Four Basic Truths of Macroeconomics

> If what you want to say is that you think the government is run by a shadowy cabal of elites whose main purpose is to impoverish the common man, then just say that.

I’m not sure why I would need to go that far afield when I can just deal with the actual words spoken by actual economists where they literally say this with slighty obscurant language. This isn’t a “shadowy cabal,” its mainstream media and economics here.

If the actual intent of economic policy is so threatening to your worldview that you need to poison the well by invoking shadowy conspiracies, perhaps you should re-evaluate your own perspective on the issue.

> I'm just going to call you a conspiracy theorist because it's probably not worth arguing with you, and "the amount of energy needed to refute bullshit is an order of magnitude larger than to produce it."

Yeah it would probably require an infinite amount of energy to refute my assertions, since they are actually true. And I think we are beyond considering the existence of the central bank to be a “conspiracy theory”, it’s kind of established.

The third great truth in this list is "an increase in the money supply leads to inflation, except when it doesn't" which is hard to argue with. Clearly a field where Nobel prizes should be awarded.

> Inflation only matters from the time you receive your paycheck to the time you invest it in productive assets or buy the necessities of life.

It means the people who save by depositing cash in the bank lose value over time, causing them to purchase investments out of necessity (rather than purchasing them because they believe its a good investment). This bids up the price of investments relative to their return, which effectively reduces returns to a level commensurate with the artificially low interest rates.

It also negatively impacts anyone who is long cash for any reason (perhaps their business requires them to retain a certain amount) and anyone who relies on fixed payments denominated in dollars (retirees, pensioners, disabled persons, those on public assistance, etc.).

> After that it sets the benchmark rate of return for your investments.

Those are nominal returns, not real returns. Inflation generates no real returns.

> If your salary fails to track inflation that's between you and your boss who's giving you a pay cut year over year

Nice rhetorical judo, to frame the central bank’s actions as normal and the lack of an increase as a decrease.

> or between you and congress if you're under the minimum wage umbrella.

Alas, if congress could lower the minimum wage without political fallout, economists might suggest they do that instead of inflating the money supply.

> Currency only has value while its changing hands and inflation is an incentive to change hands. If you'd invested in anything at all 100 years ago you'd have just as much value as you do today. If you insisted in sticking a square peg in a round hole and hid your cash in your mattress the whole time, inflation did its job and took that value from you.

This is why time preference should be taught in school.

> It means the people who save by depositing cash in the bank lose value over time, causing them to purchase investments out of necessity.

Ah you get it. That's the idea. Buy gold if you want, buy real estate, buy annuities, buy fixed incomes, I don't care, but money is an intermediary - not a long-term store of value. If you treat it as one you'll have a bad time. Just like if you treated your car as a boat. It'll work for a bit, then it'll sink. Because it's the wrong tool for the job.

> Those are nominal returns, not real returns. Inflation generates no real returns.

Did I say inflation generated returns? No, I said it sets the benchmark rate of return for your investments. If your investments fail to exceed inflation they're not the right choice. That's your duty in a capitalist society - to pick winners by investment.

> Nice rhetorical judo, to frame the central bank’s actions as normal and the lack of an increase as a decrease.

They're paying you less value so it's a decrease. You're tripping yourself up focusing on units instead of what they represent. After all, inflation has many positives, too.

> Alas, if congress could lower the minimum wage without political fallout, economists might suggest they do that instead of inflating the money supply.

That's between you and congress, not between you and Janet Yellen.

> This is why time preference should be taught in school.

I'd argue this conversation is why ECON 101 should be mandatory, so folks have the tools they need to thrive in modern society instead of, well, tilting at windmills.

> "This has been tested under conditions such as the Mariel Boat Lift, where a large number of Cuban immigrants all joined the Miami labor market in a short period of time, increasing labor supply by 7% very quickly. Research found that there was practically no impact on wages and employment for locals."

The problem with all of these studies is that they only apply to the specific circumstances of the study which will probably never happen again anywhere.

What happens if the immigrants send more of the money they make back to their home countries? What happens if the minimum wage is lower, or the immigrants have a higher skill level, so that the potential downside for wages is larger? What if the unemployment rate or labor demand is different, affecting the number of new workers that displace existing workers? What happens if immigrants' wages are taxed at a higher rate and the money goes to cronies and corporate welfare instead of being recirculated in the economy?

Measuring what happened at a different time in a different place doesn't really tell you much.