What Economists Still Don’t Get About the 2008 Crisis • Hacker News Board

Re: What Economists Still Don’t Get About the 2008 Crisis

#151

Post by fallingfrog » Mon, Jul 30, 2018, 8:36 PM UTC

JumpCrisscross wrote: post #120

fallingfrog wrote: post #114

Earlier quoted context omitted.

You can log on to your 401k account and move your position over to treasury bonds or something that looks safer, but they will wait two business days to process the transaction. I know from personal experience; don't see much information online about the phenomenon. My guess is that they are legally allowed to do this, probably because they wrote the law.

> they will wait two business days to process the transaction This was a decision your 401(k) provider made. The proper person to gripe to is whomever in HR chose a cheap provider. (They make up for reduced administrative costs by (a) being less efficient and (b) capturing float.)

Ah, here it is in the FAQ:

"When selling a mutual fund to purchase a fund in a different family, you are selling the mutual fund you own and using the proceeds to purchase another fund in a different fund family. Since you are performing a cross family trade, the settlement date for the sale will differ from the settlement date for the purchase. Typically, cross family trades execute over two business days."

Re: What Economists Still Don’t Get About the 2008 Crisis

#152

Post by nextweek2 » Mon, Jul 30, 2018, 8:40 PM UTC

deadmetheny wrote: post #97

dalbasal wrote: post #19

It's a pleasure to read an article by a writer who understands of the history economic thought, though I suspect I will disagree with him on a lot of things. Anyway, this is interesting. I'll look up these economists. On the face of it, I think it's interesting how economists are hesitant to consider money real. Money is fictional to most economists. What's real is consumer surplus, utility or some other abstract way…

Reminds me of an amusing story I read somewhere a while back: >It is the month of August; a resort town sits next to the shores of a lake. It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit. >Suddenly, a rich tourist comes to town. He enters the only hotel, lays a 100 dollar bill on the reception counter, and goes to inspect the rooms upst…

It's not that clever, they might be out of debt but they are also out of creditors. Nobody got richer or poorer just balances were settled.

That's kind of the point of money.

Re: What Economists Still Don’t Get About the 2008 Crisis

#153

Post by nickik » Mon, Jul 30, 2018, 8:45 PM UTC

crdoconnor wrote: post #107

nickik wrote: post #76

Earlier quoted context omitted.

> It's a pleasure to read an article by a writer who understands of the history economic thought He basically wrote two paragraphs with the most oversimplified and honestly often wrong intellectual history of economics. > First, because I like his intellectual shit-stirring. You mean you like it if somebody writes a book criticizing another profession even while he clearly has not studied either modern economics or e…

>You mean you like it if somebody writes a book criticizing another profession even while he clearly has not studied either modern economics or even the history of intellectual thought in economics. I wish more people would do that, sound like a healthy thing for science. You do realize that it's a history book and is not actually about economics at all? I didn't read much in that book that even discusses modern econ…

> You do realize that it's a history book and is not actually about economics at all?

The book about money and debt guess what discipline has studied this for 500 years. But of course, when he writes a book about money and debt its not economics. Of course it has other components as well but its still a large part of the substantial argument of the book, even if it doesn't cover as many pages as all his case studies.

It is also very specifically target at economist and telling everybody how stupid they are, there are ton's of references to the failures of economics and historical economists. He almost delights in it.

> The closest he gets is debunking the story about money arising because of a coincidence of wants.

Yes and is it not funny that he has never actually read the book by the economist who most popularized this. He literally doesn't know about it and has not read or studied any of the literature.

So he is 'debunking' something that he has not actually informed himself about. He literally didn't read the book by Carl Menger that made this argument. How can you take somebody like that seriously?

> A lot of people don't like him because he's left wing, I suppose.

There are tons of left wing and even communist economist and thinkers that I respect. However he is basically a charlatan who does not even have the decency to inform himself about what he is criticizing and yet writes with such a superior tone because he already knows that he is correct.

