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What if your entire worldview was just because of near-zero interest rates?

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Re: What if your entire worldview was just because of near-zero interest rates?

#341

Post by JamesBarney »

miguelazo wrote: post #111
rayiner wrote: post #73

I suspect near-zero interest rates for a decade also contributed to the political realignment of affluent suburbs trending Democrat. So long as the Fed would buy federal debt cheaply and there was no significant inflation, Democrats could advocate multi-trillion social programs while promising to maintain Reagan-era tax rates on even quite affluent folks.

What multi-trillion dollar social programs? What country are you talking about— I want to live there, sounds a lot better than the pittance we have in the US. Unless you think the Defense Department is a social program.

Social security + Medicaid + Medicare is in the trillions.

Re: What if your entire worldview was just because of near-zero interest rates?

#342

Post by notahacker »

boppo1 wrote: post #320
notahacker wrote: post #311

Earlier quoted context omitted.

It'd just be a considerably less stable equilibrium than the one we have now. It's not like treasuries and dollar reserves a central bank put into circulation before a certain date are natural things emerging out of a market demand and the ones after they put into circulation after a certain date are "interference". There is a market for credit and a dependency of that market on artificial things called dollars the F…

The market for treasuries would exist exist without theed, since they're issued by the treasury. Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate? I'm familiar with the argument that people would theoretically hoard deflationary currency, I'd counter that people will always spend to eat and purchase shelter. Calling shots like…

> The market for treasuries would exist exist without theed, since they're issued by the treasury

The market to exchange dollars for treasuries would not exist without dollars. Since we've established that it was OK for the Fed to "interfere" to create dollars in the past, it seems absurd to pretend that doing so if future is somehow different.

> Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate?

Because that's even more arbitrary (it's still the Fed creating the monetary base, they're just delinking it monetary base from credit demand and ignoring the effects of the quantity of money on the economy)

People aren't going to invest deflationary currency in productive enterprises to purchase food and shelter. They're not just going to invest it (and the rich don't need to spend very much of their wealth on food and shelter). Guess the proles will have to work harder for lower wages to make up for it. You think it's bad now....

Re: What if your entire worldview was just because of near-zero interest rates?

#343

Post by smitty1e »

thebradbain wrote: post #333
smitty1e wrote: post #317

Earlier quoted context omitted.

Great thoughts, but you invite the question: should techies like the readers of this site attempt to offer a more coherent system? People seem to scale poorly, and the US government needs reform. What to do?

Eliminate the amount of people. Unrealistic, but I think the US should get rid of state governments and only have a federal and county governments. Municipal governments can still exist, but really only in regards to city planning and infrastructure decisions. Issues like schools, police, social, the environment should really be consolidated at the county level anyways. Barring that, I think the current system is def…

> US should get rid of state governments and only have a federal and county governments.

That would be one approach. However, back to my point on the unscalability of people, I'd argue going the other way, and pushing the (arguably scope-creep) functions that the federal government has assigned itself back to the states.

Re: What if your entire worldview was just because of near-zero interest rates?

#344

Post by LarsDu88 »

huijzer wrote: post #237
LarsDu88 wrote: post #175

The folks reading this are going to get the wrong message. They are going to believe that rising interest rates will magically make it so that the most highly valued companies are the ones that produce the most societal good. This may start to happen more to a certain extent, but it's a totally false assumption. The most valuable companies before and after this era of low interest rates were and continue to be monopo…

> That's what Warren Buffet invests in (Davita Dialysis, Exxon, Apple, rail lines ---> all monopolies). That's what Peter Thiel tries to invest in (Zero to One). That's what successful Y Combinator companies ultimately strive to become. Buffett invests in companies with a durable competitive advantage which is also often called a "moat". A monopoly is a situation where there is no competition. As a counterexample, al…

Brands/Companies that Coca-Cola owns: - Sprite - Fanta - Dasani - Powerade - smartwater - Minute Maid - Fuze Tea - schweppes - Simply - Honest - innocent - fairlife - Georgia Coffee - Costa Coffee - Topo Chico - Aquarius - AdeS - Fresca - Barq's - Dogadan - Peace Tea

The list goes on. Anti-trust makes it virtually impossible to actually have a real "monopoly". Coca Cola lives in duopoly with Pepsi and other major beverage conglomerates, but the idea is the same. Having a "moat" is no different from having a monopoly. New players get in the soft drink game with the goal to get acquired down the road, no different from silicon valley startups burning money to get acquired by Google or Amazon.

Re: What if your entire worldview was just because of near-zero interest rates?

#345

Post by LarsDu88 »

huijzer wrote: post #237
LarsDu88 wrote: post #175

The folks reading this are going to get the wrong message. They are going to believe that rising interest rates will magically make it so that the most highly valued companies are the ones that produce the most societal good. This may start to happen more to a certain extent, but it's a totally false assumption. The most valuable companies before and after this era of low interest rates were and continue to be monopo…

> That's what Warren Buffet invests in (Davita Dialysis, Exxon, Apple, rail lines ---> all monopolies). That's what Peter Thiel tries to invest in (Zero to One). That's what successful Y Combinator companies ultimately strive to become. Buffett invests in companies with a durable competitive advantage which is also often called a "moat". A monopoly is a situation where there is no competition. As a counterexample, al…

> the companies with the highest valuations are those which make the most money

In a perfect competition landscape, the net profit of players goes to effectively near zero. It doesn't matter if you're making sweaters or jet engines, this virtually a law of economics. The companies which have the highest valuations are those which make the most money (by eliminating competition).

Re: What if your entire worldview was just because of near-zero interest rates?

