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Do central banks’ mounting losses actually matter?

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Re: Do central banks’ mounting losses actually matter?

#211

Post by ElevenLathe »

roenxi wrote: post #126
spaceman_2020 wrote: post #120

Earlier quoted context omitted.

Modern monetary theory is so complex and jargon-filled that the only way lay people can understand it is through conspiracy theories. Conspiracies offer succinct one-paragraph explanations (usually ready-fit for the group's biases) for extremely complex processes. In a way, it's like climate change. Extremely complex and hard to model, which invariably attracts conspiracy thinkers ready to whip it down into digestibl…

"lay people": It looks a lot like you're printing money and handing it out to your wealthy buddies. "experts": This matter is too complex and jargon-filled for you to take part in the debate. "lay people": Explain again why we have an institution that alternates between handouts to asset owners and crashing the economy? I think prices going up exponentially with time might be bad for my welfare! "experts": Those craz…

Liberal economics (i.e. the only kind presently understood when you say "economics") wants to have it both ways:

1) The world economy is too complex to be understood fully, so its best to be hands-off and let markets regulate it. Also:

2) The market is no good at regulating the world economy so we have to set up central banks, staff them with personnel from the finance industry, and give them extraordinary powers to create and destroy money and other government-backed securities. We also HAVE to let them do whatever they want with those powers, free from political pressure, since only then can they freely apply their perfect scientific knowledge of economics (which involves math now, so laypeople can't understand it without taking off their shoes) to the task of selflessly minimizing unemployment (or maybe keeping inflation down, they get to pick which) and therefore making everyone richer.

Re: Do central banks’ mounting losses actually matter?

#212

Post by boring_twenties »

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

I doubt they would let it happen as it's the worst of all options -- it guarantees more and more nuclear blackmail in the immediate future, not least from Putin himself.

Re: Do central banks’ mounting losses actually matter?

#213

Post by omgomgomgomg »

doubleunplussed wrote: post #110

This thread shows a phenomenon that I've noticed a lot of lately: that many smart people turn absolutely loopy when it comes to the topic of central banking. There's nothing quite like it, and I'm not sure how to explain it. The topic seems to make conspiracy theorists out of otherwise very reasonable people. Good to see the highest voted comments are sane, but the sanity ratio is pretty low compared to other topics.

You cannot really blame them, it is natural to question absolute authorities and centralised power.

And indeed, this is a place for tech people and devs who cant be experts in economy and banking.

I worked in banks as well as dev, the banks are doing dirty things under a legal umbrella, dont think of them as saints, all the wealth they have came from somewhere.

Now, a central bank, I am fine with that, it is important to keep the economy stable. They cannot always please everyone and they need to be politically independent, or not influenced. The politians understand that, most of the voter s do not. Imagine if every john doe had a say on a central banks SOPs

Re: Do central banks’ mounting losses actually matter?

#214

Post by danielmarkbruce »

imtringued wrote: post #85
danielmarkbruce wrote: post #45

Earlier quoted context omitted.

Treasuries, back from the central bank, or all manner of assets from other banks. It's done every day.

People don't pay their groceries with treasuries. This is getting circular. Commercial banks sell their treasuries to buy other treasuries? Really?? And where is the money to buy groceries and cause inflation supposed to come from? Come on the answer is so simple you don't need to act stupid. Commercial banks issue deposits against the treasuries and buy more treasuries which they then sell to gain reserves which the…

I didn't mention inflation.

It's unclear what the point of this comment is. As mentioned, banks use their central bank account balance for more than just buying/selling treasuries. It's used to settle payments between banks for example.

Banks don't tend to buy groceries, but if they did they wouldn't use a treasury as a form of payment. They could use a central bank balance though, if you think about the payment system (US).

Re: Do central banks’ mounting losses actually matter?

#215

Post by scottiebarnes »

freddybobs wrote: post #195
jteppinette wrote: post #185

Earlier quoted context omitted.

> it is extremely clear to me that some kind of control of the money supply is necessary, otherwise you get depressions I disagree, and I will attempt to explain myself clearly. Artificially modifying the money supply or interest rates (cost of money) breaks the market’s ability to self-regulate. Artificially low interest rates and money creation leads to an artificial boom period. This pushes investment into areas w…

> "the market’s ability to self-regulate" The market is artificial. For an example it it operates (largely) within constraints that are external - laws. Modifying the money supply is a lever that can be used to achieve goals - such as a desired inflation rate. Whether its a good idea or when and how is the appropriate way to use it is another question. Implying it is bad because it is "artificial" begs the question o…

> The market is clearly not natural.

