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

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

#151

Post by steveBK123 »

dnautics wrote: post #102
steveBK123 wrote: post #76

Earlier quoted context omitted.

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 an…

> we have never really had much of a true lockdown here. And parts of europe had more of a lockdown than the US and the population fatality rate is worse. I wonder if covid just doesn't care about lockdowns; the countries that haven't gotten hit badly are 1) an island. 2) an isolated continent. 3) an island 4) a country that sits on a peninsula that has a hugely militarized impermeable border. and 5) a group of islan…

I think to say lockdowns didn’t work raises the question - why did NYC cases & deaths peak only after all white collar workers stayed WFH for 4-6 weeks and the city looked like a ghost town?

It’s clear to me that keeping us out of offices and trains stopped the spread. Unfortunately it had been in the city for 2+ months prior and then ravaged the elderly & medical&front line workers who were out there dealing with it while we got to WFH.

Close, especially indoor contact, without masks, in cooler dry weather appears to be the recipe for disaster here.. ‘ We are seeing it play out in Wave 2 (or 3?) here as people have all gotten very sloppy, even if they are WFH.

From March-October in my social/family circle I knew 0 people with COVID. We were all at home, and people got scared straight pretty quick. Come summer things opened and cases dropped..

From early November to Christmas I knew 30+ people with COVID. Where did they get it? Kids came home from college with it. They went to bars indoors for hours. They dined indoors at restaurants.

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

#152

Post by johbjo »

Seems disingenuous.

Looking at the their data (p. 13), it does not look like a linear trend. There are two obvious change points; 1450 where rates dropped around 5%, and then 1680 it dropped 5%.

Without the extreme outliers in 1905 and 1930, the trend would be constant at 5% from 1680 onwards.

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

#153

Post by bzbarsky »

throw0101a wrote: post #49
koolba wrote: post #18

Earlier quoted context omitted.

> ... 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.

> We’ve printed trillions of dollars and Congress is en route to print trillions more. First off: it's not Congress that controls the money supply, it's the Fed. They're independent. > The price for that has yet to be paid. What price is that? Inflation? Japan's M2 has risen a lot, and it hasn't seen any for decades: * https://fred.stlouisfed.org/series/MYAGM2JPM189S * https://fred.stlouisfed.org/series/FPCPITOTLZGJP…

Unfortunately, Keynesians also made predictions (like fiscal spending moving rates off the zero bound, austerity hurting economic growth, etc) which did not turn out to be true, due to monetary offset. That is, Keynsians tend to over-focus on fiscal policy and ignore the monetary side, but in practice central banks end up sterilizing most if not all of what's going on the fiscal side, as far as I can tell.

The only group I have seen making predictions over the last 10+ years who seem to be successful are the people suggesting that central banks do NGDP level targeting instead of what they're doing right now.

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

#154

Post by anticodon »

helge9210 wrote: post #126
anticodon wrote: post #95

Earlier quoted context omitted.

> nobody has gone to war I'm pretty sure USA will start a new war in 2021-2022. Most probable targets are Iran, Saudi Arabia, Russia. Russia is the most lucrative target but because of nuclear weapon, most likely more and more protests would be organized to attempt to destroy the country from inside, like they did in Ukraine in 2014. If this strategy fail or is taking too long time, Iran or Saudi Arabia should be pre…

> like they did in Ukraine in 2014 Which "they" are you referring to?

Europe and USA. Victoria Nuland was there. I think it was a joint effort.

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

#155

Post by johbjo »

voodootrucker wrote: post #5

It took me a while to get it, but this all works in the opposite direction as well. The time value of money can be negative: A dollar today can be worth more than a dollar tomorrow. It's not pretty. When the pie is shrinking the incentives get ugly rapidly. Let's hope this can be a "good" deleveraging, we fix metrics that don't positively correlate with non-zero-sum productivity growth, and on top of that pull the ne…

> The time value of money can be negative

The time value is positive by definition, unless you somehow get penalized by having money in the future. Inflation and purchasing power is a separate phenomenon.

Negative interest rates is entirely artificial. Not in any way a market phenomenon.

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

#156

Post by bzbarsky »

vbarrielle wrote: post #110
gruez wrote: post #38

Earlier quoted context omitted.

>If we continue growing the economy at 2-3% YoY we will be extracting all energy from the Milky Way in 1000 years and applying it to the economy. Not probable! gdp growth =/= energy consumption growth Also 1.03^1000 = 6.8 10^12, but wolframalpha says the number of stars in the milky way is 3 10^11. Considering that we're nowhere close to capturing even 1% of the energy output of energy that reaches the earth, let alo…

> gdp growth =/= energy consumption growth As far as data is concerned, the correlation is pretty big though: https://theshiftproject.org/wp-content/uploads/2020/05/gdp_e...

True, but for the US, for example, energy consumption has been pretty much flat for the last 20 years, and decreasing in per-capita terms. See https://www.bloomberg.com/opinion/articles/2021-01-28/beyond...

It's interesting to see how world trends look as more and more of the world ends up in the position the US was in 20 years ago in terms of economic mix.

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

#157

Post by Robotbeat »

imtringued wrote: post #140
mrec wrote: post #99

Earlier quoted context omitted.