Re: What Economists Still Don’t Get About the 2008 Crisis

#154

Post by edanm » Mon, Jul 30, 2018, 8:46 PM UTC

crdoconnor wrote: post #107

nickik wrote: post #76

Earlier quoted context omitted.

> It's a pleasure to read an article by a writer who understands of the history economic thought He basically wrote two paragraphs with the most oversimplified and honestly often wrong intellectual history of economics. > First, because I like his intellectual shit-stirring. You mean you like it if somebody writes a book criticizing another profession even while he clearly has not studied either modern economics or e…

>You mean you like it if somebody writes a book criticizing another profession even while he clearly has not studied either modern economics or even the history of intellectual thought in economics. I wish more people would do that, sound like a healthy thing for science. You do realize that it's a history book and is not actually about economics at all? I didn't read much in that book that even discusses modern econ…

> A lot of people don't like him because he's left wing, I suppose.

I mean, sure, you can can your comment with this. But you're replying to someone who actually gave very specific criticisms of his work. You might not agree with them, but why bring politics into this?

Re: What Economists Still Don’t Get About the 2008 Crisis

#155

Post by fallingfrog » Mon, Jul 30, 2018, 8:46 PM UTC

JumpCrisscross wrote: post #120

fallingfrog wrote: post #114

Earlier quoted context omitted.

You can log on to your 401k account and move your position over to treasury bonds or something that looks safer, but they will wait two business days to process the transaction. I know from personal experience; don't see much information online about the phenomenon. My guess is that they are legally allowed to do this, probably because they wrote the law.

> they will wait two business days to process the transaction This was a decision your 401(k) provider made. The proper person to gripe to is whomever in HR chose a cheap provider. (They make up for reduced administrative costs by (a) being less efficient and (b) capturing float.)

The funny thing is, even though they say "up to 2 business days", the trade was executed at 3:59:59 PM on the dot, on the 2nd business day after I made the request. I'm certain they waited until that moment to execute the trade because legally, they can.

Re: What Economists Still Don’t Get About the 2008 Crisis

#156

Post by zwaps » Mon, Jul 30, 2018, 8:55 PM UTC

dv_dt wrote: post #102

JumpCrisscross wrote: post #90

Earlier quoted context omitted.

> economics was a science built upon the assumption that people are rational actors You may have taken a statement made in jest literally. Homo economicus is a known fiction. Just as frictionless, airless physics are a known fiction. They're useful, however, for (a) defining a limit or ideal, (b) pedagogical purposes and (c) starting to think about a problem. Microeconomics makes falsifiable predictions which can be…

Physics was able to go on from the simplistic models, refine and extend them to both a wide scale and very high quality of theoretical and empirical concurrence in exquisite detail and generality. On the other hand, economics goes on from Homo economicus into a mass of mathiness with very poor empirical correlation except perhaps in very very narrow circumstances.

Physics deals with relatively simple things compared to economics, because nature is inherently rational once one discovers the rules. Humans, on the other hand, can not be grasped so easily because they change the rules. Even if you "discover" a working theory of human behavior, people may just react by not doing that thing anymore to spite you.

So if you want to have some sort of basic theory, any theory at all that really could work with such subjects, you gotta step waaaay back. The rational actor that actually "works" to build a scientific theory is such a general concept that it has literally zero predictive value. It states that actors make consistent choices, but only for identical choice situations. Thus, even if a microsecond passes, we are not in the same choice situation and all sort of rationality is out of the window.

An actor who chooses chocolate first, and then chooses something else the next second while throwing away the chocolate is can still be rational, it's only about the counterfactual of the first choice situation. Yet, one was able to show that this sort of very general rationality is a necessary condition to writing a formal model of human behavior, in other words the homo economicus is just answering the question as to what ground rules we need to model human behavior in the first place. It is truly an immaterial, philosophical object that is used in all science dealing with human behavior.

