Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

bankofengland.co.uk

Post reply on HN
Print view View original

71–80 of 179 posts

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#71

Post by Gatsky »

throw0101a wrote: post #56
freeone3000 wrote: post #55

Earlier quoted context omitted.

What makes V increase? A new big investment opportunity? A savings tax? What starts money circulating?

Economic activity: > The velocity of money (or the velocity of circulation of money) is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period.[3] * https://en.wikipedia.org/wiki/Velocity_of_money Good video by a CFA trainer: * https://www.youtube.com/watch?v=l0mh7cCjwDU The first 10 minutes (maybe 20) probably has the most pertinent inform…

But what if you had an artificial cessation of economic activity which then suddenly resumed in the midst of a massive fiscal stimulus, unprecedented supply chain disruption and geopolitical manipulation of free trade?

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#72

Post by gruez »

throw0101a wrote: post #63
lettergram wrote: post #61

Earlier quoted context omitted.

You sure inflation isn’t here? Houses are up massively, land, cars, stocks, crypto, etc. The inflation measurement is off. But the inflation is here.

You list assets, which have generally always gone up in value over time. Inflation, i.e. CPI, is (roughly) about cost of living through a basket of goods: * https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 If you don't believe the government-published CPI you can confirm their work, as others have done: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_proj…

Presumably he's talking about asset inflation.

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#73

Post by eli_gottlieb »

waterhouse wrote: post #32
ahepp wrote: post #21

Earlier quoted context omitted.

Yet interest rates have yet to respond (unless I have missed some major news). You are correct to point out the risk, but I don't think we can call it currency debasement yet.

Ceteris paribus, creating more money reduces its value. If, over some time period, you double the money supply, yet the monetary price of a basket of consumer goods stays the same, then that means the monetary price would have been cut in half if you hadn't printed anything. So, just because other effects are strong enough to counteract your debasing doesn't mean you're not debasing the currency.

>Ceteris paribus, creating more money reduces its value.

Ceteris is not paribus at all. If we're complaining about potential inflation rather than worrying about the raging pandemic and a full-blown depression like unto the Great Depression, we're in comparatively good shape!

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#74

Post by throw0101a »

Gatsky wrote: post #71
throw0101a wrote: post #56

Earlier quoted context omitted.

Economic activity: > The velocity of money (or the velocity of circulation of money) is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period.[3] * https://en.wikipedia.org/wiki/Velocity_of_money Good video by a CFA trainer: * https://www.youtube.com/watch?v=l0mh7cCjwDU The first 10 minutes (maybe 20) probably has the most pertinent inform…

But what if you had an artificial cessation of economic activity which then suddenly resumed in the midst of a massive fiscal stimulus, unprecedented supply chain disruption and geopolitical manipulation of free trade?

We're about to find out.

The traditional thing to do is raise interest rates when things start getting hot.

But having "too much" economic activity is in some ways better than not enough with people being unemployed and such.

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#75

Post by throw0101a »

gruez wrote: post #72
throw0101a wrote: post #63

Earlier quoted context omitted.

You list assets, which have generally always gone up in value over time. Inflation, i.e. CPI, is (roughly) about cost of living through a basket of goods: * https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 If you don't believe the government-published CPI you can confirm their work, as others have done: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_proj…

Presumably he's talking about asset inflation.

Valuations go up until they go down. See 2008, and 2000 before that, and ...

As someone with another couple of decades until retirement I'd love a crash about now so that I could "buy low".

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#76

Post by steveBK123 »

peteretep wrote: post #47
kristopolous wrote: post #13

This isn't surprising. Risk and rates are related and there's been an increase in stability and decrease in risk throughout the centuries. As far as a stable society goes, low interest rates are a good sign Even amidst this terrible pandemic, no country has collapsed, nobody has gone to war, currencies haven't been debased, all protests have more or less been handled, nothing is truly out of control. Mass death and f…

> Mass death Covid has killed a lot of people and created a lot of heart-break, and it would be heartless to try and minimise that or to view it in purely economic times in this moment. However, I think that in 100 years, future historians will describe the effect of the deaths itself as being pretty negligable: maybe 10% over the expected rate without Covid in 2020 and 2021, maybe 5m people in each year total, again…

Also, I’m not sure exactly how you meant it, so I won’t direct this at you, just generally...

