Bringing back the Somali shilling • Hacker News Board

Re: Bringing back the Somali shilling

#161

Post by gumby » Thu, May 25, 2017, 9:17 PM UTC

skywhopper wrote: post #130

snarf21 wrote: post #122

Earlier quoted context omitted.

Very interesting comments. I've been thinking a lot about UBI and the one thing I still can't work out is if we are going to just have to print tons of money to be able to make it actually universal (meaning not for people < $50K). Some will still be creating real value for their income so how much is that money devalued by the amount that is given for free via UBI? Will this just cause massive inflation? (I guess I…

Consider that in many western economies, inflation has been perilously low for a decade or more. Japan, Europe, and the US all have extremely low inflation today. This leads to some problems we don't usually hear economists worry about--namely that debt-financed personal investments like a home mortgage or a student loan become much more onerous to people who have taken on that debt in the last 20 years. Since such d…

> Since such debts tend to have fixed payments over fixed periods, a reasonable rate of inflation would ensure that the real cost of paying off those debts goes down over time,

That's a dangerous assumption for someone to make. Better to consider the debt something used to map asset expense to future earnings (like a company maps dept payment & depreciation to expected asset lifetime).

The system in the US is messed up because there is a foolish bias towards home ownership. I'm not saying owning a home is inherently bad (I own one myself, but I paid cash), just that it is assumed to be inherently good, which is not. In fact it remains economically disastrous.

Re: Bringing back the Somali shilling

#162

Post by gumby » Thu, May 25, 2017, 9:27 PM UTC

hashkb wrote: post #140

gumby wrote: post #118

> As I pointed out in my old post, there's an old and nagging question in monetary economics that has never been satisfactorily answered: why is fiat money valuable? I've always been surprised by questions like this. Why is (say) gold valuable? The gold supply fluctuates unpredictably depending on gold strikes and without any consideration for creation of underlying economic value (so is inherently inflationary, exce…

> let's not forget that you "create" money when you use your credit card and "destroy" it when you pay your bill Can you elaborate on that? My understanding is: when you swipe your credit card, Visa loans you money and pays it to the merchant. When you pay your bill, Visa gets money from your bank. How is that creation or destruction of money? Seems like value is conserved to me.

It's the second of June and you have $100 in your pocket.

Case 1: You hand me $100, I hand you a widget. I put that $100 in the bank, and over the course of the month go to the ATM five times, take out $20 bucks each time, and spend it. The money supply in Palo Alto is the same all June long.

Case 2: You use your credit card to give me $100; I hand you a widget. You still have $100 in your pocket while I have $100 in my bank account I can go spend. For the month of June the money supply is $100 larger. At the end of the month you pay off your bill and the money supply shrinks back to its prior level.

Macroeconomists and central banks use various definitions of "the amount of money" (with names like M0, M1 etc) to measure different things, just as there are different measures of unemployment, inflation etc, all designed to adjust / smooth / emphasize different phenomena. Like different filters in a circuit: https://en.wikipedia.org/wiki/Money_supply

This is why I am always infuriated by politicians who use microeconomic analogies when discussing macroeconomic things like government debt and trade policy. I just assume they aren't as ignorant as they sound, which may be foolishness on my part.

Re: Bringing back the Somali shilling

#163

Post by gumby » Thu, May 25, 2017, 10:04 PM UTC

snarf21 wrote: post #122

gumby wrote: post #118

> As I pointed out in my old post, there's an old and nagging question in monetary economics that has never been satisfactorily answered: why is fiat money valuable? I've always been surprised by questions like this. Why is (say) gold valuable? The gold supply fluctuates unpredictably depending on gold strikes and without any consideration for creation of underlying economic value (so is inherently inflationary, exce…

Very interesting comments. I've been thinking a lot about UBI and the one thing I still can't work out is if we are going to just have to print tons of money to be able to make it actually universal (meaning not for people < $50K). Some will still be creating real value for their income so how much is that money devalued by the amount that is given for free via UBI? Will this just cause massive inflation? (I guess I…

Don't forget that the marginal cost of goods should decline, and even plummet. In the long term with robotic farmers, robotic harvest, robotic transport and robotic production the production cost of a shirt will be pennies and there is no reason why the purchase price should be much above the interest stream on the purchases on the robots.

This is a big reason why the productivity numbers aren't as poor as they appear: the number of labor hours required to purchase a shirt or a TV has fallen. You can see that in the massive inflation numbers on labor-intensive industries that haven't been automatable (cf the late Baumol). But when you average them together it looks like productivity hasn't grown as it is denominated in hrs/$

Re: Bringing back the Somali shilling

#164

Post by dmoy » Thu, May 25, 2017, 11:23 PM UTC

dmoy wrote: post #141

rljy wrote: post #65

Earlier quoted context omitted.

It is very common for foreigners to hate their homeland. People who move from Kuba tend to say it sucks. I moved from America to Prague and I tell everyone that America sucks. My Russian friends say Russia sucks. The Ukrainians I know say Ukraine sucks. The Kyrgyzstanies I know say Kyrgyzstan sucks. I live among foreigners, and the only ones that I've met that actually like their home country are rich ones from total…

Almost every single one of my Somali peers loves Somalia, and would much rather go back, except they can't because of the fear of getting shot to death / starving.

Though sometimes this is half-jokingly in the context of "oh god it's -10F, why do people live here? I was tricked into coming here instead of Toronto".

Re: Bringing back the Somali shilling

#165

Post by kwhitefoot » Fri, May 26, 2017, 10:33 AM UTC

omginternets wrote: post #98

kwhitefoot wrote: post #89

Earlier quoted context omitted.

