341–350 of 518 posts
Yeah this doesn't make any sense. Housing price increases have far outpaced any increase in wages. If inflation continues to run hot, I expect housing will just get even more expensive especially as investors will be frantic to park their money in something that beats inflation.
Earlier quoted context omitted.
Yup. The kernel of truth behind Austrian theories of macroeconomics/the business cycle is that interest-rate based policy setting is inherently an unstable system. If the central bank makes policy errors that fail to stabilize the underlying target (whether inflation, nominal income, exchange rates, whatever) the whole system starts spiraling away from that unstable equilibrium point, and the subsequently needed corr…
No, they completely miss the point. The fundamental problem with money is that you can delay your spending indefinitively thereby breaking the concept of supply and demand. Imagine an economy where you are self sufficient and sell but never buy anything ( cough germany). You keep accumulating more and more money and you could in theory spend it all, thereby cause a huge amount of inflation. That is the core of the de…
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…
Yup. The kernel of truth behind Austrian theories of macroeconomics/the business cycle is that interest-rate based policy setting is inherently an unstable system. If the central bank makes policy errors that fail to stabilize the underlying target (whether inflation, nominal income, exchange rates, whatever) the whole system starts spiraling away from that unstable equilibrium point, and the subsequently needed corr…
Specifically, the emphasis on relative value seems correct, the emphasis on the importance of keeping pricing signals pure/unaffected by artificial monetary supply changes to effectively allocate resources seems correct, the argument that market incentives exist for keeping interest levels reasonable without centralization seem correct, and the argument that central banks are incentivized to mismanage monetary policy over time for political reasons seems correct.
The counter arguments against Austrian ideas that seem most compelling to me are that having non centralized currencies leads to financial inefficiencies that outweigh any benefits of having market determined interest rates because of exchange friction, and that a lack of planned inflation and adoption of more hard currency would mean the velocity of money would be low and cause the economy to lock up.
I’d be very interested in a book advocating the more traditional view in favor of central banking aimed specifically at Austrians and people like myself who find the Austrian arguments compelling.
If anyone here has more economic knowledge and thinks I mischaracterized the arguments I found compelling, garbled them, or misattributed them, please correct me.
Earlier quoted context omitted.
For #1, I want increase in value over time, but don't care much about volatitlity or ease of exchange. For #2, I want low volatility (both in value and it's first derivative). For #3, I want low volatitlity in value and logistical ease of exchange. So, for #1, I want a different thing than for #2 & #3, for which I might want the same thing, since the needs are, though not identical, at least overlapping. Productive i…
Congratulations, you created the Argentine Peso. You ended up in a debt crisis and had to hyperinflate your currency.
I’m pretty sure I didn't invent anything, you just picked a random currency that meets neither your implicit goals not my explicit ones, because it's convenient for a pre-canned argument you wanted to make.
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…
> 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. I'm pretty sure that's been priced in for quite a while now, really. Interest rates have rarely gone up by much over the last 30 or so years, and for most of the last 20 they've been as close to 0 as they can go and still be called…
I don't think this is the whole story. It passes through the finance industry, but when interest rates are low, everyone outside the finance industry (who is taking out loans) benefits as well. Interest rates are levers that the central bankers can use to control the amount of outflow through the dam that is the finance industry.
Inflation is the direct result of governments printing money like crazy to hide why they spend money like crazy and continue to be extremely inefficient and corrupt instead of cutting expenses and becoming more efficient and leaner. And it mainly affects the poorest in society. How can that be good?! Don't take my word for it: see what is happening in Argentina, Venezuela, Brazil, etc and then decide for yourself how…
Brazil has had its inflation under control (for Latin American standards, anyway) since the 90s, after the Plan Real. Also, Latin American runaway inflation is something that has been happening since the 60s, every measure under the sun has been tried to fix it, with only limited success in some cases. Anyway, it's a bit more complicated than "spending money like crazy and being corrupt".
Earlier quoted context omitted.
Hmm; all of those things are what I would associate with breaking the stability promise, that is, reneging on inflation control and holding interest rates low. That encourages borrowing and propels the price of assets. I'd expect your objection to be associated with growth at all costs , not with stability.
Stability in the current economic discourse implies growth at all costs due to the way that our monetary systems are organized. "If we didn't raise the debt limit our economy would collapse"; discourse on "countries must meet their growth targets" e.g.
And, you seem to think GDP is consumer goods, but GDP is what pays for social safety nets, healthcare, etc.
Earlier quoted context omitted.
So you go from saying what I claimed "isn't born out in the data" to saying there's no way of knowing when the effects kick in (though you do give some sense of timelines, which happen to line up pretty well with what is observed), to saying the effects we do see in the data (contradicting your first point) "can be explained by seasonality". Just sounds like you're making up whatever excuses you can to avoid giving c…
> So you go from saying what I claimed "isn't born out in the data" to saying there's no way of knowing when the effects kick in No, I didn't "go from" one of those criticisms to the other. I am making both of them. I am saying both of the following: (1) The variation in the data can be explained by things we already know happen: seasonality and new variants emerging. So there's no need to hypothesize an additional e…
You cannot argue both, and yet you continue to try. Nothing else in your comment follows, since this does not follow.
Earlier quoted context omitted.
We are pretty close to full employment. Rising groceries and fuel costs hurt everyone, but that hurt is more so on the poor who have less overall cash flow.
I remember gas hitting $4 during the Bush administration on the east coast when I was still in high school. Meanwhile I'm currently paying 4.50 at costco for Premium gas. Given recent inflation I think that we're actually paying less for gas than we did during the Iraq war.