Pyrrhic Victory • Hacker News Board

Re: Pyrrhic Victory

#141

Post by WealthVsSurvive » Wed, Jun 17, 2020, 5:31 PM UTC

joejerryronnie wrote: post #128

WealthVsSurvive wrote: post #123

Earlier quoted context omitted.

I'm starting to see local businesses in my major cities close shop permanently, and I am seeing even some large businesses host going-out-of-business sales. This is merely the pre-stage. Its about to get much, much worse. The corporate news is currently reporting on the corruption surrounding the US relief funds, but I posit that the while corruption is there, the real reason that they aren't releasing the data is be…

This is fear mongering driven by obvious ideological bias. Sure, things may get worse than they are now, but you have no evidence of the scale of the problem, just as you have no evidence that socialism or “wealth re-distribution” will make anything better.

Then time will prove me wrong. I would greet it with pleasure.

Re: Pyrrhic Victory

#142

Post by fuoqi » Wed, Jun 17, 2020, 5:35 PM UTC

RobertoG wrote: post #83

fuoqi wrote: post #66

Earlier quoted context omitted.

I think you severely underestimate the power of positive feedback. Some economists argue that around of third of US GDP can be attributed to the unique position of the dollar. If for some reason foreign investors and governments will lose their faith in dollar (even today gov. bonds already have negative inflation-adjusted profits, imagine if inflation will be 10%-20%), then they will start to dump bonds and assets n…

So, if I understand it properly, your model of the world is that the USA needs to borrow in dollars (its own currency) in order to finance itself. In the case that there were not enough buyers for their bonds, the interest rate of the bonds should go up because offer and demand. This beg the question of where is the money coming in the current situation, where all the major countries are following the same policies.…

The interest rate is low because, as you correctly say, Fed uses infinite money from printing press to make it so. In other words, foreign and domestic actors already don't want to buy those bonds at the current rate, which is precisely the early stages of the process I've tried to describe in the previous message. It's just that they haven't started actively selling assets nominated in $. Yet. (Well, apart from Russia, which has significantly reduced amount of US bonds in its reserves)

Normally, printing money in such fashion (I hope we agree that Fed + government does essentially that today? MMT proponents just propose to make this process honest and transparent) would increase inflation, but in 08 this inflation got mostly "exported" into foreign countries and today, as I've said, it's compensated by low money velocity (see the Fisher equation). Money velocity was steadily dropping for many years and it's another serious indicator of structural problems of modern economy (one can view it as one of the consequences of the rising wealth inequality). But the main problem in my opinion is that I doubt that Fed will be able to drain liquidity fast enough when velocity starts to rise, which may launch all the described positive feedback forces, thus making situation geometrically worse.

A free lunch can not be infinite, one day you will have to pay. The scenario which I've described is just one possibility of how the current system may crumble.

Re: Pyrrhic Victory

#143

Post by fuoqi » Wed, Jun 17, 2020, 5:38 PM UTC

woeirua wrote: post #92

fuoqi wrote: post #66

Earlier quoted context omitted.

I think you severely underestimate the power of positive feedback. Some economists argue that around of third of US GDP can be attributed to the unique position of the dollar. If for some reason foreign investors and governments will lose their faith in dollar (even today gov. bonds already have negative inflation-adjusted profits, imagine if inflation will be 10%-20%), then they will start to dump bonds and assets n…

If T-bills are in such low demand, and investors are so spooked by the prospect of the US not being able to pay back it's debts, why are yields so low across the board? Oh wait, it's because there is huge overwhelming demand for treasuries right now because everyone knows that the markets have been totally fubared by the central banks.

This "overwhelming demand" is completely artificial, so I think we more or less agree with each other.

Re: Pyrrhic Victory

#144

Post by TremendousJudge » Wed, Jun 17, 2020, 5:38 PM UTC

couchand wrote: post #133

woeirua wrote: post #90

Earlier quoted context omitted.

You have to be careful with what you look at in the US. The media here is definitely cherry picking the worst of the worst to show people. Were some places hit really hard? Yes. Absolutely. Does the entire country look like NYC? No. Not even close.

Hey, even the outer boroughs seem more-or-less normal. It's just Manhattan that looks post-apocalyptic, and even there it depends greatly on the neighborhood.

but the pictures on the article are from San Francisco?

Re: Pyrrhic Victory

#145

Post by mtrovo » Wed, Jun 17, 2020, 5:40 PM UTC

RobertoG wrote: post #83

fuoqi wrote: post #66

Earlier quoted context omitted.

I think you severely underestimate the power of positive feedback. Some economists argue that around of third of US GDP can be attributed to the unique position of the dollar. If for some reason foreign investors and governments will lose their faith in dollar (even today gov. bonds already have negative inflation-adjusted profits, imagine if inflation will be 10%-20%), then they will start to dump bonds and assets n…

So, if I understand it properly, your model of the world is that the USA needs to borrow in dollars (its own currency) in order to finance itself. In the case that there were not enough buyers for their bonds, the interest rate of the bonds should go up because offer and demand. This beg the question of where is the money coming in the current situation, where all the major countries are following the same policies.…

> This beg the question of where is the money coming in the current situation, where all the major countries are following the same policies.

But you have to keep in mind what percentage of your debt is kept by your own economy (be it citizens or local companies).

