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

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

#191

Post by mjevans » Tue, Jul 31, 2018, 12:22 AM UTC

donclark wrote: post #160

brandonmenc wrote: post #98

Earlier quoted context omitted.

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.

The the parent posts' user, but...

I think /mostly/ the 'big ticket' items; anything with a cost over 1000 USD.

However the price of many other items are also quite high, particularly for infinitely replicate-able information (entertainment).

I'd argue that the price of many other things under about 10 USD is largely a land ownership or transportation cost; as a society we've become so effective at producing (even grown things) that the biggest issue is the price of energy and labor associated with managing those products to end users.

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

#192

Post by debatem1 » Tue, Jul 31, 2018, 12:23 AM UTC

faet wrote: post #183

debatem1 wrote: post #137

Earlier quoted context omitted.

Sure. This is pretty much my point in two charts: https://www.financialsense.com/sites/default/files/users/u61... http://www.pewresearch.org/ft_dual-income-households-1960-20... If you want to zoom in on more recent events wikipedia has a pretty compelling chart here: https://en.wikipedia.org/wiki/Household_income_in_the_United...

"Real Output" is misleading as capital inputs/investing can greatly change it. Multifactor productivity vs Compensation is pretty equal. http://i.imgur.com/5mOQARo.png

Might just be me but I'm missing the relevance. The point is that a household which has already maxed out its possible number of workers no longer has the option of sending someone else to work to deal with a sudden expense, so a two worker household is more fragile than a single worker household at the same income. The only reason I bring up productivity is to mention that it hasn't come down in proportion, which this graph doesn't show either.

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

#193

Post by mi100hael » Tue, Jul 31, 2018, 12:25 AM UTC

JumpCrisscross wrote: post #157

fallingfrog wrote: post #135

Earlier quoted context omitted.

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.

It's a legal requirement to some extent unless you have a margin account. Funds take two days to settle. If you sell, buy, and sell again within two days, your account can be suspended for violating SEC rules.

https://www.ally.com/do-it-right/investing/what-are-unsettle...

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

#194

Post by marcosdumay » Tue, Jul 31, 2018, 12:40 AM UTC

repsilat wrote: post #174

rrggrr wrote: post #89

Earlier quoted context omitted.

This is the correct answer. Bank deposits at the USFED skyrocketed. It was FED money, lent to banks to be redeposited with the FED, on which deposits the banks earned interest I might add. It was a both a liquidity injection and a handout. And, it wasn't just provided to US Banks.

In economics terms I guess this means, - Economists say "MV = PQ", and QE adds to "M", so shouldn't "P" or "Q" go up? - But the marginal dollar of added "M" had ~zero "V", so that didn't happen. ("I guess" because I've never taken any macroeconomics and can't pretend to understand it...)

Money parked in bounds has zero V.

On stocks the V is nonzero, but it will depend on how much of it actually leaves the exchange, instead of just passing from hand to hand there.

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

#195

Post by jessaustin » Tue, Jul 31, 2018, 1:01 AM UTC

Lots about monetary policy, and very little about what will actually cause the next big recession. Bank executives, shareholders, and creditors have learned well from the last go-round. They can do whatever they want, and unless their interests are opposed to those of Goldman Sachs, the USA government will bail them out. It won't be smaller next time.

This will continue until it brings down the republic.

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

#196

Post by brandonmenc » Tue, Jul 31, 2018, 1:02 AM UTC

donclark wrote: post #160

brandonmenc wrote: post #98

Earlier quoted context omitted.

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.

Specifically, consumer goods and services. Not land or real estate.

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

#197

Post by ghein » Tue, Jul 31, 2018, 1:04 AM 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.

The second part of your analogy is off.

It's not billiard physics to general relativity, it's billiard physics to fluid dynamics and predicting the exact route of a stick through a set of rapids.

In economics our biggest complaints are around failure to determine that we're near a singularity and failure to predict behaviour through singularities (in a signal processing sense). It's understandable, as we all strongly care about the path of the stick, yet still unreasonable.

Macro is a decent enough tool most of the time, as are traditional fluid mechanics approaches. What we don't have are ultra precise CFD tools but in our arguments we act like we should/do. Sometimes traders think that they do have a great CFD solution and that's how we get LTCM crashes!

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

#198

Post by JamesBarney » Tue, Jul 31, 2018, 1:14 AM UTC

adventured wrote: post #187

pdonis wrote: post #63

Earlier quoted context omitted.

> 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. That's not an "argument", it's an observation. Almost all of the QE "new money" was never used by the banks to make loans; it just sat in their accounts at the Fed. Why? Because the banks weren't fools: they knew they had way too little reserves…

> Or money printed to pay ordinary people whose retirement savings had collapsed through no fault of their own. And yes, that would have caused inflation We did exactly that. The Fed orchestrated the greatest ordinary person bailout the world has ever seen: it reinflated the US housing market and salvaged the net worth of the entire middle class in the process. It did cause vast inflation. Just look at the cost of a…

At what interest rate is the stock market not artificially juiced?

Also 247,000 to 338,000 over 12 years is not a huge gain. An APR of 2.7% doesn't seem crazy

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

#199

Post by dnautics » Tue, Jul 31, 2018, 1:15 AM UTC

daniel-cussen wrote: post #54

dnautics wrote: post #24

Earlier quoted context omitted.

david graeber's book is great, although i too take a lot of the anti-money tone with a grain of salt. If you're in a marginalized subcommunity, a concrete ledger of debts is far better than an informal ledger of debts, as a position to stand on to defend your ground. You may like "the great wave: price revolutions..." by david hackett fisher for the role of economic conditions on local revolts and global revolution.

To me, the problem with Debt is that while it indicts compound interest as harshly as it deserves, for all its hidden downstream consequences, it does not propose a real alternative to it. He proposes just not paying debts, but this means nobody accumulates capital, even literal seeds. It is as though he proposed the alternative to sugar be starvation. While those are both equally invalid choices, and are arguably th…

to be fair (and possibly to graber's discredit for not identifying this), we kind of do have a rolling debt jubilee in that events fall off your credit rating every seven years and you can declare bankruptcy.

Also, a lot of the systemic problem with our debt system (like incrementally stealing value from the labor class) derive from its centralized nature; it's been about 150 or so years since decentralized debt economies (free banking in the US and Sweden) have been around and one wonders if with modern technology - mostly in the field of communication and ease of financial transactions - would enable a more robust, resilient, and just economic system.

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

#200

Post by ghein » Tue, Jul 31, 2018, 1:16 AM UTC

zwaps wrote: post #146

smacktoward wrote: post #48

Earlier quoted context omitted.

> My own theory after digging sometime into Economics is that no one seems to have a clear idea what on earth we are actually doing. I still remember the moment I realized this. It was on the first day of my first class in Economics 101, when the professor began by telling us that economics was a science built upon the assumption that people are rational actors. I thought about all the people I'd ever known, and all…

A rational actor is one who is able to decide what he thinks about an option, and who makes decisions that are transitive (ie. consistent). In that sense, rationality is still the basis of economics, but this is not what a normal person understands as rationality. Instead, a more narrow view (partly due to difficulties of dealing with uncertainty, partly due to the context of preferences in a dynamic setting) require…

Well said!

Too many critics focus on pure dollar optimizing rather than value optimizing. We all have different value maximization functions - if you understand that dollars are just one type of value so called irrational behaviour is coldly rational. Dynamic time preferences for money are accepted but dynamic preference functions for other things (status, sense of self, stress level..) are ignored.