> Too low of inflation is bad because it means less investment in the physical economy But why did this apparently only become the case after 2008? Positive real returns without gambling were acceptable before that, and we still got a gigantic speculative bubble, so why does it suddenly become reasonable to encourage bubbles even more? Was it just a coordination problem? An initial panic reaction to slash to zero, an…

You can blame the Fed for one thing, and only one thing. They provided way too much money on the wrong side. The Fed provides loans to banks who then provide loans to companies so that they can grow faster. It's about increasing efficiency, not about total possible upside. However, there is a point after which businesses have enough loans for all the investments they have planned. Every single dollar after that is to…

Yeah, one of the most powerful levers the federal government could have with respect to climate is to provide financing support for renewables. If you reduced the cost of capital for solar, wind, and batteries (or nuclear for that matter) to the price of 30 year US treasuries, it’d crush all fossil fuel power plants and provide a spur to the economy. In addition, cheap electricity would be a huge long-term boost to the economy, it’d drive electrification of transport/heating/industry, and the cost to taxpayers would be almost nil.

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

#158

Post by throw0101a »

bzbarsky wrote: post #153
throw0101a wrote: post #49

Earlier quoted context omitted.

> We’ve printed trillions of dollars and Congress is en route to print trillions more. First off: it's not Congress that controls the money supply, it's the Fed. They're independent. > The price for that has yet to be paid. What price is that? Inflation? Japan's M2 has risen a lot, and it hasn't seen any for decades: * https://fred.stlouisfed.org/series/MYAGM2JPM189S * https://fred.stlouisfed.org/series/FPCPITOTLZGJP…

Unfortunately, Keynesians also made predictions (like fiscal spending moving rates off the zero bound, austerity hurting economic growth, etc) which did not turn out to be true, due to monetary offset. That is, Keynsians tend to over-focus on fiscal policy and ignore the monetary side, but in practice central banks end up sterilizing most if not all of what's going on the fiscal side, as far as I can tell. The only g…

In the last 10+ years fiscal spending has been half-hearted and anemic. As Krugman wrote back in 2009:

> I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

* https://krugman.blogs.nytimes.com/2009/01/06/stimulus-arithm...

Austerity does hurt economic growth:

* https://krugman.blogs.nytimes.com/2012/04/24/austerity-and-g...

From what I've read on the topic, it's hardly ever been a good idea, especially in depressed economies:

* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...

> That is, Keynsians tend to over-focus on fiscal policy and ignore the monetary side

AFAICT, Keynesians are both-and thinkers. Monetary is done first, but once you hit zero rates, then what more can you do from that angle? Printing money is only useful when you also have velocity, which has at first decreased and lately fallen off a cliff:

* https://fred.stlouisfed.org/series/M2V

At that point you have to move to fiscal. Krugman examined this in 1998 when Japan entered the quagmire before everyone else:

* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...

> are the people suggesting that central banks do NGDP level targeting instead of what they're doing right now.

Who is writing publicly on this topic, either in weblogs, articles, or Tweets?

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

#159

Post by imtringued »

gher-shyu3i wrote: post #54
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…

> As far as a stable society goes, low interest rates are a good sign Zero are even better. We've known for literally thousands of years that interest (usury) is parasitic, immoral, and dangerous. Islam, Judaism, and Christianity all outlaw it. Yet we continue to engage in it and wonder why we end up in mess after mess.

At zero interest I can borrow money to meet my debt obligations.

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

#160

Post by bzbarsky »

throw0101a wrote: post #158
bzbarsky wrote: post #153

Earlier quoted context omitted.

Unfortunately, Keynesians also made predictions (like fiscal spending moving rates off the zero bound, austerity hurting economic growth, etc) which did not turn out to be true, due to monetary offset. That is, Keynsians tend to over-focus on fiscal policy and ignore the monetary side, but in practice central banks end up sterilizing most if not all of what's going on the fiscal side, as far as I can tell. The only g…

In the last 10+ years fiscal spending has been half-hearted and anemic. As Krugman wrote back in 2009: > I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitc…

> In the last 10+ years fiscal spending has been half-hearted and anemic

See, this is one of those claims that is interesting to me because I never see anyone proposing what a "non-anemic" level would look like. No matter what gets proposed for fiscal spending, the response is "that won't be enough; we should spend more", without quantifying more.

As a scientific claim, it's unfalsifiable, fundamentally, which makes it hard to work with usefully.

> Austerity does hurt economic growth:

First off, there's a lot of cherry-picking going on. The US did "austerity" things, people claimed the result would be disastrous.... and it wasn't. Europe did austerity, but _also_ very tight central bank policy at the same exact time; results were not great, but it's hard to blame this on just "austerity" given the central bank behavior.

Just to be clear, I am not claiming that austerity _improves_ economic growth, which seems to be what the wikipedia link you post is about. I'm claiming that the specific predictions made about austerity by adherents of specific economics intellectual movements in the last 10-15 years did not in fact match what actually happened.

> but once you hit zero rates, then what more can you do from that angle?

Tons, if you want to, because you are not limited to short-term rates as your policy instrument. Those rates are correlated with monetary policy (in the short term; anti-correlated in the long term), not causative.

Note that at the point when we hit "zero rates" central banks were doing all sorts of monetary tightening (positive interest rates on reserves!, the Fed raising its policy rate 9 times over the course of a few years and consistently missing its inflation target on the low side in the process, etc).

https://en.wikipedia.org/wiki/Negative_interest_on_excess_re... is absolutely a thing you can do to increase V when you hit "zero rates". But more importantly, a large part of monetary policy is expectations management. If people expect you to undershoot your inflation targets, they act accordingly and it actually gets harder to hit the targets.

> Who is writing publicly on this topic, either in weblogs, articles, or Tweets?

https://www.themoneyillusion.com/ has been writing about it for a while now. Less recently, as the idea has gained more widespread traction; a lot more around the 2008 financial crisis and aftermath.

Is the real question here "what is this and why is it supposed to be a good idea" or "who are these people who are making better predictions"?

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