Earlier quoted context omitted.
Don't forget the debtors that aren't the government, the vast majority of the population. The dollar has been absurdly overvalued for a long time, destroying our exports and causing us to import excessively, leading to trade deficits and more debt. Not that savers won't be hurt unfairly, but they will be hurt even more by the accumulation of capacity loss caused by the lost potential output of austerity philosophies.…
Please provide evidence for overvaluation of the USD.
Devaluation is austerity done right
51–60 of 62 posts
Re: Devaluation is austerity done right
#52Earlier quoted context omitted.
> it is basically a transfer of value from those with savings/creditors to those in debt So it's a transfer from the rich to the poor. It looks just right.
You say that as though it's a moral argument independent of other factors. Do you really believe that to be the case? If so, why should you disregard other factors like why people got into debt in the first place or how much savers had to sacrifice in their own lives to achieve their savings?
> You say that as though it's a moral argument independent of other factors.
No, actually it's the fruit of some thinking the structure of our ageing western societies, and the fact that the most egalitarian societies are the happiest.
> Do you really believe that to be the case?
More than ever.
> If so, why should you disregard other factors like why people got into debt in the first place or how much savers had to sacrifice in their own lives to achieve their savings?
You know, I'm part of the 0.1% richest people on this planet (and you too, I suppose). However, I don't like to comfort myself thinking that I worked hard and deserved it, because I'm perfectly conscious that I never did work that hard (like digging shit in some hole) and I didn't really deserve it because my parents, and their parents before were doing pretty well already. I was lifted with the flow and not much else.
It's pretty easy to be under the illusion that as you didn't need that much effort to be what you are, whoever is below you must be a lazy ass, or stupid as a brick. Most of the time, however, they were just less lucky (OK they may be less gifted, or less intelligent, but that shouldn't make anyone deserving a lesser part of it all).
I've heard this song before of "lazy poor" and "hard working risk taking rich", about 1 billion times, and it always comes from people who had it easy. I don't really feel like beating this old horse more.
Re: Devaluation is austerity done right
#53Earlier quoted context omitted.
The problem with that story is that it completely ignores what has actually happened since Glass-Steagal was repealed and the bubble burst. This isn't a simple case of ants and grasshoppers. The current economic problem is a lack of aggregate demand. Too many people are cutting their spending to pay down their debts, which cuts economic activity, which puts more people out of work contributing to the lack of demand,…
> The current economic problem is a lack of aggregate demand. This just half-gelled a different viewpoint for me. There's nothing inherently noble about saving, because the demand doesn't vanish—that money still represents a claim on some fraction of society's resources, only they plan to consume in the future rather than now. Well, we have to align both present and future supply and demand. We can't have everyone ex…
> "We can't have everyone expecting to consume all their resources in the future, because then we're wasting our capacity to produce resources in the present."
Very true.
That said, there is something inherently noble about saving. Life is unpredictable and retaining your ability to weather some reasonable fraction of bad times on your own is the most base expression of a person's ability to contribute positively to a cooperative society.
If someone can't save to a reasonable degree, they simply can't be trusted to engage society in good faith. To vote responsibly, to participate without causing undue costs on everyone else, etc.
This isn't to say that more savings is equivalent to more nobility. Nor anything like that. But there is a reasonable level of saving that, when the drive isn't present, is of very real social concern and should not be allowed to pass as a neutral behavior.
To clarify: this isn't to say that low net savings at some given point is a fault. Again, life is unpredictable and a bad hand may have been dealt early in the game, or a string of bad hands beyond any reasonable expectation. It's the desire and effort and discipline expended toward (re)building that reasonable level of savings that society should incent and recognize as noble and good.
Re: Devaluation is austerity done right
#54Earlier quoted context omitted.
You say that as though it's a moral argument independent of other factors. Do you really believe that to be the case? If so, why should you disregard other factors like why people got into debt in the first place or how much savers had to sacrifice in their own lives to achieve their savings?