It's more to the credit of economists that they actually wrote this out axiomatically instead of hiding it in implicit discussion.

Then, economists went and tried to write falsifyable theories based on data and observation. This has been done with more or less success, but let's not forget that economic science still replicates much, much better than something like Psychology or Sociology, also concerned with human behavior.

By the way, applying physical approaches to economics is called econophysics and is a thing that exists. It's not really a thing that is successful, cause if you treat humans as mindless particles who are just behaving according to some ruleset, you are working with hyper-hyper rational actors. But it exists.

Re: What Economists Still Don’t Get About the 2008 Crisis

#157

Post by JumpCrisscross » Mon, Jul 30, 2018, 8:55 PM UTC

fallingfrog wrote: post #135

JumpCrisscross wrote: post #120

Earlier quoted context omitted.

> they will wait two business days to process the transaction This was a decision your 401(k) provider made. The proper person to gripe to is whomever in HR chose a cheap provider. (They make up for reduced administrative costs by (a) being less efficient and (b) capturing float.)

Fidelity is a cheap provider?

> Fidelity is a cheap provider?

No, but they have different tiers of service. In my account, for example, I can sell and purchase intraday. They do what they do for my personal account, which is credit the cash intraday. TL; DR This is not a legal, but contractual, requirement.

Re: What Economists Still Don’t Get About the 2008 Crisis

#158

Post by e67f70028a46fba » Mon, Jul 30, 2018, 9:01 PM UTC

cm2187 wrote: post #52

To me the biggest mystery about the 2008 crisis is why so much QE has resulted in so little inflation. The only convincing arguments I have heard so far is that: 1. at the same time banks were forced to significantly deleverage, so while the fed was pouring money into the systems, banks were effectively pouring money out of the system. 2. inflation happened but it was all concentrated into financial assets, real esta…

the inflation had already happened in the preceding asset bubble

QE got swallowed up to make the large creditors whole and it ended up being a massive wealth transfer to them, so you see elite real estate, art, etc. being bid up while the rest of the economy flounders around aimlessly

Re: What Economists Still Don’t Get About the 2008 Crisis

#159

Post by wuliwong » Mon, Jul 30, 2018, 9:05 PM UTC

jaxtellerSoA wrote: post #87

cm2187 wrote: post #52

To me the biggest mystery about the 2008 crisis is why so much QE has resulted in so little inflation. The only convincing arguments I have heard so far is that: 1. at the same time banks were forced to significantly deleverage, so while the fed was pouring money into the systems, banks were effectively pouring money out of the system. 2. inflation happened but it was all concentrated into financial assets, real esta…

> To me the biggest mystery about the 2008 crisis is why so much QE has resulted in so little inflation. Inflation doesn't work as simply as you might expect. What people believe is actually a big piece of the puzzle. As proof of this look at the Paul Volcker interest rate hikes, that squashed run-away inflation. While his hikes did eventually work, in the short term they did nothing to combat inflation. Why? Because…

Why does it require people to understand what is happening to increase or reduce price inflation?

Re: What Economists Still Don’t Get About the 2008 Crisis

#160

Post by donclark » Mon, Jul 30, 2018, 9:06 PM UTC

brandonmenc wrote: post #98

kaycebasques wrote: post #71

Earlier quoted context omitted.

Another explanation I’ve heard is widespread adoption of new technologies that have a lot of deflationary force behind them. E.g. Amazon giving consumers extreme price discovery, forcing companies to compete on price. Fracking and other new extraction technologies keeping oil prices down. Businesses adopting new tech to lower costs. Globalization (enabled by tech) keeping wage growth in check. https://www.advisorpers…

This squares with my belief that prices are currently way too high, for just about everything. Do any mainstream economists believe this?

High for everything, or are you talking about cars and real estate? Please provide an example. The products I see on Amazon are fairly cheap unless you are comparing it to products from CHINA.