Most of the European states that have monarchs (Norway, Denmark, Sweden, Netherlands for instance) are doing alright, Spain is an outlier.

Let's not forget the UK.

I haven't forgotten the UK. It's where I come from. Unfortunately the saying: "The past is a foreign country, they do things differently there." applies.

So I sometimes try to avoid mentioning it, and especially anything to do with Brit royalty.

Re: Bringing back the Somali shilling

#166

Post by omginternets » Fri, May 26, 2017, 10:51 AM UTC

kwhitefoot wrote: post #165

omginternets wrote: post #98

Earlier quoted context omitted.

Let's not forget the UK.

I haven't forgotten the UK. It's where I come from. Unfortunately the saying: "The past is a foreign country, they do things differently there." applies. So I sometimes try to avoid mentioning it, and especially anything to do with Brit royalty.

I'm not sure what you're hinting at, but it sounds like the current state of UK politics has you exasperated.

Still, the UK is objectively doing alright these days, and objectively has a monarchy :)

Re: Bringing back the Somali shilling

#167

Post by skywhopper » Fri, May 26, 2017, 1:34 PM UTC

Dunan wrote: post #147

skywhopper wrote: post #130

Earlier quoted context omitted.

Consider that in many western economies, inflation has been perilously low for a decade or more. Japan, Europe, and the US all have extremely low inflation today. This leads to some problems we don't usually hear economists worry about--namely that debt-financed personal investments like a home mortgage or a student loan become much more onerous to people who have taken on that debt in the last 20 years. Since such d…

It sounds from your post like you have borrowed money to buy something (a home, perhaps) and are hoping that inflation will make it easier to pay back that debt. Your arguments work exactly in reverse for someone who is saving money for future large purchases and for whom inflation would be a disaster. Without inflation, the working class is able to accumulate savings and better their lives. They don't need to put th…

My argument has nothing to do with my personal financial situation. You say the working class can accumulate savings with low inflation, but savings interest rates are basically zero. And the actual data shows people accumulating more debt, and savings are going down. Too much inflation is bad, but so is too little inflation. We've now had 10 years of far too little inflation.

Re: Bringing back the Somali shilling

#168

Post by skywhopper » Fri, May 26, 2017, 1:35 PM UTC

gumby wrote: post #161

skywhopper wrote: post #130

Earlier quoted context omitted.

Consider that in many western economies, inflation has been perilously low for a decade or more. Japan, Europe, and the US all have extremely low inflation today. This leads to some problems we don't usually hear economists worry about--namely that debt-financed personal investments like a home mortgage or a student loan become much more onerous to people who have taken on that debt in the last 20 years. Since such d…

> Since such debts tend to have fixed payments over fixed periods, a reasonable rate of inflation would ensure that the real cost of paying off those debts goes down over time, That's a dangerous assumption for someone to make. Better to consider the debt something used to map asset expense to future earnings (like a company maps dept payment & depreciation to expected asset lifetime). The system in the US is messed…

I'm not saying people should assume inflation will grow. I'm saying more inflation now would help the overall economy grow. I agree with you that there's too much of a push to home ownership (and student loans for that matter). But the fact is that many many people are overburdened with debt, and there are two ways out: slightly higher inflation for a few years, or near-zero inflation for a couple of decades.

Re: Bringing back the Somali shilling

#169

Post by thanksgiving » Sat, May 27, 2017, 9:26 PM UTC

afsina wrote: post #132

lostcolony wrote: post #124

Earlier quoted context omitted.

Yes, he's assuming the government will not be terrible to live under. But saying "at least with local government, terrible governments will be localized" is a copout. Can we have non-terrible governments? If so, it makes sense to try and ensure everyone has one.

To me this is like telling "Government will be right for everyone this time, if we tweak the parameters right". Applying rules of Empiricism to large scale governing will just make things worse as long as people have very different world views. Besides, locality has inherent advantages such as familiarity, cultural similarity and accountability. So at least some local governments will be probably suitable for your li…

I've lived in a small, rural town in Texas and a big city in New Jersey. While the dynamics of local power are very different, I never felt like anybody in power was accountable to me (I am a nobody).

The power of two or three wealthy families is readily visible almost like a movie in a small town. The power structure in a bigger city from what I can gather is a little bit more complex since there are more players. However, I don't think "the powers that be" in a local level are any more accountable to the governed in a localized setting than in a national setting.

I mean think about the last HOA you lived in and tell me you felt the power structure there was "fair".

Re: Bringing back the Somali shilling

#170

Post by Dunan » Wed, May 31, 2017, 11:55 AM UTC

skywhopper wrote: post #167

Dunan wrote: post #147

Earlier quoted context omitted.

It sounds from your post like you have borrowed money to buy something (a home, perhaps) and are hoping that inflation will make it easier to pay back that debt. Your arguments work exactly in reverse for someone who is saving money for future large purchases and for whom inflation would be a disaster. Without inflation, the working class is able to accumulate savings and better their lives. They don't need to put th…

My argument has nothing to do with my personal financial situation. You say the working class can accumulate savings with low inflation, but savings interest rates are basically zero. And the actual data shows people accumulating more debt, and savings are going down. Too much inflation is bad, but so is too little inflation. We've now had 10 years of far too little inflation.

”You say the working class can accumulate savings with low inflation, but savings interest rates are basically zero."

Yes; their savings maintains its value even if it does not earn interest. Inflation would destroy the value of what they have saved. Perhaps people are not saving as much as they would like because they know that inflation will ruin them, so they spend their money earlier than would be prudent.

We have had significant inflation in the past 10 years; the prices of just about everything at the supermarket have soared upward. That we can buy technology like computers and phones cheaper does not make up for this.