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Do central banks’ mounting losses actually matter?

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Re: Do central banks’ mounting losses actually matter?

#91

Post by barbariangrunge »

centralscam wrote: post #83

Central banking is the central planning of the availability and price of credit. Central planning of food production has created famines with no equal in history. Central planning of housing created those lovely soviet style "housing" block developments while the beautiful inner cities of eastern europe rotted away. Central planning of car production gave you cars like the Trabant which you literally had to queue 18…

Decentralized feudal lords caused the sen goku period in Japan and the warring states period in China.

Decentralized attempts to tackle climate change have resulted in run away global warming.

Decentralized negotiations led to companies exploiting workers, often to death, on a massive-scale during the industrial revolution and even today in many places.

That doesn’t say anything about whether centralization or decentralization will lead somewhere in general. There’s a lot of good and bad in both, it isn’t black and white

Re: Do central banks’ mounting losses actually matter?

#92

Post by throwaway384769 »

centralscam wrote: post #83

Central banking is the central planning of the availability and price of credit. Central planning of food production has created famines with no equal in history. Central planning of housing created those lovely soviet style "housing" block developments while the beautiful inner cities of eastern europe rotted away. Central planning of car production gave you cars like the Trabant which you literally had to queue 18…

Yeah and it's a pretty obvious vector for corruption, it gets a little too obviously lucrative to have orwellian constant waves of fabricated crises

Re: Do central banks’ mounting losses actually matter?

#93

Post by revolutukr »

luckylion wrote: post #25
lotharcable wrote: post #16

They don't go bankrupt in the conventional sense. When they go bankrupt economists like to use the term "Hyper Inflation". This means that the currency they produce becomes worthless.

Maybe you can explain it to me like I'm five. I've been occasionally watching the Turkish Lira this past year. The rates against the USD are still sinking. Against the EUR it's pretty stable. Yet allegedly they have something like 80-150% inflation in Turkey, while the EUR-zone has 10%. How does this work, why isn't the Lira becoming "worthless" with that amount of inflation?

No post body was provided.

Re: Do central banks’ mounting losses actually matter?

#94

Post by revolutukr »

miohtama wrote: post #58
smegsicle wrote: post #50

Earlier quoted context omitted.

the expectation is that if people assume that kind of inflation will continue, they would convert their wealth to another currency/form of wealth, and vendors would also prefer these other currencies, which would drive the inflation even further, right? so i also wonder what they're doing to curb the spiral

Here is a BBC article what has been done in the past to stop hyperinflation: https://www.bbc.com/news/business-45523636 The problem is that Erdogan is not doing any of this. His controversial politics are taking Turkey further down in the pit. Because Turkey’s political system is somehow broken, it is not clear if any election can replace Erdogan.

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Re: Do central banks’ mounting losses actually matter?

#95

Post by satellite2 »

centralscam wrote: post #83

Central banking is the central planning of the availability and price of credit. Central planning of food production has created famines with no equal in history. Central planning of housing created those lovely soviet style "housing" block developments while the beautiful inner cities of eastern europe rotted away. Central planning of car production gave you cars like the Trabant which you literally had to queue 18…

I'm not sure that's completely true. Banks are actually the main issuers of new money. The central banks are actually more of a banking lubricant I'm normal times. Obviously they can substitute from banks and make the credit conditions better. But they cannot really make them worse.

What's happening now is that most central bank have been stimulating the economy by lending at rates under the "natural" rate and they are now stopping.

Re: Do central banks’ mounting losses actually matter?

#96

Post by revolutukr »

rnk wrote: post #80
gdy wrote: post #60

Earlier quoted context omitted.

I'm Russian living in Russia and it feels like that since 2/24. Now almost 90% are concerned about the events in the Ukraine [0]. Personally, in February I was concerned about loss of lives, mostly Ukrainian, political repressions and Russian economy, today the economy looks okeyish, but with all the Western help to the Ukraine, it looks like it's only the question of time when Putin turns to tactical nukes. [0] http…

If he uses a nuke, even a small tactical nuke, nato and the US will respond with overwhelming conventional forces, destroying some significant Russian military assets. The world will be on a precipice of doom. I don't see how it will stop. Russia is too weak, their only response is more nukes, and then it's over for all of us.

[dead]

Re: Do central banks’ mounting losses actually matter?

#97

Post by arcticbull »

centralscam wrote: post #83

Central banking is the central planning of the availability and price of credit. Central planning of food production has created famines with no equal in history. Central planning of housing created those lovely soviet style "housing" block developments while the beautiful inner cities of eastern europe rotted away. Central planning of car production gave you cars like the Trabant which you literally had to queue 18…

> Central planning of food production has created famines with no equal in history.

