The anti-inflation pivot of 2022 • Hacker News Board

Re: The anti-inflation pivot of 2022

#131

Post by carlineng » Mon, Sep 19, 2022, 5:25 PM UTC

hef19898 wrote: post #20

disgruntledphd2 wrote: post #14

Earlier quoted context omitted.

He's not just a blogger: https://en.wikipedia.org/wiki/Adam_Tooze His books (particularly Crashed) are also really, really good.

Ok, so historian and author objects to current central bank policies. Not that much better...

I would categorize it differently. Rather than just objecting to their policy, he is describing a reason why current policies are suboptimal, and suggesting ways that current policies could be improved. Namely, that domestic central banks around the world don't coordinate policy with foreign central banks, despite the existence of major feedback loops between foreign and domestic policy. He hypothesizes that the world economy would be better off if there were more global coordination on monetary policy.

Re: The anti-inflation pivot of 2022

#132

Post by sleepdreamy » Mon, Sep 19, 2022, 5:27 PM UTC

myth_drannon wrote: post #88

ericmay wrote: post #44

Earlier quoted context omitted.

What effect will that have? If some Canadians go underwater on mortgages, won’t others who were priced out be able to afford now? I guess some will lose jobs but what’s the big downside from a country perspective with having cheaper housing? Or are you concerned about immediate effects?

It's not only about being underwater on mortgages, but having your morgtage payment double (and maybe tripling soon...). Reddit is full of panicking homeowners who are starting to straggle with payments. This will have a wide effect on the whole economy because any discretionary spending will evaporate.

The allure of home ownership in America is the fixed mortgage rate among other things. (Rent goes up each year, without question).

I purchased a home at the start of this mess with an 2.6%. Right now it's hovering around 6%. I would say I MASSIVELY lucked out.

Does Canada not fix the rate? I am confused -

Re: The anti-inflation pivot of 2022

#133

Post by hef19898 » Mon, Sep 19, 2022, 5:32 PM UTC

carlineng wrote: post #131

hef19898 wrote: post #20

Earlier quoted context omitted.

Ok, so historian and author objects to current central bank policies. Not that much better...

I would categorize it differently. Rather than just objecting to their policy, he is describing a reason why current policies are suboptimal, and suggesting ways that current policies could be improved. Namely, that domestic central banks around the world don't coordinate policy with foreign central banks, despite the existence of major feedback loops between foreign and domestic policy. He hypothesizes that the worl…

And we all saw hoe that approach, in a much more contected system for sure, worked during the Euro crisis. Funny how we survived this and the EU isn't a ruined shambles.

We just ruined average peoples lives in the southern part, especially Greece, in order to save the big banks.

Re: The anti-inflation pivot of 2022

#134

Post by Analemma_ » Mon, Sep 19, 2022, 5:33 PM UTC

kansface wrote: post #108

visiblink wrote: post #103

Earlier quoted context omitted.

Canadian mortgages have separate amortization periods (say 20 or 25 years for example) and interest rate terms (generally 1-5 years, after which the rate has to be renegotiated -- and you have the option of transferring the mortgage to another lender at that time). You can also let your rate float with the market, which is called a variable rate mortgage.

Interesting. Do you know why mortgages in Canada are so different from the US? They seem much more risky on the buyer’s side.

Nobody but the United States has long-term fixed rate mortgages: they're horrible for lenders because the lender has to assume all interest rate risk. The reason they exist in the US is because the government acts as a backstop due to pro-homeownership politics, but it causes a bunch of market distortions that are made invisible to American borrowers.

Re: The anti-inflation pivot of 2022

#135

Post by mistrial9 » Mon, Sep 19, 2022, 5:34 PM UTC

A4ET8a8uTh0 wrote: post #61

nie100sowny wrote: post #34

> A generation of young people whose education was blighted by COVID lockdowns, will face a closed labour market. But shortly after, when all inefficient companies bankrupt, they'll wake up in the booming economy, finding places in perspective businesses. Crisis is good for the economy in the long term. I only worry that governments won't allow young trees to grow after the forest's fire.

