41–50 of 71 posts
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How does this explain the loss of value of money by inflation?
More batteries, without there also being more electricity made.
Money behaves more like entropy.
Quantitative easing is a powerful drug. During the 2008 crisis, most observers didn't even seriously consider the possibility that the Fed could buy long-term treasuries and mortgage securities. Those who did vastly underestimated the scale on which the Fed would eventually do so. But QE is also highly addictive. The next downturn will most likely take place within the next 18 months. It's going to catch a lot of dum…
Can you elaborate on this? I thought Japan had negative interest rates for quite a while
Money is strange, right? It literally doesn't exist yet it can run out and cause entire nations to go into chaos. Since it is literally a sociological experiment, are we going to get to the point where we fine tune the allotment such that we disable down-turns? It's almost as if we simply just get angsty all at once, see a global therapist and the economy recovers.
Money is quite simple - it is the accumulation of value of individual work. The same way batteries store electricity - money store value of work. The same way batteries exchange stored electricity to perform work, money is exchanging stored value to work of others that we desire.
There is a social/historical commentary and a philosophical/political science discussion to be had here, but unfortunately I don't have the time right now...
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it was the government that caused this in the first place. I always wonder why people suggest this, when the "cure" to the ailment is more of the disease.
How does the government cause downturns?
All of that distorts the market and makes everyone spend money they don't actually have. Eventually all of this catches up with everyone, on a country-wide scale.
Quantitative easing is a powerful drug. During the 2008 crisis, most observers didn't even seriously consider the possibility that the Fed could buy long-term treasuries and mortgage securities. Those who did vastly underestimated the scale on which the Fed would eventually do so. But QE is also highly addictive. The next downturn will most likely take place within the next 18 months. It's going to catch a lot of dum…
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It doesn’t run out. It just gets stuck.
I'm sure someone has come up with a better analogy, but dollars are like electrons, they only do work when they move. I was looking at some other HN thread a while back and there was someone talking about how a subscription model works much better for investors because the regularity of returns worked best with expectations from the investors. And it occurred to me at that time that this electric analogy might extend…
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Money is quite simple - it is the accumulation of value of individual work. The same way batteries store electricity - money store value of work. The same way batteries exchange stored electricity to perform work, money is exchanging stored value to work of others that we desire.
The Labor Theory of Value is a fun toy model, but it isn't very accurate.
I think that GDP (and therefore inflation) don't actually measure what they used to. You can measure the number of cars being produced and houses built. It doesn't really matter how you quantity value the value of a 1999 vw golf relative to the 2019 model. Once iphones, Google, Spotify & such get thrown into the mix... GDP just doesn't tell us much about how economic output has changed over the last 20 years. For the…
I'm not sure what it really measures anymore What makes you think it has been at least once meaningful ?
There were always ambiguities. More lawyer fees = more GDP? Questionable. But... The portion of simple more=more economic outputs has really shrunk relative to the ambiguous ones where moremore or price=0 or whatnot.
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How does the government cause downturns?
By doing stuff like "guaranteeing" student loans, encouraging policies of buying homes with high credit, getting the Fed to lower interest rests too much (making credit so cheap and easy companies don't even use their profits to buy/invest in stuff anymore; they even use credit to buy back their stock. Insanity), etc All of that distorts the market and makes everyone spend money they don't actually have. Eventually a…
So much for all that personal responsibility we used to hear so much about. Far easier to blame the government for everything.
Companies use credit to buy back stock because we deregulated that activity. It used to be that the government didn’t allow it. This point is actually a counter-point to your theory.
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More batteries, without there also being more electricity made.
There exists the law of conservation for charge (aka electricity) and energy, but no conservation law for money. Money behaves more like entropy.