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Economists’ projections of interest rates and unemployment have proved too high

wsj.com

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Re: Economists’ projections of interest rates and unemployment have proved too high

#61

Post by qubex »

drcode wrote: post #45
oblio wrote: post #32

Earlier quoted context omitted.

There's been fads bigger than Bitcoin that no one remembers anymore. The true test of Bitcoin is longevity.

No, there has never been a "fad" that had a 100 billion dollar market cap.

Yeah... but... nah... it being the biggest fad in history does not mean it’s not a fad.

If even 5% of bitcoin held were placed on the market simultaneously the whole thing would implode like a coke can filled with a vacuum. It’s totally illiquid and any attempt to cash out by a significant proportion of holders would herald instant disaster. That’s why it’s so volatile. Research shows the 2017 peak and crash were due transactions by a single ‘whale’.

Re: Economists’ projections of interest rates and unemployment have proved too high

#62

Post by drcode »

seiferteric wrote: post #43
drcode wrote: post #18

Earlier quoted context omitted.

Satoshi used his/her economic theories to create a 100 billion market cap asset from literally zero... what would they have to do to convince you folks that they were on to something with their ideas? Also cure cancer?

Wouldn't that be true of someone who created a ponzi scheme also? Do you consider Madoff a success?

Madoff was a product of the artificially low interest rates established by the US Fed, causing people to participate in all sorts of risky schemes to see some investment returns. So yes, one could argue that the Fed "succeeded" at creating lots of bubbles and fueling lots of scams in recent history, though the details of the situation are of course a lot more complicated.

Re: Economists’ projections of interest rates and unemployment have proved too high

#63

Post by Excel_Wizard »

nathan_compton wrote: post #56
Excel_Wizard wrote: post #21

a savings glut is the thing that Krugman has suggested, and is the thing which makes sense to me. Which stinks because I hate Krugman.

Can you elaborate? Intuitively, no one I know has a "savings glut." If anything, people in my generation are saddled with debt.

There is more money saved up than there are good productive investments available for it, in comparison to the past.

This correlates with a few things: - Inflation of the value of investment assets (high P/E ratios) - Low interest rates on bonds - Secular stagnation

Re: Economists’ projections of interest rates and unemployment have proved too high

#64

Post by rayiner »

tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

Most inflation measures include housing, education, and healthcare. The perception that the national inflation measure isn’t accurate is rooted in the fact that a small but very vocal segment of the population (yuppies in coastal metro areas) are facing very high housing and educational costs. But that’s not true of most people. Housing prices aren’t skyrocketing in the Kansas City suburbs. Most people aren’t in college and don’t have any college debt.

Re: Economists’ projections of interest rates and unemployment have proved too high

#65

Post by TheCoelacanth »

oppositelock wrote: post #41
joycian wrote: post #24

Earlier quoted context omitted.

Could you point me to resources where I could learn about this?

The BLS is completely nuts with computing CPI. What the previous poster is referring to is called "hedonic adjustment" [1]. For example, the CPI contains a TV, and adjusts its price [2]. As an example, say that you put a 19" CRT TV in there in the 1980's, and it cost $400 at the time. Over time, as televisions got better, and it became impossible to buy that specific TV, the BLS started adjusting the price of the ori…

You can easily buy a TV for $100. BestBuy alone has 9 different TV models for under $100: https://www.bestbuy.com/site/tvs/tvs-under-500/pcmcat1539183...

Re: Economists’ projections of interest rates and unemployment have proved too high

#66

Post by nathan_compton »

Excel_Wizard wrote: post #63
nathan_compton wrote: post #56

Earlier quoted context omitted.

Can you elaborate? Intuitively, no one I know has a "savings glut." If anything, people in my generation are saddled with debt.

There is more money saved up than there are good productive investments available for it, in comparison to the past. This correlates with a few things: - Inflation of the value of investment assets (high P/E ratios) - Low interest rates on bonds - Secular stagnation

That I can believe, but it seems a bit double-speaky to call it a savings glut, right? My untutored intuition tells me that its a glut of savings in a small number of people's hands.

People who don't have a glut of savings, or even significant debt, which is a lot of people, can probably think of a lot of good uses for that money.

Assuming this sketch is accurate, the problem is too much money in the hands of too few. Not a savings glut. To call it such seems like a nakedly political way of avoiding the real issue.

Re: Economists’ projections of interest rates and unemployment have proved too high

#67

Post by jrs235 »

tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

>It ignores asset inflation (stocks, real estate, venture capital, everything else)

I consider education and health[care] to be assets too (which you include in the big three costs, in fact the big three costs are all assets).

I agree the official US inflation measure is garbage.

Re: Economists’ projections of interest rates and unemployment have proved too high

#68

Post by harryh »

DubiousPusher wrote: post #30

I'm not a subscriber so I can't read the article but I have a personal hypothesis about this. Developed economies have begun to enter a post scarcity state. Daily goods like food and household items are not responding to inflation because they are no longer scarce. The combination of economies of scale, automation and cheap foreign labor have brought many goods to this point. Meanwhile, things which are still governe…

Inflation has nothing to do with the scarcity of goods. It has to do with the scarcity of money.

Re: Economists’ projections of interest rates and unemployment have proved too high

#69

Post by [deleted] »

mrep wrote: post #58
gonational wrote: post #51

Earlier quoted context omitted.

I think it’s pretty core to my thesis that economics is a practice/study that provides little to no value to anyone, so why would it need to be replaced?

Just because it is not perfect does not mean it is useless. Just look at the countries trying to endlessly print money to see what happens when you ignore it.

[deleted]

Re: Economists’ projections of interest rates and unemployment have proved too high

#70

Post by claudeganon »

rayiner wrote: post #64
tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

Most inflation measures include housing, education, and healthcare. The perception that the national inflation measure isn’t accurate is rooted in the fact that a small but very vocal segment of the population (yuppies in coastal metro areas) are facing very high housing and educational costs. But that’s not true of most people. Housing prices aren’t skyrocketing in the Kansas City suburbs. Most people aren’t in coll…

They’re actually beginning to blow up in smaller markets as well, causing a housing and affordability crisis for people without higher education (and because wages are lower on average in these regions):

https://www.wsj.com/articles/in-boise-and-grand-rapids-the-h...

I don’t know if or when it will reach the Kansas City suburbs, but here in Michigan, my brother, a construction worker, is priced out of the market. He could move way out to the country, but his kid would have to change schools and have a long commute, and it’s actually a lot more dangerous to do so in the winter here.

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