OP probably meant "more free-market / laissez faire" vs "less free-market / centrally planned".

Re: Do central banks’ mounting losses actually matter?

#216

Post by orwin »

jteppinette wrote: post #201
freddybobs wrote: post #195

Earlier quoted context omitted.

> "the market’s ability to self-regulate" The market is artificial. For an example it it operates (largely) within constraints that are external - laws. Modifying the money supply is a lever that can be used to achieve goals - such as a desired inflation rate. Whether its a good idea or when and how is the appropriate way to use it is another question. Implying it is bad because it is "artificial" begs the question o…

When discussing price, supply and demand is a natural way to reach the most efficient answer. Alternatively, price fixing, results in market failure.

This isn't really true in the real world, but even if it were, here GP is talking about limiting supply and not price fixing.

Re: Do central banks’ mounting losses actually matter?

#217

Post by tomputer »

DemeterFarm wrote: post #206
doubleunplussed wrote: post #155

Earlier quoted context omitted.

Well, let's have a scroll... This one: https://news.ycombinator.com/item?id=33156617 No, the fed having negative equity doesn't stop them controlling the money supply. Unless like, they've literally sold all their assets and there's still too much money left in the system, but that's so far away from being a possibility that it's not worth considering. And even if it did happen, there would be options. Here we've got…

>Even though I've got plenty yet to learn, it is extremely clear to me that some kind of control of the money supply is necessary... So, you have no idea what you are talking about but you FEEL like you do? Bitcoin (now called Bitcoin Cash) has been working as cash perfectly for over 10 years with no central control necessary.

> Bitcoin (now called Bitcoin Cash)

Wrong.

Bitcoin Cash (BCH) is a fork of Bitcoin (BTC). Bitcoin Cash is a spin-off or altcoin that was created in 2017.

Re: Do central banks’ mounting losses actually matter?

#218

Post by caeril »

doubleunplussed wrote: post #110

This thread shows a phenomenon that I've noticed a lot of lately: that many smart people turn absolutely loopy when it comes to the topic of central banking. There's nothing quite like it, and I'm not sure how to explain it. The topic seems to make conspiracy theorists out of otherwise very reasonable people. Good to see the highest voted comments are sane, but the sanity ratio is pretty low compared to other topics.

For me, two things, neither of which is a conspiracy theory:

1. It's communism, for money. We live in a society in which prices for nearly everything: food, housing, laptops, etc, are all set my supply/demand equilibrium. The market finds a clearing price, and we pay it. We accept it, and we use a bit of regulation to handle edge cases in which market forces cause externalities and distortions. It works. But for some reason, we've decided that the price of money itself should be decided by a small Politburo. Why?

2. They're always wrong. Not only does the Politburo set the price of money independent of market forces, but they are incompetent. Dot plots one year off are consistently, and embarrassingly, wrong. Comments about "froth" during an obvious housing market collapse, or "transitory" to describe persistent, and growing inflation. These are 140 IQ people who have access to the best, and most timely economic data on the planet, but they are still dumber than the 94 IQ purchasing manager of a small feed supply company who knows within 5 seconds of glancing at corn harvest and transportation KPIs that there won't be anything even remotely "transitory" about inflation.

It's bad enough having a Politburo dictate prices to us, but it's a whole other matter when the mantle adopted by these tinpot Philosopher Kings turns out to be nothing more than gross, and consistent, incompetence.

My primary objection to central banking is that their existence is an affront to freedom, and that they are catastrophically bad at their jobs.

You don't need New World Order conspiracies hatched in the woods wearing gargoyle masks and conducting Satanic rituals to know that this is a terrible idea.

Re: Do central banks’ mounting losses actually matter?

#219

Post by gilbetron »

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

If setting off a nuke goes unanswered, Putin will not stop at one. Europe knows that, China knows that, the US knows that, the whole world knows that.

Re: Do central banks’ mounting losses actually matter?

#220

Post by lxgr »

kodyo wrote: post #65
lxgr wrote: post #49

Earlier quoted context omitted.

The currency can become worthless, sure, but that does not make the central bank bankrupt. The concept simply does not make sense for a (fiat) currency‘s issuer.

When the state can no longer function because it has allowed its currency to be debased, who gives a shit if the central bank is solvent or not? It’s worse than bankrupt, it’s irrelevant.

Sure, but arguably that‘s a bit like claiming that your house plant got a heart attack, i.e. can die – but not like that.
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