Eh. It sounds great in theory, but in practice ( including in US, where all the more recent crises shown ) inefficient companies get saved if they are sufficiently connected or 'important' enough to the system writ large. I am not defending the practice, but I want to point to obvious flaw in the analysis since it diverges from reality somewhat ( I just noticed the inclusion of government involvement ).

the War economies are related to this phenomenon of massive, inefficient companies getting new contracts and new cash; similar to Old World central contract awards connected to long-term govt cash flows, I believe..

Re: The anti-inflation pivot of 2022

#136

Post by bryanlarsen » Mon, Sep 19, 2022, 5:35 PM UTC

spywaregorilla wrote: post #123

nus07 wrote: post #107

Earlier quoted context omitted.

How does India do in all this? Their software development salaries in tier 1 cities are close to 100k or more. Lots of friends going back .

Pretty poorly on food security. Energy situation won't be great. I would expect india to supplant China as the bogeyman over the next few decades

Wouldn't that be great? America can't seem to function without a bogeyman. The world would be so much a better place if the bogeyman was a democracy like India instead of China or Russia. Shift that Overton window!

Re: The anti-inflation pivot of 2022

#137

Post by thaumasiotes » Mon, Sep 19, 2022, 5:37 PM UTC

carlmr wrote: post #122

thaumasiotes wrote: post #119

Earlier quoted context omitted.

The mathematicians don't need any more food than they did before the new kind of math was discovered. Why would you count that as job creation?

The single mathematician no, but a new field would lead to the creation of a new building with new people at some point.

Every one of the people in that building needs the same amount of food they did before they moved in.

Re: The anti-inflation pivot of 2022

#138

Post by groby_b » Mon, Sep 19, 2022, 5:39 PM UTC

spookthesunset wrote: post #120

groby_b wrote: post #111

Earlier quoted context omitted.

... assuming there are no further variants, and hand-waving long covid away, sure, it's settled. I think we'll find that just like reports of Mark Twain's death, rumors of the end of the pandemic are greatly exaggerated.

> rumors of the end of the pandemic are greatly exaggerated. Only if people are stupid enough to repeat the last two years of nonsense. Take away all the fear mongering and testing and you probably wouldn't even notice covid was a thing. You'd get sick like you always do and just shrug it off as "that thing that was going around" like we all did in 2019...

It is the (#2/#3/#4 depending on study) leading cause of death. We're currently at around ~150K dead/year - about 5 times the average rate of flu, about 3 times a really bad flu year.

It has significantly affected workforce participation, with a large disability burden.

You'd notice. Unless you're somewhat dense.

Re: The anti-inflation pivot of 2022

#139

Post by PKop » Mon, Sep 19, 2022, 5:39 PM UTC

WalterBright wrote: post #130

spywaregorilla wrote: post #30

I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…

Central economic planning still doesn't work.

Neither does no planning and complete decentralization (no national industrial policy, no trade barriers, letting important supply chains move out of your control or even into the borders of your adversaries).

Re: The anti-inflation pivot of 2022

#140

Post by tootie » Mon, Sep 19, 2022, 5:43 PM UTC

mjburgess wrote: post #7

This article appears to take place in a universe where interest rates at central banks are at counter-inflationary levels. They've been inflationary for a decade, and continue to be so. With inflation at 10%, fears about "going too far with interest rates" make sense only *at least* north of 5%, and realistically, 8%.

It also takes place in a universe where policy making ended in 2022. Fiscal contraction is happening because we just recovered from historic fiscal expansion due to the pandemic. Contraction will continue so long as growth continues. If we slide into recession and inflationary pressure ebbs, we'll just reverse course again.

Honestly, I know cynicism and despondency are in vogue right now but the last 20 years have shown global policy makers are doing an absolutely outstanding job. Fiat currency and Keynesian orthodoxy have been vindicated at every turn. Obviously not everything has gone perfect but considering the amount of disasters faced, we've suffered far less than in the past.