The Farm Bill in the US (right now) centrally plans food, and subsidizes some crops to below the cost of production. Individuals in the US spend less of their paychecks on food than any other country in the world, and in fact, so much so, that 40% of food in the US is wasted each year and individuals still spend less than anyone else in the world on food. Central planning created a food surplus in the US with no equal in history. [1]

> Central planning of housing created those lovely soviet style "housing" block developments while the beautiful inner cities of eastern europe rotted away.

Central planning of housing in Singapore, the HDB, single-handedly changed the landscape of Singapore. 81% of Singaporeans live in HDB flats to this day. It is widely regarded as an overwhelming success. It transformed the city-state from, basically, slums to a modern metropolis in a few short decades. [2]

> Central planning of car production gave you cars like the Trabant which you literally had to queue 18 years for.

On the other hand, central planning gave Europe rail travel, while the same central planning of transit in America gave us traffic jams and the highest road mortality rate in any developed country.

For every example you have, I can find a counter-example. I don't even believe in half of these things but it's obvious that this discussion is far from black and white as you made it out to be.

[edit] And since we're on the topic of money, decentralized currency issuance in 1800s gave us wildcat banks that went under and took everyone's value with them. [3]

You get what you put in, and it's easy to ignore the successes while focusing solely on the failures. Any system, centralized or decentralized, can fail spectacularly and history is littered with examples of massive successes and massive failures of both.

[1] https://www.weforum.org/agenda/2016/12/this-map-shows-how-mu...

[2] https://thefield.asla.org/2018/09/06/from-slums-to-sky-garde...

[3] https://en.wikipedia.org/wiki/Wildcat_banking

Re: Do central banks’ mounting losses actually matter?

#98

Post by _kbh_ »

californical wrote: post #84
rnk wrote: post #80

Earlier quoted context omitted.

If he uses a nuke, even a small tactical nuke, nato and the US will respond with overwhelming conventional forces, destroying some significant Russian military assets. The world will be on a precipice of doom. I don't see how it will stop. Russia is too weak, their only response is more nukes, and then it's over for all of us.

NATO and the US will likely not respond if Putin uses a small nuke in Ukraine. There’s too much to lose. They’ll just let it happen, as they should. Which is obviously terrible and devastating for Ukrainians, but probably best for the rest of the world. Hopefully other Russian leaders are aware of the risk though, and would actively disobey Putin if he gave the call to use nukes

> NATO and the US will likely not respond if Putin uses a small nuke in Ukraine. There’s too much to lose. They’ll just let it happen, as they should. Which is obviously terrible and devastating for Ukrainians, but probably best for the rest of the world.

It's actually the opposite, everyone should be hoping that someone delivers a devastating strike against the Russians for using any size of nuke in Ukraine. Unless you want to live in a world where every country is actively trying to get nuclear weapons you should as well.

Any lacklustre response to a use of a nuke will lead to nuclear proliferation going wild as every country in the world looks to actively acquire nuclear weapons for defence.

Re: Do central banks’ mounting losses actually matter?

#99

Post by cm2187 »

hristov wrote: post #79

This is a little alarmist. At least for the US, there don't seem to be any losses because the FED just lets the assets roll off. I.e., it does not sell the treasuries on its balance sheet, it lets them mature and gets paid the principle back by the government. If you do that and you have not purchased treasuries at negative yields (which the fed has not), and the government does not default (thankfully it hasn't) the…

You can still lose money on the interest rate you pay to the massive reserves banks have to hold at the central bank when you jack up rates but hold fixed rate bonds.

Also in theory, if they really do unwind QE (which I think they will never do), they also hold all sort of long term treasuries and ABS that they would have to sell on the open market, ie too long dated to hold to maturity. And my guess is that those are where most of the losses are (most sensitive to interest rate).

Re: Do central banks’ mounting losses actually matter?

#100

Post by thaumasiotes »

dragonwriter wrote: post #69
rr888 wrote: post #64

Earlier quoted context omitted.

There is literally one definition of bankrupt, and hyper inflation has nothing to do with it. Plus, in general hyper inflation means people in debt get relief, its the lenders who lose the purchasing power of the money they lent.

> There is literally one definition of bankrupt There are at least two, the legal definition of “under administration under bankruptcy laws“, and the less formal but still common “insolvent”. With a representational commodity currency (e.g., silver certificates) rather than fiat currency, insolvency (the inability of the issuer to redeem outstanding currency at face value) is at least reasonably connected to the risk…

> OTOH, neither definition even applies to fiat currency issuers, who literally cannot be insolvent in their own currency, and usually aren’t subject to bankruptcy law.

They can find that they are unable to use their own currency to do anything. This is practically equivalent to being insolvent, even if you give it a different name.

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