> You say that as though it's a moral argument independent of other factors. No, actually it's the fruit of some thinking the structure of our ageing western societies, and the fact that the most egalitarian societies are the happiest. > Do you really believe that to be the case? More than ever. > If so, why should you disregard other factors like why people got into debt in the first place or how much savers had to…
I'm not interested in the same old argument either. If you don't consider that hard work or decision-making abilities at least factor into the subsequent states of existence in which people find themselves, what good would data points or arguments be? You have a set of experiences or mental filters completely contrary to my own experiences and understanding of how this society works. Go figure.
It's like when I used to discuss religion with my mother-in-law. When she first declared "There isn't a single error in the Lord's Bible", I really should have just smiled and walked away. Anyone who had lived 55 years on the planet and not absorbed the fact that the earth is demonstrably and astoundingly older than 6,000 years wasn't going to be listening to the rest of my so-called "logic".
I'm still curious when I see people express opinions like yours, though.
With all those preconceptions, what kind of affinity would you have with a site like Hacker News that glorifies the success of the entrepreneur? Are you just observing us in preparation for an invasion? :)
Re: Devaluation is austerity done right
#55Earlier quoted context omitted.
> You say that as though it's a moral argument independent of other factors. No, actually it's the fruit of some thinking the structure of our ageing western societies, and the fact that the most egalitarian societies are the happiest. > Do you really believe that to be the case? More than ever. > If so, why should you disregard other factors like why people got into debt in the first place or how much savers had to…
I'm not interested in the same old argument either. If you don't consider that hard work or decision-making abilities at least factor into the subsequent states of existence in which people find themselves, what good would data points or arguments be? You have a set of experiences or mental filters completely contrary to my own experiences and understanding of how this society works. Go figure. It's like when I used…
> If you don't consider that hard work or decision-making abilities at least factor into the subsequent states of existence in which people find themselves, what good would data points or arguments be?
Hard work and good decisions are important of course. But there are good "data points" showing that people struggling with difficulties can't make good decisions. And to do hard work, you need to have an environment that allows it; for instance think about these American travellers of the 19th century shocked by Japanese laziness: we quite well know now that Japanese are hardly lazy, but in the 1840 there was simply nothing effective to do. At the individual level, hard work and good decisions matter; at the society level, not that much.
> I'm still curious when I see people express opinions like yours, though.
I find less surprising that people express such opinion as yours, because they usually attribute their own feelings a bit too literally onto others.
> With all those preconceptions, what kind of affinity would you have with a site like Hacker News that glorifies the success of the entrepreneur?
I'm a successful enough entrepreneur (depends upon your metrics of course). And I'll keep my misconceptions rather than John Galt's, if you don't mind.
Re: Devaluation is austerity done right
#56What people dont understand specially the ones that are against all inflation is this: There is natural and artefical inflation and deflation. You get for example natural inflation when you have supplyshocks (If somebody blow up intel CPUs would be more expensiv) you get artefical inflation when you print money. The first is just the market reacting to 'something'. The same goes for deflation, you have natural (good)…
When central banks target inflation (say 2%) and the economy is growing around 2% (thus 2% deflation) they acctully produce 4% inflation in nominal terms.
You're mixing up two different notions of inflation here.
There is the old-fashioned definition of inflation which calls any expansion of the "money supply" inflation. (With "money supply" in scare quotes because it's a pretty arbitrary concept, considering the multitude of very different definitions that exist.)
Then there is the modern definition of inflation, which is simply a different word for aggregate changes in the price level.
Those two notions of inflation are only superficially linked, and arguably, the modern definition makes more sense because it is what people are really interested in outside of economics.
On the topic of NGDP targeting, the blog Unlearning Economics has two enlightening posts: http://unlearningeconomics.wordpress.com/2012/05/08/on-the-l... http://unlearningeconomics.wordpress.com/2012/05/12/more-on-...
Re: Devaluation is austerity done right
#57Why should everyone pay for the speculators?
Aren't the "speculators" a bit of a boogeyman? Nobody complains when the speculators provide economic benefit (which studies say they do). Besides the general market efficiencies that speculation has been shown to provide, sometimes the speculators drive prices down very sharply in anticipation of commodity devaluation. No one ever seems to complain about that.
