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Has to Be a Joke, Because If It’s Not

alhambrapartners.com

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Re: Has to Be a Joke, Because If It’s Not

#11

Post by 0xB31B1B »

qppo wrote: post #6
EdwardDiego wrote: post #5

Earlier quoted context omitted.

Paraphrasing article: US monetary policy has failed consistently because it is predicated on a rise in inflation caused by decreases in the unemployment rate, but this hasn't occurred - probably because the unemployment rate (or how its measured) doesn't correctly capture the change in spending power in the labour market. /Paraphrasing It's kinda the same in my country - for the statistical purposes of the official S…

US monetary policy has not "failed" pretty much since Nixon. Janet Yellen's tenure is really the only blemish, but only because she didn't raise rates when we could have. I think you're confusing the "Dual Mandate" of the Fed to minimize inflation and maximize employment with some misplaced belief in economics. Every American economist of the last century has realized these are often competing ideals. It's their rais…

Yea, the point is that all the evidence we have shows the connection between inflation and employment has weakened since the 70s and is pretty tenuous right now. It theoretically exists, but its unclear what is going on in a world of both increasing automation and decreasing or stagnant productivity per worker.

Re: Has to Be a Joke, Because If It’s Not

#12

Post by KMag »

EdwardDiego wrote: post #5
ponker wrote: post #3

Can anyone summarize this in a more accessible way?

Paraphrasing article: US monetary policy has failed consistently because it is predicated on a rise in inflation caused by decreases in the unemployment rate, but this hasn't occurred - probably because the unemployment rate (or how its measured) doesn't correctly capture the change in spending power in the labour market. /Paraphrasing It's kinda the same in my country - for the statistical purposes of the official S…

There isn't one unemployment rate in the U.S., there are actually 6. What the news usually calls the unemployment rate is the U3 rate. [0] You're suggesting the U6 is a better measure, which makes sense to me, but I'm not an economist.

What I've read recently though, is that workers' expectations of inflation also play a big role in inflation. [1] The idea is that low unemployment means workers are confident and have leverage to demand pay raises that meet their inflation expectations. We may have broken inflation expectations. The Brazilians did an amazing psychological hack with the creation of the Real to fix their inflation expectations to get their inflation in check. (Though, they had the opposite problem, workers expecting very high inflation.)

[0] https://www.investopedia.com/articles/investing/080415/true-...

[1] https://www.economist.com/schools-brief/2020/08/22/why-does-...

Re: Has to Be a Joke, Because If It’s Not

#13

Post by freeone3000 »

qppo wrote: post #6
EdwardDiego wrote: post #5

Earlier quoted context omitted.

Paraphrasing article: US monetary policy has failed consistently because it is predicated on a rise in inflation caused by decreases in the unemployment rate, but this hasn't occurred - probably because the unemployment rate (or how its measured) doesn't correctly capture the change in spending power in the labour market. /Paraphrasing It's kinda the same in my country - for the statistical purposes of the official S…

US monetary policy has not "failed" pretty much since Nixon. Janet Yellen's tenure is really the only blemish, but only because she didn't raise rates when we could have. I think you're confusing the "Dual Mandate" of the Fed to minimize inflation and maximize employment with some misplaced belief in economics. Every American economist of the last century has realized these are often competing ideals. It's their rais…

And yet somehow they have in fact kept inflation at less than 2% while bringing unemployment to near zero (well, pre-pandemic, as the rest of the article, this year's numbers are screwy). That's weird, right? What's up with that?

Re: Has to Be a Joke, Because If It’s Not

#14

Post by jdfr »

The beginning of the text feels really odd, almost GPT-3-like at some points. At least, that's the way it seems when you do not know the jargon. It just rambles on and on. Thankfully it gets more coherent later on, but I am not sure what the author intended to say in this piece.

Re: Has to Be a Joke, Because If It’s Not

#15

Post by EdwardDiego »

qppo wrote: post #6
EdwardDiego wrote: post #5

Earlier quoted context omitted.

Paraphrasing article: US monetary policy has failed consistently because it is predicated on a rise in inflation caused by decreases in the unemployment rate, but this hasn't occurred - probably because the unemployment rate (or how its measured) doesn't correctly capture the change in spending power in the labour market. /Paraphrasing It's kinda the same in my country - for the statistical purposes of the official S…

US monetary policy has not "failed" pretty much since Nixon. Janet Yellen's tenure is really the only blemish, but only because she didn't raise rates when we could have. I think you're confusing the "Dual Mandate" of the Fed to minimize inflation and maximize employment with some misplaced belief in economics. Every American economist of the last century has realized these are often competing ideals. It's their rais…

I was trying to paraphrase the original article, so hold no strong opinion on this as it's largely outside my sphere. :)

Re: Has to Be a Joke, Because If It’s Not

#16

Post by EdwardDiego »

KMag wrote: post #12
EdwardDiego wrote: post #5

Earlier quoted context omitted.

Paraphrasing article: US monetary policy has failed consistently because it is predicated on a rise in inflation caused by decreases in the unemployment rate, but this hasn't occurred - probably because the unemployment rate (or how its measured) doesn't correctly capture the change in spending power in the labour market. /Paraphrasing It's kinda the same in my country - for the statistical purposes of the official S…

There isn't one unemployment rate in the U.S., there are actually 6. What the news usually calls the unemployment rate is the U3 rate. [0] You're suggesting the U6 is a better measure, which makes sense to me, but I'm not an economist. What I've read recently though, is that workers' expectations of inflation also play a big role in inflation. [1] The idea is that low unemployment means workers are confident and have…

Cheers, I don't know much at all about economics, especially not US economics, was just trying to paraphrase the article for the person I replied to, but cheers for the link, always good to learn something new :)

Re: Has to Be a Joke, Because If It’s Not

#17

Post by enricozb »

How do I go from not understanding economics/finance, to pretending to understand it? I feel like that finance uniquely is a field that every time I have tried to penetrate I get a mix of unintelligible jargon and mathematics as a facade of rigor.

I am comfortable reading both math and programming textbooks, but every finance book I've picked up so far seems to quickly not make any sense to me at all.

Re: Has to Be a Joke, Because If It’s Not

#18

Post by [deleted] »

freeone3000 wrote: post #9
aaronharnly wrote: post #4

The article assumes a shared context of facts and interpretation that makes it unreadable for someone encountering it for the first time.

While the Federal Reserve talks a lot about how its rate policies have improved the economy, actual figures from inflation and unemployment don't back up any of the improvements they're claiming, and haven't for years. Now, the Fed is moving the goalposts -- saying low unemployment can no longer be a reason for a rate increase, only inflation, since inflation has also stayed lower than the target metric. As inflation…

[deleted]

Re: Has to Be a Joke, Because If It’s Not

#19

Post by porknubbins »

enricozb wrote: post #17

How do I go from not understanding economics/finance, to pretending to understand it? I feel like that finance uniquely is a field that every time I have tried to penetrate I get a mix of unintelligible jargon and mathematics as a facade of rigor. I am comfortable reading both math and programming textbooks, but every finance book I've picked up so far seems to quickly not make any sense to me at all.

Having tried this in undergrad, lets say you’ve gotten through an Econ 101 text all the way through harder Finance math like understanding Black Scholes- you’re about half way. Now you have to learn about huge arbitrary or historical institutional complexity around how finance really works. The only way I can see how anyone keeps it in their head is they are paid to do it every day. Also there is not necessarily one truth to grasp, its more like studying climate change.
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