Think about it this way, you have X moneys in circulation tied to your economy performance. If the next day you emit X more moneys, it doesn't mean your economy performance doubled, it just means your currency represents a smaller fraction of your economy (50% less in this case). This affects everybody that is holding bags of your money. If it's only citizens of your country holding to your money then you will have big inflation and everybody is going to lose a lot of purchase power. If you have this spread around the world (say with international commerce pegged to your currency, or external investors) you're basically spreading the inflation throughout everybody and the fraction that affect your citizens is not going to be that much.

This is a good way for US to transfer a local crisis to global markets, having not that much bad consequences locally, it's almost a global wealth tax that benefits only the currency owner and their country citizens.

> At the same time, you are saying that "foreign investors" and "governments" are buying bonds with negative inflation-adjusted profits because they have "faith" in the US economy. So, in the last years, at the same time the deficit and the public debt went up, the "faith" has gone up as show by the interest rate.

They don't have faith in the economy itself, They have faith on the promise that they're going to be paid back no matter what. That's how you justify having the biggest spending on defense in the world by a big margin.

I may be too cynical at this point but more and more the US economy seems like the biggest Ponzi scheme we ever created in this world.

Re: Pyrrhic Victory

#146

Post by acqq » Wed, Jun 17, 2020, 6:02 PM UTC

syncsynchalt wrote: post #113

augustt wrote: post #86

Heads up: this page has 200MB of resources.

Thanks, I've been watching the inspector (currently at 110MB downloaded) for the last few minutes wondering when it might finish so I can read. I can probably just skip the blank space and read the text but I assumed the images were meaningful since they are taking so much leading space, that might not be the case though.

Asking everybody: is there some page where one can enter the URL and see minimized pictures from some web page?

E.g. I guess these 200 MB in 60 pngs could be reduced to cca 2 MB jpgs all.

Re: Pyrrhic Victory

#147

Post by marcosdumay » Wed, Jun 17, 2020, 6:52 PM UTC

raducu wrote: post #105

marcosdumay wrote: post #79

Earlier quoted context omitted.

You know, the GGP is complaining about high government debt levels; you are complaining about low interest levels. That's not coherent. I do agree that something is broken, but "debt is too high and interest is too low" is a bad problem statement.

How is that not coherent? Low interest rates is how governments can keep the pretense that they are not printing money out of thin air and they "service" their debt and that they will repay it at some point in the future.

It' not coherent because both printing money and borrowing cause the interest rate to increase. Low interest rates is a reaction from the market to the conditions the government puts on the table, not something that the government sets at will to push an agenda.

Re: Pyrrhic Victory

#148

Post by chewz » Wed, Jun 17, 2020, 7:10 PM UTC

marcosdumay wrote: post #147

raducu wrote: post #105

Earlier quoted context omitted.

How is that not coherent? Low interest rates is how governments can keep the pretense that they are not printing money out of thin air and they "service" their debt and that they will repay it at some point in the future.

It' not coherent because both printing money and borrowing cause the interest rate to increase. Low interest rates is a reaction from the market to the conditions the government puts on the table, not something that the government sets at will to push an agenda.

You must have not been paying attention to financial news over last decade.

> When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, the price of borrowed funds – the federal funds rate – falls.

https://en.wikipedia.org/wiki/Federal_funds_rate#Explanation...

Re: Pyrrhic Victory

#149

Post by TeMPOraL » Wed, Jun 17, 2020, 7:22 PM UTC

war1025 wrote: post #138

stronglikedan wrote: post #125

Earlier quoted context omitted.

If I had to pick between transparency and lobbying (in its current form), I'd take transparency.

The person saying transparency wasn't a good thing was saying that because transparency allows for more efficient lobbying, it has resulted in a more easily gamed system. The tradeoff they are pointing out isn't "transparency or lobbying" it's "transparency + rampant lobbying vs secrecy + less effective lobbying"

Related: there's a reason lack of transparency in individual voting is critical for fair elections.

Re: Pyrrhic Victory

#150

Post by crocal » Wed, Jun 17, 2020, 7:36 PM UTC

pdonis wrote: post #100

crocal wrote: post #30

Earlier quoted context omitted.

I have to disagree. Economy is the interface between producers and consumers of resources. It’s big time a social construct, and therefore the subject of political action. Importantly, the idea that state intervention is bad for the economy as a universal rule is simply wrong. In the long run, history clearly teaches that mixed economy work (e.g. a la Keynes), while laissez-faire (e.g. a la Friedman) or centralized e…

> In the long run, history clearly teaches that mixed economy work (e.g. a la Keynes) History teaches no such thing. History teaches that governments messing with the money supply, which is the centerpiece of Keynesian economics, leads to civilizational collapse. The Roman empire being a prime example. > centralized economies (e.g. a la Communist) don’t Government messing with the economy by manipulating the money su…

Err... Keynes « center piece » is not manipulation of money supply. This extreme monetarism you describe is... Friedman’s!!! And boy do I agree it does not work!

Ultra liberal economics lead to accumulation of wealth by few super riches. This happens to be one of the reason the Roman Empire fell because all this money could not be spent on keeping the army in working conditions. Super riches of the time hoarded the necessary gold for themselves.

But don’t put that on Keynes’ tab. It’s twistedly wrong.