#346

Post by huijzer »

LarsDu88 wrote: post #344
huijzer wrote: post #237

Earlier quoted context omitted.

> That's what Warren Buffet invests in (Davita Dialysis, Exxon, Apple, rail lines ---> all monopolies). That's what Peter Thiel tries to invest in (Zero to One). That's what successful Y Combinator companies ultimately strive to become. Buffett invests in companies with a durable competitive advantage which is also often called a "moat". A monopoly is a situation where there is no competition. As a counterexample, al…

Brands/Companies that Coca-Cola owns: - Sprite - Fanta - Dasani - Powerade - smartwater - Minute Maid - Fuze Tea - schweppes - Simply - Honest - innocent - fairlife - Georgia Coffee - Costa Coffee - Topo Chico - Aquarius - AdeS - Fresca - Barq's - Dogadan - Peace Tea The list goes on. Anti-trust makes it virtually impossible to actually have a real "monopoly". Coca Cola lives in duopoly with Pepsi and other major bev…

A moat is really not a monopoly per se. Major laptop manufacturers all have a durable competitive advantage due to their brand name and economies of scale, but they are all not monopolies. Porsche is also another example. You could argue that any company with a moat is a something-poly but then why even mention the poly and not talk about a moat instead.

Re: What if your entire worldview was just because of near-zero interest rates?

#347

Post by BeetleB »

rayiner wrote: post #282
BeetleB wrote: post #97

Earlier quoted context omitted.

It will be well beyond our lifetime when the US gets comparable to Europe in terms of population density. Bangladesh levels are way far away and there are good reasons to believe that the US can keep increasing their population via immigration and never achieve Bangladesh levels of density. For anyone not following, Bangladesh has the highest population density in the world once you exclude city states. This is a cla…

I’m not making a point about population density, but rather changing culture and reducing social trust. Immigrants make their new country more like their home country: https://www.sup.org/books/title/?id=35594

> Immigrants make their new country more like their home country

This is a more refined concern than "While slowly turning the country into Bangladesh."

There's no reason to believe that Bangladesh will dominate the influx.

We're talking changes in immigration policy to make up for a domestic population decline. It would be naive to think that the only change would be "Let's just take more people without constraints." The US has in the past put restrictions on who can immigrate, and continues to have restrictions (whatever moral judgement is attached to them is left for the reader). You can restrict the countries they come from. You can restrict the education levels. You can restrict the number entering. You can restrict how long they need to be here before they can vote. And so on.

Moreover, maintaining the current US culture is not entirely desirable. It has its good points and its bad points, but in general, a lack of change tends to become a regression rather than improvement. Many of my friends from different countries emigrated to Canada in their teens or early twenties, and I visit the country often. It's clearly benefited from the mix of cultures that came in. The US really doesn't deserve the image of a "melting pot". Do they occasionally have problems related to the various cultures that come in? Sure. Is Canada still better off? Definitely.

Also, more people coming from Bangladesh can't be all bad. At the very least it will supply interesting folks on HN to have discussions with ;-)

Re: What if your entire worldview was just because of near-zero interest rates?

#348

Post by miguelazo »

areyousure wrote: post #332
miguelazo wrote: post #111

Earlier quoted context omitted.

What multi-trillion dollar social programs? What country are you talking about— I want to live there, sounds a lot better than the pittance we have in the US. Unless you think the Defense Department is a social program.

The reference is possibly to the Green New Deal or to Build Back Better. Both probably qualify as "multi-trillion social programs", but perhaps the former fits the description better.

I wouldn’t call either of those social programs. They’re mostly subsidies for industry, with ancillary tax benefits for the rich and upper middle class. Also hardly “multi-trillion”. After reading the article in full, I assume they were alluding to the PPP and direct stimulus payments to taxpayers that suffered some fraud. Even the 25% fraud cited seems minor, but it certainly could have been administered a lot better. I agree that public investment in long term endeavors has been abysmal, but that trend started in the 70s with Carter. What all this is ultimately about is neoliberalism. Using the state via the Fed to further enrich the rich is the final end of that ideology, and it has been very successful at that.

Re: What if your entire worldview was just because of near-zero interest rates?

#349

Post by bagels »

orev wrote: post #308
bagels wrote: post #250

Earlier quoted context omitted.

I completely agree with this. COVID + everyone refusing to go back to the office means nobody needs to be in a specific place anymore. I've changed my hiring strategy to cultivate talent elsewhere and pay 1/3 of what is paid in the US.

This is the common logic since outsourcing was invented decades ago. Everyone eventually gets hit with the reality that large time zone and cultural differences lead to so much overhead on project management, not getting what you actually asked for, creative ways to game the metrics, and huge rework/bug fixes, that the 2/3 you saved gets eaten up by dealing with all of that, and anything leftover doesn’t pay for the…

It's possible the experiment fails. The gap has narrowed significantly though since everyone is remote.

Re: What if your entire worldview was just because of near-zero interest rates?

#350

Post by miguelazo »

JamesBarney wrote: post #341
miguelazo wrote: post #111

Earlier quoted context omitted.

What multi-trillion dollar social programs? What country are you talking about— I want to live there, sounds a lot better than the pittance we have in the US. Unless you think the Defense Department is a social program.

Social security + Medicaid + Medicare is in the trillions.

Those are not new and would be part of the long term public investment the article states has been lacking. You can’t have a productive economy when old people are indigent and have to be cared for entirely by their working age relatives. And Medicaid is a subsidy for industry that doesn’t compensate its workers sufficiently with adequate healthcare benefits.
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