441–450 of 550 posts
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> because it becomes impossible to service the debt Those companies should have made more responsible financial decisions.
When the money was free (near zero interest rates), borrowing money to invest in capital was imminently responsible.
It's funny how that is the view if a company does it, but not when an individual does it.
Print lotsa money, get lotsa inflation.
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Doesn't that practically mean the rich get richer and the poor stay poor? If it would be net 0 everything would stay the same?
Yes, if it were not for the inherent risk that comes with it. If you put the cash in your mattress you only face the risk of losing it due to it being stolen or when it burns. You can get insurance against that it this would need to be deducted as well. So effectively you are losing money. Now for money on your bank that pays interest it's not necessarily better. The bank can be robbed or simply go bankcrupt. And sin…
1) Banks are FDIC-insured, so unless the federal government goes under, my money can't be lost. If the US disappears, so does the dollar.
2) If people lose part of their money due to a policy like the one you propose, they won't "learn." You're asking ordinary people to be aware of things which are accessible to a fraction of a percent of the population. They'll assume banks are safe, and lose trust in "the system" if they're not.
3) Even so, I have no way of knowing what's going on at my bank. For all I know, the executives might be crooks embezzling money for the Italian mafia. We have organizations like the FBI, SEC, etc. since individuals can't investigate these things. I'd like to focus on my family and my job. That's why we've specialized.
The current approach for banking is better than free market. Personally, I think banking would best be nationalized, a la China. It's not an industry where efficient free markets do very well. That's true for health care and parts of real estate too. (And yes, there are other industries I would privatize much more, like education. This shouldn't be an ideological socialist versus free market argument, so much as looking at the extent to which free market assumptions apply to a given industry)
The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…
This is clearly an oversimplification because the crisis of 2008 was met with extreme money printing which did not cause a burst of inflation and was reeled in with relative ease as the economy restored itself. If money printing were the variable then it should cause inflation every time but it does not.
[0] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…
CPI has asset components, like housing. Central banks have one universal lever, and they use it. (This is by design, so it can be mostly independent.) The responsibility is on the fiscal side to spend it on shit that actually matters. Sending people money without means testing is dumb, but politics in this age is dumb. Unfortunately harping half-truths about central banking won't help with the situation :/ Your comme…
This is why we see talk from the Federal Reserve about how consumers will “feel pain” - the only way to reduce demand is to reduce employment or wages, to a level that the supply chain is capable of keeping up with. The Fed press conferences are really interesting to watch as they make this very clear - we are really looking at an “imbalance between supply and demand” due in part to all of economic, social, and political factors.
Also, regarding the CPI not reflecting asset prices: the CPI does not include any measure of equity prices, for instance. Since so many rely on equities to fund their retirement, an increase in equity prices is a meaningful inflation. If the price of the S&P 500 for instance is higher due to an asset bubble, it decreases my ability to purchase shares of it. The increase in equity prices we see is really inflation of equities, but never branded as such. We call it “return on investment”, because the people talking about it are mostly those who already own equities, not those looking to buy them. It’s the same reason as why homeowners dislike seeing home prices increase, while homebuyers enjoy it.
I’ll also mention that the CPI has a lot of other bunk practices in it. For instance, “hedonistic adjustment”. A (slightly conspiratorial) site called ShadowStats computes a modified CPI that uses older CPI methodology (before the meaning of inflation was redefined to show lower inflation) that currently sits at 17 or so percent.
The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…
This is clearly an oversimplification because the crisis of 2008 was met with extreme money printing which did not cause a burst of inflation and was reeled in with relative ease as the economy restored itself. If money printing were the variable then it should cause inflation every time but it does not.
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At this point the fed seems to be saying that those days are over, they will continue to increase rates until inflation hits 2%. Obviously this cannot go on forever because it becomes impossible to service the debt and you have to print money to pay it off. But it gives you more time and prevents hyper-inflation and we can hope that by then AI and other technological advances have made what we consider "economics" mo…
>we can hope that by then AI and other technological advances have made what we consider "economics" mostly irrelevant. Is there a serious hope that AGI will invent a replicator soon after coming online? It seems likeliest to me that if a greater-than-human intelligence comes online it won't have a circumvention for the laws of thermodynamics and there still won't be such a thing as a free lunch.
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The more currency flooding the economy, the less wealthy the rich people are. Inflation occurs because the owners need to remain wealthy, hence prices go up everywhere. If it were possible for the top few to do with a little less, prices wouldn't have to skyrocket.
> Inflation occurs because the owners need to remain wealthy, hence prices go up everywhere. The fun thing about HN is I hear all sorts of unique economic theories not found in any econ book. P.S. If the wealthy (or everyone else) needs more money, and just raising prices will work, why don't they do that anyway? The answer is Supply & Demand, it's the Law, and is in every econ textbook.
companies are constantly raising prices to hit the highest price point customers will tolerate. Normally, when prices get too high too quickly consumers eventually get sticker shock and start to feel ripped off so they stop buying the overpriced good (assuming they have the option), so companies lower prices by a very small amount and a new generation of consumers come into the world where the almost too high price is "normal" since it's all they've known and the whole process repeats and prices just climb and climb which is why everything when your great great grandmother was alive cost a nickle but today you pay using stacks of bills.
Right now though things are pretty messed up because every company had an excuse that let them jack prices up without customers blaming them. Companies said "Supply issues! Don't be mad at us! We're all in this together!" and consumers begrudgingly accepted excessively priced goods because "that's just how it is, extraordinary circumstances" and a generation of consumers now sees those excessive prices are normal. Some companies continue to limit supply, dragging their feet ramping production back up, because they're making money hand over fist and pulling in record profits while consumers are forced to scale back and watch their standard of living decline. Now companies are saying "Don't blame us, it's this damn inflation!" and since consumers are expecting it, they can continue to jack up prices while continuing to make money hand over fist. They don't ever want to lower prices and accept a little less so prices must continue to go up and up just like before, but now it's happening at a rate they couldn't have gotten away with previously.
Companies could accept making a little less profit and lower prices and inflation would drop. They don't want to though because for them greed is the whole of the law and anything less than higher profits and endless growth is failure. Consumers could help by refusing to buy the things they love and have spent their whole lives becoming accustomed to, but they're still traumatized from a global pandemic, they're desperate for normalcy and the goods they were forced to do without for 2+ years and in denial about the fact that their lifestyle is declining and things are only going to get worse.
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The one tech detail chosen is pretty relevant to the economic (as opposed to style) use-case here. Being able to carry a 4x8' sheet is the difference between a productive vehicle or not for a significant chunk of the contracting tradesman market. Sure, lots of users want trucks for other reasons where a short box does fine or a second row of seat is the winning feature regardless of box space, but the logic being app…
Learn to use straps, really easy to haul a 4x8' in a short bed. Noone wants a normal bed. They want a crew cab short bed. Supply and demand.
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I haven't dug into everything you are doing, but the biggest flaw I see seems to be that you assume Cash returns 0% nominal, i.e. that there is no return for holding cash. That is only true if you hide it under your mattress(and no deflation happens). Most people do not hide money under their mattress anymore, especially if they have large amounts of it. They put it in a bank account or in a MMF or some other interes…
Doesn't that practically mean the rich get richer and the poor stay poor? If it would be net 0 everything would stay the same?
The rich aren't rich through this route, although things they do mean that bank interest rates are a guaranteed return for people who are less risk-tolerant. They're rich through one or more of: risk-taking, talent, hard work, luck, connections, etc, all of which feed into the one thing that makes them money: usefulness to other people.