181–190 of 518 posts
Earlier quoted context omitted.
I agree. As a control theorist, I'd be much more comfortable with a PID controller running the ship, and I think it would do a better job.
Yup Denmark recently open sourced a lot of their fiscal policy and it works pretty much like this. Really great idea
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Why haven't I been reading this kind of hemming and hawing over the lack of full employment for, oh, the last 50 years or so? The fed has a mandate for that too, but somehow when they didn't manage to achieve it, I never heard about how society is going to collapse any minute now. Only when poor people are making income gains. Strange.
Poor people are making _nominal_ income gains. Their real income is actually declining because wage gains aren't keeping up with inflation despite a red hot labor market. It's almost like rents rise to match incomes unless you build more housing. Rent control just means that the costs get offloaded to other things like the security deposit, application fees, and deferred maintenance. You can't regulate the market out…
When it starts to get really burdensome to keep your promises, the idea of breaking them gets really attractive. But that doesn't come for free. It costs credibility. The cost of central banks breaking their inflation-control commitment when inflation starts running hot, is that the market starts pricing in their unwillingness to raise interest rates. This fuels a whole bunch of other inflation feedback loops, and th…
Counterpoint: Stability is a critical optimization criteria, but should be balanced with the need to maintain "dynamism". New ideas can't win if any time the entrenched hit problems they are bailed out. Maintaining employment is necessary for long-term societal stability, maintaining Goldman Sachs is not. In recent years our definition of stability shifted to one where market winners remain winners indefinitely.
The central banks rely on investment banks and other large institution to translate the low overnight rates into reduced commercial and consumer rates. The low interest rate, high inflation rate policies are extremely beneficial to the Goldmans of the world.
When you have to write propaganda about a thing that's long-term been identified as "bad," (with ample historical examples) actually being a good thing, you're being willfully dishonest and in denial. Many here will fight and bicker and kick and scream but Bitcoin is the only solution to the absolute ruin being dangled over the millenial and younger generations (primarily because it disconnects state/human control of…
i don't know about bitcoin but you do have a point about the current spin being put on high inflation. High inflation is universally known as bad for an economy.. until now for some reason.
Because, presumably, the shoe is about to drop and they want citizens to willfully accept their savings/investments going to zero and replaced with a digital surveillance currency (CBDC or Central Bank Digital Currency). If they can convince the general population that "inflation is good," they're less likely to take flight to alternatives like metals, Bitcoin, land, etc or try to behead the bankers who stole their wealth. IMO, MMT is just Stockholm Syndrome rebranded for finance.
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Or for young wage earners who have significant student debt. Pretty much anybody who has more current liabilities than current assets can expect to benefit from some degree of inflation
> Pretty much anybody who has more current liabilities than current assets can expect to benefit from some degree of inflation Except for the fact that they're getting a pay cut year after year. This is why the general public gets so mad about inflation. Like another commenter mentioned, inflation screws over anyone who works for a wage.
It can, but inflation affects current assets and liabilities immediately and only depresses wages over time. If inflation was 7% over the course of the year, you now owe 7% less on your outstanding loans (in real terms), while any real wage decrease would be amortized over the course of the year. Assuming inflation occurred at a fixed rate and that your nominal wage didn't change at all, you only actually lost 3.5% of your real wage.
You're also now a worker in a "hot" economy, so you can look for a new job with a higher wage (or ask for a raise, citing inflation) and limit your real wage loss to 3.5% of one year's earnings.
> This is why the general public gets so mad about inflation.
I know this is uncharitable of me, but I think the general public gets so mad about inflation because people with large capital holdings try to get the public riled up, and then the average person just doesn't sit down and do the math for their own situation. The median member of the general public is a debtor, not a creditor, so modest inflation (or high inflation over a short period) is usually good for them, financially speaking. Deflation, on the other hand, could destroy them.
For the bottom and top of the economic ladder, though, inflation is usually a bad deal, since minimum wages and safety net programs aren't normally indexed to inflation, and inflation erodes the value of savings and other current assets. Elevating the middle class at the expense of the poor is morally questionable, even if the rich get soaked along the way, too.
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an inherently unstable but critical element of an economic system shouldn't be allowed to float on the whims of a few humans, especially with overwhelming corruptive pressure lapping against them incessantly. a central bank should be trying with all its might to precisely match the amount of money in the system exactly with the amount of productivity being generated. it shouldn't be trying to implement 'fiscal policy…
I agree. As a control theorist, I'd be much more comfortable with a PID controller running the ship, and I think it would do a better job.
They call these Automatic Stabilizers in the policy world.
Rampant inflation is a problem. The inflation seen now in many places is not quite there. 7% is higher than we would like, but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation. In the US at least, a lot of the raise in the US CPI is due to rising energy costs (predicted months ago due to cold winter in Asia), used and new cars (the infamous chip shortages), and…
The downside of this is, instead of people working to create productive things, effort instead shifts to gambling and gaming the system. Witness what's happened all over our economy. It's like a cancer devouring everything: Robin Hood, GameStop, Crypto. You name it and it's turned into a casino. How does any of that increase human wealth?
When you have to write propaganda about a thing that's long-term been identified as "bad," (with ample historical examples) actually being a good thing, you're being willfully dishonest and in denial. Many here will fight and bicker and kick and scream but Bitcoin is the only solution to the absolute ruin being dangled over the millenial and younger generations (primarily because it disconnects state/human control of…
i don't know about bitcoin but you do have a point about the current spin being put on high inflation. High inflation is universally known as bad for an economy.. until now for some reason.
When it starts to get really burdensome to keep your promises, the idea of breaking them gets really attractive. But that doesn't come for free. It costs credibility. The cost of central banks breaking their inflation-control commitment when inflation starts running hot, is that the market starts pricing in their unwillingness to raise interest rates. This fuels a whole bunch of other inflation feedback loops, and th…
Counterpoint: Stability is a critical optimization criteria, but should be balanced with the need to maintain "dynamism". New ideas can't win if any time the entrenched hit problems they are bailed out. Maintaining employment is necessary for long-term societal stability, maintaining Goldman Sachs is not. In recent years our definition of stability shifted to one where market winners remain winners indefinitely.
The reasoning for that seems inexorable to me. Once you lop off the deeply negative tail of any risk curve, market actors will gorge themselves on investments that have a positive average payoff but large systemic tail risks, to exactly the degree that they're confident they won't have to bear those costs.
(See the Canadian housing market where banks are happy to offer cheap mortgages with just 5% downpayments, a downpayment that represents mere months of price appreciation, knowing that they're government-insured in the event of a widespread market downturn).
This will continue until it stops being profitable, which is when the overall level of risk and leverage has increased to the point that even the government can't guarantee those risks anymore. So a small crash gets delayed but magnified into a big one. Long-term stability sacrificed to short term stability.
That's the cost of "moral hazard", which is a bad name because it sounds like a random risk that, if we're lucky, we might avoid. But it's actually another costly conserved quantity that accumulates and accumulates.