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Four Basic Truths of Macroeconomics

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Re: Four Basic Truths of Macroeconomics

#141

Post by WalterBright »

XorNot wrote: post #110
WalterBright wrote: post #13

Earlier quoted context omitted.

> Non-monetary problems like oil shocks and pandemics can cause recessions It wasn't the oil shock of the 70's that caused recession. It was our response to it - Nixon's oil and gas price & allocation controls. We came out of that when Reagan repealed it. Our current recession is not caused by the pandemic, but the lockdown response to it.

Mmmm, the idea that the rapid and sudden collapse of the hospital system in major city centres would have led to no other economic consequences is certainly a take .

From my readings of history, the death rate from Covid is not enough to cause an economic collapse, even if everyone contracted it.

Re: Four Basic Truths of Macroeconomics

#143

Post by arcticbull »

chordalkeyboard wrote: post #135
arcticbull wrote: post #108

Earlier quoted context omitted.

So buy gold. The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Ok, pitch that. But there's many reasons why that isn't a good thing. Inability to react to shocks such as a global pandemic, generational wealth co…

> The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Thank you for the complement but I didn't invent banking.

Seemingly misunderstood it though. It was never a risk-free return. Nobody that offers you 12% APY is offering you a risk-free return :) that's a good rule to live by.

Re: Four Basic Truths of Macroeconomics

#144

Post by dang »

chordalkeyboard wrote: post #127
AngrySkillzz wrote: post #52

Earlier quoted context omitted.

You are purposefully ignoring the normal explanation, which is this: because wages are sticky, firms that need to cut costs in a recession are more likely to lay off people than they are to give pay cuts. Inflation helps to weaken that rigidity so that job losses are not as large. Maybe you know that. You claim that central banks depreciate the currency because they "think wages among the working class are too high."…

[flagged]

Would you please stop doing ideological flamewar on HN? This one was just over the top.

You've posted a ton of these and it's not what this site is for.

https://news.ycombinator.com/newsguidelines.html

Re: Four Basic Truths of Macroeconomics

#145

Post by dang »

AngrySkillzz wrote: post #52
chordalkeyboard wrote: post #37

Earlier quoted context omitted.

> What's your point. Should be obvious from the discussion, especially for someone who “knows quite a bit” about the subject. > Hi yes I know quite a bit about sticky wages and inflation. Then why did you ask me for a source for a statement that is well understood among anyone who has studied the subject? Krugman’s statements to this effect are so well-known as to have been written about in other publications. Back t…

You are purposefully ignoring the normal explanation, which is this: because wages are sticky, firms that need to cut costs in a recession are more likely to lay off people than they are to give pay cuts. Inflation helps to weaken that rigidity so that job losses are not as large. Maybe you know that. You claim that central banks depreciate the currency because they "think wages among the working class are too high."…

Would you please stop doing ideological flamewar on HN? This one was just over the top.

You've posted a ton of these and it's not what this site is for.

https://news.ycombinator.com/newsguidelines.html

Re: Four Basic Truths of Macroeconomics

#146

Post by dang »

anarchop wrote: post #17

The only truth: central banking facilitates theft of savings through debasement of the currency. This is the reason the founding fathers fought to keep central banking out of the US.

Please don't post any more shallow flamewar comments to Hacker News. You set off a massive one with this. Not cool, and not what this site is for.

https://news.ycombinator.com/newsguidelines.html

Re: Four Basic Truths of Macroeconomics

#147

Post by WalterBright »

freddie_mercury wrote: post #125
WalterBright wrote: post #13

Earlier quoted context omitted.

> Non-monetary problems like oil shocks and pandemics can cause recessions It wasn't the oil shock of the 70's that caused recession. It was our response to it - Nixon's oil and gas price & allocation controls. We came out of that when Reagan repealed it. Our current recession is not caused by the pandemic, but the lockdown response to it.

This is obviously false and all you have to do is acknowledge there are other countries in the world besides the US. Every country in the world was subjected to oil shocks. Not every country had price controls. Every country experienced a recession. Likewise, every country experienced the pandemic. Not every country had lockdowns. Every country experienced recessions. Posts that had simple explanations for complex ph…

I remember the day before Reagan signed the Executive Order to repeal all of Nixon's oil&gas allocation&price controls. Gas lines. The day after. No gas lines. All the gas you wanted. At last, I could pull right up to the pump and get gas. And the gas lines never returned in the next 40 years, despite many oil shocks (like Gulf War 1 and Gulf War 2).

The evidence is very strong that Nixon's actions caused the gas lines in the US.

Re: Four Basic Truths of Macroeconomics

#148

Post by arcticbull »

chordalkeyboard wrote: post #95
arcticbull wrote: post #88

Earlier quoted context omitted.

Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. Yes people who got in before you may have done better than you. They may not have. But the absolute price isn't relevant since owning AAPL shares isn't a necessity for life. On the o…

> Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. Someones ability to buy in to those assets is relevant for their ability to realize that appreciation. > You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. So? The units here don’t matter. The fact that the central bank policy resu…

> Someones ability to buy in to those assets is relevant for their ability to realize that appreciation.

With fractional shares all that matters is how much cash they bring to the table now how many individual units of stock they can purchase and that cash can then track the return of the underlying equity.

Re: Four Basic Truths of Macroeconomics

#149

Post by arcticbull »

chordalkeyboard wrote: post #74
AngrySkillzz wrote: post #61

Earlier quoted context omitted.

> It decreases the value of the money use to pay for them That is meaningless, though. Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. That is also wrong - the issue here i…

> Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I am better off if the nominal value of that asset matters, which it does if I want to sell it or leverage it. And anyone on a dollar denominated income is worse off. > I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead…

> Their wages don't keep pace with the inflation of assets, so they are continually unable to save or invest their way out of poverty.

They're poor, they don't have cash. Their assets have their own ROI separate from the benchmark rate.

> for the umpteenth time, they are paid in depreciating units while the real value of assets appreciates in nominal units; creating a problem where in order to save they must invest, and they continually have less real income to invest, because the paychecks are getting smaller (in real terms) and the assets are getting pricier (in nominal terms).

The depreciation only matters from the time they receive their paycheck to the time they invest in productive assets or pay for necessities. Only for the time they're holding literal dollars. If it takes a full year they retain a full 98% of the value. It doesn't matter. You are wrong.

Their paychecks are not getting smaller because wages have kept pace with inflation. [1]

[1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

Re: Four Basic Truths of Macroeconomics

#150

Post by Arn_Thor »

mandelbrotwurst wrote: post #60
p1necone wrote: post #35

Earlier quoted context omitted.

Sure you can have the entire worlds information and entertainment at your fingertips with a $50 smartphone, but if you can't afford to have a roof over your head I'd argue the smartphone is irrelevant. I don't think we should be including basic necessities alongside improvements in entertainment in the same statistic, because it will just hide problems.

> I'd argue the smartphone is irrelevant. Access to information helps you obtain and maintain a roof over your head. > I don't think we should be including basic necessities alongside improvements in entertainment in the same statistic, because it will just hide problems. Agreed.

Yes and no.. The smartphone is extremely relevant because access to the internet is essential for modern life. So much necessary activity takes place online, from banking to accessing public services. That needs to be factored in, perhaps not as the cost of a smartphone, but rather the cost of a laptop plus internet.

And yet, it doesn't matter if you have a smartphone and internet access if there are no jobs, or if those jobs don't pay sufficiently.

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