I can’t get over the techbro straw man of the “lockdown” I’ve seen thrown around a lot. First, compared to most of Asia that actually got this virus under control, we have never really had much of a true lockdown here. Second, it’s not the lockdown, its the pandemic. In most areas economic activity dropped off well before any lockdowns and has remained subdued regardless of lockdown duration as long as the virus remains active.

That is - the economic activity drop is more correlated with level of virus outbreak than with any government orders.

In NYC, everyone I know got sent home a week or more before any city/state lockdowns started.

The only time offices were mandated to be closed in NYC was about 8 weeks when we had refrigerated trucks parked outside hospitals acting as mobile morgues, and the National Guard picking up 100s of bodies per day of those who died at home.

For the most part companies have kept people WFH because they can get close to 100% productivity with close to 0% absences due to disease & death.

The mental health angle of more time spent at home, I still think is a wash. For every extrovert craving lording over a conference room of coworkers, there’s an introvert enjoying reduction in forced social interactions. Lots of people actually like their family & enjoy spending more time with them.

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#77

Post by mxcrossb »

throw0101a wrote: post #63
lettergram wrote: post #61

Earlier quoted context omitted.

You sure inflation isn’t here? Houses are up massively, land, cars, stocks, crypto, etc. The inflation measurement is off. But the inflation is here.

You list assets, which have generally always gone up in value over time. Inflation, i.e. CPI, is (roughly) about cost of living through a basket of goods: * https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 If you don't believe the government-published CPI you can confirm their work, as others have done: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_proj…

I think your analysis is right, but if cars and houses are things that people buy with borrowed money, it does seem like interest rates being low would drive prices up. And it might increase the price of inflation proof assets like crypto. Is there a framework we should be describing this with besides the broad “inflation” term?

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#78

Post by iav »

koolba wrote: post #18
kristopolous wrote: post #13

This isn't surprising. Risk and rates are related and there's been an increase in stability and decrease in risk throughout the centuries. As far as a stable society goes, low interest rates are a good sign Even amidst this terrible pandemic, no country has collapsed, nobody has gone to war, currencies haven't been debased, all protests have more or less been handled, nothing is truly out of control. Mass death and f…

> ... currencies haven't been debased ... We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid.

My estimate is the death toll from Covid is saving trillions in future benefit obligations for the US overall. From a GAAP perspective, the epidemic might come out a wash. This contrasts with the 1918 pandemic, which mainly killed the young and productive.

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#79

Post by smabie »

interest rates are not low, we just measure them wrong. The dollar is being devalued at an astounding pace, and yet some people will split hairs and say "well, technically.." look at stocks, housing, land, education, health care and food.

Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)

#80

Post by snowwrestler »

peteretep wrote: post #47
kristopolous wrote: post #13

This isn't surprising. Risk and rates are related and there's been an increase in stability and decrease in risk throughout the centuries. As far as a stable society goes, low interest rates are a good sign Even amidst this terrible pandemic, no country has collapsed, nobody has gone to war, currencies haven't been debased, all protests have more or less been handled, nothing is truly out of control. Mass death and f…

> Mass death Covid has killed a lot of people and created a lot of heart-break, and it would be heartless to try and minimise that or to view it in purely economic times in this moment. However, I think that in 100 years, future historians will describe the effect of the deaths itself as being pretty negligable: maybe 10% over the expected rate without Covid in 2020 and 2021, maybe 5m people in each year total, again…

I think the opposite; as society continues to get better at responding to disease and preventing death, the social allowance for "expected" deaths declines.

The U.S. Civil War 150 years ago is a good benchmark. We look back now at the level of death with horror, especially deaths among those receiving what passed for medical treatment back then. But of course back then, that was how medicine worked and it was not remarkable that so many people died after surgery.

Or if you want to look back closer to 100 years, look back on the level of death and disease related to World War I or the Spanish Flu.

The benchmark for evaluating our response to COVID-19 will not be some percentage over the death rate we expect today, but the optimum that people 100 years from now think we could have achieved with a competent response. Historians will be in a better position to judge the details than we are (for example, by having full access to the collected archives of various national governments of today).

But it's clear even now that the U.S. could have had far fewer deaths than we did, with a better response. Look at how well we did against SARS and MERS, or how well some other nations did against COVID-19.

Post reply on HN