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Setelinleikkaus: When Finns snipped their cash in half to curb inflation

jpkoning.blogspot.com

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Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#11

Post by nextlevelwizard »

jb1991 wrote: post #9
skynet97 wrote: post #8

Earlier quoted context omitted.

[flagged]

As someone who knew a few people under age 35 who died from Covid, I find this comment offensive.

That's the thing, some people have one experience and other the opposite.

I kept hearing "everyone knows someone who was affected by Covid", but I for one have none in my family nor have I heard any Covid related losses from any of my colleagues, but obviously there are people who were affected.

On other hand I do know a person who died due to depression caused by the isolation of lock down.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#12

Post by shigawire »

gostsamo wrote: post #3
thaumasiotes wrote: post #2

Somehow this author has come to the conclusion that price controls are the "solution" to inflation. This is a fundamental misunderstanding of why inflation is viewed as bad.

The article talks about history of alternatives to the interest rates, mainly controlling the currency supply and how it might be implemented in the future. How you discovered price control as the solution in there is still a mystery to me.

I think they are considering the last part of the article to be "price controls". If the government prevents people from buying certain goods by selectivity freezing certain purchases I'm not sure I'd call that a price controls -- more like a prohibition.

But I could see how this could be done similarly more like a price control. If the control was this granular, then maybe car purchases could be limited to $30,000 instead of blocked fully. This is effectively a price control.

Also - the author notes in the comments the post is a prognostication, not endorsement.

That said, much like the original Finnish plan, I have no idea how you'd implement this without massive loopholes. I'd imagine even if there were merits to the policy it would fail on account of the difficulty in implementation.

I wonder if it is more reasonable if there was equally a carrot to go with the stick - something analogous to the bond portion of the Finish approach.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#13

Post by HPsquared »

skynet97 wrote: post #8
pjc50 wrote: post #4

Mentioning the war on COVID but not the actual war between Russia and Ukraine that caused a huge spike in European energy prices is a big omission, since that caused a lot of global inflation.

[flagged]

All wars target the young and healthy.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#14

Post by 71bw »

skynet97 wrote: post #8
pjc50 wrote: post #4

Mentioning the war on COVID but not the actual war between Russia and Ukraine that caused a huge spike in European energy prices is a big omission, since that caused a lot of global inflation.

[flagged]

I thought we are in a place where people seem to express some sort of intelligence, and yet, reality always finds a way...

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#15

Post by gregman1 »

pjc50 wrote: post #4

Mentioning the war on COVID but not the actual war between Russia and Ukraine that caused a huge spike in European energy prices is a big omission, since that caused a lot of global inflation.

Extreme hike in energy prices was about four months before the war began. It’s when EU decided to abandon long term gas contracts and turned to spot prices (~11.2021). The war started in 02.2022.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#17

Post by teractiveodular »

A recent similar example was the Indian move in 2016 to demonetize the ₹500 and ₹1,000 notes with very little notice, which is in retrospect widely viewed to have been a disaster.

https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#19

Post by pjc50 »

shigawire wrote: post #12
gostsamo wrote: post #3

Earlier quoted context omitted.

The article talks about history of alternatives to the interest rates, mainly controlling the currency supply and how it might be implemented in the future. How you discovered price control as the solution in there is still a mystery to me.

I think they are considering the last part of the article to be "price controls". If the government prevents people from buying certain goods by selectivity freezing certain purchases I'm not sure I'd call that a price controls -- more like a prohibition. But I could see how this could be done similarly more like a price control. If the control was this granular, then maybe car purchases could be limited to $30,000 i…

In this context, all European countries including Finland were subject to rationing during the war; the question is about how to phase out both rationing and price controls without having a huge discontinuity at that moment.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#20

Post by thaumasiotes »

gostsamo wrote: post #3
thaumasiotes wrote: post #2

Somehow this author has come to the conclusion that price controls are the "solution" to inflation. This is a fundamental misunderstanding of why inflation is viewed as bad.

The article talks about history of alternatives to the interest rates, mainly controlling the currency supply and how it might be implemented in the future. How you discovered price control as the solution in there is still a mystery to me.

Yes, the solution he advocates is "we freeze your assets, allot you a certain basket of consumer goods, and take what we consider the appropriate price out of your frozen assets".

If you'd rather describe that as "communism" than "price controls", feel free.

The theme of the whole piece is that, if you don't allow people to pay more for things, then the price of those things won't rise, and that this is some sort of policy victory. It's a very stupid viewpoint; seeing prices fail to rise because you redenominated the currency means nothing. Seeing prices fail to rise because you prohibit that, on the other hand, doesn't mean nothing - instead, it means your economy is collapsing.

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