The major problem is the speculators risk OUR MONEY for THEIR PROFITS. If they win, they take their captured marbles home, if they lose, well, they were playing with other people's marbles.
This privatization of profits and socialization of risk is what's at stake. If actual accountability (even if it's not entirely symmetrical) existed, I doubt anyone would care.
Right now, it's heads==they win, tails==we lose. That's a fools game, and we're the fools.
Re: Devaluation is austerity done right
#58What people dont understand specially the ones that are against all inflation is this: There is natural and artefical inflation and deflation. You get for example natural inflation when you have supplyshocks (If somebody blow up intel CPUs would be more expensiv) you get artefical inflation when you print money. The first is just the market reacting to 'something'. The same goes for deflation, you have natural (good)…
When central banks target inflation (say 2%) and the economy is growing around 2% (thus 2% deflation) they acctully produce 4% inflation in nominal terms. You're mixing up two different notions of inflation here. There is the old-fashioned definition of inflation which calls any expansion of the "money supply" inflation. (With "money supply" in scare quotes because it's a pretty arbitrary concept, considering the mul…
I'm not sure where mixing something up.
If the central bank targets 2% price level inflation, the economy grows 2% (witch would mean 2% of deflation in prices under the productivity norm) the central bank then has to go on and print enough money that it in a non growing economy would have hit 4% nominal inflation.
I don't see where I mix up the concepts I am always talking about price inflation.
Edit: On the blogpost, I don't think the autor really understands what NGDP targeting is about. Its about the CB not distorting relative prices, its seeing whats going on in prices. With IT you mess up the function of the price system, Hayek teaches us that prices are information. The productivity norm is basically what would happen without a central bank.
Re: Devaluation is austerity done right
#59Earlier quoted context omitted.
Aren't the "speculators" a bit of a boogeyman? Nobody complains when the speculators provide economic benefit (which studies say they do). Besides the general market efficiencies that speculation has been shown to provide, sometimes the speculators drive prices down very sharply in anticipation of commodity devaluation. No one ever seems to complain about that.
The major problem is the speculators risk OUR MONEY for THEIR PROFITS. If they win, they take their captured marbles home, if they lose, well, they were playing with other people's marbles. This privatization of profits and socialization of risk is what's at stake. If actual accountability (even if it's not entirely symmetrical) existed, I doubt anyone would care. Right now, it's heads==they win, tails==we lose. That…
> The major problem is the speculators risk OUR MONEY for THEIR PROFITS.
I spent some time doing futures trading a couple of years ago, so I was an evil "speculator". I could have sworn that the money that I lost when I placed a series of bad trades was my own. I really have to learn how to hedge my futures trades with options before I get back into it. :)
> This privatization of profits and socialization of risk is what's at stake.
I agree to the extent that the whole notion of "too big to fail" and government bailouts is socializing the losses. I would really prefer if we would let the free market work and allow the financial institutions that are that bad to just go out of business.
Re: Devaluation is austerity done right
#60Earlier quoted context omitted.
Devaluation is the easiest solution from a political point of view, but it is basically a transfer of value from those with savings/creditors to those in debt (including all of us with large credit card debts and mortgages). It punishes the careful savers and rewards the profligate, and sends a signal that living high on credit is good, while those that save and live within their means are idiots.
The problem with that story is that it completely ignores what has actually happened since Glass-Steagal was repealed and the bubble burst. This isn't a simple case of ants and grasshoppers. The current economic problem is a lack of aggregate demand. Too many people are cutting their spending to pay down their debts, which cuts economic activity, which puts more people out of work contributing to the lack of demand,…
And even this lengthier story has failed to mention 40 years of stagnant and even falling real wages, the decapitalization of domestic industry in Western countries, the resulting deskilling of much of the population in Western countries, and the resultant loss of incomes for both families and governments.
An ant wakes up one morning to find that the queen of his anthill has outsourced food production to another hill of smaller ants who eat less. He is now told that he can eat as little as them, and keep receiving food, or he can be cast out and go hungry entirely. He knows winter is coming, but no longer has enough food to feed himself and save.
Winter comes, he is cast out, and the other ants in the hill laugh at the idiot who didn't save anything for winter.