hack" news. There seems be a group think here on this site, in addition to people just commenting on things they have no knowledge about especially when it comes to economics. I guess I'm just blessed with not running with herd. The affiliated link, that was my bad. But money is fiat...

There's also a lot of people who think they have a little bit of knowledge when it comes to economics. That's usually much more dangerous than knowing nothing at all about the subject.

Markets do set interest rates on assets. The interest rate is just the rate of loans the Fed offers to banks. The markets have decided to use this rate as the basis for the loans they offer without coercion from the Fed or the government.

Re: Why I Dissented

#62

Post by generj »

Kenji wrote: post #49

Wow, real dissent right here. Central banker votes a bit different on interest rates. It has zero consequences for him. Do you know what would be real dissent? Scrapping fiat money and going back to money that cannot be created out of thin air, proper money.

All money is fiat money. I have no more inherent reason to accept an ounce of gold for my sandwich than a $20 bill. The only value the gold has for me is the expected value others place upon it, which is also the only value I have for a $20 bill. Gold is only useful if we think it is useful. As an industrial metal, it would have nowhere near the present value. Historically discoveries of gold caused the value of currencies to fluctuate dramatically.

People have rose-colored glasses with gold and silver backed currencies, but they were a factor in the Great Depression and directly responsible for several severe recessions and panics.

The gold standard of Bretton Woods also never had enough gold to back it up. It was a fiction the world kindly played along with the US on.

Re: Why I Dissented

#63

Post by Kenji »

generj wrote: post #62
Kenji wrote: post #49

Wow, real dissent right here. Central banker votes a bit different on interest rates. It has zero consequences for him. Do you know what would be real dissent? Scrapping fiat money and going back to money that cannot be created out of thin air, proper money.

All money is fiat money. I have no more inherent reason to accept an ounce of gold for my sandwich than a $20 bill. The only value the gold has for me is the expected value others place upon it, which is also the only value I have for a $20 bill. Gold is only useful if we think it is useful. As an industrial metal, it would have nowhere near the present value. Historically discoveries of gold caused the value of curr…

>All money is fiat money.

That's where you started being wrong in your post.

Re: Why I Dissented

#64

Post by generj »

Kenji wrote: post #63
generj wrote: post #62

Earlier quoted context omitted.

All money is fiat money. I have no more inherent reason to accept an ounce of gold for my sandwich than a $20 bill. The only value the gold has for me is the expected value others place upon it, which is also the only value I have for a $20 bill. Gold is only useful if we think it is useful. As an industrial metal, it would have nowhere near the present value. Historically discoveries of gold caused the value of curr…

>All money is fiat money. That's where you started being wrong in your post.

How so? It's a slight exaggeration, but fundamentally correct. Commodity monies would hardly be worth anything without their additional value as a medium of exchange.

Re: Why I Dissented

#65

Post by pdog »

boulos wrote: post #34
pdog wrote: post #2

I don't agree with the premise (that the dual mandate set by Congress of maximum employment and 2% inflation should be the overarching goal of the Fed) or the conclusion (that the Fed should wait on raising interest rates), but I appreciate the transparency and attention to detail of Mr. Kashkari's analysis. More public officials should publish the reasoning behind their decisions.

> I don't agree with the premise (that the dual mandate set by Congress of maximum employment and 2% inflation should be the overarching goal of the Fed) What would you propose instead? Anytime they seemingly target something else, they're (rightly, in my opinion) chastised for overstepping their mandate. Are you instead arguing they should have a different mandate? (If not, I don't think we agree on the definition o…

The Fed should eliminate the objective of maximum employment from its mandate for monetary policy (automation will kill the notion of "maximum employment" anyways). They should also rethink their approach to inflation and raise the inflation target to 3%. Yields are likely to stay historically low due to the overwhelming demand for the ultimate safe haven asset, U.S. Treasury bonds.
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